Bon-Ton Stores Q3 Loss Widens, Again Lowers 2014 Outlook

(RTTNews) - Department store chain Bon-Ton Stores, Inc. (BONT) on Thursday reported a loss for the third quarter that widened from last year, reflecting lower sales and higher selling, general and administrative expenses. Revenues for the quarter missed analysts' expectations.

Looking ahead, the company once again lowered its earnings and comparable store sales outlook for fiscal 2014. The company's shares are down more than 8 percent in pre-market activity.

Kathryn Bufano, President and Chief Executive Officer, said, "The quarter was disappointing in that we had solid momentum through mid-October, when traffic slowed and we saw unseasonably warm weather. While our subsequent performance did not meet our expectations, we did achieve numerous measurable successes that bode well for ongoing business."

Bon-Ton Stores' net loss for the third quarter widened to $11.01 million or $0.57 per share from net loss of $0.93 million or $0.05 per share in the previous-year quarter.

The prior-year quarter's results included favorable adjustments to reduce performance incentives totaling $5.0 million.

On average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined 1 percent to $642.74 million from $651.16 million in the prior-year period. Total sales also decreased 1 percent to $658.76 million from $666.57 million last year. Analysts had a consensus revenue estimate for the quarter of $670.41 million.

Sales for the quarter were impacted by reduced traffic and warmer weather that curtailed demand for seasonal merchandise, particularly in October. Comparable store sales for the quarter decreased 0.8 percent compared with last year.

Gross margin rate for quarter decreased 29 basis points to 36.3 percent of net sales, primarily due to increased distribution and delivery costs associated with the company's omnichannel selling efforts, partially offset by a reduction in the net markdown rate.

Selling, general and administrative expenses for the quarter increased 3 percent from last year to $220.9 million, largely the result of an unfavorable comparison to reduced performance incentives in the prior year period and continued investment in information technology and the company's omnichannel operations.

Looking ahead to fiscal 2014, Bon-Ton Stores now expects earnings in a range of loss of $0.20 per share to earnings of $0.10 per share, with comparable store sales ranging from flat to 0.5 percent increase.

Earlier, the company forecast full-year earnings in a range of $0.25 to $0.55, assuming comparable store sales growth of 1 to 2 percent. The Street expects earnings of $0.35 per share for the year.

Bufano said, "We are encouraged by our sales performance thus far in November and are eager for the holiday kick-off next week. As we look to the all-important holiday season, we recognize the challenges of continued consumer uncertainty, but we believe we are well-positioned to meet anticipated fourth quarter demand with compelling product and strong marketing throughout the season."

BONT closed Wednesday's trading at $8.90. In Thursday's pre-market activity, the stock is down $0.74 or 8.31 percent to $8.16.