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I would now like to turn the call over the call over to Mr. Brendan Hoffman.Brendan L. Hoffman Good morning and thank you for joining us. I will begin with some highlights from the second quarter, followed by an overview of our four focus areas and opportunities. Overall, in the second quarter we achieved our first positive comps since the fourth quarter of 2010, and instituted several changes to our business that we believe position us well for improved performance in the second half. We evaluated and made adjustments to our merchandise assortment and marketing programs to drive store productivity. In addition, we made enhancements to e-commerce and took steps to create a store environment that emphasizes a customer first experience. We successfully completed the exchange of our senior notes in July and seamlessly transitioned to our new partner Alliance Data for our private label credit card business. We are also on track to achieve the $40 million annualized expense reductions, with an estimated benefit of $30 million to fiscal 2012. Keith will get into more details in his remarks. Moving on to the merchandise and marketing discussion. All the work we did during the season to adjust the mix of the traditional and updated assortments is beginning to pay dividends. In July, we saw a significant improvement in our Ladies Ready-to-Wear businesses, particularly Moderate Sportswear and Special sizes. Our best performing businesses for the quarter were Hard and Soft Home, Shoes and Cosmetics, while our toughest businesses were Juniors and Dresses. We are working to identify opportunities to turn these categories around. E-commerce business continues to trend at double-digit sales increases. Our Private brand penetration was 20.3% compared with 21.2% in the second quarter of 2011. We tested some new marketing events, which really communicated the value we offer through a more consistent and simplified messaging. We were very pleased with the customer’s favorable response and will expand on these in the fall.
Turning to some thoughts in the second half of the year, beginning with merchandising. We continue to evaluate and make adjustments to our assortment. We went too far, too quickly in the recalibration of our moderate traditional versus updated merchandise mix. While we think it is important to attract the updated and younger customer, this cannot be at the expense of our loyal, moderate traditional customer. Going forward, our merchandise assortment will be better aligned with our customer both existing and new. This will be a key driver of profitable sales growth.Private brand accounted for approximately 70% of our shortfall to the merchant’s gross margin plan. We shifted the assortment too far to the updated customer and combined with price increases, this hurt performance. We adjusted these issues and we were able to rework most of our offering for the fall. We expect sales increases in our private brand categories as we have adjusted our merchandise assortment and have the ability to offer more attractive price points in response to lower costs coming from oversees. Overall, we see prices returning close to 2011 levels by the first quarter of 2013 in many areas particularly apparel. And today, we have implemented to various degrees strategic initiatives designed to support our growth strategy in over 120 doors. I had spent a lot time with our buyers and market. Our partnership with our vendors is stronger than ever. The vendor community has been very supportive and is working with us to drive sales through intensifying additional doors and online. Regarding our marketing initiatives, Luis Fernandez, our new Chief Marketing Officer has now been with us for a little over three months and we’ve already seen our marketing message benefiting from Luis’ expertise. We were delivering a clear and more concise message around our plan for motions and product initiatives, resulting in improved overall shopping experience for our customer. Read the rest of this transcript for free on seekingalpha.com