Stein Mart, Inc.
STEIN MART INC (Form: 8-K, Received: 08/16/2017 16:12:29)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

August 16, 2017

(Date of Report; Date of Earliest Event Reported)

 

 

STEIN MART, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Florida   0-20052   64-0466198

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

1200 Riverplace Blvd., Jacksonville, Florida 32207

(Address of Principal Executive Offices Including Zip Code)

(904) 346-1500

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 16, 2017, Stein Mart, Inc. (“Stein Mart”) issued a press release announcing its financial results for the second quarter ended July 29, 2017. The information in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

The Stein Mart press release is attached as exhibit 99.1.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99.1 Press Release dated August 16, 2017.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

STEIN MART, INC.

(Registrant)

Date: August 16, 2017     By:  

/s/ Gregory W. Kleffner

      Gregory W. Kleffner
      Executive Vice President and Chief Financial Officer


EXHIBIT INDEX

99.1 Press Release dated August 16, 2017.

Exhibit 99.1

LOGO

 

August 16, 2017

 

FOR IMMEDIATE RELEASE

  

For more information:

Linda L. Tasseff

Director, Investor Relations

(904) 858-2639

ltasseff@steinmart.com

Stein Mart, Inc. Reports Second Quarter Fiscal 2017 Results

JACKSONVILLE, Fla. – Stein Mart, Inc. (NASDAQ: SMRT) today announced financial results for the second quarter ended July 29, 2017.

Highlights

 

    Total sales decreased 2.7 percent and comparable store sales decreased 5.0 percent

 

    Diluted loss per share of $0.28 compared to diluted earnings per share of $0.06 in 2016

 

    Average store inventories 15 percent lower than last year’s second quarter

Net loss for the second quarter was $13.0 million or $0.28 per diluted share compared to net income of $3.0 million or $0.06 per diluted share in 2016. For the first six months of 2017, net loss was $9.3 million or $0.20 per diluted share compared to net income of $16.3 million or $0.35 per diluted share in the same period in 2016.

“Our second quarter sales trends improved from the first quarter and were strongest in July as we more aggressively priced our clearance merchandise,” said Hunt Hawkins, Chief Executive Officer. “We are very pleased with the progress we made on our inventory management initiatives that resulted in 15 percent lower average store inventories at the end of the quarter. It is important that our inventories are in a very good position and well-balanced going into the fall season.”

“We will continue to operate our business with lean store inventories and tight expense control this fall while putting into place new merchandising and marketing strategies that include the launch of a new advertising campaign in September. We expect our lower inventories will give us better margins from lower markdowns primarily in the fourth quarter.”

Sales

Total sales for the second quarter of 2017 decreased 2.7 percent to $311.0 million, while comparable store sales decreased 5.0 percent. Ecommerce sales were up 41 percent over last year’s second quarter. For the first six months of 2017, total sales decreased 4.0 percent to $648.4 million, while comparable store sales decreased 6.4 percent.

Gross Profit

Gross profit for the second quarter of 2017 was $64.7 million or 20.8 percent of sales compared to $89.4 million or 28.0 percent of sales in 2016. Gross profit for the first six months of 2017 was $160.2 million or 24.7 percent of sales compared to $198.3 million or 29.4 percent of sales in 2016. The lower gross profit rate for both periods reflects much higher markdowns and to a lesser extent higher occupancy costs that negatively leverage on lower sales.


Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses for the second quarter of 2017 were $86.2 million compared to $83.8 million in 2016. SG&A expenses for the first six months of 2017 were $171.7 million compared to $170.3 million in 2016. The increase in SG&A expenses for both periods is primarily the result of higher operating expenses from new stores that were mostly offset by operating savings.

Balance Sheet

Inventories were $246 million at the end of the second quarter of 2017 compared to $280 million at the same time last year. Average inventories per store were down 15 percent to last year.

Borrowings under our credit facilities were $170.6 million at the end of the second quarter of 2017 compared to $167.4 million at the end of the second quarter last year. Unused availability at the end of the second quarter was $49.5 million.

Cash Flows

Cash provided by operating activities was $24.9 million for the first six months of 2017 compared to $52.6 million for the first six months of 2016.

