Stein Mart, Inc. (NASDAQ:SMRT) today announced financial results
for the fourth quarter and fiscal year ended January 28, 2017.
Highlights
- Full year total sales flat to last year and comparable store
sales decreased 3.8 percent
- Full year diluted earnings per share of $0.01 compared to $0.51
in 2015
Net loss for the fourth quarter was $4.9 million or
$0.11 per diluted share compared to net income of $6.3 million or
$0.13 per diluted share in 2015. For the year, net income was $0.4
million or $0.01 per diluted share compared to $23.7 million or
$0.51 per diluted share in 2015. Adjusted earnings before interest,
income taxes, depreciation and amortization (“EBITDA”) for the year
was $44.6 million compared to $76.7 million in 2015 (see Note
1).
“Our fourth quarter results were disappointing as we continued
to work through higher than desired inventory levels and the impact
of changes to marketing, merchandising and promotions implemented
during the third quarter. We were aggressive with our promotions
and markdowns to clear fall merchandise which severely impacted the
quarter’s gross profit rate and earnings,” said Hunt Hawkins, Chief
Executive Officer.
“With our new executive leadership now in place, 2017 will be a
year of transition as we refine and organize around our strategies.
Lessons learned from last year have us keenly focused on changes we
need to make to our business to significantly improve management of
our inventories and increase sales productivity. Everything we do
will be aimed at our loyal customer and support our brand and value
messaging in this continuing difficult retail environment.”
SalesTotal sales for the fourth quarter of 2016
decreased 2.2 percent to $385.5 million, while comparable store
sales decreased 5.5 percent. Total sales were $1.36 billion for
2016 and 2015, while comparable store sales decreased 3.8
percent.
Gross ProfitGross profit for the fourth quarter
of 2016 was $87.9 million or 22.8 percent of sales compared to
$105.8 million or 26.8 percent of sales in 2015. Gross profit for
the year 2016 was $359.0 million or 26.4 percent of sales compared
to $385.3 million or 28.3 percent of sales in 2015. The lower gross
profit rate for both the quarter and the year is primarily due to
higher markdowns. Additionally, higher occupancy costs, mostly from
new stores, negatively leveraged on lower comparable store
sales.
Selling, General and Administrative
ExpensesSelling, general and administrative (SG&A)
expenses for the fourth quarter of 2016 were $96.1 million compared
to $95.1 million in 2015. For the year, SG&A expenses were
$355.4 million in 2016 compared to $343.7 million in 2015.
Excluding the impact of new stores, SG&A expenses for the year
decreased primarily as a result of higher credit card program
income somewhat offset by higher expense for legal settlements and
executive severance.
Balance SheetInventories were $291
million at the end of 2016 compared to $294 million last year.
Average inventories per store were down 5.9 percent from last
year.
Borrowings under our credit facilities were $182 million and
unused availability was $72 million at the end of the year. At the
end of 2015, borrowings were $190 million and unused availability
was $74 million.
Store ActivityWe had 290 stores at the end of
2016 compared to 278 at the end of 2015. We opened thirteen new
stores and closed one store in 2016.
2017
Outlook We expect
the following factors to influence our business in
2017:
- We currently plan to open 11 new stores with five opening in
March and six in September and October.- We also plan to
close five stores and relocate one.- Net new stores should
increase sales at least four percent above our comparable store
sales increases for the year.
- We expect our gross profit rate to approach the fiscal 2015
rate.
- SG&A expenses are expected to increase approximately $15
million, the majority of which relates to new stores.
- Interest expense is estimated to be about the same as in
2016.
- The effective tax rate for the year is estimated to be 38.0
percent.
- Capital expenditures for 2017 are expected to be approximately
$32 million, or $29 million net of tenant improvement
allowances.
Filing of Form 10-KReported results are
preliminary and not final until the filing of our Form 10-K for the
fiscal year ended January 28, 2017 with the Securities and Exchange
Commission (“SEC”), and therefore remain subject to adjustment.
Conference CallA conference call for investment
analysts to discuss the Company’s fourth quarter and fiscal 2016
results will be held at 10 a.m. EST on March 8, 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 April 30, 2017.
