Bon-Ton lowers 2016 outlook after poor 1st quarter
The Bon-Ton Stores Inc., has increased its projected 2016 fiscal year losses by nearly $9 million following a reported 3.3 percent drop in total sales in its first quarter earnings report.
Bon-Ton, which has headquarters in Springettsbury Township, had originally projected $10.3 million to $20.3 million in net losses during the 2016 fiscal year, but those losses are now expected at $19 million to $29 million, according to the company's first-quarter earnings report, released Thursday.
Nancy Walsh, the company's CFO, said the retail industry is in a cyclical downturn, and she pointed to other major department stores such as JCPenney and Nordstrom also reducing their 2016 outlooks.
"It's not something the company likes to do," Walsh said, adding that the company's second quarter isn't projected to be much different.
Walsh said the company's losses are primarily driven by low sales numbers, which is a national issue among retailers, but Bon-Ton is focusing on what it can control.
On that front, the company recently opened a new distribution center that's reducing delivery expenses as management continues reducing inventory while they wait for consumer demand to increase, according to spokesman Jeff Miller.
Walsh said Bon-Ton has also started hosting more in-store events in an effort to increase sales.
Stock: The company's stock, which is traded on the NASDAQ, closed at $1.50 per share on Monday, its lowest closing price since Jan. 19, according to Yahoo Finance.
Bon-Ton's stock had closed at or above $2 per share every business day between March 4 and May 12, but those numbers are still far off from May 2013, when the stock closed near $20 per share.
The company currently operates 267 stores in 26 states, and Walsh said Bon-Ton is locked into long-term leases at many of those locations.
Since 2013, Miller said the company has opened seven stores and closed 10, with plans to close three more stores in 2016, while reopening one.
Walsh said the company has 80 stores with leases expiring in the next couple of years, but she doesn't anticipate any mass closings because most of the stores are "cash-flow positive."
Bon-Ton saw sales increases in home, young men's, big and tall and contemporary categories but was beset by poor sales numbers in women's accessories, apparel and shows, according to the release. The company also saw double-digit sales growth from online sales.
Walsh said she believed Bon-Ton was set up well to compete because of its diversity of national brands, private labels and specialized local products.
Overall, the first quarter produced a $37.8 million net loss, compared to a $34.1 million net loss during the first quarter of 2015.
Walsh said that, historically, the fourth quarter is the most profitable for retailers because of the influx of holiday shopping.