Kingswood Capital Management L.P. will buy all shares not controlled by Chairman Jay Stein.
With its stock price floundering as the company struggles to increase sales, Stein Mart Inc. agreed Jan. 31 to a buyout by a private equity firm.
The Jacksonville-based fashion retailer said Kingswood Capital Management L.P. agreed to buy all shares not controlled by Chairman Jay Stein.
Stein controlled 32% of the shares of the company, according to its most recent proxy statement. Under the agreement, an entity controlled by Stein will continue to own about one-third of the company.
An affiliate of Kingswood will pay 90 cents a share to buy the other shares, which closed Jan. 30 at 65 cents. The stock has not closed above $1 since May.
With about 48 million shares outstanding, Kingswood would be paying about $29 million to buy two-thirds of the company.
Stein Mart said the deal was approved by a special committee of its board of directors after conducting a strategic review.
“The special committee and its advisors conducted a thorough and independent process to review the company’s strategic alternatives and identify a transaction that would maximize shareholder value,” said Richard Sisisky, chairman of the special committee, in a news release.
“We believe that this transaction is in the best interest of all Stein Mart stakeholders, including our many loyal employees,” he said.
Jay Stein’s grandfather, Sam, founded the company by opening a store in Greenville, Mississippi, in 1908.
It remained a one-store business until Jay succeeded his father, Jake, as CEO in the 1970s.
It then began an expansion program by opening a second store in Memphis in 1977 and eventually grew into a national chain.
Stein Mart opened its first Jacksonville store in 1983 and moved its headquarters to the city in 1984. It now has about 375 employees in the corporate office.
Jay Stein took the family-owned business public in 1992, at a time when initial public offerings were less common than they are today. With the popularity of Stein Mart stores among Northeast Florida shoppers, the IPO generated strong interest in Jacksonville.
Stein stepped back from his role as CEO in 2001, but remained chairman of the board and maintained his controlling interest in the stock. He had a second stint as CEO from 2011-16.
Stein Mart, which has 283 stores in 30 states, has struggled in recent years as brick-and-mortar retailers lose sales to online businesses.
Stein Mart’s total sales fell 3.7% in the first nine months of fiscal 2019 to $882.7 million, and comparable-store sales fell 1.9%.
Comparable-store sales are sales at stores in operation for more than one year and are considered a key indicator of a retailer’s performance.
Stein Mart, which has been closing underperforming stores, had 293 locations two years ago.
Kingswood is a Los Angeles-based firm that focuses on “businesses that are undergoing varying degrees of operational, financial or market-driven change,” according to its website.