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Bon-Ton Stores Management Discusses Q1 2012 Results - Earnings Call Transcript

I would now like to turn the call over to Mr. Brendan Hoffman.

Brendan L. Hoffman

Good morning, and thank you for joining us. I will share my observations of some actions taken or that we are beginning to take during my initial 90 days with the company. But first, let me quickly review our merchandising performance in the first quarter.

We were a little fooled in the beginning of the first quarter based on February results doing better than expected, especially because we had shifted a very big promotion, Community Day, out of February to the end of April. We believe the stronger-than-expected February sales results were due in large part to the warmer-than-normal temperatures we were experiencing in our markets. In retrospect, while the event was successful, it had a negative impact on April in total, as it suppressed April sales prior to the event. We will move this event back to February, where it will help that month and not impact the entire month of April, which is more important to the quarter than February.

We continued to see some customer resistance to price increases, especially in our private brand merchandise. Private brand penetration was 19% compared to 19.7% in the first quarter of 2011. We have seen slight cost reductions on our current second quarter deliveries and will benefit from additional reductions going forward, which will enable us to reduce price points on most categories going forward. This should favorably impact the private brand business in the fall.

Our best performing businesses for the quarter were lady shoes, hard home and cosmetics. Franchise businesses had positive comp sales for the quarter and performed better than the company -- total company average.

Our Incredible Value Program or IVP was slightly below last year, and the toughest businesses were moderate traditional ladies sportswear, ladies outerwear and juniors.

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