Home a 'Troubled Category' at Stein Mart
March 26, 2007-- Home Textiles Today,
Linens was one of Stein Mart's "greater challenges" during the fourth quarter and all of last year as its home division "languished" and the mid-tier department store tried to recoup this segment of its business.
William Moll, evp and cmo, said during the 270-unit chain's earnings call last week that Stein Mart's linens business "overall, is difficult," with "significant declines in these categories." But there are efforts underway to improve its performance. "We are looking at all aspects of the area — packaging, price points, value assortments, etc., and our new gmm in that area is focusing on getting this right."
For fiscal year 2006, Stein Mart reported net income of $37.1 million, down 27.1% from earnings of $50.9 million in the prior year. Sales of $1.5 billion were up 1.3%, while comp sales were down 1.2%. In the 14-week fourth quarter, earnings were flat at $21.0 million, while sales rose 7.9% to $461.0 million; comps rose 0.9%.
Over the past year, the company made many merchandise changes to its home department, moving away from utility and more toward fashion, home décor and entertaining.
"We are pleased with most of the decorative home and gift parts of that division," he said. "We are still trying to re-engineer the tabletop area and we are re-introducing some categories of gift-able merchandise and stationery," which were significant components of home before the department was overhauled early last year.
A bright spot of home has been Nina by Nina Campbell, with the recent launch described by Moll as "very good." The retailer dedicated six pages to the line in its direct mail piece in February. "We've expanded some categories and are pleased with the quality, price value relationship and where volume is taking place," Moll added.
Home makes up about 14% of Stein Mart's total sales, said Michael Fisher, president and ceo.
When asked by an analyst about the possibility of reducing the home department's square footage — similar to what Stein Mart did last year when it downtrended its lagging children's business — Fisher said home continues to be "important to the whole offering we give our customer.
"She still values those families of business in our assortments," Fisher said. "So to make any significant reductions we don't think would be prudent."
He said while home is a "troubled category," it has been that way for other retailers, as well, and the plan going forward is to "continue to rework our assortments and find a sweet spot. And we've made some progress. Last year we had substantial improvements in home decor and home furnishings areas and we still have work to do in tabletop. We're adding some new categories in that family of business and we're looking at every part of our home textiles business."
On the real estate front, Stein Mart expects to enter several new markets, potentially as soon as this fall and next spring, but Fisher said it is too early to make announcements about specific sites.
Additional stores will open in Florida, California, Virginia, North and South Carolina, and Texas as well as some in the Northeast and the New Jersey market.
"We have nine leases for fall that are signed or in the final process of being signed, and another 13 stores at some level of negotiations for fall openings," he added.
Also for this fall, Stein Mart will unveil a new branding message. It recently retained a new advertising agency — DeVito/Verdi — to conduct customer research and develop new creative ads.
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