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I love the chargers(not San Diego).They always spend more.Damn cc companies cutting their opens to buy and freezing accounts.Go gettem Thursday Obama.lol
Same here so far this week.Down a little on ebhi~Up a little on psun.Did not like all the over extended charts.Then pei~ddr and cbl take off again.Jeez
I agree.I have been having a tough time the last week getting positions based on the charts.They pull back a little then bang back up aka pei and cbl.I can't wait to see what Obama says Thursday to the credit card companies.If they keep up their bs it will not be a good holiday season once again for retailers.I know.Bob :))
Well Well,I posted a few times about how the credit card companies/banks were taking it to businesses and personal credit accounts.Believe me the last month figures of consumer credit spending did not drop because people are getting smarter.It is dropping because the credit card companies are freezing lines and dropping the open to buys for both personal and biz accounts.Obama to meet with them Thursday:APRIL 21, 2009 Policy Makers Take Aim at Credit-Card Practices Article
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By SUDEEP REDDY
Congress and the White House are taking aim at controversial credit-card practices, from higher interest rates on past balances to fees for paying by phone or online.
In a bid to aid consumers hit hard by the recession, lawmakers are pushing legislation this week that would ban a long list of credit-card practices that essentially amount to higher costs for consumers. Meanwhile, the Obama administration has scheduled a meeting with executives from credit-card issuers at the White House on Thursday, adding to pressure on the industry. President Barack Obama plans to attend.
The efforts come months after the Federal Reserve issued new consumer-protection rules that cover most of the provisions lawmakers are considering, but don't take effect until July 2010. Congressional action would only speed up the changes modestly -- a House version gives card companies a year from the bill's signing -- but would codify the new provisions in law and allow lawmakers to take credit for aiding consumers during the downturn.
The Senate Banking Committee late last month narrowly passed a measure that goes beyond the House version. It would, among other things, ban a company from considering a consumer's bad credit from other loans -- an overdue home or car payment, for instance -- to change interest rates for that company's credit card.
The House Financial Services Committee plans to vote Wednesday on legislation that includes the provisions cleared by the Fed earlier this year, along with other rules such as a ban on marketing credit cards to minors and the ban on fees for phone or Internet payments. Rep. Carolyn Maloney (D., N.Y.), said she hopes her credit-card legislation will pass the House again -- it cleared easily last September -- and be reconciled with the Senate version to reach the president's desk before summer.
The latest battle over credit cards comes as regulators and lawmakers respond to years of easy credit that put Americans in deeper debt and fueled some of today's troubles in financial markets.
The Fed's regulations, approved in December, came after years of work drawing up policies, soliciting public comments and field-testing sample disclosures to make sure cardholders could understand the fine print.
Among the key regulations set to take effect in July 2010:
Banks can't treat payments as late unless consumers have a "reasonable amount of time" to make the payment; at least three weeks before the due date.
Banks must allocate minimum payments to balances with the highest rate first, or pro-rata among all balances.
Banks cannot raise interest rates from the opening amount unless it's a variable rate or an introductory rate with an increase disclosed in advance; or a year after the account opens, a 45-day advance notice has been made; or if a minimum payment is received more than 30 days after the due date.
A ban on double-cycle billing, which allows banks to calculate interest based on a prior month's balance in addition to the current month, even if the prior month had been paid off.
Consumer groups have been pushing lawmakers to act, saying cardholders need relief now. The current rules "give very little help to families that are struggling with their debt," said Lauren Saunders, managing attorney at the National Consumer Law Center.
"I don't think the issuers should wait for these rules to come out to start dealing fairly with consumers," she said. "The issue that's hurting consumers the most right now are these big retroactive rate increases. They could just stop doing those tomorrow."
But the industry is warning that some of the efforts -- including speeding up implementation -- would paralyze issuers and force them to raise interest rates, cut credit lines and cancel accounts, hurting consumers who need credit.
The Fed's new rules "upend" the card business and fast-forwarding them would "create huge implementation challenges," said Kenneth Clayton, senior vice president of card policy at the American Bankers Association.
