Bon-Ton Stores net loss expands in first quarter, updates fiscal 2017 outlook
Weak mall traffic and warm weather continues to hinder Bon-Ton Stores. The retailer’s fourth-quarter results were negatively impacted by these factors that are out of its control, and the retailer’s first quarter had a similar fate.
“Our first-quarter results did not meet our expectations due primarily to weak mall traffic trends, unfavorable weather and marketing challenges associated with the Easter calendar shift,” said President and Chief Executive Officer Kathryn Bufano, who is resigning from the company on August 25, 2017.
“That said, our omnichannel business once again generated double digit growth and we continued to expand our merchandise offering with highly recognized brands as well as exclusive and private brands that resonate with our customer.”
The double-digit omnichannel growth reflected online sales, as well as mobile sales and Bon-Ton’s Let Us Find It customer service program. Omnichannel could not quell the retailer’s sales decline however. Total sales fell 9.3% to $536.1 million and comparable sales decreased 8.8%.
The markdown rate and increased delivery expenses impacted the gross margin rate, which decreased 170 basis points, and gross profit fell $27.5 million to $172.6 million.
Net loss for the quarter expanded to $57.3 million, or $2.86 per share, from a net loss of $37.8 million, or $1.91 per share, in the previous first quarter, and adjusted EBITDA was negative $15.6 million, compared to positive $1.3 million in the prior year.
Bufano added, “Looking ahead, we will continue to make enhancements to our omnichannel strategy, expand our merchandise assortment with brands and categories that appeal to our customer, and elevate our marketing programs to drive traffic and conversion. In addition, we expect to achieve additional cost reductions in fiscal 2017 through the rollout of our internal profit improvement initiative.”
Bon-Ton also updated its fiscal 2017 guidance and now expects comparable sales to decrease in a range of 3.0% to 4.0% and a gross margin rate of flat to up 10 basis points. The company continues to expect the loss per share to be in range of $2.08 to $2.59.
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