Stein Mart, Inc. Reports Third Quarter 2013 Financial Results

Stein Mart, Inc. Reports Third Quarter 2013 Financial Results

Third Quarter Highlights:

  *Total sales up 6.1 percent, comparable store sales up 4.8 percent over
    last year.
  *Breakeven diluted earnings per share improve from last year's $0.04
    diluted loss per share.

JACKSONVILLE, Fla., Nov. 21, 2013 (GLOBE NEWSWIRE) -- Stein Mart, Inc.
(Nasdaq:SMRT) today announced financial results for the third quarter ended
November 2, 2013.

Overview of Results

Net income for the third quarter of 2013 was $28 thousand or breakeven per
diluted share compared to a net loss of $1.7 million or $0.04 loss per diluted
share in 2012.

For the first nine months of 2013, net income was $18.1 million or $0.40 per
diluted share compared to $11.5 million or $0.26 per diluted share in the same
period in 2012. Adjusted net income for the first nine months of 2012 was
$10.2 million or $0.23 per diluted share (see Note 1).

EBITDA for the third quarter was $6.9 million compared to $2.8 million in
2012. EBITDA for the first nine months of 2013 was $51.0 million compared to
$34.2 million adjusted EBITDA in 2012 (see Note 2).

Comments on Results

"Our earnings continue to improve as a result of our continued sales
momentum," said Jay Stein, Chief Executive Officer. "We have been very focused
on refining our brands, pricing and sales execution and the improvements are
evident in our results."

Total sales for the third quarter of 2013 increased 6.1 percent to $290.5
million, while comparable store sales increased 4.8 percent. For the first
nine months of 2013, total sales increased 4.5 percent to $902.8 million,
while comparable store sales increased 4.0 percent.

Gross profit for the third quarter increased to $77.8 million or 26.8 percent
of sales from $70.7 million or 25.8 percent of sales in 2012. The increase in
the quarter's gross profit rate was primarily the result of higher markup and
slightly lower occupancy costs as a percentage of sales, offset by slightly
higher markdowns. Gross profit for the first nine months of 2013 increased
$19.6 million to $256.0 million or 28.4 percent of sales from $236.4 million
or 27.4 percent of sales in 2012. The increase in the year-to-date gross
profit rate was primarily the result of higher markup, slightly lower
markdowns as a percentage of sales and slightly lower occupancy costs as a
percentage of sales.

Selling, general and administrative ("SG&A") expenses for the third quarter
were $77.9 million or 26.8 percent of sales compared to $74.4 million or 27.2
percent of sales in 2012. The $3.5 million increase over 2012 SG&A expenses
was primarily due to higher compensation costs, higher depreciation expense,
$0.4 million of professional fees associated with last year's restatement and
$0.2 million of start-up costs for our e-commerce launch and supply chain
transition. The higher compensation costs mostly resulted from higher
earnings-based incentive compensation expense and increased payroll to support
our higher sales and new stores. The SG&A increases were partially offset by
lower healthcare costs due to favorable claims experience.

For the first nine months, SG&A expenses were $225.9 million or 25.0 percent
of sales compared to $217.3 million or 25.2 percent of sales last year. SG&A
expenses for the first nine months of 2012, adjusted to remove $2.1 million in
gift card breakage, were $219.4 million and 25.4 percent of sales (see Note
1). The $6.5 million increase in 2013 over 2012 adjusted SG&A was primarily
due to higher compensation costs, higher depreciation expense, $1.2 million of
start-up costs for our e-commerce launch and supply chain transition and $1.1
million of professional fees associated with last year's restatement.These
increases were partially offset by lower healthcare costs due to favorable
claims experience, higher credit card program income, lower store closing
costs and slightly lower advertising expense.

Our effective tax rate was 39.4 percent for the first nine months of 2013
compared to 39.2 percent in 2012.

Balance Sheet Highlights

Cash at the end of the third quarter was $59.5 million compared to $104.1
million at the end of the third quarter of 2012.The lower cash balance
reflects payment of a special dividend of $43.8 million at the end of 2012 and
two quarterly dividends ($0.05 per share) totaling $4.4 million during
2013.We have not borrowed on our credit facility since the beginning of 2009.

