Stein Mart, Inc. (NASDAQ:SMRT) today announced financial results
for the second quarter ended July 30, 2016.
Second Quarter Highlights
- Diluted earnings per share of $0.06 compared to $0.09 in
2015
- Total sales increased 2.6 percent and comparable store sales
decreased 1.4 percent
- Eight new stores opening this fall will complete the 2016 plan
for 13 stores
Net income for the second quarter was $3.0 million or $0.06 per
diluted share compared to net income of $4.1 million or $0.09 per
diluted share in 2015. For the first six months of 2016, net income
was $16.3 million or $0.35 per diluted share compared to $17.7
million or $0.38 per diluted share in the same period in 2015. The
first six months of 2016 includes $1.7 million, or $0.02 per
diluted share, higher expense for actual and anticipated legal
settlements.
Adjusted earnings before interest, income taxes, depreciation
and amortization (EBITDA) for the first half was $48.7 million
compared to $46.9 million in 2015 (see Note 1).
“Our sales trends improved in the second quarter
from the first quarter. Though same store sales were down, the
improved trend, along with our new stores, increased our total
sales for the quarter,” said Dawn Robertson, Chief Executive
Officer. “We managed our spring markdowns and seasonal inventories
well and continued our focus on controlling expenses in a
challenging apparel sales environment.”
“Beginning in the third quarter, we are introducing
some of our exciting new merchandising and marketing initiatives,”
continued Robertson. “For our existing loyal customers, these
include rolling out our revitalized merchandise assortments,
Fabulous Finds and the new ‘A List’ program. In addition, we are
aggressively growing our activewear business in all stores and
presenting a modern assortment in 60 stores to attract and grow a
new customer demographic. We are excited about all of these new
initiatives which we believe will positively impact sales.”
SalesTotal sales for the second quarter of 2016
increased 2.6 percent to $319.8 million, while comparable store
sales decreased 1.4 percent. For the first six months of 2016,
total sales increased 1.6 percent to $675.5 million, while
comparable store sales decreased 2.5 percent.
Gross ProfitGross profit for the second quarter
of 2016 was $89.4 million or 28.0 percent of sales compared to
$88.9 million or 28.5 percent of sales in 2015. The decrease in the
second quarter gross profit rate is due to higher markdowns and
higher occupancy costs.
Gross profit for the first six months of 2016 was $198.3 million
or 29.4 percent of sales compared to $197.3 million or 29.7 percent
of sales in 2015. The decrease in the gross profit rate for the
first half was the result of higher occupancy costs and the higher
second quarter markdowns.
Selling, General and Administrative
Expenses
Selling, general and administrative (SG&A) expenses for the
second quarter of 2016 were $83.8 million or 26.2 percent of sales
compared to $81.5 million or 26.2 percent of sales in 2015. The
$2.3 million increase in SG&A expenses is primarily the result
of higher operating expenses for new stores.
For the first six months, SG&A expenses were $170.3 million
compared to $167.2 million in 2015. SG&A expenses for the
first six months include $1.7 million higher expense for actual and
anticipated legal settlements. Excluding these costs from each
period, SG&A expenses for the first half would be $168.5
million or 24.9 percent of sales compared to $167.1 million or 25.1
percent of sales in 2015.
InventoriesInventories were $280
million at the end of the second quarter of 2016 compared to $277
million at the same time last year. Average inventories per store
were down 4 percent from last year.
Interest Expense and DebtInterest expense for
the second quarter of 2016 was $0.9 million compared to $0.8
million in 2015. For the first six months, interest expense was
$1.8 million compared to $1.5 million last year. Borrowings under
our credit facilities were $167 million at the end of the second
quarter. Unused availability was $91 million at the end of the
quarter.
Store ActivityWe had 283 stores at the end of
the second quarter compared to 269 last year. Pre-opening costs
related to new and relocated stores were $0.3 million for the
second quarter of 2016 compared to $0.5 million in last year’s
second quarter. Pre-opening costs for the first six months of 2016
were $1.4 million compared to $0.8 million last year.
