Bonton shares jump 52 pct as liquidity concerns ease
today May 7, 2009
By Poojya Trivedi
BANGALORE, May 7 (Reuters) - Shares of apparel and home-furnishings retailer Bon-Ton Stores Inc (BONT.O) jumped 52 percent on Thursday as fears of the company's liquidity eased.
Bon-Ton Spring 2009
"The company is in a clean inventory position, and per management's comments on the press release, liquidity concerns are no longer front and centre," Wall Street Strategies Inc (wstreet.com) analyst Brian Sozzi said in an e-mail response.
The company ended April with excess borrowing capacity under a revolving credit facility of $165 million, above the required minimum availability of $75 million, Keith Plowman, chief financial officer said in a statement.
In its regulatory filing dated April 15, Bon-Ton had raised concerns about its liquidity and said the tightening of credit markets can make it more difficult to access funds.
The stock may have also benefited from better-than-expected April sales.
The company reported a decline of 5 percent in April same-store sales, which were narrower than its expectations of a fall in the range of 6.5 percent to 7.5 percent.
"What I believe we are seeing with Bon-Ton today is short-covering given an April sales performance that was stronger than what many were expecting in key merchandise departments," Sozzi said.
Bon-Ton, which operates the Elder-Beerman, Boston Store and Carson Pirie Scott chains besides its namesake chain, on Thursday reported a decline of 11 percent and 16 percent in comparable store and clearance inventories, respectively.
The company also expects to receive $30 million tax refund in the second quarter of fiscal 2009.
Shares of the York, Pennsylvania-based company touched a high of $5.11, before paring some of the gains to trade up 15.82 percent at $3.87 on Nasdaq.
Nearly 3 million shares changed hands by afternoon, about 1.7 times the 50-day moving average daily volume. (Editing by Anil D'Silva)
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