Stein Mart 2008 Annual Report Download

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Annual Report 2008
“Value is
the new
fashion chic”

Table of contents

  • Page 1
    Value is "the new fashion chic " Annual Report 2008

  • Page 2
    .... We closed ten under-performing stores and decided not to actively seek new real estate until the market stabilizes. We acknowledge that 2009 will be another challenging year, but our operational structure has been refined to re ect leaner times. We are focused on achieving our sales plan and...

  • 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 (Zip Code...

  • Page 4
    ...of the Company's management and on information currently available to such management. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to publicly update or revise its forward-looking statements in light of new information or future events...

  • Page 5
    ... BUSINESS OVERVIEW Headquartered in Jacksonville, Florida, Stein Mart is a national retailer offering the fashion merchandise, service and presentation of a better department or specialty store at prices competitive with off-price retail chains. Our focused assortment of merchandise features current...

  • Page 6
    ... stores offer many of the services typically found in better department or specialty stores, such as a liberal merchandise return policy, a Preferred Customer program, a Stein Mart Platinum MasterCard® and electronic gift certificates. Each store is staffed to provide a number of sales associates...

  • Page 7
    ...regarding customer preferences, habits and advertising receptivity. We have an Internet site, www.steinmart.com, to promote Stein Mart's fashion point of view, as well as provide information for customers regarding stores, store locations, company management and selected sales promotion activity. We...

  • Page 8
    ... 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 also make sales through the Internet, and although we do maintain an Internet site, we do not sell merchandise online. Accordingly...

  • Page 9
    ... store sales and quarterly results of operations are affected by a variety of factors, including: x fashion trends x actions of competitors x calendar shifts of holiday or seasonal periods x the effectiveness of our inventory management x changes in our merchandise mix x the timing of promotional...

  • Page 10
    ...: State Number of Stores State Number of Stores Alabama Arizona Arkansas California Colorado Florida Georgia Illinois Indiana Iowa Kansas Kentucky Louisiana Massachusetts Michigan Mississippi 10 8 2 20 2 46 16 5 7 1 2 2 8 1 1 5 Missouri Nebraska Nevada New Jersey New York North Carolina Ohio...

  • Page 11
    ... and leasehold improvements in stores opened prior to 2008. As of January 31, 2009 we lease 107,342 gross square feet of office space for our corporate headquarters in Jacksonville, Florida. We also lease a 92,000 square foot distribution/warehouse facility in Jacksonville for the purpose of...

  • Page 12
    ... ended January 31, 2009. The comparison assumes $100 was invested at the beginning of the five year period in Stein Mart, Inc. stock and in each of the indices shown and assumes reinvestment of any dividends. $200 $180 $160 $140 $120 Dollars $100 $80 $60 $40 $20 $0 1/31/2004 1/29/2005 1/28/2006...

  • Page 13
    ... operations Discontinued operations Total Cash dividends paid per share Adjusted Non-GAAP Measures: (3) Adjusted income (loss) per diluted share Consolidated Operating Data: Stores open at end of period Sales per store including shoe department (4) Sales per store excluding shoe department (5) Sales...

  • Page 14
    ...to better fashion apparel for women and men, as well as accessories, gifts, linens and shoes. Management believes that Stein Mart differentiates itself from typical off-price retail chains by offering: (i) primarily current-season merchandise carried by better department or specialty stores, (ii) at...

  • Page 15
    ...our best and most loyal Stein Mart customers x Work with our vendors to provide more desirable brand name merchandise at better value prices x Introduce "modern" categories for ladies and men's sportswear, accessories and dresses and reduce Home area (gifts and linens) space allocation and inventory...

  • Page 16
    ...to the inclusion of operating results for the 14 stores opened in 2007 and the six stores opened in 2008. Corporate SG&A expenses were higher in 2008 primarily due to professional fees related to ongoing expense reduction initiatives and higher benefit costs, while last year included $1.8 million of...

