JACKSONVILLE, Fla., March 20, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its fourth quarter and fiscal year ended February 2, 2008. The Company's fiscal 2007 was a 52-week year; the Company's fiscal 2006 was a 53-week year ending February 3, 2007.
Fourth quarter results
For the fourth quarter of 2007, the Company incurred a net loss of $(12.1) million or $(0.30) per diluted share as compared to net income of $21.1 million or $0.48 per diluted share in 2006. As previously reported, for the 13 weeks ended February 2, 2008, sales decreased 9.4 percent to $417.4 million from the $461.0 million for the 14 weeks ended February 3, 2007. Excluding the extra week in last year's fourth quarter, sales decreased 3.3 percent. Comparable store sales for the 13 weeks ended February 2, 2008 decreased 6.2 percent from the 13 weeks ended February 3, 2007.
Gross profit decreased to $84.1 million or 20.1 percent of net sales from $135.5 million or 29.4 percent of net sales. The gross profit rate decreased primarily due to significantly higher markdowns and increased occupancy costs, slightly offset by improved markup.
Selling, general and administrative (SG&A) expenses were $106.2 million or 25.4 percent of net sales as compared to $108.7 million or 23.6 percent of net sales during the prior year's fourth quarter. The SG&A rate was higher due to a lack of leverage on decreased sales. Store closing and asset impairment charges of $4.7 million and $1.3 million were recorded in the fourth quarter of 2007 and 2006, respectively.
"The steep decline in business last fall required us to take an exceptional amount of markdowns in the fourth quarter to move seasonal merchandise," noted president and chief executive officer Linda M. Farthing. "Although very costly, it did allow us to reduce our overall inventory to levels more appropriate for this uncertain retailing climate."
Fiscal year results
For the fiscal year 2007, the Company incurred a net loss of $(4.5) million or $(0.11) per diluted share, as compared to net income of $37.2 million or $0.85 per diluted share in 2006. As previously reported, for the 52 weeks ended February 2, 2008, net sales totaled $1.46 billion, a 2.9 percent decrease from the $1.50 billion in net sales for the 53 weeks ended February 3, 2007. Excluding the extra week for last year, sales decreased 1.5 percent. Comparable store sales for the 52 weeks ended February 2, 2008 decreased 4.0 percent from the 52 weeks ended February 3, 2007.
Gross profit was $361.4 million or 24.8 percent of net sales in 2007 compared to $416.3 million or 27.7 percent of net sales in 2006. The gross profit rate decreased primarily due to increased markdowns and occupancy costs, slightly offset by improved markup.
Selling, general and administrative (SG&A) expenses were $388.6 million or 26.7 percent of net sales as compared to $376.6 million or 25.1 percent of net sales during the prior year. The SG&A rate was higher due to a lack of leverage on decreased sales, and reflected increased advertising, depreciation and costs related to the transition of the president/CEO position. Store closing and asset impairment charges of $5.2 million and $2.4 million were recorded in 2007 and 2006, respectively.
Other income decreased $1.8 million for the fourth quarter due to a $1.8 million settlement received in 2006 from the Visa Check/MasterMoney anti-trust litigation. However for the year, other income increased $3.2 million, which reflects the increased revenues from our credit card program that was introduced in October 2006.
During 2007, 14 new stores were opened, two were closed and two were relocated. At February 2, 2008, there were 280 stores in operation as compared to 268 at the same time last year.
"Although it was in line with our revised projections, our 2007 performance was deeply disappointing," commented Linda M. Farthing, president and chief executive officer. "We are committed to improved results in 2008, despite the difficulties in the current economic environment."
Farthing characterized her plans for the current fiscal year as cautious and disciplined. "We will be controlling inventory very tightly, and we have already taken steps to reduce our costs to only the most necessary expenditures," she said.
"Our main emphasis in 2008 is finding innovative ways to reach and satisfy our current customers, as well as develop new ones," she continued. "We will be exploring and testing several new initiatives to build on our traditional strength of meeting our shoppers' expectations with exciting merchandise and customer service."
Farthing identified more opportunistic purchasing, and flexing the selling floor space to feature more product lines and expanded merchandise categories as areas that are being targeted to enhance productivity. She also pointed to enhancing the in-store experience, elevating the marketing program, and a continued effort to improve operational efficiencies as additional keys to success in 2008.
Store network update
As previously indicated, the Company has moderated its new store-opening program. The current plan is to open six new stores and relocate one store (Nashville, TN) in 2008. One new store (Franklin, NJ) opened last week and four more (Holmdel, NJ; Indianapolis, IN; Westborough, MA and Phoenix, AZ) will open by the end of the first quarter. A store in Port St. Lucie, FL will open later in the year. The current expectation is for six existing stores to close in 2008, which would result in no new net growth and an expected year- end store count of 280 locations.
