Bon-Ton Stores, Inc. Q2 2009 Earnings Call Transcript

| About: The Bon-Ton (BONT)

Bon-Ton Stores, Inc. (NASDAQ:BONT)

Q2 2009 Earnings Call

August 20, 2009 10:00 am ET


Joe Teklits - ICR

Bud Bergren – President, Chief Executive Officer

Keith Plowman – Executive Vice President, Chief Financial Officer

Tony Buccina – President Merchandising


Karru Martinson – Duetsche Bank

Emily Shanks – Barclays Capital

Grant Jordan – Wells Fargo Securities

Colleen Burns – Oppenheimer

Ken Bann – Jefferies & Co.

[Kent for Jack Japes – Holden Asset Management]


Welcome to today's Bon-Ton Stores Incorporated second quarter 2009 earnings conference call. (Operator Instructions) At this time it is my pleasure to introduce Mr. Joe Teklits with ICR.

Joe Teklits

Good morning everybody. Welcome to Bon-Ton's second quarter fiscal 2009 conference call. Today Mr. Budd Bergren, President and CEO, Tony Buccina, Vice Chairman and President of Merchandising and Keith Plowman, Executive Vice President and Chief Financial Officer will host the call. You may access a copy of the earnings release on the company's website at You may also obtain a copy of the earnings release by calling 203-682-8200.

As a reminder, the statements contained in this conference call which are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results might differ materially from those projected in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC.

With that, I'd like to turn the call over to Mr. Bud Bergren, President and CEO.

Bud Bergren

Good morning and thank your for joining us. I'll begin with comments on the second quarter and our outlook for the remainder of 2009. Keith will then provide details on the quarter's financials and review the financial guidance assumptions for 2009. Tony will outline the quarter's merchandise results and discuss our merchandise initiative as we head into the fall and holiday shopping season. After that I will make some closing remarks and then we'll be available to answer your questions.

We are pleased to report financial results that exceeded our expectations resulting in revised full year guidance. I'm very proud of how our team is managing through this difficult economic period and I want to thank all of our associates for their continued focus on execution.

During the second quarter we continued to carefully manage inventory levels and control costs and we recorded improved operating results that exceeded our expectations, resulting in a full year guidance which Keith will discuss in detail.

Some of the highlights from our second quarter 2009 include; we had an improvement in our gross margin rate of approximately 130 basis points to 37.1, we realized a net reduction in our SG&A expenses during the second quarter of $23.5 million and year to date a net reduction of $42.4 million. We are on track to exceed our guidance in $70 million in annual SG&A expense reduction.

There was a $21.7 million improvement in our operating loss for the second quarter, a $10.6 million of an operating loss of $33.2 million in the same period last year. As a reminder, the second quarter of 2008 included a $17.8 million non cash good will impairment charge.

EBITDA increased $2.7 million in the second quarter of 2009 compared with the prior period. Through discipline and management we reduced our comparable store inventories by approximately 5% at the end of the quarter versus a year and our clearance levels decreased by approximately 12% compared with the prior year period. This along with an improved gross margin rate exemplifies the quality of our sales.

Our excess borrowing capacity at the end of the second quarter 2009 remained well above the $75 million minimum available covenants under our credit facility.

Second quarter regional sales results reflected strength in Nebraska and out west, Minnesota, Michigan, Central Illinois and Indiana, Western Pennsylvania and Ohio. The best performing markets through prior year period were Toledo, York, Lancaster, Omaha, Detroit and Buffalo. Our worst performing regions were Chicago and Eastern Pennsylvania.

Our e-commerce business continues to exceed our sales plan again in the second quarter 2009 and was well above sales of the prior year period. Tony will talk more about the merchandise accomplishments and initiatives which include a discussion on the continued growth of our private growth and exclusive brands, key item programs, incredible value program and e-commerce.

Looking ahead, while there have been some encouraging news regarding the macro economic environment, we plan to continue to manage our business conservatively. Our focus is on controlling inventory and expenses, driving gross margin with our private brands, key item initiatives which deliver value to our customers and enhanced margins to our sales.

We plan to maintain strong domestic vendor relationships and using our merchandise optimization initiative to manage the merchandise mix for our unique set of stores. Understanding our local customer is a long time strategy of ours and is delivering the expected results and also delivering a strong message emphasizing our value oriented merchandise assortment.

