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JACKSONVILLE, Fla., Aug 21, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its second quarter and first half ended August 2, 2008.
Second Quarter of 2008
For the 13-week second quarter of 2008, the Company incurred a net loss of $(8.0) million or $(0.19) per share as compared to net income of $2.2 million or $0.05 per share in 2007. Net sales decreased 5.8 percent to $311.6 million for the 13 weeks ended August 2, 2008 from $330.7 million for the 13 weeks ended August 4, 2007. Comparable store sales for the 13 weeks ended August 2, 2008 decreased 9.7 percent from the 13 weeks ended August 4, 2007.
Gross profit declined to $74.1 million or 23.8 percent of sales in the second quarter of 2008 compared to $86.2 million or 26.1 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 occupancy leverage on lower sales.
Selling, general and administrative (SG&A) expenses were $92.5 million or 29.7 percent of sales as compared to $87.7 million or 26.5 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 closing expenses and certain non-recurring legal expenses and professional fees related to ongoing expense reduction initiatives. Additionally, there were increases in store operating expenses related to the 13 additional non-comparable stores, although they were substantially offset by savings in the comparable stores.
First Half of 2008
For the first six months of 2008, the Company incurred a net loss of $(1.0) million or $(0.02) per share as compared to net income of $10.3 million or $0.24 per share in 2007. Net sales decreased 6.1 percent to $663.8 million for the 26 weeks ended August 2, 2008 from $706.9 million for the 26 weeks ended August 4, 2007. Comparable store sales for the 26 weeks ended August 2, 2008 decreased 9.5 percent from the 26 weeks ended August 4, 2007.
Gross profit declined to $171.9 million or 25.9 percent of sales in the first half of 2008 compared to $191.1 million or 27.0 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 occupancy leverage on lower sales.
SG&A expenses were $184.1 million or 27.7 percent of sales as compared to $185.1 million or 26.2 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 closing expenses and certain non-recurring expenses, offset by decreased advertising expense. Again, there were increases in store operating expenses related to the 15 additional non-comparable stores, substantially offset by savings in the comparable stores.
"We took aggressive markdowns in the second quarter to drive customer traffic and achieve our goal of keeping inventory levels in line with the sales trend," noted Linda M. Farthing, president and chief executive officer of Stein Mart. "These lowered inventory levels, which we expect to continue, should give us a cleaner platform to present fresh fashion going forward."
Other news
The Company continues to work on several initiatives designed to increase sales; motivate existing customers and attract new ones; reduce expenses; and provide a stronger, in-store message of fashion and value. A new marketing campaign will debut in the third quarter, as will a new store signage package.
"We remain focused on what we can control in this uncertain environment, and we believe our investments related to expense reductions should begin to benefit us in the fall season and into 2009," Farthing continued.
Store network update
No new stores were opened and one store closed in the second quarter, resulting in 283 stores in operation at August 2, 2008 as compared to 270 at the same time last year.
One new store and one relocated store will open in the third quarter, completing the store-opening program for 2008. The Company now expects to close nine additional stores by the end of fiscal 2008, which would result in a year-end store count of 276.
Conference Call
Due to the pending arrival of Tropical Storm Fay in North Florida, management has rescheduled the previously announced conference call for investment analysts to discuss these results to 10 a.m. ET Monday, August 25, 2008. The call may be heard on the investor relations portion of the Company's website at http://ir.steinmart.com. A replay of the conference call will be available on the website through August 29, 2008.
