Attached files
| file | filename |
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| 8-K - FORM 8-K - STEIN MART INC | d8k.htm |
Exhibit 99.1
1200 RIVERPLACE BOULEVARD • JACKSONVILLE, FL 32207-1809 • (904) 346-1500
| May 19, 2011 | For more information: | |||
| Nancy Murphy | ||||
| FOR IMMEDIATE RELEASE | Director, Investor Relations | |||
| (904) 346-1506 | ||||
| nmurphy@steinmart.com |
STEIN MART, INC. REPORTS FIRST QUARTER 2011 FINANCIAL RESULTS
Financial highlights:
| • | Diluted earnings per share of $0.35, or $0.32 as adjusted. |
| • | Operating income as adjusted of $24.2 million increases 14.2 percent. |
| • | Comparable store sales up 1.5 percent. |
JACKSONVILLE, FL – Stein Mart, Inc. (Nasdaq: SMRT) today announced financial results for the first quarter ended April 30, 2011.
Overview of Results
Net income for the first quarter was $15.9 million or $0.35 per diluted share compared to net income of $14.3 million or $0.32 per diluted share in 2010. Net income as adjusted was $14.7 million or $0.32 per diluted share for the first quarter of 2011. The results as adjusted exclude an after-tax gain of $1.2 million or $0.03 per diluted share to correct an error in the Company’s credit card reward liability (see Reward Breakage Gain below).
Sales increased to $303.5 million, up 0.8 percent from $301.0 million in the first quarter in 2010. Comparable store sales increased 1.5 percent for the same period.
“We are pleased to report solid first quarter results including higher comparable store sales, improved margins and a 14.2 percent increase in operating income as adjusted,” said David H. Stovall, Jr., president and chief executive officer of Stein Mart, Inc. “Customers responded positively to our growing assortment of designer labels and brands at great values.”
Operating income as adjusted increased to $24.2 million or 8.0 percent of sales, from $21.2 million or 7.0 percent of sales in the first quarter of 2010 as a result of higher gross profit and other income. Gross profit increased to $89.9 million or 29.6 percent of sales, from $87.5 million or 29.1 percent of sales in the first quarter 2010. Other income as adjusted increased $1.0 million to $6.3 million due to higher income from the credit card program, the leased shoe department, and breakage on unused gift and merchandise return cards. Selling, general and administrative expenses were $72.0 million or 23.7 percent of sales, compared to $71.6 million or 23.8 percent of sales in the first quarter of 2010.
The effective tax rate (“ETR”) of 39.3 percent for the first quarter increased from 32.3 percent in the same period in 2010. The lower ETR in 2010 benefitted first quarter 2010 earnings by $0.03 per share.
Balance Sheet Highlights
The Company maintained a strong balance sheet with $94.2 million in cash at the end of the first quarter, compared to $71.6 million at the end of the first quarter of 2010, and no debt.
Inventories were $258.8 million at the end of the first quarter compared to $237.5 million at the same time in 2010. This increase resulted from higher basic replenishment and year-round merchandise, lower than expected sales in April, and increased opportunistic purchases for next season. The Company is managing its position and expects inventories to be more in line with sales performance at the end of the second quarter.
Accounts payable increased as a result of a change in payment terms to be more consistent with industry practices and higher inventories.
Capital Expenditures
The Company is increasing its plan for capital expenditure in 2011 by $5 million to a range of $30 to $35 million. The increase is for the purchase of point-of-sale hardware in all stores which will increase operational efficiency.
Store network
The Company operated 262 Stein Mart stores at the end of the first quarter of 2011. No new stores were opened, two stores were closed and two were relocated in the quarter.
Reward Breakage Gain
Results for the first quarter include a pretax gain of $2.0 million ($1.2 million after tax or $0.03 per diluted share) to correct an error that resulted in an overstatement of the liability for outstanding and unused credit card rewards issued under the Stein Mart MasterCard program. The overstatement was due to inaccuracies in the data used to calculate breakage income for expired rewards in fiscal years 2008 through 2010. This correction was not material to any previously reported period and is reported in Other income.
Conference Call
A conference call for investment analysts to discuss the Company’s first quarter results will be held at 10 a.m. ET today, Thursday, May 19, 2011. The call may be heard on the investor relations portion of the Company’s website at http://ir.steinmart.com. A replay of the conference call will be available on the website through June 3, 2011.
Investor Presentation
Stein Mart’s first quarter 2011 investor presentation has been posted to the investor relations portion of the Company’s website at http://ir.steinmart.com.
About Stein Mart
Stein Mart stores offer the fashion merchandise, service and presentation of a better department or specialty store, at prices competitive with off-price retail chains. Currently with locations from California to Massachusetts, Stein Mart’s focused assortment of merchandise features current season, moderate to better fashion apparel for women and men, as well as accessories, shoes and home fashions.
SAFE HARBOR STATEMENT>>>>>>>Except for historical information contained herein, the statements in this release may be forward-looking, and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company does not assume any obligation to update or revise any forward-looking statements even if experience or future changes make it clear that projected results expressed or implied will not be realized. Forward-looking statements involve known and unknown risks and uncertainties that may cause Stein Mart’s actual results in future periods to differ materially from forecasted or expected results. Those risks include, without limitation:
| • | continued consumer sensitivity to economic conditions |
| • | on-going competition from other retailers |
| • | changing preferences in apparel |
| • | the effectiveness of advertising, marketing and promotional strategies |
| • | ability to negotiate acceptable lease terms with current landlords |
| • | ability to successfully implement strategies to exit under-performing stores |
| • | unanticipated weather conditions and unseasonable weather |
| • | adequate sources of merchandise at acceptable prices |
| • | the Company’s ability to attract and retain qualified employees |
| • | disruption of the Company’s distribution system |
| • | acts of terrorism |
and the other risks and uncertainties described in the Company’s filings with the Securities and Exchange Commission.
