Bon-Ton Bonds Decline After Comparable Sales Miss Estimates

Bon-Ton Stores Inc. (BONT)’s bonds fell to the lowest in almost two weeks as the retailer said its March same-store sales dropped, missing analyst estimates.

Bon-Ton’s $480 million of 10.25 percent notes due March 2014 declined 2.125 cents to 85.875 cents on the dollar to yield 19.4 percent as of 12:50 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. There were 31 trades of at least $1 million of the security today, the most of any U.S. high-yield bond, Trace data show.

Comparable-store sales for the five weeks ended March 31 fell 0.1 percent to $254.1 million, compared with $254.5 million in the same period last year, York, Pennsylvania-based Bon-Ton said today in a statement. The figure came in below the 1.7 percent average projection from analysts surveyed by researcher Retail Metrics Inc.

Same-store sales for the more than 20 companies tracked by Swampscott, Massachusetts-based Retail Metrics rose 3.9 percent, beating the average estimate for a 3.3 percent gain. Sales have topped estimates for four straight months.

The company had $814 million of outstanding long-term debt, less current maturities, as of Jan. 28, according to a March 7 regulatory filing.

Bon-Ton, which has department stores in the U.S. Northeast and Midwest, expects to produce $60 million to $70 million of free cash flow this year, the retailer said in a March 7 earnings statement. The company’s bonds rose 5.5 cents after the announcement, the most since September 2009, to 72.5 cents, Trace data show.

Bon-Ton is seeking to attract new customers with trendier clothes as it tries to make enough money to pay off or refinance its debts before they come due in two years. In January, the chain appointed Brendan Hoffman, the former head of Lord & Taylor LLC, as chief executive officer.

To contact the reporter on this story: Heather Perlberg in New York at hperlberg@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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