About Stein Mart
Stein Mart stores offer the fashion merchandise, service and presentation of a better department or specialty store, at prices up to 60 percent off department and specialty store prices, every day. Currently with locations from California to Massachusetts, Stein Mart's focused assortment of merchandise features current season, moderate to better fashion 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:
-- changes in consumer spending due to current events and/or general
economic conditions
-- the effectiveness of advertising, marketing and promotional strategies
-- on-going competition from other retailers
-- changing preferences in apparel
-- 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, except for share data)
August 2, February 2, August 4,
2008 2008 2007
ASSETS
Current assets:
Cash and cash equivalents $18,312 $15,145 $16,853
Trade and other receivables 8,283 12,372 9,999
Inventories 248,900 262,496 272,447
Income taxes receivable 10,759 14,103 2,445
Prepaid expenses and other current assets 14,680 13,985 16,290
Total current assets 300,934 318,101 318,034
Property and equipment, net 107,911 110,687 113,732
Other assets 33,184 31,751 30,305
Total assets $442,029 $460,539 $462,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $53,880 $77,124 $62,270
Accrued liabilities 73,760 75,508 71,794
Total current liabilities 127,640 152,632 134,064
Notes payable to banks 30,958 27,133 14,341
Other liabilities 29,329 24,085 27,887
Total liabilities 187,927 203,850 176,292
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;
42,390,969, 41,831,182 and
42,925,584 shares issued and
outstanding, respectively 424 418 429
Additional paid-in capital 8,230 5,288 14,516
Retained earnings 245,448 250,983 270,834
Total stockholders' equity 254,102 256,689 285,779
Total liabilities and stockholders'
equity $442,029 $460,539 $462,071
Stein Mart, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
August 2, August 4, August 2, August 4,
2008 2007 2008 2007
Net sales $311,628 $330,739 $663,751 $706,858
Cost of merchandise sold 237,506 244,541 491,883 515,750
Gross profit 74,122 86,198 171,868 191,108
Selling, general and
administrative expenses 92,523 87,712 184,062 185,123
Other income, net 5,373 5,255 11,303 10,634
Income (loss) from operations (13,028) 3,741 (891) 16,619
Interest (expense) income, net (205) (43) (572) 84
Income (loss) before income
taxes (13,233) 3,698 (1,463) 16,703
Income tax benefit (provision) 5,230 (1,503) 458 (6,396)
Net income (loss) $(8,003) $2,195 $(1,005) $10,307
Net income (loss) per share:
Basic $(0.19) $0.05 $(0.02) $0.24
Diluted $(0.19) $0.05 $(0.02) $0.24
Weighted-average shares
outstanding:
Basic 41,309 42,547 41,280 42,894
Diluted 41,309 43,070 41,280 43,491
Stein Mart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
26 Weeks 26 Weeks
Ended Ended
August 2, August 4,
2008 2007
Cash flows from operating activities:
Net income (loss) $(1,005) $10,307
Adjustments to reconcile net income (loss) to
net cash operating activities:
Depreciation and amortization 12,690 12,671
Impairment of property and other assets 328 108
Store closing charges 1,153 175
Deferred income taxes (841) (3,446)
Share-based compensation 2,480 4,710
Tax benefit from equity issuances - 266
Excess tax benefits from share-based
compensation (3) (237)
Changes in assets and liabilities:
Trade and other receivables 4,089 165
Inventories 13,596 18,496
Income taxes receivable 3,344 (2,445)
Prepaid expenses and other current assets (1,100) 532
Other assets (632) (2,497)
Accounts payable (23,244) (20,973)
Accrued liabilities (2,625) (6,315)
Income taxes payable - (13,091)
Other liabilities 465 5,602
Net cash provided by operating activities 8,695 4,028
Cash flows from investing activities:
Capital expenditures (9,900) (12,628)
Purchases of short-term investments - (36,580)
Sales of short-term investments - 47,415
Net cash used in investing activities (9,900) (1,793)
Cash flows from financing activities:
Borrowings under notes payable to banks 399,746 63,689
Repayments of notes payable to banks (395,921) (49,348)
Cash dividends paid - (5,424)
Excess tax benefits from share-based compensation 3 237
Proceeds from exercise of stock options - 3,517
Proceeds from employee stock purchase plan 548 586
Repurchase of common stock (4) (16,199)
Net cash provided by (used in) financing
activities 4,372 (2,942)
Net increase (decrease) in cash and cash equivalents 3,167 (707)
Cash and cash equivalents at beginning of year 15,145 17,560
Cash and cash equivalents at end of period $18,312 $16,853
SOURCE Stein Mart, Inc.
http://www.steinmart.com
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