Stein Mart ups profits by 33 percent

Heath E. Combs, Don Hogsett, March 22, 2004

Launching an 11th hour recovery, and bounding back from earlier losses, Southeastern off-pricer Stein Mart Inc. boosted fourth-quarter profits by 33.4 percent, to $13.9 million from $10.4 last year, helped by sharply stronger margins.

Held in check by the shutdown of 16 stores over the past 12 months, sales inched up by 1 percent, to $410.2 million from $406.3 million last year. Same-store sales also rose by 1 percent.

Giving a big lift to the bottom line, average gross margin expanded by 290 basis points, or 2.9 percentage points, helped by less promotional activity and a greater emphasis on everyday pricing.

Hampered by store closing and asset impairment charges, operating costs climbed by 110 basis points, or 1.1 percentage points.

"We are pleased with a positive finish to what was a very difficult year for our company," said Michael Fisher, president and CEO. "While our decisions to close stores, eliminate full-price coupons and undertake a major new marketing campaign negatively impacted our 2003 results, these actions were vital for the future of our business and critical to our objectives to return the company to its historic level of profitability."

For all of last year, Stein Mart recorded a modest profit of $2.2 million, down 89.4 percent from $20.7 million in 2002. The retailer would have operated at a loss but for miscellaneous, non-operating income of $13 million.

In a lift to the bottom line, the retailer said it reduced shrinkage by 35 percent.

Stein Mart Inc.

Qtr. 1/31 (x000) 2003 2002 % chg
( ) - denotes decline
a-SG&A expenses for both the fourth-quarter and 12-month periods includes store closing and asset impairment charges.
Sales $410,200 406,300 1.0
Oper. income (EBIT) 21,300 13,800 54.3
Net income 13,900 10,400 33.4
Per share (diluted) 0.33 0.25 32.0
Averaqe gross margin 27.5% 24.6%
SG&A expenses 22.3%a 21.2%a
12 months 2003 2002 % chg
Sales $1,355,457 $1,401,613 -3.3
Oper. income (EBIT) (5,106) 22,566
Net income 2,201a 20,690a -89.4
Per share (diluted) 0.09 0.51 -82.4
Average gross margin 25.1% 24.8%
SG&A expenses 25.5%a 23.1%a

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