Too many markdowns caused Stain Mart Inc. to struggle during the fourth quarter.
Net income for the quarter was $6.3 million, or 13 cents a diluted share, a far cry from last year’s $12.3 million, or 27 cents. Adjusted earnings per share totaled 17 cents, which was 3 cents lower than the FactSet estimate of 20 cents a share.
Sales for the three months ending Jan. 30 increased 1.8 percent to $394.1 million from $386.9 million a year earlier. Sales were in line with the FactSet estimate. Comparable sales for the fourth quarter dropped by 1.1 percent.
For the full year, the company’s net income was $23.7 million, which was less than last year’s $26.9 million.
“Disappointing fourth quarter sales and a more promotional holiday selling season drove our results lower than the prior year,” said Jay Stein, chief executive officer. “Our fourth-quarter gross profit rate was lower as we made appropriate valuation decisions on inventories,”
Gross profit for the fourth quarter was $105.8 million, or 26.8 percent of sales, compared to $113.6 million, or 29.4 percent of sales, for the same period last year.
Stein went on to say, ““On a positive note, we increased our comparable-store sales for the year, had solid sales growth from 10 new stores and controlled our expenses well. We also ended the year with acceptable inventory levels going into our strong spring selling season.”
Looking ahead, Stein Mart expects to open a total of 12 stores this year, which should increase sales 4 percent above the comp-store sales increases for the year. Gross profits are forecast to be 50 basis points higher than 2015.
Stein Mart stock has tumbled 35 percent over the past year, although over the past four weeks it had started to turn around, moving up over 22 percent and lately trading near $8.