Many banks are already trying to raise rates on the riskiest consumers as their credit-card businesses post hefty losses while cardholders lose their jobs and fall behind on payments. Bank of America Corp., which reported a first-quarter profit Monday, said its credit-card business posted a $1.8 billion loss after a $867 million profit a year earlier.
"If you keep lenders from being able to manage risk, they're going to have to raise rates significantly higher," Mr. Clayton said. "They're going to have to reduce access to credit only to people they consider the most creditworthy. That will have a significant impact on millions of Americans and on the broader economy."
The credit-card issuers originally requested a meeting with the administration to discuss major industry issues. But the Obama administration turned the tables, setting a meeting with top executives and sending public messages that it would help consumers.
Over the weekend, White House economic adviser Lawrence Summers said President Obama would focus on "credit-card abuses" and "the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into."
Mr. Summers, speaking on NBC's Meet the Press, added: "We need to do things to stop the marketing of credit in ways that addicts people to it and so that our households are again saving, and families are again preparing to send their kids to college, for their retirement and so forth."
So far so good.More reports coming.I am getting dizzy anymore.Kinda layin low this week.lol Bob :))
So far so good.More reports coming.I am getting dizzy anymore.Kinda layin low this week.lol Bob :))
Hey ctb,The mall developers rallied once again.Stupid me thinking I could do no wrong picked up some ebhi yesterday.lol Bob :))
I did like ebhi technically and thought .33/.30 would hold.New terms coming along with a new line and cost cutting across the board.Not doing much this week but did buy 5000.Did not go larger because I thought .38/.39 area would hold also but didn't pull the trigger until yesterday around.33.5.Played psun in and out since my first mention around 1.60.Love their cost cutting measures and they are finally discounting.Waiting on the developers to get more inline technically after the big runs the last month.Store operations at ebhi are biz as usual and shelves are stocked well in my area.
Psun 3.02+.46 Ebhi .28-.07.Mixed feelings.
Hi Joe,Amazon should help.Also the First Acsent line is to be rolled out this month.The company is also going back to basics along with cutting costs across the board.This article kept my attention on ebhi.Eddie Bauer says new terms give retailer "breathing room"
04/09/2009 09:58:00 AM
McClatchy-Tribune Information Services
Apr. 9--Bellevue-based retailer Eddie Bauer Holdings said today that it has reached an agreement with its lenders to change the financial covenants for a $225 million term loan.
Chief Executive Neil Fiske told analysts and investors in a conference call that the changes provide short-term financial relief, though at a price "above what would have been considered market rate a year ago."
The new terms include a substantial increase in interest rates and warrants for Eddie Bauer's common stock. In return, the outdoor-apparel company gets "breathing room to weather the recession and hopefully come out in 2010 ready for growth as the economy turns," Fiske said.
Eddie Bauer disclosed in March that it was trying to change its loan covenants to avoid a "going concern" opinion from its accountants -- a reference to its ability to continue to operate indefinitely. The company said it was at risk of violating a consolidated secured leverage ratio for the $225 million term loan, on which $193 million is outstanding.
Fiske said the new agreed-upon ratios "will make it much easier to stay compliant," despite a difficult economic environment. He noted that the company subsequently received a "clean opinion" from its auditors.
"There is no sign yet that the economy has hit bottom and is beginning to turn," he said in the conference call. "The first quarter of this year will be the most negative, with revenues declining about 15 percent versus last year.
"We anticipate improvement in each of the successive quarters," he said, adding that sales at stores open at least a year probably will remain down from 2008 levels until late this year or early next year.
As of March 27, Eddie Bauer had $268 million in outstanding debt, including the $193 million on its term loan and $75 million in convertible notes.
Fiske said the company will contact its convertible-note holders over the next few weeks to discuss the possible terms for converting their $75 million to common stock. If after 90 days Eddie Bauer does not convert the notes to stock, its lenders are entitled to additional fees and warrants under the new terms, Fiske said.
Taking a shot here with ebhi off bottom bb.33.
Lots a wackage today.Retail/developers also getting hit.
Saw that Stevo.
Agree,Many are moving nicely for now.Like a buffet.lol Bob :))
Hey Crash,Go Pats back at you.Bob :))
You have seen it all for sure.Mucho Drama lol Bob :))
Thanks for Da charts.Talk to you later.Gotta run
Agree Rocket eom.
