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