24 Aug Steinmart Posts Q2 Loss on Weaker Margins, Comps Decline
Stein Mart, Inc. reported Wednesday that total sales decreased 2.7 percent to $311.0 million in the second quarter ended July 29, 2017, while comparable store sales decreased 5.0 percent. Ecommerce sales were up 41 percent over last year’s second quarter. Gross margins fell 720 basis points to 20.8 percent of sales. The diluted loss per share of 28 cents compared to diluted earnings per share of 6 cents in 2016
The net loss for the second quarter was $13.0 million or 28 cents per diluted share compared to net income of $3.0 million or 6 cents per diluted share in 2016. For the first six months of 2017, net loss was $9.3 million or 20 cents per diluted share compared to net income of $16.3 million or 35 cents per diluted share in the same period in 2016.
“Our second quarter sales trends improved from the first quarter and were strongest in July as we more aggressively priced our clearance merchandise,” said Hunt Hawkins, Chief Executive Officer. “We are very pleased with the progress we made on our inventory management initiatives that resulted in 15 percent lower average store inventories at the end of the quarter. It is important that our inventories are in a very good position and well-balanced going into the fall season.”
Inventories were $246 million at the end of the second quarter of 2017 compared to $280 million at the same time last year. Average inventories per store were down 15 percent to last year.
“We will continue to operate our business with lean store inventories and tight expense control this fall while putting into place new merchandising and marketing strategies that include the launch of a new advertising campaign in September, continued Hawkins. We expect our lower inventories will give us better margins from lower markdowns primarily in the fourth quarter.”
For the first six months of 2017, total sales decreased 4.0 percent to $648.4 million, while comparable store sales decreased 6.4 percent.
Gross profit for the first six months of 2017 was $160.2 million or 24.7 percent of sales compared to $198.3 million or 29.4 percent of sales in 2016. The lower gross profit rate for both periods reflects much higher markdowns and to a lesser extent higher occupancy costs that negatively leverage on lower sales.
SG&A expenses for the first six months of 2017 were $171.7 million compared to $170.3 million in 2016. The increase in SG&A expenses for both periods is primarily the result of higher operating expenses from new stores that were mostly offset by operating savings.
Steinmart had 292 stores at the end of the second quarter compared to 283 at the end of the second quarter last year. No stores were opened or closed during the second quarter. SMRT is now expecting to open a total of 10 new stores and close six stores in 2017.