Bon-Ton FY16 net loss widens to 63.4 mn dollars

The Bon-Ton Stores’ comparable store sales decreased 4.7 percent for the fourth quarter. Net income was 44.7 million dollars or 2.09 per diluted share compared to 50.6 million dollars or 2.42 dollars in the same quarter last year. Comparable store sales decreased 3.8 percent in fiscal 2016, while net loss was 63.4 million dollars or 3.18 dollars per diluted share against net loss in fiscal 2015 of 57.1 million dollars or 2.90 dollars per diluted share.

Commenting on the company’s results, Kathryn Bufano, President and CEO said in a media release, "While the continued weak traffic trends and unseasonably warm weather pressured sales in the fourth quarter, we expanded gross margin by 145 basis points and grew adjusted EBITDA by 8 percent. In addition, we exceeded our cost reduction goal by 7 million dollars, with net savings of 31 million dollars for the year. Looking ahead, we will strive to make progress on our strategic initiatives and believe we are positioned to deliver improved performance going forward."

Fourth quarter result highlights

Total fourth quarter sales decreased 5.5 percent to 877.3 million dollars. The company said, comparable sales trends improved from Thanksgiving through the end of December and subsequently weakened in January and continued to see double-digit sales growth in omnichannel which reflects sales via its website, mobile site, and its Buy Online Pick Up In-Store initiative.

Adjusted EBITDA totalled 101.6 million dollars compared to adjusted EBITDA of 94 million dollars in the fourth quarter of fiscal 2015. Excluding the financial impact of the severance costs and insurance settlement, adjusted EBITDA was 97.3 million dollars in the fourth quarter of fiscal 2015.

The gross margin rate in the fourth quarter increased 145 basis points to 36.2percent as compared to the fourth quarter of fiscal 2015, primarily due to reduced markdowns and lower distribution costs, partially offset by deleverage from lower sales volume.

Review of the full year performance

Total full year sales in the period decreased 4.3 percent to 2.60 billion dollars but the gross margin rate increased 80 basis points to 35.5 percent as compared with fiscal 2015 as a result of reduced markdowns and lower delivery and distribution expenses. Gross profit decreased 19.1 million dollars to 922.9 million dollars in fiscal 2016 as compared with fiscal 2015 as a result of decreased sales volume in the current year.

The company said fiscal 2016 results include a 0.32 dollar per diluted share in consulting expenses and severance costs related to the company's cost savings initiatives, and 0.85 dollar per diluted share in non-cash asset impairment charges. Adjusted EBITDA totalled 116 million dollars inclusive of 6.5 million dollars of consulting expenses and severance costs compared with fiscal 2016 Adjusted EBITDA guidance of 114 million dollars to 124 million dollars. Excluding the aforementioned consulting expenses and severance costs, adjusted EBITDA was 122.5 million dollars.

FY17 loss expected to range between 2.08 to 2.59 dollars

For fiscal 2017, the company expects loss per diluted share to be in a range of 2.08 dollars to 2.59 dollars, inclusive of a 0.05 dollar expense from the 53rd week, and adjusted EBITDA to be in a range of 115 million to 125 million dollars.

The company said, assumptions reflected in its full-year guidance include a comparable sales decrease ranging from 2 percent to 3 percent, which excludes sales from the 53rd week; a gross margin rate increase of 10 to 20 basis points over the fiscal 2016 rate of 35.5 percent. The company expects to decrease debt by approximately 20 million to 30 million dollars by the end of fiscal 2017.

Picture:Bon-Ton website