We are opening eight new stores this fall for a total of 13 new
stores this year. We are closing one store this month and will have
290 stores at the end of the year.
Updated 2016 OutlookWe have updated our full
year 2016 outlook as follows:
- We continue to expect that new stores will increase sales an
estimated 4 percent above our comparable store sales results for
the full year.
- We continue to expect our gross profit rate to be 50 basis
points higher than in 2015 as we return to more normal markdown
levels in the fourth quarter.
- We are now forecasting SG&A expenses for the full year to
be approximately $360 million compared to the $370 million
previously estimated. Expenses for fall 2016 will be higher
than fall 2015 due to new stores, with the increase being greater
in the third quarter.
- We now expect the full year effective tax rate to be somewhat
less than the 38.5 percent previously estimated.
Filing of Form 10-QReported results are
preliminary and until the filing of our Form 10-Q for the fiscal
quarter ended July 30, 2016 with the Securities and Exchange
Commission (SEC), remain subject to adjustment.
Conference CallA conference call for investment
analysts to discuss the Company’s second quarter 2016 results will
be held at 11 a.m. ET on Friday, August 19, 2016. 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, 2016.
Investor PresentationStein Mart’s second
quarter 2016 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. (NASDAQ:SMRT)
is a national retailer offering designer and name-brand fashion,
accessories and home decor at everyday discount prices. Stein Mart
provides real value that customers will love every day both in
stores and online. Stein Mart currently operates 283 stores across
31 states and has plans to expand over the next year. Stein Mart is
adding new modern brands to its stores this year to offer
discriminating shoppers even more of the fashion and savings they
want. 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, ability to implement our strategic plans to
sustain profitable growth, 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, material weaknesses in
internal control over financial reporting and other risks and
uncertainties described in the Company’s filings with the SEC.
SMRT-F
Additional information about Stein Mart, Inc. can
be found at www.steinmart.com
|
Stein Mart, Inc.Condensed
Consolidated Statements of
Income(Unaudited)(In thousands, except
per share amounts) |
|
|
13 Weeks Ended |
13 Weeks Ended |
26 Weeks Ended |
26 Weeks Ended |
|
July 30, 2016 |
August 1, 2015 |
July 30, 2016 |
August 1, 2015 |
|
|
|
|
|
Net sales |
$ |
319,761 |
|
$ |
311,583 |
|
$ |
675,473 |
|
$ |
665,104 |
|
Cost of merchandise
sold |
|
230,322 |
|
|
222,648 |
|
|
477,142 |
|
|
467,789 |
|
Gross
profit |
|
89,439 |
|
|
88,935 |
|
|
198,331 |
|
|
197,315 |
|
Selling, general and
administrative expenses |
|
83,840 |
|
|
81,545 |
|
|
170,314 |
|
|
167,167 |
|
Operating
income |
|
5,599 |
|
|
7,390 |
|
|
28,017 |
|
|
30,148 |
|
Interest expense,
net |
|
883 |
|
|
807 |
|
|
1,849 |
|
|
1,493 |
|
Income
before income taxes |
|
4,716 |
|
|
6,583 |
|
|
26,168 |
|
|
28,655 |
|
Income tax expense |
|
1,709 |
|
|
2,489 |
|
|
9,850 |
|
|
10,997 |
|
Net
income |
$ |
3,007 |
|
$ |
4,094 |
