EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

1200 RIVERPLACE BOULEVARD • JACKSONVILLE, FL 32207-1809 • (904) 346-1500

 

May 22, 2008      For more information:
     Susan Datz Edelman
FOR IMMEDIATE RELEASE      Director, Stockholder Relations
     (904) 346-1506
     sedelman@steinmart.com

STEIN MART, INC. REPORTS 1Q’08 FINANCIAL RESULTS

JACKSONVILLE, FL –Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its first quarter ended May 3, 2008.

First quarter results

For the first quarter of 2008, the Company earned $7.0 million or $0.17 per diluted share as compared to net income of $8.1 million or $0.18 per diluted share in 2007. As previously reported, net sales for the first quarter decreased 6.4 percent to $352.1 million from $376.1 million the previous year and comparable store sales decreased 9.3 percent from the first quarter of 2007.

Gross profit decreased to $97.7 million or 27.8 percent of net sales from $104.9 million or 27.9 percent of net sales in the same period last year. The gross profit rate was essentially flat, with increased occupancy costs offset by improved markup and decreased markdowns.

Selling, general and administrative (SG&A) expenses were $91.5 million or 26.0 percent of net sales as compared to $97.4 million or 25.9 percent of net sales during the same period last year. The SG&A rate was higher due to a lack of leverage on negative comparable store sales, but reflected a decrease of $5.9 million primarily from reduced advertising and corporate office expenses.

“Entering the period with lowered levels of inventory compared to last year and a focused expense discipline was instrumental in our first quarter performance, and we believe those efforts will continue to be critical as we move through the months ahead,” noted president and chief executive officer Linda M. Farthing. “While we have had some individual event success, the persistent trend of decreased sales absent promotional drivers is troubling, and we remain concerned about the consumer’s cautious mindset as we look out at the rest of the year.”

Farthing went on to say, “If these sales trends persist, we will have to take steeper markdowns in the second quarter in order to reach our goal of keeping inventories current. And while we were able to reduce expenditures in the first quarter, there will be less opportunity for savings in the second quarter.”

Other news

The Company continues to work on initiatives related to merchandising, expense control, inventory management and the in-store experience. A greater proportion of recognizable brands in the store and more opportunistic purchases are appearing on the sales floor. The reduction of SG&A expenses continues to be a priority, with a focus on non-merchandise procurement and other indirect spend categories. Using tools like a stronger customer relationship management program, strategies are being developed to deliver a stronger value message to potential and returning customers.


Store network

During the first quarter of 2008, five new stores (Westboro, MA; Phoenix, AZ; Indianapolis, IN; and Franklin Park and Holmdel, NJ) were opened and one was closed. At May 3, 2008, there were 284 stores in operation as compared to 270 at the same time last year.

Conference Call

Management will hold a conference call for investment analysts at 10 a.m. ET this morning to discuss these results. 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 May 30, 2008.

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 Massachusetts, 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.

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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)

 

     May 3, 2008    February 2, 2008    May 5, 2007

ASSETS

        

Current assets:

        

Cash and cash equivalents

   $ 22,473    $ 15,145    $ 23,484

Trade and other receivables

     11,493      12,372      10,172

Inventories

     280,573      262,496      308,279

Income taxes receivable

     10,060      14,103      —  

Prepaid expenses and other current assets

     15,309      13,985      17,151
                    

Total current assets

     339,908      318,101      359,086

Property and equipment, net

     109,948      110,687      112,376

Other assets

     33,535      31,751      28,633
                    

Total assets

   $ 483,391    $ 460,539    $ 500,095
                    

LIABILITIES AND STOCKHOLDERS’ EQUITY

        

Current liabilities:

        

Accounts payable

   $ 80,392    $ 77,124    $ 91,635

Accrued liabilities

     73,774      75,508      73,093

Income taxes payable

     —        —        9,108
                    

Total current liabilities

     154,166      152,632      173,836

Notes payable to banks

     40,000      27,133      5,420

Other liabilities

     28,864      24,085      24,359
                    

Total liabilities

     223,030      203,850      203,615

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; 42,078,878, 41,831,182 and 43,850,458 shares issued and outstanding, respectively

     421      418      438

Additional paid-in capital

     6,489      5,288      24,888

Retained earnings

     253,451      250,983      271,154
                    

Total stockholders’ equity

     260,361      256,689      296,480
                    

Total liabilities and stockholders’ equity

   $ 483,391    $ 460,539    $ 500,095
                    


Stein Mart, Inc.

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

 

     13 Weeks Ended
May 3, 2008
    13 Weeks Ended
May 5, 2007

Net sales

   $ 352,123     $ 376,119

Cost of merchandise sold

     254,377       271,209
              

Gross profit

     97,746       104,910

Selling, general and administrative expenses

     91,539       97,411

Other income, net

     5,930       5,379
              

Income from operations

     12,137       12,878

Interest (expense) income, net

     (367 )     127
              

Income before income taxes

     11,770       13,005

Provision for income taxes

     4,772       4,893
              

Net income

   $ 6,998     $ 8,112
              

Net income per share:

    

Basic

   $ 0.17     $ 0.19
              

Diluted

   $ 0.17     $ 0.18
              

Weighted-average shares outstanding:

    

Basic

     41,251       43,240
              

Diluted

     41,435       43,912
              


Stein Mart, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     13 Weeks Ended
May 3, 2008
    13 Weeks Ended
May 5, 2007
 

Cash flows from operating activities:

    

Net income

   $ 6,998     $ 8,112  

Adjustments to reconcile net income to net cash used in operating activities:

    

Depreciation and amortization

     6,497       6,365  

Impairment of property and other assets

     —         108  

Store closing charges

     111       55  

Deferred income taxes

     271       (1,092 )

Share-based compensation

     1,258       2,300  

Tax benefit from equity issuances

     —         293  

Excess tax benefits from share-based compensation

     —         (267 )

Changes in assets and liabilities:

    

Trade and other receivables

     879       (8 )

Inventories

     (18,077 )     (17,336 )

Income taxes receivable

     4,043       —    

Prepaid expenses and other current assets

     (1,729 )     (687 )

Other assets

     (1,327 )     (2,410 )

Accounts payable

     3,268       8,392  

Accrued liabilities

     (2,547 )     (4,938 )

Income taxes payable

     —         (3,983 )

Other liabilities

     264       2,005  
                

Net cash used in operating activities

     (91 )     (3,091 )
                

Cash flows from investing activities:

    

Capital expenditures

     (5,448 )     (5,266 )

Purchases of short-term investments

     —         (36,580 )

Sales of short-term investments

     —         47,415  
                

Net cash (used in) provided by investing activities

     (5,448 )     5,569  
                

Cash flows from financing activities:

    

Borrowings under notes payable to banks

     242,212       7,420  

Repayments of notes payable to banks

     (229,345 )     (2,000 )

Cash dividends paid

     —         (2,734 )

Excess tax benefits from share-based compensation

     —         267  

Proceeds from exercise of stock options

     —         3,450  

Repurchase of common stock

     —         (2,957 )
                

Net cash provided by financing activities

     12,867       3,446  
                

Net increase in cash and cash equivalents

     7,328       5,924  

Cash and cash equivalents at beginning of year

     15,145       17,560  
                

Cash and cash equivalents at end of period

   $ 22,473     $ 23,484