Stein Mart 2009 Annual Report Download

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Annual Report 2009

Table of contents

  • Page 1
    Annual Report 2009

  • Page 2
    ... started the year with a net debt to our banks of $11 million, and ended the year debt-free and with $81 million in cash. We made a dramatic change in the way we do business by instituting new supply chain distribution, and we added strength to our leadership team with a new chief financial officer...

  • Page 3
    ...fiscal year ended January 30, 2010 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 0-20052 [ ] STEIN MART, INC. (Exact name of registrant as specified in its charter) Florida (State or...

  • 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
    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. Our focused assortment of merchandise features current-season, moderate to better fashion ...

  • Page 6
    ... merchandise return policy, merchandise locator service, a Preferred Customer program, a Stein Mart Platinum MasterCard® and electronic gift certificates. Each store is staffed to provide a number of sales associates who provide on-demand customer service. All of our stores have their own Boutique...

  • Page 7
    ...for customers regarding stores, store locations, company management and selected sales promotion activity. We use steinmart.com to highlight featured merchandise and for traffic stimulation; however, we do not sell merchandise online at this time. Visitors to the website may apply for the Stein Mart...

  • Page 8
    we do not sell merchandise online. Accordingly, we may face periods of intense competition in the future which could have a material adverse effect on our profitability and results of operations. Unanticipated changes in fashion trends and changing consumer preferences. Our success depends in part ...

  • Page 9
    ... in the future. Our stock price is influenced by these financial fluctuations, as well as other factors, including economic conditions, timing of promotional events, actions of competitors, inventory management, changes in fashion trends and unseasonable weather conditions. If the third parties that...

  • Page 10
    ... Arkansas California Colorado Florida Georgia Illinois Indiana Iowa Kansas Kentucky Louisiana Massachusetts Michigan Mississippi 10 9 2 19 2 44 13 5 7 1 2 2 8 1 1 5 Missouri Nevada New Jersey New York North Carolina Ohio Oklahoma Pennsylvania South Carolina Tennessee Texas Utah Virginia Washington...

  • Page 11
    ... and Related Matters Our common stock trades on The NASDAQ Stock Market LLC ("NASDAQ") under the trading symbol "SMRT". On April 9, 2010, there were 1,146 stockholders of record. The following table sets forth the high and low sales prices of our common stock per NASDAQ for each quarter in the years...

  • Page 12
    ...$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 ...2009 1/30/2010 Stein Mart, Inc. NASDAQ Composite Dow Jones US Apparel Retailers 1/29/2005 1/28/2006 2/3/2007 2/2/2008 1/31/2009 1/30/2010 Stein Mart...

  • Page 13
    ... shoe department sales and selling space, administrative, receiving and storage areas. All periods are calculated on a 52-week basis. (6) Comparable store sales information for a period reflects stores open throughout that period and for the same 52-week period in the prior year, except for the year...

  • Page 14
    ...$1.14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview 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...

  • Page 15
    ... from supply chain will be similar to 2009 savings and should slightly more than offset the addbacks of compensation and related expenses that were temporarily lowered in 2009. We plan to relocate five to ten stores to better locations in their respective markets. We also plan to close four and open...

  • Page 16
    ... in 2009 and the six stores opened in 2008 amounted to $0.3 million and $1.5 million, respectively. Other income, net decreased $2.0 million in 2009 compared to 2008 due to a decrease in the number of credit cards issued through our co-brand credit card program offset slightly by income from our new...

  • Page 17
    ... benefit costs, while last year included $1.8 million of separation costs for the resignation of the former President/Chief Executive Officer. SG&A expenses as a percentage of net sales were higher this year due to a lack of leverage on lower sales. Pre-opening expenses for the six stores opened...

  • Page 18
    ...of year 2009 inventory balance is only slightly higher compared to 2008, accounts payable is much higher at the end of 2009 primarily due to approximately $30 million of merchandise in distribution centers at the end of 2009 that was received earlier than at the end of 2008 as part of our new supply...

  • Page 19
    ...or market. We perform physical inventory counts at all stores annually. Included in the carrying value of merchandise inventories is a reserve for shrinkage. Shrinkage is estimated based on historical physical inventory results as a percentage of sales for the year. The difference between actual and...

  • Page 20
    ... locations, additional store closing costs may be recorded. 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, a portion of which is paid by the covered employees...

  • Page 21
    ... None. ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have carried out an evaluation of the effectiveness of the design and...

  • Page 22
    ...of conduct applicable to all of our officers, directors and employees, including the principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. The text of this code of conduct may be found on our web site at www.steinmart.com. We...

  • Page 23
    ..., Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on the 15th day of April, 2010. /s/ Jay Stein Jay Stein Chairman of...

  • Page 24
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  • 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, present fairly, ...