|
$ |
16,318 |
|
$ |
17,658 |
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
Basic |
$ |
0.07 |
|
$ |
0.09 |
|
$ |
0.36 |
|
$ |
0.39 |
|
Diluted |
$ |
0.06 |
|
$ |
0.09 |
|
$ |
0.35 |
|
$ |
0.38 |
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
Basic |
|
45,719 |
|
|
44,710 |
|
|
45,657 |
|
|
44,661 |
|
Diluted |
|
46,555 |
|
|
45,926 |
|
|
46,415 |
|
|
45,846 |
|
Stein Mart,
Inc.Condensed Consolidated Balance
Sheets(Unaudited)(In thousands, except
for share and per share data) |
|
|
July 30, 2016 |
January 30, 2016 |
August 1, 2015 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
11,765 |
|
$ |
11,830 |
|
$ |
11,620 |
|
Inventories |
|
279,691 |
|
|
293,608 |
|
|
277,243 |
|
Prepaid expenses and
other current assets |
|
20,925 |
|
|
18,586 |
|
|
30,060 |
|
Total
current assets |
|
312,381 |
|
|
324,024 |
|
|
318,923 |
|
Property and equipment,
net |
|
169,597 |
|
|
162,954 |
|
|
156,072 |
|
Other assets |
|
29,892 |
|
|
29,247 |
|
|
30,323 |
|
Total
assets |
$ |
511,870 |
|
$ |
516,225 |
|
$ |
505,318 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
98,185 |
|
$ |
105,569 |
|
$ |
122,699 |
|
Current portion of
debt |
|
10,000 |
|
|
10,000 |
|
|
9,167 |
|
Accrued expenses and
other current liabilities |
|
68,411 |
|
|
71,571 |
|
|
64,661 |
|
Total
current liabilities |
|
176,596 |
|
|
187,140 |
|
|
196,527 |
|
Long-term debt |
|
157,371 |
|
|
180,150 |
|
|
161,033 |
|
Deferred rent |
|
42,286 |
|
|
41,146 |
|
|
37,532 |
|
Other liabilities |
|
46,149 |
|
|
31,472 |
|
|
36,250 |
|
Total
liabilities |
|
422,402 |
|
|
439,908 |
|
|
431,342 |
|
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; 46,848,195, 45,814,583 and 45,702,328 |
|
|
|
shares
issued and outstanding, respectively |
|
468 |
|
|
458 |
|
|
457 |
|
Additional paid-in
capital |
|
46,547 |
|
|
42,801 |
|
|
40,025 |
|
Retained earnings |
|
42,722 |
|
|
33,337 |
|
|
33,918 |
|
Accumulated other
comprehensive loss |
|
(269 |
) |
|
(279 |
) |
|
(424 |
) |
Total
shareholders’ equity |
|
89,468 |
|
|
76,317 |
|
|
73,976 |
|
Total
liabilities and shareholders’ equity |
$ |
511,870 |
|
$ |
516,225 |
|
$ |
505,318 |
|
|
NOTE TO PRESS RELEASE
Note 1 – 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 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.
|
|
|
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA |
|
Unaudited (in thousands) |
|
|
|
|
26 Weeks |
26 Weeks |
|
|
|
|
Ended |
Ended |
|
|
|
|
July 30, 2016 |
Aug. 1, 2015 |
|
|
Net
income |
$ |
16,318 |
|
$ |
17,658 |
|
|
|
Add back
amounts for computation of EBITDA: |
|
|
|
|
|
Interest
expense, net |
|
1,849 |
|
|
1,493 |
|
|
|
|
Income tax
expense |
|
9,850 |
|
|
10,997 |
|
|
|
|
Depreciation and amortization |
|
15,611 |
|
|
14,534 |
|
|
|
EBITDA |
|
43,628 |
|
|
44,682 |
|
|
|
Adjustments: |
|
|
|
|
Ecommerce losses |
|
1,812 |
|
|
1,273 |
|
|
|
Expense related to legal settlements |
|
1,833 |
|
|
113 |
|
|
|
Store closing and impairment charges |
|
38 |
|
|
64 |
|
|
|
Pre-opening costs |
|
1,388 |
|
|
815 |
|
|
|
Total adjustments |
|
5,071 |
|
|
2,265 |
|
|
|
Adjusted
EBITDA |
$ |
48,699 |
|
$ |
46,947 |
|
For more information:
Linda L. Tasseff
Director, Investor Relations
(904) 858-2639
ltasseff@steinmart.com
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