| Basis of Presentation | 1. Basis of Presentation The accompanying Condensed Consolidated Financial
Statements (Unaudited) have been prepared in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”) for interim financial information and
with the instructions to Form 10-Q S-X. 10-K As used herein, the terms “we,”
“our,” “us” and “Stein Mart”
refer to Stein Mart, Inc. and its wholly-owned subsidiaries.
Revenue Recognition In May 2014, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2014-09, Revenue
from Contracts with Customers (Topic
606) No. 2014-09”). No. 2014-09 No. 2014-09, Revenue from sales of our merchandise is recognized
at the time of sale net of any returns,
discounts and percentage-off We offer gift and merchandise return cards to our
customers. Some cards are electronic and none have expiration
dates. At the time gift cards are sold, the issuance is recorded as
a liability to customers, and no revenue is recognized. At the time
merchandise return cards are issued for returned merchandise, the
sale is reversed and a liability to customers is recorded. These
card liabilities are reduced and sales revenue recognized when they
are redeemed for merchandise. Card liabilities are included in
accrued expenses and other current liabilities in the Condensed
Consolidated Balance Sheets (Unaudited). Our gift and merchandise return cards may not
ultimately be redeemed either in full or partially. We account for
this “breakage” of unused amounts as revenue in
proportion to the pattern of rights exercised by the customer. With
the adoption of ASU No. 2014-09,
Credit Card We offer co-branded We receive royalty revenue from Synchrony based on
card usage in our stores and at other retailers for the Stein Mart
Mastercard. We also receive revenues for new accounts and gain
share based on the profitability of the overall program. Credit
card revenue is recorded within other revenue in the Condensed
Consolidated Statements of Operations (Unaudited). These revenues
are recorded as they are earned based on the occurrence of the
various program activities and represent the majority of other
revenue. Once a card is activated, the card holders are
eligible to participate in the credit card rewards program, which
provides for an incentive to card holders in the form of reward
points for which certificates are issued in $10 increments, which
is equivalent to 1,000 points. Points are valued at the stand-alone
selling price of the certificates issued. We defer a portion of our
revenue for loyalty points earned by customers using
the co-branded in-store
Adjustments to Previously Reported Financial Statements The following tables set forth the adjustments made
to our financial statements for the adoption of
ASU No. 2014-09
Condensed Consolidated Balance Sheets
February 3,
2018
As Reported
Adjustment
As Adjusted
Prepaid expenses and other current assets
$ 24,194
$ 2,426
$ 26,620
Accrued expenses and other current liabilities 76,058 2,395 78,453
Retained deficit (7,949 ) 31 (7,918)
July 29,
2017
As Reported
Adjustment
As Adjusted
Prepaid expenses and other current assets
$ 32,200
$ 3,515
$ 35,715
Accrued expenses and other current liabilities 69,418 3,484 72,902
Retained earnings 7,040 31 7,071
Condensed Consolidated Statements
of Operations
13 Weeks Ended
July 29, 2017
As Reported
Adjustment
As Adjusted
Other revenue
$ -
$ 3,498
$ 3,498
Selling, general and administrative expenses
86,201 3,498 89,699
26 Weeks Ended
July 29, 2017
As Reported
Adjustment
As Adjusted
Other revenue
$ -
$ 7,212
$ 7,212
Selling, general and administrative expenses
171,695 7,212 178,907
Condensed Consolidated Statements of Cash Flows
26 Weeks Ended
July 29, 2017
As Reported
Adjustment
As Adjusted
Prepaid expenses and other current assets
$ (1,951)
$ (706)
$ (2,657)
Accrued expenses and other current liabilities (3,757) 706 (3,051)
Revenue The following table sets forth our revenue by type
of contract (in thousands):
13 Weeks Ended
13 Weeks Ended
26 Weeks Ended
26 Weeks Ended
Store sales (1) $ 292,094 $ 297,785 $ 599,005
$ 619,956
Ecommerce sales (1) 13,017 7,893 25,831 16,491
Licensee commissions (2) 5,828 5,358 12,788 11,924
Net sales $ 310,939 $ 311,036 $ 637,624
$ 648,371
Credit card revenue (3) 2,221 2,698 4,489 5,366
Breakage revenue (4) 1,221 781 3,216 1,776
Other 47 19 86 70
Other revenue 3,489 3,498 7,791 7,212
Total revenue $ 314,428 $ 314,534 $ 645,415
$ 655,583
(1)
Store and Ecommerce sales are net of any returns,
discounts and percentage-off
(2)
Licensee commissions are leased department
commissions received net of any returns.
(3)
Credit card revenue earned from Synchrony
programs.
(4)
Breakage revenue earned on unused gift and
merchandise return cards and unused certificates and loyalty reward
points. The following table sets forth the gross up of the
sales return reserve (in thousands):
August 4, 2018
February 3, 2018
July 29, 2017
Reserve for sales returns $ (3,756 ) $ (4,094 ) $ (4,810)
Cost of inventory returns 1,976 2,426 3,515 The following table sets forth the contract
liabilities and their relationship to revenue (in thousands):
August 4, 2018
February 3, 2018
July 29, 2017
Deferred revenue contracts (11,817 ) (12,512 ) (13,306)
Gift card liability (9,328 ) (12,180 ) (9,223)
Credit card reward liability (5,034 ) (4,689 ) (3,263)
Liability for deferred revenue $ (26,179 ) $ (29,381 ) $ (25,792)
Contract liabilities include consideration received
for gift card and loyalty related performance obligations which
have not been satisfied as of the dates presented above. The following table sets forth a rollforward of the
amounts included in contract liabilities for the periods presented
(in thousands):
26 Weeks Ended
26 Weeks Ended
Beginning balance
$ 29,381
$ 29,412
Current period gift cards sold and loyalty reward points earned 16,311 14,158
Net sales from redemptions (1) (15,503) (15,210)
Breakage and amortization (2) (4,010) (2,568)
Ending balance
$ 26,179
$ 25,792
(1)
$1.9 million and $1.8 million in net
sales from redemptions were included in the beginning balance of
contract liabilities for the 13 weeks ended August 4, 2018 and
July 29, 2017, respectively. $6.4 million in net sales
from redemptions were included in the beginning balance of contract
liabilities for the 26 weeks ended August 4, 2018 and
July 29, 2017, respectively.
(2)
$0.4 million in breakage and amortization were
included in the beginning balance of contract liabilities for the
13 weeks ended August 4, 2018 and July 29, 2017,
respectively. $2.7 million and $1.7 million in breakage
and amortization were included in the beginning balance of contract
liabilities for the 26 weeks ended August 4, 2018 and
July 29, 2017, respectively.
Accrued Expenses and Other Current Liabilities The following table sets forth the major components
of accrued expenses and other current liabilities (in
thousands):
August 4, 2018
February 3, 2018
July 29, 2017
Property taxes $ 14,950 $ 17,451 $ 14,543
Unredeemed gift and merchandise return cards 9,288 12,150 9,203
Compensation and employee benefits 8,613 7,732 6,962
Accrued vacation 7,632 7,632 7,715
Other
33,258
33,488
34,479
Accrued expenses and other current liabilities
$ 73,741
$ 78,453
$ 72,902
Recent Accounting Pronouncements In February 2016, the FASB issued
ASU No. 2016-02, Leases
(Topic 842) No. 2018-11 non-lease In August 2018, the FASB issued ASU No.
2018-15, Intangibles—Goodwill and
Other— Internal-Use Software (Subtopic
350-40). Intangibles—Goodwill and
Other—Internal-Use Software (Subtopic 350-40) |
