Stein Mart 2015 Annual Report Download

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2015 ANNUAL REPORT
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Table of contents

  • Page 1
    CAR T Sign In | Register WOMEN HANDBAGS ACCESSORIES SHOES MEN BED & BATH HOME Search CONNECTING WITH OUR CUSTOMER Any Way, Any Time 2015 ANNUAL REPORT STEINMART.COM

  • Page 2
    ... through higher sales from comparable and new stores. I am really looking forward to having Dawn here to lead our great team as we do this. I am looking forward to the amazing opportunity of serving as Chief Executive Officer of this successful retail company of Stein Mart. Joining Stein Mart is...

  • Page 3
    ... [ ] STEIN MART, INC. (Exact name of registrant as specified in its charter) Florida (State or other jurisdiction of incorporation or organization) 64-0466198 (I.R.S. Employer Identification Number) 1200 Riverplace Blvd., Jacksonville, Florida (Address of principal executive offices) 32207...

  • Page 4
    ... Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information 10 12 12 18 18 18 18 19 PART III 10. 11. 12. 13. 14. Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 5
    ...Florida, Stein Mart is a national retailer offering the fashion merchandise, service and presentation of a better department or specialty store. Our focused assortment of merchandise features current season, moderate to better fashion apparel for women and men, as well as accessories, shoes and home...

  • Page 6
    ... continual flow of fashion merchandise, targeted sales promotions, store layout, merchandise presentation, and the quality, value and depth of our merchandise assortment. E-COMMERCE We sell merchandise offerings on www.steinmart.com. The website allows customers to make online purchases of much of...

  • Page 7
    ... stock-keeping units, (iii) merchandise presentation and customer service more comparable to upscale retailers and (iv) competitive price levels. DISTRIBUTION Our logistics network ("supply chain") consists of consolidation centers ("CC's") located in the Atlanta, Los Angeles and New Jersey...

  • Page 8
    ... more promotional and have reduced their price points. Certain department stores and certain of our vendors have opened outlet stores which offer merchandise at prices that are competitive with ours. Many of our competitors have significant internet sales. While we maintain an internet site, our...

  • Page 9
    ... degree upon our ability to purchase fashion and brand name merchandise, and to do so at acceptable wholesale prices. We continuously seek out buying opportunities and compete for these opportunities with other retailers. In the event of a further decrease in retail sales and the resulting pressure...

  • Page 10
    ..., we collect, process and retain sensitive and confidential customer and employee information and we process customer credit card and check information. In addition, we accept and transmit credit card applications through our retail locations. We also rely on commercially available systems, software...

  • Page 11
    ... 30 states: State Number of Stores State Number of Stores Alabama Arizona Arkansas California Colorado Florida Georgia Illinois Indiana Kansas Kentucky Louisiana Massachusetts Michigan Mississippi 8 11 2 26 3 43 14 4 7 2 2 8 1 2 6 Missouri Nevada New Jersey New Mexico New York North Carolina Ohio...

  • Page 12
    ... table sets forth the high and low sales prices of our common stock per NASDAQ and our quarterly cash dividends per common share for each quarter in the years ended January 30, 2016 and January 31, 2015: High 2015 Low Dividend High 2014 Low Dividend First Quarter Second Quarter Third Quarter Fourth...

  • Page 13
    ... and assumes reinvestment of any dividends. $300 $250 $200 DOLLARS $150 $100 $50 $0 1/29/2011 1/28/2012 Stein Mart, Inc. 2/2/2013 2/1/2014 1/31/2015 1/30/2016 NASDAQ Composite 1/29/2011 1/28/2012 2/2/2013 S&P 500 Apparel Retail 2/1/2014 1/31/2015 1/30/2016 Stein Mart, Inc. NASDAQ Composite...

  • Page 14
    ... merchandise, service and presentation of a better department or specialty store at prices comparable to off-price retail chains. Our focused assortment of merchandise features current season moderate to better fashion apparel for women and men, as well as accessories, shoes and home fashions. 2015...

  • Page 15
    ..., together with the New Credit Agreement, the "Credit Facilities"). The Credit Facilities replaced the Company's former $100 million senior secured revolving credit facility. On February 27, 2015 the Company paid a special cash dividend of $5.00 per common share. The payment made in connection with...

  • Page 16
    ...by $4.4 million of lower corporate compensation and benefits, $4.0 million of lower expenses associated with the SEC investigation as well as higher credit card program income. Interest Expense. The following table compares interest expense for fiscal 2015 to fiscal 2014 (dollar amounts in thousands...