Lets hope eeso does not turn into another pbls.I remember all the contracts and traded it between .02/.05.Now their is a flashy pic of the fat rich ceo.Check out the ihub board.I remember.Bob :))
Well,I am just trying to find anyone on ihub that wants to start a retail board that knows their stuff.If I had the time I would do it.I don't,would contribute as I am the expert.Not gloating,but I have owned multiple locations in the malls(15 years)and have lots of connections as to what is going on in the sector.Schuylkill Expressway nightmare lol :)))
Hey crash,I noticed the drastic swings in the weather has killed and stunted a lot of early bloomers.Get me some pats tickets.Huge fan my whole life.Bob :))
You are a my neighbor~If anyone knows of a person that has a lot of retail store knowledge let me know.I do not have the time to start a retail store/developer board myself.I will help out as time permits.I think ihub needs a board dedicated to the sector.Lots going on in the sector and many companies are beat to crap.A retail board would benefit traders and longer term investors.Thanks Bob :))
If anyone knows of a person that has a lot of retail store knowledge let me know.I do not have the time to start a retail store/developer board myself.I will help out as time permits.I think ihub needs a board dedicated to the sector.Lots going on in the sector and many companies are beat to crap.A retail board would benefit traders and longer term investors.Thanks Bob :))
Goodnight to a local Soda company that I grew up with.Crystal beverage had iconic brands in NE Pa nearly 50 years with brands such as Cherokee red and 50/50.I am very good friends with the owners wife and the competition from pepsi and coke finally put them down.Checked the legals and the building has been sold.Mking room for yet another strip mall.Gateway to downtown Scranton to be improved
Yahoo! Buzz
BY JAMES HAGGERTY
STAFF WRITER
Published: Saturday, March 14, 2009
Updated: Saturday, March 14, 2009 7:19 AM EDT
A $7 million renovation project that will create new jobs and clean up an eyesore intersection leading into downtown Scranton is moving forward.
“Mulberry Street is going to be completely cleaned up,” George Semian, broker and owner at Semian & Gress Real Estate, predicted after a group he heads completed the purchase Thursday of the former Crystal Soda Water Co. headquarters at 421 Franklin Ave., for $695,000. Paperwork on the sale was filed Friday.
Plans call for development of Mulberry Place, which will house Mr. Semian’s real estate agency and its 30 employees, a bank branch, a restaurant, a florist, an orthodontist and possibly a physicians’ group, Mr. Semian said.
“It’s a great concept. It’s going to work,” said Mr. Semian, whose firm will relocate from the Mellon Bank Building at 400 Spruce St., in November after the redevelopment is complete. “There will be 100-plus people working there.”
Mr. Semian’s group, Mulberry Place LLC, plans to demolish about 9,000 square feet of warehouse space at the rear of the 24,000-square-foot soft-drink company to add 30 more parking spots for a total of about 150 on the site.
He said the group also has an agreement to buy an adjoining property at 119 Mulberry St., that most recently housed North American Warhorse, a motorcycle dealership. Earlier, the building was an Allied Services facility and it had housed Duke Tire Co. for many years.
“We’ve already negotiated the terms” on the acquisition of the Warhorse building, Mr. Semian said. Dunmore businessman Louis DeNaples owns the structure, Mr. Semian said, though he would not disclose a purchase price.
The development will be announced formally on March 27, Mr. Semian said.
The investment will help create a new look at the western approach to Central City. The Warhorse building has been empty for years and a lot housing a long-vacated gas station at Mulberry and Mifflin Avenue is being converted into a Dunkin’ Donuts.
“The Semian building is going to be a real jewel anchoring the entrance to the city,” said Austin Burke, president of the Greater Scranton Chamber of Commerce, which stands across the street from the site. “The whole Mulberry corridor is a major thoroughfare through Scranton.”
Crystal Soda Water Co., which makes Crystal Club beverages, had owned the Franklin Street site since 1965. It will consolidate operations at its production facility at 104 Poplar St., company president Louis Kahanowitz said.
Crystal, which employs about 20 people, has undergone some changes in recent months and its products are scarce at regional grocery stores.
