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    Small-Cap Stock on Watch: The Bon-Ton Stores Inc. (BONT)

    Small-Cap Stock on Watch: The Bon-Ton Stores Inc. (BONT)

    Shares in department store operator The Bon-Ton Stores Inc. (NASDAQ: BONT) jumped 18.1% to $8.24 Thursday, extending the previous day’s gains when the company reported its latest quarterly results. Over 2.19 million shares traded hands during the session, versus the 10-day average of 585.93K.

    Over the last 52 weeks, the stock has ranged from a low of $2.23 to a high of $16.93. It is currently trading above its 50-day and 200-day moving averages of $4.61 and $4.50, respectively. Market capitalization currently stands at 162.34 million and it has 19.70 million outstanding shares.

    BONT shares traded higher despite the company reporting weak results for the fourth quarter ended January 28, 2012.  Net income came in at $78.2 million, or $4.00 per share, compared with $85 million, or $4.41 per share, reported in the comparable period of the previous year.

    The latest quarter’s result include income of $0.93 per diluted share associated with the gain on extinguishment of debt.  Excluding the gain and other factors, including income tax and depreciation, the company earnings dropped $34.4 million to $106.4 million, compared with $140.7 million in the fourth quarter of fiscal 2010.

    Comparable stores sales dropped 2.6% for the fourth quarter of fiscal 2011, while total sales for the thirteen weeks ended January 28, 2012, slipped 2.7% to $983.2 million, compared with $1.01 billion for the same period last year.

    Brendan Hoffman, president and CEO of The Bon-Ton Stores, made the following statements: “Our fourth quarter sales and margin performance were below our expectations primarily due to the adverse impact of milder weather in our markets on sales of cold-weather merchandise as well as softness in our moderate traditional businesses. We responded by aggressively taking markdowns, resulting in a reduced gross margin rate for the fourth quarter and fiscal 2011. These efforts reduced inventory levels and enabled us to transition into spring assortments. Despite the fiscal 2011 results, we reduced our debt by approximately $47 million.”

    Despite the weak quarterly results, the parent company of Boston Store and other department store chains was upbeat and predicted that it would generate as much as $70 million of cash this year for the expansion of its growth initiatives in many more stores.  The company also projected renewed focus on its small stores in smaller markets, continued expansion of its private brands, growth in its eCommerce business, and general support of its operations.

    “As we expand the initiatives we have been implementing, we expect to drive profitable sales growth and create the desired level of customer service to achieve our goals,” Hoffman said.

    BONT shares have gained 60.9% in the last five days and 59.7% in the last month.  Year-to-date, the stock is down 46.6%.

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