May 22, 2008

The Bon-Ton Stores, Inc. Announces First Quarter Fiscal 2008 Results

YORK, Pa., May 22, 2008 (BUSINESS WIRE) -- The Bon-Ton Stores, Inc. (NASDAQ: BONT) today reported results for the first quarter of fiscal 2008 ended May 3, 2008.

For the thirteen-week period ended May 3, 2008, the Company reported a net loss of $34.1 million, or $2.03 per diluted share, compared to a net loss of $29.3 million, or $1.78 per diluted share for the thirteen-week period ended May 5, 2007.

Comments

Bud Bergren, President and Chief Executive Officer, commented, "Our financial results continue to be impacted by the macro economic environment. Despite the softer retail environment, I'm proud of how our management team executed in the first quarter. We successfully reduced our comparable store inventories by 8.7% as compared to the prior period, which resulted in an improvement in our gross margin rate. We continue to review our expenses and are pleased that during the first quarter we realized a net reduction of $4.6 million in our selling, general and administrative expenses. Lastly, we reduced our debt levels and increased our excess borrowing capacity under our credit facility, as compared to the first quarter of fiscal 2007."

Mr. Bergren continued, "Looking ahead to the remainder of 2008, we will manage our business under the assumption that the difficult macro economic environment will continue. While we are prepared to implement the necessary measures to deal with the current environment, we remain confident that we have a solid strategic plan in place and we will benefit from our efforts as the macro environment improves."

Sales

For the first quarter of fiscal 2008, comparable store sales decreased 4.6%. Total sales for the first quarter of fiscal 2008 decreased 5.1% to $700.2 million compared to $737.6 million for the same period last year.

Other Income

Other income in the first quarter of fiscal 2008 decreased slightly to $22.8 million compared to $22.9 million in the first quarter of fiscal 2007.

Gross Margin

In the first quarter, gross margin dollars decreased $9.1 million compared to the first quarter of fiscal 2007, reflecting the decrease in sales volume in fiscal 2008. The gross margin rate for the first quarter of fiscal 2008 increased 0.5 percentage point to 34.0% of net sales, compared to 33.5% reported in the first quarter of fiscal 2007, primarily reflecting our inventory management efforts and resultant reduced markdowns.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses in the first quarter of fiscal 2008 decreased $4.6 million to $255.8 million as compared to $260.3 million in the first quarter of fiscal 2007. The SG&A expense rate for the first quarter of fiscal 2008 was 36.5% compared to 35.3% for the first quarter of fiscal 2007, reflecting the reduced sales volume in fiscal 2008.

EBITDA

EBITDA, defined as net loss before interest, income taxes and depreciation and amortization, decreased $4.7 million in the first quarter of fiscal 2008 to $4.7 million as compared to $9.4 million in the first quarter of fiscal 2007. EBITDA is not a measure recognized under generally accepted accounting principles - see Note 1 below.

Depreciation and Amortization / Amortization of Lease-related Interests

Depreciation and amortization expense, including amortization of lease-related interests, increased $2.0 million to $30.2 million in the first quarter of fiscal 2008 as compared to $28.2 million in the first quarter of fiscal 2007, primarily reflecting the increased expense associated with the prior year capital expenditures.

Interest Expense, Net

Interest expense, net, decreased $3.1 million to $24.4 million in the first quarter of fiscal 2008 as compared to $27.5 million in the first quarter of fiscal 2007. The decrease reflects reduced borrowings and reduced interest rates.

Guidance

Keith Plowman, Executive Vice President and Chief Financial Officer, commented, "As previously stated in our April sales press release, our excess borrowing capacity under our credit facility at the end of the first quarter of fiscal 2008 was $274 million, an increase compared to $191 million at the end of the first quarter of fiscal 2007, reflecting the strength of our balance sheet and reductions in our debt and letters of credit. We will continue to closely manage our excess borrowing capacity in this difficult environment."

