Stein Mart Q1 Profits Fall 87% On 7.1% Sales Decline

Stein Mart, Inc. announced the company earned $1.5 million, or $0.04 per share, for the first quarter of 2003as compared to earnings of $11.4 million, or $0.27 per share, in the first quarter of 2002. As previously reported, total sales for the first quarter of 2003 were $330.6 million, a 7.1 percent decrease from the $356.0 million in sales for the same period in 2002. Comparable store sales for the first quarter decreased 9.3 percent from 2002 to 2003.

“Our results were adversely impacted by the lack of expense leverage on negative comparable store sales and the additional markdowns necessary to manage our inventory,” noted Michael D. Fisher, president and chief executive officer. “With sales continuing substantially below plan, inventory management has taken on even greater importance and our aggressive efforts have controlled inventories to appropriate levels and freshness.”

If the current trends continue, management anticipates same-store sales for the second quarter of 03 will be in the negative, mid-single digit range, which would result in a loss for the quarter. Due to the ongoing uncertainty in the retail sales environment, management declines to provide a more specific outlook until there is clearer economic visibility.

During the first quarter, the Company opened seven new stores, and one additional store has opened since the end of the quarter. The Company plans to open six more stores this year, for a total of 14 new stores in 2003.

As previously announced, the Company intends to close a total of 16 stores in 2003. Three of those stores have already closed (two in the first quarter and one last week). The 16 stores slated for closure this year incurred total pre-tax operating losses of $3.2 million in the first quarter of 2003.

Because of the shortfall in sales, the Company was not in compliance with one of its credit agreement convenants at the end of the first quarter of 2003. The Company is in the process of completing a new credit agreement, which is expected to close by June 2003.

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

                                                    For The 13 Weeks Ended
                                                      May 3,         May 4,
                                                      2003           2002
    Net sales                                       $330,557       $355,979

    Cost of merchandise sold                         246,861        259,448

        Gross profit                                  83,696         96,531

    Selling, general and administrative expenses      84,503         81,281

    Other income, net                                  3,653          3,700

        Income from operations                         2,846         18,950

    Interest expense                                     405            614

    Income before income taxes                         2,441         18,336

    Income tax provision                                 928          6,968

        Net income                                    $1,513        $11,368