‘Unprecedented’ downturn at Stein Mart
-- Home Textiles Today, 11/20/2008 2:11:00 PM
Jacksonville, Fla. – Stein Mart Inc.’s president and ceo, Linda Farthing, summed up the company’s third quarter as, “in a word: unprecedented.”
“I don’t need to tell you how difficult the environment is…and I don’t need to tell you how customers appear to be paralyzed by the daily headlines,” she continued. “It has become a battle to get her into the door and it takes a surprisingly deep discount to get her to open her wallet.”
Stein Mart reported a quarterly net loss of $14.1 million, or 34 cents per share, far deeper than the year-ago loss of $2.7 million, or 6 cents per share.
For the quarter, total sales of $298.8 million were down 10.4% compared to last year’s third quarter, while comp store sales decreased 12.6%. Gross profit decreased $18.7 million, and as a percent of sales decreased 330 basis points. And merchandise margin decreased 95 basis points due to increased mark-downs, the company said.
This, despite the 279-unit off-price mid-tier department store chain’s “very prudent” planning for the fall.
As has been the case with so many other challenged home retailers, Stein Mart’s limited good news stemming from its third quarter came in the form of reduced inventories -- down 12.2%, “to be in line with our sales trend at the end of the third quarter.”
But, Farthing added, “I must emphasize it came at a great cost to our bottom line … Although we have persistently been adjusting inventory, no one could have anticipated the degree of comp declines we and others have been having. And it appears we will need even more aggressive markdowns in the fourth quarter to end the year with season-appropriate inventories at the proper levels [because] it is critical to us that our inventories be current as we move to spring season.”
Most of Stein Mart’s merchandise mix in the third quarter “remained challenging, and that is to say the least,” Farthing said. Exceptions – “modest increases” – included novelty merchandise items and “exceptional brand name” pieces. In apparel, sales stemmed from “basic layering pieces. She is replenishing what she needs in her wardrobe.”
For spring 2009, Stein Mart plans to be “very, very, very, underline-underline conservative, not only to keep inventories in line but to have plenty of firepower to take advantage of great brand opportunities presenting themselves to us. We are holding inventories extremely tight and hope to have none of these issues in the spring.”
When asked by an analyst about potential new spring assortments, William Moll, evp, chief merchandising officer, said Stein Mart will have “new lines not seen in the past” at its stores.
“The current environment has opened up avenues we have not had in the past, and we are taking advantage of every place we can,” he said.
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