Exhibit 99.1
The Bon-Ton Stores, Inc. Announces Second Quarter Fiscal 2007 Results
-Net Loss of $0.91 Per Diluted Share versus Prior Year Net Loss of
$1.20 Per Diluted Share-
-Company Revises Guidance for Fiscal 2007-
YORK, Pa.--(BUSINESS WIRE)--Aug. 23, 2007--The Bon-Ton Stores,
Inc. (NASDAQ: BONT) today reported results for the second quarter of
fiscal 2007 ended August 4, 2007.
For the second quarter of fiscal 2007, the Company reported a net
loss of $15.0 million, or $0.91 per diluted share, compared to a net
loss of $19.8 million, or $1.20 per diluted share, for the second
quarter of fiscal 2006. The Company reported a net loss of $44.3
million, or $2.68 per share, for the twenty-six weeks ended August 4,
2007, compared to a net loss of $30.6 million, or $1.87 per share, for
the comparable period last year.
Comments
Bud Bergren, President and Chief Executive Officer, commented, "We
improved our gross margin rate in the second quarter of 2007 by 310
basis points to 38.0% with the elimination of liquidation events we
offered in the second quarter of 2006. We also achieved an EBITDA
improvement in the second quarter of approximately 60% over the prior
year period. However, the additional sales shortfall reflecting what
we believe was a challenging retail environment, along with the
planned reduction in our sales of approximately $17.5 million related
to last year's liquidation events, reduced our EBITDA and net income
below our expectations for the quarter."
Mr. Bergren continued, "While uncertainty regarding consumer
confidence persists, we believe we have the right initiatives in place
to achieve our revised guidance for the year and our longer-term
objectives. We are encouraged by the strong performance in several key
merchandise categories in the first half of the year including
children's, better sportswear, juniors, intimate apparel and shoes,
and by the customer's positive response to our new fall assortments.
We will continue to manage our inventories and control expenses to
plan. As we have noted before, fiscal 2007 is a transitional year for
Bon-Ton as a result of the ongoing process of integrating Bon-Ton and
Carson's; we will not have a fully comparable year until 2008. We
remain on track with the integration process in all areas of the
business and are intently focused on driving sales and profit for our
Company. The integration is a long-term process that we believe has
and will add significant value and we remain focused on a successful
completion of this process."
Sales
For the second quarter of fiscal 2007, total sales decreased 5.1%
to $708.6 million compared to $746.8 million for the prior year
period. Bon-Ton and Carson's combined comparable stores sales
decreased 5.0%.
Year-to-date total sales increased 10.5% to $1,446.2 million
compared to $1,308.5 million for the same period last year. For
informational purposes only, year-to-date Carson's comparable store
sales decreased 0.2% compared to the prior year period. Year-to-date
Bon-Ton comparable store sales decreased 9.0%
Other Income
Other income increased to $22.1 million in the second quarter of
fiscal 2007, compared to $20.0 million in the prior year period,
primarily due to an increase in the program revenue received under the
Credit Card Program Agreement ("CCPA") with HSBC Bank Nevada, N.A.
("HSBC"). Year-to-date other income increased to $44.8 million,
compared to $34.8 million in the prior year period, primarily due to
the inclusion in the first quarter of fiscal 2007 of thirteen weeks of
Carson's operations as compared to eight weeks of Carson's operations
in the prior year period and an increase in the program revenue
received under the CCPA with HSBC.
Gross Margin
In the second quarter of fiscal 2007, gross margin dollars
increased $8.6 million compared to the prior year period. The gross
margin rate in the second quarter increased 3.1 percentage points, to
38.0% of net sales, as compared to 34.9% reported in the prior year
period. The increase in the second quarter 2007 gross margin rate
primarily reflects the elimination of low-margin liquidation sales of
non-go-forward merchandise in the Bon-Ton stores in the second quarter
of fiscal 2006. Year-to-date gross margin dollars increased $45.3
million compared to prior year period, primarily due to the inclusion
in the first quarter of fiscal 2007 of thirteen weeks of Carson's
operations as compared to eight weeks of Carson's operations in the
prior year period. The year-to-date gross margin rate decreased 0.3
percentage point to 35.7% of net sales, as compared to 36.0% reported
in the prior year period. The year-to-date gross margin rate reflects
the negative margin impact of the sales for the first five weeks in
the first quarter of fiscal 2007 in the Carson's stores, which were
not included in the first quarter results of fiscal 2006.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses in the
second quarter of fiscal 2007 decreased $2.9 million to $255.5 million
as compared to the prior year period. The SG&A expense rate increased
1.5 percentage points to 36.1% of net sales, compared to 34.6% of net
sales in the prior year period. Year-to-date SG&A expenses increased
$57.5 million compared to the prior year period. The increase in SG&A
dollars is primarily attributable to the inclusion in the first
quarter of fiscal 2007 of thirteen weeks of Carson's operations as
compared to eight weeks of Carson's operations in the prior year
period. The year-to-date SG&A expense rate increased by 0.7 percentage
point to 35.7% compared to 35.0% in the prior year period. Integration
expenses in the first half of fiscal 2007 approximated $3.9 million.