With two important quarters approaching, we feel very good about our execution during this recession and believe our assortment differentiated quality merchandise and outstanding values is well aligned with our customer needs for the fall and holiday season.

At this time, I'd like to turn the call over to Keith.

Keith Plowman

Good morning everyone. I will review the income statement and balance sheet components and then update our fiscal 2009 guidance and the assumptions underlying this guidance. Before reviewing the financial results, I will focus on a few key items.

First, as previously announced in our June sales press release, we received our anticipated tax refund of approximately $33 million which was used to pay down debt in our revolver. And in an August press release, we noted we completed negotiations with HSBC which resulted in a third amendment to the credit card program agreement which is in effect through June 20, 2012.

Next, we continued with our strategy of maximizing cash flow by reducing operating expenses, curtailing our capital expenditures and controlling inventory levels in order to benefit our working capital requirements.

During the second quarter we reduced expenses by approximately $23.5 million. Therefore, we now believe we will achieve approximately $80 million in annual SG&A expense reduction. These expense savings which impact our SG&A expenses and our gross margin combined with lower capital spending and inventory levels are benefiting our 2009 cash flow.

Moving to a discussion of our second quarter fiscal 2009 financial results, the net loss in the second quarter of 2009 was $34.8 million or $2.04 per diluted share compared with a net loss of $33.8 million or $2.01 per diluted share which included a $0.72 per share for the good will impairment charge in the second quarter of 2008.

As a reminder, there is significant impact from reduced tax benefit in the second quarter of 2009 as compared with the prior year and its impact on our net loss. To this point, the pre-tax loss in the second quarter of 2009 which was $33.8 million improved by $22.9 million as compared to the 2008 pre-tax loss, which again, included a $17.8 million good will impairment charge, but without that charge, still would have exceeded $5 million.

The year to date net loss was $80.2 million or $4.72 per diluted share compared with a net loss of $67.9 million or $4.04 per diluted share in 2008.

For the second quarter comparable store sales decreased 9.8% compared with the prior year period. Total sales for the 13 weeks decreased 9.5% to $609.2 million compared with $673.4 million for the prior year period. Year to date comparable store sales decreased 9.2%. Year to date total sales decreased 8.7% to $1.2538 million compared with $1.3736 million for the same period last year.

Other income in the second quarter decreased $16.1 million compared with $21.5 million in the second quarter of 2008. Year to date other income increased to $34.5 million compared with $44.3 million in the prior year period. The second quarter and year to date 2009 amounts reflect the reduced sales volume and reduced income from our proprietary credit card.

Gross margin dollars in the second quarter decreased by $15.3 million attributable to the current year decrease in sales volume compared with the second quarter of 2008. The second quarter gross margin rate increased approximately 130 basis points to 37.1% of net sales compared with 35.9% in the prior year period. This reflects disciplined inventory control which resulted in reduced net mark downs.

The year to date gross margin dollars decreased $28.9 million compared with the prior year period. The year to date gross margin rate improved approximately 100 basis points to 35.9% compared with 34.9% in the prior year.

SG&A expenses in the second quarter of 2009 decreased by $23.5 million to $222.9 million compared with $246.4 million in the prior year period. The second quarter SG&A expense rate was 36.6% which was even with the prior year.

Year to date SG&A expenses decreased $42.4 million compared with the prior year period. The year to date SG&A expense rate was 36.7% compared with 36.6% in the prior year period, reflecting the lower 2009 sales volume which was partially offset by the expense reductions.

EBITDA, defined as earnings before interest, taxes, depreciation and amortization, including amortization of lease related interest and good will impairment charges increased $2.7 million in the second quarter to $19.3 million compared with $16.5 million in the prior year period.

Year to EBITDA increased $3.7 million to $25 million compared with $21.3 million in the prior year. EBITDA is a non-GAAP term. For a reconciliation of EBITDA to net loss, please refer to our earnings press release.

Depreciation and amortization expense including amortization of lease related interest, decreased $1.2 million to $29.9 million compared with $31.1 million in the second quarter of 2008. Year to date depreciation and amortization expense including amortization of lease related interest decreased $2.1 million to $59.2 million compared with $61.3 million in the prior year.

Interest expense net, decreased $1.2 million to $23.2 million compared with $24.4 million in the second quarter of 2008 reflecting reduced interest rates and borrowing levels in the period. Year to date interest expense net decreased $2.6 million to $46.1 million compared with $48.7 million in the prior year period largely due to decreased borrowing levels and reduced interest rate.

An income tax provision of $900,000 was recorded in the second quarter of fiscal 2009 compared with a $22.9 million income tax benefit in the second quarter of fiscal 2008. Year to date income tax benefit decreased $38.5 million to $100,000 compared with $38.7 million in the prior year period. The current year decrease principally reflects the company's continuation throughout 2009 of evaluation allowance position against virtually all of our net deferred tax assets.

Now focusing on some key ratios and balance sheet amounts, our working capital decreased to approximately $377.9 million compared with $427.4 million last year or a reduction of $49.5 million. The decrease principally reflects current year reductions of tax assets and merchandise inventories.

Merchandise inventories at cost decreased $35.4 million or 5% compared with last year, primarily reflecting reduced inventory levels in response to macro economic environment and retail inventory for comparable stores decreased approximately 5%.

Total debt including capital leases was $1,142.4 million at August 1, 2009 compared with $1,189.8 million at August 2, 2008, a reduction of $47.4 million. Year to date capital expenditures not reduced by landlord contributions were $13 million compared to $52.8 million for the prior year period. We continue to be focuses on maximizing operating cash flow and controlling our capital expenditures.

Based on our results for the spring, and our expectations for the fall, we are revising our full year fiscal 2009 guidance as follows; EBITDA in the range of $150 million to $170 million, loss per diluted share in the range of $3.70 to $2.50 and cash flow as defined in our press release in the range of $15 million to $35 million.

The underlying assumptions reflected in our 2009 guidance include a comparable store sales decrease in the range of 7% to 9%, gross margin rate of 36%, SG&A expense dollars decrease of approximately $80 million and effective tax rate of 0%, capital expenditures not to exceed $40 million net of landlord contributions, an estimated $17 million diluted weighted average shares outstanding.

In a difficult economic environment, we are pleased with our second quarter results which reflected inventory, capital and expense initiatives we implemented this year. We will continue to manage our business with an emphasis on maintaining cash flow.

Our Form 10-Q for the second quarter of fiscal 2009 will be available by September 10. At this time, I would like to turn the call over to Tony.

Tony Buccina

We are pleased with the progress that we have made on various merchandising initiatives in the second quarter and we are pleased with the selling on some of our new fall items, especially in our private brand merchandise and in our children's area. We also continue to achieve a higher gross margin rate than in the prior year period.

In the second quarter our gross margin rate improved approximately 130 basis points over prior year and year to date our gross margin rate is 100 basis points better than the prior year.

We managed our receipts operating with less inventory throughout the quarter. We began the second quarter with 16% less clearance inventory than last year and ended the quarter with 12% less clearance than at the end of second quarter last year.

We significantly increased our incredible value program of store wide key items as we recognized early in the season that our customer was responding to value. We saw increased penetration in several of our higher margin businesses which contributed to the improvement also in the margin rate.

In response to our customer's focus on price and value, we continued to move receipts into our moderately priced areas during the second quarter. This has been the trend over the last couple of quarters as consumers are spending their limited discretionary dollars on more value oriented merchandise.

Moderate areas in missy's sportswear, missy shoes, missy moderate handbags and men's moderate sportswear showed strength whereas sales in our better merchandise continue to be challenged. Inventory in the better zone will be planned in line with these sales trends until the customers begin to feel comfortable with purchasing these higher end goods.

Our best sales results for the quarter were soft home, children's and missy moderate sportswear. The toughest areas were better missy sportswear and furniture, although furniture did improve near the end of the quarter with the successful new marketing event.

Our franchise business exceeded planned sales again for the second quarter and increased as a percent of total sales. The best franchise businesses were moderate update, cosmetics, and petites while social dressing, women's large size sportswear and ladies shoes did not perform to expectations.

Our men's outdoor apparel focused business made their sales plan and margin rate in the second quarter with the strongest performing brands including Columbia, Rural Rich Timberland and our own private label.

Our key item initiative also increased in penetration to total company sales and we are thrilled with the incredible value program which grew to almost 8% of company sales versus 5% last year. Customers recognize the value in these items and we plan to expand this program for fall.

