Stein Mart 2013 Annual Report Download - page 8



2XU VDOHV DQG RSHUDWLQJ UHVXOWV DUH DIIHFWHG E\ FRQVXPHU VHQVLWLYLW\ WR HFRQRPLF FRQGLWLRQV  7KH UHWDLO DSSDUHO EXVLQHVV LV
GHSHQGHQWXSRQFRQVXPHUVSHQGLQJDQGDVDIDVKLRQUHWDLOHUZHUHO\RQWKHH[SHQGLWXUHRIGLVFUHWLRQDU\LQFRPHIRUPRVWLIQRWDOORIRXU
VDOHV  (FRQRPLFIDFWRUV LPSDFWLQJ FRQVXPHU FRQILGHQFHDQG OHYHOV RI FRQVXPHU VSHQGLQJ LQFOXGH OHYHOV RI HPSOR\PHQW WKH KRXVLQJ
PDUNHWSUHYDLOLQJLQWHUHVWUDWHVWD[SROLFLHVSHUVRQDOEDQNUXSWFLHVHQHUJ\FRVWVDQGDYDLODELOLW\DQGFRVWRIFUHGLW&RQVXPHUFRQILGHQFH
LVDOVRDIIHFWHGE\ERWKGRPHVWLFDQGLQWHUQDWLRQDOHYHQWV'HWHULRUDWLRQLQWKHOHYHORIFRQVXPHUVSHQGLQJFRXOGKDYHDPDWHULDODGYHUVH
HIIHFWRQRXUUHVXOWVRIRSHUDWLRQV

:HIDFHLQWHQVHFRPSHWLWLRQLQWKHUHWDLOLQGXVWU\:HIDFHLQWHQVHFRPSHWLWLRQIRUFXVWRPHUVIURPGHSDUWPHQWVWRUHVVSHFLDOW\VWRUHV
UHJLRQDO DQG QDWLRQDO RIISULFH UHWDLO FKDLQV DQG ,QWHUQHW DQG PDLORUGHU UHWDLOHUV  0DQ\ RI WKHVH FRPSHWLWRUV DUH ODUJHU DQG KDYH
VLJQLILFDQWO\ JUHDWHU ILQDQFLDO DQG PDUNHWLQJ UHVRXUFHV WKDQ ZH GR  ,Q DGGLWLRQ PDQ\ GHSDUWPHQW VWRUHV DQG RWKHU FRPSHWLWRUV KDYH
EHFRPHPRUHSURPRWLRQDODQGKDYHUHGXFHGWKHLUSULFHSRLQWV&HUWDLQGHSDUWPHQWVWRUHVDQGFHUWDLQRIRXUYHQGRUVKDYHRSHQHGRXWOHW
VWRUHVZKLFKRIIHUPHUFKDQGLVHDWSULFHVWKDWDUHFRPSHWLWLYHZLWKRXUV0DQ\RIRXUFRPSHWLWRUVKDYHVLJQLILFDQW,QWHUQHWVDOHV:KLOHZH
PDLQWDLQ DQ,QWHUQHW VLWH DQGEHJDQ VHOOLQJPHUFKDQGLVH RQ WKH ,QWHUQHWLQ RXU,QWHUQHW VDOHVFXUUHQWO\FRPSULVH DQLQVLJQLILFDQW
SRUWLRQRIRXUWRWDOVDOHV,IZHIDLOWRVXFFHVVIXOO\FRPSHWHRXUSURILWDELOLW\DQGUHVXOWVRIRSHUDWLRQVFRXOGEHKDUPHG

