YORK, Pa.--(BUSINESS WIRE)--March 12, 2015--The Bon-Ton Stores, Inc. (NASDAQ:BONT) today reported operating results for its fiscal fourth quarter and full year ended January 31, 2015.

Kathryn Bufano, President and Chief Executive Officer, commented, “We were pleased with our sales performance in the fourth quarter in both stores and eCommerce. However, increased promotional activity in support of our initiative to drive incremental traffic as well as higher delivery expenses associated with our omnichannel operations resulted in a reduced gross margin rate in the fourth quarter. We managed our inventory such that we ended the period in line with our sales trend and well-positioned for spring selling.”

Ms. Bufano continued, “As we look ahead, we are excited for continued progress on our initiatives. We are focused on building compelling assortments, refocusing our brand, driving our omnichannel business, maximizing operating efficiency and managing our inventory for profitability. To that end, we are looking forward to the opening of our new eCommerce fulfillment center, which we expect will facilitate significant expansion of our shipping capacity with improved operational efficiency and support the fastest growing area of our business. Investments such as this will continue paving the way for sustainable long-term profitable growth.”

Comparable store sales in the fourth quarter of fiscal 2014 increased 4.3%, with growth in both store and eCommerce operations. Total sales in the period increased 3.0% to $942.6 million, compared with $914.9 million in the fourth quarter of fiscal 2013. Top performing merchandise categories included cold weather and active apparel and home. We continued our trend of double-digit sales growth in eCommerce in the period, the result of expanded product offerings and an additional online event.

Other income in the fourth quarter of fiscal 2014 was $20.9 million, an increase of $1.1 million over the comparable prior year period. The increase was largely the result of increased revenues associated with our proprietary credit card operations. Proprietary credit card sales, as a percentage of total sales, increased 87 basis points to 45.2% in the fourth quarter of fiscal 2014.

Gross margin decreased $2.2 million to $329.5 million in the fourth quarter of fiscal 2014 as compared with the comparable prior year period. The gross margin rate in the period decreased 130 basis points to 35.0% of net sales, primarily due to increased markdowns and distribution and delivery costs associated with our omnichannel selling efforts.

Selling, general and administrative (“SG&A”) expense in the fourth quarter of fiscal 2014 increased marginally to $248.0 million from $247.8 million in the fourth quarter of fiscal 2013 as savings from our expense efficiency initiative were offset by continued investment in omnichannel operations and information technology services and increased advertising expenses. The SG&A expense rate decreased 78 basis points to 26.3% of net sales in the fourth quarter of fiscal 2014 due to the increased sales volume.

In the fourth quarter of 2014, we recorded a gain of $10.8 million for an insurance settlement, of which approximately $1.9 million was attributed to profit recovery and approximately $8.9 million to asset recovery. The settlement resulted from claims associated with one store that experienced fire damage, resulting in temporary closure to allow for repairs and restoration.

We recorded non-cash impairment charges of $2.0 million related to reductions in the reported carrying value of certain long-lived and intangible assets, compared with $5.8 million of similar charges in the fourth quarter of fiscal 2013.

Comparable store sales increased 0.2% in fiscal 2014. Total sales in the period decreased 0.5% to $2.756 billion from $2.770 billion in fiscal 2013. eCommerce sales increased over 25% in fiscal 2014, the fifth consecutive year of sales growth in excess of 20%, driven by an expanded merchandise assortment, increased marketing expenditures and ongoing technology investments to improve the customer experience.

Other income in fiscal 2014 was $66.7 million, an increase of $2.7 million over fiscal 2013 results. Our proprietary credit card operations fueled this growth, as revenues associated with said operations increased in tandem with increased loyalty program sales. Proprietary credit card sales, as a percentage of total sales, increased 144 basis points to 48.8% in fiscal 2014.

Gross margin decreased $18.1 million to $983.3 million in fiscal 2014 as compared with fiscal 2013. The gross margin rate decreased 48 basis points to 35.7% as we incurred increased markdowns and distribution and delivery costs associated with our omnichannel operations in the current year.

In fiscal 2014, SG&A expense was $907.0 million, an increase of $7.7 million over fiscal 2013 results, largely driven by increased marketing expenditures and investment in information technology services and omnichannel operations. The SG&A expense rate increased 44 basis points to 32.9% in fiscal 2014.

Net interest expense decreased $6.9 million to $61.7 million in fiscal 2014 as compared with fiscal 2013, primarily due to reductions in cash fees and amortization of deferred fees in the period and a reduction in the borrowing rates associated with our revolving credit facility.

In fiscal 2013, we incurred a loss on extinguishment of debt of $4.4 million, primarily related to the tender and redemption of certain of our senior notes. We recorded minimal similar charges in fiscal 2014 related to the prepayment of mortgage debt.