Inventories of $329.7 million at the end of the third quarter of 2013 were
11.1 percent higher than the $296.7 million at the end of the third quarter
last year.Inventories were higher partially due to this year's calendar shift
which causes our quarter-end to be one week later, when we have seasonally
higher inventory levels.Additionally, we brought in merchandise earlier this
year to drive and support sales, particularly during this year's shorter
holiday selling season.

Operating Initiatives

Our e-commerce business has been operational for just over two months.As a
new business venture, we are continually enhancing our site presentation and
analyzing our results to drive online traffic.

The important transition of our supply chain distribution centers from
third-party to company-operated is nearly complete. The final distribution
center in Ontario, CA (Los Angeles) will be fully operational in January. 

Store Network

We operated 264 Stein Mart stores at the end of the third quarter of 2013
compared to 262 stores at the end of the third quarter last year.Our 2013
store plan, which is now complete, included four new stores, four relocations
and three closings.While our 2014 store planning is not complete, we are
working towards doubling the number of new stores with fewer closings in 2014
compared to 2013.

Fourth Quarter Outlook - Revised Second Half

With our third quarter now complete, our fourth quarter and second half
outlook is as follows:

-- Our gross profit rate for the fourth quarter is expected to be
approximately 100 basis points lower than last year's fourth quarter,
resulting in a second half rate that is slightly lower than last year's second
half rate.The fourth quarter gross profit rate is impacted by the
following:

  *More normal markdown levels compared to last year's fourth quarter when
    sales exceeded our planned merchandise levels.
  *The positive impact of the 53^rd week in 2012.
  *Increasing e-commerce sales which have lower margins due to fulfillment
    costs.
  *Greater penetration of sales from our home division which has lower
    margins.

-- SG&A expenses for the fourth quarter last year included $4.0 million of
legal and accounting fees related to the restatement of our financial
statements and $3.0 million for the 53^rd week.Excluding these items, SG&A
expenses for the fourth quarter this year are expected to be up slightly to
last year's fourth quarter, with the second half up about $4 million.This
increase in second half SG&A expenses is primarily the result of higher store
operating expenses associated with this year's higher sales and higher
incentive compensation expense.

Filing of Form 10-Q

Reported results are preliminary and not final until the filing of our Form
10-Q for the fiscal quarter ended November 2, 2013 with the Securities and
Exchange Commission ("SEC"), and therefore remain subject to adjustment.

Conference Call

A conference call for investment analysts to discuss our third quarter results
will be held at 10 a.m. ET today, Thursday, November 21, 2013.The call may be
heard on the investor relations portion of the Company's website at
http://ir.steinmart.com. A replay of the conference call will be available
on the website through December 31, 2013.

Investor Presentation

Stein Mart's third quarter 2013 investor presentation has been posted to the
investor relations portion of the Company's website at
http://ir.steinmart.com.

About Stein Mart

Stein Mart 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 Massachusetts,
Stein Mart's focused assortment of merchandise features current season,
moderate to better fashion apparel for women and men, as well as accessories,
shoes and home fashions.

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, without limitation:

  oconsumer sensitivity to economic conditions;
  ocompetition in the retail industry;
  ochanges in consumer preferences and fashion trends;
  othe effectiveness of advertising, marketing and promotional strategies;
  oability to negotiate acceptable lease terms with current and potential
    landlords;
  oability to successfully implement strategies to exit under-performing
    stores;
  oextreme and/or unseasonable weather conditions;
  oadequate sources of merchandise at acceptable prices;
  odependence on certain key personnel and ability to attract and retain
    qualified employees;
  oincreases in the cost of employee benefits;
  odisruption of the Company's distribution process;
  oinformation technology failures;
  oacts of terrorism;
  othe effectiveness of our internal control over financial reporting;
  ocosts and other adverse developments associated with the SEC
    investigation; and
  oother risks and uncertainties described in the Company's filings with the
    SEC.

