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Stein Mart, Inc. Reports Third Quarter 2015 Results Third Quarter Highlights

The following excerpt is from the company's SEC filing.

Diluted loss per share of $0.01 compared to $0.03 loss in 2014

Adjusted operating income of $2.0 million compared to $1.8 million in 2014

JACKSONVILLE, Fla. Stein Mart, Inc. (NASDAQ: SMRT) today announced financial results for the third quarter ended October 31, 2015.

Overview of Results

Net loss for the third quarter was $0.2 million or $0.01 per diluted share compared to net loss of $1.2 million or $0.03 per diluted share in 2014. Third quarter adjusted operating income was $2.0 million compared to $1.8 million in 2014. Adjusted net income was $0.6 million or $0.01 per diluted sha re in 2015 compared to adjusted net income of $0.9 million or $0.02 per diluted share in 2014 (see Note 1). Third quarter 2015 includes $0.8 million, or $0.01 per diluted share, higher interest expense.

For the first nine months of 2015, net income was $17.5 million or $0.37 per diluted share compared to $14.6 million or $0.32 per diluted share in the same period in 2014. Adjusted operating income was $33.7 million for the first nine months of 2015 compared to $30.2 million in 2014. Adjusted net income was $19.2 million or $0.41 per diluted share for 2015 compared to adjusted net income of $18.3 million or $0.40 per diluted share for 2014 (see Note 1). The first nine months of 2015 includes $2.2 million, or $0.03 per diluted share, higher interest expense.

Adjusted earnings before interest, income taxes, depreciation and amortization (EBITDA) for the first nine months of 2015 increased $2.7 million to $58.4 million (see Note 2).

Comments on Results

Our third quarter sales were severely impacted by unseasonably warm weather. We are working to address our sales and promotional strategies for the fourth quarter to get back to more acceptable top-line results, said Jay Stein, Chief Executive Officer. Our sales-focused initiatives have produced strong results for more than three years and it is important that we continue to make the right long-term investments. As an example, our new store growth is already giving us excellent returns with our fall store openings delivering outstanding results.

Sales

Total sales for the third quarter of 2015 decreased 1.0 percent to $300.7, while comparable store sales decreased 2.3 percent. For the first nine months of 2015, total sales increased 3.8 percent to $965.8 million, while comparable store sales increased 1.9 percent. Our ecommerce business contribution to comparable store sales growth was 60 basis points in the third quarter and 70 basis points in the nine-month period.

Gross Profit

Gross profit for the third quarter of 2015 was $82.2 million or 27.3 percent of sales compared to $84.6 million or 27.8 percent of sales in 2014. The decrease in the third quarter gross profit rate was primarily due to the deleveraging of higher occupancy costs (including new stores) on lower sales, somewhat offset by lower buying and distribution expenses allocated to cost of sales. Merchandise margins were consistent with the prior year.

Gross profit for the first nine months of 2015 was $279.5 million or 28.9 percent of sales compared to $273.1 million or 29.3 percent of sales in 2014. The decrease in the gross profit rate for the first nine months was primarily due to the deleveraging of higher occupancy costs (including new stores) with merchandise margins consistent with the prior year.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses for the third quarter of 2015 were $81.5 million compared to $86.3 million in 2014. Costs related to our SEC investigation which was settled in September were $30,000 in the third quarter of 2015, net of expected insurance recoveries, compared to $1.6 million in 2014 (see Note 1). The remaining $3.2 million decrease in SG&A expenses was the result of lower earnings-based incentive compensation, store closing costs and store operating expenses.

For the first nine months, SG&A expenses were $248.6 million compared to $249.0 million in 2014. SEC investigation costs, net of expected insurance recoveries, were $0.2 million in the first nine months of 2015 compared to $2.9 million in 2014 (see Note 1). The remaining $2.3 million increase in SG&A expenses was primarily the result of higher ecommerce costs and store operating expenses to support new stores, somewhat offset by lower healthcare and store closing costs.

Interest Expense and Debt

Interest expense for the third quarter of 2015 was $0.9 million...


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