Stein Mart (SMRT) Misses Q1 EPS by 7c, Comps fall 7.6%, Suspends Dividend

Stein Mart (NASDAQ: SMRT) reported Q1 EPS of $0.08, $0.07 worse than the analyst estimate of $0.15. Revenue for the quarter came in at $337.3 million versus the consensus estimate of $355.57 million.

Comparable store sales decreased 7.6 percent primarily due to lower traffic

“We continue to experience softer than planned store traffic and sales. 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,” said Hunt Hawkins, Chief Executive Officer.

“Until we gain improved visibility during this period of weak retail apparel sales, we believe it is important to implement measures to maximize free cash flow to improve our financial position. In that regard, we have decided to suspend our quarterly dividend and significantly reduce our planned capital expenditures.”

Updated 2017 Outlook We have updated our full year 2017 outlook as follows:

• We continue to expect our total sales to be at least four percent above our comparable store sales for the year due to net new stores and this year’s additional 53rd week.
• We now expect our 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.
• We are forecasting SG&A expenses to increase only $5 million this year instead of the $15 million previously estimated due to additional operating savings and eliminating most incentive compensation.
• Future quarters’ effective tax rate will be higher than the 38.0 percent previously estimated due to the impact of permanent items on lower anticipated earnings.
• If first quarter sales trends continue into the second quarter, we estimate that our loss per share will be in the range of $0.20 to $0.25 for the second quarter.

For earnings history and earnings-related data on Stein Mart (SMRT) click here.

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