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JACKSONVILLE, Fla., Nov 17, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its third quarter and first nine months ended October 29, 2005.
Third quarter results
For the third quarter of 2005, the Company earned $1.4 million or $0.03 per diluted share as compared to a net loss of $2.0 million or ($0.05) per diluted share in the third quarter of 2004. Net sales for the third quarter were $336.5 million, a 1.8 percent increase over the $330.4 million in net sales for the third quarter of 2004. Comparable store sales increased 0.4 percent from the third quarter of 2004 to the third quarter of 2005. Gross profit increased to $83.1 million, or 24.7 percent of net sales in the third quarter of 2005 compared to $76.2 million, or 23.1 percent of net sales in the same period of 2004. Gross profit was favorably impacted by improved mark-up and decreased markdowns. Selling, general and administrative (SG&A) expenses were $85.1 million or 25.3 percent of net sales as compared to $82.9 million or 25.1 percent of net sales during the prior year's third quarter. The increase in SG&A as a percent of sales was due primarily to lack of leverage resulting from the 0.4 percent increase in comparable store sales. Average store inventories were down 3.6 percent at the end of the quarter compared to the same time last year.
Year-to-date results
For the first nine months of 2005, the Company earned $29.8 million or $0.67 per diluted share, as compared to $15.1 million or $0.36 per diluted share in the first nine months of 2004. Net sales for the first nine months of 2005 were $1,054.3 million, a 3.9 percent increase over the $1,014.7 million in net sales during the same period last year. Comparable store sales increased 2.3 percent from the first nine months of 2004 to the first nine months of 2005. Gross profit increased to $291.0 million, or 27.6 percent of net sales in the first nine months of 2005 compared to $258.9 million or 25.5 percent of net sales during the same period of 2004. The improvement in the gross profit rate was primarily due to improved mark-up and decreased markdowns. Selling, general and administrative costs were $255.5 million, or 24.2 percent of net sales, as compared to $244.8 million, or 24.1 percent of sales, during the same period last year. The increase in SG&A as a percent of sales was a result of increased advertising expenses this year.
"We are pleased to have produced a profit in the third quarter, despite eight weeks of punishing hurricane activity that preoccupied communities and customers," commented Michael D. Fisher, president and chief executive officer. "This significant earnings improvement is the result of productivity initiatives we have been implementing over the past three years."
Store Network
Stein Mart was extensively impacted by hurricane activity during the third quarter. Several major storms, most notably Hurricane(s) Katrina and Wilma, disrupted business and closed stores in at least seven states over the course of eight weeks. Several areas were threatened and/or struck more than once, and while only a few Stein Mart stores were structurally damaged, issues with power, infrastructure and evacuated associates curtailed business significantly. Management estimates $5.7 million in sales was lost during the third quarter due to stores that were closed for at least one day.
As of this week, just one of the Company's four New Orleans stores damaged during Hurricane Katrina remains closed for repairs and restocking; it should re-open in January. Two Florida stores that were closed for two weeks after Hurricane Wilma reopened last week, and one New Orleans store that has been closed since August opened earlier this week.
During the third quarter, Stein Mart expanded its presence in three existing markets by adding stores in Chicago, Phoenix and Cincinnati. An older store in Montgomery, Alabama was relocated as well. The 2005 new store- opening program of eight stores (including one relocation) has been completed. Six under-performing stores have been closed so far this year; a seventh will close in early 2006. At year-end, Stein Mart will have 262 stores.
In 2006, the Company expects to open approximately 20 new stores, with most of the openings occurring in the second half of the year.
Expectations for fourth quarter
Sales in the first two weeks of November have been below expectations, although management believes that a return to more normalized selling will occur with cooler weather. With a weaker November, and facing double-digit comparable store sales increases from December and January last year, the Company now expects comparable store sales to be flat to slightly down for the fourth quarter ending January 28, 2006. With those assumptions, earnings for the fourth quarter would be approximately $0.47 - $0.50 per diluted share, and earnings for fiscal 2005 would be $1.14 - $1.17 per diluted share, a 28 percent increase over the $0.89 per diluted share earned in 2004.
SEC Inquiry
Stein Mart has received an inquiry from the Southeast Regional Office of the U.S. Securities and Exchange Commission in Miami, Florida (the "SEC"). The SEC has requested documents and other information from the Company relating primarily to the Company's accounting policies and procedures for vendor allowances and inventory valuation since February 1, 2003. The SEC has advised the Company that its inquiry should not be construed as an indication by the SEC or its staff that any violations of law have occurred, nor should it be considered a reflection upon any person, entity or security.
The Company continuously monitors its accounting policies, procedures and practices to assure the integrity of its accounting and financial reporting processes. In addition, prior to the SEC's inquiry, the Company conducted a review of its accounting policies, procedures and practices with respect to vendor allowances during fiscal 2004 and the first quarter of 2005 and concluded that there were no material errors in the Company's accounting for vendor allowances. Accordingly, the Company remains confident in the integrity of its accounting and financial reporting processes.
"We are providing the SEC with the information they have requested," said Michael D. Fisher, president and chief executive officer. "Our goal is to cooperate fully while also maintaining our focus on the execution of our business plan."
Third quarter conference call
The Company will host a conference call with management to discuss these results and the outlook for the fourth quarter at 9:00 a.m. Eastern Time today (November 17) and may be accessed by all interested parties at http://www.steinmart.com .
