Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

March 13, 2019

(Date of Report; Date of Earliest Event Reported)

 

 

STEIN MART, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Florida   0-20052   64-0466198

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

1200 Riverplace Blvd., Jacksonville, Florida 32207

(Address of Principal Executive Offices Including Zip Code)

(904) 346-1500

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


ITEM 2.02     RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On March 13, 2019, Stein Mart, Inc. (“Stein Mart”, or the “Company”) issued a press release announcing its financial results for the fourth quarter ended February 2, 2019. The information in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

The Stein Mart press release is attached as exhibit 99.1.

ITEM 5.02     DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

On March 11, 2019, the registrant received notice from Mitchell W. Legler of his resignation from the Company as General Counsel at the end of June 2019. Further, Mr. Legler will not be standing for reelection to the Company’s Board of Directors. Mr. Legler will receive his normal payment through the end of June 2019. Mr. Legler will not receive any additional payments upon his retirement. Mr. Legler has been a board member since 1991.

ITEM 9.01     FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

 

99.1    Press Release dated March 13, 2019.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    STEIN MART, INC.
    (Registrant)
Date: March 13, 2019     By:  

/s/ James B. Brown

    James B. Brown
    Executive Vice President and Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

 

March 13, 2019    For more information:
   Linda L. Tasseff
FOR IMMEDIATE RELEASE    Director, Investor Relations
   (904) 858-2639
   ltasseff@steinmart.com

Stein Mart, Inc. Reports Fourth Quarter and Fiscal 2018 Results

Provides 2019 Outlook

 

   

FY2018 gross profit increased 180 basis points

 

   

FY2018 SG&A expenses decreased $28.1 million

 

   

Operating income improved $36.1 million to $4.9 million in 2018

JACKSONVILLE, Fla. – Stein Mart, Inc. (NASDAQ: SMRT) today announced financial results for the fourth quarter and fiscal year ended February 2, 2019.

Operating income for the fourth quarter was $6.6 million in 2018 compared to $4.1 million in 2017. Adjusted operating income for the fourth quarter was $5.6 million in 2018 and $6.9 million in 2017 (see Note 1). Operating income for the year was $4.9 million in 2018 compared to an operating loss of $31.2 million in 2017. Adjusted operating income for the year was $6.3 million compared to an operating loss of $26.9 million in 2017 (see Note 1).

Net income for the fourth quarter of 2018 was $4.4 million or $0.09 per diluted share compared to a net loss of $0.4 million or $0.01 per diluted share in 2017. Adjusted net income for the fourth quarter was $3.4 million or $0.07 per diluted share compared to $3.5 million or $0.08 per diluted share in 2017 (see Note 1). For the year, net loss was $6.0 million or $0.13 per diluted share in 2018 compared to $24.3 million or $0.52 per diluted share in 2017. Adjusted net loss for the year was $4.5 million or $0.10 in 2018 and $19.9 million or $0.43 in 2017 (see Note 1). Net loss for 2017 includes an income tax benefit of $11.7 million compared to less than $0.1 million in 2018 (see Income Taxes below).

Adjusted earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the fourth quarter of 2018 was $13.6 million compared to $15.0 million for the fourth quarter of 2017. For the year, adjusted EBITDA increased $31.9 million to $39.5 million for 2018 from $7.6 million for 2017. (See Note 2.)

“Fourth quarter results reflect holiday sales that were below our expectations, with traffic impacted by changes we made to our holiday marketing strategy,” said Hunt Hawkins, Chief Executive Officer. “Despite our lower sales, operating results for fiscal 2018 were significantly better than last year due to our continued focus on inventory productivity, which drove our higher gross profit rate, and strong expense control.”

“As we begin 2019, we will continue to build upon the foundation we have laid. Although early first quarter sales have been slow to start, our new initiatives focused on sales growth give us the opportunity to improve annual results.”


Net Sales

Net sales for the 13-week fourth quarter ended February 2, 2019 were $340.8 million compared to $384.9 million for the 14-week fourth quarter ended February 3, 2018. Net sales for the 52-week fiscal year ended February 2, 2019 were $1.26 billion compared to $1.32 billion for 53-week fiscal year ended February 3, 2018. Net sales were impacted by comparable sales results, the closing of eight underperforming stores in fiscal 2018, as well as the benefit of a 53rd week in fiscal 2017.

