The Bon-Ton Stores Inc. together with its subsidiaries operates quality fashion department stores. The company's strategy focuses on being the premier fashion retailer in smaller markets that demand but often have limited access to better branded merchandise. In many of its markets The Bon-Ton is the primary destination for branded fashion merchandise from top designers such as Calvin Klein Liz Claiborne Nautica Ralph Lauren and Tommy Hilfiger. Bonton Stores Inc. has a market cap of $146.3 million; its shares were traded at around $7.88 . Bonton Stores Inc. had an annual average earning growth of 11.3% over the past 10 years.
Highlight of Business Operations:Costs and expenses: Gross margin in the second quarter of 2009 decreased $15.3 million to $226.1 million as compared with $241.4 million in the comparable prior year period. The decrease is attributable to decreased sales volume. Gross margin as a percentage of net sales increased approximately 130 basis points to 37.1% in the second quarter of 2009 from 35.9% in the same period last year, primarily due to disciplined inventory management efforts that resulted in decreased net markdowns.
Costs and expenses: Gross margin in 2009 was $450.3 million as compared with $479.2 million in 2008, reflecting a decrease of $28.9 million. The decrease in gross margin dollars was due to the decreased sales volume in the period. Gross margin as a percentage of net sales increased approximately 100 basis points to 35.9% in the current year from 34.9% last year, primarily due to decreased net markdowns.
SG&A expense in 2009 was $459.8 million as compared with $502.2 million in 2008, a decrease of $42.4 million, evidencing that initiatives targeting an annualized $80 million of expense reductions in the Companys cost structure are proceeding as planned. Despite the expense savings, the expense rate in 2009 marginally increased to 36.7% of net sales, compared with 36.6% in 2008, due to the reduced sales volume.
At August 1, 2009, we had $15.6 million in cash and cash equivalents and $173.7 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 recessionary pressures in fiscal 2009, we heightened our focus on maximizing cash flow by reducing operating expenses and significantly curtailing our planned capital expenditures. Additionally, we are continuing to control inventory levels in order to benefit our working capital needs. We anticipate that these actions, together with projected cash benefits from our cost savings initiatives, will positively impact our fiscal 2009 cash flow.
Our primary sources of working capital are cash flows from operations and borrowings under our revolving credit facility, which provides for up to $800.0 million in borrowings. In the first quarter of 2009, we elected to reduce the previous $1.0 billion commitment under our revolving credit facility by $200.0 million in order to reduce interest expense associated with the unused commitment fee.
Our capital expenditures in 2009, which do not reflect reductions for landlord contributions of $2.0 million, totaled $13.0 million. Capital expenditures for fiscal 2009, net of approximately $7 million of landlord contributions, are not expected to exceed $40 million, a significant reduction from the prior years capital expenditures of $84.8 million (which do not reflect reductions for landlord contributions of $18.9 million), as we are limiting store expansion and remodel activities in the near term. Included in fiscal 2009 planned capital expenditures is continued investment in information technology.
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