Stein Mart reports Q4 & FY 07 financial results
March 21, 2008 - United States Of America
Stein Mart Inc announced financial results for its fourth quarter and fiscal year ended February 2, 2008. The Company's fiscal 2007 was a 52-week year; the Company's fiscal 2006 was a 53-week year ending February 3, 2007.
For the fourth quarter of 2007, the Company incurred a net loss of $(12.1) million or $(0.30) per diluted share as compared to net income of $21.1 million or $0.48 per diluted share in 2006.
As previously reported, for the 13 weeks ended February 2, 2008, sales decreased 9.4 percent to $417.4 million from the $461.0 million for the 14 weeks ended February 3, 2007. Excluding the extra week in last year's fourth quarter, sales decreased 3.3 percent.
Comparable store sales for the 13 weeks ended February 2, 2008 decreased 6.2 percent from the 13 weeks ended February 3, 2007.
Gross profit decreased to $84.1 million or 20.1 percent of net sales from $135.5 million or 29.4 percent of net sales. The gross profit rate decreased primarily due to significantly higher markdowns and increased occupancy costs, slightly offset by improved markup.
Selling, general and administrative (SG&A) expenses were $106.2 million or 25.4 percent of net sales as compared to $108.7 million or 23.6 percent of net sales during the prior year's fourth quarter.
The SG&A rate was higher due to a lack of leverage on decreased sales. Store closing and asset impairment charges of $4.7 million and $1.3 million were recorded in the fourth quarter of 2007 and 2006, respectively.
"The steep decline in business last fall required us to take an exceptional amount of markdowns in the fourth quarter to move seasonal merchandise," noted president and chief executive officer Linda M. Farthing.
"Although very costly, it did allow us to reduce our overall
inventory to levels more appropriate for this uncertain retailing climate."
For the fiscal year 2007, the Company incurred a net loss of $(4.5) million or $(0.11) per diluted share, as compared to net income of $37.2 million or $0.85 per diluted share in 2006.
As previously reported, for the 52 weeks ended February 2, 2008, net sales totaled $1.46 billion, a 2.9 percent decrease from the $1.50 billion in net sales for the 53 weeks ended February 3, 2007.
Excluding the extra week for last year, sales decreased 1.5 percent. Comparable store sales for the 52 weeks ended February 2, 2008 decreased 4.0 percent from the 52 weeks ended February 3, 2007.
Gross profit was $361.4 million or 24.8 percent of net sales in 2007 compared to $416.3 million or 27.7 percent of net sales in 2006.
The gross profit rate decreased primarily due to increased markdowns and occupancy costs, slightly offset by improved markup.
Selling, general and administrative (SG&A) expenses were $388.6 million or 26.7 percent of net sales as compared to $376.6 million or 25.1 percent of net sales during the prior year.
The SG&A rate was higher due to a lack of leverage on decreased sales, and reflected increased advertising, depreciation and costs related to the transition of the president/CEO position. Store closing and asset impairment charges of $5.2 million and $2.4 million were recorded in 2007 and 2006, respectively.
Other income decreased $1.8 million for the fourth quarter due to a $1.8 million settlement received in 2006 from the Visa Check/MasterMoney anti-trust litigation. However for the year, other income increased $3.2 million, which reflects the increased revenues from our credit card program that was introduced in October 2006.
During 2007, 14 new stores were opened, two were closed and two were relocated. At February 2, 2008, there were 280 stores in operation as compared to 268 at the same time last year.
"Although it was in line with our revised projections, our 2007 performance was deeply disappointing," commented Linda M. Farthing, president and chief executive officer. "We are committed to improved results in 2008, despite the difficulties in the current economic environment."
Farthing characterized her plans for the current fiscal year as cautious and disciplined. "We will be controlling inventory very tightly, and we have already taken steps to reduce our costs to only the most necessary expenditures," she said.
"Our main emphasis in 2008 is finding innovative ways to reach and satisfy our current customers, as well as develop new ones," she continued.
"We will be exploring and testing several new initiatives to build on our traditional strength of meeting our shoppers' expectations with exciting merchandise and customer service."
Farthing identified more opportunistic purchasing, and flexing the selling floor space to feature more product lines and expanded merchandise categories as areas that are being targeted to enhance productivity.
She also pointed to enhancing the in-store experience, elevating the marketing program, and a continued effort to improve operational efficiencies as additional keys to success in 2008.
Management will hold a conference call for investment analysts at 10 a.m. ET this morning to discuss these results and Company strategy for 2008.
The call may be heard on the investor relations portion of the Company's website. A replay of the presentation will be available on the website until March 29, 2008.