“We have issues, but we’re still in business,” Mr. Kahanowitz said.
Goodnight to a local Soda company that I grew up with.Crystal beverage had iconic brands in NE Pa nearly 50 years with brands such as Cherokee red and 50/50.I am very good friends with the owners wife and the competition from pepsi and coke finally put them down.Checked the legals and the building has been sold.Mking room for yet another strip mall.Gateway to downtown Scranton to be improved
Yahoo! Buzz
BY JAMES HAGGERTY
STAFF WRITER
Published: Saturday, March 14, 2009
Updated: Saturday, March 14, 2009 7:19 AM EDT
A $7 million renovation project that will create new jobs and clean up an eyesore intersection leading into downtown Scranton is moving forward.
“Mulberry Street is going to be completely cleaned up,” George Semian, broker and owner at Semian & Gress Real Estate, predicted after a group he heads completed the purchase Thursday of the former Crystal Soda Water Co. headquarters at 421 Franklin Ave., for $695,000. Paperwork on the sale was filed Friday.
Plans call for development of Mulberry Place, which will house Mr. Semian’s real estate agency and its 30 employees, a bank branch, a restaurant, a florist, an orthodontist and possibly a physicians’ group, Mr. Semian said.
“It’s a great concept. It’s going to work,” said Mr. Semian, whose firm will relocate from the Mellon Bank Building at 400 Spruce St., in November after the redevelopment is complete. “There will be 100-plus people working there.”
Mr. Semian’s group, Mulberry Place LLC, plans to demolish about 9,000 square feet of warehouse space at the rear of the 24,000-square-foot soft-drink company to add 30 more parking spots for a total of about 150 on the site.
He said the group also has an agreement to buy an adjoining property at 119 Mulberry St., that most recently housed North American Warhorse, a motorcycle dealership. Earlier, the building was an Allied Services facility and it had housed Duke Tire Co. for many years.
“We’ve already negotiated the terms” on the acquisition of the Warhorse building, Mr. Semian said. Dunmore businessman Louis DeNaples owns the structure, Mr. Semian said, though he would not disclose a purchase price.
The development will be announced formally on March 27, Mr. Semian said.
The investment will help create a new look at the western approach to Central City. The Warhorse building has been empty for years and a lot housing a long-vacated gas station at Mulberry and Mifflin Avenue is being converted into a Dunkin’ Donuts.
“The Semian building is going to be a real jewel anchoring the entrance to the city,” said Austin Burke, president of the Greater Scranton Chamber of Commerce, which stands across the street from the site. “The whole Mulberry corridor is a major thoroughfare through Scranton.”
Crystal Soda Water Co., which makes Crystal Club beverages, had owned the Franklin Street site since 1965. It will consolidate operations at its production facility at 104 Poplar St., company president Louis Kahanowitz said.
Crystal, which employs about 20 people, has undergone some changes in recent months and its products are scarce at regional grocery stores.
“We have issues, but we’re still in business,” Mr. Kahanowitz said.
We learned well from Bill.
Foo Fighters~Times like these(acoustic)~
Pro drought here.lol
Yea,The weather just can't change for the better and stay that way.Same here next few days.Just for the fun I bought two of those upside down tomato plant growers as seen on tv.The people I know that grow gardens want pics.lol Bob :)
Janice,73 and sunny two days in a row.I Got the fever.
An old high school/college pub I never read.lol Bob :))
Win Win situation.The orange bowl was floating when I was their.http://hightimes.com/magazine
Correct,These days you could lose a billion but if analysts were expecting a 2 billion loss the stock rallies.Nice for us.
Thanks Yak,A couple key financial stocks in their.Will be interesting to see guidance from some others.
The best time I saw the Stones was the Steel Wheels tour at the Orange Bowl.
Look at the charts and the statistical info along with the 10k.lol Bob :)))
Hey Morgan,Interesting situation here.
