Exhibit 99.1
The Bon-Ton Stores, Inc. Announces Third Quarter Results
YORK, Pa.--(BUSINESS WIRE)--Nov. 17, 2005--The Bon-Ton Stores,
Inc. (NASDAQ:BONT) today reported results for the third quarter ended
October 29, 2005.
Income
For the third quarter of fiscal 2005, the Company reported a net
loss of $6.3 million, or $0.39 per share, which included an after-tax
charge of $0.04 per share reflecting expenses associated with the sale
of the proprietary credit card operations, compared to a net loss of
$0.7 million, or $0.05 per share, in the prior year period. For the
nine months ended October 29, 2005, the Company reported a net loss of
$12.2 million, or $0.75 per share, which includes an after-tax charge
of $0.08 per share associated with the sale of its proprietary credit
card operations in the second quarter of 2005, versus a net loss of
$6.7 million, or $0.42 per share, reported for the comparable period
last year. The results in the second quarter of fiscal 2004 included
an after-tax charge of $0.07 per share for costs associated with the
closing of the Company's Pottstown, Pennsylvania store.
Sales
As previously announced, for the third quarter of fiscal 2005,
total and comparable store sales decreased 4.1% to $285.7 million
compared to $297.8 million for the same period last year.
Year-to-date total sales decreased 2.9% to $822.6 million compared
to $847.1 million for the same period last year. Comparable store
sales decreased 2.6%.
Gross Margin
In the third quarter, gross margin dollars decreased $15.2 million
from the prior year period, reflecting the lower sales and decreased
gross margin rate for the current period. The gross margin rate
decreased 3.7 percentage points to 33.8% of sales as compared to 37.5%
reported last year, reflecting higher markdowns and increased fuel
costs in the third quarter of fiscal 2005. Year-to-date gross margin
dollars decreased $21.4 million. Year-to-date gross margin rate
decreased by 1.5 percentage points to 35.5% versus 37.0% reported in
the prior year period.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses decreased $7.5
million in the third quarter of fiscal 2005. The SG&A expense rate
decreased 1.1 percentage points to 34.2% of net sales, reflecting
reduced corporate, store and integration expenses, compared to 35.3%
for the same period last year. Year-to-date SG&A expenses decreased
$13.5 million, which includes a $1.2 million pre-tax charge associated
with the sale of the Company's proprietary credit card operations in
the second quarter of fiscal 2005. The year-to-date SG&A expense rate
decreased 0.5 percentage point to 34.8% of sales, compared to 35.3% in
the prior year period which included a $1.7 million pre-tax charge
associated with the closing of the Company's Pottstown, Pennsylvania
store in the second quarter of fiscal 2004.
Depreciation and Amortization
Depreciation and amortization expense in the third quarter
increased $1.4 million, compared to the prior year period, reflecting
accelerated depreciation on software associated with our credit
operation and a decrease in depreciation expense related to the impact
of Elder-Beerman final purchase price allocation adjustments recorded
in fiscal 2004. Year-to-date depreciation and amortization expense
increased $0.8 million over the prior year period.
Interest
Interest expense, net decreased $0.7 million in the third quarter
and $0.3 million in the first nine months of fiscal 2005, compared to
the respective prior year periods. Interest expense was positively
impacted by a reduction in long-term debt as a result of applying the
proceeds from the credit card sale in early July 2005, partially
offset by an increase in interest rates.
Comments
James H. Baireuther, Vice Chairman and Chief Administrative
Officer, commented, "Earnings were negatively impacted by the
shortfall in sales and a lower gross margin rate during the third
quarter. Factors which contributed to the decrease in sales and the
subsequent higher markdowns were the unseasonably warm weather we
experienced in our regions and the macro environment reflecting the
lack of consumer confidence and the concerns of higher gas and heating
costs. Additionally, the cost of procuring goods was affected by
higher fuel costs. These concerns prompted us to adjust our
expectations for customer spending during the holiday season;
therefore, in our press release of November 3, 2005, we revised our
earnings guidance to a range of $1.50 to $1.60 per share. Yesterday we
announced the closing of our Walden Galleria store in Buffalo, New
York which will result in a pre-tax charge of approximately $1.8
million, or an after-tax charge of $0.07 per share; therefore, we have
revised our earnings guidance to a range of $1.43 to $1.53 per share.
The total estimated one-time pre-tax charges for the closing of the
four store locations announced on September 20, 2005 and November 16,
2005 is $2.7 million. We expect the closing of these stores will have
a positive impact of approximately $3 million on our fiscal 2006
pre-tax earnings."
Mr. Baireuther continued, "Categories that performed better than
the Company average for third quarter were women's special size
apparel, shoes, intimate, men's sportswear, home and fashion
accessories. Among the weakest areas of business were men's
furnishings, dresses and coats. We are focused on the holiday season
and on maximizing the profitability of the fourth quarter with a full
assortment of exciting merchandise, and a compelling marketing and
advertising program, showcasing values our customers will recognize."
The Company's quarterly conference call to discuss the third
quarter of 2005 will be broadcast live over the Internet on November
17, 2005 at 10:00 a.m. eastern time. To access the call, please visit
the investor relations section of the Company's website at
www.bonton.com/investor/home.asp. An online archive of the broadcast
will be available within two hours after the conclusion of the call.
