NEW YORK — Unproductive stores pushed Stein Mart Inc. into the red for both the second quarter and first half, as the retailer said it is planning for a challenging third quarter while disengaging from a percentage-off coupon strategy.
For the three months ended Aug. 2, the loss was $2.8 million, or 7 cents a diluted share, versus income of $2.8 million, or 7 cents, in the year-ago quarter. Sales were down 2.5 percent to $303.5 million from $311.4 million, while same-store sales fell 5.8 percent.
Michael Fisher, president and chief executive officer, said in a statement, “Our business remained difficult during the quarter, and the stores we are closing further hampered our results. Without the impact of those stores, we would have shown an operating profit for both the second quarter and the first half.”
Stein Mart previously said it would close 16 underperforming stores this year. Four have already been shuttered, with eight slated for closure during the third quarter. The balance will be closed during the fourth quarter.
Fisher added the company recently revamped its marketing program, a key goal toward improving sales per square foot.
The company said in the statement that it has used percentage-off coupons in both its newspaper inserts and direct-mail offerings for the past three years. “What began as a strategy to attract new customers in a difficult retail environment has now run its course and is no longer supportive of Stein Mart’s unique selling proposition. As a result, Stein Mart has refrained from across-the-board coupons in its advertising and sales promotion since the last weekend in July,” the retailer said.
“Minimizing coupons will be difficult in the short run, but we believe the long-term success of Stein Mart is tied to consistently delivering fresh, exciting merchandise at outstanding values throughout the store, every day,” Fisher explained.
As a further step away from its reliance on coupons, Stein Mart is preparing a new advertising campaign that will be both image- and event-focused, using newspaper inserts, direct mail, radio and television. The retailer expects to roll out its first nationwide television campaign in time for the 2003 holiday season.
“Coupons will still occasionally be distributed,” Stein Mart said, “but will be primarily used to move clearance and sale items, in new store introductions and for targeted new customer prospecting.”
While comparable-store sales are expected to decline 10 percent to 12 percent in the third quarter, Stein Mart said the fourth quarter should be a profitable one, assuming an improving economy.
For the six months, the loss was $1.3 million, or 3 cents, against income of $14.1 million, or 34 cents, last year. Sales fell 5 percent to $634.1 million from $667.4 million.