Thanks,Taking a look at ideas for next week.Psun popped friday also.Super sized Happy meal for a psun chart.lol Bob :))
Hey buyit,Been watching bont a long time.BK fears seem to be easing a bit.Keep an eye on psun and ebhi also.Pei/cbl/ddr grt are good traders also in the mall developer sector.Investment Filter
Finding good investments through sound analysis
Thursday, January 03, 2008
The Bon-Ton Stores
I have started to realize that over the past month or so I have spent way too much time following what the big investment firms and home builders are doing South of the Border and have lost sight of everything else in the investment world. So my New Years resolution is to get back to the basics and look for some good value investments outside of the credit crunch bubble. So here goes:
The Bon-Ton Stores (BONT - NASDAQ), an operator of department stores focusing on women's apparel, recently came to my attention when it landed on the NASDAQ 52 week low list. I recognized the name immediately as it is one of the largest department stores in the United States and also because it had been a bit of a high flier this year in the stock market. Recently, however, the tides have turned for the company and just yesterday it closed at $5.12 (as of January 14, 2008), which equates to a drop of 90% from its 52 week high of $56.54 on March 3, 2007. In my own short experience, when a companies stock drops as much as this it is usually because the company has hit some very difficult times and is headed for at worst Chapter 11 and at a minimum a long road full of directional changes and cost cutting which may or may not work; but of course the only way to find out for sure is to start digging through the financial statements.
One interesting side note about the company, before I get into the nitty gritty, is that even though Bon-Ton has not had one year of negative earnings over the past ten years, it generally only has a positive fourth quarter. So each year it has three quarters of negative earnings followed by an excellent fourth quarter that keeps it in the black. Now I understand that retail companies will almost exclusively have their best quarter at the end of the calendar year because of holiday shopping, but the difference between the quarters is not usually as drastic as it is for Bon-Ton. For instance in 2006 (negative numbers are in parentheses) they had first quarter earnings of ($0.67), second quarter earnings of ($1.20), third quarter earnings of ($0.66) and fourth quarter earnings of $5.31, which put them at $2.78 for the full year. The current year also looks like it will follow a similar pattern (1st: ($1.78), 2nd: ($0.91) and 3rd: ($1.17)) as analysts expect full year earnings of $0.99, which translates into fourth quarter earnings of $4.85. If this estimate is true than the company would be trading at only five times earnings which puts it at a very cheap level in comparison to the rest of the department store industry, which is currently trading at twelve times. Now I am not entirely sure why I am so fascinated with this revelation of the earnings discrepancy, but it just honestly jumped right out at me when I was looking at the financial statements and made me wonder what will happen to its stock when it releases its fourth quarter earnings later this month. Anyway, I am getting off topic so I am going to move on as the real question at hand is whether or not Bon-Ton is a good investment.
The first thing that jumped out at me when I began my research was Bon-Ton's share price as compared to its net worth (i.e. assets minus liabilities), which is a very useful number to note as it reveals what is left over once all of the companies liabilities are taken care of.
Looking at the most recent quarterly statements of Bon-Ton (Nov. 3, 2007) I can see from the balance sheet that it currently has a total equity (i.e. net worth) of $285 million and approximately 17.5 million shares outstanding, which translates into a book value per share of $16.28. So just to put this into perspective, this means that if the company paid off all of their outstanding liabilities they would still have $16.28 per share left over; theoretically a company should never trade for less than its book value, but of course this is not always the case. As of the last closing price Bon-Ton was trading at $5.12 or 31% of it's book value. Now one thing that I always take note of when performing this calculation is how much of the book value inventory accounts for. The reason for this is that if a company goes bankrupt, their book value should deteriorate since inventory will generally not sell for as much as the company has it valued for on its books (this is especially true for a company such as Bon-Ton whose inventory is made up of apparel). So for a company that is trading below book value I like to say that they have a 'margin of safety' (a term that I have borrowed from Benjamin Graham) when it comes to its inventory value, as the price of inventory can drop down to the point where book value will equal the shares trading price before it starts taking away value from the shareholder. In Bon-Tons case it's inventory can drop by $169 million or 17% of its current value, which is very comforting to know. Of course, just because a company is trading for less than its book value does not mean that it is a good investment. All this says is that it is currently trading at a great price, but if you are like me and prefer holding onto your securities over a long time period you will generally not purchase a company unless you feel it is a superior company with long-term value. So with this in mind I did a quick and dirty analysis of Bon-Ton so that I could get a better overall picture of the company. After reviewing various financial and historical background information I came out with two issues that really stood out to me and gave me cause for concern. The first was the amount of debt it has on its books and the second is the recent news of a large drop in same-store sales. Either one of these is a cause for concern so I made sure to do as much research into both of these issues and try to make an informed decision afterwards.
