Stein Mart stung by sales slowdown in 3Q
GDA Staff -- Gifts & Dec, October 29, 2001
Jacksonville, FL — Hit hard by a slowdown in same-store sales following terrorist attacks last month, Stein Mart Inc. posted a third-quarter loss of $14.4 million, compared with a small profit the year before of $1.3 million.
Lifted by new store openings, overall sales at the retailer improved by 4.8 percent, to $280.3 million from $267.6 million a year ago. But with consumers shell-shocked after last month's attacks, same-store sales dropped off by 4.8 percent, putting margins and costs both under pressure.
Average gross margin eroded by 360 basis points, to 20.0 percent from 23.6 percent the prior year, worn down by heavy markdowns to move out excess inventory. Gross margin dollars fell by 11.2 percent, to $56.0 million from $63.1 million. Layering on even more pressure to the bottom line, costs jumped up by 200 basis points, to 25.1 percent of sales from 23.1 percent a year ago. Measured in absolute dollars, costs shot up by 14.0 percent, to $70.4 million from $61.8 million, an increase of $8.6 million.
Adding even more pressure, interest costs shot up by 55.3 percent, to $1.3 million from $827,000. Tying up even more cash, inventories increased by 15.0 percent — way outpacing the 4.6 percent increase in sales — to $354.7 million from $308.5 million last year.
"While retail sales declines pale in comparison to human tragedy, these events have created extensive turmoil for retailers, including Stein Mart," said Jack Williams, ceo. "A combination of significantly lower than expected sales and higher markdowns to accelerate our inventory clearance produced the disappointing results for the third quarter."
Taking note of a big jump in inventories, Williams said, "We have been working closely with our merchandise suppliers to manage inventory commitments for what is likely to be an unsettled holiday shopping season."
Through the third week of October, Stein Mart said it continued to post mid-single-digit sales declines, pointing to fourth-quarter earnings per share in the range of 25 to 30 cents per share.
Store growth continued on track during the third quarter, the company said, with six new stores, one relocated and another closed. Fifteen new stores are slated to open during the fourth quarter, with one more closing, bringing the year-end total to 253 stores.
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