Stein Mart, Inc. (NASDAQ:SMRT) today announced financial results
for the third quarter ended October 29, 2016.
Third Quarter Highlights
- Total sales decreased 0.4 percent and comparable store sales
decreased 4.6 percent
- Diluted loss per share of $0.24 compared to $0.01 loss in
2015
- Eight new stores opened this quarter to complete 2016 plan for
290 stores at year-end
Net loss for the third quarter was $11.0 million or
$0.24 per diluted share compared to net loss of $0.2 million or
$0.01 per diluted share in 2015. For the first nine months of 2016,
net income was $5.3 million or $0.11 per diluted share compared to
$17.5 million or $0.37 per diluted share in the same period in
2015.
Adjusted earnings before interest, income taxes,
depreciation and amortization (EBITDA) for the first nine months
was $42.5 million compared to $55.7 million in 2015 (see Note
1).
“We introduced new marketing and promotional
changes, as well as new merchandising strategies, during the
quarter which were not embraced by our customer. The promotional
changes were particularly impactful on our ability to clear spring
merchandise on a timely and profitable basis during the quarter. As
a result, we took significant markdowns to liquidate spring
inventories. The lower gross profit rate also reflects higher
occupancy costs, mostly from new stores, which negatively leverage
on lower comparable store sales,” said Hunt Hawkins, Interim Chief
Executive Officer.
“As we look forward to the fourth quarter, we have
returned our marketing and promotions to what has worked in the
past as we explore a better strategy, but the challenging retail
environment will likely continue to drive higher markdowns as we
diligently work to enter 2017 with the right inventories. A bright
spot in this environment is our new fall stores, which are
performing above plan.”
SalesTotal sales for the third
quarter of 2016 decreased 0.4 percent to $299.5 million, while
comparable store sales decreased 4.6 percent. For the first nine
months of 2016, total sales increased 1.0 percent to $975.0
million, while comparable store sales decreased 3.1 percent.
Gross ProfitGross profit for the
third quarter of 2016 was $72.7 million or 24.3 percent of sales
compared to $82.2 million or 27.3 percent of sales in 2015. Gross
profit for the first nine months of 2016 was $271.0 million or 27.8
percent of sales compared to $279.5 million or 28.9 percent of
sales in 2015.
Selling, General and Administrative
ExpensesSelling, general and administrative (SG&A)
expenses for the third quarter of 2016 were $89.0 million compared
to $81.5 million in 2015. This year’s third quarter includes a $1.4
million charge related to our former CEO’s resignation in
September. The remaining $6.1 million increase in SG&A expenses
is primarily the result of additional operating expenses for new
stores and higher advertising expense, offset by higher credit card
program income.
For the first nine months, SG&A expenses were
$259.3 million in 2016 compared to $248.6 million in 2015. SG&A
expenses for the first nine months increased for the same items as
the quarter, plus $1.9 million higher expense for actual and
anticipated legal settlements.
InventoriesInventories were $384
million at the end of the third quarter of 2016 compared to $373
million at the same time last year. Average inventories per store
were down 3.5 percent from last year.
Interest Expense and DebtInterest
expense was $0.9 million for the third quarter of 2016 and 2015.
For the first nine months, interest expense was $2.8 million
compared to $2.4 million last year. Borrowings under our credit
facilities were $180 million and unused availability was $77
million at the end of the third quarter.
Store ActivityWe had 290 stores at
the end of the third quarter compared to 274 last year. We opened
eight new stores during this year’s third quarter which completed
our 2016 store plan.
Pre-opening costs related to new and relocated
stores were $2.2 million for the third quarter of 2016 compared to
$1.8 million in last year’s third quarter. Pre-opening costs for
the first nine months of 2016 were $3.5 million compared to $2.7
million last year.
Updated 2016 Outlook
Based on our results through the third quarter, we have updated our
full year 2016 outlook as follows:
- Due to higher markdowns in third quarter 2016 and deleveraging
of occupancy costs, we now expect our full year gross profit rate
to be lower than in 2015.
