Jacksonville, FL—Stein Mart today reported that its second quarter profit jumped 47.8% as the off-price retailer’s sales and margins improved.
For the quarter ended August 3, Stein Mart posted net income of $3.4 million, or 8 cents a share, compared with net income of $2.3 million, or 5 cents a share, a year ago. That was in line with analysts’ average estimate for 8 cents a share.
Total net sales increased 3.8% t to $291.0 million, compared to the consensus estimate of $295.53 million. Comparable store sales were up 6.4%.
For its first half, Stein Mart reported total sales increased 3.8% to $612.3 million, while comparable store sales rose 3.6%.
“Our second quarter same store sales increase of 6.4 percent was driven by our great merchandise, brands and pricing” said CEO Jay Stein. “We’ve said for a long while that increases in sales and margin will leverage against our lean expense structure resulting in higher earnings growth. This is now happening.”
E-Commerce Launches Soon
Gross profit for the second quarter widened to $80.3 million, or 27.6% of sales from $73.8 million, or 26.3 percent of sales, in 2012. The increase in the gross profit rate was primarily the result of lower markdowns and slightly higher markup.
Selling, general and administrative expenses for the second quarter were $74.5 million or 25.6% of sales compared to $70.0 million or 25% of sales in 2012.
“Supported by our strong first six months results, we are entering the fall season with optimism about our ability to grow sales,” said Stein. ”As we begin our third quarter, we now believe that our gross margin rate will continue to be better than last year and that our expense structure will allow much of our higher gross margin dollars to drop to our bottom line.”
Stein Mart expects to launch its much-anticipated e-commerce business “in the next few weeks.” The site will contain a “significant selection” of Stein Mart stores’ inventory mix as well as some online exclusives.
While we expect lower margins on e-commerce sales in the second half of the year, the lower margins on expected volumes will likely impact our overall gross profit rate only slightly,” the company noted.
Looking ahead for the rest of the year, total capital expenditures will be about $34 million, “including $14 million for continuing information system upgrades, $5 million for distribution center equipment and software, and the remainder for new and relocated stores, store remodels and new fixtures.”