Bon-Ton Stores Inc.(BONT) reported fourth quarter 2010 earnings of $4.41, which outpaced the Zacks Consensus Estimate of $4.29 and the year-ago quarter earnings of $4.34. The better-than-expected results were driven by growth in the top line.

The company’s full-year income was $21.5 million or $1.12 per share, compared with a net loss of $4.1 million or 24 cents per share in fiscal 2009.

Total revenue of the departmental store chain inched up 0.8% year over year to $1,010.0 million in the reported quarter attributable to a 0.8% rise in the same-store sales. In 2010, revenues were $2.98 billion, representing year-over-year growth of 0.7% driven by higher comparable store sales (up 0.9%).

The gross margin for the quarter contracted 110 basis points (bps) to 37.0%, attributed to higher delivery costs and increased net markdowns. However, in fiscal 2010, gross margin expanded 50 bps to 37.6% due to higher sales volumes and net markups.

Selling, general and administrative expenses, as a percentage of revenue, plunged 160 bps to 25.3% in the quarter and 90 bps to 31.6% in 2010, as the company continues to focus on cost control. As a result, EBITDA increased $5.4 million to $140.7 million in the reported quarter and rose $34.5 million to $243.6 million in FY10.

Financial Position

 
Bon-Ton ended the year with cash and cash equivalents of $16.3 million, shareholders’ equity of $183.3 million and credit facility of $472 million.

Outlook

Bon-Ton, headquartered in York, Pennsylvania and Milwaukee, Wisconsin expects earnings in the range of $1.00 to $1.50 and EBITDA to be between $235 million and $255 million in 2011. Comparable store sales are estimated to be up 1.5% to 3.5% and gross margin to be in the range of flat to down 30 bps in 2011.

Our Take

The company reported better-than-expected results and outlook. Hence, we expect an upward movement in estimates over the coming days. The Zacks Consensus Estimate is currently pegged at $1.05 for 2011 and 89 cents for 2012.

One of Bon-Ton’s primary competitors, Dillard’s Inc.(DDS), the leading fashion apparel, cosmetics and home furnishings retailer, posted fourth quarter 2010 earnings of $1.55 per share, surpassing the Zacks Consensus Estimate of $1.25 per share and prior-year quarter earnings of $1.04 per share.

 
BON-TON STORES (BONT): Free Stock Analysis Report
 
DILLARDS INC-A (DDS): Free Stock Analysis Report
 
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