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Stein Mart: Linens Lag as Home Hums

It is the gifts — not the linens — that keep giving at Stein Mart, where the home business was boosted during the first quarter through renewed emphasis in this category and home décor.

The 270-unit specialty mid-price chain saw its gifts division perform "slightly better than the company's trend, with gifts and home décor segments positive for the quarter," said William Moll, evp and cmo, during Stein Mart Inc.'s quarterly earnings call.

But not all was rewarding in home, Moll said, adding "Linens continued to be the most challenging area of the store."

To build on the momentum in gifts and home décor, Stein Mart is concentrating on opening up both the range of price points and the selection in this division, "with renewed emphasis on gifts and sharper pricing on some home décor," he said.

And to help along the lagging linens, the plan is to continue to focus on "enticing customers with attractive products and pricing," such as with the introduction of a new bath shop assortment this summer, and the expansion of the Nina Campbell brand — "which has been successful in top-of-bed," Moll said — into towels, bath rugs and additional bedding assortments.

Michael Fisher, president and ceo, described the first quarter as "a rollercoaster for us, confronting winter storms in February, enjoying a robust March with the best monthly comp performance in some time, and suffering through a very substantial comp decline in April," with additional severe cold weather.

He added that Stein Mart's successes, "and there were several, were ultimately overshadowed by a significant shortfall in revenue and the resulting inability to leverage higher cost."

For the first quarter ended May 5, earnings rose 6.6% to $8.1 million, or 18 cents per share. Sales bumped up 3.1% to $376.8 million, while comps dropped 2.0%.

Despite a tough quarter and projected shortfalls this summer, Stein Mart is on schedule to expand its store count by 14 to 17 new units in 2007, and two store closings for the year.

Already during the first quarter, two of the 14 to 17 new units were opened —- a fifth unit in Austin, Texas, and a 19th store in Southern California. Additionally, a unit in Toldeo, Ohio was relocated.

In the fall, Stein Mart expects to open two stores in North Carolina, another two in Ohio, and as many as three in Texas.

Leases have been signed for sites in Tennessee, Missouri, Virginia, and Nevada, and the retailer expects to sign more leases for stores in New York, California, and Florida.

Most of these stores will open either late in the third quarter or very early in fourth quarter.

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