Highlights
- Sales grew 7.5 percent in the first quarter; comparable store
sales increased 4.8 percent.
- Adjusted diluted earnings per share of $0.31 compared to $0.32
in 2014.
- Full year gross profit rate and SG&A expense outlook
reaffirmed
Stein Mart, Inc. (Nasdaq:SMRT) today announced financial results
for the first quarter ended May 2, 2015.
Overview of Results
Net income for the first quarter was $13.6 million or $0.29 per
diluted share compared to net income of $14.1 million or $0.31 per
diluted share in 2014. First quarter adjusted net income was $14.2
million or $0.31 per diluted share compared to adjusted net income
of $14.7 million or $0.32 per diluted share in 2014 (see Note 1).
First quarter 2015 includes $0.6 million higher interest expense on
our credit facilities which impacted earnings $0.4 million
after-tax or $0.01 per diluted share.
The quarterly timing of certain items negatively impacted
year-over-year comparisons for the first quarter of 2015, but will
have a positive impact in the second through fourth quarters. This
primarily resulted in a lower first quarter gross profit rate and
somewhat higher selling, general and administrative (SG&A)
expenses. We continue to expect our full year 2015 gross profit
rate to be consistent with our 2014 rate and that our full year
SG&A expenses will be as previously guided (see Gross Profit
and Selling, General and Administrative Expenses below).
Comments on Results
"We are extremely pleased with our solid comparable store sales
increase for the quarter and the performance of our new stores,"
said Jay Stein, Chief Executive Officer. "Our inventories are in
great shape. As planned, our gross profit rate will improve as the
year proceeds and our expenses will continue to leverage against
our higher sales. This should be more evident beginning with our
second quarter results."
Sales
Total sales of $353.5 million for the first quarter of 2015
increased 7.5 percent compared to $328.9 million in 2014.
Comparable store sales increased 4.8 percent for the first quarter
with our ecommerce business contributing 80 basis points to our
comparable sales growth. Traffic increased more than two percent
during the quarter; slightly higher than our fourth quarter
increase.
Gross Profit
Gross profit for the first quarter of 2015 was $108.4 million or
30.7 percent of sales compared to $104.3 million or 31.7 percent of
sales in 2014. The decrease in the first quarter gross profit rate
was due to the timing of markdowns to clear inventories at stores
being closed or relocated, timing of the allocation of buying and
distribution expenses to cost of sales, slightly higher markdowns
to clear fall merchandise and fulfillment costs for ecommerce
sales.
Compared to last year, we expect our gross profit rate to be
about the same in the second and third quarters and higher in the
fourth quarter as the impact of items which unfavorably impacted
the first quarter rate reverse.
Selling, General and Administrative Expenses
SG&A expenses for the first quarter of 2015 were $85.6
million or 24.2 percent of sales compared to $81.2 million or 24.7
percent of sales last year. The $4.4 million increase over 2014
SG&A expenses was primarily the result of higher compensation
and ecommerce costs offset by $1.0 million lower preopening due to
fewer new and relocated stores this spring. The higher compensation
costs mostly resulted from increased payroll to support our new
stores and higher sales as well as higher earnings-based incentive
compensation expense which is more heavily recorded in the first
and fourth quarters.
We continue to expect full year SG&A expenses to be
approximately $15 million higher than last year's $338 million (not
including SEC investigation costs) with the largest increase
estimated in the fourth quarter of 2015. We expect SG&A
expenses as a percent of sales will be lower than last year's rate
as expenses continue to leverage against our higher sales.
Interest Expense and Debt
Interest expense for the first quarter of 2015 increased $0.6
million to $0.7 million due to borrowings on our credit facilities
used to partially fund a $226 million special dividend paid in
February 2015. Borrowings under our credit facilities were $152
million at the end of the first quarter. Unused availability was
$116 million at the end of the quarter.
Outstanding Shares
Diluted weighted-average shares outstanding at the
end of the first quarter of 2015 increased from the end of the
first quarter of 2014 primarily due to the impact of our long term
incentive program. This quarter's higher outstanding shares
decreased diluted earnings per share $0.01.
Inventories
Inventories were $303 million at the end of the first quarter of
2015, 2.6 percent higher than the $295 million at the end of the
first quarter last year reflecting additional stores. Average
inventories per store were flat to last year.
Store Activity
The Company ended the quarter with 270 stores compared to 263 at
the end of the first quarter last year. During the quarter,
one new store was opened and one was closed.
We are now expecting to open ten new stores, close three stores
and relocate one store in 2015. A new store planned in San
Clemente, CA planned for fall 2015 has shifted to the first quarter
of 2016. The additional closing is the result of a relocation
planned for 2016 that is now closing in 2015 and reopening as a new
store 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 May 2, 2015 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 first quarter 2015 results will be held at 10 a.m. EDT on
May 21, 2015. 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 June 30, 2015.