Comparable sales for the 13-week period ended February 2, 2019 decreased 3.5 percent on a shifted basis, which compares to the same period ended February 3, 2018. Comparable sales for the 52-week period ended February 2, 2019 decreased 1.0 percent on a shifted basis. Comparable sales results for 2018 reflect lower store traffic partially offset by higher average unit retail and digital sales growth of 15 percent in the 13-week period and 62 percent in the 52-week period.

Gross Profit

Gross profit for the fourth quarter of 2018 was $92.5 million or 27.1 percent of sales compared to $102.4 million or 26.6 percent of sales in 2017. Gross profit for the year 2018 was $337.8 million or 26.9 percent of sales compared to $330.9 million or 25.1 percent of sales in 2017. The increase in the gross profit rate reflects higher gross margin from reduced markdowns and improved inventory productivity. For the fourth quarter, increases in the rate were offset by the deleverage of occupancy costs on lower sales.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses for the fourth quarter of 2018 were $89.5 million compared to $101.5 million in 2017. For the year, SG&A expenses were $348.1 million in 2018 and $376.1 million in 2017. The decrease in SG&A expenses was primarily from cost savings initiatives in the stores and corporate office, lower advertising expenses and the impact of closed stores. In addition, SG&A expenses in the 2018 fourth quarter and year benefitted from a $3.3 million decrease in accrued compensated absences as a result of a change in vacation policy.

Interest Expense, Net

Interest expense for the fourth quarter of 2018 was $2.5 million compared to $1.4 million in 2017. Interest expense for the year 2018 was $10.9 million compared to $4.8 million in 2017. The increase in interest expense is due to a higher blended interest rate, as well as overall higher rates.

Income Taxes

Income tax benefit was $0.3 million for fourth quarter of 2018 compared to income tax expense of $3.2 million for the fourth quarter of 2017. For the year, income tax benefit was less than $0.1 million in 2018 and $11.7 million 2017. The 2017 fourth quarter and year include additional expense related to the Tax Cuts and Jobs Act of 2017 (“Tax Act”) including a valuation allowance established against deferred tax assets (see Note 1). The small amount of income taxes in the 2018 fourth quarter and year reflects our net operating loss position along with the valuation allowance.

Cash Flows

Inventories were $255.9 million at the end of 2018 compared to $270.2 million last year. Average inventories per store were down 4.3 percent to last year.

Capital expenditures totaled $9.0 million in 2018 compared to $21.2 million in 2017. The decrease is due to fewer new stores and lower information system technology investments. For fiscal 2019, capital expenditures are planned flat to 2018 as we continue to focus on being efficient with our investments.


Credit terms from our vendors and factors, which were reduced earlier in the year, increased in the second half of the year. Accounts payable was $29.8 million lower at the end of 2018 compared to the end of 2017. Despite the trade credit tightening, debt decreased to $154.1 million at the end of 2018 compared to $156.1 million at the end of 2017. Unused availability under our credit facility was $58.2 million at the end of 2018. In addition, we had $14.5 million available to borrow which would be collateralized by life insurance policies at the end of the year.

Store Activity

We had 287 stores at the end of 2018 compared to 293 at the end of 2017. We opened two new stores and closed eight stores during 2018. For 2019, we are not planning to open any new stores and plan to close four stores during the first half; three of which were closed in February at natural lease expirations.

2019 Outlook

We expect the following factors to influence our business in 2019:

 

   

We anticipate flat to low single-digit increases in comparable sales

 

   

We expect to maintain our improved 2018 gross profit rate with leverage of occupancy costs, offset by higher Ecommerce fulfillment costs

 

   

SG&A expenses are expected to be about the same as in 2018

 

   

Interest expense is estimated to be approximately $1.5 million lower

Filing of Form 10-K

Reported results are preliminary and not final until the filing of our Form 10-K for the fiscal year ended February 2, 2019 with the Securities and Exchange Commission (“SEC”), and therefore remain subject to adjustment.

Conference Call

A conference call to discuss the Company’s fourth quarter and fiscal 2018 results will be held at 4:30 p.m. ET on March 13, 2019. The call may be heard on the Company’s investor relations website at http://ir.steinmart.com. A replay of the conference call will be available on the website through April 30, 2019.

Investor Presentation

Stein Mart’s fourth quarter and fiscal 2018 investor presentation has been posted to the investor relations portion of the Company’s website at http://ir.steinmart.com.

About Stein Mart

Stein Mart, Inc. is a national specialty off-price retailer offering designer and name-brand fashion apparel, home décor, accessories and shoes at everyday discount prices. Stein Mart provides real value that customers love every day both in stores and online. For more information, please visit www.steinmart.com.

