After a first-quarter 5.2 percent decrease in total sales and a comparable store sales decrease of 7.6 percent, Stein Mart Inc. has decided to suspend its quarterly dividend and significantly reduce capital expenditures, the Jacksonville-based national specialty and off-price retailer reported.
Net income for the first quarter was $3.7 million compared to net income of $13.3 million in 2016, the company said in a news release announcing first-quarter fiscal results. Income tax expense for the first quarter of 2017 includes $1.1 million higher expense related to the new accounting standard on stock compensation.
“We continue to experience softer than planned store traffic and sales, Hunt Hawkins, chief executive officer, said in a news release. “As a result, markdowns were significantly higher for the quarter despite our focus on inventory management. Given the uncertain retail environment, we are being more conservative planning fall, keeping a higher percentage of our buying in reserve to opportunistically take advantage of any sales upside. We expect to see additional inventory reductions as the year progresses.”
Total sales for the first quarter of 2017 were $337.3 million compared to $355.7 million in 2016. Comparable store sales decreased 7.6 percent primarily due to lower traffic. E-commerce sales were up 38 percent over last year’s first quarter.
Gross profit for the first quarter of 2017 was $95.6 million or 28.3 percent of sales compared to $108.9 million or 30.6 percent of sales in 2016. The lower gross profit rate for the quarter reflects higher markdowns and higher occupancy costs that negatively leverage on lower sales.
In its news release, Stein Mart said it expects total sales to be at least 4 percent above comparable store sales for the year because of net new stores and this year’s additional 53rd week, and expects its gross profit rate will be about the same as the fiscal 2016 rate. This is significantly less than previously estimated primarily due to higher first- and second-quarter markdowns to reduce inventories for the remainder of the year.
Stein Mart had 292 stores across 31 states at the end of the first quarter compared to 283 at the end of the first quarter last year. The company opened five new stores and closed three stores during the quarter, and are expecting to open 10 new stores and close seven stores in 2017.