August 21, 2003 Susan Datz Edelman
Director, Stockholder Relations
FOR IMMEDIATE RELEASE (904) 346-1506
sedelman@steinmart.com
STEIN MART REPORTS 2Q AND SIX MONTHS '03 FINANCIAL RESULTS
JACKSONVILLE, FL -- Stein Mart, Inc. {Nasdaq: SMRT}, a 270-store nationwide
retail chain, today announced financial results for the second quarter and six
months ended August 2, 2003.
For the 13-week second quarter of 2003, the Company incurred a net loss of
$(2.8) million or $(0.07) per share as compared to earnings of $2.8 million or
$0.07 per share in the second quarter of 2002. As previously reported, total
sales for the second quarter of 2003 were $303.5 million, a 2.5 percent decrease
from the $311.4 million in sales for the same period in 2002. Comparable store
sales for the second quarter decreased 5.8 percent from 2002 to 2003.
For the 26-week first half of 2003, the Company incurred a net loss of $(1.3)
million or $(0.03) per share as compared to earnings of $14.1 million or $0.34
per share in the first half of 2002. As previously reported, total sales were
$634.1 million, a 5.0 percent decrease from the $667.4 million in sales for the
first half of 2002. Comparable store sales for the first half decreased 7.6
percent from 2002 to 2003.
The Company previously announced it would close a total of 16 under-performing
stores this year. Four stores are already closed and eight more will close in
the third quarter. The final four stores are expected to close in the fourth
quarter of `03. During the second quarter, the loss from operations of the 16
closed/closing stores totaled $(6.8) million or $(0.10) per share. For the first
half of the year, the loss from operations of the closing/closed stores totaled
$(10.7) million or $(0.16) per share.
"Our business remained difficult during the quarter and the stores we are
closing further hampered our results; without the impact of those stores, we
would have shown an operating profit for both the second quarter and the first
half," said Michael D. Fisher, president and chief executive officer of Stein
Mart, Inc. "Our focus remains on long-term opportunities for the Company, with
efforts to derive greater productivity from merchandise and improve sales per
square foot, close under-performing stores and our most recent decision to
significantly revamp our marketing program."
New Marketing Initiative
Stein Mart, like many other retailers, has used percentage-off coupons in both
its newspaper inserts and direct mail offerings for the past three years. What
began as a strategy to attract new customers in a difficult retail environment
has now run its course and is no longer supportive of Stein Mart's unique
selling proposition. As a result, Stein Mart has refrained from across-the-board
coupons in its advertising and sales promotion since the last weekend in July.
According to Fisher, "minimizing coupons will be difficult in the short run, but
we believe the long-term success of Stein Mart is tied to consistently
delivering fresh, exciting merchandise at outstanding values throughout the
store, every day."
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At the same time, the Company is preparing a new advertising campaign to
showcase Stein Mart's unique blend of fashion merchandise, outstanding value and
convenient locations. The new campaign will be both image and event-focused, and
will use newspaper inserts, direct mail, radio and, starting with six test
markets next month, television advertising. After the television test results
are validated and refined, the Company will roll out its first nationwide TV
campaign in time for the 2003 holiday season.
Coupons will still occasionally be distributed, but will be primarily used to
move clearance and sale items, in new store introductions and for targeted new
customer prospecting.
Store Network Update
During the second quarter of 2003, the Company opened two new stores
(Washington, DC and Hendersonville, NC) and closed two. For the year, the
Company has opened nine locations and closed four.
For the remainder of the year, Stein Mart will open three new locations--a sixth
store in Jacksonville, FL and one in Vero Beach, FL in the third quarter and one
in Chapel Hill, NC in the fourth quarter. Two additional stores that were slated
to open in Fall '03 have been moved to Spring '04 so that the Company can take
advantage of opening them simultaneously in a major metropolitan market.
Fall '03 Expectations
Given the current economic environment and the disengagement from coupons,
management expects a challenging third quarter, traditionally Stein Mart's most
difficult period. This year, the third quarter will be disadvantaged as
customers adjust to the change in marketing strategy, and, as a result,
management believes comparable store sales could decrease approximately 10-12
percent in the third quarter as compared to the 2.2 percent increase in 3Q '02
which produced a loss of $0.09 per share. In addition, the closure of eight
under-performing stores will substantially increase store closing expenses as
compared to 2Q '03.
In the fourth quarter, assuming an improving economy, the successful launch of
the Company's new advertising campaign and the closure of the final four of the
16 stores in the store-closing program, Stein Mart's performance should improve.
