Exhibit 99.1
The Bon-Ton Stores, Inc. Announces
Third Quarter Fiscal 2007 Results
Net Loss of $1.17 Per Diluted Share versus Prior Year Net Loss of
$0.66 Per Diluted Share
Company Revises Guidance for Fiscal 2007
YORK, Pa.--(BUSINESS WIRE)--Nov. 29, 2007--The Bon-Ton Stores,
Inc. (NASDAQ: BONT) today reported results for the third quarter of
fiscal 2007 ended November 3, 2007.
For the third quarter of fiscal 2007, the Company reported a net
loss of $19.4 million, or $1.17 per diluted share, compared to a net
loss of $10.9 million, or $0.66 per diluted share, for the third
quarter of fiscal 2006. The Company reported a net loss of $63.6
million, or $3.86 per diluted share, for the thirty-nine weeks ended
November 3, 2007, compared to a net loss of $41.5 million, or $2.53
per diluted share, for the comparable period last year.
Comments
Bud Bergren, President and Chief Executive Officer, commented,
"Our August comparable store sales were positive and we were getting
early indications of favorable customer response to our fall
merchandise. The deterioration of the macro-economic environment and
the unseasonable weather in September and October negatively impacted
our comparable store sales in both months. Consequently, our third
quarter EBITDA and net income results were below our expectations."
Mr. Bergren continued, "We are encouraged by the improvement in
our business since the beginning of November when the arrival of
seasonable weather had a positive impact on our sales. Our two major
promotions in November performed well. We believe our reported
comparable store sales for November will be in the high single to low
double digits. We continue to manage our inventories and control
expenses to plan. While we recognize that we are currently operating
in a difficult retail environment, Bon-Ton's long-term plan is intact
and we are confident in the longer-term potential of the Company. We
remain on track to achieve our targets as they relate to the
integration of Bon-Ton and Carson's, which will ultimately deliver
shareholder value."
Sales
For the third quarter of fiscal 2007, total sales decreased 2.9%
to $780.8 million compared to $804.1 million for the prior year
period. Bon-Ton and Carson's combined comparable store sales in the
same period decreased 3.0%.
Year-to-date total sales increased 5.4% to $2,227.0 million
compared to $2,112.6 million for the same period last year. For
informational purposes only, year-to-date Carson's comparable store
sales decreased 1.0%. Year-to-date Bon-Ton comparable store sales
decreased 7.4%.
Other Income
Other income increased to $24.6 million in the third quarter of
fiscal 2007, compared to $22.9 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 $69.4 million,
compared to $57.6 million in the prior year period, primarily due to
the inclusion of thirteen weeks of Carson's operations in the first
quarter of fiscal 2007, 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 third quarter of fiscal 2007, gross margin dollars
decreased $22.2 million compared to the prior year period. The gross
margin rate in the third quarter decreased 1.8 percentage points to
34.8% of net sales, as compared to 36.6% reported in the prior year
period. Year-to-date gross margin dollars increased $23.0 million
compared to the prior year period, primarily due to the inclusion of
thirteen weeks of Carson's operations in the first quarter of fiscal
2007 as compared to eight weeks of Carson's operations in the prior
year period. The year-to-date gross margin rate decreased 0.8
percentage point to 35.4% of net sales, as compared to 36.2% reported
in the prior year period, reflecting the negative margin impact of the
sales from Carson's stores that were included in the first five weeks
in the first quarter of fiscal 2007, but not included in the first
quarter results of fiscal 2006.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses in the third
quarter of fiscal 2007 decreased $8.3 million to $265.3 million as
compared to the prior year period. The SG&A expense rate of 34.0% was
even with the prior year period. Year-to-date SG&A expenses increased
$49.2 million compared to the prior year period. The increase in SG&A
expenses is primarily attributable to the inclusion of thirteen weeks
of Carson's operations in the first quarter of fiscal 2007 as compared
to eight weeks of Carson's operations in the prior year period. The
year-to-date SG&A expense rate increased by 0.5 percentage point to
35.1% compared to 34.6% in the prior year period. Integration expenses
year-to-date were approximately $4.7 million.
EBITDA
EBITDA, defined as net income (loss) before interest, income taxes
and depreciation and amortization, decreased $12.1 million in the
third quarter of fiscal 2007 to $31.4 million as compared to $43.5
million in the third quarter of fiscal 2006. Year-to-date EBITDA
decreased $14.4 million to $76.9 million as compared to $91.2 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, increased $1.8 million to $31.4 million in
the third quarter of fiscal 2007 as compared to $29.6 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 $14.5 million to $91.1 million as compared to
$76.7 million in the prior year period. The increase in year-to-date
depreciation and amortization expense is primarily attributable to the
inclusion of thirteen weeks of Carson's operations in the first
quarter of fiscal 2007 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, decreased $0.5 million to $27.4 million in
the third quarter of fiscal 2007 as compared to $27.9 million in the
prior year period. Year-to-date interest expense, net, increased $3.2
million to $82.3 million as compared to $79.1 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 September and October
and our forecast for the fourth quarter, we expect fiscal 2007
earnings per diluted share to be in the range of $1.50 to $1.80 and
EBITDA to be in the range of $272 to $280 million. Assumptions
reflected in our revised full year fiscal 2007 guidance include:
-- Reduced total sales growth to an increase of 1.3% to 1.7%;
-- Reduced comparable stores sales to a negative 1.9% to a
negative 2.2%; and
-- Reduced gross margin rate to a range of 36.4% to 36.5%.
