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JACKSONVILLE, Fla., March 21, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its fourth quarter and fiscal year ended February 3, 2007. The Company's fiscal 2006 was a 53-week year, with an extra week at the end of January; the Company's fiscal 2005 was a 52-week year ended January 28, 2006.
Fourth quarter results
For the 14-week fourth quarter of 2006, the Company earned $21.0 million or $0.48 per diluted share as compared to net income of $21.1 million or $0.48 per diluted share in 2005. As previously reported, for the 14 weeks ended February 3, 2007, sales increased 7.9 percent to $461.0 million from $427.4 million for the 13 weeks ended January 28, 2006. The extra week in the fourth quarter of 2006 added $19.7 million in sales and increased earnings per share approximately $0.04. Comparable store sales for the 13 weeks ended January 27, 2007 increased 0.9 percent from the 13 weeks ended January 28, 2006.
Gross profit increased to $135.5 million or 29.4 percent of net sales from $125.2 million or 29.3 percent of net sales. The gross profit rate increased slightly due to improved markup, somewhat offset by increased markdowns and equity-based buying costs. Gross profit for this year's fourth quarter was favorably impacted by $2.1 million pre-tax from better-than-expected shrinkage results and a favorable rent adjustment of $1.5 million. Last year's fourth quarter gross profit was favorably impacted by $3.4 million pre-tax from better-than-expected shrinkage results and $1.9 million insurance recovery for hurricane losses.
Selling, general and administrative (SG&A) expenses were $108.7 million or 23.6 percent of net sales as compared to $97.6 million or 22.8 percent of net sales during the prior year's fourth quarter. The SG&A rate was higher due to a lack of leverage on relatively flat sales, and reflected increases in payroll, depreciation, advertising, insurance expenses, and equity-based compensation. Store closing and asset impairment charges of $1.3 million and $1.8 million were recorded in the fourth quarter of 2006 and 2005, respectively.
Fiscal year results
For the 53-week fiscal year 2006, the Company earned $37.1 million or $0.85 per diluted share, as compared to net income of $50.9 million or $1.15 per diluted share in 2005. As previously reported, for the 53 weeks ended February 3, 2007, net sales totaled $1.50 billion, a 1.3 percent increase from the $1.49 billion in net sales for the 52 weeks ended January 28, 2006. As noted above, the extra week added $19.7 million in sales and increased earnings per share approximately $0.04. Comparable store sales for the 52 weeks ended January 27, 2007 declined 1.2 percent from the 52 weeks ended January 28, 2006.
Gross profit was $416.3 million or 27.7 percent of net sales compared to $416.2 million or 28.1 percent of net sales. The gross profit rate declined due to increases in markdowns, occupancy and equity-based buying costs, somewhat offset by improved markup.
Selling, general and administrative (SG&A) expenses were $376.6 million or 25.1 percent of net sales as compared to $353.1 million or 23.8 percent of net sales during the prior year. The SG&A rate was higher due to a lack of leverage on relatively flat sales, and reflected increases in payroll, depreciation, advertising, insurance expenses and equity-based compensation. Store closing and asset impairment charges of $2.4 million and $3.4 million were recorded in 2006 and 2005, respectively.
Other income increased $2.7 million for the fourth quarter and for the year. This increase is from a $1.8 million settlement received from the Visa Check/MasterMoney anti-trust litigation and the revenue from our new credit card program.
"We were disappointed in our inability to grow sales and profitability to our projections in 2006," said Michael D. Fisher, president and chief executive officer of Stein Mart, Inc. "We focused on implementing a number of initiatives designed to make our business more relevant to customers as well as more productive, but in this uncertain retail climate, our ambitious agenda proved to be more challenging than anticipated. We have made substantial progress, and our priority now is to fine-tune our initiatives, attract customers, and provide the fashion apparel and home decor they desire."
Accomplishments:
-- Installed markdown optimization software
-- Eliminated children's apparel; added space and inventory to intimate
apparel and special sizes, as well as additional categories of
ready-to-wear
-- Added key, exclusive vendors in fashion apparel (A Line/Anne Klein,
Jones & Co.) to reinforce Stein Mart's value proposition; expanded
proprietary brands (Alan Flusser Golf; Peck & Peck weekend)
-- Partnered with internationally known interior designer/author Nina
Campbell for exclusive home decor and linens; the agreement includes
personal appearances and a magazine/ design workbook exclusively for
Stein Mart customers
-- Introduced new proprietary British-inspired menswear label (T Harris)
-- Unified all shoe departments under DSW Shoes
-- Initiated a co-brand Stein Mart Mastercard(R) to provide a new level
of benefit to our customers, as well as more efficient and targeted
communications ability
-- Opened 12 new stores; they generated $28.6 million in sales in 2006.
Six stores were closed, for a year-end total of 268 stores
-- Spent $48.8 million to open new stores, upgrade technology and
improve/remodel stores
-- Completed the installation of point-of-sale (POS) processing
technology to speed transactions in all stores
-- Made the associated structural changes in the cash/wrap and
service areas of stores receiving the new POS technology
-- Upgraded paint/decor package in selected stores
-- Paid a special dividend of $1.50 per share to all stockholders;
maintained regular $0.25 annual dividend
Plans for 2007
The following initiatives are expected to have strategic prominence in the Company's operations in 2007:
-- Unveil a new branding message; a new advertising agency (DeVito/Verdi)
has been retained to do customer research and develop creative-new ads
should appear in Fall '07.
-- Continue to integrate/refine markdown optimization software to improve
gross margin
-- Plan to open approximately 15-20 new stores-two in the first quarter,
with the remainder opening in the third and fourth quarters. Two
stores will be relocated and two locations are being considered for
closure due to under-performance.
