March 17, 2005 For more information:
Susan Datz Edelman
FOR IMMEDIATE RELEASE Director, Stockholder Relations
- --------------------- (904) 346-1506
sedelman@steinmart.com
STEIN MART, INC. REPORTS 4Q & FY'04 FINANCIAL RESULTS
JACKSONVILLE, FL - Stein Mart, Inc. (Nasdaq: SMRT) today announced financial
results for its fourth quarter and fiscal year ended January 29, 2005.
For the fourth quarter of 2004, the Company earned $22.8 million or $0.53 per
diluted share, a 65 percent increase over net income of $13.9 million or $0.33
per diluted share in the fourth quarter of 2003.
Net sales for the fourth quarter were $444.9 million, an 8.8 percent increase
over the $408.9 million in sales for the fourth quarter of 2003. Comparable
store sales increased 8.0 percent from the fourth quarter of 2003 to the fourth
quarter of 2004.
Gross profit increased to $130.2 million, or 29.3 percent of sales in the fourth
quarter of 2004 compared to $112.4 million, or 27.5 percent of sales in the same
period of 2003. Gross profit was favorably impacted by a 0.5 percentage point
improvement in shrinkage from last year; this represents the second year of
better-than-expected inventory results from a restructured loss prevention
organization and enhanced systems.
Selling, general and administrative (SG&A) expenses rose to $97.4 million or
21.9 percent of sales as compared to $90.9 million or 22.2 percent of sales
during the prior year's fourth quarter. Included in SG&A for the fourth quarter
of 2004 and 2003 were store closing and asset impairment charges of $3.2 million
(including stores closing in 2005) and $1.6 million, respectively.
For the fifty-two week fiscal year 2004, the Company earned $38.0 million or
$0.89 per diluted share as compared to earnings of $2.2 million or $0.05 per
diluted share in 2003.
Net sales were $1.460 billion, an 8.0 percent increase from the $1.352 billion
in sales for 2003. Comparable stores sales increased 9.1 percent for the year.
Gross profit was $390.0 million, or 26.7 percent of sales for fiscal 2004
compared to $339.8 million, or 25.1 percent of sales in the same period of 2003.
Selling, general and administrative expenses decreased to $343.2 million or 23.5
percent of sales as compared to $344.7 million or 25.5 percent of sales during
fiscal 2003. Included in SG&A for fiscal 2004 and fiscal 2003 were store closing
and asset impairment charges of $4.7 million and $12.0 million, respectively.
During 2004, Stein Mart opened seven new stores, relocated two stores and closed
seven locations. The seven closed stores' aggregate loss from operations during
2004 was $3.8 million or $0.06 per share. The Company exited one market in the
first quarter of 2004; therefore, that store is reported as a "discontinued
operation" in 2004 and joins two other stores as discontinued operations for
2003 as required by SFAS 144 in the Statements of Operations. Stein Mart ended
fiscal 2004 with 261 stores as compared with 261 stores at the end of 2003.
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"The strength of our 2004 business is a direct result of our initiatives over
the past two years: creating a distinctive fashion assortment, delivering it
more frequently to our stores to promote newness, offering compelling prices on
merchandise, and supporting both full price and seasonal clearance with a more
clearly defined marketing plan," commented Michael D. Fisher, president and
chief executive officer. "Our inventories are fresh and well-controlled, our
store level productivity is greatly improved, our real estate portfolio is
stronger than ever, and we believe we have a solid platform for further growth
and improvement."
Accomplishments during 2004
o Increased total sales by 8.0 percent overall and comparable store
sales by 9.1 percent
o Improved net income to $0.89 per share vs. $0.05 per share in 2003
o Improved gross profit as a percentage of sales by 160 basis points
o Improved SG&A rate by 200 basis points
o Improved sales per average comparable store from $5.22 million to
$5.70 million
o Opened seven new locations during the year which produced $19.4
million in sales by year-end; relocated two stores to more
advantageous locations and closed seven underperforming stores
o Reduced average store inventories by 2.2 percent
o Reduced inventory shrinkage for a pre-tax benefit of $2.2 million
o Eliminated borrowings and ended the year with more than $92 million in
cash and short-term investments
Lease Accounting Review
As a result of a clarification issued on February 7, 2005 by the Securities and
Exchange Commission, the Company, like most other retailers, is reviewing its
accounting treatment for construction allowances received from lessors as
incentives on certain operating leases. The Company does not anticipate that
there will be a material effect on its financial position, results of operations
or cash flows for the fiscal years 2004, 2003 or 2002 related to the resolution
of this issue. The Company anticipates completing this review in conjunction
with the filing of its Form 10-K for the year ended January 29, 2005.
Plans for 2005
The Company plans to open 15 new stores in 2005, including one relocation, and
expects to close eight locations.
Capital expenditures are planned at $20-22 million for the 15 new store
locations, existing store remodels and technology improvements. The Company's
strong cash position will continue to be utilized for investment in the store
network and infrastructure, as well as regular repurchases of the Company's
common stock under its current authorization from the Board of Directors.
Earnings Estimates
Comparable store sales have been below plan for the first two weeks of March. If
the current trend continues, March 2005 comparable store sales would decrease in
the low single digit range for the month compared to an 18.4 percent increase in
March 2004; however, April comparable store sales are expected to be positive.
