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Bon-Ton Deep in Red

Keeps Financial House in Order

Recording a steep loss in its 2008 results, Bon-Ton Stores pointed to ways it will reduce the red ink in 2009, and was rewarded by Wall Street, which sent the share price up more than 16% by midday on moderate trading volume, the day of the announcement.

In the fourth quarter, the 280-unit department store operator was hit with a net loss of $87.7 million, or $5.22 per diluted share, in a major reversal from its net profit of $75.2 million, or $4.43 EPS one year ago.

In full year results, the net loss was $169.9 million, or $10.12 EPS — way down from earnings of $11.6 million, or 68 cents EPS in 2007.

The Q4 results were heavily impacted by charges amounting to $7.39 per share, mainly the result of the write-down of various "long-lived and intangible assets."

Sales in the quarter fell 9.4% to $1.03 billion; comps declined 9.7%. Full year sales of $3.13 billion were down 7.0% as comps declined 7.4%.

Keith Plowman, evp and cfo, outlined the 2009 guidance for negative EPS of $3.40–$4.30, based on a comp-store sales decrease "in the range of 6.5% to 9.0%."

Financial analysts and shareholders were meant to be reassured by the litany of Bon-Ton's aggressive moves to cut inventory — year-end 2008 comp store inventory was down 13%, noted president and ceo Bud Bergren — and trim borrowing to a very conservative level. And for the moment, they apparently were reassured, as the stock price headed above $1.30 for the first time since March 6. Shares have traded below $2 since early November.

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