(RTTNews) - The Bon-Ton Stores, Inc. (BONT: News ) Thursday reported a narrower loss for the third quarter despite lower sales, helped by improved gross margins and lower costs as a result of initiatives implemented during 2008 and 2009. The company also revised its fiscal 2009 guidance, now expecting lower loss than projected earlier.

The York, Pennsylvania-based department stores operator reported net loss for the third quarter of $4.15 million or $0.24 per share, narrower than $14.33 million or $0.85 per share in the previous year.

Net sales for the quarter declined 2.9% to $703.95 million from $724.93 million last year. Comparable store sales decreased 2.6% for the third quarter.

Other income declined to $18.67 million from $22.74 million in the previous year, reflecting reduced sales volume and reduced income from proprietary credit card.

Costs of merchandise sold were $439.03 million, down from $466.79 million last year. Gross margin rate for the third quarter was 37.6% of net sales, an increase of 200 basis points from the prior-year quarter, reflecting decreased net markdown rate and increased net markup.

Selling, general and administrative expenses declined to $234.80 million from $261.92 million a year ago. Depreciation and amortization expense, including amortization of lease-related interests, decreased to $29.2 million from $31.0 million in the third quarter of fiscal 2008.
Interest expense decreased to $23.2 million from $24.7 million a year ago, primarily due to decreased borrowing levels and reduced interest rates.

"We were pleased with the sustained improvement of our sales trend throughout the quarter, which included a comparable store sales increase of 3.1% in the month of October, as well as a 200 basis point gross margin improvement in the third quarter which we attribute to well-managed inventory levels and reduced levels of clearance merchandise in our assortment. In addition, we realized $27.1 million in cost savings during the quarter," said Bud Bergren, President and Chief Executive Officer.

For the nine-month period, net loss widened to $84.36 million or $4.96 per share from $82.22 million or $4.90 per share in the same period of the previous year. Net sales for the period declined to $1.96 billion from $2.10 billion last year.

Looking forward, the company revised its full year 2009 guidance, and now expects loss per share in the range of $2.30 to $1.20. Earlier in October, the company estimated loss per share to be at the high end of the previously stated guidance range of $3.70 to $2.50.

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