The Bon-Ton Stores, Inc. Announces Third Quarter Fiscal 2012 Results

The Bon-Ton Stores, Inc. (NASDAQ: BONT) today reported results for the third quarter of fiscal 2012 ended October 27, 2012.

Third Quarter Highlights

• Comparable store sales increased 1.9%.
• Gross margin rate was 36.6% compared with 37.4% in the third quarter of fiscal 2011.
• Operating income totaled $10.8 million, compared with operating income of $0.5 million in the third quarter of fiscal 2011.
• Adjusted EBITDA increased $9.0 million to $34.1 million, compared with $25.0 million in the third quarter of fiscal 2011. Adjusted EBITDA is not a measure recognized under generally accepted accounting principles (see Note 1).
• Net loss improved $11.9 million to $10.1 million, or $0.55 per diluted share, compared with a net loss of $22.0 million, or $1.21 per diluted share, for the third quarter of fiscal 2011.

Comments

Brendan Hoffman, President and Chief Executive Officer, commented, “We believe that our third quarter results reflect progress made as a result of initiatives we have been implementing throughout the year, including a better-balanced merchandise assortment, refined marketing efforts, our ‘Customer First’ shopping experience, and expense management. We were excited to see customers respond favorably to the new fall receipts and to our multi-channel methods of communication which created excitement and traffic in stores and online. This all led to 36% Adjusted EBITDA growth for the quarter as compared with the prior year third quarter.”

Mr. Hoffman continued, “We are looking forward to the holiday shopping season as we believe that we are well-positioned for continued momentum in the fourth quarter with strong merchandising and marketing initiatives in place.”

Year-to-date Highlights

• Comparable stores sales increased 0.3%.
• Gross margin rate was 35.6%, compared with 36.7% in the prior year period.
• Operating loss totaled $25.3 million, compared with an operating loss of $13.8 million in the prior year period. Operating loss for the fiscal 2012 period includes an $8.0 million charge for severance-related costs associated with targeted reductions to the Company’s cost structure.
• Adjusted EBITDA, inclusive of the aforementioned $8.0 million of severance-related costs, was $46.0 million, compared with $63.8 million in the prior year period (see Note 1).
• Net loss totaled $96.0 million, or $5.20 per diluted share, compared with a net loss of $90.3 million, or $5.00 per diluted share, for the prior year period. Year-to-date results for fiscal 2012 include a charge of $6.7 million, or $0.36 per diluted share, for fees associated with the senior notes exchange, a charge of $8.0 million, or $0.43 per diluted share, for the aforementioned severance-related costs and a net gain of $1.9 million, or $0.10 per diluted share, related to the Company’s sale of certain Rochester, NY locations and subsequent prepayment penalty on the extinguishment of related mortgage debt. Year-to-date fiscal 2011 loss included a charge of $9.5 million, or $0.52 per diluted share, associated with the voluntary prepayment of the Company’s second lien term loan and the refinancing of its revolving credit facility.

Net Sales

For the third quarter of fiscal 2012, comparable stores sales increased 1.9%. Total sales for the thirteen weeks ended October 27, 2012 increased 1.9% to $668.7 million, compared with $656.1 million for the prior year period.

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