-- Continue to upgrade paint/decor package in selected stores
Guidance
First quarter '07 expectations have been somewhat diminished by a weather- impaired February which did not support selling fresh spring product. March will be positively impacted by an earlier Easter and customer response in the first two weeks of the month is encouraging. Management expects March comparable stores sales to increase in the mid-single-digit range and April to be flat to down slightly with less benefit from Easter, resulting in a comparable stores sales increase in the low single digit range for the first quarter of 2007. If those comparable store goals are achieved, they would produce earnings per share between $0.21 and $0.23 for the first quarter of 2007, as compared to $0.17 for the same period last year.
Conference Call with Management
Management will discuss these financial results and the outlook for first quarter 2007 in a conference call today (March 21, 2007) at 10:00 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.
Management to present at Merrill Lynch Retailing Leaders Conference
Michael Fisher, president and chief executive officer, and William Moll, executive vice president and chief merchandising officer, will make a presentation at the Merrill Lynch Retailing Leaders Conference in New York City tomorrow (Thursday, March 22, 2007) at 8:45 a.m. ET. A live audio webcast of management's presentation will be available. To access the audio webcast, log on to the investor relations portion of the Company's website at http://ir.steinmart.com. A replay of the presentation will be available 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 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:
-- 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
www.steinmart.com
Stein Mart, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
February 3, 2007 January 28, 2006
ASSETS
Current assets:
Cash and cash equivalents $17,560 $20,200
Short-term investments 10,835 104,935
Trade and other receivables 10,164 11,121
Inventories 290,943 265,788
Prepaid expenses and other current assets 14,531 13,672
Total current assets 344,033 415,716
Property and equipment, net 113,254 87,106
Other assets 23,110 17,023
Total assets $480,397 $519,845
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $83,243 $88,408
Accrued liabilities 78,072 80,337
Income taxes payable 7,483 9,892
Total current liabilities 168,798 178,637
Other liabilities 23,427 17,469
Total liabilities 192,225 196,106
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;
43,736,720 and 43,516,372 shares issued
and outstanding, respectively 437 435
Additional paid-in capital 21,803 21,967
Unearned compensation - (3,704)
Retained earnings 265,932 305,041
Total stockholders' equity 288,172 323,739
Total liabilities and
stockholders' equity $480,397 $519,845
Stein Mart, Inc.
Consolidated Statements of Income
(Unaudited)
(In thousands except per share amounts)
14 Weeks Ended 13 Weeks Ended Year Ended Year Ended
February 3, January 28, February 3, January 28,
2007 2006 2007 2006
Net sales $460,990 $427,359 $1,501,296 $1,481,615
Cost of merchandise
sold 325,523 302,155 1,084,975 1,065,409
Gross profit 135,467 125,204 416,321 416,206
Selling, general and
administrative
expenses 108,651 97,572 376,611 353,104
Other income, net 6,843 4,171 18,214 15,477
Income from operations 33,659 31,803 57,924 78,579
Interest income
(expense), net (90) 690 1,006 2,026
Income before
income taxes 33,569 32,493 58,930 80,605
Provision for
income taxes 12,501 11,438 21,754 29,721
Net income $21,068 $21,055 $37,176 $50,884
Earnings per share
-- Basic $0.49 $0.49 $0.86 $1.18
Earnings per share
-- Diluted $0.48 $0.48 $0.85 $1.15
Weighted-average
shares outstanding
-- Basic 43,147 43,374 43,196 43,283
Weighted-average
shares outstanding
-- Diluted 43,789 44,281 43,877 44,388
Stein Mart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Year Ended Year Ended
February 3, 2007 January 28, 2006
Cash flows from operating activities:
Net income $37,176 $50,884
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 23,992 20,223
Impairment of property and
other assets 649 708
Store closing charges 1,973 2,197
Gain from insurance settlement - (639)
Deferred income taxes (4,536) (2,114)
Share-based compensation 5,505 880
Tax benefit from equity issuances 794 4,617
Excess tax benefits from share-based
compensation (742) -
Changes in assets and liabilities:
Trade and other receivables 957 898
Inventories (25,155) 11,376
Prepaid expenses and other
current assets (859) (747)
Other assets (7,783) (3,804)
Accounts payable (5,165) (10,755)
Accrued liabilities (2,577) 1,297
Income taxes payable (2,409) 2,544
Other liabilities 8,499 (1,202)
Net cash provided by operating activities 30,319 76,363
Cash flows from investing activities:
Capital expenditures (48,759) (34,801)
Purchases of short-term investments (641,005) (1,971,320)
Sales of short-term investments 735,105 1,938,860
Net cash provided by (used in)
investing activities 45,341 (67,261)
Cash flows from financing activities:
Borrowings under notes payable to banks 166,021 -
Repayments of notes payable to banks (166,021) -
Cash dividends paid (76,285) (8,187)
Excess tax benefits from share-based
compensation 742 -
Proceeds from exercise of stock options 2,171 15,250
Proceeds from employee stock purchase plan 1,160 1,112
Repurchase of common stock (6,088) (17,327)
Net cash used in financing activities (78,300) (9,152)
Net (decrease) increase in cash and cash
equivalents (2,640) (50)
Cash and cash equivalents at
beginning of year 20,200 20,250
Cash and cash equivalents at end of year $17,560 $20,200
Supplemental disclosures of cash flow
information:
Income taxes paid $25,009 $25,027
Interest paid 434 -
SOURCE Stein Mart, Inc.
Susan Datz Edelman, Director, Stockholder Relations, +1-904-346-1506, sedelman@steinmart.com
http://www.steinmart.com
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