David Stovall joined Jacksonville-based Stein Mart Inc. as president and CEO in December 2008, after 22 years with Belk Inc., most recently as chairman of Belk’s Central Division in Charlotte, N.C. Stovall led Stein Mart, which sells fashion merchandise at prices up to 60 percent off department store prices, from a loss of more than $70 million in 2008 to a profit of almost $24 million in 2009. It operates in 30 states and the District of Columbia. Stovall, 63, and his wife, Deborah, have three grown children who live in New York. Stovall says women make up more than 80 percent of Stein Mart’s shoppers, so he refers to the typical Stein Mart customer as “she.” He met with Daily Record Managing Editor Karen Brune Mathis last week.
How’s it going?
It’s busy. The world is a challenging place and this economy is something that even those of us that have been around as long as I have have never experienced, so predicting with any degree of certainty as to what the future holds is likely a waste of time and energy.
You are a seasoned industry veteran. Have you ever seen anything like this?
Never. Nothing close. Nothing even comparable to this would be my quick answer.
How do you adjust?
The most important point is that we have a plan that we all agree on. Everybody executes the plan, but we maintain our flexibility because we really can’t see around the corner or over the next hill, which in the past within a range, we’ve always been able to be fairly good predictors as to what customers’ behavior is going to be.
How do you determine customer behavior? What are the factors you look at?
The primary way we’ve always done it is historically, this is what she’s done, this is how she’s acted, this is what she did. We have a customer research project that occurs every day. Fundamentally. That I had 265 locations yesterday and I saw the results this morning that told me what the customer thought of us yesterday. In some places, she liked us a lot, and in others, she didn’t.
When you say she liked you a lot, what are the factors?
The daily factor is a revenue factor. Did our sales grow? Did our sales decline? And within the departments in the store, which places did they grow or decline? So yesterday, she liked our jewelry, for example. She thought our costume jewelry and our dresses were terrific.
How do you predict what she’ll like tomorrow?
That’s why we have a team of merchants who shop, scour the market, create things, work on distinctive merchandise. Part of what we are trying to do is react to fashion trends, but another piece of this, which would be the real trick or the real skill, would be to give her what she never knew she wanted. That’s the surprise piece and that’s how you get probably the highest level of success.
Do you have an example of what she didn’t know she wanted?
Flower pins. One of the hottest things we’ve got going is all these big flowers that clip on. Who knew?
What does the team watch to develop the trends for Stein Mart?
It’s extensive and it’s not one source. It’s multiple sources. It starts on the designer runways, whether it’s in Milan or Paris or New York, where you’ll see introductions in new things and generally somewhat more extreme fashion, that then gets interpreted.
There’s color information out there from fashion experts. We use our manufacturers, the vendors, the suppliers we purchase goods from, to help us determine what’s going to be good.
We’re still historians. Last year, this was good, it’s likely to change but it’s still going to be important, or it’s no longer important, whether it’s prints or embellishment or solids or brights or deep tones or black-and-white or whatever the case may be.
The goal is pretty simple. Be right more than you’re wrong.
When did you decide you wanted to go into retail, that you were an executive in the retail industry?
Somebody else decided I could be an executive. I didn’t decide that. My father was in the retail business. He worked for the Leggett Stores for 42 years.
I grew up in a lot of towns in Virginia, but the first time I remember (I wanted to be in retail) was in Staunton, Virginia, and my father was the assistant store manager at a Leggett store in downtown Staunton. He would drive me to school. The kindergarten was right up the street from the store, in a church. I would go into the store with him in the morning. And the trash cans were on wheels and he would make sure all the trash cans were pulled up to the aisle and I would push them to the front door. As a kindergartner.
He was an ex-Marine dive bomber pilot and (there was) not much variance, not much room from that center line.
Did you always work in retail?
All but one summer when I worked in a customer service area in an air-conditioning manufacturing plant. I have no idea why I did that, but I did.
What did you learn?
I needed to be in retail.
Are you glad?
Yes. It’s been very good to me. I’ve been very fortunate to have worked with terrific people and there are days I think I’m relatively good at what I do and there are days I think I am not very good, that I should have learned more. But almost every day I still look forward to going to work.
