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Bon-Ton August Comps Rise

Zacks Equity Research

Bon-Ton Stores Inc. (BONT) which operates 272 stores in the Northeast, Midwest and upper Great Plains, recently reported a 2.2% upside in same-store sales for the four-week period ended August 25, 2012.

This compared favorably with a 4.7% decline in the year-ago period.  The comps benefited from the continuous efforts to improve the merchandise collection and the enhancement of marketing program.

Total sales crept up 2.1% to $180.8 million for the month of August, 2012 from $177.1 million in the comparable period ended August, 2011.

August comps were primarily driven by improved performance of categories like ladies and special size sportswear, both moderate and better; shoes; children’s and home. The company also gained strongly from fine jewelry sales.

Additionally, Bon-Ton continues to record double-digit sales growth in eCommerce and considers it to be a significant growth driver. Moreover, the company’s various efforts such as market share expansion of updated merchandise and marketing initiatives are expected to drive sales further.

Bon-Ton’s year-to-date total revenue slipped 0.4% year over year to $1,416.4 million and same-store sales were down 0.3%.

Same-store sales at Bon-Ton’s rival Kohl’s Corporation (KSS) jumped 3.4% in the four-week period ended, August 27, 2012. Total sales rose 5.3% for the period.

Despite a challenging macroeconomic environment, U.S retailers succeeded in achieving positive same-store sales growth for the month of August, which is encouraging. The higher comps were mainly aided by back-to-school promotions.

Bon-Ton remains upbeat with the August comps results and expects the same trend to continue in 2012. The company expects comps growth in the range of flat to 1.25% for 2012, up from the previous estimate of negative 1.5% to positive 1.0%.

For 2012, Bon-Ton expects earnings in the range of loss of $1.35 per share to a profit of 20 cents per share, down from its prior outlook of a loss of 95 cents to a profit of 50 cents per share. However, the company reiterated its EBITDA guidance between $160 million and $190 million.

The Zacks Consensus Estimates for the third quarter and fiscal 2012 are pegged at a loss of $1.15 and 55 cents, respectively. The estimates have not budged in the last 7 days, implying that the analysts do not see any near-term catalysts.

The stock has a Zacks #3 Rank, implying a short-term Hold rating. We also reiterate our long-term Neutral recommendation on Bon-Ton.

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