Cautionary Statement Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this release may be forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company does not assume any obligation to update or revise any forward-looking statements even if experience or future changes make it clear that projected results expressed or implied will not be realized. Forward-looking statements involve known and unknown risks and uncertainties that may cause Stein Mart’s actual results in future periods to differ materially from forecasted or expected results. Those risks include, without limitation: dependence on our ability to purchase merchandise at competitive terms through relationships with our vendors and their factors, consumer sensitivity to economic conditions, competition in the retail industry, changes in fashion trends and consumer preferences, ability to implement our strategic plans to sustain profitable growth, effectiveness of advertising and marketing, capital availability and debt levels, dividend impact on stock price, ability to negotiate acceptable lease terms with current and potential landlords, ability to successfully implement strategies to exit under-performing stores, extreme and/or unseasonable weather


conditions, adequate sources of merchandise at acceptable prices, dependence on certain key personnel and ability to attract and retain qualified employees, impacts of seasonality, increases in the cost of compensation and employee benefits, disruption of the Company’s distribution process, dependence on imported merchandise, information technology failures, data security breaches, single supplier for shoe department, single provider for ecommerce website, acts of terrorism, ability to adapt to new regulatory compliance and disclosure obligations, material weaknesses in internal control over financial reporting and other risks and uncertainties described in the Company’s filings with the SEC.


Stein Mart, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

     13 Weeks Ended     14 Weeks Ended     52 Weeks Ended     53 Weeks Ended  
     February 2, 2019     February 3, 2018     February 2, 2019     February 3, 2018  

Net sales

   $ 340,847     $ 384,867     $ 1,257,598     $ 1,318,633  

Other revenue

     3,609       3,208       15,134       13,936  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     344,456       388,075       1,272,732       1,332,569  

Cost of merchandise sold

     248,385       282,419       919,812       987,692  

Selling, general and administrative expenses

     89,477       101,530       348,061       376,111  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     6,594       4,126       4,859       (31,234

Interest expense, net

     2,476       1,351       10,882       4,788  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     4,118       2,775       (6,023     (36,022

Income tax (benefit) expense

     (316     3,190       (25     (11,698
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 4,434     $ (415   $ (5,998   $ (24,324
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share:

        

Basic

   $ 0.09     $ (0.01   $ (0.13   $ (0.52
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.09     $ (0.01   $ (0.13   $ (0.52
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding:

        

Basic

     46,803       46,482       46,706       46,342  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     47,443       46,482       46,706       46,342  
  

 

 

   

 

 

   

 

 

   

 

 

 


Stein Mart, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except for share and per share data)

 

     February 2, 2019     February 3, 2018  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 9,049     $ 10,400  

Inventories

     255,884       270,237  

Prepaid expenses and other current assets

     28,326       26,620  
  

 

 

   

 

 

 

Total current assets

     293,259       307,257  

Property and equipment, net

     123,838       151,128  

Other assets

     24,108       24,973  
  

 

 

   

 

 

 

Total assets

   $ 441,205     $ 483,358  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 89,646     $ 119,388  

Current portion of debt

     —         13,738  

Accrued expenses and other current liabilities

     77,650       78,453  
  

 

 

   

 

 

 

Total current liabilities

     167,296       211,579  

Long-term debt

     153,253       142,387  

Deferred rent

     39,708       40,860  

Other liabilities

     33,897       40,214  
  

 

 

   

 

 

 

Total liabilities

     394,154       435,040  
  

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

    

Shareholders’ equity:

    

Preferred stock - $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding

    

Common stock - $.01 par value; 100,000,000 shares authorized; 47,874,286 and 47,978,275 shares issued and outstanding, respectively

     479       480  

Additional paid-in capital

     60,172       56,002  

Retained deficit

     (13,853     (7,918

Accumulated other comprehensive income (loss)

     253       (246
  

 

 

   

 

 

 

Total shareholders’ equity

     47,051       48,318  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 441,205     $ 483,358  
  

 

 

   

 

 

 


Stein Mart, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     52 Weeks Ended
February 2, 2019
    53 Weeks Ended
February 3, 2018
 

Cash flows from operating activities:

    

Net loss

   $ (5,998   $ (24,324

Adjustments to reconcile loss to net cash provided by operating activities:

    

