Bon-Ton lowers FY17 outlook, to shut 40 stores in 2018

Comparable store sales at Bon Ton Stores in the third quarter of fiscal 2017 decreased 6.6 percent, which the company attributed to unseasonably warm weather. Total sales in the period also decreased 7.6 percent to 545.3 million dollars compared with 589.9 million dollars in the third quarter of fiscal 2016.

Commenting on the third quarter trading, William Tracy, the company’s President and CEO said in a press release: "While results in the third quarter fell short of our expectations, we are taking more aggressive actions to fuel improved performance as well as strengthen our financial position. We expect to implement a significant store rationalization program and plan to close at least 40 locations through 2018."

Gross profit and EBITDA decline in Q3

The company said that it continued its double-digit sales growth in omnichannel, which reflects sales via the company's website, mobile site, and its Let Us Find It customer service program, which was driven by increased demand and conversion on both the company's ecommerce and mobile platforms during the quarter as the company leveraged its West Jefferson facility and store-fulfilment network.

Other income in the third quarter was 17.1 million dollars, a decrease of 0.2 million dollars over the comparable prior year period due to lower revenues associated with the company's proprietary credit card operations. The gross margin rate was 33.1 percent of net sales, a decrease of approximately 200 basis points as compared with the third quarter of fiscal 2016 due to an increase in the markdown rate driven by a shift in merchandise mix. Gross profit decreased 26.8 million dollars to 180.3 million dollars in the quarter.

Adjusted EBITDA was negative 5.2 million dollars compared to adjusted EBITDA of 10.6 million dollars, same quarter last year.

Bon Ton lowers earnings guidance for FY17

As a result of financial performance in the third quarter the company said, it now expects fiscal 2017 loss per share to be in a range of 2.86 dollars to 3.35 dollars, inclusive of a 0.05 dollar per share expense from the 53rd week, and adjusted EBITDA to be in a range of 100 million dollars to 110 million dollars.

Updated assumptions reflected in the company's full-year guidance include a comparable sales decrease now ranging from 4.5 percent to 5.5 percent, which excludes sales from the 53rd week and a gross margin rate decrease now ranging from 50 to 65 basis points below the fiscal 2016 rate of 35.5 percent.

Picture:Facebook/Bon Ton