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Stein Mart gross profit decline in Q2

21
Aug '08
Stein Mart Inc 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.


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