Stein Mart, Inc. Reports First Quarter 2013 Financial Results

Highlights:
  • Diluted earnings per share of $0.33 compared to $0.25 last year.
  • Net income of $14.7 million increases 35.6 percent.
  • Comparable store sales up 1.2 percent.

JACKSONVILLE, Fla., May 23, 2013 (GLOBE NEWSWIRE) -- Stein Mart, Inc. (Nasdaq:SMRT) today announced financial results for the first quarter ended May 4, 2013.

Overview of Results

Net income for the first quarter of 2013 was $14.7 million or $0.33 per diluted share compared to net income of $10.8 million or $0.25 per diluted share in 2012. EBITDA for the first quarter increased 29.3 percent to $31.2 million compared to $24.1 million in 2012 (see Note 1).

Total sales for the first quarter of 2013 increased 3.8 percent to $321.4 million, while comparable store sales increased 1.2 percent.

"We ended the quarter strongly with an 8.0 percent comp sales increase in April and a positive comp for the quarter, despite a slow start caused by colder than normal weather and the Easter calendar shift," said Jay Stein, Chief Executive Officer. "Our increased sales and a higher gross profit rate leveraged against relatively flat expenses drove our substantially higher earnings."

Comments on Results

Gross profit for the first quarter increased to $97.9 million or 30.5 percent of sales from $91.9 million or 29.7 percent of sales in 2012. The increase in gross profit was due to increased sales and an increase in the gross profit rate which was primarily the result of lower markdowns.

Selling, general and administrative ("SG&A") expenses for the first quarter were $73.6 million or 22.9 percent of sales compared to $72.9 million or 23.6 percent of sales in 2012. The slight increase in SG&A expenses was primarily due to higher depreciation expense and $0.7 million of additional professional fees associated with our restatement, partially offset by various other cost reductions.

The effective tax rate was 39.6 percent for the first quarter of 2013 compared to 42.7 percent in 2012. Last year's rate was higher primarily due to non-deductible expenses associated with our post-retirement life insurance benefit that was discontinued during the fourth quarter of 2012.

Balance Sheet Highlights

Cash at year end of the first quarter was $83.9 million, after paying a dividend of $43.8 million at the end of 2012, compared to $116.7 million at the end of the first quarter of 2012. We have not borrowed on our credit facility since the beginning of 2009.

Inventories were $278.4 million at the end of the first quarter of 2013 compared to $262.8 million at the end of the first quarter last year. Inventories were higher than last year to support our higher sales.

Store Network

The Company operated 262 Stein Mart stores at the end of the first quarter of 2013 and 263 stores at the end of the first quarter last year. During the quarter, we relocated two stores and closed one store. We expect to open four new stores, relocate two stores and close two stores during the second half of the year.

Filing of Form 10-Q

Reported results are preliminary and not final until the filing of Form 10-Q for the fiscal quarter ended May 4, 2013 with the SEC, and therefore remain subject to adjustment.

Conference Call

A conference call for investment analysts to discuss the Company's first quarter results will be held at 10 a.m. ET today, Thursday, May 23, 2013. 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, 2013.

Investor Presentation

Stein Mart's first quarter 2013 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, 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.

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:
  • consumer sensitivity to economic conditions
  • competition in the retail industry
  • changes in consumer preferences and fashion trends
  • the effectiveness of advertising, marketing and promotional strategies
  • 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
  • increases in the cost of employee benefits
  • disruption of the Company's distribution process
  • information technology failures
  • acts of terrorism
  • material weaknesses in internal control over financial reporting
  • other risks and uncertainties described in the Company's filings with the Securities and Exchange Commission.

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.

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 4, 2013 February 2, 2013 April 28, 2012
ASSETS      
Current assets:      
Cash and cash equivalents  $ 83,946  $ 67,233  $ 116,723
Inventories  278,435  243,345  262,780
Prepaid expenses and other current assets  18,007  22,855  21,050
Total current assets  380,388  333,433  400,553
Property and equipment, net  132,335  131,570  113,856
Other assets  26,603  26,706  22,887
Total assets  $ 539,326  $ 491,709  $ 537,296
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities:      
Accounts payable  $ 165,629  $ 130,972  $ 149,650
Accrued expenses and other current liabilities  65,755  66,109  74,189
Total current liabilities  231,384  197,081  223,839
Other liabilities  58,235  60,594  55,108
Total liabilities  289,619  257,675  278,947
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; 43,825,455, 43,808,485 and 43,295,411 shares issued and outstanding, respectively  438  438  433
Additional paid-in capital  18,470  17,491  13,107
Retained earnings  231,266  216,574  246,219
Accumulated other comprehensive loss  (467)  (469)  (1,410)
Total shareholders' equity  249,707  234,034  258,349
Total liabilities and shareholders' equity  $ 539,326  $ 491,709  $ 537,296
 
Stein Mart, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
     
  13 Weeks Ended 13 Weeks Ended
  May 4, 2013 April 28, 2012
     
Net sales  $ 321,364  $ 309,708
Cost of merchandise sold  223,419  217,844
Gross profit  97,945  91,864
Selling, general and administrative expenses  73,563  72,907
Operating income  24,382  18,957
Interest expense, net  61  46
Income before income taxes  24,321  18,911
Income tax expense  9,629  8,078
Net income  $ 14,692  $ 10,833
     
Net income per share:    
Basic  $ 0.34  $ 0.25
Diluted  $ 0.33  $ 0.25
     
Weighted-average shares outstanding:    
Basic  42,814  42,712
Diluted  43,262  42,752
 
Stein Mart, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)
     
  13 Weeks Ended 13 Weeks Ended
  May 4, 2013 April 28, 2012
     
Net income  $ 14,692  $ 10,833
Other comprehensive income, net of tax:    
Change in post-retirement benefit obligations  2  9
Comprehensive income  $ 14,694  $ 10,842
 
Stein Mart, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
     
  13 Weeks Ended 13 Weeks Ended
  May 4, 2013 April 28, 2012
Cash flows from operating activities:    
Net income  $ 14,692  $ 10,833
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  6,812  5,167
Share-based compensation  1,362  729
Store closing charges  (176)  146
Loss on disposal of property and equipment  120  96
Deferred income taxes  1,865  (688)
Tax deficiency from equity issuances  (389)  (667)
Excess tax benefits from share-based compensation  (24)  (33)
Changes in assets and liabilities:    
Inventories  (35,090)  (43,948)
Prepaid expenses and other current assets  2,336  13,352
Other assets  103  (318)
Accounts payable  34,657  43,587
Accrued expenses and other current liabilities  329  6,590
Other liabilities  (826)  552
Net cash provided by operating activities  25,771  35,398
Cash flows from investing activities:    
Acquisition of property and equipment  (7,697)  (9,120)
Net cash used in investing activities  (7,697)  (9,120)
Cash flows from financing activities:    
Capital lease payments  (1,391)  (1,415)
Excess tax benefits from share-based compensation  24  33
Proceeds from exercise of stock options and other  14  13
Repurchase of common stock  (8)  (2,239)
Net cash used in financing activities  (1,361)  (3,608)
Net increase in cash and cash equivalents  16,713  22,670
Cash and cash equivalents at beginning of year  67,233  94,053
Cash and cash equivalents at end of period  $ 83,946  $ 116,723
CONTACT: Linda Tasseff         Director, Investor Relations         (904) 858-2639         ltasseff@steinmart.com

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