  • Page 17
    ...funds, available cash, credit terms from vendors, and our Credit Facilities. See Note 4 of the Consolidated Financial Statements for further discussion of these facilities. Working capital is used to support store inventories and capital investments for system improvements, new store openings and to...

  • Page 18
    ...million and received excess tax benefits from share-based compensation of $1.9 million. We had no capital leases in 2015 or 2014. Capital lease payments were $2.2 million for 2013. Impact of Inflation Although we expect that our operations will be influenced by general economic conditions, we do not...

  • Page 19
    ...million, respectively, in store closing charges, net of impairments. Insurance Reserves. We use a combination of insurance and self-insurance for various risks including workers' compensation, general liability and associate-related health care benefits. We are responsible for paying the claims that...

  • Page 20
    ... management concluded that our internal control over financial reporting was effective as of January 30, 2016. The effectiveness of the Company's internal control over financial reporting as of January 30, 2016 has been audited by KPMG LLP, an independent registered public accounting firm, as stated...

  • Page 21
    ...Company's internal control over financial reporting. ITEM 9B. OTHER INFORMATION None PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item is incorporated herein by reference to the disclosure found in the Proxy Statement for our June 21, 2016...

  • Page 22
    ...are required to make the statements in this report not misleading. Additional information about the Company may be found elsewhere in this report and the Company's other public files, which are available without charge through the SEC's website at http://www.sec.gov. Unless otherwise indicated below...

  • Page 23
    ... Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STEIN MART, INC. Date: April 11, 2016 By: /s/ Dawn H. Robertson Dawn H. Robertson Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of...

  • Page 24
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  • Page 25
    ..., in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Stein Mart, Inc. and subsidiaries as of January 30, 2016 and January 31, 2015, and the related consolidated statements of income, comprehensive income, shareholders...

  • Page 26
    ... ended January 30, 2016, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Stein Mart's internal control over financial reporting as of January 30, 2016, based on...

  • Page 27
    Stein Mart, Inc. Consolidated Balance Sheets (In thousands, except for share and per share data) January 30, 2016 January 31, 2015 ASSETS Current assets: Cash and cash equivalents Inventories Prepaid expenses and other current assets T otal current assets Property and equipment, net Other assets ...

  • Page 28
    Stein Mart, Inc. Consolidated Statements of Income (In thousands, except for per share amounts) Year Ended January 30, 2016 Year Ended January 31, 2015 Year Ended February 1, 2014 Net sales Cost of merchandise sold Gross profit Selling, general and administrative expenses Operating...Weighted-average ...

  • Page 29
    Stein Mart, Inc. Consolidated Statements of Comprehensive Income (In thousands) Year Ended January 30, 2016 Year Ended January 31, 2015 Year Ended February 1, 2014 Net income Other comprehensive income, net of tax: Change in post-retirement benefit obligations (See Note 7): Other comprehensive ...

  • Page 30
    ... payment related to the net share settlement of equity awards Common shares issued under employee stock purchase plan Reacquired shares Issuance of restricted stock, net Share-based compensation Tax benefit from equity issuances Cash dividends paid ($0.15 per share) Balance at February 1, 2014...

  • Page 31
    Stein Mart, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended January 30, 2016 Year Ended January 31, 2015 Year Ended February 1, 2014 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ...

  • Page 32
    ... Accounting Policies and Other Information As of January 30, 2016 we operated a chain of 278 retail stores in 30 states and an internet store that offers the fashion merchandise, service and presentation of a better department or specialty store at prices competitive with off-price retail chains...

  • Page 33
    ...in 2015 and 2014, includes changes in postretirement benefits. See Note 7 for further discussion. Revenue Recognition. Revenue from sales of our merchandise is recognized at the time of sale, net of any returns, discounts and percentage-off coupons. The Company's e-commerce operation records revenue...

  • Page 34
    ...the credit card rewards program, which provides for an incentive to cardholders in the form of reward certificates upon the cumulative purchase of an established amount. Stein Mart cardholders also receive special promotional offers and advance notice of in-store sales events. In 2015, 2014 and 2013...

  • Page 35
    ... related to the consolidation centers and distribution warehouses. SG&A includes store operating expenses, such as payroll and benefit costs, advertising, store supplies, depreciation and other direct selling costs, and costs associated with our corporate functions. Change in Accounting Estimate...

