The Bon-Ton Stores, Inc. reported comparable store sales for the second quarter of 2009 decreased 9.8%. Total sales for the thirteen weeks ended August 1, 2009 decreased 9.5% to $609.2 million compared with $673.4 million for the prior year period.
Year-to-date comparable store sales decreased 9.2%. Year-to-date total sales decreased 8.7% to $1.25 billion compared with $1.37 million for the same period last year.
Net loss totaled $34.8 million, or $2.04 per diluted share, for the second quarter of fiscal 2009 compared with a net loss of $33.8 million, or $2.01 per diluted share for the second quarter of fiscal 2008. The goodwill impairment charge recorded the second quarter of fiscal 2008 amounted to 72 cents per diluted share.
Operating loss for the second quarter of fiscal 2009 was $10.6 million, an improvement from the $32.3 million loss reported in the same period of 2008. The second quarter of fiscal 2008 included a $17.8 million non-cash goodwill impairment charge.
Gross margin dollars in the second quarter decreased $15.3 million compared with the second quarter of fiscal 2008, reflecting the current year decrease in sales volume. The gross margin rate for the second quarter of fiscal 2009 increased approximately 130 basis points to 37.1% of net sales compared with 35.9% in the second quarter of fiscal 2008, reflecting disciplined inventory control that resulted in reduced net markdowns.
Year-to-date gross margin dollars decreased $28.9 million compared with the prior year period. The year-to-date gross margin rate improved 100 basis points to 35.9% compared with 34.9% in the prior year period.
EBITDA increased $2.7 million in the second quarter of fiscal 2009 to $19.3 million compared with $16.5 million in the second quarter of fiscal 2008. Year-to-date EBITDA increased $3.7 million to $25.0 million compared with $21.3 million in the prior year period.
As previously disclosed, in the second quarter of fiscal 2008 the company recorded a pre-tax charge of $17.8 million to write-off the value of goodwill. On an after-tax basis, this equated to $12.0 million, or a charge of 72 cents per share.
Other income in the second quarter of fiscal 2009 decreased to $16.1 million compared with $21.5 million in the second quarter of fiscal 2008. Year-to-date other income decreased to $34.5 million compared with $44.3 million in the prior year period. The second quarter and year-to-date fiscal 2009 amounts reflect reduced sales volume and reduced income from our proprietary credit card.
The company reported selling, general and administrative expenses in the second quarter of fiscal 2009 decreased $23.5 million to $222.9 million compared with $246.4 million in the second quarter of fiscal 2008. The SG&A expense rate for the second quarter of fiscal 2009 was 36.6%, even with the prior year period. Year-to-date SG&A expenses decreased $42.4 million compared with the prior year period. The year-to-date SG&A expense rate increased to 36.7% compared with 36.6% in the prior year period, reflecting the lower sales volume in fiscal 2009.
Depreciation and amortization expense, including amortization of lease-related interests, decreased $1.2 million to $29.9 million in the second quarter of fiscal 2009 compared with $31.1 million in the second quarter of fiscal 2008. Year-to-date depreciation and amortization expense, including amortization of leased-related interests, decreased $2.1 million to $59.2 million compared with $61.3 million in the prior year period.
Interest expense, net, decreased $1.2 million to $23.2 million in the second quarter of fiscal 2009 compared with $24.4 million in the second quarter of fiscal 2008. Year-to-date interest expense, net, decreased $2.6 million to $46.1 million compared with $48.7 million in the prior year period. The decreases in the second quarter and year-to-date periods are primarily due to decreased borrowing levels and reduced interest rates.
An income tax provision of $0.9 million was recorded in the second quarter of fiscal 2009 compared with a $22.9 million income tax benefit in the second quarter of fiscal 2008. Year-to-date income tax benefit decreased $38.5 million to $0.1 million compared with $38.7 million in the prior year period. The current year decrease principally reflects the Company’s continuation throughout 2009 of a valuation allowance position against virtually all net deferred tax assets.