Mr. Plowman continued, "We are operating under the assumption that the retail environment will remain challenging for the remainder of fiscal 2008 and our focus is on strengthening our company through additional operating efficiencies. We are confident that we are well-positioned to take advantage of opportunities when the economy shows signs of recovery. Our revised guidance for fiscal 2008 diluted earnings per share is a range of $0.00 to $0.30 and EBITDA is a range of $224 to $232 million. Assumptions reflected in this guidance include:

-- Comparable store sales decrease in the range of 2.5% to 3.5%;

-- Gross margin rate flat to the fiscal 2007 rate of 36.1%;

-- SG&A dollars decrease to prior year;

-- Capital expenditures of $80 million (net of landlord contributions); and

-- Estimated diluted weighted average shares outstanding of 17.3 million to 17.5 million."

The Company's quarterly conference call to discuss first quarter fiscal 2008 results will be broadcast live today at 10:00 a.m. Eastern time. To access the call, please visit the investor relations section of the Company's website at http://investors.bonton.com. An online archive of the broadcast will be available within two hours after the conclusion of the call. You may also participate by calling (888) 224-1142 at 9:55 a.m. Eastern time. A taped replay of the conference call will be available within two hours of the conclusion of the call and will remain available through Thursday, June 5, 2008. The number to call for the taped replay is (888) 203-1112 and the conference PIN is 6749019.

The Bon-Ton Stores, Inc. operates 280 department stores, which includes eleven furniture galleries, in 23 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's and Younkers nameplates and, under the Parisian nameplate, three stores in the Detroit, Michigan area. The stores offer a broad assortment of brand-name fashion apparel and accessories for women, men and children, as well as cosmetics and home furnishings. For further information, please visit the investor relations section of the Company's website at http://investors.bonton.com.

Statements made in this press release, other than statements of historical information, are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements. Factors that could cause such differences include, but are not limited to, risks related to retail businesses generally, consumer spending patterns and debt levels, additional competition from existing and new competitors, inflation, changes in the costs of fuel and other energy and transportation costs, weather conditions that could negatively impact sales, uncertainties associated with opening new stores or expanding or remodeling existing stores, the ability to attract and retain qualified management, the dependence upon key vendor relationships, the ability to reduce SG&A expenses and the ability to obtain financing for working capital, capital expenditures and general corporate purposes. Additional factors that could cause the Company's actual results to differ from those contained in these forward-looking statements are discussed in greater detail under Item 1A of the Company's Form 10-K filed with the Securities and Exchange Commission.

Note 1: As used in this release, EBITDA is defined as net loss before interest, income taxes, depreciation and amortization and amortization of lease-related interests. EBITDA is not a measure of financial performance under generally accepted accounting principles ("GAAP"). However, we present EBITDA in this release because we consider it to be an important supplemental measure of our performance and believe that it is frequently used by securities analysts, investors and other interested parties to evaluate the performance of companies in our industry and by some investors to determine a company's ability to service or incur debt. In addition, our management uses EBITDA internally to compare the profitability of our stores. EBITDA is not calculated in the same manner by all companies and accordingly is not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies. EBITDA should not be assessed in isolation from or construed as a substitute for net income or cash flows from operations, which are prepared in accordance with GAAP. EBITDA is not intended to represent, and should not be considered to be a more meaningful measure than, or an alternative to, measures of operating performance as determined in accordance with GAAP. A reconciliation of net income to EBITDA is provided in the financial schedules accompanying this release.