  • Page 17
    ... 14 stores opened in 2007. The closed store group includes the two stores closed in 2007 and the six stores closed in 2006. Included in the aforementioned changes is a $22.1 million sales decrease due to fiscal year 2006 sales including an extra week. Gross profit for the year ended February 2, 2008...

  • Page 18
    ... improvements and pre-opening costs (primarily advertising, stocking and training). Pre-opening costs are expensed at the time of opening. Initial inventory investment for a new store is approximately $925,000. The Company has a $150 million senior revolving secured credit agreement (the "Agreement...

  • Page 19
    ...of net sales during the first three quarters of each year. Critical Accounting Policies and Estimates The preparation of the Company's consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related...

  • Page 20
    ... in subleasing closed store locations, additional store closing costs may be recorded. Insurance Reserves. The Company uses a combination of insurance and self-insurance for various risks including workers' compensation, general liability and associate-related health care benefits, a portion of...

  • Page 21
    ... the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, has carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures, as defined in Rule 13a-15...

  • Page 22
    ...in the Company's Proxy Statement for its June 9, 2009 Annual Meeting of Stockholders. The Company has adopted a code of conduct applicable to all of the Company's officers, directors and employees, including the Company's principal executive officer, principal financial officer, principal accounting...

  • Page 23
    ... statements and exhibits are filed as part of this report or are incorporated herein as indicated. 1. List of Financial Statements Page Report of Independent Registered Certified Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements...

  • Page 24
    ... 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 16, 2009 By: /s/ David H. Stovall, Jr. David H. Stovall, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities...

  • Page 25
    Report of Independent Registered Certified Public Accounting Firm To the Board of Directors and Stockholders of Stein Mart, Inc.: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholders' equity, and cash flows, respectively ...

  • Page 26
    Stein Mart, Inc. Consolidated Balance Sheets (In thousands, except for share data) January 31, 2009 February 2, 2008 ASSETS Current assets: Cash and cash equivalents Trade and other receivables Inventories Income taxes receivable Prepaid expenses and other current assets Total current assets ...

  • Page 27
    Stein Mart, Inc. Consolidated Statements of Operations (In thousands, except for share amounts) Year Ended January 31, 2009 Year Ended February 2, 2008 Year Ended February 3, 2007 Net sales Cost of merchandise sold Gross profit Selling... $0.86 $0.85 Weighted-average shares outstanding: Basic Diluted...

  • Page 28
    ... Net loss Common shares issued under stock option plan Common shares issued under employee stock purchase plan Reacquired shares Issuance of restricted stock Share-based compensation Tax benefit from equity issuances Cash dividends paid Balance at February 2, 2008 Adjustment for adoption of EITF 06...

  • Page 29
    Stein Mart, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended January 31, 2009 Year Ended February 2, 2008 Year Ended February 3, 2007 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating ...

  • Page 30
    ...Policies and Other Information As of January 31, 2009 the Company operated a chain of 276 off-price retail stores in 31 states and the District of Columbia that features current-season, moderate to better fashion apparel for men and women, as well as accessories, gifts, linens and shoes, all offered...

  • Page 31
    ...(the "Agreement") with GE Money Bank (the "Bank"). During the term of the Agreement, Stein Mart will make the Program available to its customers, including accepting and transmitting account applications and accepting the credit card in its stores. The Bank will extend credit directly to cardholders...

  • Page 32
    ...123R requires companies to recognize expense in the financial statements for the fair values of all share-based payments to employees over the employees' requisite service periods. Earnings Per Share ("EPS"). Basic EPS is computed by dividing net income (loss) by the basic weighted-average number of...

  • Page 33
    ...merchandise costs, net of vendor discounts and allowances; freight; inventory shrinkage; store occupancy costs (including rent, common area maintenance, real estate taxes, utilities and maintenance); payroll, benefits and travel costs directly associated with buying inventory; and costs of operating...

