Stein Mart Inc. availed itself of higher markup and “slightly lower markdowns” to increase profits in its second quarter.
The Jacksonville, Fla.-based off-price/department store hybrid registered net income of $4.1 million, or 9 cents a diluted share, more than double the result for the 2014 quarter of $1.7 million, or 4 cents.
Eliminating a one-time item for e-commerce losses, adjusted earnings per share for the most recent quarter was 10 cents, double the 5-cent result expected by analysts.
Revenues came in below the consensus estimate of $315.6 million, moving up 4.5 percent to $311.6 million from $298.2 million as same-store sales rose 3 percent during the period.
Gross margin, expected to improve in the second quarter, hit 28.5 percent of sales, up from 28.3 percent a year ago. Higher markups and reduced markdowns were “somewhat offset by higher occupancy costs,” the company said.
For the full year, gross margin is expected to be in line with the 29.3 percent reported in 2014, as projected at the start of the year, despite Stein Mart’s incorporation some 2016 pre-opening occupancy costs for new stores into its tabulations.
“We are very pleased with our strong second-quarter earnings, which were driven by leveraging our increased sales along with a higher gross profit rate,” said Jay Stein, chief executive officer.
Stein added that the company will open its first Long Island store next month in Commack, N.Y., and finish the year with 269 units, four above the figure at the end of 2014.
In 2016, Stein Mart plans six store openings in the spring and six or more in the fall.
Shares of Stein Mart rose 38 cents, or 3.6 percent, to $10.99 in Nasdaq trading Thursday.
For the six months, net income increased 11.7 percent to $17.7 million, or 38 cents, as revenues were up 6.1 percent to $665.1 million. Same-store sales were up 4 percent and gross margin declined to 29.7 percent of sales from 30.1 percent.