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Stein Mart's home business makes a comeback in Q1

Jacksonville, Fla. - After several years of experimenting with its merchandise approach, Stein Mart is returning to previous ways of doing business - and home textiles is part of that strategy.

The 262-unit off-price mid-tier department store chain singled out linens as one of the three best-performing categories during the first quarter, ended April 28. And within home, "all categories did well," noted evp of finance and cfo Gregory Kleffner, "including bedding, decorative pillows, towels - and we had a really good response to bright colors."

"Our home used to be heralded at Stein Mart," said Jay Stein, interim ceo, during the company's conference call with analysts this morning. "And then we went through other directions, given that we downsized ... our first ceo wanted to downsize home and increase fashion. Our second [ceo] gave other sets of instructions, and we didn't have competent people there."

Stein added, "We have got clearly, clearly the best management we have ever had in our lives in home today...And our sales are on the plus side in a very commendable fashion. We are getting back to where we used to be in home, and if you walk into the store, you will see it."

He confirmed home is comping positively, but did not quantify it.

The first-quarter's weakest performing categories at Stein Mart included gifts, specifically wall art and lamps.

While the news about the home business was positive, Stein Mart's first-quarter results still showed some ongoing struggles.

Net income dropped 25.8% to $11.8 million, or 27 cents per share. Sales were essentially flat: $303.4 million versus last year's $303.5 million. Comparable store sales decreased a modest 0.4%.

Since last year's fourth quarter, Stein Mart has been actively reducing coupons in an effort to return to an every-day price value model. In the first quarter, about 22% of sales were associated with coupons compared to 33% a year ago. The reduction in sales with coupons was predominantly on regular-price merchandise, which was 43% lower in the first quarter of 2012 compared to the first quarter of 2011.

"It is very important for us to reinforce the value of our merchandise at their regular prices," Stein said. "We have made substantial progress on this initiative during the first quarter with only a minimal impact to our comparable store sales. I feel encouraged given the reduction in coupon-associated sales. We are establishing a much healthier sales and gross margin base from which to grow in the future."

In other news, Stein Mart continues with its search for a new ceo, as "finding the right person to lead our company remains a key priority," Stein said.

David Stovall Jr. stepped down from the post in mid September 2011, and Stein has since then served as interim ceo until a replacement is found.



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