Stein Mart Cuts Back Home
Cecile Corral -- Home Textiles Today, June 2, 2008
As its home business continues declining in relevance among consumers, Stein Mart has set plans for the fall to shrink the category's inventories and square footage space at the store level, the 284-unit mid-price chain said during its first-quarter earnings call last week.
"It will probably be at the end of fiscal 2008 that [home] will be in the position [in terms of inventory and square footage] that we really want it to be," said Bill Moll, evp, chief merchandising officer, saying the process is "in place right now and you will see changes taking place in the third quarter."
He described home as "our worst performing business." It currently generates about 14% of Stein Mart's total sales.
Expanding on the chain's efforts to reduce its home business, Moll added, "I do feel comfortable that we have a lot of actionable points in place, that this will level itself off, but as we know from the industry it is a difficult business."
Home may be the poorest performer, but Stein Mart nonetheless suffered "an extremely challenging" first quarter all around "from a sales perspective," said ceo and president Linda McFarland Farthing.
For the first quarter ended May 3, sales fell 6.4% to $352.1 million, with comps posting a 9.3% decline. Earnings were $7.0 million, or 17 cents per share, down 13.6%.
Stein Mart's customers, McFarland Farthing said, were prompted to shop "only when there was significant discounting involved. Otherwise their response has been lackluster, at best."
Spring sales likewise "failed to materialize," she added, giving reason to Stein Mart's forlorn outlook for the second quarter.
"Let me stress that the sales shortfall in the first quarter will have adverse markdown ramifications in the second quarter as we work to liquidate spring/summer merchandise," she said.
And yet, gift-able goods — including stronger sellers like electronics, boxed jewelry and bath sets — proved "an important category this spring," Moll said.
In response to this trend, coupled with the overall decline in linens and home décor items, Stein Mart is amplifying its offerings of "more gift-able" goods like crystal, home entertainment items and lamps in the place of furniture and decorative pieces.
Additionally, Stein Mart's refocused approach to its waning linens business is to take "an aggressive price point stance on bedding, towels, sheets and top-of-bed. In general, we see the customer responding to sharply priced novelty items that make her feel better."
On the real estate front, Stein Mart has scaled back its new store opening count in light of the soft economy. Already five new stores have opened this year and one other is scheduled to open in the late summer. There is also one relocation set for later this year.