8QDQWLFLSDWHG FKDQJHV LQ IDVKLRQ WUHQGV DQG FKDQJLQJ FRQVXPHU SUHIHUHQFHV PD\ DGYHUVHO\ DIIHFW RXU VDOHV  2XU VXFFHVV
GHSHQGV LQ SDUW XSRQ RXU DELOLW\ WR DQWLFLSDWH DQG UHVSRQG WR FKDQJLQJ FRQVXPHU SUHIHUHQFHV DQG IDVKLRQ WUHQGV LQ D WLPHO\ PDQQHU
$OWKRXJKZH DWWHPSWWR VWD\DEUHDVWRI WKHIDVKLRQ WDVWHVRI RXUFXVWRPHUV DQGSURYLGHPHUFKDQGLVHWKDW VDWLVILHVFXVWRPHU GHPDQG
IDVKLRQ WUHQGV FDQ FKDQJH UDSLGO\ DQG ZH FDQQRW DVVXUH WKDW ZH ZLOO DFFXUDWHO\ DQWLFLSDWH VKLIWV LQ IDVKLRQ WUHQGV DQG DGMXVW RXU
PHUFKDQGLVH PL[ WR DSSHDO WR FKDQJLQJ FRQVXPHU WDVWHV LQ D WLPHO\ PDQQHU  ,I ZH PLVMXGJH WKH PDUNHW IRU RXU SURGXFWV RU DUH
XQVXFFHVVIXO LQ UHVSRQGLQJ WR FKDQJHV LQ IDVKLRQ WUHQGV RU LQ PDUNHW GHPDQG ZH FRXOG H[SHULHQFH LQVXIILFLHQW LQYHQWRU\ OHYHOV DQG
PLVVHG RSSRUWXQLWLHV RU H[FHVV LQYHQWRU\ OHYHOV DQG KLJKHU PDUNGRZQV HLWKHU RI ZKLFK ZRXOG KDYH D PDWHULDO DGYHUVH HIIHFW RQ RXU
ILQDQFLDOFRQGLWLRQDQGUHVXOWVRIRSHUDWLRQV

2XU DGYHUWLVLQJ PDUNHWLQJ DQG SURPRWLRQDO VWUDWHJLHV PD\ EH LQHIIHFWLYH  2XU SURILWDELOLW\ DQG UHVXOWV RI RSHUDWLRQV PD\ EH
PDWHULDOO\DIIHFWHGE\WKHHIIHFWLYHQHVVDQGHIILFLHQF\RIRXUPDUNHWLQJH[SHQGLWXUHVDQGRXUDELOLW\WRVHOHFWWKHULJKWPDUNHWVDQGPHGLDLQ
ZKLFKWRDGYHUWLVH,QSDUWLFXODUZHPD\QRWEHVXFFHVVIXOLQRXUHIIRUWVWRFUHDWHJUHDWHUDZDUHQHVVRIRXUVWRUHVDQGSURPRWLRQVLGHQWLI\
WKH PRVW HIIHFWLYH DQG HIILFLHQW OHYHO RI VSHQGLQJ LQ HDFK PDUNHW DQG VSHFLILF PHGLD YHKLFOH DQG GHWHUPLQH WKH DSSURSULDWH FUHDWLYH
PHVVDJH DQG PHGLD PL[ IRU RXU DGYHUWLVLQJ PDUNHWLQJ DQG SURPRWLRQDO H[SHQGLWXUHV  :KLOH ZH XWLOL]H GLIIHUHQW W\SHV RI PHGLD GDLO\
QHZVSDSHUVDUHDQLPSRUWDQWGHOLYHU\YHKLFOHIRUSUHVVDGYHUWLVLQJDQGFLUFXODULQVHUWLRQV7KHQHZVSDSHUEXVLQHVVLVXQGHULQFUHDVLQJ
HFRQRPLF SUHVVXUH DQG WKH GHPLVH RI FHUWDLQ QHZVSDSHUV ZRXOG MHRSDUGL]H DQ LPSRUWDQW GLVWULEXWLRQ PHWKRG IRU RXU DGYHUWLVLQJ$V
UHDGHUV VKLIW DZD\ IURP QHZVSDSHUV RXU VXFFHVV ZLOO GHSHQG PRUH RQ RXU HIIHFWLYH XVH RI RWKHU IRUPV RI PHGLD IRU RXU DGYHUWLVLQJ
PDUNHWLQJDQGSURPRWLRQDOVWUDWHJLHV2XUSODQQHGPDUNHWLQJH[SHQGLWXUHVPD\QRWUHVXOWLQLQFUHDVHGUHYHQXHV,QDGGLWLRQLIZHDUH
QRWDEOHWR PDQDJHRXUPDUNHWLQJ H[SHQGLWXUHVRQ DFRVWHIIHFWLYHEDVLVRXUSURILWDELOLW\ DQGUHVXOWVRI RSHUDWLRQVFRXOGEHPDWHULDOO\
DGYHUVHO\DIIHFWHG
:HPD\EHXQDEOHWRUDLVHDGGLWLRQDOFDSLWDOLIQHHGHGRUWRUDLVHFDSLWDORQIDYRUDEOHWHUPV,IRXUH[LVWLQJFDVKFDVKJHQHUDWHG
IURPRSHUDWLRQVDQGIXQGVDYDLODEOHXQGHURXUUHYROYLQJFUHGLWDJUHHPHQWZHUHLQVXIILFLHQWWRIXQGRXUIXWXUHRSHUDWLRQVLQFOXGLQJFDSLWDO
H[SHQGLWXUHVRUUHSD\GHEWZKHQLWEHFRPHVGXHZHPD\QHHGWRUDLVHDGGLWLRQDOIXQGVWKURXJKSXEOLFRUSULYDWHHTXLW\RUGHEWILQDQFLQJ
,I XQIDYRUDEOH FDSLWDO RU FUHGLW PDUNHW FRQGLWLRQV H[LVWLI DQGZKHQZH ZHUHWR VHHNDGGLWLRQDO ILQDQFLQJ ZHPD\QRW EHDEOH WR UDLVH
VXIILFLHQWFDSLWDORQIDYRUDEOHWHUPVRURQDWLPHO\EDVLVLIDWDOO)DLOXUHWRREWDLQFDSLWDORQDFFHSWDEOHWHUPVZKHQUHTXLUHGFRXOGKDYHD
PDWHULDODGYHUVHHIIHFWRQRXUEXVLQHVVLQFOXGLQJDQLQDELOLW\WRIXQGQHZJURZWKDQGRWKHUFDSLWDOH[SHQGLWXUHV

