Stein Mart stumbles in Q2
August 25, 2003-- Home Textiles Today,
Hobbled by weakening sales, thinning margins and rising costs, off-price retailer Stein Mart Inc. recorded a second-quarter loss of $2.8 million compared with a year-ago profit of $2.8 million.
Sales declined by 2.5 percent, to $303.5 million from $311.4 million last year, and same-store sales fell off by 5.8 percent in a persistently soft retail environment.
Under heavy markdown pressure as the retailer cleaned its shelves of unproductive merchandise, average gross margin contracted by 160 basis points, or 1.6 percentage points, to 23.5 percent from 25.1 percent a year ago. Gross margin dollars fell by 8.7 percent, to $71.3 million from $78.1 million.
Costs climbed sharply higher when measured both in absolute dollars and as a percentage of weakening sales. Expenses ticked up by 130 basis points, or 1.3 percentage points, to 25.8 percent of sales from 24.5 percent last year. In real dollars, costs rose by 2.7 percent, to $78.4 million from $76.3 million.
With costs exceeding gross margin, the retailer generated a substantially widened operating loss of $7.1 million, compared with an operating loss of $1.8 million in the same period a year ago.
With business still soft, Stein Mart has already said it will close a total of 16 under-performing stores this year — four are already shuttered, and eight more will close during the third quarter. During the second quarter, the retailer said the operating loss generated by the 16 closed or closing stores totaled about $6.8 million.
"Without the impact of those stores, we would have shown an operating profit for both the second quarter and the first half," said Michael Fisher, president and ceo.
Stein Mart Inc.
|Qtr. 8/2 (x000)||2003||2002||% chg|
a-Second-quarter results include miscellaneous income of $3.1 million, compared with $3.4 million last year; and a $1.7 million income tax benefit vs. a prior-year tax provision of $1.7 million.
b-Six-month results include miscellaneous income of $6.7 million vs. $7.1 million last year; and an income-tax benefit of $772,000 vs. a prior-year tax provision of $14.1 million.
|Oper. income (EBIT)||(7,065)||(1,786)||—|
|Per share (diluted)||(0.07)||0.07||—|
|Average gross margin||23.5%||25.1%||—|
|Oper. income (EBIT)||(7,872)b||(17,036)b||—|
|Per share (diluted)||(0.03)||0.34||—|
|Average gross margin||24.4%||26.2%||—|