Struggling Stein Mart is making changes
By Mark Basch, Contributing Writer
Jay Stein says about “95 percent” of retailers are struggling in the current economic environment, and his company is no exception.
But the chairman of fashion retailer Stein Mart Inc. isn’t satisfied that his company is going along with the trend.
“We’re clearly not where we want to be, need to be, are going to be,” Stein told shareholders at the annual meeting at the company’s Southbank headquarters.
“We’ll get through this. That I’m going to assure you,” he said.
Stein Mart Inc.’s comparable-store sales fell 3.8 percent in fiscal 2016 and dropped 7.6 percent in the first quarter this year.
Comparable-store sales are sales at stores open for more than one year and are considered a key indicator of a retailer’s performance.
With the sales drop, Stein Mart’s stock fell to a low of $1 last month after its first-quarter earnings report, down from a 52-week high of $9.23 last summer and a 10-year high of $16.65 in February 2015.
The 10-year high coincided with a decision to pay stockholders a special $5-a-share dividend. With the market price of the stock falling sharply since then, one shareholder at the meeting asked company officials if that dividend payment was a wise decision and possibly contributed to the decline.
“I think it was very coincidental,” Stein said.
He said the dividend came at a time when “we had a number of financial companies that talked to us about buying the company.”
Stein and other company officials didn’t want to sell, and they decided to pay the dividend to shareholders instead.
“It’s a very tough environment out there in retail,” Chief Financial Officer Greg Kleffner said.
“I think that’s what reflects the stock price, not the dividend,” he said.
Stein Mart last month said it would stop paying dividends altogether, after 16 straight quarters of paying cash dividends.
“Making this decision was not easy, but it was prudent,” Chief Executive Officer D. Hunt Hawkins said as the company takes a more conservative approach to cash management.
Hawkins was named permanent CEO in January at the same time MaryAnne Morin joined Stein Mart as president, with responsibility for merchandising.
Hawkins said the new executive team is taking several steps to improve Stein Mart’s performance, including better inventory management.
Because buying decisions for merchandise are made so far in advance, it will take some time before the inventory management program pays off.
“You’ll see much more progress in this area as the year progresses,” Hawkins said.
Stein Mart also has signed on with a new advertising firm from Nashville, Bohan, and will be bringing out new ads in the third quarter, he said.
Meanwhile, the company is testing a new layout of its ladies’ apparel department in 50 of its nearly 300 stores that it hopes will attract more shoppers.
Hawkins said the new layout is already in place at the Stein Mart store on Baymeadows Road, near Interstate 295, in Jacksonville and the early results have been good.
Stein Mart also is trying to grow its e-commerce business, with online sales rising by 38 percent in the first quarter.
“We are making progress. It’s much closer to being a bottom-line contributor,” Hawkins said.
Hawkins does expect shareholders to eventually see better bottom-line results as the company’s initiatives take hold.
“As Jay said, we will get this business back where it belongs,” he said.