Bon-Ton Stores Inc.
(
BONT
), a department store chain, recently announced the appointment of
Brendan L. Hoffman as its new CEO and president, effective February
7. Hoffman is also set to join the company’s board of
directors.
Hoffman replaces Bud Bergen who announced in November last year
that he will retire once the company finds a new leader. With
Hoffman holding the office of the company’s president and CEO,
Burgen will become the chairman of the
Bon-Ton’s board. Once Bergren takes on the role of the chairman,
Executive Chairman Tim Grumbacher will step down from his position
but will remain as a board member.
Hoffman, 43, previously served as the president and CEO of Lord
Taylor’s LLC. Prior to that, Hoffman served for six years as
the president and CEO of Neiman Marcus Direct, a subsidiary of The
Neiman Marcus Group Inc. He played a key role in the growth of
neimanmarcus.com and bergdorfgoodman.com. He also served as the
vice president of Neiman Marcus’s Last Call Clearance Division and
as a divisional merchandise manager of Bergdorf Goodman Inc.
We remain optimistic regarding the appointment of Hoffman as the
CEO of Bon
-
Ton’s and expect the company to benefit from his rich experience in
the retail industry. The company is continuously witnessing
sluggish same-store sales and we expect comps to turnaround under
his leadership. Following the news of the appointment of the new
CEO, the company’s share price climbed 53 cents to close at $3.76
on Tuesday.
In the recently concluded third quarter of 2011, the company
reported disappointing results. The company reported a loss of
$1.21 per share much wider than the Zacks Consensus Estimate of
break-even results and the year-ago quarter loss of 36 cents. The
lower-than-expected results were due to sluggish traffic, which led
to a 5.9% drop in same-store sales.
The negative comp trend also carried in the next two month as
well. Bon-Ton experienced a dip of 4.9% and 0.7% in comps for the
month of November and December, respectively. Subsequently, the
company trimmed its outlook for the fourth quarter of 2011.
For the upcoming fourth quarter of 2011, the company slashed its
EBITDA forecast to $170 million – $175 million from the previous
range of $190 million – $210 million and earnings per share
guidance to a loss of $1.30 per share to $1.00 per share from the
earlier projection of a loss of 65 cents to a gain of 25 cents. It
also expects cash in the range of $5 million to $10 million, down
from its previous estimate of $25 million to $40 million.
Bon-Ton, headquartered in York, Pennsylvania and Milwaukee,
Wisconsin, is slated to release its fourth quarter results on March
6, 2012. The Zacks Consensus Estimates for the fourth quarter of
2011 and fiscal 2011 are pegged at $3.51 and ($1.20),
respectively.
We reiterate our long-term Neutral recommendation on
Bon-Ton.
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