Zacks_Analysts' Blog : August Comps Slip at Bon-Ton - Analyst Blog

Same-store sales at Bon-Ton Stores Inc. (BONT) slipped 4.7% in the four-week period ended August 27, 2011 compared with a drop of 4.6% in the year-ago period. On a year-to-date basis, same-store sales fell 1.8% in August 2011.

Total sales declined 5.4% to $177.1 million during the four-week period ended August 27, 2011 from $187.2 million in the same period ended August 28, 2010. Further, on a year-to-date basis, total sales increased 2.4% to $1,422.5 million, compared with $1,457.1 million for the prior-year period ended August 28, 2010.

The company’s sales were mostly affected by lower consumer traffic. However, the company experienced strong business in categories like cosmetics, sportswear, watches, latest shoes and intimate apparel. The company’s eCommerce category also witnessed solid growth, primarily driven by strong online sales.

Additionally, Bon-Ton received an upbeat response for its shoe assortment in 17 locations and management expects to drive further sales in the fall on the back of higher demand for shoes. Moreover, the company undertook various merchandise initiatives to improve its product mix and drive sales further.

However, same-store sales at Bon-Ton’s peer company, Kohl’s Corporation (KSS) went down 1.9% in the four-week period ended August 27, 2011 compared with an increase of 4.5% in the year-ago period.

In the second quarter of 2011, total revenue of the departmental store chain plummeted 2.2% year over year to $595.5 million attributable to a 1.5% drop in same-store sales.

For fiscal 2011, the company expects same-store sales in the range of flat to up 1.0%.

Bon-Ton is expected to release its third quarter 2011 results on November 21, 2011. The Zacks Consensus Estimate for sales is pegged at $717 million for the third quarter. We believe the company will find it difficult to achieve the estimate in the third quarter, owing to its dismal results in August.

The Zacks Consensus EPS estimates for the third quarter and fiscal 2011 are pegged at a loss of 24 cents and earnings of 85 cents, respectively. The estimates have not budged in the last 30 days, implying that analysts do not see any near-term catalyst.

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