Citing the negative impact of warmer weather, Stein Mart Inc. posted weaker sales in the third quarter as losses narrowed to 1 cent a share from 3 cents in the same period last year.
The loss for the quarter came in at $197,000, which compares to $1.2 million last year. Sales for the quarter fell 1 percent to $300.7 million from $303.7 million last year. On an adjusted basis, net income came in at $593,000, or 1 cent a share, which compares to $947,000, or 2 cents, in the prior year.
The retailer also noted that average inventories “for our comparable stores, not including e-commerce, were 5 percent higher than last year.”
Jay Stein, chief executive officer, said sales “were severely impacted by unseasonably warm weather. We are working to address our sales and promotional strategies for the fourth quarter to get back to more acceptable top-line results.”
The ceo said the retailer’s sales-focused initiatives “have produced strong results for more than three years and it is important that we continue to make the right long-term investments. As an example, our new store growth is already giving us excellent returns with our fall store openings delivering outstanding results.”
Those investments, however, are impacting margins. During the quarter, the gross profit margin lost 52 basis points to 27.33 percent. “The decrease in the third-quarter gross profit rate was primarily due to the deleveraging of higher occupancy costs (including new stores) on lower sales, somewhat offset by lower buying and distribution expenses allocated to cost of sales,” the retailer said. “Merchandise margins were consistent with the prior year.”
Quarterly adjusted results also included $217,000 in year-to-date expenses that relate to a Securities and Exchange Commission investigation that the company settled in September.
Based on the retailer’s quarterly results, the company said it expects “new stores should increase sales 3 to 4 percent above our comparable store sales increases for the fourth quarter.” And it also expects full-year gross margins “to be lower than the 29.3 percent reported in 2014, which reflects higher pre-opening occupancy costs for new stores opening in the first quarter of 2016 and a more promotional fall selling season due to the slow start.”
The retailer also said it would cease reporting monthly same-store sales.