EBITDA
EBITDA, defined as net income (loss) before interest, income taxes
and depreciation and amortization, increased $13.6 million in the
second quarter of fiscal 2007 to $36.1 million compared to $22.5
million in the second quarter of fiscal 2006. Year-to-date EBITDA
decreased $2.2 million to $45.5 million compared to $47.7 million in
the prior year period. EBITDA is not a measure recognized under
generally accepted accounting principles - see Note 1 below.
Depreciation and Amortization and Amortization of Lease-related
Interests
Depreciation and amortization expense, including amortization of
lease-related interests, in the second quarter of fiscal 2007
increased $3.7 million to $31.6 million compared to $27.9 million in
the prior year period, primarily due to the increased expense
associated with prior year capital expenditures. Year-to-date
depreciation and amortization expense, including amortization of
lease-related interests, increased $12.7 million to $59.8 million
compared to $47.1 million in the prior year period. The increase in
year-to-date depreciation and amortization dollars is primarily
attributable to the inclusion in the first quarter of fiscal 2007 of
thirteen weeks of Carson's operations as compared to eight weeks of
Carson's operations in the prior year period and the increased expense
associated with prior year capital expenditures.
Interest Expense, Net
Interest expense, net, in the second quarter of fiscal 2007
increased $0.1 million to $27.4 million compared to $27.3 million in
the prior year period. Year-to-date interest expense, net, increased
$3.7 million to $54.9 million compared to $51.2 million in the prior
year period. In the first quarter of fiscal 2006, the Company recorded
a charge of $6.8 million reflecting the write-off of fees associated
with a bridge facility and the early payoff of the Company's previous
debt.
Guidance
Keith Plowman, Executive Vice President and Chief Financial
Officer, commented, "Based on our lower sales in June and July, which
were preceded by lower than anticipated results in the first quarter
of fiscal 2007, we are revising our initial guidance for fiscal 2007
earnings per diluted share to be in a range of $2.75 to $2.90 and
EBITDA in a range of $305 to $310 million. Assumptions reflected in
our revised full year fiscal 2007 guidance include:
-- Reduced the total sales growth to an increase of 2.5% to 3%;
-- Reduced the comparable stores sales to a negative 1% to 1.5%;
-- Reduced the gross margin rate to a range of 36.9% to 37.0%;
-- Maintained the increase of $8 million in cost savings;
-- Maintained the reduction of $9.5 million of integration costs;
-- Maintained capital expenditures of $106 million (net of
landlord contributions); and
-- Maintained estimated weighted average shares outstanding at
17.00 to 17.35 million."
Mr. Plowman continued, "We are managing our inventories and
expenses in order to achieve our revised earnings guidance for the
year. We continue to manage our business in line with our long-term
approach and strategies. We have an appropriate debt structure in
place, excess capacity of $229.0 million at the end of the second
quarter and we expect to continue to pay down our debt with the cash
generated by the business."
The Company's quarterly conference call to discuss second quarter
fiscal 2007 results will be broadcast live today 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. You may also participate by calling
(800) 811-8845 at 9:55 a.m. Eastern time. A taped replay of the
conference call will be available within two hours of the conclusion
of the call and will remain available through Thursday, September 6,
2007. The number to call for the taped replay is (888) 203-1112 and
the conference PIN is 6644029.
The Bon-Ton Stores, Inc. operates 278 department stores, which
includes nine furniture galleries, in 23 states in the Northeast,
Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston
Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers
nameplates and, under the Parisian nameplate, two stores in the
Detroit, Michigan area. The stores offer a broad assortment of
brand-name fashion apparel and accessories for women, men and
children, as well as cosmetics and 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 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,
deterioration in consumer confidence, additional competition from
existing and new competitors, weather conditions that could negatively
impact sales, uncertainties associated with opening new stores or
expanding or remodeling existing stores, risks related to the
Company's integration of the business and operations comprising the
acquired Carson's and Parisian stores, 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 under Item 1A of the Company's Form 10-K filed with the
Securities and Exchange Commission.
Note 1: As used in this release, EBITDA is defined as net income
(loss) before interest, income taxes, depreciation and amortization
and amortization of lease-related interests. EBITDA is not a measure
of financial performance under generally accepted accounting
principles ("GAAP"). However, we present EBITDA in this release
because we consider it to be an important supplemental measure of our
performance and believe that it is frequently used by securities
analysts, investors and other interested parties to evaluate the
performance of companies in our industry and by some investors to
determine a company's ability to service or incur debt. In addition,
our management uses EBITDA internally to compare the profitability of
our stores. EBITDA is not calculated in the same manner by all
companies and accordingly is not necessarily comparable to similarly
entitled measures of other companies and may not be an appropriate
measure for performance relative to other companies. EBITDA should not
be assessed in isolation from or construed as a substitute for net
income or cash flows from operations, which are prepared in accordance
with GAAP. EBITDA is not intended to represent, and should not be
considered to be a more meaningful measure than, or an alternative to,
measures of operating performance as determined in accordance with
GAAP. A reconciliation of net income to EBITDA is provided in the
financial schedules accompanying this release.
THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data) August 4, February 3,
(Unaudited) 2007 2007
- ----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 21,901 $ 24,733
Merchandise inventories 757,294 787,487
Prepaid expenses and other current assets 108,685 84,731
Deferred income taxes 17,858 17,858
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Total current assets 905,738 914,809
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Property, fixtures and equipment at cost, net of
accumulated depreciation and amortization of
$360,263 and $311,160 at August 4, 2007 and
February 3, 2007, respectively 877,457 897,886
Deferred income taxes 76,653 76,586
Goodwill 27,824 27,377
Intangible assets, net of accumulated
amortization of $16,992 and $12,087 at August
4, 2007 and February 3, 2007, respectively 171,796 176,700
Other long-term assets 38,304 41,441
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Total assets $2,097,772 $2,134,799
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 235,608 $ 209,742
Accrued payroll and benefits 46,322 68,434
Accrued expenses 141,705 178,642
Current maturities of long-term debt 5,463 5,555
Current maturities of obligations under capital
leases 2,010 1,936
Income taxes payable - 48,086
- ----------------------------------------------------------------------
Total current liabilities 431,108 512,395
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Long-term debt, less current maturities 1,194,500 1,120,169
Obligations under capital leases, less current
maturities 68,420 69,456
Other long-term liabilities 99,415 86,383
- ----------------------------------------------------------------------
Total liabilities 1,793,443 1,788,403
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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 14,564,744
and 14,469,196 at August 4, 2007 and February
3, 2007, respectively 146 145
Class A Common Stock - authorized 20,000,000
shares at $0.01 par value; issued and
outstanding shares of 2,951,490 at August 4,
2007 and February 3, 2007 30 30
Treasury stock, at cost - 337,800 shares at
August 4, 2007 and February 3, 2007 (1,387) (1,387)
Additional paid-in-capital 134,869 130,875
Accumulated other comprehensive income 1,115 1,189
Retained earnings 169,556 215,544
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Total shareholders' equity 304,329 346,396
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Total liabilities and shareholders' equity $2,097,772 $2,134,799
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THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
-----------------------------------------------
(In thousands except
share and per share
data) August 4, July 29, August 4, July 29,
(Unaudited) 2007 2006 2007 2006
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Net sales $ 708,620 $ 746,772 $ 1,446,181 $ 1,308,546
Other income 22,117 19,974 44,763 34,787
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730,737 766,746 1,490,944 1,343,333
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Costs and expenses:
Costs of merchandise
sold 439,198 485,933 929,870 837,513
Selling, general and
administrative 255,480 258,361 515,612 458,141
Depreciation and
amortization 30,239 26,823 57,199 45,337
Amortization of lease-
related interests 1,332 1,046 2,561 1,748
- ----------------------------------------------------------------------
Income (loss) from
operations 4,488 (5,417) (14,298) 594
Interest expense, net 27,429 27,285 54,898 51,153
- ----------------------------------------------------------------------
Loss before income
taxes (22,941) (32,702) (69,196) (50,559)
Income taxes (7,966) (12,927) (24,922) (19,949)
- ----------------------------------------------------------------------
Net loss $ (14,975) $ (19,775) $ (44,274) $ (30,610)
- ----------------------------------------------------------------------
Per share amounts -
Basic:
Net loss $ (0.91) $ (1.20) $ (2.68) $ (1.87)
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Basic weighted average
shares outstanding 16,498,320 16,430,971 16,490,038 16,410,467
Diluted:
Net loss $ (0.91) $ (1.20) $ (2.68) $ (1.87)
- ----------------------------------------------------------------------
Diluted weighted
average shares
outstanding 16,498,320 16,430,971 16,490,038 16,410,467
Other financial data:
EBITDA (1) $ 36,059 $ 22,452 $ 45,462 $ 47,679
(1) EBITDA Reconciliation
The following table reconciles net income to EBITDA for the
periods indicated:
THIRTEEN TWENTY-SIX
WEEKS ENDED WEEKS ENDED
---------------------------------------
(In thousands) August 4, July 29, August 4, July 29,
(Unaudited) 2007 2006 2007 2006
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Net loss $(14,975) $(19,775) $(44,274) $(30,610)
Adjustments:
Income taxes (7,966) (12,927) (24,922) (19,949)
Interest expense, net 27,429 27,285 54,898 51,153
Depreciation and amortization 30,239 26,823 57,199 45,337
Amortization of lease-related
interests 1,332 1,046 2,561 1,748
- ----------------------------------------------------------------------
EBITDA $ 36,059 $ 22,452 $ 45,462 $ 47,679
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CONTACT: The Bon-Ton Stores, Inc.
Mary Kerr, 717-751-3071
Vice President
Public and Investor Relations
mkerr@bonton.com