Capital expenditures totaled $11.8 million for the first six months of 2017 compared to $23.9 million for the first six months of 2016.

Store Activity

We had 292 stores at the end of the second quarter compared to 283 at the end of the second quarter last year. No stores were opened or closed during the second quarter. We are now expecting to open a total of 10 new stores and close six stores in 2017.

Filing of Form 10-Q

Reported results are preliminary and not final until the filing of our Form 10-Q for the fiscal quarter ended July 29, 2017 with the Securities and Exchange Commission (SEC), and therefore remain subject to adjustment.

Conference Call

A conference call for investment analysts to discuss the Company’s second quarter 2017 results will be held at 4:30 p.m. ET on August 16, 2017. 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 31, 2017.

Investor Presentation

Stein Mart’s second quarter 2017 investor presentation has been posted to the investor relations portion of the Company’s website at http://ir.steinmart.com.

About Stein Mart

Stein Mart, Inc. is a national specialty and off-price retailer offering designer and name-brand fashion apparel, home décor, accessories and shoes at everyday discount prices. Stein Mart provides real value that customers will love every day both in stores and online. The Company currently operates 292 stores across 31 states. For more information, please visit www.steinmart.com.

Cautionary Statement Regarding Forward-Looking Statements

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: consumer sensitivity to economic conditions, competition in the retail industry, changes in fashion trends and consumer preferences, ability to implement our strategic plans to sustain profitable growth, effectiveness of advertising and marketing, capital availability and debt levels, dividend impact on stock price, ability to negotiate acceptable lease terms with current and potential landlords, ability to successfully implement strategies to exit under-performing stores, extreme and/or unseasonable weather conditions, adequate sources of merchandise at acceptable prices, dependence on certain key personnel and ability to attract and retain qualified employees, impacts of seasonality, increases in the cost of compensation and employee benefits, disruption of the Company’s distribution process, dependence on imported merchandise, information technology failures, data security breaches, single supplier for shoe department, single provider for ecommerce website, acts of terrorism, ability to adapt to new regulatory compliance and disclosure obligations, material weaknesses in internal control over financial reporting and other risks and uncertainties described in the Company’s filings with the SEC.

###


Stein Mart, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

     13 Weeks Ended     13 Weeks Ended      26 Weeks Ended     26 Weeks Ended  
     July 29, 2017     July 30, 2016      July 29, 2017     July 30, 2016  

Net sales

   $ 311,036     $ 319,761      $ 648,371     $ 675,473  

Cost of merchandise sold

     246,368       230,322        488,147       477,142  
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     64,668       89,439        160,224       198,331  

Selling, general and administrative expenses

     86,201       83,840        171,695       170,314  
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating (loss) income

     (21,533     5,599        (11,471     28,017  

Interest expense, net

     1,142       883        2,281       1,849  
  

 

 

   

 

 

    

 

 

   

 

 

 

(Loss) Income before income taxes

     (22,675     4,716        (13,752     26,168  

Income tax (benefit) expense

     (9,682     1,709        (4,459     9,850  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income

   $ (12,993   $ 3,007      $ (9,293   $ 16,318  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income per share:

         

Basic

   $ (0.28   $ 0.07      $ (0.20   $ 0.36  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ (0.28   $ 0.06      $ (0.20   $ 0.35  
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted-average shares outstanding:

         

Basic

     46,264       45,719        46,214       45,657  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

     46,264       46,555        46,214       46,415  
  

 

 

   

 

 

    

 

 

   

 

 

 


Stein Mart, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except for share and per share data)

 

     July 29, 2017     January 28, 2017     July 30, 2016  

ASSETS

      

Current assets:

      

Cash and cash equivalents

   $ 10,577     $ 10,604     $ 11,765  

Inventories

     246,243       291,110       279,691  

Prepaid expenses and other current assets

     32,200       30,249       20,925  
  

 

 

   

 

 

   

 

 

 

Total current assets

     289,020       331,963       312,381  

Property and equipment, net

     160,282       165,542       169,597  

Other assets

     29,806       30,344       29,892  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 479,108     $ 527,849     $ 511,870  
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

      

Current liabilities:

      

