Stein Mart 2012 Annual Report Download - page 18

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16
Results of Operations
The following table sets forth each line item of the Consolidated Statements of Income expressed as a percentage of net sales:
2012 2011 2010
(Restated) (Restated)
Net sales 100.0% 100.0% 100.0%
Cost of merchandise sold 72.2% 72.9% 72.3%
Gross profit 27.8% 27.1% 27.7%
Selling, general and administrative expenses 24.9% 24.4% 23.1%
Operating income 2.9% 2.7% 4.6%
Interest expense, net 0.0% 0.0% 0.0%
Income before income taxes 2.9% 2.7% 4.6%
Income tax expense (benefit) 0.9% 1.0% (0.1)%
Net income 2.0% 1.7% 4.7%
2012 Compared to 2011
Net Sales. The following table provides net sales for fiscal 2012 compared to fiscal 2011 (dollar amounts in thousands):
2012 2011 Increase
(Restated)
Net sales 1,232,366$ 1,177,951$ 54,415$
Sales percent increase:
Total net sales 4.6%
Comparable store sales 2.7%
The comparable store sales increase was driven by increases in the number of transactions, the average units per transaction, and
average unit retail prices.
Gross Profit. The following table compares gross profit for fiscal 2012 to fiscal 2011 (dollar amounts in thousands):
2012 2011 Increase
(Restated)
Gross profit 342,630$ 319,616$ 23,014$
Percentage of net sales 27.8% 27.1% 0.7%
Gross profit as a percent of sales for 2012 increased from 2011 primarily due to lower markdowns resulting from our strategy of reducing
coupons applicable to our regular-priced merchandise.
Selling, General and Administrative Expenses. The following table compares SG&A expenses for fiscal 2012 to fiscal 2011 (dollar
amounts in thousands):
2012 2011 Increase
(Restated)
Selling, general and administrative expenses 306,407$ 287,184$ 19,223$
Percentage of net sales 24.9% 24.4% 0.5%
SG&A expenses increased primarily due to a $9.4 million increase in corporate expenses, $5.2 million increase in store expenses, $5.3
million increase in depreciation expense, $4.1 million decrease in credit card program income and a $1.0 million decrease in other income,
partially offset by a $3.7 million decrease in advertising expenses and $2.1 million increase in breakage income on unused gift cards and
merchandise return cards.
Corporate expenses increased primarily due to $4.0 million in legal and accounting costs related to the restatement as well as higher
compensation and benefit costs. Store expenses increased primarily due to higher compensation costs, partially offset by a decrease in
credit card interchange fees. Credit card program income decreased primarily due to a performance-based incentive from GE Capital
Retail Bank (“GE”) related to the final program year of our prior co-brand agreement received in 2011 as well as the elimination of new
account fees when we entered into the Amended and Restated Co-Brand and Private Label Credit Card Consumer Program Agreement