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JACKSONVILLE, Fla., Nov 16, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its third quarter and nine months ended October 28, 2006.
For the third quarter of 2006, the Company earned $237,000 or $0.01 per diluted share as compared to net income of $1.4 million or $0.03 per diluted share in the third quarter of 2005. Net sales for the third quarter of 2006 were $339.2 million, up 0.8 percent from the $336.5 million in sales for the same period last year. Comparable store sales increased 0.2 percent from the third quarter of 2005 to the third quarter of 2006. Gross profit increased to $89.3 million or 26.3 percent of net sales in the third quarter of 2006 compared to $83.1 million or 24.7 percent of net sales in the same period of 2005. Gross profit increased due to decreased markdowns and improved mark-up, somewhat offset by increased occupancy costs and equity-based buying compensation. Selling, general and administrative (SG&A) expenses were $92.6 million or 27.3 percent of net sales as compared to $85.1 million or 25.3 percent of net sales during the prior year's third quarter. The SG&A rate was higher due to a lack of leverage on relatively flat sales, and reflected increases in store payroll, depreciation, store-opening costs, advertising, insurance expenses, equity-based compensation and legal expenses related to a wage-and-hour lawsuit.
For the first nine months of 2006, the Company earned $16.1 million or $0.37 per diluted share as compared to net income of $29.8 million or $0.67 per diluted share in the first nine months of 2005. Net sales for the first nine months were $1,040.3 million, down 1.3 percent from the $1,054.3 million in sales for the same period last year. Comparable store sales decreased 2.0 percent from the first nine months of 2005 to the first nine months of 2006. Gross profit decreased to $280.9 million or 27.0 percent of net sales in the first nine months of 2006 compared to $291.0 million or 27.6 percent of net sales in the same period of 2005. Gross profit was negatively impacted by increased markdowns, occupancy costs, and equity-based buying compensation, somewhat offset by improved mark-up. SG&A expenses were $268.0 million or 25.8 percent of net sales as compared to $255.5 million or 24.2 percent of net sales during the prior year's first nine months. The SG&A rate was higher due to a lack of leverage on decreased sales and reflected increases in store payroll, depreciation, store-opening costs, advertising, insurance expenses, equity-based compensation and legal expenses related to a wage-and-hour lawsuit.
"While comparable sales growth is not yet meeting our expectations, we are beginning to see improved profitability associated with recent merchandise reallocations; specifically the transformation to a more relevant Home assortment and the addition of several key, ready-to-wear categories in lieu of children's apparel," said Michael D. Fisher, president and chief executive officer of Stein Mart, Inc. "Our challenge now is to accelerate holiday sales, and we believe our increased commitment to appropriate current- and forward- season merchandise, as well as a more aggressive promotional plan, will give us the best chance to be successful on the top line."
Updates on Recent Initiatives
The Company has had a number of merchandising and store operations initiatives underway this year. The following is an update on these efforts:
* All children's apparel has been cleared from Stein Mart stores, and the
expanded assortments of intimate apparel, special sizes and certain
classifications of ready-to-wear are in place and performing to
expectations.
* Plans for the transfer of the remaining 102 shoe departments to DSW are
on track with the expected transition slated for January 2007.
* The Company launched its co-brand credit card in October; it will serve
as the foundation for enhanced marketing strategies for the Preferred
Customer program.
* Continuing its fashion upgrade of the Home area, the Company recently
unveiled a new collection of gifts and linens conceived by Nina
Campbell, an award-winning English interior designer and author. The
Nina/Nina Campbell collection will be exclusive to Stein Mart.
* The price optimization system is now performing as expected.
* The 360 Commerce cash register platform installation is complete, with
180 stores being converted this year. The installations included
transaction processing hardware and software, as well as the re-
configuration of the cash/wrap-service desk areas in each of the stores.
2006 Store Opening program completed
In the third quarter, six stores were opened and two were closed. So far this month, Stein Mart has entered the Pittsburgh market with one new store and added an 11th store in Atlanta. This morning, Stein Mart completes its 2006 store-opening program with a new location in Royal Palm Beach, Florida. For the year, twelve stores have opened and six have closed, bringing to 268 the number of stores now in operation as compared to 262 at the end of 2005.
In 2007, the Company expects to open approximately 20 new stores. Any decision on store closures for 2007 will be made at the end of fiscal 2006.
Guidance
Sales for the first week of November were encouraging; however, sales in the second week, which included a key, one-day promotional event, were less than expected. Should this slower trend continue, management would expect a comparable store sales increase of approximately 2-3 percent for the fourth quarter, which would produce diluted earnings per share approximately in line with the $0.48 earned last year in the fourth quarter. As a reminder, fiscal 2006 (ending February 3, 2007) is a 53-week year compared to fiscal 2005 which was a 52-week year.
Quarterly Dividend Declared
The Stein Mart board of directors has declared a quarterly dividend of $0.0625 per common share payable on December 22, 2006 to stockholders of record at the close of business on December 8, 2006.
Conference Call with Management
Management will discuss this information and answer questions from analysts in a conference call today (November 16, 2006) at 10:30 a.m. ET. The call may be heard on the investor relations portion of Stein Mart's website at http://ir.steinmart.com, and a recording of the call will remain on the website until the end of the month.
