Stein Mart 2008 Annual Report Download - page 5

PART I
ITEM 1. 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-season, moderate to better fashion apparel for women and men, as well as accessories, gifts, linens and shoes, all offered at
prices competitive with off-price retail chains. Begun in the early 1900’s as a single store in Greenville, Mississippi, the Company
operated 276 stores in 31 states and the District of Columbia as of January 31, 2009.
As used herein, the terms “we”, “our”, “us”, “Stein Mart” and the “Company” refer to Stein Mart, Inc., a Florida corporation, and its
wholly-owned subsidiaries.
KEY STRENGTHS
Our mission is to provide current season, first-quality fashion apparel, accessories and gifts at prices comparable to off-price retail
chains in a convenient, attractive, easy-to-shop location. We believe our success and future growth will depend on the consistent
execution of the following key strengths:
xExpertise in creating a desirable, current season assortment of brand name, exclusive and proprietary fashion apparel,
accessories, gift and home merchandise
xAccess to and strong partnerships with a wide range of manufacturers
xCapability to offer everyday low prices on fashion merchandise through buying methodologies and low-price cost structure
xEmphasis on an attractive store appearance, appealing merchandise presentation and on-demand customer service, similar
to a department or specialty store
xConvenience-based location strategy in neighborhood shopping centers within close proximity to upscale, residential
neighborhoods
xContinuation of a strong balance sheet and ample borrowing capabilities for seasonal needs
TARGET CUSTOMER
Our target customer is a 35-60 year old woman, sometimes called a “missy customer,” who is both fashion-conscious and value-
seeking. Proprietary research has shown she is most likely to have a higher than average household income, at least some college
education, and if she is employed, she typically has a professional or paraprofessional occupation. We seek to add an additional
subset to our target customer demographic by including select youthful apparel and accessories to attract a more updated customer.
COMPETITION
As a hybrid between a traditional better department or specialty store and a conventional off-price business, we compete with many
different retail formats, although we believe our main competition comes from department and specialty stores, rather than
conventional off-price retail chains.
From our customer’s perspective, we believe we differentiate ourselves from department stores and specialty stores due to our (i)
everyday low pricing, (ii) convenient locations in neighborhood shopping centers near upscale neighborhoods, and (iii) assortments
that are more edited than department stores and more varied than specialty stores. We also believe we differentiate ourselves from
typical off-price retail chains by offering (i) primarily current-season merchandise carried by better department or specialty stores, (ii)
at moderate to better price levels, (iii) a stronger merchandising “statement,” consistently offering more depth of color and size in
individual stock-keeping units, and (iv) merchandise presentation and customer service more comparable to other upscale retailers.
MERCHANDISING, PURCHASING AND PRICING
Our fashion assortment is driven primarily by our own merchandising plan, which is intended to reflect seasonal fashion trends. Name
brand merchandise is complemented by a select program of private label and proprietary/exclusive merchandise. In 2008
approximately 16 percent of sales were from private label or proprietary/exclusive merchandise. The majority of merchandise is
consistent from store to store, with exceptions based on individual store selling characteristics, seasonal delivery fluctuations and/or
regional preferences.
Our merchants purchase products from approximately 1,500 vendors. None of our vendors accounted for more than 5% of our total
purchases during 2008. We buy a majority of our merchandise at the same time and from many of the same manufacturers as
traditional department/specialty stores although we generally do not require the same level of typical vendor concessions, such as
advertising allowance or return privileges, which are common in the department store industry. As a result, we believe that our buyers
are able to negotiate more favorable pricing terms from vendors. We also purchase some merchandise opportunistically when we
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