Stein Mart (SMRTQ) 8-K Stein Mart, Inc. Reports 1Q ‘06 Financial Results

Exhibit 99.1

1200 RIVERPLACE BOULEVARD  •  JACKSONVILLE, FL 32207-1809  •  (904) 346-1500

May 18, 2006	For more information:
	Susan Datz Edelman
FOR IMMEDIATE RELEASE	Director, Stockholder Relations
	(904) 346-1506
	sedelman@steinmart.com

STEIN MART, INC. REPORTS 1Q ‘06 FINANCIAL RESULTS

JACKSONVILLE, FL – Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its first quarter ended April 29, 2006.

For the first quarter of 2006, the Company earned $7.6 million or $0.17 per diluted share as compared to net income of $16.8 million or $0.38 per diluted share in the first quarter of 2005. Net sales for the first quarter of 2006 were $364.8 million, down 4.2 percent from the $380.7 million in sales for the first quarter of 2005. Comparable store sales decreased 5.1 percent from the first quarter of 2005 to the first quarter of 2006.

Gross profit decreased to $97.6 million or 26.7 percent of net sales in the first quarter of 2006 compared to $111.7 million or 29.3 percent of net sales in the same period of 2005. Gross profit was negatively impacted by increased markdowns taken to keep inventories current and lack of occupancy cost leverage, somewhat offset by improved mark-up.

Selling, general and administrative (SG&A) expenses were $90.5 million or 24.8 percent of net sales as compared to $89.0 million or 23.4 percent of net sales during the prior year’s first quarter. The SG&A rate was higher due to a lack of leverage on negative comparable store sales.

“As projected, first quarter was difficult as we sought to unify our fashion assortment and fully install our new Home area merchandise,” said Michael D. Fisher, president and chief executive officer of Stein Mart, Inc. “While we made sequential progress through the quarter, ending with slightly positive comparable store sales for April, greater markdowns were necessary to bring inventories to appropriate seasonal levels.”

Store Network Update

During the first quarter, Stein Mart opened three new stores: a seventh location in the Chicago area, a new market entry in Queens, NY and a new store in Aiken, SC. Two stores were closed. As of April 29, 2006, the Company operated 263 stores compared to 258 at this time last year.

Going forward, the Company expects to open 13 new stores and close four, for a total of 16 openings and six closings in 2006. Two stores are expected to close in the second quarter; seven openings and two closings are planned for the third quarter; and six openings are scheduled in the fourth quarter. At year-end, the Company expects to operate 272 stores.

Guidance

For the second quarter ending July 29, 2006, management expects comparable store sales to increase 1 - 2 percent, which would result in earnings per share of $0.25-$0.27 as compared to $0.26 per share for the same period last year. Due to the shortfall in the first quarter of 2006, management now anticipates comparable store sales will increase 1 – 2 percent for the year and earnings will be in line with last year’s $1.15 per share.

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Stein Mart, Inc.

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Quarterly Dividend Declared

The Stein Mart board of directors declared a quarterly dividend of $0.0625 per common share payable on June 23, 2006 to stockholders of record at the close of business on June 9, 2006.

Conference Call with Management

Management will discuss this information and answer questions from analysts in a conference call today (May 18, 2006) at 10:30 a.m. ET. The call may be heard on the investor relations portion of Stein Mart’s website at http://ir.steinmart.com, and a recording of the call will remain on the website until the end of the month.

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 New York, Stein Mart’s focused assortment of merchandise features moderate to designer brand-name apparel for women, men and young children, as well as accessories, gifts, linens and shoes.

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:

• changing preferences in apparel

• changes in consumer spending due to current events and/or general economic conditions

• availability of new store sites at acceptable lease terms

• unanticipated weather conditions and unseasonable weather

• the effectiveness of advertising, marketing and promotional strategies

• on-going competition from other retailers

• adequate sources of merchandise at acceptable prices

• the Company’s ability to attract and retain qualified employees to support planned growth,

• ability to successfully implement strategies to exit or improve under-performing stores

• disruption of the Company’s distribution system

• acts of terrorism

and the other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission.