Investor Presentation
Stein Mart's first quarter 2015 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 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, as well as
steinmart.com, Stein Mart's focused assortment of merchandise
features current season, moderate to better fashion apparel for
women and men, as well as accessories, shoes and home
fashions. 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 consumer
preferences and fashion trends, effectiveness of advertising and
marketing, capital availability and debt levels, 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, outcome of SEC
investigation, material weaknesses in internal control over
financial reporting and 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. |
Condensed Consolidated
Balance Sheets |
(Unaudited) |
(In thousands, except for share
and per share data) |
|
|
May 2, 2015 |
January 31, 2015 |
May 3, 2014 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 17,190 |
$ 65,314 |
$ 88,311 |
Inventories |
302,781 |
285,623 |
295,190 |
Prepaid expenses and other current
assets |
28,342 |
22,733 |
25,396 |
Total current assets |
348,313 |
373,670 |
408,897 |
Property and equipment, net |
149,254 |
148,782 |
143,610 |
Other assets |
30,889 |
30,639 |
28,202 |
Total assets |
$ 528,456 |
$ 553,091 |
$ 580,709 |
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 164,092 |
$ 129,924 |
$ 178,295 |
Current portion of debt |
6,667 |
-- |
-- |
Accrued expenses and other current
liabilities |
67,219 |
69,213 |
62,255 |
Total current liabilities |
237,978 |
199,137 |
240,550 |
Long-term debt |
145,777 |
-- |
-- |
Deferred rent |
33,654 |
31,284 |
31,187 |
Other liabilities |
40,296 |
37,732 |
36,646 |
Total liabilities |
457,705 |
268,153 |
308,383 |
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; 45,395,851, 44,918,649 and 44,727,231 shares
issued and outstanding, respectively |
454 |
449 |
447 |
Additional paid-in capital |
37,476 |
34,875 |
28,186 |
Retained earnings |
33,249 |
250,046 |
243,951 |
Accumulated other comprehensive
loss |
(428) |
(432) |
(258) |
Total shareholders' equity |
70,751 |
284,938 |
272,326 |
Total liabilities and shareholders'
equity |
$ 528,456 |
$ 553,091 |
$ 580,709 |
|
|
Stein Mart,
Inc. |
Condensed Consolidated
Statements of Income |
(Unaudited) |
(In thousands, except per share
amounts) |
|
|
|
|
13 Weeks Ended |
13 Weeks Ended |
|
May 2, 2015 |
May 3, 2014 |
|
|
|
Net sales |
$ 353,521 |
$ 328,854 |
Cost of merchandise sold |
245,141 |
224,528 |
Gross profit |
108,380 |
104,326 |
Selling, general and administrative
expenses |
85,622 |
81,229 |
Operating income |
22,758 |
23,097 |
Interest expense, net |
686 |
65 |
Income before income taxes |
22,072 |
23,032 |
Income tax expense |
8,508 |
8,957 |
Net income |
$ 13,564 |
$ 14,075 |
|
|
|
Earnings per common share: |
|
|
Basic |
$ 0.30 |
$ 0.31 |
Diluted |
$ 0.29 |
$ 0.31 |
|
|
|
Weighted-average shares outstanding: |
|
|
Basic |
44,612 |
43,829 |
Diluted |
45,766 |
44,456 |
|
|
Stein Mart,
Inc. |
Condensed Consolidated
Statements of Comprehensive Income |
(Unaudited) |
(In thousands) |
|
|
|
|
13 Weeks Ended |
13 Weeks Ended |
|
May 2, 2015 |
May 3, 2014 |
Net income |
$ 13,564 |
$ 14,075 |
Other comprehensive income, net of tax: |
|
|
Amounts reclassified from accumulated
other comprehensive income |
4 |
3 |
Comprehensive income |
$ 13,568 |
$ 14,078 |
|
|
Stein Mart,
Inc. |
Condensed Consolidated
Statements of Cash Flows |
(Unaudited) |
(In thousands) |
|
|
|
|
13 Weeks Ended |
13 Weeks Ended |
|
May 2, 2015 |
May 3, 2014 |
Cash flows from operating
activities: |
|
|
Net income |
$ 13,564 |
$ 14,075 |
Adjustments to reconcile net income to
net cash provided by operating activities: |
|
|
Depreciation and amortization |
7,223 |
6,991 |
Share-based compensation |
1,783 |
1,369 |
Store closing charges (benefits) |
51 |
(46) |
Loss on disposal of property and
equipment |
1 |
59 |
Deferred income taxes |
