- Stein Mart filed for Chapter 11 Wednesday with plans to close "a significant portion, if not all" of its physical stores, according to a press release.
- The company has begun the store closing and liquidation process for its stores. Stein Mart, which operates 281 stores, said it is evaluating all of its options, including a sale of its intellectual property and e-commerce business.
- Stein Mart this week laid off about half of its 340 corporate associates based at its Jacksonville, Florida, headquarters, a spokesperson told Retail Dive in an email. In a securities filing, the company also said that, in connection with its bankruptcy, it terminated company president MaryAnne Morin, who remains on Stein Mart's board.
The mass disruption caused by the pandemic has taken another retailer.
"Ultimately, due to the combination of a challenging retail environment and the impact of COVID-19, we and our advisors determined that we will wind down the business," Stein Mart CEO Hunt Hawkins said in a statement. "Please know that this was an extremely difficult decision, and is deeply disappointing for all of us at Stein Mart. We have loved serving our communities over the years and are so grateful to our loyal customers who chose to shop our stores."
Well before the pandemic crisis began, Stein Mart had its struggles. The retailer's revenue has fallen every year since fiscal 2016, and its net income has remained negative during that time as well. It has in recent years tried to improve its top line by, among other things, adding Amazon lockers to stores and introducing buy online, pick up in-store services.
In January, the retailer had a deal signed with Kingswood Capital Management for the private equity firm to take over Stein Mart, which would have ended years of deflated stock and efforts to sell itself and give stockholders an exit. But in April, the retailer announced that the deal was off, by mutual agreement.
For its part, according to the company, a Stein Mart special committee opted to cancel the merger in response to "the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, uncertainty regarding Stein Mart's ability to satisfy the conditions to closing, and the substantial expense to Stein Mart of soliciting shareholder approval for a transaction which is unlikely to close."
Since then, Stein Mart has warned its shareholders it might not be able to survive the pandemic. Its liquidity problems have persisted, even after receiving a $10 million dollar loan thanks to the federal stimulus package, meant to boost the retailer's liquidity as store sales remained depressed amid the ongoing COVID-19 crisis.
Stein Mart continued searching for a possible acquirer after the Kingswood deal was nixed, but apparently those efforts have fallen short so far. So did its efforts to come up with enough liquidity to stay afloat amid heavy losses and depressed sales. In announcing the company's Chapter 11 filing, Hawkins said that Stein Mart "lacks sufficient liquidity to continue operating in the ordinary course of business."
The retailer appears to have left open the possibility of salvaging some of its physical business, but it would take another savior emerging, with little time for that to happen, in a retail market that is still full of uncertainty.