About Stein Mart
Stein Mart stores offer the fashion merchandise, service and presentation of a better department or specialty store, at prices competitive with off- price retail chains. Currently with locations from California to New York, Stein Mart's focused assortment of merchandise features moderate to designer brand-name apparel for women, men and young children, as well as accessories, gifts, linens and shoes.
SAFE HARBOR STATEMENT>>>>>>>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, on-going competition from other retailers, availability of new store sites at acceptable lease terms, ability to successfully implement strategies to exit or improve under-performing stores, changing preferences in apparel, changes in consumer spending due to current events and/or general economic conditions, the effectiveness of new advertising, marketing and promotional strategies, adequate sources of merchandise at acceptable prices, disruption of the Company's distribution system, and unanticipated weather conditions and unseasonable weather, the Company's ability to attract and retain qualified employees to support planned growth, and the other risks and uncertainties described in the Company's filings with the Securities and Exchange Commission.
Additional information about Stein Mart, Inc. can be found at http://www.steinmart.com.
Stein Mart, Inc.
Consolidated Balance Sheets
(In thousands)
October 29, January 29, October 30,
2005 2005 2004
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $27,866 $20,250 $26,146
Short-term investments 65,895 72,475 9,000
Trade and other receivables 1,820 5,852 3,934
Inventories 313,332 277,164 322,664
Prepaid expenses and other current
assets 21,696 13,010 22,418
Total current assets 430,609 388,751 384,162
Property and equipment, net 81,901 71,048 74,112
Other assets 14,915 14,781 15,011
Total assets $527,425 $474,580 $473,285
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $123,922 $99,163 $135,391
Accrued liabilities 71,827 73,257 69,437
Income taxes payable -- 5,089 --
Total current liabilities 195,749 177,509 204,828
Other liabilities 21,794 20,561 20,114
Total liabilities 217,543 198,070 224,942
COMMITMENTS AND CONTINGENCIES
Stockholders' 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;
43,759,295, 42,880,031 and
42,494,654 shares issued and
outstanding, respectively 438 429 425
Paid-in capital 26,563 14,340 8,865
Unearned compensation (3,829) (603) (454)
Retained earnings 286,710 262,344 239,507
Total stockholders' equity 309,882 276,510 248,343
Total liabilities and
stockholders' equity $527,425 $474,580 $473,285
Stein Mart, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
13 Weeks Ended 39 Weeks Ended
October October October October
29, 2005 30, 2004 29, 2005 30, 2004
Net sales $336,537 $330,432 $1,054,256 $1,014,664
Cost of merchandise sold 253,486 254,228 763,254 755,802
Gross profit 83,051 76,204 291,002 258,862
Selling, general and
administrative expenses 85,057 82,884 255,532 244,818
Other income, net 3,749 3,293 11,306 10,460
Income (loss) from operations 1,743 (3,387) 46,776 24,504
Interest income, net 509 108 1,336 142
Income (loss) from continuing
operations before income
taxes 2,252 (3,279) 48,112 24,646
Income tax (provision) benefit (856) 1,246 (18,283) (9,365)
Income (loss) from continuing
operations 1,396 (2,033) 29,829 15,281
Loss from discontinued
operations, net of tax
benefit -- -- -- (145)
Net income (loss) $1,396 $(2,033) $29,829 $15,136
Basic income (loss) per share:
Continuing operations $0.03 $(0.05) $0.69 $0.36
Discontinued operations -- -- -- --
Total $0.03 $(0.05) $0.69 $0.36
Diluted income (loss) per
share:
Continuing operations $0.03 $(0.05) $0.67 $0.36
Discontinued operations -- -- -- --
Total $0.03 $(0.05) $0.67 $0.36
Weighted-average shares
outstanding - Basic 43,553 42,394 43,252 42,181
Weighted-average shares
outstanding - Diluted 44,605 42,394 44,424 42,578
Stein Mart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
For The 39 Weeks Ended
October 29, October 30,
2005 2004
Cash flows from operating activities:
Net income $29,829 $15,136
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 14,973 14,054
Impairment (recovery) of property and other
assets 531 (245)
Store closing charges 452 1,340
Deferred income taxes 1,381 966
Restricted stock compensation 516 80
Tax benefit from exercise of stock options 4,595 1,009
Changes in assets and liabilities:
Trade and other receivables 4,032 293
Inventories (36,168) (39,285)
Prepaid expenses and other current assets (8,771) (8,890)
Other assets (1,281) (1,134)
Accounts payable 24,759 70,273
Accrued liabilities (2,902) 8,410
Income taxes payable (5,089) --
Other liabilities 478 (2,769)
Net cash provided by operating activities 27,335 59,238
Cash flows from investing activities:
Capital expenditures (24,731) (15,535)
Purchases of short-term investments (1,379,420) (465,100)
Sales of short-term investments 1,386,000 456,100
Net cash used in investing activities (18,151) (24,535)
Cash flows from financing activities:
Net payments under notes payable to banks -- (24,962)
Dividends paid (5,463) --
Proceeds from exercise of stock options 15,157 4,034
Proceeds from employee stock purchase plan 499 406
Purchases of common stock (11,761) --
Net cash used in financing activities (1,568) (20,522)
Net increase in cash and cash equivalents 7,616 14,181
Cash and cash equivalents at beginning of year 20,250 11,965
Cash and cash equivalents at end of period $27,866 $26,146
Supplemental disclosures of cash flow
information:
Income taxes paid $24,896 $15,709
Interest paid
-- 64
SOURCE Stein Mart, Inc.
Susan Datz Edelman, Director, Stockholder Relations, Stein Mart, +1-904-346-1506, or
sedelman@steinmart.com
http://www.prnewswire.com