Mr. Plowman continued, "Our revised guidance includes the
expectation that the retail environment will continue to be
promotional through the holidays, and we are managing our inventories
and expenses accordingly. We believe we have implemented the right
strategies and are managing our business to deliver sustainable
long-term sales and earnings growth. In addition, we have an
appropriate debt structure in place, our excess borrowing capacity of
$253.6 million at the end of the third quarter was approximately $6
million greater than the prior year and in the fourth quarter we
expect to pay down debt with the cash generated by the business."
The Company's quarterly conference call to discuss third 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 http://investors.bonton.com. An online
archive of the broadcast will be available within two hours after the
conclusion of the call. You may also participate by calling (888)
215-7013 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, December 13, 2007. The
number to call for the taped replay is (888) 203-1112 and the
conference PIN is 9615343.
The Bon-Ton Stores, Inc. operates 280 department stores, which
includes ten 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, three 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 http://investors.bonton.com.
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 (loss) 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) November 3, February 3,
(Unaudited) 2007 2007
-----------------------
Assets
Current assets:
Cash and cash equivalents $ 23,976 $ 24,733
Merchandise inventories 1,036,853 787,487
Prepaid expenses and other current assets 115,193 84,731
Deferred income taxes 12,832 17,858
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Total current assets 1,188,854 914,809
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Property, fixtures and equipment at cost, net
of accumulated depreciation and
amortization of $389,623 and $311,160 at
November 3, 2007 and February 3, 2007,
respectively 892,254 897,886
Deferred income taxes 87,058 76,586
Goodwill 22,233 27,377
Intangible assets, net of accumulated
amortization of $19,444 and $12,087 at
November 3, 2007 and February 3, 2007,
respectively 169,668 176,700
Other long-term assets 37,574 41,441
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Total assets $2,397,641 $2,134,799
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 428,040 $ 209,742
Accrued payroll and benefits 50,206 68,434
Accrued expenses 152,800 178,642
Current maturities of long-term debt 5,559 5,555
Current maturities of obligations under
capital leases 2,123 1,936
Income taxes payable - 48,086
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Total current liabilities 638,728 512,395
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Long-term debt, less current maturities 1,293,064 1,120,169
Obligations under capital leases, less current
maturities 67,824 69,456
Other long-term liabilities 112,584 86,383
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Total liabilities 2,112,200 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
14,594,111 and 14,469,196 at November 3,
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 November
3, 2007 and February 3, 2007 30 30
Treasury stock, at cost - 337,800 shares at
November 3, 2007 and February 3, 2007 (1,387) (1,387)
Additional paid-in-capital 137,274 130,875
Accumulated other comprehensive income 45 1,189
Retained earnings 149,333 215,544
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Total shareholders' equity 285,441 346,396
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Total liabilities and shareholders' equity $2,397,641 $2,134,799
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THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THIRTEEN THIRTY-NINE
WEEKS ENDED WEEKS ENDED
---------------------------------------------------
(In thousands November 3, October 28, November 3, October 28,
except share and
per share data)
(Unaudited) 2007 2006 2007 2006
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Net sales $ 780,839 $ 804,100 $ 2,227,020 $ 2,112,646
Other income 24,646 22,859 69,409 57,646
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805,485 826,959 2,296,429 2,170,292
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Costs and expenses:
Costs of
merchandise sold 508,802 509,829 1,438,672 1,347,342
Selling, general
and
administrative 265,279 273,581 780,891 731,722
Depreciation and
amortization 30,107 28,756 87,306 74,093
Amortization of
lease-related
interests 1,280 831 3,841 2,579
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Income (loss) from
operations 17 13,962 (14,281) 14,556
Interest expense,
net 27,383 27,929 82,281 79,082
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Loss before income
taxes (27,366) (13,967) (96,562) (64,526)
Income taxes (8,004) (3,066) (32,926) (23,015)
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Net loss $ (19,362) $ (10,901) $ (63,636) $ (41,511)
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Per share amounts
-
Basic:
Net loss $ (1.17) $ (0.66) $ (3.86) $ (2.53)
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Basic weighted
average shares
outstanding 16,533,957 16,439,314 16,504,678 16,420,082
Diluted:
Net loss $ (1.17) $ (0.66) $ (3.86) $ (2.53)
- ----------------------------------------------------------------------
Diluted weighted
average shares
outstanding 16,533,957 16,439,314 16,504,678 16,420,082
Other financial
data:
EBITDA (1) $ 31,404 $ 43,549 $ 76,866 $ 91,228
(1) EBITDA Reconciliation
The following table reconciles net loss to EBITDA for the periods
indicated:
THIRTEEN THIRTY-NINE
WEEKS ENDED WEEKS ENDED
---------------------------------------
(In thousands) November October November October
3, 28, 3, 28,
(Unaudited) 2007 2006 2007 2006
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Net loss $(19,362) $(10,901) $(63,636) $(41,511)
Adjustments:
Income taxes (8,004) (3,066) (32,926) (23,015)
Interest expense, net 27,383 27,929 82,281 79,082
Depreciation and amortization 30,107 28,756 87,306 74,093
Amortization of lease-related
interests 1,280 831 3,841 2,579
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EBITDA $ 31,404 $ 43,549 $ 76,866 $ 91,228
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CONTACT: The Bon-Ton Stores, Inc.
Mary Kerr, 717-751-3071
Vice President
Public and Investor Relations
mkerr@bonton.com