Bon-Ton bonds dip on disappointing sales; Rite Aid sees sales, notes gain; Kodak retreats

By Stephanie N. Rotondo

Portland, Ore., Jan. 5 - Distressed debt ended Thursday's session a bit weaker after two consecutive sessions of gains.

"The stock market was lower most of the day," a trader said, providing an explanation for the softer tone.

Several retailers put out December sales reports during the session, and most were not as good as was expected. Bon-Ton Stores Inc., for instance, saw its bonds slide on the back of its report.

Rite Aid Corp., however, saw its bonds moving modestly upward on a seemingly positive December report.

Away from retailers, Eastman Kodak Co. paper continued to lose ground as investors worried about a potential bankruptcy filing. Texas Industries Inc. was also weaker following the release of the company's fiscal second-quarter results.

Bon-Ton numbers disappoint

Bon-Ton Stores' bonds were down on the day after the company reported a 1.1% decline in total sales for the month of December.

One trader called the 10¼% notes due 2014 down 3½ points to levels around 60. Another trader said the debt hit a low of 58 before coming back to end around 60.

He said that was "still down a couple points."

For the month of December, the York, Pa.-based retailer saw same-store sales fall 0.7%. Total sales dropped to $505.2 million from $510.8 million the year before.

For the year, same-store sales were down 2.8%, with total sales slipping 3.2% to $2.71 billion.

The company attributed the lighter sales to milder temperatures.

Bon-Ton also revised its guidance, reducing EBITDA expectations to $170 million to $175 million from $190 million to $210 million.

The loss per share was also revised to a range of $1.00 to $1.30.

Rite Aid sales, bonds improve

Rite Aid also released same-store sales numbers, which showed a 3.6% increase for December.

A trader called the 7.7% notes due 2027 up 1½ points to 751/2.

Another trader pegged the 9½% notes due 2017 at 94 bid, 94½ offered and the 8 5/8% notes due 2015 around 97.

He said both issues were firmer on the day.

Another market source, however, called the 8 5/8% notes down half a point at 97½ bid.

For the five weeks ended Dec. 31, Camp Hill, Pa.-based Rite Aid reported total sales of $2.64 billion, a 3.3% increase year over year.

For the year, same-store sales gained 1.8% and total sales improved by 1.4%, coning in at $21.55 billion.

Retailers busy, lower

Among other retailers, Sears Holding Corp.'s 6 5/8% notes due 2018 remained actively traded but steady around the 76 mark, according to several traders.

Gymboree Corp.'s 9 1/8% notes due 2018 meanwhile fell "almost 3 [points]," a trader said, to finish around 86.

At another shop, a trader said Gap Inc.'s 5.95% notes due 2021 dropped half a point to a full point to 94 bid, 94½ offered.

Kodak easing lower

Eastman Kodak's bonds continued to decline Thursday as investors worried about a possible bankruptcy filing.

One trader called the 7¼% notes due 2013 "down a little more" at 29 bid, 30 offered.

Another trader placed the issue around "29-ish," seeing "a fair amount of activity."

A third market source deemed the debt down 1½ points at 29½ bid.

Earlier in the week, news outlets reported that the Rochester, N.Y.-based company was putting together a bankruptcy filing in the event that it could not sell its digital patents. If a sale cannot be completed by the end of the month, Kodak reportedly intends to seek Chapter 11 protections.

On Thursday, Moody's Investors Service lowered its ratings on Kodak to Caa3 from Caa2. Standard & Poor's dropped its rating to CCC- from CCC.

Texas Industries slides

Texas Industries' 9¼% notes due 2020 took a hit Thursday after the company reported its fiscal second-quarter earnings.

A trader called the notes down "almost 2 [points]" around 88¼ on "just a couple trades."

Another trader also saw the issue losing a couple points, seeing it trade with an 88 handle.

The Dallas-based cement and aggregate manufacturer released its second-quarter results late Wednesday, reporting a net loss of $21 million, or 75 cents per share. That compared to a loss of $11.2 million, or 40 cents per share, the year before.

"While the general economy is showing signs of some improvement, it has yet to manifest itself in increased construction activity in our markets," Mel Brekhus, chief executive officer, said in the earnings release. "This is consistent with my expectation of a slow and prolonged recovery in the construction industry."

Gross margin fell to 1.8% from 8.1%.

Broad market mixed

In the rest of the distressed debt realm, a trader said Lehman Brothers Holdings Inc.'s debt was "stronger," trading around 27.

He also said that PMI Group Inc.'s debt - which tends to trade on top of one another - was "up a touch" at 211/2.

Tribune Co.'s benchmark 4 7/8% notes due 2010 meantime gained 3 to 4 points, closing at 431/2.

AMR Corp.'s 6¼% notes due 2014 were "a touch weaker," a trader said, trading around 211/2. The notes were trading around 23 previously, according to the trader.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.