JACKSONVILLE, Fla., May 17, 2017 (GLOBE NEWSWIRE) Stein Mart, Inc. (NASDAQ:SMRT) today announced financial results for the first quarter ended April 29, 2017.
Highlights
Net income for the first quarter was $3.7 million or $0.08 per diluted share compared to net income of $13.3 million or $0.29 per diluted share in 2016. Income tax expense for the first quarter of 2017 includes $1.1 million ($0.02 per diluted share) higher expense related to the new accounting standard on stock compensation.
“We continue to experience softer than planned store traffic and sales. As a result, markdowns were significantly higher for the quarter despite our focus on inventory management. Given the uncertain retail environment, we are being more conservative planning fall, keeping a higher percentage of our buying in reserve to opportunistically take advantage of any sales upside. We expect to see additional inventory reductions as the year progresses,” said Hunt Hawkins, Chief Executive Officer.
“Until we gain improved visibility during this period of weak retail apparel sales, we believe it is important to implement measures to maximize free cash flow to improve our financial position. In that regard, we have decided to suspend our quarterly dividend and significantly reduce our planned capital expenditures.”
Sales
Total sales for the first quarter of 2017 were $337.3 million compared to $355.7 million in 2016. Comparable store sales decreased 7.6 percent primarily due to lower traffic. Ecommerce sales were up 38 percent over last year’s first quarter.
Gross Profit
Gross profit for the first quarter of 2017 was $95.6 million or 28.3 percent of sales compared to $108.9 million or 30.6 percent of sales in 2016. The lower gross profit rate for the quarter reflects higher markdowns and higher occupancy costs that negatively leverage on lower sales.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses for the first quarter of 2017 were $85.5 million compared to $86.5 million in 2016. SG&A expenses were lower this year as a result of operating savings and lower expense for legal settlements that more than offset higher operating expenses from new stores.
Balance Sheet
Inventories were $322 million at the end of the first quarter of 2017 compared to $317 million at the same time last year. Average inventories per store were down 2.1 percent to last year.
Borrowings under our credit facilities were $157 million and unused availability was $94 million at the end of the first quarter. At the end of the first quarter last year, borrowings were $149 million and unused availability was $113 million.
Cash Flows
Cash provided by operating activities was $40.2 million for the first quarter of 2017 compared to $60.3 million for the first quarter of 2016.
Capital expenditures totaled $7.2 million for the first quarter of 2017 compared to $11.3 million in 2016. Planned capital expenditures for fiscal 2017 have been decreased to approximately $24 million or $21 million net of tenant improvement allowances. Capital expenditures were $42 million or $36 million net of tenant improvement allowances in fiscal 2016.
Suspending the $0.075 quarterly dividend will free up approximately $14 million of cash to apply against debt on an annual basis.
Store Activity
We had 292 stores at the end of the first quarter compared to 283 at the end of the first quarter last year. We opened five new stores and closed three stores during the quarter. We are now expecting to open a total of 10 new stores and close seven stores in 2017.
Updated 2017 Outlook
We have updated our full year 2017 outlook as follows:
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 April 29, 2017 with the Securities and Exchange Commission (SEC), and therefore remain subject to adjustment.
Conference Call
A conference call for investment analysts to discuss the Company’s first quarter 2017 results will be held at 4:30 p.m. ET on May 17, 2017. 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 May 31, 2017.
Investor Presentation
Stein Mart’s first quarter 2017 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, Inc. is a national specialty and off-price retailer offering designer and name-brand fashion apparel, home décor, accessories and shoes at everyday discount prices. Stein Mart provides real value that customers will love every day both in stores and online. The Company currently operates 292 stores across 31 states.
Stein Mart, Inc. | |||||
Condensed Consolidated Statements of Income | |||||
(Unaudited) | |||||
(In thousands, except per share amounts) | |||||
13 Weeks Ended | 13 Weeks Ended | ||||
April 29, 2017 | April 30, 2016 | ||||
Net sales | $ | 337,335 | $ | 355,712 | |
Cost of merchandise sold | 241,779 | 246,820 | |||
Gross profit | 95,556 | 108,892 | |||
Selling, general and administrative expenses | 85,494 | 86,474 | |||
Operating income | 10,062 | 22,418 | |||
Interest expense, net | 1,139 | 966 | |||
Income before income taxes | 8,923 | 21,452 | |||
Income tax expense | 5,223 | 8,141 | |||
Net income | $ | 3,700 | $ | 13,311 | |
Net income per share: | |||||
Basic | $ | 0.08 | $ | 0.29 | |
Diluted | $ | 0.08 | $ | 0.29 | |
Weighted-average shares outstanding: | |||||
Basic | 46,165 | 45,595 | |||
Diluted | 46,171 | 46,275 | |||
Stein Mart, Inc. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(Unaudited) | |||||||||
(In thousands, except for share and per share data) | |||||||||
April 29, 2017 | January 28, 2017 | April 30, 2016 | |||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 15,554 | $ | 10,604 | $ | 16,317 | |||
Inventories | 322,030 | 291,110 | 316,897 | ||||||
Prepaid expenses and other current assets | 24,161 | 30,249 | 22,676 | ||||||
Total current assets | 361,745 | 331,963 | 355,890 | ||||||
Property and equipment, net | 164,012 | 165,542 | 166,261 | ||||||
Other assets | 28,692 | 30,344 | 30,141 | ||||||
Total assets | $ | 554,449 | $ | 527,849 | $ | 552,292 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 162,208 | $ | 114,419 | $ | 152,807 | |||
Current portion of debt | 8,333 | 10,000 | 10,000 | ||||||
Accrued expenses and other current liabilities | 71,360 | 72,772 | 75,385 | ||||||
Total current liabilities | 241,901 | 197,191 | 238,192 | ||||||
Long-term debt | 149,119 | 171,792 | 138,960 | ||||||
Deferred rent | 42,509 | 41,774 | 41,667 | ||||||
Other liabilities | 49,128 | 46,832 | 45,738 | ||||||
Total liabilities | 482,657 | 457,589 | 464,557 | ||||||
COMMITMENTS AND CONTINGENCIES | |||||||||
Shareholders’ 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; 47,181,498, 47,018,942 and 46,372,908 | |||||||||
shares issued and outstanding, respectively | 472 | 470 | 464 | ||||||
Additional paid-in capital | 51,557 | 50,241 | 44,370 | ||||||
Retained earnings | 20,059 | 19,853 | 43,175 | ||||||
Accumulated other comprehensive loss | (296) | (304) | (274) | ||||||
Total shareholders’ equity | 71,792 | 70,260 | 87,735 | ||||||
Total liabilities and shareholders’ equity | $ | 554,449 | $ | 527,849 | $ | 552,292 | |||