SMRT-F

        Additional information about Stein Mart, Inc. can be found at
                              www.steinmart.com


Stein Mart, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except for share and per share data)

                                November 2, 2013 February 2, 2013 October 27,
                                                                   2012
ASSETS                                                           
Current assets:                                                  
Cash and cash equivalents        $59,517        $67,233        $104,121
Inventories                      329,691         243,345         296,689
Prepaid expenses and other       25,796          22,855          17,566
current assets
Total current assets             415,004         333,433         418,376
Property and equipment, net      140,422         131,570         125,582
Other assets                     26,930          26,706          24,635
Total assets                     $582,356       $491,709       $568,593
LIABILITIES AND SHAREHOLDERS'                                    
EQUITY
Current liabilities:                                             
Accounts payable                 $199,135       $130,972       $185,037
Accrued expenses and other       65,192          66,109          65,499
current liabilities
Total current liabilities        264,327         197,081         250,536
Other liabilities                61,690          60,594          56,667
Total liabilities                326,017         257,675         307,203
COMMITMENTS AND CONTINGENCIES                                    
Shareholders' equity:                                            
Preferred stock -- $0.01 par
value; 1,000,000 shares                                          
authorized; no shares issued or
outstanding
Common stock -- $0.01 par value;
100,000,000 shares authorized;
44,500,995, 43,808,485 and       445             438             436
43,608,228 shares issued and
outstanding, respectively
Additional paid-in capital       26,078          17,491          15,430
Retained earnings                230,278         216,574         246,866
Accumulated other comprehensive  (462)           (469)           (1,342)
loss
Total shareholders' equity       256,339         234,034         261,390
Total liabilities and            $582,356       $491,709       $568,593
shareholders' equity


Stein Mart, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

                              13 Weeks    13 Weeks    39 Weeks    39 Weeks
                               Ended       Ended       Ended       Ended
                              November 2, October 27, November 2, October 27,
                               2013        2012        2013        2012
                                                               
Net sales                      $290,453  $273,729  $902,786  $863,809
Cost of merchandise sold       212,688    203,039    646,760    627,436
Gross profit                   77,765     70,690     256,026    236,373
Selling, general and           77,873     74,431     225,909    217,306
administrative expenses
Operating (loss) income        (108)      (3,741)    30,117     19,067
Interest expense, net          69         81         197        170
(Loss) Income before income    (177)      (3,822)    29,920     18,897
taxes
Income tax (benefit) expense   (205)      (2,163)    11,786     7,417
Net income (loss)              $28       $(1,659)  $18,134   $11,480
                                                               
Net income (loss) per share:                                    
Basic                          $0.00      $(0.04)   $0.41     $0.26
Diluted                        $0.00      $(0.04)   $0.40     $0.26
                                                               
Weighted-average shares                                         
outstanding:
Basic                          43,102     42,568     42,949     42,622
Diluted                        43,924     42,568     43,631     42,769


Stein Mart, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)

                           13 Weeks    13 Weeks Ended 39 Weeks    39 Weeks
                            Ended                      Ended       Ended
                           November 2, October 27,    November 2, October 27,
                            2013        2012           2013        2012
                                                               
Net income (loss)           $28       $(1,659)     $18,134   $11,480
Other comprehensive income,                                     
net of tax:
Change in post-retirement   2          26            7          77
benefit obligations
Comprehensive income (loss) $30       $(1,633)     $18,141   $11,557


