Stein Mart stumbles in third quarter

A whopping rise in expenses combined with declining sales to bring a poor third quarter to Stein Mart Inc.

The chain experienced huge increases in both its net loss and its operating loss during the quarter just ended as it struggled with the impact of store closings and the elimination of a coupon program.

Stein Mart's third-quarter net loss was $10.4 million, as compared with a 2002 third-quarter net loss of $3.8 million. The chain's operating loss was $19.6 million in the third quarter, compared with an $8.6 million operating loss the year before.

What hurt the chain's numbers in the third quarter was a staggering 480-basis point increase in its selling, general and administrative expenses as a percentage of sales, which finished the quarter at 29.5 percent. On a dollar basis, SG&A rose 13.2 percent, to $93.2 million.

Stein Mart closed eight stores in the third quarter as part of a program to eliminate 16 underperforming stores in 2003. The 3Q loss from operations from these stores was $9.7 million; $20.5 million for the year-to-date.

"Our third-quarter results were hurt by eliminating full-price coupons and closing eight stores," said Stein Mart's president and chief executive officer, Mike Fisher. "However, without the store-closing impact, we would have incurred a loss of 11 cents per share for the quarter and shown a slight operating profit year to date."

The chain's third-quarter sales were slightly more than $315.9 million, compared with $332.8 million in sales in last year's third quarter.

Stein Mart Inc.

Qtr. 11/1 (x000) 2003 2002 % chg
Sales $315,942 $332,847 -5.1
Operating income -19,636 -8,646
Net income -10,399 -3,843
Earnings per share -0.25 -0.09
Average gross margin 23.3% 22.1%
SG&A percentage 29.5% 24.7%
Nine months 2003 2002 % chg
Sales 950,047 1,000,253 -5.0
Operating income -27,508 8,390
Net income -11,659 10,300
Earnings per share -0.28 0.25
Average gross margin 24.0% 24.8%
SG&A percentage 27.0% 24.0%

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