Quarterly Report (10-q)

Date : 12/04/2019 @ 9:32PM
Source : Edgar (US Regulatory)
Stock : Stein Mart Inc (SMRT)
Quote : 0.883  0.0 (0.00%) @ 12:59AM
After Hours
Last Trade
Last $ 0.88 ▼ -0.00 (-0.05%)

Quarterly Report (10-q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 2, 2019

or

[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 0-20052

STEIN MART, INC.

(Exact name of registrant as specified in its charter)

 

Florida

 

64-0466198

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

 

 

1200 Riverplace Blvd., Jacksonville, Florida

 

32207

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (904) 346-1500

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, $0.01 par value

SMRT

The NASDAQ Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

[  ]

 

Accelerated filer

[  ]

Non-accelerated filer

[X]

 

Smaller reporting company

[X]

 

 

 

Emerging growth company

[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [  ] No [X]

 

The number of shares outstanding of the Registrant’s common stock as of November 29, 2019, was 48,174,038.

 


 

 

Stein Mart, Inc.

Table of Contents

 

 

 

 

PAGE

 

 

 

 

PART I

FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Consolidated Financial Statements (Unaudited):

 

 

 

 

 

 

 

Consolidated Balance Sheets at November 2, 2019, February 2, 2019 and
November 3, 2018

 

3

 

 

 

 

 

Consolidated Statements of Operations for the 13 and 39 Weeks Ended
November 2, 2019 and November 3, 2018

 

4

 

 

 

 

 

Consolidated Statements of Comprehensive Loss for the 13 and 39 Weeks Ended November 2, 2019 and November 3, 2018

 

5

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity for the 13 and 39 Weeks Ended
November 2, 2019 and November 3, 2018

 

6

 

 

 

 

 

Consolidated Statements of Cash Flows for the 39 Weeks Ended November 2, 2019 and November 3, 2018

 

8

 

 

 

 

 

Notes to Consolidated Financial Statements

 

9

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

 

 

 

Item 4.

Controls and Procedures

 

27

 

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

28

 

 

 

 

Item 1A.

Risk Factors

 

28

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

 

 

 

 

Item 3.

Defaults upon Senior Securities

 

28

 

 

 

 

Item 4.

Mine Safety Disclosures

 

29

 

 

 

 

Item 6.

Exhibits

 

30

 

 

 

SIGNATURES

 

31

 

2


 

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

 

Stein Mart, Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except for share and per share data)

 

 

 

November 2, 2019

 

 

February 2, 2019

 

 

November 3, 2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,953

 

 

$

9,049

 

 

$

13,884

 

Inventories

 

 

307,124

 

 

 

255,884

 

 

 

305,010

 

Prepaid expenses and other current assets

 

 

23,368

 

 

 

28,326

 

 

 

35,638

 

Total current assets

 

 

343,445

 

 

 

293,259

 

 

 

354,532

 

Property and equipment, net of accumulated depreciation and

   amortization of $270,205, $251,793 and $249,705, respectively

 

 

108,781

 

 

 

119,740

 

 

 

129,683

 

Operating lease assets

 

 

361,168

 

 

 

-

 

 

 

-

 

Other assets

 

 

25,949

 

 

 

24,108

 

 

 

24,594

 

Total assets

 

$

839,343

 

 

$

437,107

 

 

$

508,809

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

126,541

 

 

$

89,646

 

 

$

122,019

 

Current portion of operating lease liabilities

 

 

80,936

 

 

 

-

 

 

 

-

 

Accrued expenses and other current liabilities

 

 

80,223

 

 

 

77,650

 

 

 

82,043

 

Total current liabilities

 

 

287,700

 

 

 

167,296

 

 

 

204,062

 

Long-term debt

 

 

170,292

 

 

 

153,253

 

 

 

190,657

 

Deferred rent

 

 

-

 

 

 

39,708

 

 

 

40,558

 

Noncurrent operating lease liabilities

 

 

316,890

 

 

 

-

 

 

 

-

 

Other liabilities

 

 

32,554

 

 

 

33,897

 

 

 

35,982

 

Total liabilities

 

 

807,436

 

 

 

394,154

 

 

 

471,259

 

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock - $0.01 par value, 1,000,000 shares authorized;

   no shares issued or outstanding

 

 

-

 

 

 

-

 

 

 

-

 

Common stock - $0.01 par value; 100,000,000 shares authorized;

   48,194,610, 47,874,286 and 47,898,068 shares issued and

   outstanding, respectively

 

 

482

 

 

 

479

 

 

 

479

 

Additional paid-in capital

 

 

61,504

 

 

 

60,172

 

 

 

59,009

 

Retained deficit

 

 

(30,283

)

 

 

(17,951

)

 

 

(21,706

)

Accumulated other comprehensive income (loss)

 

 

204

 

 

 

253

 

 

 

(232

)

Total shareholders’ equity

 

 

31,907

 

 

 

42,953

 

 

 

37,550

 

Total liabilities and shareholders’ equity

 