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 better brand-name apparel for women and men, 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:
* the effectiveness of advertising, marketing and promotional strategies
* on-going competition from other retailers
* changing preferences in apparel
* changes in consumer spending due to current events and/or general
economic conditions
* unanticipated weather conditions and unseasonable weather
* adequate sources of merchandise at acceptable prices
* availability of new store sites at acceptable lease terms
* the Company's ability to attract and retain qualified employees to
support planned growth
* ability to successfully implement strategies to exit or improve under-
performing stores
* disruption of the Company's distribution system
* acts of terrorism
and the other risks and uncertainties described in the Company's filings with the Securities and Exchange Commission.
SMRT-F
Additional information about Stein Mart, Inc. can be found at
http://www.steinmart.com
Stein Mart, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
October January October
28, 2006 28, 2006 29, 2005
ASSETS
Current assets:
Cash and cash equivalents $14,928 $20,200 $27,866
Short-term investments - 104,935 65,895
Trade and other receivables 11,546 11,121 7,348
Inventories 349,024 265,788 313,332
Prepaid expenses and other current assets 21,812 13,672 21,696
Total current assets 397,310 415,716 436,137
Property and equipment, net 110,187 87,106 81,901
Other assets 19,018 17,023 14,915
Total assets $526,515 $519,845 $532,953
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $133,387 $88,408 $123,922
Accrued liabilities 76,367 80,337 77,355
Income taxes payable - 5,453 -
Total current liabilities 209,754 174,198 201,277
Notes payable to banks 26,494 - -
Other liabilities 23,295 21,908 21,794
Total liabilities 259,543 196,106 223,071
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;
43,548,314; 43,516,372 and
43,759,295 shares issued and
outstanding, respectively 435 435 438
Additional paid-in capital 25,187 21,967 26,563
Unearned compensation (6,226) (3,704) (3,829)
Retained earnings 247,576 305,041 286,710
Total stockholders' equity 266,972 323,739 309,882
Total liabilities and stockholders'
equity $526,515 $519,845 $532,953
Stein Mart, Inc.
Consolidated Statements of Income
(Unaudited)
(In thousands except per share amounts)
13 Weeks 13 Weeks 39 Weeks 39 Weeks
Ended Ended Ended Ended
October October October October
28, 2006 29, 2005 28, 2006 29, 2005
Net sales $339,171 $336,537 $1,040,306 $1,054,256
Cost of merchandise sold 249,909 253,486 759,452 763,254
Gross profit 89,262 83,051 280,854 291,002
Selling, general and
administrative expenses 92,634 85,057 267,960 255,532
Other income, net 3,777 3,749 11,371 11,306
Income from operations 405 1,743 24,265 46,776
Interest income (expense), net (28) 509 1,096 1,336
Income before income taxes 377 2,252 25,361 48,112
Provision for income taxes 140 856 9,253 18,283
Net income $237 $1,396 $16,108 $29,829
Net income per share:
Basic $0.01 $0.03 $0.37 $0.69
Diluted $0.01 $0.03 $0.37 $0.67
Weighted-average shares
outstanding:
Basic 43,162 43,553 43,212 43,252
Diluted 43,662 44,605 43,907 44,424
Stein Mart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
39 Weeks 39 Weeks
Ended Ended
October October
28, 2006 29, 2005
Cash flows from operating activities:
Net income $16,108 $29,829
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 18,881 14,973
Impairment of property and other assets - 531
Store closing charges 1,243 452
Deferred income taxes (2,821) 1,381
Share-based compensation 3,657 516
Tax benefit from equity issuances 502 4,595
Excess tax benefits from share-based
compensation (296) -
Changes in assets and liabilities:
Trade and other receivables (425) 4,032
Inventories (83,236) (36,168)
Prepaid expenses and other current assets (8,140) (8,771)
Other assets (3,317) (1,281)
Accounts payable 44,979 24,759
Accrued liabilities (4,230) (2,902)
Income taxes payable (5,453) (5,089)
Other liabilities 1,651 478
Net cash (used in) provided by operating
activities (20,897) 27,335
Cash flows from investing activities:
Capital expenditures (39,067) (24,731)
Purchases of short-term investments (586,225) (1,379,420)
Sales of short-term investments 691,160 1,386,000
Net cash provided by (used in) investing
activities 65,868 (18,151)
Cash flows from financing activities:
Net borrowings under notes payable to banks 26,494 -
Cash dividends paid (73,572) (5,463)
Excess tax benefits from share-based
compensation 296 -
Proceeds from exercise of stock options 2,046 15,157
Proceeds from employee stock purchase plan 581 499
Repurchase of common stock (6,088) (11,761)
Net cash used in financing activities (50,243) (1,568)
Net (decrease) increase in cash and cash
equivalents (5,272) 7,616
Cash and cash equivalents at beginning of year 20,200 20,250
Cash and cash equivalents at end of period $14,928 $27,866
SOURCE Stein Mart, Inc.
Susan Datz Edelman, Director, Stockholder Relations, of Stein Mart, Inc., +1-904-346-1506, or sedelman@steinmart.com
http://www.steinmart.com
Copyright (C) 2006 PR Newswire. All rights reserved
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