Debt
A high debt level can be a very worrying prospect as it can easily turn a company into a candidate for bankruptcy. For Bon-Ton total long-term debt, as of Nov 3, 2007, was $1.3 billion, which is a substantial amount of money for any company. The majority of this debt was taken on in early 2006 to facilitate the purchase of two subsidiaries of Saks Incorporated (SAK - NYSE) which cost just over one billion dollars. Now when I look at long-term debt there are three main aspects that I want to know about: what kind of debt is it, when is it due and what, if any, covenants (i.e. restrictions) have been placed on the debt. Luckily all of this information is easily obtainable in the notes to the annual financial statements, which are located at the back of the statements. For Bon-Ton looking at its year end 2006 statements under Note ten I was able to find the following:
Due Date: $25 million of the outstanding debt is due by the end of 2010, $350 million is due by the end of 2011 and the remaining $925 million is due in 2012 or after. This is a positive sign as the company should have little to no problem keeping up with debt payments over the next couple of years.
Type of Debt: In order to facilitate the purchase of the two subsidiaries of Saks, Bon-Ton opened up a credit facility (i.e. a line of credit) with the Bank of America and entered into an indenture with the Bank of New York. Since these two represent approximately 75% of the debt outstanding I have concentrated my efforts into simplifying them below.
Credit Facility - The total facility allows for up to $1 billion in loans, has an expiry date of March 6, 2011 and is secured by substantially all of the assets of Bon-Ton. As of February 3, 2007 $342 million of this amount had been withdrawn.
Now as I have said in earlier posts, bank debt is much more worrying for an investor than any other type of debt, as the bank can very easily demand repayment of the whole loan at anytime and in doing so force the company into bankruptcy. Banks of course generally don't want to force a company into bankruptcy since it will probably mean that they won't recover 100% of what it is owed, but if a company hits hard times and is having trouble keeping up with interest payments then this may be the only solution. In this case, however, since Bon-Ton has only taken out $342 million of the total $1 billion, it should have no trouble keeping up with interest and ultimately principal repayments, so I am not overly worried about the possibility of bankruptcy, but it is always good to take note of it.
There are also two covenants (i.e. restrictions) on this loan that an investor should be aware of. The first places a maximum on the amount of dividends Bon-Ton is allowed to pay and the other puts a limit on the amount it can spend on capital expenditures. The dividend restrictions states that the company cannot pay out more than $15 million over the life of the agreement or over $4 million in any one year (presently Bon-Ton is paying out $0.05 per quarter for a yield of just over 3%, which is a better than average pay-out). This should not be a problem as the company hasn't paid out more than $1.7 million over the past three years but it is good to note that there is a ceiling. The second covenant restricts the company to $125 million per year in capital expenditures with a one year carryover for any unused amounts. Once again I don't feel this will be a problem as the most the company has ever spent in one year is $100 million.
Indenture - An indenture is a technical word for a contract between a bond issuer (i.e. Bon-Ton) and the holder of the bond (i.e. Bank of New York) that states the time period, amount of interest and any other covenants or terms of the bond. This particular indenture was signed on March 6, 2006, for $510 million at 10.25% (payable every six months), with a maturity date of March 15, 2014 and a stipulation that they cannot be redeemed prior to March 15, 2010. One positive note for Bon-Ton is that they may redeem up to 35% of the Notes prior to March 15, 2009 through the proceeds of an equity offering (i.e. selling more shares). There are also several covenants on this indenture but the financials do not provide the exact details so the company must not feel that they are material. It only states that there are restrictions on dividend payments, additional debt, making certain investments, using assets as security in other transactions (this one is standard in most secured loans), and selling assets or merging into other companies. Overall I would consider this debt to be much more positive than the bank debt as the bondholders are not capable of demanding full payment of the debt until March 15, 2010.