$

839,343

 

 

$

437,107

 

 

$

508,809

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3


 

Stein Mart, Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

 

 

 

13 Weeks Ended

November 2, 2019

 

 

13 Weeks Ended

November 3, 2018

 

 

39 Weeks Ended

November 2, 2019

 

 

39 Weeks Ended

November 3, 2018

 

Net sales

 

$

276,132

 

 

$

279,047

 

 

$

882,658

 

 

$

916,511

 

Other revenue

 

 

4,291

 

 

 

3,814

 

 

 

13,479

 

 

 

11,765

 

Total revenue

 

 

280,423

 

 

 

282,861

 

 

 

896,137

 

 

 

928,276

 

Cost of merchandise sold

 

 

206,721

 

 

 

209,286

 

 

 

651,122

 

 

 

671,426

 

Selling, general and administrative expenses

 

 

83,285

 

 

 

86,626

 

 

 

247,891

 

 

 

258,071

 

Operating loss

 

 

(9,583

)

 

 

(13,051

)

 

 

(2,876

)

 

 

(1,221

)

Interest expense, net

 

 

2,306

 

 

 

3,078

 

 

 

7,024

 

 

 

8,406

 

Loss before income taxes

 

 

(11,889

)

 

 

(16,129

)

 

 

(9,900

)

 

 

(9,627

)

Income tax expense

 

 

203

 

 

 

171

 

 

 

308

 

 

 

291

 

Net loss

 

$

(12,092

)

 

$

(16,300

)

 

$

(10,208

)

 

$

(9,918

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.25

)

 

$

(0.35

)

 

$

(0.22

)

 

$

(0.21

)

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

47,545

 

 

 

46,743

 

 

 

47,354

 

 

 

46,674

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

Stein Mart, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)

 

 

 

13 Weeks Ended

November 2, 2019

 

 

13 Weeks Ended

November 3, 2018

 

 

39 Weeks Ended

November 2, 2019

 

 

39 Weeks Ended

November 3, 2018

 

Net loss

 

$

(12,092

)

 

$

(16,300

)

 

$

(10,208

)

 

$

(9,918

)

Other comprehensive (loss) income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts reclassified from accumulated other

   comprehensive loss

 

 

(17

)

 

 

5

 

 

 

(49

)

 

 

14

 

Comprehensive loss

 

$

(12,109

)

 

$

(16,295

)

 

$

(10,257

)

 

$

(9,904

)

 

The accompanying notes are an integral part of these consolidated financial statements.

5


 

Stein Mart, Inc.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance on February 2, 2019

 

 

47,874

 

 

$

479

 

 

$

60,172

 

 

$

(17,951

)

 

$

253

 

 

$

42,953

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,969

 

 

 

-

 

 

 

3,969

 

Other comprehensive loss, net of tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16

)

 

 

(16

)

Reacquired shares, net

 

 

(87

)

 

 

(1

)

 

 

(102

)

 

 

-

 

 

 

-

 

 

 

(103

)

Issuance of restricted stock, net

 

 

278

 

 

 

3

 

 

 

(3

)

 

 

-

 

 

 

-

 

 

 

-

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

730

 

 

 

-

 

 

 

-

 

 

 

730

 

Dividends, net of forfeitures

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

5

 

Adjustment for adoption of accounting

   standard

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,133

)

 

 

-

 

 

 

(2,133

)

Balance on May 4, 2019

 

 

48,065

 

 

 

481

 

 

 

60,797

 

 

 

(16,110

)

 

 

237

 

 

 

45,405

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,085

)

 

 

-

 

 

 

(2,085

)

Other comprehensive loss, net of tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16

)

 

 

(16

)

Common shares issued under employee

   stock purchase plan

 

 

147

 

 

 

1

 

 

 

106

 

 

 

-

 

 

 

-

 

 

 

107

 

Reacquired shares, net

 

 

(12

)

 

 

-

 

 

 

(11

)

 

 

-

 

 

 

-

 

 

 

(11

)

Issuance of restricted stock, net

 

 

26

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

316

 

 

 

-

 

 

 

-

 

 

 

316

 

Dividends, net of forfeitures

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

1

 

Balance on August 3, 2019

 

 

48,226

 

 

 

482

 

 

 

61,208

 

 

 

(18,194

)

 

 

221

 

 

 

43,717

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(12,092

)

 

 

-

 

 

 

(12,092

)

Other comprehensive loss, net of tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(17

)

 

 

(17

)

Reacquired shares, net

 

 

(8

)

 

 

-

 

 

 

(6

)

 

 

-

 

 

 

-

 

 

 

(6

)

Issuance of restricted stock, net

 

 

(23

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

302

 

 

 

-

 

 

 

-

 

 

 

302

 

Dividends, net of forfeitures

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3

 

 

 

-

 

 

 

3

 

Balance on November 2, 2019

 

 

48,195

 

 

$

482

 

 

$

61,504

 

 

$

(30,283

)

 

$

204

 

 

$

31,907

 

 

The accompanying notes are an integral part of these consolidated financial statements.

