The Bon-Ton Stores, Inc. reported comparable store sales decreased 6.1 percent in the second quarter of fiscal 2017.  Total sales in the period decreased 7.0 percent to $504.4 million, compared with $542.4 million in the second quarter of fiscal 2016. The company continued its double-digit sales growth in omni-channel, which reflects sales via the company’s website, mobile site, and its Let Us Find It customer service program, as the company leveraged its West Jefferson facility and store-fulfillment network.

Other income in the second quarter of fiscal 2017 was $21.0 million, an increase of $4.8 million over the comparable prior year period.  The increase was primarily due to income associated with gift card breakage and, to a lesser degree, higher revenues associated with the company’s proprietary credit card operations.  Proprietary credit card sales, as a percentage of total sales, increased approximately 40 basis points to 57.4 percent in the second quarter of fiscal 2017.

The gross margin rate in the second quarter of fiscal 2017 decreased approximately 100 basis points as compared with the second quarter of fiscal 2016 to 35.5 percent of net sales, primarily due to an increase in the markdown rate.  Gross profit decreased $18.9 million to $179.2 million in the second quarter of fiscal 2017, primarily as a result of decreased sales volume.

SG&A expense in the second quarter of fiscal 2017 decreased $20.7 million, or 9.8 percent, as compared with the second quarter of fiscal 2016, to $191.2 million. This was largely due to savings associated with prior year closed stores and reductions in consulting fees, medical insurance, payroll, taxes and rent, as well as gains associated with various real estate transactions.  The SG&A expense rate in the second quarter of 2017 was 37.9 percent of net sales, a decrease of approximately 120 basis points from the prior year.

Adjusted EBITDA totaled $9.1 million in the second quarter of fiscal 2017, inclusive of $4.6 million of income associated with gift card breakage, $7.8 million of gains related to various real estate transactions and $1.9 million of severance costs.  In the second quarter of fiscal 2016, Adjusted EBITDA was $2.5 million, inclusive of $2.4 million of consulting fees related to cost reduction initiatives and $2.2 million of severance costs.  (As used in this release, Adjusted

Guidance    

For fiscal 2017, the company continues to expect loss per share to be in a range of $2.08 to $2.59, inclusive of a 5 cents per share expense from the 53rd week, and Adjusted EBITDA to be in a range of $115 million to $125 million.

Updated assumptions reflected in the company’s full-year guidance include the following:

  • A comparable sales decrease now ranging from 3.5 percent to 4.5 percent, which excludes sales from the 53rd week;
  • A gross margin rate decrease now ranging from 40 to 60 basis points below the fiscal 2016 rate of 35.5 percent;
  • SG&A expense now ranging from $834 million to $839 million, including approximately $10 million for the 53rd week, compared to SG&A expense of $880.6 million in fiscal 2016;
  • Capital expenditures not to exceed $30 million, net of external contributions; and
  • An estimated 20.3 million weighted average shares outstanding.
  • The company expects to decrease debt by approximately $15 million to $20 million by the end of fiscal 2017.

Photo courtesy Bon-Ton