Bud Bergren, President and Chief Executive Officer, commented, “We continued to carefully manage inventory levels and control costs and are pleased to report results that exceeded our expectations, resulting in revised full-year guidance. During the quarter, we reduced our comparable store and clearance inventories and generated an approximate 130 basis-point improvement in our gross margin rate. We also realized a net reduction of $23.5 million in our selling, general and administrative expenses, bringing our year-to-date total expense savings to $42.4 million, and we are on track to exceed our guidance of $70 million in annual selling, general and administrative expense reduction. I am very proud of how our team is managing through this difficult economic period and want to thank all of our associates for their continued focus on execution.”
Mr. Bergren continued, “Looking ahead, while there has been some encouraging news regarding the macroeconomic environment, we plan to continue to manage our business conservatively. With two important quarters approaching, we feel very good about our execution during this recession and believe our assortment of differentiated quality merchandise at outstanding values is well-aligned with our customers’ needs for the fall and holiday seasons. Lastly, maintaining strong cash flow and liquidity remain a key priority for the Company.”
Regarding guidance, Keith Plowman, Executive Vice President and Chief Financial Officer, stated, “As noted in the company’s August 6, 2009 sales press release, our July excess borrowing capacity under our revolving credit facility was $174 million, well above the required minimum availability. We are revising our full year 2009 guidance for EBITDA to a range of $150 million to $170 million and loss per diluted share in the range of $3.70 to $2.50. Additionally, our current estimate for cash flow is a range of $15 million to $35 million for the year, permitting us to manage and reduce our debt levels. Assumptions reflected in our full-year guidance include:
Comparable store sales decrease in the range of 7.0% to 9.0%;
Gross margin rate of 36.0%;
SG&A expense decrease of approximately $80 million;
Effective tax rate of 0%;
Capital expenditures not to exceed $40 million, net of landlord contributions; and
Estimated 17 million diluted weighted average shares outstanding.”
THE BON-TON STORES, INC. AND SUBSIDIARIES | |||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
THIRTEEN | TWENTY-SIX | ||||||||||||||||
WEEKS ENDED | WEEKS ENDED | ||||||||||||||||
(In thousands except share and per share data) (Unaudited) | August 1, 2009 | August 2, 2008 | August 1, 2009 | August 2, 2008 | |||||||||||||
Net sales | $ | 609,228 | $ | 673,384 | $ | 1,253,759 | $ | 1,373,632 | |||||||||
Other income | 16,076 | 21,513 | 34,468 | 44,288 | |||||||||||||
625,304 | 694,897 | 1,288,227 | 1,417,920 | ||||||||||||||
Costs and expenses: | |||||||||||||||||
Costs of merchandise sold | 383,097 | 431,962 | 803,463 | 894,462 | |||||||||||||
Selling, general and administrative | 222,923 | 246,394 | 459,750 | 502,168 | |||||||||||||
Depreciation and amortization | 28,696 | 29,892 | 56,794 | 58,910 | |||||||||||||
Amortization of lease-related interests | 1,217 | 1,206 | 2,444 | 2,414 | |||||||||||||
Goodwill impairment | – | 17,767 | – | 17,767 | |||||||||||||
Loss from operations | (10,629 | ) | (32,324 | ) | (34,224 | ) | (57,801 | ) | |||||||||
Interest expense, net | 23,194 | 24,376 | 46,120 | 48,738 | |||||||||||||
Loss before income taxes | (33,823 | ) | (56,700 | ) | (80,344 | ) | (106,539 | ) | |||||||||
24_4686″> Income tax provision (benefit) | 24_6104″> 939 | 24_7633″> (22,874 | 24_7728″> ) | 24_9179″> (141 | 24_9249″> ) | 24_10583″> (38,650 | 24_11583″> ) | ||||||||||
Net loss | $ | (34,762 | ) |