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Stein Mart expects productivity from prototype

After weathering a tough economic period this past second quarter, Stein Mart is experimenting with a more compact and high-end version of its typical 36,000-square-foot store concept that will occupy less than half the space yet is expected to generate higher sales.

"[The new concept store] is a smaller footprint but we do expect its sales productivity per square foot to be considerably higher than the existing Stein Mart stores," Michael Fisher, president and coo, said last week during the company's quarterly conference call yesterday to discuss its second quarter earnings.

On Oct. 24, Stein Mart will open its first "collections of Stein Mart" prototype store in the posh community of Palos Verdes, CA, with another three to five "collections" stores slated to open in other states in 2003. The company would not disclose the exact locations of the other new stores opening next year because of pending lease agreements, except to say that at least one is expected to be located in the Southeast region. But all the collections stores will be strategically located in areas of high-end demographics, such as resort towns and premium real estate neighborhoods, and will be situated in specialty store districts, not in malls.

The new concept stores average about 15,000 square feet in size and will be stocked with only boutique-like goods — namely jewelry, fashion assortments, accessories, some women's sportswear and gifts.

"At present we do not plan to put linens, textiles or children's goods in these stores," Fisher said.

Added Gwen Manto, executive vp of merchandising: "Our plan is to make it the best of Stein Mart, a fashion offering in whatever market we open these stores in."

Fisher acknowledged that rent costs for these collections stores are expected to be higher than those of typical Stein Marts.

"But these higher rent costs will be offset by a higher sales per square foot," he said.

Stein Mart has been developing the "collections" stores concept over the past year or so, he said.

"The genesis of it was that we felt that there were some of our target customers who were located in either premium market locations or resort areas where we couldn't reach, either because of available real estate or rental space," Fisher said. "We saw this new prototype store as access to get closer to those customers."

Manto added that also aiding that effort is Stein Mart's new planning program "which gave us the opportunity to be able to merchandise a store that was sized differently or merchandised differently from our other stores."

Helping to spread the word about the rollout of the "collections" stores will be a full advertising program that will include direct mailings.

"It's too early to tell exactly what our growth potential will be through the new prototype stores, but we certainly have done the modeling about that, and we think this concept provides a very economically attractive opportunity," Fisher said.

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