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Additional information about Stein Mart, Inc. can be found at www.steinmart.com
Stein Mart, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except for share data)
| April 30, 2011 | January 29, 2011 | May 1, 2010 | ||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 94,163 | $ | 80,171 | $ | 71,624 | ||||||
| Trade and other receivables |
8,864 | 10,360 | 7,910 | |||||||||
| Inventories |
258,804 | 232,295 | 237,524 | |||||||||
| Income taxes receivable |
— | 2,382 | — | |||||||||
| Prepaid expenses and other current assets |
14,386 | 15,226 | 12,430 | |||||||||
| Total current assets |
376,217 | 340,434 | 329,488 | |||||||||
| Property and equipment, net |
81,072 | 79,964 | 73,139 | |||||||||
| Other assets |
14,992 | 16,046 | 16,198 | |||||||||
| Total assets |
$ | 472,281 | $ | 436,444 | $ | 418,825 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable |
$ | 117,039 | $ | 95,545 | $ | 82,783 | ||||||
| Accrued liabilities |
63,184 | 72,587 | 80,363 | |||||||||
| Income taxes payable |
5,010 | — | 4,551 | |||||||||
| Total current liabilities |
185,233 | 168,132 | 167,697 | |||||||||
| Other liabilities |
20,949 | 21,061 | 20,444 | |||||||||
| Total liabilities |
206,182 | 189,193 | 188,141 | |||||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||||||
| Stockholders’ equity: |
||||||||||||
| Preferred stock - $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding |
||||||||||||
| Common stock - $.01 par value; 100,000,000 shares authorized; 44,659,326, 44,396,504 and 43,381,693 shares issued and outstanding, respectively |
447 | 444 | 434 | |||||||||
| Additional paid-in capital |
24,071 | 21,126 | 16,622 | |||||||||
| Retained earnings |
241,125 | 225,225 | 213,053 | |||||||||
| Accumulated other comprehensive income |
456 | 456 | 575 | |||||||||
| Total stockholders’ equity |
266,099 | 247,251 | 230,684 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 472,281 | $ | 436,444 | $ | 418,825 | ||||||
Stein Mart, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
| 13 Weeks Ended April 30, 2011 |
13 Weeks Ended May 1, 2010 |
|||||||
| Net sales |
$ | 303,546 | $ | 300,998 | ||||
| Cost of merchandise sold |
213,626 | 213,495 | ||||||
| Gross profit |
89,920 | 87,503 | ||||||
| Selling, general and administrative expenses |
72,025 | 71,598 | ||||||
| Other income, net |
8,316 | 5,273 | ||||||
| Operating income |
26,211 | 21,178 | ||||||
| Interest income, net |
4 | 8 | ||||||
| Income before income taxes |
26,215 | 21,186 | ||||||
| Provision for income taxes |
10,315 | 6,838 | ||||||
| Net income |
$ | 15,900 | $ | 14,348 | ||||
| Net income per share: |
||||||||
| Basic |
$ | 0.35 | $ | 0.33 | ||||
| Diluted |
$ | 0.35 | $ | 0.32 | ||||
| Weighted-average shares outstanding: |
||||||||
| Basic |
43,851 | 42,512 | ||||||
| Diluted |
44,186 | 43,657 | ||||||
Stein Mart, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| 13 Weeks Ended April 30, 2011 |
13 Weeks Ended May 1, 2010 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 15,900 | $ | 14,348 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Depreciation and amortization |
4,286 | 4,336 | ||||||
| Change in valuation allowance for deferred tax assets |
— | (798 | ) | |||||
| Deferred income taxes |
4,595 | 798 | ||||||
| Store closing charges |
143 | 138 | ||||||
| Share-based compensation |
914 | 198 | ||||||
| Tax benefit from equity issuances |
80 | 2,041 | ||||||
| Excess tax benefits from share-based compensation |
(124 | ) | (1,998 | ) | ||||
| Changes in assets and liabilities: |
||||||||
| Trade and other receivables |
1,496 | 2,268 | ||||||
| Inventories |
(26,509 | ) | (19,399 | ) | ||||
| Income taxes receivable |
2,382 | — | ||||||
| Prepaid expenses and other current assets |
(2,303 | ) | (1,318 | ) | ||||
| Other assets |
(501 | ) | (645 | ) | ||||
| Accounts payable |
21,494 | 2,465 | ||||||
| Accrued liabilities |
(9,454 | ) | (4,334 | ) | ||||
| Income taxes payable |
5,010 | 1,590 | ||||||
| Other liabilities |
(71 | ) | (579 | ) | ||||
| Net cash provided by (used in) operating activities |
17,338 | (889 | ) | |||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(5,424 | ) | (8,871 | ) | ||||
| Net cash used in investing activities |
(5,424 | ) | (8,871 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Excess tax benefits from share-based compensation |
124 | 1,998 | ||||||
| Proceeds from exercise of stock options |
2,009 | 434 | ||||||
| Repurchase of common stock for employee withholdings |
(55 | ) | (2,023 | ) | ||||
| Net cash provided by financing activities |
2,078 | 409 | ||||||
| Net increase (decrease) in cash and cash equivalents |
13,992 | (9,351 | ) | |||||
| Cash and cash equivalents at beginning of year |
80,171 | 80,975 | ||||||
| Cash and cash equivalents at end of period |
$ | 94,163 | $ | 71,624 | ||||