  • Page 36
    ... December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of ASU No. 2014-15 is not expected to have a material effect on our consolidated financial statements. In April 2015, the FASB...

  • Page 37
    ... components of accrued expenses and other current liabilities are as follows: January 30, 2016 January 31, 2015 Compensation and employee benefits Unredeemed gift and merchandise return cards Property taxes Accrued vacation Other Accrued expenses and other current liabilities $ $ 11,600 $ 11,310...

  • Page 38
    ... is generally comprised of a fixed minimum amount plus a contingent amount based on a percentage of sales in excess of specified levels. Most store leases also require additional payments covering real estate taxes, common area costs and insurance. Rent expense is as follows: 2015 2014 2013 Minimum...

  • Page 39
    ... 30, 2016, we had net operating losses ("NOL") carryforwards for state income tax purposes of $1.9 million that will begin to expire in 2023. Deferred tax assets (liabilities) are reflected on the Consolidated Balance Sheets as follows: January 30, 2016 January 31, 2015 Non-current deferred tax...

  • Page 40
    ... of limitations. We are currently open to audit under the statute of limitations by the Internal Revenue Service for the tax years 2013 and 2014. The Company's state tax returns are open to audit under statutes of limitations for the tax years 2010 through 2014. 7. Employee Benefit Plans We have...

  • Page 41
    ... officers, key executives and director-level employees with preretirement life insurance benefits based upon three to five times the current annual compensation. The discount rate used to determine the benefit obligation was 4.15% and 3.45% as of January 30, 2016 and January 31, 2015, respectively...

  • Page 42
    ... The fair value of each stock option granted during 2015, 2014 and 2013 was estimated at the date of grant using the Black-Scholes options pricing model with the following weighted-average assumptions: 2015 2014 2013 Expected term Risk-free interest rate Volatility Dividend yield 4.9 years 1.3% 38...

  • Page 43
    STEIN MART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, except per share amounts) In February 2015, as a result of paying a special cash dividend, all outstanding stock options were modified to decrease the exercise price and increase the number of options in ...

  • Page 44
    ... Statements of Income. The following tables show the activity in the store closing reserve: LeaseRelated Sev erance and Other Total Balance at February 2, 2013 Charges Payments Balance at February 1, 2014 Charges Payments Balance at January 31, 2015 Charges Payments Balance at January 30, 2016...

  • Page 45
    ... the Company's general counsel. Legal fees associated with these services were $0.2 million in 2015, 2014 and 2013. In addition, the director also participated in our 2015, 2014 and 2013 Incentive Plans related to his role as general counsel to the Company. We leased three locations in 2014 and 2013...

  • Page 46
    ... as the Prior Agreement. Synchrony extends credit directly to cardholders under the Program to finance purchases from Stein Mart and, for co-brand cardholders, from other retailers. Synchrony provides all servicing for the credit card accounts, including customer service and collections, and bears...

  • Page 47
    ... January 23, 2014 Form of stock certificate for Common Stock, incorporated by reference to the Company's Form S-1 Registration Statement No. 33-46322 Amended and Restated Stein Mart, Inc. Employee Stock Purchase Plan, incorporated by reference to the Company's definitive proxy statement on Schedule...

  • Page 48
    ...aka Affiliated Business Group and Stein Mart, Inc., incorporated by reference to the Company's Form 10-K for the fiscal year ended January 31, 2015 Amended and Restated Co-Brand and Private Label Credit Card Consumer Program Agreement by and between Stein Mart, Inc. and GE Capital Retail Bank, dated...

  • Page 49
    ... Officer Pursuant to 18 U.S.C. Section 1350 (filed herein) Interactive data files from Stein Mart, Inc.'s Annual Report on Form 10-K for the year ended January 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements...

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  • Page 51
    ..., CORPORATE Brently Baxter Controller Sharon Hart Chief Information Officer Steven Horowitz Real Estate and Construction Glori Katz Marketing, Advertising and Sales Promotion Richard A. Schart Supply Chain SENIOR VICE PRESIDENT, STEIN MART BUYING CORP. Jane Dever General Merchandising Manager, Home...

  • Page 52
    NAPLES, FL - OPENED MARCH 2016 RECORD-BREAKING GRAND OPENING SALES 1200 RIVERPLACE BOULEVARD | JACKSONVILLE, FL 32207 WWW.STEINMART.COM