Depreciation and amortization

     32,447       32,333  

Share-based compensation

     4,109       5,691  

Store closing charges

     215       168  

Impairment of property and other assets

     2,803       3,792  

Loss on disposal of property and equipment

     681       329  

Deferred income taxes

     —         (3,222

Changes in assets and liabilities:

    

Inventories

     14,353       20,873  

Prepaid expenses and other current assets

     (1,706     6,438  

Other assets

     (1,350     2,254  

Accounts payable

     (29,823     5,096  

Accrued expenses and other current liabilities

     (635     3,021  

Other liabilities

     (6,194     (4,737
  

 

 

   

 

 

 

Net cash provided by operating activities

     8,902       47,712  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Net acquisition of property and equipment

     (8,993     (21,244

Proceeds from cancelled corporate owned life insurance policies

     2,514       2,716  

Proceeds from insurance claims

     296       44  
  

 

 

   

 

 

 

Net cash used in investing activities

     (6,183     (18,484
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from borrowings

     1,107,183       474,529  

Repayments of debt

     (1,109,208     (500,238

Debit issuance costs

     (1,146     —    

Cash dividends paid

     (223     (3,639

Capital lease payments

     (736     (164

Proceeds from exercise of stock options and other

     202       328  

Repurchase of common stock

     (142     (248
  

 

 

   

 

 

 

Net cash used in financing activities

     (4,070     (29,432
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (1,351     (204

Cash and cash equivalents at beginning of year

     10,400       10,604  
  

 

 

   

 

 

 

Cash and cash equivalents at end of year

   $ 9,049     $ 10,400  
  

 

 

   

 

 

 


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Note 1 - Adjusted Results

We report our consolidated financial results in accordance with generally accepted accounting principles (“GAAP”). However, to supplement these consolidated financial results, management believes that certain non-GAAP operating results, which exclude those items detailed below, may provide a more meaningful measure to compare our results of operations between periods. We believe these non-GAAP results provide useful information to both management and investors by excluding certain items that impact comparability of the results.

Reconciliation of Operating Income (Loss), Tax (Benefit) Expense, Net Income (Loss), and Diluted EPS from GAAP Basis to Adjusted Non-GAAP Basis

Unaudited (in thousands, except for share data)

 

     13 Weeks Ended February 2, 2019     14 Weeks Ended February 3, 2018  
     Operating
Income
(Loss)
    Tax
Benefit
    Net
Income
(Loss)
    Diluted
EPS
    Operating
Income
(Loss)
    Tax
Provision
(Benefit)
    Net (Loss)
Income
    Diluted
EPS
 

GAAP Basis

   $ 6,594     $ (316   $ 4,434     $ 0.09     $ 4,126     $ 3,190     $ (415   $ (0.01

Adjustments:

                

Change in vacation policy (1)

     (3,267     —         (3,267     (0.07        

Asset impairment charges

     2,312       —         2,312       0.05       3,152       1,162       1,990       0.05  

Hurricane related (recoveries)/ expenses, net of insurance proceeds (3)

     (955     —         (955     (0.02     (363     (134     (229     (0.1

Expenses related to legal settlements

     918       —         918       0.02          

Impact of Tax Act (4)

             —         2,167       2,167       0.05  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments

     (992     —         (992     (0.02     2,789       3,195       3,927       0.09  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Non-GAAP Basis

   $ 5,602     $ (316   $ 3,442     $ 0.07     $ 6,915     $ 6,385     $ 3,512     $ 0.08  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     52 Weeks Ended February 2, 2019     53 Weeks Ended February 3, 2018  
     Operating
Income
(Loss)
    Tax
Benefit
    Net (Loss)
Income
    Diluted
EPS
    Operating
Income
(Loss)
    Tax
(Benefit)
Provision
    Net (Loss)
Income
    Diluted
EPS
 

GAAP Basis

   $ 4,859     $ (25   $ (5,998   $ (0.13   $ (31,234   $ (11,698   $ (24,324   $ (0.52

Adjustments:

                

Change in vacation policy (1)

     (3,267       (3,267     (0.07        

Asset impairment charges

     2,803         2,803       0.06       3,792       1,398       2,394       0.05  

Credit agreements extension fees (2)

     1,100         1,100       0.02          

Hurricane related (recoveries)/ expenses, net of insurance proceeds (3)

     (237       (237     (0.01     492       181       311       0.01  

Expenses related to legal settlements

     1,057         1,057       0.02       67       25       42       —    

Impact of Tax Act (4)

             —         1,724       1,724       0.03  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments

     1,456       —         1,456       0.03       4,351       3,328       4,471       0.09  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Non-GAAP Basis

   $ 6,315     $ (25   $ (4,542   $ (0.10   $ (26,883   $ (8,370   $ (19,853   $ (0.43
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Decrease in accrued compensated absences during the fourth quarter of 2018 due to a change in vacation policy.