What do you look forward to when you come to work?
Making a difference, either in other people’s lives, to how they enjoy their job, or in this case, in the success of the company and what it can do for our employees and our shareholders and our customers. One of the things that you think about when you have a job like I do is that I am responsible for 12,000 people having a job and I want to make sure that not only do those 12,000 have jobs, but we can grow the business and have 13,000, 14,000 and 15,000 people have a job in a place they enjoy working.
What is your next move within the company?
We’re focused on delivering what the customer wants and that really is top-line sales growth. We have a number of focuses around inventory management, expense control, profitability, balance sheet management. But the primary target is to be able to show growth again and it’s difficult in this economy.
The customer’s behavior has clearly changed, changed now almost two years ago in the summer of ‘08 as the world changed. It rocked the foundation, the security that tomorrow was going to be a better day. You watch what happened yesterday in the market. Today in the market, stuff continues, so it’s hard for consumers to have confidence that it’s OK to spend, it’s OK to shop, it’s OK to consume above levels back to former levels. I don’t know that we ever go back there. It’s very competitive out there and she’s clearly changed her consumption behavior.
How has she changed?
I think there are a couple of things that she’s doing. She’s shopping her closet. So rather than complete head-to-toe purchasing, she is building on the basic or the item that she had last year. Everything is not new. It’s fewer units that she is buying.
She is entertaining and is being entertained less, in a grand kind of way. When we look at the social occasion dress business that had been a huge part of the Stein Mart dress area, we saw last holiday that, because of company cutbacks, it wasn’t a case she didn’t want the dresses. She didn’t have any place to go wear them. Her company didn’t have a party and his company didn’t have a party, so not only didn’t she buy one dress, she didn’t buy two.
You have 265 stores. Any plans to add more?
There are two places that we are looking primarily at. One is, we have a location that is in a good market for us but the quality of that location has changed over the years and we are looking to relocate. We actually have done three (relocations) in the first quarter and five to 10 for this year. Relocations to where we know we want to be in the market, where we have a great customer, but we can improve their shopping experience if we relocate.
There are a couple of opportunities that have surfaced where we have committed to open a brand-new store, but primarily in existing markets. At this point, it is unlikely we would be going into any new markets.
How do you choose a location?
We’re primarily looking for our core customer and an underserved portion of our core customer, who is higher-than-average income and understands and appreciates fashion and is value-conscious. So we look at those demographics and figure out where those folks live and look for the right mix of tenants in a center, convenience, location, ingress, egress, tenants across the street, next door, all of those factors that make shopping pleasant.
What role does time play for customers?
Time is as scarce a resource as financial resources. It really is. It’s as scarce an asset.
How do you choose fashions?
The nature of our business is that we plan for a degree of mistakes. They are called markdowns, so we plan for inventory obsolescence, which is a kind way of saying she didn’t want it. That is part of the structure and we expect that if there is too much of an item that she wants, or she doesn’t want it at all, or it doesn’t fit, for whatever reason, we had the specifications that were wrong or the price was not what she wanted to pay for it.
How do you determine market by market? You have different demographics, different needs, different wants. How difficult is that?
It is difficult. Probably the biggest component of that is weather. That creates the most difference, whether you are in South Florida, South Texas, San Diego or Indianapolis, Chicago, Buffalo. The weather patterns are so different. That’s probably our most difficult challenge. There are some taste level differences. There is a more casual approach to apparel in the West and in the Southwest than there is in the Mid-Atlantic and Northeast. There is a whole resort business.
It’s not a national assortment. The basics are national and our chandelier earrings are national, but there will be some differences.
What are we going to be seeing in the stores?
There are a number of terrific looks. We’ve seen a whole regeneration of interest in career-looking apparel, not necessarily structured, boxy, suit-y looking, but more career apparel. We are seeing some military influences. The whole sweater category is going to be strong this fall. We’re going to see some luxury fabrics; the cashmere influence is coming back.
If they are going to buy a few less pieces, they are going to buy better pieces so that you can keep them longer and get more wear out of them.
