March 18, 2004 For more information:
Susan Datz Edelman
FOR IMMEDIATE RELEASE Director, Stockholder Relations
(904) 346-1506
sedelman@steinmart.com
STEIN MART, INC. REPORTS 4Q & FY'03 FINANCIAL RESULTS
JACKSONVILLE, FL - Stein Mart, Inc. (Nasdaq: SMRT) today announced financial
results for its fourth quarter and fiscal year ended January 31, 2004.
For the fourth quarter of 2003, the Company earned $13.9 million or $0.33 per
share, an increase of 33.4% over net income of $10.4 million or $0.25 per share
in the fourth quarter of 2002. Net sales for the fourth quarter were $410.2
million, a 1.0% increase over the $406.3 million in sales for the fourth quarter
of 2002. Comparable store sales increased 1.0% from the fourth quarter of 2002
to the fourth quarter of 2003. Gross profit increased to $112.7 million, or
27.5% of net sales in the fourth quarter of 2003 compared to $99.8 million, or
24.6% of sales in the same period of 2002. Selling, general and administrative
(SG&A) costs rose to $91.4 million or 22.3% of sales as compared to $86.0
million or 21.2% of sales during the prior year's fourth quarter. Included in
SG&A for the fourth quarter of 2003 and 2002 were store closing and asset
impairment charges of $1.8 million and $2.5 million, respectively.
For the fifty-two week fiscal year, the Company earned $2.2 million or $0.05 per
share as compared to earnings of $20.7 million or $0.50 per share in 2002. Net
sales were $1.355 billion, a (3.3)% decrease from the $1.402 billion in sales
for 2002. Comparable stores sales declined (4.7)% for the year. Gross profit was
$340.8 million, or 25.1% of net sales for fiscal 2003 compared to $347.0
million, or 24.8% of sales in the same period of 2002. Selling, general and
administrative costs rose to $345.9 million or 25.5% of sales as compared to
$324.4 million or 23.2% of sales during fiscal 2002. Included in SG&A for fiscal
2003 and fiscal 2002 were store closing and asset impairment charges of $12.2
million and $2.5 million, respectively.
During 2003, Stein Mart opened 12 new stores and closed 16 under-performing
locations. The 16 closed stores' aggregate loss from operations during 2003 was
$22.7 million or $0.34 per share. Two stores that closed in Albuquerque, New
Mexico represented Stein Mart's only exit from a market; therefore, those two
stores are reported as "discontinued operations" as required by SFAS 144 in the
Statement of Operations. Stein Mart ended fiscal 2003 with 261 stores as
compared with 265 stores at the end of 2002.
"We are pleased with a positive finish to what was a very difficult year for
our Company," commented Michael D. Fisher, president and chief executive
officer. "While our decisions to close stores, eliminate full-price coupons and
undertake a major new marketing campaign negatively impacted our 2003 results,
these actions were vital for the future of our business and critical to our
objectives to return the Company to its historic level of profitability."
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Accomplishments during 2003
o Opened 12 new locations during the year which produced $38.2 million
in sales by year-end; closed 16 underperforming stores
o Reduced average store inventories by 3.2%
o Reduced shrinkage 35% for a benefit of $4.5 million as a result of a
restructured loss prevention organization and systems put in place
during the last two years
o Introduced Peck & Peck label ladies' clothing in Boutique and Raymond
Waites gifts and linens as exclusive lines for Stein Mart
o Launched national TV branding campaign featuring Stein Mart customers
o Eliminated full price coupons; re-engineered sales promotion
activities and calendar to reinforce the everyday value proposition
and to make the seasonal clearance cycle more efficient
o Entered into a new, three-year, $150 million loan agreement with added
flexibility and lower rates, as well as the opportunity to extend the
terms and increase the size of the facility.
Plans for 2004
The Company plans to open 10-12 new stores in 2004, including relocations of
three existing stores. The Company plans to close six locations in 2004; all six
will be at or near the end of their lease agreements. A $1.3 million pre-tax
asset impairment charge and a $1.6 million pre-tax inventory reserve were
recorded during 2003 for the closing stores and relocations. At year-end 2004,
the Company expects to be operating between 262 and 264 stores.
Most of the 2004 store openings will occur in the second half of the year. Last
week, a fourth collections of Stein Mart store was opened on Amelia Island,
Florida and in May, the Company will enter the greater Philadelphia market with
the first of two stores to open there this year.
Earnings Estimates
Although management had anticipated that comparable store sales for the first
quarter ending May 1, 2004 would increase between four and five percent, March
sales are substantially ahead of that pace. If this rate of sales continues
until Easter, and moderates as expected thereafter, it is likely that the
Company could produce a high, single digit comparable store sales increase for
the first quarter, which would result in net income of $0.15 - $0.17 per share.
Due to the dynamic nature of both the external retail environment and the recent
changes to the Company's marketing, sales promotion and clearance strategies
(i.e. elimination of full price coupons, launch of nationwide TV advertising
campaign, reduction of pre-print advertising, and addition of red-dot clearance
program), management plans to provide earnings estimates as each quarter
progresses.
