Bon-Ton Stores' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Bon-Ton Stores (BONT)

Q4 2011 Earnings Call

March 07, 2012 10:00 am ET


Jean Fontana - Senior Vice President

Brendan L. Hoffman - Chief Executive Officer, President and Director

Keith E. Plowman - Chief Financial Officer, Executive Vice President of Finance and Principal Accounting Officer

Anthony J. Buccina - Vice Chairman and President of Merchandising


Grant Jordan - Wells Fargo Securities, LLC, Research Division

Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division

Michael Exstein - Crédit Suisse AG, Research Division

Emily E. Shanks - Barclays Capital, Research Division

William M. Reuter - BofA Merrill Lynch, Research Division

Karen Eltrich - Goldman Sachs Group Inc., Research Division

Karru Martinson - Deutsche Bank AG, Research Division

Carla Casella - JP Morgan Chase & Co, Research Division

Rishi Parekh - Sterne Agee & Leach Inc., Research Division

Todd Harkrider - UBS Investment Bank, Research Division

Colleen Burns

Unknown Analyst



Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today's Bon-Ton Stores Inc. Fourth Quarter 2011 Financial Results Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would like to now turn the conference to Ms. Jean Fontana. Please go ahead, ma'am.

Jean Fontana

Thank you, Augusta. Good morning, and welcome to Bon-Ton's fourth quarter and fiscal 2011 conference call. Mr. Brendan Hoffman, President and CEO; Mr. Tony Buccina, Vice Chairman and President of Merchandising; and Mr. Keith Plowman, Executive Vice President and Chief Financial Officer will host today's call.

You may access a copy of the earnings release on company's website at You may also obtain a copy of the earnings release by calling (203) 682-8200.

The statements contained in this conference call which are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results might differ materially from those projected in such statements due to a number of risks and uncertainties, including those set forth in the cautionary note in the earnings release and all of which are described in the company's filings with the SEC.

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'll begin with some opening comments, Keith will provide financial details on fourth quarter and full year 2011 results and outline the financial guidance and assumptions for 2012. Tony will discuss the fourth quarter's merchandise results and the merchandising initiatives for 2012. After that, I will make closing remarks and then we will be available to address your questions.

I will begin by saying how happy I am to be here. I've been on board for only one month and most of my time has been spent in becoming familiar with the company and its people. I've had many one-on-one meetings with the senior leadership group, as well as larger group meetings with the different peer man [ph] heads and their leadership teams. In addition, I've spent a great deal of time visiting stores. I visited over 30 stores in multiple states to try to get a better understanding of the different banner names, store sizes and locations that make up our portfolio of stores. My initial reaction is that I'm more excited about the opportunities that we have in front of us than I had anticipated.

Now for a brief overview of the results from our strategic initiatives that began in mid-September. Sales in our 7 pilot stores significantly outperformed the company. We expanded and updated in better fashion assortments, we reallocated square footage to more productive categories and added new brands, our marketing campaign of Rediscover Bon-Ton resonated with the customers in these markets. Customer feedback from our pilot stores is very positive. They noticed the changes made to their store, the assortment and the improvement in their overall shopping experience. This was evidenced by the results in these stores.

Also shoe expansions in 16 stores, 7 of which were the pilot stores, produced very strong sales results. We significantly increased the square footage of our shoe departments and added new brands for the assortment. We believe this represents a meaningful opportunity going forward.

Based on the success of these pilot stores, we will expand the strategic initiatives to 67 additional stores over the course of this year. We will focus on updated merchandise, we will create visual enhancements and new fixturing, we will renovate and refresh stores, including carpet, lighting, fitting rooms, restrooms, et cetera. In addition to this initiative and based on my early assessment of the company, the other areas of focus for 2012 will include: Reallocating square footage in our stores to increase focus on high-growth categories like ladies shoes. This may include eliminating lower producing categories in smaller stores that are space challenged; increase the attention given to our small stores and niche markets where there is less competition, which provides an opportunity to achieve outside comp store growth increases if we execute more effectively; reengineer our marketing cadence to ensure that our message to the customer is clear and concise, including refreshing some of our events; drive traffic with effective marketing using traditional and new media channels to communicate to the customer her way and reaching younger customers as well; continue to use targeted direct mail to entice our core customer with our value, fashion and quality; Customer First, we have a renewed focus on enhancing our customer shopping experience. We will strive to ensure every customer easily understands our merchandise assortments, promotions, ability to order a size and/or color we don't have in stock for her, either through a well-trained associate or using an online kiosk in a comfortable environment. We will continue to grow our eCommerce business to make sure it's our biggest store in each category and drive sales growth to reach over 5% of our total sales over the next few years.

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