We’re seeing some longer jackets. There’s a relatively new idea called ‘jeggings,’ which is leggings that look like jeans, so it’s that sort of a combination of jeans and a legging that, covered with tunic tops and longer tops, will be terrific for fall.
You’re working on the Home section?
One of the things we discovered as we talked to customers is customers remembered that Stein Mart was a destination for merchandise for the home and for gifts from the home area. These customers told us that had declined over the years, and we’d seen it in the business. So we decided to embark last September on a home reinvent and if you go into our stores today, you will see us probably 25 percent completed on this reinvent. We will be complete by the August-September period, where what you will see is much more distinctive merchandise that’s aspirational, that’s special, that’s the kind of things that you’re going to want to look for, that’s going to look great in your home as a home decor piece.
This ought to look to you like Stein Mart Home did five to 10 years ago.
DSW provides Stein Mart shoes under a lease arrangement. What about the shoe department?
There are significant improvements in our shoe assortment. The shoe business has been very good around the country. Sandals and all the stuff, it’s very different-looking.
It generally is about newness. One of the things that challenges you (women) all to action is putting on something in the morning and you go, ‘Hmm, this looks old.’ You all are not going to have a good day.
We are. Guys are. ‘Let’s buy a pair of navy pants.’ OK. ‘Let’s buy the same tattersall print shirt.’ OK. We can do that. We don’t care. Shoes. Men buy shoes. Do you know how they buy shoes? And what do they do? They wear them in and say, ‘I want this pair.’ That’s how they do it.
What do you see with the economy?
I don’t know. This is more about what I read than what I see. I see most people suggesting that it’s here to stay for a number of years, bouncing along the bottom with some small pluses, some small minuses and hopefully nothing disastrous. You have the European monetary situation. You’ve got this Gulf oil thing, that’s a significant challenge to the ecosystem, to the whole coastline, to fishing to tourism to our business in New Orleans, Louisiana, serious challenges to what were healthy businesses through no fault of their own. What else can happen to New Orleans? It’s just scary.
I think the stimulus money is used up. One of the things that’s happened that I think you are going to read around the country is that the primary goal of the stimulus money was to create jobs. What happened to much of it is it went into state and local governments that maintained jobs because the state and local revenues were significantly off. So the stimulus money kept the government employees, state and local, kept those jobs intact.
You are beginning to see all over the country in local newspapers, teacher reductions, parks and recreation reductions, staff, local government, libraries, shortened hours, closings. All of this stuff that is going to be significant.
I think you are going to see unemployment, which is probably the number that I watch with the most trepidation, not make significant recovery.
That’s what worries me. But every local government has these kinds of challenges they are going to have to deal with. That means our customers are going to have to deal with them, which means I do.
Is Stein Mart considering online shopping?
We are planning a small scale test of e-commerce in the fourth quarter to see how having an online presence would work with our business model.
How are you settling into the community?
What a great city Jacksonville is. I was in Charlotte for almost 25 years and loved Charlotte. I made lots of terrific new friends here in Jacksonville. I’m on the Jacksonville Civic Council, which I think is going to be very helpful to the community in a broad sense. You have 51 CEOs who are committed to making a difference to make Jacksonville a better place to do business. It is about quality of life, but it’s about the quality of being able to do business, not just about quality of life, so we can attract terrific people to come to work for us. We can keep our best and brightest children coming back to Jacksonville to continue.
Jacksonville has lots of assets. This downtown area is faced with a lot of problems and a lot of challenges, but there’s also a lot to work with here. The natural resources, whether it is the St. Johns River – or I did notice we have an ocean, which is really cool to have an ocean – not to mention the wonderful climate. And a consolidated government, by the way. That’s the envy of cities all over the country to have a consolidated government so you don’t have things at cross purposes.
When you visit stores, do the employees recognize you?
I have been to over 100 stores. Most times, they do. When I go to stores, I want to meet the folks, so I tell them I am coming.
I enjoy meeting the people, thanking them for what they do for us. I listen to their ideas. I rarely go in and say, ‘Here is what I want you to do.’ There are occasions that I may have to have those conversations, but I am there to hear from them, to thank them for taking care of Stein Mart’s customers.
But here in Jacksonville, of course, they’ve all figured out who I am and they figured out who Debbie is.