Management fully expects to be profitable for fiscal 2003, excluding the impact
of the 16 closed stores.
Conference Call
Additional details concerning Stein Mart's second quarter and first half results
and management's business outlook will be discussed on a conference call with
industry analysts and institutional investors today, Thursday, August 21, 2003
at 10:30 a.m. EDT. Participants may listen to a real time audio webcast of the
conference call by visiting www.steinmart.com, or hear a recorded version of the
call on the website until the end of the month.
About Stein Mart
Stein Mart's 270 stores offer the merchandise, service and presentation of a
traditional, better department/ 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 children, as well as accessories, gifts,
linens and shoes.
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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, but are not
limited to, on-going competition from other retailers, availability of new store
sites at acceptable lease terms, ability to successfully implement strategies to
exit or improve under-performing stores, changing preferences in apparel,
changes in consumer spending due to current events and/or general economic
conditions, adequate sources of merchandise at acceptable prices and the other
risks and uncertainties described in the Company's filings with the Securities
and Exchange Commission.
###
Additional information about Stein Mart, Inc. can be found at www.steinmart.com.
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Stein Mart, Inc.
Balance Sheets
(In thousands)
August 2, February 1, August 3,
2003 2003 2002
-------------- -------------- --------------
ASSETS (Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 14,516 $ 9,859 $ 15,485
Trade and other receivables 3,441 4,919 5,779
Inventories 299,759 297,230 325,765
Prepaid taxes 2,728 - -
Prepaid expenses and other current assets 8,775 4,361 6,081
-------------- -------------- --------------
Total current assets 329,219 316,369 353,110
Property and equipment, net 84,601 86,351 89,904
Other assets 8,651 7,497 7,075
-------------- -------------- --------------
Total assets $422,471 $410,217 $450,089
============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 71,779 $ 70,472 $ 71,856
Accrued liabilities 51,633 53,407 49,979
Income taxes payable - 5,353 1,187
Notes payable to banks - 41,350 -
-------------- -------------- --------------
Total current liabilities 123,412 170,582 123,022
Notes payable to banks 57,449 - 93,100
Other liabilities 19,314 16,328 16,505
-------------- -------------- --------------
Total liabilities 200,175 186,910 232,627
COMMITMENTS AND CONTINGENCIES
Stockholders' equity:
Preferred stock - $.01 par value; 1,000,000 shares
authorized; no shares outstanding
Common stock - $.01 par value; 100,000,000 shares
authorized; 41,729,713; 41,618,678 and 41,709,381
shares issued and outstanding, respectively 417 416 417
Paid-in capital 1,353 721 -
Unearned compensation (384) - -
Retained earnings 220,910 222,170 217,045
-------------- -------------- --------------
Total stockholders' equity 222,296 223,307 217,462
-------------- -------------- --------------
Total liabilities and stockholders' equity $422,471 $410,217 $450,089
============== ============== ==============
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Stein Mart, Inc.
Statements of Income
(Unaudited)
(In thousands except per share amounts)
13 Weeks Ended 26 Weeks Ended
--------------------------------- ---------------------------------
August 2, August 3, August 2, August 3,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
Net sales $303,548 $311,427 $634,105 $667,406
Cost of merchandise sold 232,258 233,323 479,119 492,771
-------------- -------------- -------------- --------------
Gross profit 71,290 78,104 154,986 174,635
Selling, general and administrative expenses 78,355 76,318 162,858 157,599
Other income, net 3,079 3,359 6,732 7,059
-------------- -------------- -------------- --------------
Income (loss) from operations (3,986) 5,145 (1,140) 24,095
Interest expense 487 669 892 1,283
-------------- -------------- -------------- --------------
Income (loss) before income taxes (4,473) 4,476 (2,032) 22,812
Income tax benefit (provision) 1,700 (1,701) 772 (8,669)
-------------- -------------- -------------- --------------
Net income (loss) $ (2,773) $ 2,775 $ (1,260) $ 14,143
============== ============== ============== ==============
Earnings (loss) per share - Basic $(0.07) $0.07 $(0.03) $0.34
============== ============== ============== ==============
Earnings (loss) per share - Diluted $(0.07) $0.07 $(0.03) $0.34
============== ============== ============== ==============
Weighted-average shares outstanding - Basic 41,601 41,669 41,594 41,612
============== ============== ============== ==============
Weighted-average shares outstanding - Diluted 41,601 42,024 41,594 41,977
============== ============== ============== ==============
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