| 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, Revenue
from Contracts with Customers
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 )
October 28,
2017
As Reported
Adjustment
As Adjusted
Prepaid expenses and other current assets $ 31,371 $ 1,894 $ 33,265
Accrued expenses and other current liabilities 78,595 1,863 80,458
Retained deficit (7,552 ) 31 (7,521 )
Condensed
Consolidated Statements of Operations
13 Weeks Ended
October 28, 2017
As Reported
Adjustment
As Adjusted
Other revenue $
- $
3,516 $
3,516
Selling, general and administrative expenses 92,158 3,516 95,674
39 Weeks Ended
October 28, 2017
As Reported
Adjustment
As Adjusted
Other revenue $
- $
10,728 $
10,728
Selling, general and administrative expenses 263,853 10,728 274,581
Condensed
Consolidated Statements of Cash Flows
39 Weeks Ended
October 28, 2017
As Reported
Adjustment
As Adjusted
Prepaid expenses and other current assets $
(1,122 ) $
915 $
(207 )
Accrued expenses and other current liabilities 4,696 (915 ) 3,781
Revenue The following table sets forth our revenue by type
of contract (in thousands):
13 Weeks Ended
13 Weeks Ended
39 Weeks Ended
39 Weeks Ended
Store sales (1) $
261,138 $
271,836 $
860,143 $
891,792
Ecommerce sales (1) 11,897 8,172 37,728 24,663
Licensed department commissions (2) 6,092 5,387 18,880 17,311
Net sales $ 279,127 $ 285,395 $ 916,751 $ 933,766
Credit card revenue (3) 1,754 2,230 6,243 7,596
Breakage revenue (4) 1,930 1,242 5,146 3,018
Other 50 44 136 114
Other revenue 3,734 3,516 11,525 10,728
Total revenue
$ 282,861
$ 288,911
$ 928,276
$ 944,494
(1)
Store and Ecommerce sales are net of any returns,
discounts and percentage-off
(2)
Licensed department commissions are licensed
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):
November 3, 2018
February 3, 2018
October 28, 2017
Reserve for sales returns $
(4,888 ) $
(4,094 ) $
(3,189 )
Cost of inventory returns 1,919 2,426 1,894
The following table sets forth the contract
liabilities and their relationship to revenue (in thousands):
November 3, 2018
February 3, 2018
October 28, 2017
Deferred revenue contracts $
(11,417 ) $
(12,512 ) $
(12,909 )
Gift card liability (8,774 ) (12,180 ) (8,799 )
Credit card reward liability (4,972 ) (4,689 ) (3,224 )
Liability for deferred revenue $
(25,163 ) $
(29,381 ) $
(24,932 ) 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):
39 Weeks Ended
39 Weeks Ended
Beginning balance $
29,381 $
29,412
Current period gift cards sold and loyalty reward points earned 23,287 20,212
Net sales from redemptions (1) (21,164 ) (20,483 )
Breakage and amortization (2) (6,341 ) (4,209 )
Ending balance $ 25,163 $ 24,932
(1)
$1.0 million and $0.9 million in net
sales from redemptions were included in the beginning balance of
contract liabilities for the 13 weeks ended November 3, 2018
and October 28, 2017, respectively. $7.4 and $7.3 million
in net sales from redemptions were included in the beginning
balance of contract liabilities for the 39 weeks ended
November 3, 2018 and October 28, 2017, respectively.
(2)
$0.4 million in breakage and amortization were
included in the beginning balance of contract liabilities for the
13 weeks ended November 3, 2018 and October 28, 2017,
respectively. $3.1 million and $2.1 million in breakage
and amortization were included in the beginning balance of contract
liabilities for the 39 weeks ended November 3, 2018 and
October 28, 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):
November 3, 2018
February 3, 2018
October 28, 2017
Property taxes $
18,424 $
17,451 $
17,364
Unredeemed gift and merchandise return cards 8,734 12,150 8,777
Compensation and employee benefits 8,649 7,732 7,944
Accrued vacation 7,632 7,632 7,715
Other 38,604 33,488 38,658
Accrued expenses and other current liabilities $ 82,043 $ 78,453 $ 80,458
Recent Accounting Pronouncements In February 2016, the FASB issued
ASU No. 2016-02, Leases
(Topic 842) No. 2018-11 In August 2018, the FASB issued
ASU No. 2018-15, Intangibles—Goodwill
and Other— Internal-Use 350-40). No. 2015-05, Intangibles—Goodwill
and Other—Internal-Use 350-40 internal-use |