- We are now estimating SG&A expenses for the full year to be
slightly lower than our previous estimate of $360 million.
Filing of Form 10-QReported
results are preliminary and until the filing of our Form 10-Q for
the fiscal quarter ended October 29, 2016 with the Securities and
Exchange Commission (SEC), remain subject to adjustment.
Conference CallA conference call
for investment analysts to discuss the Company’s third quarter 2016
results will be held at 10 a.m. ET on Thursday, November 17, 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 November
30, 2016.
Investor PresentationStein Mart’s
third 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. The Company currently operates
290 stores across 31 states. Stein Mart is adding new modern brands
to its stores 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
Operations |
(Unaudited) |
(In thousands, except per share amounts) |
|
|
13 Weeks Ended |
|
|
13 Weeks Ended |
|
|
39 Weeks Ended |
|
|
39 Weeks Ended |
|
October 29, 2016 |
|
|
October 31, 2015 |
|
|
October 29, 2016 |
|
|
October 31, 2015 |
|
|
|
|
|
Net sales |
$ |
299,527 |
|
|
|
$ |
300,665 |
|
|
|
$ |
975,000 |
|
|
|
$ |
965,769 |
|
Cost of merchandise
sold |
|
226,816 |
|
|
|
|
218,497 |
|
|
|
|
703,958 |
|
|
|
|
686,286 |
|
Gross profit |
|
72,711 |
|
|
|
|
82,168 |
|
|
|
|
271,042 |
|
|
|
|
279,483 |
|
Selling, general and
administrative expenses |
|
89,034 |
|
|
|
|
81,464 |
|
|
|
|
259,348 |
|
|
|
|
248,631 |
|
Operating (loss) income |
|
(16,323 |
) |
|
|
|
704 |
|
|
|
|
11,694 |
|
|
|
|
30,852 |
|
Interest expense,
net |
|
949 |
|
|
|
|
891 |
|
|
|
|
2,798 |
|
|
|
|
2,384 |
|
(Loss) income before income
taxes |
|
(17,272 |
) |
|
|
|
(187 |
) |
|
|
|
8,896 |
|
|
|
|
28,468 |
|
Income tax (benefit)
expense |
|
(6,262 |
) |
|
|
|
10 |
|
|
|
|
3,588 |
|
|
|
|
11,007 |
|
Net (loss) income |
$ |
(11,010 |
) |
|
|
$ |
(197 |
) |
|
|
$ |
5,308 |
|
|
|
$ |
17,461 |
|
|
|
|
|
|
Net (loss) income per
share: |
|
|
|
|
Basic |
$ |
(0.24 |
) |
|
|
$ |
(0.01 |
) |
|
|
$ |
0.12 |
|
|
|
$ |
0.39 |
|
Diluted |
$ |
(0.24 |
) |
|
|
$ |
(0.01 |
) |
|
|
$ |
0.11 |
|
|
|
$ |
0.37 |
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
Basic |
|
45,845 |
|
|
|
|
44,791 |
|
|
|
|
45,720 |
|
|
|
|
44,704 |
|
Diluted |
|
45,845 |
|
|
|
|
44,791 |
|
|
|
|
46,599 |
|
|
|
|
45,916 |
|
|
|
|
|
|
Stein Mart, Inc. |
Condensed Consolidated Balance
Sheets |
(Unaudited) |
(In thousands, except for share and per share
data) |
|
|
October 29, 2016 |
|
|
January 30, 2016 |
|
|
October 31, 2015 |
ASSETS |
|
Current assets: |
|
Cash and cash
equivalents |
$ |
13,968 |
|
|
|
$ |
11,830 |
|
|
|
$ |
14,126 |
|
Inventories |
|
383,932 |
|
|
|
|
293,608 |
|
|
|
|
372,912 |
|
Prepaid expenses and
other current assets |
|
29,980 |
|
|
|
|
18,586 |
|
|
|
|
