Stein Mart Q4 Profit Down 45%, Sales Miss View

(RTTNews) - Apparel retailer Stein Mart Inc. (SMRT) on Thursday reported a 45 percent decline in profit for the fourth quarter from the year-ago period that included an additional week, reflecting lower sales and one-time charges. Sales for the quarter missed analysts' expectations.

Jacksonville, Florida-based Stein Mart's net income for the fourth quarter was $7.42 million or $0.16 per share, down from $13.55 million or $0.30 per share in the year-ago period.

In the latest quarter, the discount-store chain refined its estimation of the buying and distribution costs allocated to inventories. The change lowered the percentage of expenses allocated to inventory purchases. The latest quarter's results include a charge of $3.10 million after-tax or $0.07 per share related to a decrease in inventories.

Excluding items, adjusted net income for the quarter was $13.12 million or $0.29 per share, compared to $12.34 million or $0.28 per share in the prior-year quarter. On average, five analysts polled by Thomson Reuters expected the company to report earnings of $0.26 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the thirteen-week fourth quarter declined 2 percent to $360.79 million from $368.56 million in the same period last year, which included 14 weeks. Analysts had a consensus revenue estimate of $364.49 million for the quarter.

Comparable store sales for the quarter rose 3.1 percent.

Gross margin for the quarter was 30.9 percent of sales. Excluding the $10 million impact of the accounting estimate change, gross margin was 28.1 percent, compared to 28.8 percent in the year-ago period.

The decrease in the adjusted gross profit rate was primarily the result of higher markdowns, offset by higher markup. The company noted that markdown levels were slightly higher this year compared to the year-ago period when sales exceeded plan.

In addition, the lower gross profit rate reflects the positive impact of last year's 53rd week on the year-ago period's results and greater home division sales in the latest quarter that have slightly lower margins.

Looking ahead to fiscal 2014, Stein Mart expects sales increases to leverage against its expense structure to continue driving earnings, particularly as it adds stores.

The company projects capital expenditures for 2014 of about $38 million. This includes $13 million for information systems, $13 million for existing stores, and $12 million for new and relocated stores.

The company's current plan for 2014 is to open 10 stores, relocate six stores to better locations in their respective markets, and close two stores.

SMRT closed Wednesday's trading at $14.29, up $0.06 or 0.42 percent on a volume of 141,026 shares.