Investor PresentationStein Mart’s fourth
quarter and fiscal 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 287 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
StatementsExcept 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.
|
|
|
|
| Stein Mart, Inc.Consolidated
Statements of Operations |
| (In thousands, except per share amounts) |
|
|
| |
13 Weeks Ended |
|
13 Weeks Ended |
|
52 Weeks Ended |
|
52 Weeks Ended |
| |
January 28, 2017 |
|
January 30, 2016 |
|
January 28, 2017 |
|
January 30, 2016 |
| |
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
| Net sales |
$ |
385,518 |
|
|
$ |
394,132 |
|
$ |
1,360,518 |
|
|
$ |
1,359,901 |
| Cost of merchandise
sold |
|
297,581 |
|
|
|
288,328 |
|
|
1,001,539 |
|
|
|
974,614 |
| Gross
profit |
|
87,937 |
|
|
|
105,804 |
|
|
358,979 |
|
|
|
385,287 |
| Selling, general and
administrative expenses |
|
96,065 |
|
|
|
95,093 |
|
|
355,413 |
|
|
|
343,724 |
| Operating
(loss) income |
|
(8,128 |
) |
|
|
10,711 |
|
|
3,566 |
|
|
|
41,563 |
| Interest expense,
net |
|
1,086 |
|
|
|
899 |
|
|
3,884 |
|
|
|
3,283 |
| (Loss)
Income before income taxes |
|
(9,214 |
) |
|
|
9,812 |
|
|
(318 |
) |
|
|
38,280 |
| Income tax (benefit)
expense |
|
(4,307 |
) |
|
|
3,562 |
|
|
(719 |
) |
|
|
14,569 |
| Net
(loss) income |
$ |
(4,907 |
) |
|
$ |
6,250 |
|
$ |
401 |
|
|
$ |
23,711 |
| |
|
|
|
|
| Net (loss) income per
share: |
|
|
|
|
|
Basic |
$ |
(0.11 |
) |
|
$ |
0.14 |
|
$ |
0.01 |
|
|
$ |
0.52 |
|
Diluted |
$ |
(0.11 |
) |
|
$ |
0.13 |
|
$ |
0.01 |
|
|
$ |
0.51 |
| |
|
|
|
|
| Weighted-average shares
outstanding: |
|
|
|
|
|
Basic |
|
45,981 |
|
|
|
44,905 |
|
|
45,785 |
|
|
|
44,754 |
|
Diluted |
|
45,981 |
|
|
|
46,061 |
|
|
46,597 |
|
|
|
45,953 |
| |
|
|
|
|
| |
| Stein Mart, Inc.Consolidated Balance
Sheets |
| (In thousands, except for share and per share
data) |
| |
|
|
January 28, 2017 |
|
January 30, 2016 |
|
ASSETS |
|
(Unaudited) |
|
|
|
|
|
| Current
assets: |
|
|
|
|
|
|
|
| Cash and
cash equivalents |
$ |
10,604 |
|
|
$ |
11,830 |
|
|
Inventories |
|
291,110 |
|
|
|
293,608 |
|
| Prepaid
expenses and other current assets |
|
30,249 |
|
|
|
18,586 |
|
| Total
current assets |
|
331,963 |
|
|
|
324,024 |
|
| Property
and equipment, net |
|
165,542 |
|
|
|
162,954 |
|
| Other
assets |
|
30,344 |
|
|
|
29,247 |
|
| Total
assets |
$ |
527,849 |
|
|
$ |
516,225 |
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
| Current
liabilities: |
|
|
| Accounts
payable |
$ |
114,419 |
|
|
$ |
105,569 |
|
| Current
portion of debt |
|
10,000 |
|
|
|
10,000 |
|
| Accrued
expenses and other current liabilities |
|
72,772 |
|
|
|
71,571 |
|
| Total
current liabilities |
|
197,191 |
|
|
|
187,140 |
|
|
Long-term debt |
|
171,792 |
|
|
|
180,150 |
|
| Deferred
rent |
|
41,774 |
|
|
|
41,146 |
|
| Other
liabilities |
|
46,832 |
|
|
|
31,472 |
|
| Total
liabilities |
|
457,589 |
|
|
|
439,908 |
|
|
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; 47,018,942 and 45,814,583 |
|
|
| shares
issued and outstanding, respectively |
|
470 |
|
|
|
458 |
|
|
Additional paid-in capital |
|
50,241 |
|
|
|
42,801 |
|
| Retained
earnings |
|
19,853 |
|
|
|
33,337 |
|
|
Accumulated other comprehensive loss |
|
(304 |
) |
|
|
(279 |
) |
| Total
shareholders’ equity |
|
70,260 |
|
|
|
76,317 |
|
| Total
liabilities and shareholders’ equity |
$ |
527,849 |
|
|
$ |
516,225 |
|
|
|
|
|
| |
