MCM Macro BonTon (BONT) update, 1/10/08... 'Bankruptcy Odds Increasing'

The company is effectively reporting that they did not have a Christmas. When your business model is to incur retail sales, thats bad, and generally just not good for investor morale.

Same store sales were down over -11%, with the BonTon stores themselves down -14.2%.

The company's prior "guidance" was to earn $1.50-1.80/share. Now they're revising that to $.50-.$80/share. This explains, partly, why the stock was down over -20% at one point intraday yesterday, as this news had to have leaked into the halls of the hedge fund community.

When "comping" down double digit sales declines, a levered retailer's income statement has comparable de-leverage characteristics to an Airline company. Generally, investors dont respect that fact, until they have to.

The beginning of another US Retail Bankruptcy cycle is under way. Buy WalMart, and short the rest.

KM

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