(100) |
4,175 |
Tax benefit from equity issuances |
3,722 |
662 |
Excess tax benefits from share-based
compensation |
(3,723) |
(688) |
Changes in assets and liabilities: |
|
|
Inventories |
(17,158) |
(33,673) |
Prepaid expenses and other current
assets |
(5,156) |
(960) |
Other assets |
29 |
(788) |
Accounts payable |
33,231 |
46,881 |
Accrued expenses and other current
liabilities |
(2,111) |
(8,107) |
Other liabilities |
3,178 |
4,889 |
Net cash provided by operating
activities |
34,534 |
34,839 |
Cash flows from investing
activities: |
|
|
Net acquisition of property and
equipment |
(7,085) |
(9,241) |
Net cash used in investing
activities |
(7,085) |
(9,241) |
Cash flows from financing
activities: |
|
|
Proceeds from borrowings |
267,200 |
-- |
Repayments of debt |
(114,756) |
-- |
Debt issuance costs |
(369) |
-- |
Cash dividends paid |
(228,825) |
(2,240) |
Excess tax benefits from share-based
compensation |
3,723 |
688 |
Proceeds from exercise of stock options
and other |
63 |
52 |
Repurchase of common stock |
(2,609) |
(2,641) |
Net cash used in financing
activities |
(75,573) |
(4,141) |
Net (decrease) increase in cash and cash
equivalents |
(48,124) |
21,457 |
Cash and cash equivalents at beginning of
year |
65,314 |
66,854 |
Cash and cash equivalents at end of
period |
$ 17,190 |
$ 88,311 |
NOTES TO PRESS RELEASE
Note 1 - Adjusted Results
We report our consolidated financial results in
accordance with generally accepted accounting principles ("GAAP").
However, to supplement these consolidated financial results,
management believes that certain non-GAAP operating results, which
exclude those items detailed below, may provide a more meaningful
measure to compare our results of operations between periods. We
believe these non-GAAP results provide useful information to both
management and investors by excluding certain items that impact
comparability of the results.
Reconciliation of
Operating Income, Net Income and Diluted EPS from GAAP Basis to
Adjusted Non-GAAP Basis |
Unaudited (in
thousands, except for share data) |
|
|
13
Weeks Ended May 2, 2015 |
13
Weeks Ended May 3, 2014 |
|
Operating
Income |
Tax Provision |
Net
Income |
Diluted EPS |
Operating
Income |
Tax Provision |
Net
Income |
Diluted EPS |
GAAP Basis |
$22,758 |
$8,508 |
$13,564 |
$0.29 |
$23,097 |
$8,957 |
$14,075 |
$0.31 |
Adjustments: |
|
|
|
|
|
|
|
|
Ecommerce losses |
501 |
190 |
311 |
0.01 |
645 |
245 |
400 |
0.01 |
SEC Investigation costs (1) |
463 |
176 |
287 |
0.01 |
328 |
125 |
203 |
0.00 |
Store closing & impairment
charges |
55 |
21 |
34 |
0.00 |
-- |
-- |
-- |
-- |
Total adjustments |
1,019 |
387 |
632 |
0.02 |
973 |
370 |
603 |
0.01 |
Adjusted Non-GAAP Basis |
$23,777 |
$8,895 |
$14,196 |
$0.31 |
$24,070 |
$9,327 |
$14,678 |
$0.32 |
|
|
|
|
|
|
|
|
|
(1) Professional fees and other
expenses related to the SEC investigation into our 2012 financial
restatement. |
Note 2 - EBITDA
As used in this release, EBITDA is defined as earnings before
interest, income taxes, depreciation and amortization. EBITDA
is not a measure of financial performance under 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.
Reconciliation of Net
Income to EBITDA and Adjusted EBITDA |
Unaudited (in
thousands) |
|
13 Weeks |
13 Weeks |
|
Ended |
Ended |
|
May 2, 2015 |
May 3, 2014 |
Net income |
$13,564 |
$14,075 |
Add back amounts for computation of
EBITDA: |
|
|
Interest expense, net |
686 |
65 |
Income tax expense |
8,508 |
8,957 |
Depreciation and amortization |
7,223 |
6,991 |
EBITDA |
29,981 |
30,088 |
Adjustments: |
|
|
Ecommerce losses |
501 |
645 |
SEC Investigation costs |
463 |
328 |
Store closing & impairment
charges |
55 |
-- |
Pre-opening costs |
344 |
1,332 |
Total adjustments |
1,363 |
2,305 |
Adjusted EBITDA |
$31,344 |
$32,393 |
CONTACT: Linda L. Tasseff
Director, Investor Relations
(904) 858-2639
ltasseff@steinmart.com
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