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JACKSONVILLE, Fla., Aug 23, 2007 /PRNewswire-FirstCall via COMTEX News Network/ --
Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its second quarter and first half ended August 4, 2007.
Note: the 53rd week in fiscal 2006 created a timing shift in the 4-5-4 calendar for fiscal 2007, resulting in a one-week difference between Stein Mart's fiscal reporting periods and comparable store sales reporting periods. This timing shift negatively impacted total net sales for the second quarter of 2007, but the net effect for the first six months of the year was slightly positive.
Second Quarter of 2007
For the 13-week second quarter of 2007, the Company earned $2.2 million or $0.05 per diluted share as compared to net income of $8.3 million or $0.19 per diluted share in 2006. Net sales decreased 1.7 percent to $330.7 million for the 13 weeks ended August 4, 2007 from $336.3 million for the 13 weeks ended July 29, 2006. Comparable store sales for the 13 weeks ended August 4, 2007 decreased 1.2 percent from the 13 weeks ended August 5, 2006.
Gross profit declined to $86.2 million or 26.1 percent of sales in the second quarter of 2007 compared to $94.0 million or 28.0 percent of sales in the same period last year. The gross profit rate decreased primarily due to higher markdowns, somewhat offset by increased mark-up. Gross profit also suffered from a lack of leverage on lower sales, as well as increased buying costs, primarily from share-based compensation.
Selling, general and administrative (SG&A) expenses were $87.7 million or 26.5 percent of sales as compared to $84.8 million or 25.2 percent of sales during the same period last year. The SG&A rate was higher due to a lack of leverage on lower sales, and reflected increases in store operating expenses, depreciation, advertising, and share-based compensation.
First Half of 2007
For the first six months of 2007, the Company earned $10.3 million or $0.24 per diluted share as compared to net income of $15.9 million or $0.36 per diluted share in 2006. Net sales increased 0.8 percent to $706.9 million for the 26 weeks ended August 4, 2007 from $701.1 million for the 26 weeks ended July 29, 2006. Comparable store sales for the 26 weeks ended August 4, 2007 decreased 1.6 percent from the 26 weeks ended August 5, 2006.
Gross profit declined slightly to $191.1 million or 27.0 percent of sales in the first half of 2007 compared to $191.6 million or 27.3 percent of sales in the same period last year. Merchandise margins increased slightly as higher mark-up was mostly offset by increased markdowns, but the gross profit rate decreased due to a lack of sales leverage and increased buying costs, primarily from share-based compensation.
Selling, general and administrative (SG&A) expenses were $185.1 million or 26.2 percent of sales as compared to $175.3 million or 25.0 percent of sales during the same period last year. The SG&A rate was higher due to a lack of leverage on lower sales, and reflected increases in store operating expenses, depreciation, advertising, and share-based compensation.
"We were disappointed by our performance in the second quarter, and remain concerned about the constrained selling environment in an uncertain economy," said Michael D. Fisher, president and chief executive officer of Stein Mart, Inc. "We are taking a very conservative posture in terms of inventory management and continue to look for every opportunity to improve our productivity."
Guidance for Third Quarter 2007
Based on current unfavorable selling trends, management expects comparable store sales to decrease (2) to (4) percent for the quarter ending this year on November 3, 2007. With lowered sales, there will be negative pressure on gross margin, and although certain controllable expenses have been reduced, those savings will be offset by the costs associated with new and recently-opened stores that are not yet in the comparable store sales base.
Based on these variables, management expects to report a loss of $(0.03) to $(0.06) per share for the quarter ending November 3, 2007.
Store Network Update
As of August 4, 2007, the Company operated 270 stores as compared to 261 stores at the same time last year.
Two stores were opened and one was relocated in the first quarter of the year; no new stores opened in the second quarter. Thirteen new store openings, one relocation and two store closings are planned to take place in the third quarter. One of those openings (Charlotte, NC) and the relocation (Roanoke, VA) took place last week.
Other new stores for the fall season include additional stores in markets of Raleigh, NC; St. Louis, MO; Nashville, TN; Las Vegas, NV; Dallas, TX and two additional stores in Cleveland, OH; as well as entry locations in Jupiter, FL, Chantilly, VA; Rochester, NY and two suburban New Jersey communities (Succasunna and Franklin Park).
The third quarter openings will complete the Company's store opening/closing activity for the year. In 2007, the Company will have opened 15 new stores, relocated two stores and closed two stores, for a total of 281 stores in operation at year-end, compared to 268 at the same time in 2006.
Dividend and Stock Repurchase Update
The Board of Directors has declared a quarterly dividend of $0.0625 per common share payable on September 21, 2007 to stockholders of record at the close of business on September 7, 2007.
In the second quarter of 2007, the Company repurchased one million shares of stock at a cost of $13.2 million. So far this year, the Company has repurchased a total of 1.2 million shares of stock at a cost of $16.2 million.