The Bon-Ton Stores, Inc. operates 139 department stores and two
furniture stores in 16 states from the Northeast to the Midwest under
the Bon-Ton and Elder-Beerman names. The stores carry a broad
assortment of quality brand-name fashion apparel and accessories for
women, men and children, as well as distinctive home furnishings. For
further information, please visit the investor relations section of
the Company's website at www.bonton.com/investor/home.asp.
Statements made in this press release, other than statements of
historical information, are forward-looking statements and are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve risks and
uncertainties that may cause results to differ materially from those
set forth in these statements. Factors that could cause such
differences include, but are not limited to, risks related to retail
businesses generally, additional competition from existing and new
competitors, uncertainties associated with opening new stores or
expanding or remodeling existing stores, risks related to the
Company's pending acquisition of the approximate 142 stores comprising
the Northern Department Store Group of Saks Incorporated, the ability
to attract and retain qualified management, the dependence upon key
vendor relationships and the ability to obtain financing for working
capital, capital expenditures and general corporate purposes.
Additional factors that could cause the Company's actual results to
differ from those contained in these forward-looking statements are
discussed in greater detail in the Company's periodic reports filed
with the Securities and Exchange Commission.
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THIRTEEN THIRTY-NINE
(In thousands except WEEKS ENDED WEEKS ENDED
share and per share -----------------------------------------------
data) October 29, October 30, October 29, October 30,
(Unaudited) 2005 2004 2005 2004
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Net sales $ 285,676 $ 297,798 $ 822,555 $ 847,079
Other income 2,126 2,012 6,098 6,211
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287,802 299,810 828,653 853,290
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Costs and expenses:
Costs of
merchandise sold 189,229 186,180 530,692 533,849
Selling, general
and administrative 97,759 105,232 285,848 299,391
Depreciation and
amortization 7,508 6,101 21,525 20,687
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Income (loss) from
operations (6,694) 2,297 (9,412) (637)
Interest expense, net 2,804 3,489 9,710 10,057
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Loss before income
taxes (9,498) (1,192) (19,122) (10,694)
Income tax benefit (3,198) (447) (6,965) (4,010)
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Net loss $ (6,300) $ (745) $ (12,157) $ (6,684)
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Per share amounts -
Basic:
Net loss $ (0.39) $ (0.05) $ (0.75) $ (0.42)
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Basic weighted
average shares
outstanding 16,218,717 15,999,908 16,175,790 15,887,321
Diluted:
Net loss $ (0.39) $ (0.05) $ (0.75) $ (0.42)
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Diluted weighted
average shares
outstanding 16,218,717 15,999,908 16,175,790 15,887,321
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data) Oct. 29, Jan. 29,
(Unaudited) 2005 2005
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Assets
Current assets:
Cash and cash equivalents $ 14,445 $ 22,908
Retained interest in trade receivables, net of
allowance for doubtful accounts and sales
returns of $6,172 at January 29, 2005 - 82,576
Other receivables, net of allowance for doubtful
accounts of $1,577 and $244 at October 29, 2005
and January 29, 2005, respectively 10,908 11,967
Merchandise inventories 418,355 296,382
Prepaid expenses and other current assets 19,488 12,253
Deferred income taxes 7,977 4,819
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Total current assets 471,173 430,905
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Property, fixtures and equipment at cost, net of
accumulated depreciation and amortization of
$212,813 and $198,797 at October 29, 2005 and
January 29, 2005, respectively 166,217 168,304
Deferred income taxes 32,892 24,908
Goodwill 2,965 2,965
Intangible assets, net of accumulated amortization
of $6,117 and $5,364 at October 29, 2005 and
January 29, 2005, respectively 8,510 9,400
Other assets 7,013 9,674
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Total assets $688,770 $646,156
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $174,032 $101,151
Accrued payroll and benefits 18,156 25,361
Accrued expenses 46,327 46,646
Current maturities of long-term debt 937 869
Current maturities of obligations under capital
leases 246 939
Income taxes payable 2,452 4,817
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Total current liabilities 242,150 179,783
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Long-term debt, less current maturities 154,191 178,257
Obligations under capital leases, less current
maturities 46 98
Other long-term liabilities 39,787 25,461
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Total liabilities 436,174 383,599
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Shareholders' equity:
Preferred Stock - authorized 5,000,000 shares at
$0.01 par value; no shares issued - -
Common Stock - authorized 40,000,000 shares at
$0.01 par value; issued shares of 14,065,289
and 13,568,977 at October 29, 2005 and January
29, 2005, respectively 141 136
Class A Common Stock - authorized 20,000,000
shares at $0.01 par value; issued and
outstanding shares of 2,951,490 at October 29,
2005 and January 29, 2005 30 30
Treasury stock, at cost - shares of 337,800 at
October 29, 2005 and January 29, 2005 (1,387) (1,387)
Additional paid-in-capital 127,687 119,284
Deferred compensation (6,422) (1,096)
Accumulated other comprehensive loss (65) (427)
Retained earnings 132,612 146,017
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Total shareholders' equity 252,596 262,557
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Total liabilities and shareholders' equity $688,770 $646,156
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CONTACT: The Bon-Ton Stores, Inc.
Mary Kerr
Vice President
Corporate Communications
(717) 751-3071