Bon-Ton comparable store sales down 2.6 percent in Q3

The Bon-Ton Stores comparable store sales decreased 2.6 percent in the third quarter as compared with the prior year period. Gross margin rate decreased 286 basis points as compared with last year to 33.4 percent of net sales in the current year period.

”Clearly, our third quarter results were challenged as sales were pressured by unseasonably warm weather, which significantly impacted our cold-weather classifications, and by continued weakness in overall traffic trends. However, customers strongly responded to our expanded brand offerings and we also saw sustained momentum in certain core categories. Recognizing that the competitive environment is likely to continue, we remain focused on creating a differentiated and compelling product assortment and leveraging our home town strategy,” said Kathryn Bufano, President and Chief Executive Officer.

Third quarter details

Total sales in the period decreased 3 percent to 623.4 million dollars, compared with 642.7 million dollars in the third quarter of fiscal 2014. The company said that sales were adversely impacted by unseasonably warm weather and the continuation of soft traffic trends. Despite these challenges, it achieved a 3 percent increase in sales associated with proprietary credit card and sales growth in ecommerce, owing to a higher conversion rate. Year-to-date fiscal 2015 comparable store sales decreased 1percent.

Other income in the third quarter was 17.5 million dollars, compared with 16 million dollars in the third quarter of fiscal 2014. Proprietary credit card sales, as a percentage of total sales, increased 299 basis points to 54.5 percent. The gross margin rate decreased 286 basis points as compared with the third quarter of fiscal 2014 to 33.4 percent of net sales. Gross profit decreased 24.9 million dollars to 208.4 million dollars as a result of both decreased sales volume and rate in the period.

Guidance for FY15

For fiscal 2015, the company now expects adjusted EBITDA in a range of 110 million dollars to 120 million dollars and earnings per diluted share in a range of a loss of 2.15 dollars to 2.65 dollars. Assumptions include a comparable store sales performance ranging from a decrease of 0.5 percent to 1.5 percent and a gross margin rate ranging from a decrease of 70 to 80 basis points from the fiscal 2014 rate of 35.7 percent.

”Looking ahead, we are not anticipating major changes in the retail environment in the near term. Accordingly, we are pursuing a number of avenues to drive additional process improvements and further reduce expenses. The company's plan is expected to yield approximately 35 million dollars in annual savings in fiscal 2016,” added Bufano.