Year-end conference call
The Company will host a conference call with management to discuss
these results at 10:30 a.m. Eastern Time today (March 18) and may be accessed by
all interested parties at www.steinmart.com.
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About Stein Mart
Stein Mart's 261 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 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, 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, the effectiveness of new advertising, marketing and promotional
strategies, 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
Unaudited
(In thousands)
January 31, February 1,
2004 2003
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 11,965 $ 9,859
Trade and other receivables 4,227 4,919
Inventories 283,379 297,230
Prepaid expenses and other current assets 6,227 4,361
-------------- --------------
Total current assets 305,798 316,369
Property and equipment, net 76,934 86,351
Other assets 10,297 7,497
-------------- --------------
Total assets $393,029 $410,217
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 59,046 $ 70,472
Accrued liabilities 60,715 53,407
Income taxes payable - 5,353
Notes payable to banks - 41,350
-------------- --------------
Total current liabilities 119,761 170,582
Notes payable to banks 24,962 -
Other liabilities 20,628 16,328
-------------- --------------
Total liabilities 165,351 186,910
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; 41,993,529 and 41,618,678 shares
issued and outstanding, respectively 420 416
Paid-in capital 3,196 721
Unearned compensation (309) -
Retained earnings 224,371 222,170
-------------- --------------
Total stockholders' equity 227,678 223,307
-------------- --------------
Total liabilities and stockholders' equity $393,029 $410,217
============== ==============
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Stein Mart, Inc.
Statements of Operations
Unaudited
(In thousands except per share amounts)
For The 52 Weeks Ended
----------------------------------------------------
January 31, February 1, February 2,
2004 2003 2002
-------------- -------------- --------------
Net sales $1,355,457 $1,401,613 $1,313,144
Cost of merchandise sold 1,014,695 1,054,616 997,950
-------------- -------------- --------------
Gross profit 340,762 346,997 315,194
Selling, general and administrative expenses 345,868 324,431 299,933
Other income, net 13,040 13,870 13,984
-------------- -------------- --------------
Income from operations 7,934 36,436 29,245
Interest expense 1,688 2,604 4,000
-------------- -------------- --------------
Income from continuing operations before income taxes 6,246 33,832 25,245
Provision for income taxes 2,373 12,856 9,593
-------------- -------------- --------------
Income from continuing operations 3,873 20,976 15,652
Loss from discontinued operations, net of tax benefit (1,672) (286) (298)
-------------- -------------- --------------
Net income $ 2,201 $ 20,690 $ 15,354
============== ============== ==============
Basic income (loss) per share:
Continuing operations $0.09 $0.51 $0.38
Discontinued operations (0.04) (0.01) (0.01)
-------------- -------------- --------------
Total $0.05 $0.50 $0.37
============== ============== ==============
Diluted income (loss) per share:
Continuing operations $0.09 $0.51 $0.38
Discontinued operations (0.04) (0.01) (0.01)
-------------- -------------- --------------
Total $0.05 $0.50 $0.37
============== ============== ==============
Weighted-average shares outstanding - Basic 41,649 41,575 41,176
============== ============== ==============
Weighted-average shares outstanding - Diluted 41,701 41,764 41,493
============== ============== ==============
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Stein Mart, Inc.
Statements of Cash Flows
Unaudited
(In thousands)
For The 52 Weeks Ended
----------------------------------------------------
January 31, February 1, February 2,
2004 2003 2002
-------------- -------------- --------------
Cash flows from operating activities:
Net income $ 2,201 $20,690 $15,354
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 18,975 18,770 16,822
Impairment of property and other assets 3,881 2,709 1,114
Store closing charges 5,883 113 2,206
Deferred income taxes (1,734) 9,193 (4,999)
Restricted stock compensation 37 - -
Tax benefit from exercise of stock options 164 385 1,024
Changes in assets and liabilities:
Trade and other receivables 692 282 (1,752)
Inventories 13,851 (1,072) (13,260)
Prepaid expenses and other current assets (2,062) 32 (641)
Other assets (2,896) (1,542) (619)
Accounts payable (11,426) (23,203) 13,180
Accrued liabilities 4,340 7,293 1,503
Income taxes payable (5,353) 1,282 (728)
Other liabilities 3,315 (214) 448
-------------- -------------- --------------
Net cash provided by operating activities 29,868 34,718 29,652
Cash flows used in investing activities:
Capital expenditures (13,343) (19,072) (24,982)
Cash flows from financing activities:
Net borrowings under notes payable to banks (16,388) (16,400) (2,486)
Proceeds from exercise of stock options 1,271 810 2,048
Proceeds from employee stock purchase plan 910 1,028 997
Purchase of common stock (212) (1,501) (6,019)
-------------- -------------- --------------
Net cash used in financing activities (14,419) (16,063) (5,460)
-------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents 2,106 (417) (790)
Cash and cash equivalents at beginning of year 9,859 10,276 11,066
-------------- -------------- --------------
Cash and cash equivalents at end of year $11,965 $ 9,859 $10,276
============== ============== ==============
Supplemental disclosures of cash flow information:
Interest paid $ 1,702 $ 2,567 $ 3,980
Income taxes paid 7,723 2,392 14,221
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