Our product differentiation was 32.1% for the quarter on plan, but slightly below last year. Our private brand had another good quarter with sales and gross margin rate in dollars coming in above plan and last year. Our private brand penetration grew to 20% of company sales.

Our best performing private brands for the quarter were Breckenridge, Living Quarters, and Studio Works Accessories. Our customers recognize the great value in our private brands.

E-commerce beat sales plan for the quarter. Sales were more than double last year as we made improvements to our site and expanded the number of items available online. We continue to see great sales potential coming out of our e-commerce initiative.

Another reason for our improved margin performance is our merchandize optimization strategy. We are increasing our planning and allocation organization to support the merchants while providing new analytical tools and processes. We started the program with men's and kids in fall 2008. Center core was added to the first quarter of 2009 and our home store in the second quarter.

We expect this strategy to help support further gross margin improvement this fall as the initiative marries the merchandise mix to our customer's shopping patterns and at specific store locations.

Looking ahead to fall 2009, we will continue to focus on achieving our margin rate improvement through managing our receipts, keeping inventory fresh and providing the moderate merchandise assortments that our customers want. We expect our gross margin to improve in 2009 as stated in our guidance.

We plan to grow our franchise businesses and the men's outdoor business at a faster rate than total store. We will also maximize our store wide key items programs. We expect these items to be 25% of the total store sales this fall with an emphasis on newness.

The incredible value program is planned to continue to expand to 9% of total company sales versus 6% last year. This had a significant positive margin impact for spring and we expect this to continue for fall.

Product differentiation will be similar to last year at 31.3% of total sales. We will continue to drive private brand sales with an expanded assortment while non private brands differentiated product will decrease.

We will continue to focus on our e-commerce business that we plan to grow aggressively by adding new vendors and new styles throughout all product categories. Last year our focus was mostly home and home is our largest volume home store on e-commerce. This year we've expanded to almost every product category.

We will continue to partner closely with our vendors during these tough economic times. Our strong vendor relationship is one of the keys to our success and we appreciate their understanding and support of our merchandise strategy.

I'll now turn the call back over to Bud.

Bud Bergren

With two important quarters approaching, we feel good about our execution during the difficult economic environment and we believe the initiatives we put in place at the beginning of the year are working. Lastly, maintaining strong cash flow and liquidity remain a key priority for the company.

At this time, we'll open the discussion for questions.

Question-and-Answer Session


(Operator Instructions) Your first question comes from Karru Martinson – Duetsche Bank.

Karru Martinson – Duetsche Bank

On the EBITDA guidance that you gave, it seems like on an LTM basis you're at the mid point already and with the gross margin improvement that you're looking at the second half here, what's your thinking behind the range, and is the supply kind of a flat year for second half.

Keith Plowman

When you look at the guidance that we gave and the underlying assumptions, if you run from the 7% to 9%, you take the 36% gross margin rate that we provided and you take the SG&A improvement that we've noted out there, you'll get right to our guidance range.

At this point we're very pleased with what we've done in gross margin. I will tell you that management feels good about the second half as they've noted in their comments earlier, and what we think the opportunities are in the second half. But right now, we are looking to an economy that's not sure, so we are really looking at a gross margin rate of 36% based upon those comp numbers. When you just do the math, that's essentially where it takes you to.

Karru Martinson – Duetsche Bank

In terms of the borrowing capacity, we're past the low point now, correct?

Keith Plowman

We had two low points last year, July and then October. And October actually was lower than July in 2008. Some of that reflected the changes going on in the macro environment. We still expect that those will be our two low months and when you look at where we were with excess capacity in the month of July, and we feel pretty good about what we had given before saying that we expected to be in that 150 range to the October month.

Karru Martinson – Duetsche Bank

I have to ask about the auto market exposure and if you're seeing anything different in those markets versus the other ones.

Bud Bergren

Actually as I said earlier, Detroit was one of our better markets in the second quarter. We actually have seen things stabilize there. The auto related markets are about 14% of our sales actually in the second quarter, had a little better sales trend than the whole company, so we are actually seeing some improvement in that market.


Your next question comes from Emily Shanks – Barclays Capital.

Emily Shanks – Barclays Capital

Around Semi-Fine Jewelry's bankruptcy, how is that affecting you and can you comment on what percentage of sales it represents for you?

Bud Bergren

Finley also announced they're vacating the department store businesses, so we will be vacating with Finley sometime this fall season. We are transitioning to a different concept that we're not ready to announce right now. But on the forecast there would be no effect from what happened with Finley on our forecast.

Emily Shanks – Barclays Capital

So there's no change in the transition timeline with the bankruptcy filing and you are going to be handling that either internally or with a third party, but yet to be announced. Is that fair?

Bud Bergren

Yes. Essentially this was something that was known earlier that there was some concerns out there and really Finley had been forthcoming quite some time ago saying that they were moving out of the department store business. So when we put together our numbers, we effectively were showing the decrease of business as you went through the year and knowing that they would be exiting the business somewhere in the second half and that is actually reflected in our guidance at this point. And we are working on some other strategies to address that.

Emily Shanks – Barclays Capital

I wanted to see if I could also just ask about CIT. Obviously you have been forthcoming in the past around the amount of A/R that are factored and I know that CIT at one point last winter didn't, was not factored into your receivables. Can you just box that risk for us, give us a sense of how you evaluate your exposure to CIT at this point?

Bud Bergren

I think the best that I can answer that is to say that we continue to have correspondence and relationship as CIT continues to support orders for the company. What makes it very difficult as you know, is there's a lot of noise and moving parts out there, co-factoring community today, and that's making it very difficult making things jump back and forth as to stability or what's happening.

But I can tell you that here we keep continual, weekly communications out there. We do consider them to be an important player out in the market. We do communicate with them, but first and foremost we communicate with our vendor partners who are very important to us.

Emily Shanks – Barclays Capital

So there's been no change from your perspective at this point.

Bud Bergren

I think there has obviously been change just because of the noise that's out there. I can't really give you, like you said box it in for you. I can't really do that at this point because I think things continue to change. As you know, there's been some news out there that continues to develop and I think at this point we have to watch how things go through the third quarter, then we'll have a better picture.

Emily Shanks – Barclays Capital

As we look at what your average retail unit price is, absent promotions that went on from last year, how should we think about that going forward? I'm asking the question as it relates to, I'm just curious, are vendors actually changing their price points that they're introducing this fall and with back to school or how are those rolling out?

Bud Bergren

I would say that the vendor community is really doing a good job on creating value. And sometimes value doesn't necessarily mean just lowering the price although a lot of them have lowered prices on certain areas.

We work with the vendors on putting our, working on a couple of big items with each of our vendors on an incredible value program where we work a little short. They work a little short. We keep it on sale at a value price every day and its sales and coupons.

As I've mentioned before, that piece of our business grew from 5% to 8% in the spring season, so there's a lot of that happening and the vendors, more and more of them are talking about making value happen.


Your next question comes from Grant Jordan – Wells Fargo Securities.

Grant Jordan – Wells Fargo Securities

I appreciate the color on your expectations around the available on the AVL revolver. I believe that comes up for due in March 2011. Have you had any initial discussions around re-upping that facility?

Keith Plowman

We continue to watch the market. There's no question it's prudent for the company to continue to keep those kind of investigations and dialogue, things like that open. And certainly we've been very attentive to that.

But in today's environment, things have changed so substantially in the last three months, in the last six months when you look at what the costs are. You look at what availability is, what terms are available out there. Everything just continues to change and it is getting better, so we continue to monitor it and the company is going to make decisions based upon what we think is the opportune time to make those changes.

Grant Jordan – Wells Fargo Securities

As you look a little bit longer term at your portfolio stores, do you think there will be opportunities to rationalize your store portfolio or do you think you'll start to look at maybe opening new stores in certain markets?

Bud Bergren

Right now we don't see, we're not looking at opening new stores right now at all. We have one opening in a couple of weeks and then there's a remodel going on for next year, but otherwise we are focusing our cash right now on paying down debt and really until things stabilize, we wouldn't up any consideration for that.

Grant Jordan – Wells Fargo Securities

What about closing stores? Any thoughts around that?

Bud Bergren

We are closing stores as we always have. If we don't see a store that's cash flow positive or we have an availability to negotiate a better deal with a landlord that is a top priority for us.


Your next question comes from Colleen Burns – Oppenheimer.

Colleen Burns – Oppenheimer

Just a follow up on the cash flow negative; I think you said last quarter that 20 stores were running cash flow negative. Have you seen any improvement there and do you think you'll make a determination about those stores after fourth quarter?