The one aspect that you have to be worried about with bonds is whether or not the company will be able to meet the interest payments. If the company defaults on even one payment than the bondholders can demand full payment of the notes. So to ensure that the company will not run into this problem I like to look at its coverage ratio. Anything below 1.5 makes me worry and anything below 1 makes me run for the hills. For this calculation I like to look at it on an annual basis so that I get a clearer picture of the companies position. Going back the last twelve reported months for Bon-Ton I found that it had a total interest payment of $110 million, which when compared to their EBIT of $145 million gives it a coverage ratio of 1.32 placing it in the higher than average risk category. It is not, however, a definite sign that you should stay away from this company, but if the retail industry heads south and Bon-Ton's sales follow suit then it could have difficulty keeping up with interest payments. On the other hand, however, the interest payments on the indenture alone will be just over $26 million every six months. In this case the company should have no problem paying out the semi-annual payments even if it does hit rough times and sales decline significantly.
Same Store Sales
Every month sales, including same store sales figures, for all public retail companies are reported and nicely condensed into an easy to read news release by CNNMoney (here is a link to the December results).
Every investor that has an interest in the retail industry should take careful note of this release and make sure to pay special attention to the same store sales figures. As I have said in earlier posts, same store sales is a key figure for a retail company as it indicates whether or not a company is increasing their sales from existing stores. In the recent December report, Bon-Ton had one of the worst same store sales when it had a decrease of 11.3% compared to the prior year. This number on its own is a very worrying figure, however, what I like to do is compile a month by month breakdown as I personally don't feel that you can get a clear picture of a companies position based on only one month.
After doing a bit of data collection I came out with the following same store sales figures for Bon-Ton in 2007 with negative figures in parentheses: January 2.2%; February 9.8%; March 0.6%; April (13.4%); May 1.2%; June (8.0%); July (7.6%); August 1.3%; September (7.1%); October (1.4%); November 8.6%; and December (11.3%).
If you add up all the numbers you get a total decline of 25.1%, which is a very concerning number, but when I look at the monthly numbers on an individual basis I see a slightly different picture. For the beginning of the year they had some solid numbers with an almost 10% increase in February. After this the company had several poor months, including a horrible April, with a couple of small positive growth numbers in between. At the end of the year they had both ends of the spectrum with a solid November and subsequent poor December. In my own short history of experience with retail companies I have noticed that the ones that ended up completely losing the publics interest had consistent monthly results of poor same store sales. Bon-Ton on the other hand has a somewhat inconsistent past year that to me doesn't completely indicate a company headed towards the garbage dump. On the other hand, I also don't feel that it is completely in the clear and would hope that management are very concerned with the figures, which of course could have been why it decided on adding to their base of stores and ultimately purchased the two subsidiaries from Saks.
So after reviewing everything above and taking note of all of my usual figures and calculations for Bon-Ton I would have to say that it doesn't fit into the profile that I had in mind for them when I first noted the price drop; I really don't feel that an investor should be worried about it heading for bankruptcy and I also don't think that management is going to have to drastically change the direction that the company is headed. On the other hand , however, I also don't believe that this is a great company, but instead I would categorize it as a solid company that is currently trading at a cheap price. The only problem with this is that I am not sure if I would know when to sell the shares. Generally I hold on to my investments for as long as I can and don't sell them unless I feel they are wildly overvalued. For Bon-Ton though, I feel that I would have a very difficult time knowing when this would be. I know they are worth a lot more than they are trading at now but since I don't feel that they are a great company I am not sure I will ever know what its true value is. In this case I think I would have to use a set measuring stick, such as waiting for the price to double, before I sold. Either way I am not sure that I will be a shareholder anytime soon as my financial resources are currently tied up so all of this may be a moot point anyway; but if anyone out there has some spare cash sitting around and likes this company more than I do for the long run than this is a great time to buy.
Yes they would Leo,I am voicing my opinion because it is right.Jared and Mark are playing the secrecy game.That is not the way to go if you have the info to back up a higher share price of.10+.The markets are rallying and cash is flowing in all exchanges.The pinks and otcbb are slow in the summer.I believe the bigboards will rock this summer after 2nd q earnings releases.They are not taking advantage of their situation based on their revenues if real with signed contracts.Thats about it.Bob :)))