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Stein Mart rebounds with profit in 2Q

JACKSONVILLE, FL — Staging a comeback from a first-quarter loss, Stein Mart Inc. recorded a second-quarter profit of $10.9 million, but earnings still declined by 21.4 percent from a year-ago profit of $13.8 million, the bottom line weighed down by thinning margins, higher costs and rising interest expense.

Lifted by nine new stores opened this year, sales advanced by 10.1 percent, to $320.7 million from $291.2 million last year. Same-store sales edged up by 1.5 percent, up against a year-ago gain of 12.8 percent.

Reflecting the hit-or-miss retail environment, same-store sales "went from mid-single-digit positive during April to negative during June," the company reported. And moving into the third quarter, same-store sales remain negative in July. This trend, if it persists, the company said, will put at risk its current assumption of low-single-digit same-store sales growth for the second half of the year, and its ability to hold earnings flat with year-ago levels.

Putting the bite on profits during the period, average gross margin eroded by 120 basis points, to 27.1 percent from 28.3 percent the prior year. But given a lift from the added sales, gross margin dollars still increased by 5.6 percent, to $86.9 million from $82.3 million. At the same time, costs climbed higher by 90 basis points, rising to 22.5 percent of sales from 21.6 percent a year ago.

Adding another modest level of pressure, interest costs, while still low, climbed higher by 15.2 percent, to $900,000 from $781,000.

"We believe the concern about the economic climate reduced traffic into our stores, despite our excellent spring merchandise selection," said chairman and ceo Jay Stein.

Stein Mart Inc.

Qtr. 6/30 (x000) 2001 2000 % CHG
Sales $320,665 $291,188 10.1
Oper. income (EBIT) 14,567 19,347 -24.7
Net income 10,876 13,830 -21.4
Per share (diluted) 0.26 0.32 -18.8
Average gross margin 27.1% 28.3%
SG&A expenses 22.5% 21.6%
Six months
Sales 591,629 536,639 10.2
Oper. income (EBIT) 9,771 18,628 -47.5
Net income 9,487 14,829 -36.0
Per share (diluted) 0.23 0.34 -32.4
Average gross margin 25.3% 26.0%
SG&A expenses 23.6% 22.5%

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