Stein Mart, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

                                            39 Weeks Ended   39 Weeks Ended
                                            November 2, 2013 October 27, 2012
Cash flows from operating activities:                        
Net income                                   $18,134        $11,480
Adjustments to reconcile net income to net                   
cash provided by operating activities:
Depreciation and amortization                20,834          17,245
Share-based compensation                     5,248           3,769
Store closing charges                        (145)           654
Loss on disposals of property and equipment  586             929
Deferred income taxes                        6,740           (2,972)
Tax deficiency from equity issuances         (68)            (682)
Excess tax benefits from share-based         (610)           (59)
compensation
Changes in assets and liabilities:                           
Inventories                                  (86,346)        (77,857)
Prepaid expenses and other current assets    (5,542)         15,105
Other assets                                 (224)           (1,235)
Accounts payable                             68,163          78,974
Accrued expenses and other current           (691)           (1,219)
liabilities
Other liabilities                            (920)           5,559
Net cash provided by operating activities    25,159          49,691
Cash flows from investing activities:                        
Acquisition of property and equipment        (30,272)        (32,732)
Net cash used in investing activities        (30,272)        (32,732)
Cash flows from financing activities:                        
Cash dividends paid                          (4,430)         --
Capital lease payments                       (2,197)         (4,025)
Excess tax benefits from share-based         610             59
compensation
Proceeds from exercise of stock options and  3,633           434
other
Repurchase of common stock                   (219)           (3,359)
Net cash used in financing activities        (2,603)         (6,891)
Net (decrease) increase in cash and cash     (7,716)         10,068
equivalents
Cash and cash equivalents at beginning of    67,233          94,053
year
Cash and cash equivalents at end of period   $59,517        $104,121

NOTES TO PRESS RELEASE

Note 1 - Adjusted Results

We report our consolidated financial results in accordance with generally
accepted accounting principles ("GAAP").However, to supplement these
consolidated financial results, management believes that certain non-GAAP
operating results, which exclude certain breakage income on unused gift and
merchandise return cards, may provide a more meaningful measure on which to
compare our results of operations between periods.We believe these non-GAAP
results provide useful information to both management and investors by
excluding certain items that impact comparability of the results.

Year-to-date 2012 results include $2.1 million higher breakage income on
unused gift and merchandise return cards as a result of changes in breakage
assumptions during the second quarter of 2012 ($1.3 million after tax or $0.03
per diluted share).Below is a reconciliation of Selling, general and
administrative expenses ("SG&A"), Net income and Diluted EPS (GAAP Basis) to
adjusted SG&A, Net income and Diluted EPS (Non-GAAP Basis) for the 39 weeks
ended October 27, 2012.


                       39 Weeks Ended October 27, 2012
                       SG&A      Net Income Diluted EPS
GAAP Basis              $ 217,306 $ 11,480   $ 0.26
Adjustments:                               
Gift card breakage      2,100     1,292      0.03
Adjusted/Non-GAAP Basis $ 219,406 $ 10,188   $ 0.23

Note 2 - EBITDA

As used in this release, EBITDA is defined as earnings before interest, income
taxes, depreciation and amortization.EBITDA is not a measure of financial
performance under generally accepted accounting principles ("GAAP").However,
we present EBITDA in this release because we consider it to be an important
supplemental measure of our performance and because it is frequently used by
analysts, investors and others to evaluate the performance of
companies.EBITDA is not calculated in the same manner by all
companies.EBITDA should be used as a supplement to results of operations and
cash flows as reported under GAAP and should not be considered to be a more
meaningful measure than, or an alternative to, measures of operating
performance as determined in accordance with GAAP. Below is a reconciliation
of Net income to EBITDA and Adjusted EBITDA for the 13 weeks and 39 weeks
ended November 2, 2013 and October 27, 2012.


                         13 Weeks     13 Weeks      39 Weeks     39 Weeks
                        Ended        Ended         Ended        Ended
                         Nov. 2, 2013 Oct. 27, 2012 Nov. 2, 2013 Oct. 27, 2012
Netincome (loss)        $ 28         $ (1,659)     $ 18,134     $ 11,480
Add back amounts for                                          
computation of EBITDA:
Interest expense, net    69           81            197          170
Income tax (benefit)     (205)        (2,163)       11,786       7,417
expense
Depreciation and         7,019        6,568         20,834       17,245
amortization
EBITDA                   6,911        2,827         50,951       36,312
Gift card breakage (see  --           --            --           (2,100)
Note 1)
Adjusted EBITDA          $ 6,911      $ 2,827       $ 50,951     $ 34,212

CONTACT: For more information:
         Linda Tasseff
         Director, Investor Relations
         (904) 858-2639
         ltasseff@steinmart.com

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