The Bon-Ton Narrows Q1 Loss as Sales Decline 6.2%…

The Bon-Ton Stores, Inc. reported a net loss of $2.9 million, or $0.20 per share, for the first quarter of fiscal 2003 compared to a net loss of $4.4 million, or $0.29 per share, for the first quarter of fiscal 2002.

As previously announced, first quarter comparable store sales for the quarter decreased 5.6%. Total sales for the thirteen weeks ended May 3, 2003 decreased 6.2% to $141.1 million from $150.5 million reported for the same period last year due to the continuing weak economy. Increases in coats, accessories and shoes were offset by decreases in men’s, children’s, junior’s and misses.

In the first quarter, the gross margin rate increased 3.7 percentage points to 37.0% this year versus 33.3% reported for the same period last year. At the end of the first quarter, inventory at retail decreased 1.6% compared to the prior year.

Selling, general and administrative (SG&A) expenses increased $0.7 million from last year. The SG&A expense rate in the first quarter increased 2.8 percentage points to 36.4% of sales from 33.6% of sales for the prior year period, largely reflecting the sales shortfall.

James H. Baireuther, Vice Chairman and Chief Administrative Officer, commented, “We reduced our first quarter loss to $2.9 million from $4.4 million in the prior year period, even with disappointing sales. Gross margin increased $2.1 million and as a percentage of sales increased to 37.0% from 33.3% last year. This increase reflects the benefits of our 2002 inventory control initiative which included stringent currency and turnover standards, resulting in minimal impact from seasonal merchandise on the first quarter of fiscal 2003. This inventory initiative had a significant positive impact on gross margin in the first quarter of 2003 as compared to the first quarter of the prior year. We expect it will not have the same impact on our gross margin rate in the remaining quarters of 2003. SG&A expenses increased $0.7 million from the prior year period. SG&A expenses as a percent to sales increased 2.8 percentage points largely reflecting the sales shortfall.”

Mr. Baireuther continued, “We will maintain our aggressive promotional stance to address market share while continuing to control our inventory and expenses. We reinforce our original earnings guidance for fiscal 2003 in the range of $0.65 to $0.70 per share.”

               THE BON-TON STORES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                                      THIRTEEN
                                                     WEEKS ENDED
                                               -----------------------
(In thousands except share and per share data)    May 3,      May 4,
(Unaudited)                                        2003        2002
----------------------------------------------------------------------

Net sales                                        $141,111    $150,517
Other income, net                                     526         534
                                               -----------------------
                                                  141,637     151,051
                                               -----------------------
Costs and expenses:
  Costs of merchandise sold                        88,927     100,397
  Selling, general and administrative              51,380      50,636
  Depreciation and amortization                     4,764       5,057
                                               -----------------------
Loss from operations                               (3,434)     (5,039)
Interest expense, net                               1,244       1,977
                                               -----------------------
Loss before income taxes                           (4,678)     (7,016)
Income tax benefit                                 (1,730)     (2,631)
                                               -----------------------
Net loss                                          $(2,948)    $(4,385)