Ms. Bufano stated, “Our fiscal 2015 guidance, which excludes any potential impact associated with an early termination of our mortgage facilities, is as follows: Adjusted EBITDA in a range of $150 million to $160 million, earnings per diluted share in a range of a loss of $0.25 to earnings of $0.25 and cash flow (see Note 2) in a range of $5 million to $15 million. Assumptions reflected in our full-year guidance include the following:

Ms. Bufano noted, “The potential impact associated with an early termination of the mortgage facilities includes the make-whole provision in the agreements, which could range up to approximately $12 million.”

Ms. Bufano added, “Our excess borrowing capacity under our revolving credit facility was approximately $383 million at the end of fiscal 2014.”

The Company’s quarterly conference call to discuss fourth quarter and fiscal 2014 results will be broadcast live today at 10:00 a.m. Eastern time. Investors and analysts interested in participating in the call are invited to dial (888) 765-5576 at 9:55 a.m. Eastern time and reference conference ID 8736316. A taped replay of the conference call will be available within two hours of the conclusion of the call and will remain available through Thursday, March 19, 2015. The number to call for the taped replay is (877) 870-5176 and the replay PIN is 8736316. The conference call will also be broadcast on the Company’s website at http://investors.bonton.com. An online archive of the webcast will be available within two hours of the conclusion of the call.

The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania and Milwaukee, Wisconsin, operates 270 stores, which includes nine furniture galleries and four clearance centers, in 26 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates. The stores offer a broad assortment of national and private brand fashion apparel and accessories for women, men and children, as well as cosmetics and home furnishings. For further information, please visit the investor relations section of the Company’s website at http://investors.bonton.com.

Certain information included in this press release contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words such as “may,” “could,” “will,” “plan,” “expect,” “anticipate,” “estimate,” “project,” “intend” or other similar expressions and include the Company’s fiscal 2015 guidance, involve important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. Factors that could cause such differences include, but are not limited to: risks related to retail businesses generally; a significant and prolonged deterioration of general economic conditions which could negatively impact the Company in a number of ways, including the potential write-down of the current valuation of intangible assets and deferred taxes; risks related to the Company’s proprietary credit card program; potential increases in pension obligations; consumer spending patterns, debt levels, and the availability and cost of consumer credit; additional competition from existing and new competitors; inflation; deflation; changes in the costs of fuel and other energy and transportation costs; weather conditions that could negatively impact sales; uncertainties associated with expanding or remodeling existing stores; the ability to attract and retain qualified management; the dependence upon relationships with vendors and their factors; a data security breach or system failure; the ability to reduce or control SG&A expenses, including initiatives to reduce expenses and improve efficiency; operational disruptions; unsuccessful marketing initiatives; the ability to expand our capacity and efficiency through our new eCommerce fulfillment center; changes in, or the failure to successfully implement, our key strategies, including initiatives to improve our merchandising, marketing and operations; adverse outcomes in litigation; the incurrence of unplanned capital expenditures; the ability to obtain financing for working capital, capital expenditures and general corporate purposes; the impact of regulatory requirements including the Health Care Reform Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act; the inability or limitations on the Company’s ability to favorably adjust the valuation allowance on deferred tax assets; and the financial condition of mall operators. Additional factors that could cause the Company’s actual results to differ from those contained in these forward-looking statements are discussed in greater detail under Item 1A of the Company’s Form 10-K filed with the Securities and Exchange Commission.

Note 1: As used in this release, Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, including amortization of lease-related interests, impairment charges and loss on extinguishment of debt. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles (“GAAP”). However, we present Adjusted EBITDA in this release because we consider it to be an important supplemental measure of our performance and because it is frequently used by securities analysts, investors and other interested parties to evaluate the performance of companies in our industry and by some investors to determine a company’s ability to service or incur debt. In addition, our management uses Adjusted EBITDA internally to compare the profitability of our stores. Adjusted EBITDA is not calculated in the same manner by all companies and, accordingly, is not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies. Adjusted EBITDA should not be assessed in isolation from or construed as a substitute for net income or cash flows from operations, which are prepared in accordance with GAAP. Adjusted EBITDA is not intended to represent, and should not be considered to be a more meaningful measure than, or an alternative to, measures of operating performance as determined in accordance with GAAP. A reconciliation of net income (loss) to Adjusted EBITDA is provided in the financial schedules accompanying this release.

Note 2: As used in this release, cash flow reflects the forecasted net income (loss), plus depreciation and amortization, amortization of lease-related interests and impairment charges, less capital expenditures and pension contributions.



THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)	January 31,			February 1,
(Unaudited)	2015			2014

Assets
Current assets:
Cash and cash equivalents	$	8,753		$	7,058
Merchandise inventories		734,956			709,733
Prepaid expenses and other current assets		93,394			76,285
Total current assets		837,103			793,076
Property, fixtures and equipment at cost, net of accumulated depreciation and
amortization of $910,494 and $865,111 at January 31, 2015 and February 1, 2014, respectively		641,996			640,004
Deferred income taxes		15,781			15,765
Intangible assets, net of accumulated amortization of $64,451 and $62,068 at
January 31, 2015 and February 1, 2014, respectively		90,151			102,800
Other long-term assets		23,483			25,584
Total assets	$	1,608,514		$	1,577,229
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	208,882		$	200,465
Accrued payroll and benefits		28,848			28,343
Accrued expenses		158,022			150,595
Current maturities of long-term debt		6,788			7,363
Current maturities of obligations under capital leases		3,961			3,797
Deferred income taxes		24,478			22,744
Total current liabilities		430,979			413,307
Long-term debt, less current maturities		850,963			804,372
Obligations under capital leases, less current maturities		45,016			48,977
Other long-term liabilities		193,908			182,617
Total liabilities		1,520,866			1,449,273
Shareholders' equity:
Preferred Stock - authorized 5,000,000 shares at $0.01 par value; no shares issued		-			-
Common Stock - authorized 40,000,000 shares at $0.01 par value; issued shares
of 17,818,323 and 17,846,457 at January 31, 2015 and February 1, 2014, respectively		178			178
Class A Common Stock - authorized 20,000,000 shares at $0.01 par value; issued
and outstanding shares of 2,951,490 at January 31, 2015 and February 1, 2014		30			30
Treasury stock, at cost - 337,800 shares at January 31, 2015 and February 1, 2014		(1,387	)		(1,387	)
Additional paid-in-capital		161,359			160,772
Accumulated other comprehensive loss		(80,405	)		(50,448	)
Retained earnings		7,873			18,811
Total shareholders' equity		87,648			127,956
Total liabilities and shareholders' equity	$	1,608,514		$	1,577,229



THE BON-TON STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	THIRTEEN						FIFTY-TWO
	WEEKS ENDED						WEEKS ENDED
(In thousands, except per share data)	January 31,			February 1,			January 31,			February 1,
(Unaudited)	2015			2014			2015			2014

Net sales	$	942,590		$	914,863		$	2,756,237		$	2,770,068
Other income		20,879			19,756			66,659			63,992
		963,469			934,619			2,822,896			2,834,060

Costs and expenses:
Costs of merchandise sold		613,107			583,144			1,772,953			1,768,672
Selling, general and administrative		248,009			247,810			907,036			899,363
Gain on insurance recovery		(10,779	)		-			(10,779	)		-
Depreciation and amortization		22,440			20,624			90,118			85,872
Amortization of lease-related interests		1,100			1,155			4,542			4,543
Impairment charges		2,045			5,778			2,492			6,230
Income from operations		87,547			76,108			56,534			69,380
Interest expense, net		15,512			15,840			61,736			68,587
Loss on extinguishment of debt		-			136			153			4,433

Income (loss) before income taxes		72,035			60,132			(5,355	)		(3,640	)
Income tax provision (benefit)		297			(1,207	)		1,619			(84	)

Net income (loss)	$	71,738		$	61,339		$	(6,974	)	$	(3,556	)

Basic income (loss) per share	$	3.56		$	3.06		$	(0.36	)	$	(0.19	)


Diluted income (loss) per share	$	3.55		$	3.04		$	(0.36	)	$	(0.19	)

Other financial data:
Adjusted EBITDA (1)	$	113,132		$	103,665		$	153,686		$	166,025


	THIRTEEN					FIFTY-TWO
	WEEKS ENDED					WEEKS ENDED
(In thousands)	January 31,		February 1,			January 31,			February 1,
(Unaudited)	2015		2014			2015			2014

Net income (loss)	$	71,738	$	61,339		$	(6,974	)	$	(3,556	)
Adjustments:
Income tax provision (benefit)		297		(1,207	)		1,619			(84	)
Loss on extinguishment of debt		-		136			153			4,433
Interest expense, net		15,512		15,840			61,736			68,587
Depreciation and amortization		22,440		20,624			90,118			85,872
Amortization of lease-related interests		1,100		1,155			4,542			4,543
Impairment charges		2,045		5,778			2,492			6,230
Adjusted EBITDA	$	113,132	$	103,665		$	153,686		$	166,025

CONTACT:
The Bon-Ton Stores, Inc.
Kim George, 717-751-3071
Divisional Vice President
Investor Relations
kim.george@bonton.com