31,614 |
|
Total current assets |
|
427,880 |
|
|
|
|
324,024 |
|
|
|
|
418,652 |
|
Property and equipment,
net |
|
172,771 |
|
|
|
|
162,954 |
|
|
|
|
162,907 |
|
Other assets |
|
29,831 |
|
|
|
|
29,247 |
|
|
|
|
30,505 |
|
Total assets |
$ |
630,482 |
|
|
|
$ |
516,225 |
|
|
|
$ |
612,064 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
Current
liabilities: |
|
Accounts payable |
$ |
208,161 |
|
|
|
$ |
105,569 |
|
|
|
$ |
202,176 |
|
Current portion of
debt |
|
10,000 |
|
|
|
|
10,000 |
|
|
|
|
10,000 |
|
Accrued expenses and
other current liabilities |
|
77,076 |
|
|
|
|
71,571 |
|
|
|
|
68,162 |
|
Total current liabilities |
|
295,237 |
|
|
|
|
187,140 |
|
|
|
|
280,338 |
|
Long-term debt |
|
169,681 |
|
|
|
|
180,150 |
|
|
|
|
181,833 |
|
Deferred rent |
|
42,266 |
|
|
|
|
41,146 |
|
|
|
|
41,163 |
|
Other liabilities |
|
45,401 |
|
|
|
|
31,472 |
|
|
|
|
36,470 |
|
Total liabilities |
|
552,585 |
|
|
|
|
439,908 |
|
|
|
|
539,804 |
|
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; 46,919,426, 45,814,583
and 45,675,579 |
|
shares issued and outstanding,
respectively |
|
469 |
|
|
|
|
458 |
|
|
|
|
457 |
|
Additional paid-in
capital |
|
49,497 |
|
|
|
|
42,801 |
|
|
|
|
41,826 |
|
Retained earnings |
|
28,196 |
|
|
|
|
33,337 |
|
|
|
|
30,397 |
|
Accumulated other
comprehensive loss |
|
(265 |
) |
|
|
|
(279 |
) |
|
|
|
(420 |
) |
Total shareholders’ equity |
|
77,897 |
|
|
|
|
76,317 |
|
|
|
|
72,260 |
|
Total liabilities and shareholders’
equity |
$ |
630,482 |
|
|
|
$ |
516,225 |
|
|
|
$ |
612,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Adjustments to EBITDA include non-cash items
(impairment charges), significant non-recurring unusual items
(executive severance, legal settlements) and new stores investments
(pre-opening costs).
Reconciliation of Net Income to EBITDA and Adjusted
EBITDA |
Unaudited (in thousands) |
|
|
39 Weeks |
|
|
39 Weeks |
|
|
Ended |
|
|
Ended |
|
|
Oct. 29, 2016 |
|
|
Oct. 31, 2015 |
Net
income |
$ |
5,308 |
|
|
|
$ |
17,461 |
|
Add back
amounts for computation of EBITDA: |
|
|
|
Interest expense,
net |
|
2,798 |
|
|
|
|
2,384 |
|
|
Income tax expense |
|
3,588 |
|
|
|
|
11,007 |
|
|
Depreciation and
amortization |
|
23,636 |
|
|
|
|
22,050 |
|
EBITDA |
|
35,330 |
|
|
|
|
52,902 |
|
Adjustments: |
|
|
Executive
severance |
|
1,440 |
|
|
|
|
- |
|
Expense related to
legal settlements |
|
1,894 |
|
|
|
|
125 |
|
Non-cash impairment
charges |
|
277 |
|
|
|
|
- |
|
New store pre-opening
costs |
|
3,546 |
|
|
|
|
2,651 |
|
Total adjustments |
|
7,157 |
|
|
|
|
2,776 |
|
Adjusted
EBITDA |
$ |
42,487 |
|
|
|
$ |
55,678 |
|
|
|
|
|
|
|
|
|
|
For more information:
Linda L. Tasseff
Director, Investor Relations
(904) 858-2639
ltasseff@steinmart.com
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