  • Page 26
    Stein Mart, Inc. Consolidated Balance Sheets (In thousands, except for share data) January 30, 2010 January 31, 2009 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 30, 2010 Year Ended January 31, 2009 Year Ended February 2, 2008 Net sales Cost of merchandise sold Gross profit Selling, general and administrative expenses Other income, net Income (...

  • Page 28
    Stein Mart, Inc. Consolidated Statements of Stockholders' Equity (In thousands) Accumulated Other Comprehensive Income Common Stock Additional Paid-in Capital Retained Earnings Total Stockholders' Equity Balance at February 3, 2007 Adoption of accounting guidance related to uncertain tax ...

  • Page 29
    Stein Mart, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended January 30, 2010 Year Ended January 31, 2009 Year Ended February 2, 2008 Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating ...

  • Page 30
    ... of Significant Accounting Policies and Other Information As of January 30, 2010 we operated a chain of 267 retail stores in 30 states and the District of Columbia that offers the fashion merchandise, service and presentation of a better department or specialty store at prices competitive with off...

  • Page 31
    ... Program Agreement (the "Agreement") with GE Money Bank (the "Bank"). Stein Mart makes the Program available to its customers, including accepting and transmitting account applications and accepting the credit card in its stores. The Bank extends credit directly to cardholders under the program to...

  • Page 32
    ... to the guidance, we 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"). Effective February 1, 2009, we adopted the new guidance of ASC Topic 260, Earnings Per Share...

  • Page 33
    ... 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 related to the consolidation centers...

  • Page 34
    ...2010 January 31, 2009 Compensation and employee benefits Unredeemed gift and returns cards Property taxes Other $19,838 20,780 14,405 29,307 $84,330 $20,340 19,892 13,767 25,795 $79,794 4. Revolving Credit Agreement We have a $150 million senior revolving secured credit agreement (the "Agreement...

  • Page 35
    ... payments covering real estate taxes, common area costs and insurance. Rent expense is as follows: 2009 2008 2007 Minimum rentals Contingent rentals $80,724 430 $81,154 $82,146 275 $82,421 $77,774 332 $78,106 Our shoe department inventory is provided by a single supplier under a supply...

  • Page 36
    ... rate to pre-tax amounts due to the following items: 2009 2008 2007 Federal tax at the statutory rate State income taxes, net of federal benefit Valuation allowance Business tax credits Effect of changes in tax uncertainties Compensation-related items Change in cash surrender value Other Income tax...

  • Page 37
    ... twelve months related to settlements of these examinations. 7. Employee Benefit Plans We have a defined contribution retirement plan (a 401K plan) covering employees who are at least 21 years of age, have completed at least one year of service and who work at least 1,000 hours annually. Under the...

  • Page 38
    ... Directors' current authorization. Share-Based Compensation Plans We have an Employee Stock Purchase Plan (the "Stock Purchase Plan") whereby all employees who complete six months employment and who work on a full-time basis or are regularly scheduled to work more than 20 hours per week are eligible...

  • Page 39
    STEIN MART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, except per share amounts) A summary of stock option information for the three years ended January 30, 2010 is as follows (in thousands, except per share amounts): Number of Shares Weighted-Average Exercise ...

  • Page 40
    ... in subleasing closed store locations when management expects, additional reserves for store closing costs may be recorded. During 2009, 2008 and 2007, we recorded net pre-tax charges of $2.7 million, $4.7 million and $1.1 million, respectively, for store closing charges, including adjustments to...

  • Page 41
    ...million, respectively. 10. Sales by Major Merchandise Category We are a single business segment. The following table summarizes sales by major merchandise category: 2009 2008 2007 Ladies' apparel and accessories Men's apparel and accessories Gifts and linens Other Net sales 11. Quarterly Results of...

  • Page 42
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  • Page 43
    ... 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 Form S-8 Registration Statement filed on June 26, 2009 Form...

  • Page 44
    ... ended July 29, 2006 Management Incentive Compensation Plan, amended and restated effective February 1, 2009, incorporated by reference to the Company's Proxy Statement filed on April 22, 2009 Amended and Restated Employment Agreement, dated June 4, 2009, between Stein Mart, Inc. and James G. Delfs...

  • Page 45
    ... Credit Card Consumer Program Agreement by and between Stein Mart, Inc. and GE Money Bank, dated 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 Pursuant...

  • Page 46
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  • Page 47
    ..., 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 Officer Kirk V. Light Real Estate Richard A. Schart Supply Chain Vice Presidents, Regional Directors of Stores...

  • Page 48
    1200 Riverplace Boulevard Jacksonville, FL 32207 www.steinmart.com On the cover: Molley, a Stein Mart customer since 1998, is featured in our Spring 2010 "Real Stein Mart customers" advertising campaign.