Stein Mart loses $13M as it clears inventory
Stein Mart said last week that second quarter total sales fell 2.7% to $311.0 million and same-store sales fell 5%, while e-commerce sales surged 41% year over year. Despite the decline, same-store sales represented an improvement over Q1, and clearance deals drove same-store sales to their strongest point in July, executives told analysts last week, according to a transcript from Seeking Alpha.
Net loss for the second quarter was $13 million or 28 cents per diluted share, down from net income of $3 million or 6 cents per diluted share in the year-ago period, according to a company press release. For the first six months of 2017, net loss was $9.3 million or 20 cents per diluted share, down from net income of $16.3 million or 35 cents per diluted share in the same period in 2016.
The discount retailer completed its plans for 10 new stores this year, according to a company press release earlier this month. In September, the retailer plans to launch an advertising campaign to reach new customers, including more television, digital and social advertising, executives said.
Stein Mart’s sales performance “began slipping in the fall of 2015 and since then has been further impacted by the challenges we all see in the retail apparel industry,” CEO Hunt Hawkins told analysts last week, according to a conference call transcript from Seeking Alpha. “Unfortunately, we were slow to react to the changing environment and lower traffic, so our inventories grew excessively, particularly in the latter half of 2016.”
That was a difficult period for department stores and mall retailers, he noted, saying that Stein Mart is “behaving more and more like a department store however, in terms of our merchandise acquisition and sales promotion.”
In July, traffic improved from negative to flat and units per transaction were up. Plus, the company is rearranging its stores to prominently feature best-sellers like dresses and to improve signage. The company is also featuring more name brands that resonate with customers, executives said.
They added that lean times are leading the retailer to continue its focus on tight inventory management and cost-containment, including by taking clearance markdowns earlier and reducing inventories — by 15% during Q2.
In addition to those efforts, Chief Financial Officer Gregory Kleffner said the retailer is improving its loyalty program. As of Sept. 6, a new Elite level card will earn points for all users. Previously, only the company’s MasterCard holders received points. Another upgrade means that customers spending $500 in a calendar year using the cards will receive two points for every dollar spent at Stein Mart as well as free shipping on steinmart.com, which Kleffner anticipates will drive penetration and sales, offsetting the costs of the program.
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