GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

BonTon Stores Inc. Reports Operating Results (10-Q)

December 09, 2010 | About:
10qk

10qk

18 followers
BonTon Stores Inc. (BONT) filed Quarterly Report for the period ended 2010-10-30.

Bonton Stores Inc. has a market cap of $265.8 million; its shares were traded at around $13.7 with a P/E ratio of 19.9 and P/S ratio of 0.1. Bonton Stores Inc. had an annual average earning growth of 20.6% over the past 10 years. GuruFocus rated Bonton Stores Inc. the business predictability rank of 4-star.BONT is in the portfolios of Mario Gabelli of GAMCO Investors, Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Costs and expenses: Gross margin in the third quarter of 2010 increased $2.7 million to $267.7 million as compared with $264.9 million in the comparable prior year period. The increase is attributable to an improved gross margin rate. Gross margin as a percentage of net sales increased 60 basis points to 38.2% in the third quarter of 2010 from 37.6% in the same period last year. We improved our merchandise margins primarily through well-executed inventory management, which resulted in decreased markdowns in the period.

Depreciation and amortization expense and amortization of lease-related interests decreased $3.3 million, to $25.9 million in the third quarter of 2010 from $29.2 million in the third quarter of 2009, primarily due to the reduced asset base resulting from significant reductions in capital expenditures in fiscal 2009 (whereby depreciation expense greatly exceeded asset additions) and, to a lesser extent, asset impairments recorded in fiscal 2009.

Costs and expenses: Gross margin in 2010 was $746.1 million as compared with $715.2 million in 2009, reflecting an increase of $30.9 million. The increase in gross margin dollars was due to the increased sales volume and an increased margin rate in the period. Gross margin as a percentage of net sales increased 130 basis points to 37.9% in the current year from 36.5% last year, primarily due to decreased net markdowns and increased sales penetration of private brand and value-priced offerings, both of which typically generate higher net markup and gross margin.

Income tax provision: The effective tax rate in 2010 and 2009 largely reflects the Companys valuation allowance position against all net deferred tax assets. The $0.5 million income tax provision in 2010 includes certain state income tax expense and recognition of deferred tax liabilities associated with indefinite-lived assets, partially offset by a $1.5 million tax benefit resulting from recognition of uncertain tax positions due to a statute of limitations expiration. The $0.4 million income tax provision in 2009 includes certain state income tax expense, a tax position exposure accrual, and recognition of deferred tax liabilities associated with indefinite-lived assetspartially offset by a $1.6 million tax benefit resulting from recognition of uncertain tax positions due to a statute of limitations expiration.

At October 30, 2010, we had $18.4 million in cash and cash equivalents and $461.6 million available under our asset-based revolving credit facility (before taking into account the minimum borrowing availability covenant under such facility of $75.0 million). In anticipation of continued economic uncertainty in fiscal 2010, we maintained our focus on maximizing cash flow by reducing operating expenses and continuing to control inventory levels in order to benefit our working capital needs. We anticipate that these actions will positively impact our fiscal 2010 cash flow.

Net cash used in investing activities primarily reflects capital expenditures for store remodels and information technology. Capital expenditures totaled $36.0 million and $22.2 million in 2010 and 2009, respectively; these expenditures do not reflect reductions for external contributions of $4.6 million and $5.5 million in 2010 and 2009, respectively. We anticipate our fiscal 2010 capital expenditures will not exceed $50.0 million (net of external contributions of $6.5 million), an increase over our fiscal 2009 capital investments of $32.3 million (which does not reflect reductions for external contributions of $7.6 million).

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 4.4/5 (5 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide