Seeking Alpha
Editor's notes: BONT faces a bad combination of competition, weak locations, and a tough economic climate, and lacks the balance sheet flexibility to respond appropriately. 35% downside.

The Bon-Ton Stores (BONT) recently lowered guidance on its latest earnings call in August, sending shares lower. After reviewing the company, I believe that SG&A projections are still $50-60MM too aggressive, and that we will see further guidance reductions over the next several quarters. Normally $50-60MM in annual SG&A would not be a big deal, but considering the company only does about $90-$100MM in operating income annually (3% operating margins) and the fact that the company has only 20MM shares outstanding, I believe that EPS, EBITDA, and free cash flow guidance could be slashed from their already low levels. Furthermore, the company is extremely over-levered with debt and may be unable to meet future payments and maturities...

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