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Hurricanes Can't Stop Stein Mart

Despite losing almost $6 million in sales to a pair of hurricanes that damaged and shut many of its stores, Stein Mart Inc. parlayed strict inventory controls and stronger margins into a $1.4 million third quarter profit, recovering from a year-before loss of $2 million.

Sales increased 1.8 percent, to $336.5 million from $330.4 million, and would have climbed higher but for store closings and business disrupted by Hurricanes Katrina and Wilma. The retailer estimated about $5.7 million in sales was lost due to stores that were closed for at least one day. Held in check by storms, same-store sales edged up 0.4 percent.

Providing a lift to the bottom line, average gross margin widened 1.6 percentage points, to 24.7 percent from 23.1 percent helped by improved mark-up and fewer markdowns, the company said. Merchandise stockpiles were cut 2.9 percent from year-ago levels, to $313.3 million from $322.7 million, yielding a savings of $9.3 million.

“We are pleased to have produced a profit in the third quarter, despite eight weeks of punishing hurricane activity that preoccupied communities and customers,” said Michael Fisher, CEO.

Storms had a major impact on business, the retailer said, closing stores in at least seven states over the course of eight weeks. “Several areas were threatened and/or struck more than once, and while only a few Stein Mart stores were structurally damaged, issues with power, infrastructure and evacuated associates curtailed business significantly,” the retailer said.

Stein Mart Inc.

Qtr. 10/29 (x000) 2005 2004 % change
a-Third quarter results include $3.7 million in miscellaneous income, up 13.8 percent from $3.3 million during the same period a year ago; and an income-tax benefit of $856,000, compared with a year-before tax payment of $1.2 million.
b-Nine month results include $11.3 million in miscellaneous income, compared with $10.5 million last year; and an income tax benefit of $18.3 million, compared with a year-before tax benefit of $9.4 million. The prior-year nine months included an after-tax $145,000 loss from discontinued operations.
Sales $336,537 $330,432 1.8
Oper. income (EBIT) (2,006) (6,680) --
Net income 1,396a (2,003)a --
Per share (diluted) 0.03 (0.05) --
Average gross margin 24.7% 23.1% --
SG&A expenses 25.3% 25.1% --
Nine months
Sales 1,054,256 1,014,664 3.9
Oper. income (EBIT) 35,470 14,044 152.6
Net income 29,829b 15,136b 97.1
Per share (diluted) 0.67 0.36 86.1
Average gross margin 27.6% 25.5% --
SG&A expenses 24.2% 24.1% --

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