SMRT-F

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Additional information about Stein Mart, Inc. can be found at www.steinmart.com

Stein Mart, Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands)

	April 29, 2006			January 28, 2006			April 30, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	33,553		$	20,200		$	25,147
Short-term investments		25,000			104,935			62,000
Trade and other receivables		11,510			11,121			9,685
Inventories		287,627			265,788			302,892
Prepaid expenses and other current assets		15,615			13,672			13,798
Total current assets		373,305			415,716			413,522
Property and equipment, net		95,156			87,106			75,678
Other assets		16,791			17,023			14,777
Total assets	$	485,252		$	519,845		$	503,977
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	125,213		$	88,408		$	107,030
Accrued liabilities		73,603			80,337			71,974
Income taxes payable		2,294			5,453			6,842
Total current liabilities		201,110			174,198			185,846
Other liabilities		21,833			21,908			21,755
Total liabilities		222,943			196,106			207,601
COMMITMENTS AND CONTINGENCIES
Stockholders’ 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; 43,587,650; 43,516,372 and 43,222,966 shares issued and outstanding, respectively		436			435			432
Additional paid-in capital		23,392			21,967			19,016
Unearned compensation		(6,002	)		(3,704	)		(2,210	)
Retained earnings		244,483			305,041			279,138
Total stockholders’ equity		262,309			323,739			296,376
Total liabilities and stockholders’ equity	$	485,252		$	519,845		$	503,977

Stein Mart, Inc.

Consolidated Statements of Income

(Unaudited)

(In thousands except per share amounts)

	13 Weeks Ended April 29, 2006		13 Weeks Ended April 30, 2005
Net sales	$	364,831	$	380,654
Cost of merchandise sold		267,245		268,959
Gross profit		97,586		111,695
Selling, general and administrative expenses		90,536		88,968
Other income, net		4,153		3,966
Income from operations		11,203		26,693
Interest income, net		891		394
Income before income taxes		12,094		27,087
Provision for income taxes		4,535		10,293
Net income	$	7,559	$	16,794
Net income per share:
Basic	$	0.17	$	0.39
Diluted	$	0.17	$	0.38
Weighted-average shares outstanding:
Basic		43,228		42,905
Diluted		44,074		44,202

Stein Mart, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	13 Weeks Ended April 29, 2006			13 Weeks Ended April 30, 2005
Cash flows from operating activities:
Net income	$	7,559		$	16,794
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,029			4,510
Store closing charges		331			498
Deferred income taxes		(714	)		501
Stock-based compensation		891			137
Changes in assets and liabilities:
Trade and other receivables		(389	)		1,695
Inventories		(21,839	)		(25,728	)
Prepaid expenses and other current assets		(1,943	)		(873	)
Other assets		(225	)		(110	)
Accounts payable		36,805			7,867
Accrued liabilities		(7,294	)		(7,269	)
Income taxes payable		(3,159	)		1,753
Other liabilities		227			580
Net cash provided by operating activities		16,279			355
Cash flows from investing activities:
Capital expenditures		(12,981	)		(8,868	)
Purchases of short-term investments		(463,750	)		(550,800	)
Sales of short-term investments		543,685			561,275
Net cash provided by investing activities		66,954			1,607
Cash flows from financing activities:
Cash dividends paid		(68,117	)		—
Excess tax benefits from stock-based compensation		180			1,710
Proceeds from exercise of stock options		1,542			5,381
Repurchase of common stock		(3,485	)		(4,156	)
Net cash (used in) provided by financing activities		(69,880	)		2,935
Net increase in cash and cash equivalents		13,353			4,897
Cash and cash equivalents at beginning of year		20,200			20,250
Cash and cash equivalents at end of year	$	33,553		$	25,147
Supplemental disclosures of cash flow information:
Income taxes paid	$	8,211		$	6,452