Stein Mart Inc. reported significantly improved fourth quarter results with a net loss of $0.4 million or 1 cent per diluted share down from a net loss of $4.9 million or 11 cents per diluted share during the same time period in 2016. Comparable store sales were down 5.4 percent for the quarter, and total sales decreased 0.2 percent to $384.9 million.
Operating income for the fourth quarter was $4.1 million compared to an operating loss of $8.1 million in 2016. Results included pre-tax impairment charges that, when excluded, brought adjusted operating income for the quarter to $7.3 million, up $14.3 million from the adjusted operating loss of $7 million in 2016.
Stein Mart CEO Hunt Hawkins said that 2017 was “a year of transition” to position the company for the future. He pointed to improved inventory productivity through reduced inventory, flow changes and better markdown practices.
“We also launched a new advertising campaign, cut expenses and capital spending, and expanded eCommerce by adding ship-from-store fulfillment,” Hawkins said. “These changes allowed us to achieve meaningful fourth quarter adjusted operating income that grew $14.3 million from last year driven by gross profit expansion and even greater growth in our merchandise margins.”
The company’s president, Mary Ann Morin, said that average store inventories were down 10 percent and that e-commerce was up 80 percent for the quarter, representing 5 percent of total sales. By the end of 2017, 50 Stein Mart stores had ship-to-store capabilities; customers responded so positively that the retailer launched plans for 60 more by the end of the first quarter.
Stein Mart’s strongest selling areas are in the west, Florida and Texas, said CFO Greg Kleffner.
After cost reductions of $10 million in 2018 and reduced 2017 capital expenditures by $21 million, Stein Mart is looking ahead to 2018 carefully, planning capital expenditures of just $10 million and no new store openings.
Stein Mart (NASDAQ: SMRT) is expecting further growth with e-commerce to bring flat to low single-digit increases in comparable store sales in the first half of 2018, along with slightly lower SG&A expenses. Going forward, the retailer wants to return to comparable sales growth, continue with its newly revamped inventory management and strengthen its financial position with tight expense control and reduced spending.
Also on March 14, Stein Mart announced the close of a $50 million term loan with Gordon Brothers Finance Company. Stein Mart repaid its existing $25 million first-in, last-out loan from Wells Fargo National Association at the same time.
Keffner said that the transaction “shows the confidence that our lending partners have in our business.”
Keffner mentioned at the end of the fourth quarter call that the company received a NASDAQ notice reporting that March 12 was the 30th consecutive business day of stock trading below $1, which starts a six-month process in which Stein Mart would remain listed but have to hit $1 again for 10 consecutive trading days.
“With our expected 2018 results we feel good about being in compliance with Nasdaq during that time frame,” Keffner said.
In after hours trading, Stein Mart stock skyrocketed from 77 cents to a recent high of $1.13, as of 6:30 p.m. Wednesday.