Current Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 21, 2008
(Date of Report; Date of Earliest Event Reported)
STEIN MART, INC.
(Exact Name of Registrant as Specified in its Charter)
| Florida | 0-20052 | 64-0466198 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1200 Riverplace Blvd., Jacksonville, Florida 32207
(Address of Principal Executive Offices Including Zip Code)
(904) 346-1500
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| ITEM 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
On August 21, 2008, Stein Mart, Inc. issued a press release, a copy of which is attached as Exhibit 99.1, that includes financial results for the quarterly period and six months ended August 2, 2008.
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS |
(d) Exhibits
| 99.1 | Press Release dated August 21, 2008. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| STEIN MART, INC. | ||||
| (Registrant) | ||||
| Date: August 26, 2008 | By: |
/s/ James G. Delfs |
||
| James G. Delfs | ||||
| Senior Vice President, Finance and | ||||
| Chief Financial Officer | ||||
EXHIBIT INDEX
| 99.1 | Press Release dated August 21, 2008. |
Exhibit 99.1
1200 RIVERPLACE BOULEVARD • JACKSONVILLE, FL 32207-1809 • (904) 346-1500
| August 21, 2008 | For more information: | |||
| Susan Datz Edelman | ||||
| FOR IMMEDIATE RELEASE | Director, Stockholder Relations | |||
| (904) 346-1506 | ||||
| sedelman@steinmart.com |
STEIN MART, INC. REPORTS 2Q AND FIRST HALF 2008 FINANCIAL RESULTS
JACKSONVILLE, FL – Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for its second quarter and first half ended August 2, 2008.
Second Quarter of 2008
For the 13-week second quarter of 2008, the Company incurred a net loss of $(8.0) million or $(0.19) per share as compared to net income of $2.2 million or $0.05 per share in 2007. Net sales decreased 5.8 percent to $311.6 million for the 13 weeks ended August 2, 2008 from $330.7 million for the 13 weeks ended August 4, 2007. Comparable store sales for the 13 weeks ended August 2, 2008 decreased 9.7 percent from the 13 weeks ended August 4, 2007.
Gross profit declined to $74.1 million or 23.8 percent of sales in the second quarter of 2008 compared to $86.2 million or 26.1 percent of sales in the same period last year. The gross profit rate decreased primarily due to higher markdowns, somewhat offset by increased mark-up. Gross profit also suffered from a lack of occupancy leverage on lower sales .
Selling, general and administrative (SG&A) expenses were $92.5 million or 29.7 percent of sales as compared to $87.7 million or 26.5 percent of sales during the same period last year. The SG&A rate was higher due to a lack of leverage on lower sales, and reflected increases in store closing expenses and certain non-recurring legal expenses and professional fees related to ongoing expense reduction initiatives. Additionally, there were increases in store operating expenses related to the 13 additional non-comparable stores, although they were substantially offset by savings in the comparable stores.
First Half of 2008
For the first six months of 2008, the Company incurred a net loss of $(1.0) million or $(0.02) per share as compared to net income of $10.3 million or $0.24 per share in 2007. Net sales decreased 6.1 percent to $663.8 million for the 26 weeks ended August 2, 2008 from $706.9 million for the 26 weeks ended August 4, 2007. Comparable store sales for the 26 weeks ended August 2, 2008 decreased 9.5 percent from the 26 weeks ended August 4, 2007.
Gross profit declined to $171.9 million or 25.9 percent of sales in the first half of 2008 compared to $191.1 million or 27.0 percent of sales in the same period last year. Merchandise margins increased slightly as higher mark-up was mostly offset by increased markdowns, but the gross profit rate decreased due to a lack of occupancy leverage on lower sales .
SG&A expenses were $184.1 million or 27.7 percent of sales as compared to $185.1 million or 26.2 percent of sales during the same period last year. The SG&A rate was higher due to a lack of leverage on lower sales, and reflected increases in store closing expenses and certain non-recurring expenses, offset by decreased advertising expense . Again, there were increases in store operating expenses related to the 15 additional non-comparable stores, substantially offset by savings in the comparable stores.
“We took aggressive markdowns in the second quarter to drive customer traffic and achieve our goal of keeping inventory levels in line with the sales trend,” noted Linda M. Farthing, president and chief executive officer of Stein Mart. “These lowered inventory levels, which we expect to continue, should give us a cleaner platform to present fresh fashion going forward.”
