Stein Mart 2012 Annual Report Download - page 19

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17
with GE in October 2011. Advertising expenses decreased due to the reduction of certain media usage. The increase in breakage income
on unused gift cards and merchandise return cards is a result of an update in our breakage assumptions during the second quarter of
2012.
Income Taxes. The following table compares income tax expense for fiscal 2012 to fiscal 2011 (dollar amounts in thousands):
2012 2011 Decrease
(Restated)
Income tax expense 10,971$ 12,215$ (1,244)$
Effective tax rate ("ETR") 30.5% 38.0% (7.5)%
Income tax expense for 2012 was favorably impacted by non-taxable income related to the elimination of post-retirement life insurance
benefit of $6.4 million.
2011 Compared to 2010
Net Sales. The following table provides net sales for fiscal 2011 compared to fiscal 2010 (dollar amounts in thousands):
2011 2010 Decrease
(Restated) (Restated)
Net sales 1,177,951$ 1,201,081$ (23,130)$
Sales percent decrease:
Total net sales (1.9)%
Comparable store sales (1.1)%
The comparable store sales decrease was driven by decreases in the number of transactions and the average units per transaction,
partially offset by an increase in average unit retail prices.
Gross Profit. The following table compares gross profit for fiscal 2011 to fiscal 2010 (dollar amounts in thousands):
2011 2010 Decrease
(Restated) (Restated)
Gross profit 319,616$ 332,666$
(
13,050
)
$
Percenta
g
e of net sales 27.1% 27.7%
(
0.6
)
%
Gross profit as a percent of sales decreased for 2011 from 2010 primarily due to higher occupancy and buying costs and the negative
leverage on lower sales.
Selling, General and Administrative Expenses. The following table compares SG&A expenses for fiscal 2011 to fiscal 2010 (dollar
amounts in thousands):
2011 2010 Increase
(Restated) (Restated)
Selling, general and administrative expenses 287,184$ 277,330$ 9,854$
Percentage of net sales 24.4% 23.1% 1.3%
SG&A expenses increased $9.9 million due to a $9.3 million decrease in breakage income on unused gift cards and merchandise return
cards, a $2.9 million increase in advertising expenses, a $2.7 million increase in corporate expenses, a $0.7 million increase in
depreciation expense and a $0.4 million decrease in other income. These increases were partially offset by a $4.5 million decrease in
stores expenses, $1.0 million higher income from the credit card program and $0.8 million decrease in asset impairment and store closing
charges.
In 2010 we incurred a $1.2 million charge associated with changing our physical inventory process and recorded $9.7 million of income
related to breakage on gift cards, neither of which reoccurred in 2011. The increase in corporate expenses include unfavorable market
value changes in the cash surrender value of insurance contracts underlying our executive split-dollar insurance plans for 2011 compared
to 2010 and higher information systems expenses. Store expense reductions include $3.5 million for the elimination of operating costs
from closed stores and a $1.0 million savings in credit card interchange fees. The increase in credit card income includes a $1.6 million