The Bon-Ton Stores reported a net loss of $5.6 million, or $0.35 per share, for the first quarter of fiscal 2004 compared to a net loss of $2.9 million, or $0.20 per share, for the first quarter of fiscal 2003.
Sales
As previously announced, for the first quarter of fiscal 2004, total sales increased 87.9% to $265.1 million, including $125.7 million from the acquired Elder-Beerman stores, compared to $141.1 million for the same period last year. Bon-Ton comparable store sales decreased 2.0%.
Elder-Beerman sales are not included in the Company's reported comparable store sales, therefore the following is provided for informational purposes only. Elder-Beerman comparable store sales for the thirteen weeks ended May 1, 2004 decreased 2.9%. For Elder-Beerman and Bon-Ton combined, comparable store sales for the thirteen weeks ended May 1, 2004 decreased 2.4%.
Gross Margin/Inventory
In the first quarter, gross margin dollars increased $44.2 million, or 85% over the prior year period, primarily due to the impact of Elder-Beerman operations. The gross margin rate decreased 0.6 percentage point to 36.4% this year versus 37.0% reported for the same period last year. The decrease in gross margin rate reflects the inclusion of Elder-Beerman sales at a comparably lower gross margin rate and an increase in the markdown rate. At the end of the first quarter, comparable store inventory at retail decreased 4.8% compared to the prior year.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses increased $45.1 million, including $41.4 million from Elder-Beerman operations, in the first quarter. The SG&A expense rate in the first quarter was even with last year at 36.4% of sales. SG&A includes integration costs and expense reductions reflecting the realization of synergies.
Depreciation and Amortization
Depreciation expense in the first quarter increased $1.8 million reflecting the expense for the Elder-Beerman operations.
Interest
Interest expense increased $2.0 million reflecting the increased borrowings required to fund the acquisition of Elder-Beerman and increased deferred financing fees associated with the Elder-Beerman acquisition.
Comments
James H. Baireuther, Vice Chairman and Chief Administrative Officer, commented, “First quarter results were impacted by a decrease in sales volume and a very promotional retail environment which negatively impacted the Company's profit performance. We are addressing this issue with the finalization of our vendor matrix, product assortment and inventory levels, along with a strong marketing calendar. We will leverage each company's respective strengths to drive increased value for our customers and shareholders as we continue the integration process and combine the two companies. The quarter results were positively impacted by synergies realized which offset all of the integration expenses incurred during the first quarter. We are not revising our original earnings guidance for fiscal 2004 of $1.20 to $1.40 per share; we believe this range is attainable.”
First quarter 2004 financial results will be released Thursday, May 20, 2004. The Company's quarterly conference call to discuss the first quarter 2004 will be broadcast live over the Internet on May 20, 2004 at 10:00 a.m. eastern time. To access the call, please visit the investor relations section of the Company's website at www.bonton.com/investor/home.asp. An online archive of the broadcast will be available within one hour after the conclusion of the call.
The Bon-Ton Stores, Inc. operates 142 department stores in 16 states from the Northeast to the Midwest under the Bon-Ton and Elder-Beerman names. The stores carry a broad assortment of quality brand-name fashion apparel and accessories for women, men and children, as well as distinctive home furnishings. For further information, please visit the investor relations section of the Company's website at www.bonton.com/investor/home.asp.
Statements made in this press release, other than statements of historical information, are forward looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements. Factors that could cause such differences include, but are not limited to, risks related to retail businesses generally, our ability to integrate the recently acquired Elder-Beerman stores into our over-all operations, additional competition from existing and new competitors, uncertainties associated with opening new stores or expanding or remodeling existing stores, the ability to attract and retain qualified management, the dependence upon key vendor relationships and the ability to obtain financing for working capital, capital expenditures and general corporate purposes. Additional factors that could cause the Company's actual results to differ from those contained in these forward looking statements are discussed in greater detail in the Company's periodic reports filed with the Securities and Exchange Commission.
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONSTHIRTEEN
WEEKS ENDED
--------------------------
(In thousands except share and per share
data) May 1, May 3,
(Unaudited) 2004 2003
----------------------------------------------------------------------Net sales $ 265,083 $ 141,111
Other income, net 983 526
----------------------------------------------------------------------
266,066 141,637
----------------------------------------------------------------------Costs and expenses:
Costs of merchandise sold 168,663 88,927
Selling, general and administrative 96,507 51,380
Depreciation and amortization 6,575 4,764
----------------------------------------------------------------------
Loss from operations (5,679) (3,434)
Interest expense, net 3,204 1,244
----------------------------------------------------------------------Loss before income taxes (8,883) (4,678)
Income tax benefit (3,332) (1,730)
----------------------------------------------------------------------Net loss $ (5,551) $ (2,948)
----------------------------------------------------------------------Per share amounts -
Basic:
Net loss $ (0.35) $ (0.20)
----------------------------------------------------------------------Basic weighted average shares
outstanding 15,686,415 15,033,345Diluted:
Net loss $ (0.35) $ (0.20)
----------------------------------------------------------------------Diluted weighted average shares
outstanding 15,686,415 15,033,345