Management will hold a conference call for investment analysts at 10 a.m. ET this morning to discuss these results and Company strategy for 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 presentation will be available on the website until March 29, 2008.
As previously announced, management has discontinued providing sales and earnings guidance for future periods due to the current volatile retailing environment. The Company will continue to report total and comparable stores sales monthly, and will issue complete financial results quarterly.
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 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.
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) February 2, 2008 February 3, 2007 ASSETS Current assets: Cash and cash equivalents $15,145 $ 17,560 Short-term investments - 10,835 Trade and other receivables 12,372 10,164 Inventories 262,496 290,943 Income taxes receivable 14,103 - Prepaid expenses and other current assets 13,985 14,531 Total current assets 318,101 344,033 Property and equipment, net 110,687 113,254 Other assets 31,751 23,064 Total assets $460,539 $480,351 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $77,124 $83,243 Accrued liabilities 75,508 78,522 Income taxes payable - 7,483 Total current liabilities 152,632 169,248 Notes payable to banks 27,133 - Other liabilities 24,085 22,931 Total liabilities 203,850 192,179 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; 41,831,182 and 43,736,720 shares issued and outstanding, respectively 418 437 Additional paid-in capital 5,288 21,803 Retained earnings 250,983 265,932 Total stockholders' equity 256,689 288,172 Total liabilities and stockholders' equity $460,539 $480,351 Stein Mart, Inc. Consolidated Statements of Operations Unaudited (In thousands, except for share amounts) 13 Weeks 14 Weeks Ended Ended Year Ended Year Ended February 2, February 3, February 2, February 3, 2008 2007 2008 2007 Net sales $417,444 $460,990 $1,457,645 $1,501,296 Cost of merchandise sold 333,354 325,523 1,096,235 1,084,975 Gross profit 84,090 135,467 361,410 416,321 Selling, general and administrative expenses 106,225 108,651 388,572 376,611 Other income, net 5,006 6,843 21,376 18,214 Income (loss) from operations (17,129) 33,659 (5,786) 57,924 Interest (expense) income, net (433) (90) (794) 1,006 Income (loss) before income taxes (17,562) 33,569 (6,580) 58,930 Income tax benefit (provision) 5,414 (12,501) 2,050 (21,754) Net income (loss) $(12,148) $21,068 $(4,530) $37,176 Net income (loss) per share: Basic $(0.30) $0.49 $(0.11) $0.86 Diluted $(0.30) $0.48 $(0.11) $0.85 Weighted-average shares outstanding: Basic 41,158 43,147 42,123 43,196 Diluted 41,158 43,789 42,123 43,877 Stein Mart, Inc. Consolidated Statements of Cash Flows Unaudited (In thousands) Year Ended Year Ended February 2, 2008 February 3, 2007 Cash flows from operating activities: Net Income (loss) $(4,530) $37,176 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 26,068 23,992 Impairment of property and other assets 4,017 649 Store closing charges 1,145 1,973 Deferred income taxes (4,492) (4,536) Share-based compensation 5,502 5,505 Tax benefit from equity issuances 180 794 Excess tax benefits from share-based compensation (151) (742) Changes in assets and liabilities: Trade and other receivables (2,208) 957 Inventories 28,447 (25,155) Income taxes receivable (14,103) - Prepaid expenses and other current assets 951 (859) Other assets (1,993) (7,736) Accounts payable (6,119) (5,165) Accrued liabilities (2,770) (2,577) Income taxes payable (13,091) (2,409) Other liabilities 990 8,452 Net cash provided by operating activities 17,843 30,319 Cash flows from investing activities: Capital expenditures (25,898) (48,759) Purchases of short-term investments (36,580) (641,005) Sales of short-term investments 47,415 735,105 Net cash (used in) provided by investing activities (15,063) 45,341 Cash flows from financing activities: Borrowings under notes payable to banks 365,811 166,021 Repayments of notes payable to banks (338,678) (166,021) Cash dividends paid (10,263) (76,285) Excess tax benefits from share-based compensation 151 742 Proceeds from exercise of stock options 3,556 2,171 Proceeds from employee stock purchase plan 1,127 1,160 Repurchase of common stock (26,899) (6,088) Net cash used in financing activities (5,195) (78,300) Net decrease in cash and cash equivalents (2,415) (2,640) Cash and cash equivalents at beginning of year 17,560 20,200 Cash and cash equivalents at end of year $15,145 $17,560 Supplemental disclosures of cash flow information: Income taxes paid $ 28,216 $25,009 Interest paid 988 434
SOURCE Stein Mart, Inc.
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