  • Page 34
    ... February 2, 2008 Compensation and employee benefits Unredeemed gift and returns cards Property taxes Payroll and other taxes Other $20,340 19,892 13,767 3,605 22,190 $79,794 $20,314 21,643 12,905 4,363 16,283 $75,508 4. Revolving Credit Agreement The Company has a $150 million senior revolving...

  • Page 35
    .... Annual store rent is generally comprised of a fixed minimum amount plus a contingent amount based on a percentage of sales exceeding a stipulated amount. Most leases also require additional payments covering real estate taxes, common area costs and insurance. Rent expense is as follows: 2008 2007...

  • Page 36
    ... the statutory U.S. corporate tax rate to pre-tax amounts due to the following items: 2008 2007 2006 Federal tax at the statutory rate State income taxes, net of federal benefit Change in valuation allowance Business tax credits Effect of FIN48 Compensation-related items Change in cash surrender...

  • Page 37
    ... Revenue Service (IRS) completed its examination of the Company's federal income tax returns for fiscal years 2003 and 2004 and the Company settled with the IRS. The most significant adjustments were related to the Company's revenue recognition associated with gift and return cards. Subsequent...

  • Page 38
    ...of dividends paid. Share-Based Compensation Plans The Company has an Employee Stock Purchase Plan (the "Stock Purchase Plan") whereby all employees who complete six months employment with the Company and who work on a full-time basis or are regularly scheduled to work more than 20 hours per week are...

  • Page 39
    ... is calculated from a lattice model using historical employee exercise data. A summary of stock option information for the three years ended January 31, 2009 is as follows (in thousands, except per share amounts): Number of Shares Weighted-Average Exercise Price Aggregate Intrinsic Value Weighted...

  • Page 40
    ... restricted stock awards vested during fiscal 2008 was $0.1 million. As of January 31, 2009, there were no vested MP Performance Shares. 9. Store Closing Charges The Company closes under-performing stores in the normal course of business. The Company closed ten stores during 2008, two stores during...

  • Page 41
    ... Related Information. SFAS No. 131 requires that companies report revenues for each product or group of similar products. The following table summarizes the Company's sales by major merchandise category: 2008 2007 2006 Ladies' apparel and accessories Men's apparel and accessories Gifts and linens...

  • Page 42
    STEIN MART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, except per share amounts) 11. Quarterly Results of Operations (Unaudited) Year Ended January 31, 2009 13 Weeks Ended May 3, 2008 13 Weeks Ended Aug. 2, 2008 13 Weeks Ended Nov. 1, 2008 13 Weeks Ended Jan. 31...

  • Page 43
    ... of Common Stock of Stein Mart, Inc., incorporated by reference to the Company's Form 10-K for the fiscal year ended December 30, 2000 Form of stock certificate for Common Stock, incorporated by reference to the Company's Form S-1 Registration Statement No. 33-46322 Form of Director's and Officer...

  • Page 44
    ... by reference to the Company's Form 8-K filed on December 8, 2008 Loan and Security Agreement dated July 18, 2003, among Stein Mart, Inc., Wachovia Bank, National Association and Fleet Retail Finance, Inc. as Co-Arrangers, Congress Financial Corporation (Florida) as Administrative and Collateral...

  • Page 45
    ...-Brand Credit Card Consumer Program Agreement by and between Stein Mart, Inc. and GE Money Bank, dated as of September 28, 2006, incorporated by reference to the Company's Form 8-K filed on October 4, 2006 Consent of PricewaterhouseCoopers LLP (filed herein) Certification of Chief Executive Officer...

  • Page 46
    (This page intentionally left blank)

  • Page 47
    ..., Advertising and Sales Promotion Joseph Martinolich Internal Audit, Safety and Security Senior Vice Presidents, Stein Mart Buying Corporation Roseann McLean Planning and Allocation John H. Pennell General Merchandise Manager, Men's and Home Vice Presidents, Corporate Andrew Black Chief Information...

  • Page 48
    once you go you get it 1200 Riverplace Boulevard Jacksonville, FL 32207 www.steinmart.com