Other news
The Company continues to work on several initiatives designed to increase sales; motivate existing customers and attract new ones; reduce expenses; and provide a stronger, in-store message of fashion and value. A new marketing campaign will debut in the third quarter, as will a new store signage package.
“We remain focused on what we can control in this uncertain environment, and we believe our investments related to expense reductions should begin to benefit us in the fall season and into 2009,” Farthing continued.
Store network update
No new stores were opened and one store closed in the second quarter, resulting in 283 stores in operation at August 2, 2008 as compared to 270 at the same time last year.
One new store and one relocated store will open in the third quarter, completing the store-opening program for 2008. The Company now expects to close nine additional stores by the end of fiscal 2008, which would result in a year-end store count of 276.
Conference Call
Due to the pending arrival of Tropical Storm Fay in North Florida, management has rescheduled the previously announced conference call for investment analysts to discuss these results to 10 a.m. ET Monday, August 25, 2008. 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 August 29, 2008.
About Stein Mart
Stein Mart stores offer the fashion merchandise, service and presentation of a better department or specialty store, at prices up to 60 percent off department and specialty store prices, every day. 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, 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, without limitation:
| • |
changes in consumer spending due to current events and/or general economic conditions |
| • |
the effectiveness of advertising , marketing and promotional strategies |
| • |
on-going competition from other retailers |
| • |
changing preferences in apparel |
| • |
unanticipated weather conditions and unseasonable weather |
| • |
adequate sources of merchandise at acceptable prices |
| • |
availability of new store sites at acceptable lease terms |
| • |
the Company’s ability to attract and retain qualified employees to support planned growth |
| • |
ability to successfully implement strategies to exit or improve under-performing stores |
| • |
disruption of the Company’s distribution system |
| • |
acts of terrorism |
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
Stein Mart, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except for share data)
| August 2, 2008 | February 2, 2008 | August 4, 2007 | |||||||
|
ASSETS |
|||||||||
|
Current assets: |
|||||||||
|
Cash and cash equivalents |
$ | 18,312 | $ | 15,145 | $ | 16,853 | |||
|
Trade and other receivables |
8,283 | 12,372 | 9,999 | ||||||
|
Inventories |
248,900 | 262,496 | 272,447 | ||||||
|
Income taxes receivable |
10,759 | 14,103 | 2,445 | ||||||
|
Prepaid expenses and other current assets |
14,680 | 13,985 | 16,290 | ||||||
|
Total current assets |
300,934 | 318,101 | 318,034 | ||||||
|
Property and equipment, net |
107,911 | 110,687 | 113,732 | ||||||
|
Other assets |
33,184 | 31,751 | 30,305 | ||||||
|
Total assets |
$ | 442,029 | $ | 460,539 | $ | 462,071 | |||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||
|
Current liabilities: |
|||||||||
|
Accounts payable |
$ | 53,880 | $ | 77,124 | $ | 62,270 | |||
|
Accrued liabilities |
73,760 | 75,508 | 71,794 | ||||||
|
Total current liabilities |
127,640 | 152,632 | 134,064 | ||||||
|
Notes payable to banks |
30,958 | 27,133 | 14,341 | ||||||
|
Other liabilities |
29,329 | 24,085 | 27,887 | ||||||
|
Total liabilities |
187,927 | 203,850 | 176,292 | ||||||
|
COMMITMENTS AND CONTINGENCIES |
|||||||||
|
Stockholders’ equity: |
|||||||||
|
Preferred stock - $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding |
|||||||||
|
Common stock - $.01 par value; 100,000,000 shares authorized; 42,390,969, 41,831,182 and 42,925,584 shares issued and outstanding, respectively |
424 | 418 | 429 | ||||||
|
Additional paid-in capital |
8,230 | 5,288 | 14,516 | ||||||
|
