Stein Mart Sales Spiral Downward

Jacksonville, Fla. On Thursday, Stein Mart reported continued declines in operating performance. Net sales for the second quarter of 2008 were $311.6 million, down 5.8% from the same period in 2007. Same-store sales slumped 9.7% from the year-ago quarter.

Additionally, the company reported its second-quarter selling, general and administrative (SG&A) expenses increased to $92.5 million vs. $86.2 million last year. Notably, as a percentage of sales, the SG&A rate increased from 26.5% of 2007 sales to 29.7% of sales this year.

In its prepared statement, Stein Mart noted the increase in SG&A rate was due, in part, to a lack of leverage on lower sales and also reflected increases in store-closing expenses.

Overall, the first half of the year was comparably disappointing, with same-store sales for the initial six months of 2008 down 9.5% compared to 2007.

Attempting to shed a positive light on future possibilities, Stein Mart president and chief executive Linda M. Farthing described a house-cleaning approach to inventory markdowns.

“We took aggressive markdowns in the second quarter to drive customer traffic and achieve our goal of keeping inventory levels in line with the sales trend,” she explained. “These lowered inventory levels, which we expect to continue, should give us a cleaner platform to present fresh fashion going forward.”

Stein Mart has announced it will introduce a new marketing campaign this quarter as well as new signage for stores.

The company closed one store during the second quarter and currently operates 283 locations vs. 270 stores at the end of second quarter 2007. Stein Mart expects to open one store, relocate one store and close nine additional stores in 2008, which would bring the year-end total to 276 locations.