Stein Mart 2010 Annual Report Download

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Annual Report 2010

Table of contents

  • Page 1
    Annual Report 2010

  • Page 2
    ... two years we reduced SG&A expenses by over $100 million, while carefully maintaining the shopping experience our customers expect. We implemented a new supply chain, closed underperforming stores and improved efficiency in all areas of the business. With our rigorous cost and inventory controls in...

  • Page 3
    ... file number 0-20052 [ ] 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...

  • 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
    ... 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 apparel for women and men, as well as accessories...

  • Page 6
    ...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 7
    ... of Stein Mart®, not critical to our merchandising strategy. AVAILABLE INFORMATION Copies of our annual report on Form 10-K, proxy statement, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those filings are available free of charge on the investor relations...

  • Page 8
    ... points and 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 while we maintain an Internet site, we currently sell gift cards and a narrow...

  • Page 9
    ... chief merchandising officer; and Gary Pierce, senior vice president and director of stores; as well as Jay Stein, chairman of the board of directors. Our continued success is also dependent upon our ability to attract and retain qualified employees to meet our needs. The seasonality of our business...

  • Page 10
    ...Number of Stores Alabama Arizona Arkansas California Colorado Florida Georgia Illinois Indiana Kansas Kentucky Louisiana Massachusetts Michigan Mississippi 9 9 2 19 2 45 13 5 7 2 2 8 1 1 6 Missouri Nevada New Jersey New York North Carolina Ohio Oklahoma Pennsylvania South Carolina Tennessee Texas...

  • Page 11
    ...of record on December 8, 2010. Issuer Purchases of Equity Securities The following table provides information regarding repurchases of our common stock during the quarter ended January 29, 2011: ISSUER PURCHASES OF EQUITY SECURITIES Total number of shares purchased Average price paid per share Total...

  • Page 12
    ... 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. $140 $120 $100 $80 Dollars $60 $40 $20 $0 1/28/2006 2/3/2007 Stein Mart, Inc. 2/2/2008 1/31/2009 1/30/2010 1/29/2011 NASDAQ Composite Dow Jones...

  • 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
    ... 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, shoes...

  • Page 15
    Results of Operations The following table sets forth each line item of the Consolidated Statements of Operations expressed as a percentage of net sales (numbers may not add due to rounding): 2010 2009 2008 Net sales Cost of merchandise sold Gross profit Selling, general and administrative expenses ...

  • Page 16
    ...corporate expenses. Store expense reductions include a $9.0 million decrease in personnel expenses resulting from our new supply chain process, a $9.0 million decrease in other store operating and depreciation expenses and a $5.7 million decrease due to the elimination of operating costs from closed...

  • Page 17
    ... year 2009 inventory balance was only slightly higher compared to 2008, accounts payable was higher at the end of 2009 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 chain network...

  • Page 18
    ...leasehold 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 $800,000. We have a $150 million senior revolving secured credit agreement (the "Agreement...

  • Page 19
    ...closing charges related to stores closed or relocated in 2010. 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 20
    ... 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 operation...

  • Page 21
    ...web site. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the disclosure found in the Proxy Statement for our June 14, 2011 Annual Meeting of Stockholders. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED...

  • Page 22
    ... ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The following financial 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...

  • Page 23
    ...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 1, 2011 By: /s/ David H. Stovall, Jr. David H. Stovall, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities...

  • 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 29, 2011 January 30, 2010 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 Year Ended Year Ended January 29, 2011 January 30, 2010 January 31, 2009 Net sales Cost of merchandise sold Gross profit Selling, general and administrative expenses Other income, net ...

  • Page 28
    Stein Mart, Inc. Consolidated Statements of Stockholders' Equity (In thousands) Accumulated Other Total Comprehensive Stockholders' Income Equity Common Stock Shares Amount Additional Paid-in Capital Retained Earnings Balance at February 2, 2008 Adoption of accounting guidance for split-dollar ...

  • Page 29
    ... activities: Borrowings under notes payable to banks Repayments of notes payable to banks Cash dividends paid Excess tax benefits from share-based compensation Proceeds from exercise of stock options Proceeds from employee stock purchase plan Repurchase of common stock for employee withholdings...

  • Page 30
    ... of Significant Accounting Policies and Other Information As of January 29, 2011 we operated a chain of 264 retail stores in 29 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
    ... 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 finance purchases from Stein Mart, as...

  • Page 32
    ... income in the period the reward expires. Marketing expenditures incurred, representing payments to third parties, are expensed as incurred and recorded in selling, general and administrative ("SG&A") expenses. Reimbursements of marketing expenses received from the Bank are recorded in other income...

  • Page 33
    ... costs related to the consolidation centers and distribution warehouses. SG&A expenses include 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. Recent Accounting...

  • Page 34
    ... there is no remaining fair value of impaired store-related assets at January 29, 2011. 3. Accrued Liabilities The major components of accrued liabilities are as follows: January 29, 2011 January 30, 2010 Compensation and employee benefits Unredeemed gift and returns cards Property taxes Other $23...

  • Page 35
    ... under operating leases. Annual store rent 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...

  • Page 36
    ...Consolidated Statements of Operations. The remainder related primarily to a decrease in deferred tax assets associated with stock based compensation recorded in prior years for which a tax benefit was not realized. Deferred tax assets (liabilities) are reflected on the Consolidated Balance Sheets as...

  • Page 37
    ... no effect on the Consolidated Statement of Operations. 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 profit...

  • Page 38
    ... employment and who work on a full-time basis or are regularly scheduled to work more than 20 hours per week are eligible to participate in the Stock Purchase Plan. Participants in the Stock Purchase Plan may purchase shares of the Company's common stock at 85% of the lower of the fair market value...

  • 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 29, 2011 is as follows (in thousands, except per share amounts): Number of Shares Weighted-Average Exercise ...

  • Page 40
    ... key employees in which vesting was based on our common stock obtaining a certain market price (115,000 shares at $18 per share and 125,000 shares at $24 per share). These MP Performance Shares expired in September 2010. The following table summarizes non-vested stock activity for the three years...

  • Page 41
    STEIN MART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in thousands, except per share amounts) The following tables show the activity in the store closing reserve: January 30, 2010 Charges Payments January 29, 2011 Lease termination costs Severance Total store closing ...

  • Page 42
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  • Page 43
    ... 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 of Director's and Officer's Indemnification Agreement...

  • Page 44
    ... the Company's Form 8-K filed on May 21, 2010 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 Agent, General Electric...

  • Page 45
    ... 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 to Section 302 of...

  • Page 46
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  • Page 47
    ... Jr. Controller Senior Vice Presidents, Stein Mart Buying Corporation Roseann McLean Planning and Allocation Kathy Pickering General Merchandise Manager, Ladies and Accessories Vice Presidents, Corporate Andrew Black Chief Information Officer Kirk V. Light 3FBM&TUBUF Richard A. Schart Supply Chain...

  • Page 48
    1200 Riverplace Boulevard | Jacksonville, FL 32207 | www.steinmart.com