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Sluggish March Comps for Bon-Ton

BONT KSS

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Bon-Ton Stores Inc. (BONT) reported a 0.1% dip in same-store sales for the four-week period ended March 31, 2012. However, this compared favorably with a 6.1% plunge in the year-ago period. Though, on a year-to-date basis, same-store sales fell 0.3% in March this year.

Total sales also slipped 0.1% to $254.1 million during the four-week period ended March 31, 2012 from $254.5 million in the comparable period ended March, 2011. However, on a year-to-date basis, total sales inched up 0.3% to $453.5 million from $452.2 million in the prior-year period.

March comps suffered due to weak performance of categories like juniors, furniture as well as moderate traditional sportswear in missy, petites and large size.

However, the company witnessed strong upside in categories like better missy sportswear, ladies shoes, children's, cosmetics and fine jewelry. Additionally, Bon-Ton recorded 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, pilot store renovations and Customer First program are expected to drive sales further.

Sales at Bon-Ton’s peer company, Kohl’s Corporation (KSS - Analyst Report) rose 5.3% in the five-week period ended, March 31, 2012, due to warmer weather and an earlier Easter. Same-store sales jumped 3.6% for the period.

In the fourth quarter of 2011, total revenue of the departmental store chain plummeted 2.7% year over year to $983.2 million; attributable to weak sales in cold-weather categories arising from the mild weather conditions in December and poor moderate traditional business. Same-store sales results also fell 2.8% during the quarter.

Bon-Ton, headquartered in York, Pennsylvania and Milwaukee, Wisconsin expects earnings in the range of 15 cents to 75 cents per share for fiscal 2012. EBITDA is expected between $180 million and $200 million. Same-store sales are estimated to be up 1% to 2% and gross margin in the range of 36.5% to 37.1%.

The Zacks Consensus EPS estimates for the first quarter and fiscal 2012 are pegged at a loss of $1.41and earnings of 31 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 #2 Rank, implying a short-term Buy rating. We also reiterate our long-term Neutral recommendation on Bon-Ton.

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