Bon-Ton Stores Inc. (BONT - Snapshot Report), a department store chain, recently announced the appointment of Brendan L. Hoffman as its new CEO and president, effective February 7. Hoffman is also set to join the company’s board of directors.
Hoffman replaces Bud Bergen who announced in November last year that he will retire once the company finds a new leader. With Hoffman holding the office of the company’s president and CEO, Burgen will become the chairman of the Bon-Ton’s board. Once Bergren takes on the role of the chairman, Executive Chairman Tim Grumbacher will step down from his position but will remain as a board member.
Hoffman, 43, previously served as the president and CEO of Lord & Taylor’s LLC. Prior to that, Hoffman served for six years as the president and CEO of Neiman Marcus Direct, a subsidiary of The Neiman Marcus Group Inc. He played a key role in the growth of neimanmarcus.com and bergdorfgoodman.com. He also served as the vice president of Neiman Marcus’s Last Call Clearance Division and as a divisional merchandise manager of Bergdorf Goodman Inc.
We remain optimistic regarding the appointment of Hoffman as the CEO of Bon-Ton’s and expect the company to benefit from his rich experience in the retail industry. The company is continuously witnessing sluggish same-store sales and we expect comps to turnaround under his leadership. Following the news of the appointment of the new CEO, the company’s share price climbed 53 cents to close at $3.76 on Tuesday.
In the recently concluded third quarter of 2011, the company reported disappointing results. The company reported a loss of $1.21 per share much wider than the Zacks Consensus Estimate of break-even results and the year-ago quarter loss of 36 cents. The lower-than-expected results were due to sluggish traffic, which led to a 5.9% drop in same-store sales.
The negative comp trend also carried in the next two month as well. Bon-Ton experienced a dip of 4.9% and 0.7% in comps for the month of November and December, respectively. Subsequently, the company trimmed its outlook for the fourth quarter of 2011.
For the upcoming fourth quarter of 2011, the company slashed its EBITDA forecast to $170 million - $175 million from the previous range of $190 million - $210 million and earnings per share guidance to a loss of $1.30 per share to $1.00 per share from the earlier projection of a loss of 65 cents to a gain of 25 cents. It also expects cash in the range of $5 million to $10 million, down from its previous estimate of $25 million to $40 million.
Bon-Ton, headquartered in York, Pennsylvania and Milwaukee, Wisconsin, is slated to release its fourth quarter results on March 6, 2012. The Zacks Consensus Estimates for the fourth quarter of 2011 and fiscal 2011 are pegged at $3.51 and ($1.20), respectively.
We reiterate our long-term Neutral recommendation on Bon-Ton.