| Stein Mart, Inc.Consolidated
Statements of Cash Flows |
| (In thousands) |
| |
|
Year Ended |
|
Year Ended |
|
|
January 28, 2017 |
|
January 30, 2016 |
| Cash flows from
operating activities: |
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
| Net
income |
|
$ |
401 |
|
|
$ |
23,711 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
32,600 |
|
|
|
29,873 |
|
|
Share-based compensation |
|
|
7,923 |
|
|
|
6,516 |
|
| Store
closing charges |
|
|
570 |
|
|
|
7 |
|
|
Impairment of property and other assets |
|
|
1,433 |
|
|
|
2,008 |
|
| Loss on
disposal of property and equipment |
|
|
3,437 |
|
|
|
167 |
|
| Deferred
income taxes |
|
|
1,835 |
|
|
|
(4,835 |
) |
| Tax
(expense) benefit from equity issuances |
|
|
(874 |
) |
|
|
3,646 |
|
| Excess
tax benefits from share-based compensation |
|
|
(86 |
) |
|
|
(3,932 |
) |
| Changes
in assets and liabilities: |
|
|
|
|
Inventories |
|
|
2,498 |
|
|
|
(7,985 |
) |
|
Prepaid expenses and other current assets |
|
|
(12,537 |
) |
|
|
520 |
|
|
Other assets |
|
|
(1,020 |
) |
|
|
2,045 |
|
|
Accounts payable |
|
|
8,785 |
|
|
|
(24,438 |
) |
|
Accrued expenses and other current liabilities |
|
|
646 |
|
|
|
(316 |
) |
|
Other liabilities |
|
|
14,974 |
|
|
|
11,425 |
|
| Net cash
provided by operating activities |
|
|
60,585 |
|
|
|
38,412 |
|
| Cash flows from
investing activities: |
|
|
|
| Net
acquisition of property and equipment |
|
|
(42,378 |
) |
|
|
(44,365 |
) |
| Proceeds
from sale of assets |
|
|
3,178 |
|
|
|
- |
|
| Net cash
used in investing activities |
|
|
(39,200 |
) |
|
|
(44,365 |
) |
| Cash flows from
financing activities: |
|
|
|
| Proceeds
from borrowings |
|
|
453,800 |
|
|
|
673,312 |
|
|
Repayments of debt |
|
|
(462,200 |
) |
|
|
(483,079 |
) |
| Debit
issuance costs |
|
|
- |
|
|
|
(380 |
) |
| Cash
dividends paid |
|
|
(14,700 |
) |
|
|
(239,089 |
) |
| Excess
tax benefits from share-based compensation |
|
|
86 |
|
|
|
3,932 |
|
| Proceeds
from exercise of stock options and other |
|
|
2,071 |
|
|
|
1,339 |
|
|
Repurchase of common stock |
|
|
(1,668 |
) |
|
|
(3,566 |
) |
| Net cash
used in financing activities |
|
|
(22,611 |
) |
|
|
(47,531 |
) |
| Net
decrease in cash and cash equivalents |
|
|
(1,226 |
) |
|
|
(53,484 |
) |
| Cash
and cash equivalents at beginning of year |
|
|
11,830 |
|
|
|
65,314 |
|
| Cash
and cash equivalents at end of year |
|
$ |
10,604 |
|
|
$ |
11,830 |
|
| |
|
|
|
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) |
| |
|
52 Weeks |
|
52 Weeks |
| |
|
Ended |
|
Ended |
| |
|
Jan. 28, 2017 |
|
Jan. 30, 2016 |
| Net
income |
$ |
401 |
|
|
$ |
23,711 |
| Add back
amounts for computation of EBITDA: |
|
|
| |
Interest
expense, net |
|
3,884 |
|
|
|
3,283 |
| |
Income tax
(benefit) expense |
|
(719 |
) |
|
|
14,569 |
| |
Depreciation and amortization |
|
32,600 |
|
|
|
29,873 |
| EBITDA |
|
36,166 |
|
|
|
71,436 |
|
Adjustments: |
|
|
| Executive severance |
|
1,440 |
|
|
|
- |
| Expense related to legal settlements |
|
1,993 |
|
|
|
205 |
| Non-cash impairment charges |
|
1,433 |
|
|
|
2,008 |
| New store pre-opening costs |
|
3,546 |
|
|
|
3,036 |
| Total adjustments |
|
8,412 |
|
|
|
5,249 |
| Adjusted
EBITDA |
$ |
44,578 |
|
|
$ |
76,685 |
| |
|
|
|
|
|
|
For more information:
Linda L. Tasseff
Director, Investor Relations
(904) 858-2639
ltasseff@steinmart.com
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