Bud Bergren

There's a couple of answers for that. First off, we continue as we noted previously, we have monthly meetings where we look at our real estate portfolio and our investment there and we look at utilization returns and so forth. So that's something that's a constant activity for the company.

You can't necessarily make the changes you would like to or make the switches out of locations and things like that at the time that you would prefer to do. You have covenants and you have agreements, leases and so forth that you need to continue to operate under. Having said that, we'll continue to monitor it.

In answer to your question have we seen changes, being that we're a department store and significant business for our company comes from third and fourth quarter, there's really nothing that would indicate any kind of change or improvement or decrease in the numbers. But there's nothing that can give indications. We really do our tests towards the end of the year, so it's something that we'll come back and revisit and will have more information as we get to our fourth quarter call.

Colleen Burns – Oppenheimer

On the gross margin rate improvement, how much of that improvement was driven by increased private label sales year over year?

Keith Plowman

I'm not going to say that in total, but part of our margin improvement was due to obviously less clearance inventory. We had improvement in our initial mark up and we also had improvement in our mix which we also include private brand in our mix as well as our other higher margin areas.

It all worked in our favor and we've been working, that's something that we said in our first calls. We're going to focus on margin. It's not just one. It's not just controlling inventory. There's a lot of initiatives in there to increase our margin.

Colleen Burns – Oppenheimer

Would you say the biggest piece of it was less clearance, less mark downs quarter over quarter?

Bud Bergren

Yes. The largest share of it was that but there was also improvement in incredible value which had an impact on our rate improvement. There was also mix in our private brand. Our private brand picked up several hundred basis points over the prior year and that grew to 20% of our business, so there was a big improvement in mix.

Colleen Burns – Oppenheimer

On the inventory, the total inventory decline of 5% year over year, was that in line with what your expectations were ending the second quarter?

Bud Bergren


Colleen Burns – Oppenheimer

Are you doing anything different as you look into the back half of the year on the promotional side? Are you planning more events, more promotion etc?

Bud Bergren

We're actually not planning more events. We've tested a few things for spring that we're going to be implementing in the fall. This week we actually have a new promotion that we're doing that we've been working on in the spring and we're anxious to see how we perform this weekend.


Your next question comes from Ken Bann – Jefferies & Co.

Ken Bann – Jefferies & Co.

I was wondering you mentioned for awhile that Eastern Pennsylvania has been a troubled sales area. Could you give us an idea of what's going on? Are you seeing a lot of the smaller stores close in some of the malls and are any of the landlords in trouble or are you able to negotiate with those landlords maybe on better rates or better terms in those malls?

Bud Bergren

It would be a little more specific on the areas. The issue is a bit more Harrisburg and Allentown area. The Lancaster and York market has actually been pretty good, especially Lancaster. But Harrisburg has been the problem I think mainly because of the government in Pennsylvania has had some financial issues more so than other stores.

We haven't seen a numerous number of stores or other stores closing in those markets or anything really changing from competitors and in the way of negotiations with landlords, that's an ongoing basis and we negotiate with all of our landlords to improve it.

When you're working with one landlord, they just usually don't have one mall or one market, it's usually across the country. So we negotiate all of our markets at one time.

Ken Bann – Jefferies & Co.

Are you seeing a loss in the smaller stores in other malls outside of the Pennsylvania area close or has it generally been relatively stable?

Bud Bergren

It's been fairly stable right now. We haven't noticed a rush of anything in particular since the Linen's and Things and Circuit City.


Your next question comes from [Kent for Jack Japes – Holden Asset Management]

[Kent for Jack Japes – Holden Asset Management]

On the credit card, I was wondering if you could give me the total not due as well as past due amounts?

Keith Plowman

We do not own the credit card. The credit card is owned by HSBC. We would not have that. It's on a non recourse type basis. Other than what we've announced out in the disclosures, there's really not much more I can tell you.

[Kent for Jack Japes – Holden Asset Management]

So we can't even get allowances for doubtfuls?

Keith Plowman

We don't have allowances for doubtful's because again, it's owned by HSBC.


We have no further questions at this time. I'll turn things back over to Bud for any additional or closing remarks.

Bud Bergren

Thank you for your questions and your interest in our progress this year. We look forward to speaking with you about our third quarter 2009 financial results on our conference call in November. Thanks for joining us today and your involvement with Bon-Ton.

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