Retained earnings |
245,448 | 250,983 | 270,834 | ||||||
|
Total stockholders’ equity |
254,102 | 256,689 | 285,779 | ||||||
|
Total liabilities and stockholders’ equity |
$ | 442,029 | $ | 460,539 | $ | 462,071 | |||
Stein Mart, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
|
13 Weeks Ended
August 2, 2008 |
13 Weeks Ended
August 4, 2007 |
26 Weeks Ended
August 2, 2008 |
26 Weeks Ended
August 4, 2007 |
|||||||||||||
|
Net sales |
$ | 311,628 | $ | 330,739 | $ | 663,751 | $ | 706,858 | ||||||||
|
Cost of merchandise sold |
237,506 | 244,541 | 491,883 | 515,750 | ||||||||||||
|
Gross profit |
74,122 | 86,198 | 171,868 | 191,108 | ||||||||||||
|
Selling, general and administrative expenses |
92,523 | 87,712 | 184,062 | 185,123 | ||||||||||||
|
Other income, net |
5,373 | 5,255 | 11,303 | 10,634 | ||||||||||||
|
Income (loss) from operations |
(13,028 | ) | 3,741 | (891 | ) | 16,619 | ||||||||||
|
Interest (expense) income, net |
(205 | ) | (43 | ) | (572 | ) | 84 | |||||||||
|
Income (loss) before income taxes |
(13,233 | ) | 3,698 | (1,463 | ) | 16,703 | ||||||||||
|
Income tax benefit (provision) |
5,230 | (1,503 | ) | 458 | (6,396 | ) | ||||||||||
|
Net income (loss) |
$ | (8,003 | ) | $ | 2,195 | $ | (1,005 | ) | $ | 10,307 | ||||||
|
Net income (loss) per share: |
||||||||||||||||
|
Basic |
$ | (0.19 | ) | $ | 0.05 | $ | (0.02 | ) | $ | 0.24 | ||||||
|
Diluted |
$ | (0.19 | ) | $ | 0.05 | $ | (0.02 | ) | $ | 0.24 | ||||||
|
Weighted-average shares outstanding: |
||||||||||||||||
|
Basic |
41,309 | 42,547 | 41,280 | 42,894 | ||||||||||||
|
Diluted |
41,309 | 43,070 | 41,280 | 43,491 | ||||||||||||
Stein Mart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
26 Weeks Ended
August 2, 2008 |
26 Weeks Ended
August 4, 2007 |
|||||||
|
Cash flows from operating activities: |
||||||||
|
Net income (loss) |
$ | (1,005 | ) | $ | 10,307 | |||
|
Adjustments to reconcile net income (loss) to net cash operating activities: |
||||||||
|
Depreciation and amortization |
12,690 | 12,671 | ||||||
|
Impairment of property and other assets |
328 | 108 | ||||||
|
Store closing charges |
1,153 | 175 | ||||||
|
Deferred income taxes |
(841 | ) | (3,446 | ) | ||||
|
Share-based compensation |
2,480 | 4,710 | ||||||
|
Tax benefit from equity issuances |
— | 266 | ||||||
|
Excess tax benefits from share-based compensation |
(3 | ) | (237 | ) | ||||
|
Changes in assets and liabilities: |
||||||||
|
Trade and other receivables |
4,089 | 165 | ||||||
|
Inventories |
13,596 | 18,496 | ||||||
|
Income taxes receivable |
3,344 | (2,445 | ) | |||||
|
Prepaid expenses and other current assets |
(1,100 | ) | 532 | |||||
|
Other assets |
(632 | ) | (2,497 | ) | ||||
|
Accounts payable |
(23,244 | ) | (20,973 | ) | ||||
|
Accrued liabilities |
(2,625 | ) | (6,315 | ) | ||||
|
Income taxes payable |
— | (13,091 | ) | |||||
|
Other liabilities |
465 | 5,602 | ||||||
|
Net cash provided by operating activities |
8,695 | 4,028 | ||||||
|
Cash flows from investing activities: |
||||||||
|
Capital expenditures |
(9,900 | ) | (12,628 | ) | ||||
|
Purchases of short-term investments |
— | (36,580 | ) | |||||
|
Sales of short-term investments |
— | 47,415 | ||||||
|
Net cash used in investing activities |
(9,900 | ) | (1,793 | ) | ||||
|
Cash flows from financing activities: |
||||||||
|
Borrowings under notes payable to banks |
399,746 | 63,689 | ||||||
|
Repayments of notes payable to banks |
(395,921 | ) | (49,348 | ) | ||||
|
Cash dividends paid |
— | (5,424 | ) | |||||
|
Excess tax benefits from share-based compensation |
3 | 237 | ||||||
|
Proceeds from exercise of stock options |
— | 3,517 | ||||||
|
Proceeds from employee stock purchase plan |
548 | 586 | ||||||
|
Repurchase of common stock |
(4 | ) | (16,199 | ) | ||||
|
Net cash provided by (used in) financing activities |
4,372 | (2,942 | ) | |||||
|
Net increase (decrease) in cash and cash equivalents |
3,167 | (707 | ) | |||||
|
Cash and cash equivalents at beginning of year |
15,145 | 17,560 | ||||||
|
Cash and cash equivalents at end of period |
$ | 18,312 | $ | 16,853 | ||||