Accounts payable

   $ 87,561     $ 114,419     $ 98,185  

Current portion of debt

     5,833       10,000       10,000  

Accrued expenses and other current liabilities

     69,418       72,772       68,411  
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     162,812       197,191       176,596  

Long-term debt

     164,779       171,792       157,371  

Deferred rent

     42,293       41,774       42,286  

Other liabilities

     48,271       46,832       46,149  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     418,155       457,589       422,402  
  

 

 

   

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

      

Shareholders’ 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; 47,904,091, 47,018,942 and 46,848,195 shares issued and outstanding, respectively

     479       470       468  

Additional paid-in capital

     53,721       50,241       46,547  

Retained earnings

     7,040       19,853       42,722  

Accumulated other comprehensive loss

     (287     (304     (269
  

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     60,953       70,260       89,468  
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 479,108     $ 527,849     $ 511,870  
  

 

 

   

 

 

   

 

 

 


Stein Mart, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

 

     26 Weeks Ended     26 Weeks Ended  
   July 29, 2017     July 30, 2016  
     (Unaudited)     (Unaudited)  

Cash flows from operating activities:

    

Net (loss) income

   $ (9,293   $ 16,318  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     16,226       15,611  

Share-based compensation

     3,379       3,511  

Store closing charges

     172       37  

Impairment of property and other assets

     640       —    

Loss on disposal of property and equipment

     236       10  

Deferred income taxes

     4,199       978  

Tax expense from equity issuances

     —         (196

Excess tax benefits from share-based compensation

     —         (471

Changes in assets and liabilities:

    

Inventories

     44,867       13,917  

Prepaid expenses and other current assets

     (1,951     (2,339

Other assets

     (566     (763

Accounts payable

     (26,800     (7,763

Accrued expenses and other current liabilities

     (3,757     (1,207

Other liabilities

     (2,409     14,949  
  

 

 

   

 

 

 

Net cash provided by operating activities

     24,943       52,592  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Net acquisition of property and equipment

     (11,761     (23,939

Proceeds from cancelled corporate owned life insurance policies

     1,445       55  
  

 

 

   

 

 

 

Net cash used in investing activities

     (10,316     (23,884
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from borrowings

     230,094       164,913  

Repayments of debt

     (241,295     (187,713

Cash dividends paid

     (3,563     (6,885

Excess tax benefits from share-based compensation

     —         471  

Proceeds from exercise of stock options and other

     328       1,439  

Repurchase of common stock

     (218     (998
  

 

 

   

 

 

 

Net cash used in financing activities

     (14,654     (28,773
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (27     (65

Cash and cash equivalents at beginning of year

     10,604       11,830  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 10,577     $ 11,765  
  

 

 

   

 

 

 


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA:

EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles (GAAP). However, we present EBITDA in this release because we consider it to be an important supplemental measure of our performance and because it is frequently used by analysts, investors and others to evaluate the performance of companies. EBITDA is not calculated in the same manner by all companies. EBITDA should be used as a supplement to results of operations and cash flows as reported under GAAP and should not be considered to be a more meaningful measure than, or an alternative to, measures of operating performance as determined in accordance with GAAP.

The following table shows the Company’s reconciliation of Net Income to EBITDA and Adjusted EBITDA which are considered Non-GAAP financial measures. Adjustments to EBITDA include non-cash items (impairment charges), significant non-recurring unusual items (legal settlements) and new stores investments (pre-opening costs).

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA

Unaudited (in thousands)

 

     26 Weeks
Ended
July 29, 2017
     26 Weeks
Ended
July 30, 2016
 

Net (loss) income

   ($ 9,293    $ 16,318  

Add back amounts for computation of EBITDA:

     

Interest expense, net

     2,281        1,849  

Income tax (benefit) expense

     (4,459      9,850  

Depreciation and amortization

     16,226        15,611  
  

 

 

    

 

 

 

EBITDA

     4,755        43,628  
  

 

 

    

 

 

 

Adjustments:

     

Expense related to legal settlements

     44        1,833  

Non-cash impairment charges

     640        —    

New store pre-opening costs

     1,231        1,388  
  

 

 

    

 

 

 

Total adjustments

     1,915        3,221  
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 6,670      $ 46,849