              THE BON-TON STORES, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)   May 3,    February 2,
(Unaudited)                                       2008        2008
----------------------------------------------------------------------
Assets
Current assets:
  Cash and cash equivalents                    $   18,759  $   21,238
  Merchandise inventories                         773,320     754,802
  Prepaid expenses and other current assets        86,650      78,332
  Deferred income taxes                            17,536      17,536
----------------------------------------------------------------------
    Total current assets                          896,265     871,908
----------------------------------------------------------------------
Property, fixtures and equipment at cost, net
 of accumulated depreciation and
  amortization of $446,120 and $418,279 at May
   3, 2008 and February 2, 2008, respectively     880,399     885,455
Deferred income taxes                              88,105      87,357
Goodwill                                           17,767      17,767
Intangible assets, net of accumulated
 amortization of $23,951 and $21,917 at
  May 3, 2008 and February 2, 2008,
   respectively                                   163,464     165,872
Other long-term assets                             36,977      39,272
----------------------------------------------------------------------
    Total assets                               $2,082,977  $2,067,631
----------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                             $  229,940  $  220,158
  Accrued payroll and benefits                     39,660      49,902
  Accrued expenses                                154,177     166,603
  Current maturities of long-term debt              5,797       5,656
  Current maturities of obligations under
   capital leases                                   2,357       2,239
  Income taxes payable                                  -         899
----------------------------------------------------------------------
    Total current liabilities                     431,931     445,457
----------------------------------------------------------------------
Long-term debt, less current maturities         1,142,813   1,079,841
Obligations under capital leases, less current
 maturities                                        66,599      67,217
Other long-term liabilities                       110,955     112,055
----------------------------------------------------------------------
Total liabilities                               1,752,298   1,704,570
----------------------------------------------------------------------
Shareholders' equity:
  Preferred Stock - authorized 5,000,000
   shares at $0.01 par value; no shares issued          -           -
  Common Stock - authorized 40,000,000 shares
   at $0.01 par value; issued shares
    of 15,074,906 and 14,614,111 at May 3,
     2008 and February 2, 2008, respectively          151         146
  Class A Common Stock - authorized 20,000,000
   shares at $0.01 par value; issued
    and outstanding shares of 2,951,490 at May
     3, 2008 and February 2, 2008                      30          30
  Treasury stock, at cost - 337,800 shares at
   May 3, 2008 and February 2, 2008                (1,387)     (1,387)
  Additional paid-in-capital                      141,332     139,805
  Accumulated other comprehensive income            1,814         799
  Retained earnings                               188,739     223,668
----------------------------------------------------------------------
    Total shareholders' equity                    330,679     363,061
----------------------------------------------------------------------
    Total liabilities and shareholders' equity $2,082,977  $2,067,631
----------------------------------------------------------------------

              THE BON-TON STORES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS




                                               THIRTEEN     THIRTEEN
                                             WEEKS ENDED  WEEKS ENDED
                                             -------------------------
(In thousands except share and per share        May 3,       May 5,
 data)
(Unaudited)                                      2008         2007
----------------------------------------------------------------------

Net sales                                    $   700,248  $   737,561
Other income                                      22,775       22,861
----------------------------------------------------------------------
                                                 723,023      760,422
----------------------------------------------------------------------

Costs and expenses:
   Costs of merchandise sold                     462,500      490,672
   Selling, general and administrative           255,774      260,347
   Depreciation and amortization                  29,018       26,960
   Amortization of lease-related interests         1,208        1,229
----------------------------------------------------------------------
Loss from operations                             (25,477)     (18,786)
Interest expense, net                             24,362       27,469
----------------------------------------------------------------------

Loss before income taxes                         (49,839)     (46,255)
Income tax benefit                               (15,776)     (16,956)
----------------------------------------------------------------------

Net loss                                     $   (34,063) $   (29,299)
----------------------------------------------------------------------

Per share amounts -
  Basic:
       Net loss                              $     (2.03) $     (1.78)
----------------------------------------------------------------------

  Basic weighted average shares outstanding   16,777,587   16,481,756

  Diluted:
       Net loss                              $     (2.03) $     (1.78)
----------------------------------------------------------------------

  Diluted weighted average shares
   outstanding                                16,777,587   16,481,756



Other financial data:
EBITDA (1)                                   $     4,749  $     9,403

(1) EBITDA Reconciliation
 The following table reconciles net loss to EBITDA for the periods
  indicated:

                                                THIRTEEN    THIRTEEN
                                               WEEKS ENDED WEEKS ENDED
                                               -----------------------
  (In thousands)                                 May 3,      May 5,
  (Unaudited)                                     2008        2007
  --------------------------------------------------------------------

  Net loss                                       $(34,063)   $(29,299)
  Adjustments:
       Income tax benefit                         (15,776)    (16,956)
       Interest expense, net                       24,362      27,469
       Depreciation and amortization               29,018      26,960
       Amortization of lease-related interests      1,208       1,229
  --------------------------------------------------------------------

  --------------------------------------------------------------------
  EBITDA                                         $  4,749    $  9,403
  --------------------------------------------------------------------

SOURCE: The Bon-Ton Stores, Inc.

The Bon-Ton Stores, Inc.
Mary Kerr, 717-751-3071
Vice President
Investor and Public Relations
mkerr@bonton.com

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