:HPD\EHXQDEOHWRQHJRWLDWHDFFHSWDEOHOHDVHWHUPVZLWKFXUUHQWDQGSRWHQWLDOODQGORUGV2XUJURZWKDQGVXFFHVVGHSHQGVLQ
SDUWRQRXUDELOLW\WRUHQHZDQGHQWHULQWRQHZOHDVHVIRUVXFFHVVIXOVWRUHV7KHUHLVQRDVVXUDQFHWKDWZHZLOOEHDEOHWRUHQHJRWLDWH
OHDVHVDWVLPLODURUVDWLVIDFWRU\WHUPVDWWKHHQGRIWKHOHDVHDQGZHFRXOGEHIRUFHGWRPRYHRUH[LWWUDGHDUHDVLIDQRWKHUIDYRUDEOH
DUUDQJHPHQWFDQQRWEHPDGH 7KHUHLVDOVRQRDVVXUDQFHWKDWZHZLOOEHDEOHWRQHJRWLDWHVDWLVIDFWRU\WHUPVRQQHZRUUHSODFHPHQW
VWRUHV

:HPD\QRWEHDEOHWRH[LWXQGHUSHUIRUPLQJVWRUHVRQDFFHSWDEOHWHUPV$VSDUWRIRXUVWUDWHJ\ZHFORVHFHUWDLQXQGHUSHUIRUPLQJ
VWRUHVJHQHUDOO\EDVHGRQWKHODFNRIVWRUHSURILWDELOLW\6XFKFORVXUHVVXEMHFWXVWRFRVWVLQFOXGLQJOHDVHWHUPLQDWLRQSD\PHQWVDQGWKH
ZULWHGRZQRIOHDVHKROGLPSURYHPHQWVHTXLSPHQWIXUQLWXUHIL[WXUHVDQGLQYHQWRU\)RUHDUO\WHUPLQDWLRQVZHPD\UHPDLQOLDEOHIRUIXWXUH
OHDVHREOLJDWLRQVZKLFKFRXOGDGYHUVHO\DIIHFWRXUSURILWDELOLW\DQGUHVXOWVRIRSHUDWLRQV
%HFDXVH RI RXU IRFXV RQ NHHSLQJ RXU LQYHQWRU\ DW WKH IRUHIURQW RI IDVKLRQ WUHQGV H[WUHPH DQGRU XQVHDVRQDEOH ZHDWKHU
FRQGLWLRQVFRXOGIRUFHXVWRKDYHKLJKHULQYHQWRU\PDUNGRZQV2XUEXVLQHVVLVVXVFHSWLEOHWRXQVHDVRQDEOH ZHDWKHUFRQGLWLRQV
)RUH[DPSOHH[WHQGHGSHULRGVRIXQVHDVRQDEO\ZDUPWHPSHUDWXUHVGXULQJWKHIDOOVHDVRQRUFRROZHDWKHUGXULQJWKHVSULQJVHDVRQFRXOG
UHQGHUDSRUWLRQ RIRXU LQYHQWRU\LQFRPSDWLEOHZLWK WKRVHXQVHDVRQDEOHFRQGLWLRQV3URORQJHG XQVHDVRQDEOHZHDWKHUFRQGLWLRQV FRXOG
KDYHDPDWHULDO DGYHUVHHIIHFWRQ RXUEXVLQHVV ILQDQFLDOFRQGLWLRQDQG UHVXOWVRI RSHUDWLRQV,QDGGLWLRQKXUULFDQHVRU RWKHUH[WUHPH