For the first quarter ended May 2, 2009, Stein Mart earned $16.1 million or 38 cents per diluted share as compared to $7.0 million or 17 cents per diluted share in 2008. As previously reported, net sales for the first quarter decreased 9.2% to $319.6 million from $352.1 million the previous year and comparable store sales decreased 8.0% from the first quarter of 2008.


Gross profit decreased to $96.8 million from $97.7 million in 2008. As a percent of net sales, gross profit increased to 30.3% from 27.8 percent in the same period last year. The increase in the gross profit rate resulted from increased markup and decreased markdowns, slightly offset by higher occupancy costs.


Selling, general and administrative (SG&A) expenses were $79.9 million or 25.0% of net sales as compared to $91.5 million or 26.0% of net sales during the same period last year. The $11.7 million decrease in SG&A resulted primarily from reduced payroll expense in stores and in the corporate office, and from lower depreciation expense.


The effective tax rate for the first quarter of 2009 was 25.8% compared to 40.5% last year. The lower rate in the current quarter resulted from the reversal of a portion of the valuation allowance for deferred tax assets using the discrete period method.


“Despite a very difficult sales environment, first quarter earnings improved due to tightly controlled inventories that enhanced merchandise margins, and significant expense reductions; these initiatives produced a positive cash flow of $32 million and allowed us to end the period debt free,” commented David H. Stovall, Jr., president and CEO of Stein Mart, Inc. “While our conservative outlook regarding the macro environment persists, we believe our re-focused brand strategy and the new marketing initiatives are beginning to gain traction, and will be key to our long-term success.”


Store network


During the first quarter of 2009, a new store opened in Houston, Texas and two existing locations in Atlanta closed. At May 2, 2009, there were 275 stores in operation as compared to 284 stores at the same time last year.


 

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

                                               13 Weeks Ended  13 Weeks Ended
                                                 May 2, 2009     May 3, 2008

    Net sales                                      $319,570      $352,123
    Cost of merchandise sold                        222,740       254,377
    Gross profit                                     96,830        97,746
    Selling, general and administrative expenses     79,856        91,539
    Other income, net                                 4,997         5,930
    Income from operations                           21,971        12,137
    Interest expense, net                               279           367
    Income before income taxes                       21,692        11,770
    Provision for income taxes                        5,606         4,772
    Net income                                      $16,086        $6,998

    Net income per share:
    Basic                                             $0.38         $0.17
    Diluted                                           $0.38         $0.17

    Weighted-average shares outstanding:
    Basic                                            42,676        42,003
    Diluted                                          42,892        42,034