(2)

Advisory fees related to the extension and amendment of credit agreements completed in September 2018.

(3)

Property losses incurred earlier in the year from hurricanes were recovered in the fourth quarter.

(4)

Represents impacts of the Tax Cuts and Jobs Act of 2017.


Note 2: Adjusted EBITDA

EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under GAAP. However, we present EBITDA in this release because we consider it to be an important supplemental measure of our performance and because it is frequently used by analysts, investors and others to evaluate the performance of companies. EBITDA is not calculated in the same manner by all companies. EBITDA should be used as a supplement to results of operations and cash flows as reported under GAAP 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.

The following table shows the Company’s reconciliation of net income (loss) to EBITDA and Adjusted EBITDA which are considered Non-GAAP financial measures. Adjusted EBITDA excludes non-cash items (impairment charges), significant non-recurring unusual items and investment in new stores (pre-opening costs).

 

     13 Weeks Ended
February 2, 2019
     14 Weeks Ended
February 3, 2018
     52 Weeks Ended
February 2, 2019
    53 Weeks Ended
February 3, 2018
 

Net income (loss)

   $ 4,434      $ (415    $ (5,998   $ (24,324

Add back amounts for computation of EBITDA:

          

Interest expense, net

     2,476        1,351        10,882       4,788  

Income tax (benefit) expense

     (316      3,190        (25     (11,698

Depreciation and amortization

     7,934        8,079        32,447       32,333  
  

 

 

    

 

 

    

 

 

   

 

 

 

EBITDA

     14,528        12,205        37,306       1,099  
  

 

 

    

 

 

    

 

 

   

 

 

 

Adjustments:

          

Change in vacation policy (1)

     (3,267      —          (3,267     —    

Non-cash impairment charges

     2,312        3,152        2,803       3,792  

Credit agreements extension fees (2)

     —          —          1,100       —    

Hurricane related (recoveries)/expenses, net of insurance proceeds (3)

     (955      (363      (237     492  

Expense related to legal settlements

     918        —          1,057       67  

New store pre-opening costs

     61        4        725       2,167  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total adjustments

     (931      2,793        2,181       6,518  
  

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 13,597      $ 14,998      $ 39,487     $ 7,617  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)

Decrease in accrued compensated absences during the fourth quarter of 2018 due to a change in vacation policy.

(2)

Advisory fees related to the extension and amendment of credit agreements completed in September 2018.

(3)

Property losses incurred earlier in the year from hurricanes were recovered in the fourth quarter.


Note 3: Changes in Comparable Sales

Management believes that providing calculations of changes in comparable sales including and excluding sales from licensed departments assists in evaluating the Company’s ability to generate sales growth, whether through owned businesses or departments licensed to third parties. The following table shows the Company’s reconciliation of these calculations. Due to the 53rd week in fiscal 2017, comparable sales for the fourth quarter and fiscal year are presented on a shifted basis which compares to the respective periods ended February 3, 2018.

 

     13 Weeks Ended
February 2, 2019

Decrease in comparable sales excluding sales from licensed departments (1)

   (4.8%)

Impact of growth in comparable sales of licensed departments (2)

   1.3%
  

 

Decrease in comparable sales including sales from licensed departments

   (3.5%)
  

 

 

     52 Weeks Ended
February 2, 2019

Decrease in comparable sales excluding sales from licensed departments (1)

   (2.2%)

Impact of growth in comparable sales of licensed departments (2)

   1.2%
  

 

Decrease in comparable sales including sales from licensed departments

   (1.0%)
  

 

 

(1)

Represents the period-to-period percentage change in net sales from stores open throughout the period presented and the same period in the prior year and all online sales of steinmart.com, excluding commissions from departments licensed to third parties.

(2)

Represents the impact of including sales of departments licensed to third parties throughout the period presented and the same period in the prior year and all online sales of steinmart.com in the calculation of comparable sales. The company licenses its shoe and vintage handbag departments in its stores and online to third parties and receives a commission from these third parties based on a percentage of their sales. In our financial statements prepared in conformity with GAAP, the company includes commissions (rather than sales of the departments licensed to third parties) in its net sales. The Company does not include the commission amounts from licensed department sales in its comparable sales calculations.