6


 

Stein Mart, Inc.

Consolidated Statements of Shareholders’ Equity, continued

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Loss) Income

 

 

Equity

 

Balance on February 3, 2018

 

 

47,978

 

 

$

480

 

 

$

56,002

 

 

$

(11,843

)

 

$

(246

)

 

$

44,393

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,334

 

 

 

-

 

 

 

7,334

 

Other comprehensive income, net of tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4

 

 

 

4

 

Reacquired shares

 

 

(45

)

 

 

(1

)

 

 

(36

)

 

 

-

 

 

 

-

 

 

 

(37

)

Issuance of restricted stock, net

 

 

(23

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

995

 

 

 

-

 

 

 

-

 

 

 

995

 

Dividends, net of forfeitures

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8

 

 

 

-

 

 

 

8

 

Balance on May 5, 2018

 

 

47,910

 

 

 

479

 

 

 

56,961

 

 

 

(4,501

)

 

 

(242

)

 

 

52,697

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(952

)

 

 

-

 

 

 

(952

)

Other comprehensive income, net of tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

5

 

Common shares issued under employee

   stock purchase plan

 

 

92

 

 

 

1

 

 

 

89

 

 

 

-

 

 

 

-

 

 

 

90

 

Reacquired shares

 

 

(3

)

 

 

-

 

 

 

(10

)

 

 

-

 

 

 

-

 

 

 

(10

)

Issuance of restricted stock, net

 

 

(61

)

 

 

(1

)

 

 

1

 

 

 

-

 

 

 

-

 

 

 

-

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

847

 

 

 

-

 

 

 

-

 

 

 

847

 

Dividends, net of forfeitures

 

 

-

 

 

 

-

 

 

 

-

 

 

 

34

 

 

 

-

 

 

 

34

 

Balance on August 4, 2018

 

 

47,938

 

 

 

479

 

 

 

57,888

 

 

 

(5,419

)

 

 

(237

)

 

 

52,711

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16,300

)

 

 

-

 

 

 

(16,300

)

Other comprehensive income, net of tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

5

 

Reacquired shares

 

 

(4

)

 

 

-

 

 

 

(10

)

 

 

-

 

 

 

-

 

 

 

(10

)

Issuance of restricted stock, net

 

 

(36

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

1,131

 

 

 

-

 

 

 

-

 

 

 

1,131

 

Dividends, net of forfeitures

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13

 

 

 

-

 

 

 

13

 

Balance on November 3, 2018

 

 

47,898

 

 

$

479

 

 

$

59,009

 

 

$

(21,706

)

 

$

(232

)

 

$

37,550

 

 

The accompanying notes are an integral part of these consolidated financial statements.

7


 

Stein Mart, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

39 Weeks Ended

 

 

39 Weeks Ended

 

 

 

November 2, 2019

 

 

November 3, 2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(10,208

)

 

$

(9,918

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

21,220

 

 

 

23,799

 

Share-based compensation

 

 

1,348

 

 

 

2,973

 

Store closing benefits

 

 

(31

)

 

 

(180

)

Impairment of property and other assets

 

 

11

 

 

 

693

 

Loss on disposal of property and equipment

 

 

44

 

 

 

137

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Inventories

 

 

(51,240

)

 

 

(34,773

)

Prepaid expenses and other current assets

 

 

4,159

 

 

 

(9,018

)

Other assets

 

 

(5,348

)

 

 

(1,882

)

Accounts payable

 

 

36,976

 

 

 

2,559

 

Accrued expenses and other current liabilities

 

 

1,046

 

 

 

3,977

 

Operating lease assets and liabilities, net

 

 

(3,640

)

 

 

-

 

Other liabilities

 

 

(4,197

)

 

 

(3,928

)

Net cash used in operating activities

 

 

(9,860

)

 

 

(25,561

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Net acquisition of property and equipment

 

 

(5,145

)

 

 

(7,379

)

Proceeds from canceled corporate owned life insurance policies

 

 

2,900

 

 

 

2,514

 

Proceeds from insurance claims

 

 

82

 

 

 

296

 

Net cash used in investing activities

 

 

(2,163

)

 

 

(4,569

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

305,032

 

 

 

1,033,415

 

Repayments of debt

 

 

(288,132

)

 

 

(997,990

)

Debt issuance costs

 

 

-

 

 

 

(1,146

)

Cash dividends paid

 

 

(91

)

 

 

(147

)

Capital lease payments

 

 

(869

)

 

 

(551

)

Proceeds from exercise of stock options

 

 

107

 

 

 

90

 

Repurchase of common stock

 

 

(120

)

 

 

(57

)

Net cash provided by financing activities

 

 

15,927

 

 

 

33,614

 

Net increase in cash and cash equivalents

 

 

3,904

 

 

 

3,484

 

Cash and cash equivalents at beginning of year

 

 

9,049

 

 

 

10,400

 

Cash and cash equivalents at end of period