The comparable store sales increase for the quarter is now expected to be 2-3
percent, resulting in earnings per share at the low end of the previously
announced range of $0.33 - $0.35.
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 17) 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 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, 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 29, January 31,
2005 2004
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 20,250 $ 11,965
Short-term investments 72,475 -
Trade and other receivables 5,852 4,227
Inventories 277,164 283,379
Prepaid expenses and other current assets 11,818 12,299
-------------- --------------
Total current assets 387,559 311,870
Property and equipment, net 77,711 78,371
Other assets 9,789 8,860
-------------- --------------
Total assets $475,059 $399,101
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 99,163 $ 65,118
Accrued liabilities 73,257 60,715
Income taxes payable 5,089 -
-------------- --------------
Total current liabilities 177,509 125,833
Notes payable to banks - 24,962
Other liabilities 21,040 20,628
-------------- --------------
Total liabilities 198,549 171,423
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; 42,880,031 and 41,993,529 shares issued
and outstanding, respectively 429 420
Paid-in capital 14,340 3,196
Unearned compensation (603) (309)
Retained earnings 262,344 224,371
-------------- --------------
Total stockholders' equity 276,510 227,678
-------------- --------------
Total liabilities and stockholders' equity $475,059 $399,101
============== ==============
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Stein Mart, Inc.
Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
13 Weeks Ended 52 Weeks Ended
--------------------------------- ---------------------------------
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
Net sales $444,943 $408,910 $1,459,607 $1,351,623
Cost of merchandise sold 314,694 296,522 1,069,574 1,011,849
-------------- -------------- -------------- --------------
Gross profit 130,249 112,388 390,033 339,774
Selling, general and administrative expenses 97,421 90,880 343,161 344,680
Other income, net 3,817 3,045 14,277 13,004
-------------- -------------- -------------- --------------
Income from operations 36,645 24,553 61,149 8,098
Interest income 190 - 371 -
Interest expense - 375 39 1,688
-------------- -------------- -------------- --------------
Income from continuing operations before income taxes 36,835 24,178 61,481 6,410
Provision for income taxes 13,998 9,188 23,363 2,436
-------------- -------------- -------------- --------------
Income from continuing operations 22,837 14,990 38,118 3,974
Loss from discontinued operations, net of tax benefit - (1,130) (145) (1,773)
-------------- -------------- -------------- --------------
Net income $ 22,837 $ 13,860 $ 37,973 $ 2,201
============== ============== ============== ==============
Basic income (loss) per share:
Continuing operations $0.54 $0.36 $0.90 $0.09
Discontinued operations - (0.03) - (0.04)
-------------- -------------- -------------- --------------
Total $0.54 $0.33 $0.90 $0.05
============== ============== ============== ==============
Diluted income (loss) per share:
Continuing operations $0.53 $0.36 $0.89 $0.09
Discontinued operations - (0.03) - (0.04)
-------------- -------------- -------------- --------------
Total $0.53 $0.33 $0.89 $0.05
============== ============== ============== ==============
Weighted-average shares outstanding - Basic 42,530 41,750 42,268 41,649
============== ============== ============== ==============
Weighted-average shares outstanding -Diluted 43,409 41,957 42,786 41,701
============== ============== ============== ==============
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Stein Mart, Inc.
Statements of Cash Flows
(Unaudited)
(In thousands)
For The 52 Weeks Ended
---------------------------------
January 29, January 31,
2005 2004
-------------- --------------
Cash flows from operating activities:
Net income $37,973 $ 2,201
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 18,047 19,543
Impairment of property and other assets 2,103 3,881
Store closing charges 1,382 5,883
Deferred income taxes 57 (1,734)
Restricted stock compensation 114 37
Tax benefit from exercise of stock options 1,938 164
Changes in assets and liabilities:
Trade and other receivables (1,625) 692
Inventories 6,215 13,851
Prepaid expenses and other current assets 1,035 (2,309)
Other assets (929) (2,896)
Accounts payable 34,045 (11,179)
Accrued liabilities 12,612 4,340
Income taxes payable 5,089 (5,353)
Other liabilities (1,651) 2,747
-------------- --------------
Net cash provided by operating activities 116,405 29,868
Cash flows used in investing activities:
Capital expenditures (19,490) (13,343)
Purchases of short-term investments (912,525) -
Sales of short-term investments 840,050 -
-------------- --------------
Net cash used in investing activities (91,965) (13,343)
-------------- --------------
Cash flows from financing activities:
Net borrowings under notes payable to banks (24,962) (16,388)
Proceeds from exercise of stock options 7,855 1,271
Proceeds from employee stock purchase plan 952 910
Purchase of common stock - (212)
-------------- --------------
Net cash used in financing activities (16,155) (14,419)
-------------- --------------
Net increase in cash and cash equivalents 8,285 2,106
Cash and cash equivalents at beginning of year 11,965 9,859
-------------- --------------
Cash and cash equivalents at end of period $20,250 $11,965
============== ==============
Supplemental disclosures of cash flow information:
Interest paid $ 63 $ 1,702
Income taxes paid 17,154 7,723
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