Conference Call with Management
Management will discuss these financial results and the Company's perspective on the fall season in a conference call with financial analysts today (August 23, 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.
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 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:
-- on-going competition from other retailers
-- changes in consumer spending due to current events and/or general
economic conditions
-- the effectiveness of advertising, marketing and promotional strategies
-- unanticipated weather conditions and unseasonable weather
-- changing preferences in apparel
-- 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, except for share data)
Aug. 4, Feb. 3, July 29,
2007 2007 2006
ASSETS
Current assets:
Cash and cash equivalents $16,853 $17,560 $21,559
Short-term investments - 10,835 5,000
Trade and other receivables 9,999 10,164 11,303
Inventories 272,447 290,943 266,543
Prepaid income taxes 2,445 - 762
Prepaid expenses and other current assets 16,290 14,531 13,901
Total current assets 318,034 344,033 319,068
Property and equipment, net 113,732 113,254 104,795
Other assets 30,305 23,064 18,624
Total assets $462,071 $480,351 $442,487
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $62,270 $83,243 $84,864
Accrued liabilities 71,794 78,522 70,136
Income taxes payable - 7,483 -
Total current liabilities 134,064 169,248 155,000
Notes payable to banks 14,341 - -
Other liabilities 27,887 22,931 17,483
Total liabilities 176,292 192,179 172,483
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;
42,925,584, 43,736,720 and 43,676,810
shares issued and outstanding,
respectively 429 437 437
Additional paid-in capital 14,516 21,803 19,497
Retained earnings 270,834 265,932 250,070
Total stockholders' equity 285,779 288,172 270,004
Total liabilities and stockholders'
equity $462,071 $480,351 $442,487
Stein Mart, Inc.
Consolidated Statements of Income
(Unaudited)
(In thousands, except for share data)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
Aug. 4, July 29, Aug. 4, July 29,
2007 2006 2007 2006
Net sales $330,739 $336,304 $706,858 $701,135
Cost of merchandise sold 244,541 242,298 515,750 509,543
Gross profit 86,198 94,006 191,108 191,592
Selling, general and
administrative expenses 87,712 84,790 185,123 175,326
Other income, net 5,255 3,441 10,634 7,594
Income from operations 3,741 12,657 16,619 23,860
Interest income (expense), net (43) 233 84 1,124
Income before income taxes 3,698 12,890 16,703 24,984
Provision for income taxes 1,503 4,578 6,396 9,113
Net income $2,195 $8,312 $10,307 $15,871
Net income per share:
Basic $0.05 $0.19 $0.24 $0.37
Diluted $0.05 $0.19 $0.24 $0.36
Weighted-average shares
outstanding:
Basic 42,547 43,245 42,894 43,236
Diluted 43,070 43,985 43,491 44,029
Stein Mart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
26 Weeks 26 Weeks
Ended Ended
Aug. 4, July 29,
2007 2006
Cash flows from operating activities:
Net income $10,307 $15,871
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,671 12,248
Impairment of property and other assets 108 -
Store closing charges 175 1,190
Deferred income taxes (3,446) (818)
Share-based compensation 4,710 2,188
Tax benefit from equity issuances 266 425
Excess tax benefits from share-based
compensation (237) (272)
Changes in assets and liabilities:
Trade and other receivables 165 (182)
Inventories 18,496 (755)
Prepaid income taxes (2,445) (762)
Prepaid expenses and other current assets 532 (229)
Other assets (2,497) (2,486)
Accounts payable (20,973) (3,544)
Accrued liabilities (6,315) (11,079)
Income taxes payable (13,091) (9,892)
Other liabilities 5,602 (526)
Net cash provided by operating activities 4,028 1,377
Cash flows from investing activities:
Capital expenditures (12,628) (28,006)
Purchases of short-term investments (36,580) (580,925)
Sales of short-term investments 47,415 680,860
Net cash (used in) provided by investing
activities (1,793) 71,929
Cash flows from financing activities:
Borrowings under notes payable to banks 63,689 -
Repayments of notes payable to banks (49,348) -
Cash dividends paid (5,424) (70,842)
Excess tax benefits from share-based compensation 237 272
Proceeds from exercise of stock options 3,517 1,675
Proceeds from employee stock purchase plan 586 581
Repurchase of common stock (16,199) (3,633)
Net cash used in financing activities (2,942) (71,947)
Net (decrease) increase in cash and cash equivalents (707) 1,359
Cash and cash equivalents at beginning of year 17,560 20,200
Cash and cash equivalents at end of period $16,853 $21,559
SOURCE Stein Mart, Inc.
Susan Datz Edelman, Director, Stockholder Relations, of Stein Mart, Inc., +1-904-346-1506, sedelman@steinmart.com
http://www.steinmart.com
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