Stein Mart Leads All Nasdaq Stocks with 73% Rise

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Thursday, March 15, 2018

After months of seeing its stock price beaten down, discount retailer Stein Mart Inc. (NASDAQ:SMRT) is rallying bigly on Thursday, leading all Nasdaq-listed issues in percentage gain following a solid report of the fourth quarter and fiscal year ended February 3, 2018. Like so many of its peers, Stein Mart has struggled to hang onto market share or develop an online presence strong enough to offset lower receipts at its brick-and-mortar stores as consumers continue to turn to the web and services like Amazon.com to make purchases.
For the latest quarter, sales were basically flat compared to the year prior quarter at $384.9 million. Total sales for the full year were off by 3.1% at $1.32 billion. Comparable store sales, a key growth metric for retailers comparing sales at stores open at least one year, were down by 5.4% and 6.2% for the quarter and year, respectively.
The shiny side of the coin came from gross profits, operating income and outlook (see below). Gross profit for the quarter was $102.4 million, or 26.6% of sales, versus $87.9 million, or 22.8% of sales, in the year prior quarter. Operating income improved to $4.1 million for the quarter, reversing from an operating loss of $8.1 million a year earlier. Excluding non-cash pretax asset impairment charges, adjusted operating income for the fourth quarter was $7.3 million, up $14.3 million from the adjusted operating loss of $7.0 million in
Net loss for the quarter was shaved to about $400,000, or 1 cent per share, compared to a net loss of $4.9 million, or 11 cents per share, in Q4 fiscal 2016.
Looking ahead at the first half of fiscal 2018, management has a relatively rosy outlook, calling for flat to single-digit increases in comparable sales (after contraction last quarter and across fiscal 2017), gross profit expansion by about 200 basis points and lower sales, general and administrative expenses. In aggregate, the company sees first half operating income above $8 million, a substantial improvement from the $11.5 million operating loss in the first half of last year.
Investors are cheering the report, sending shares Thursday morning as high as $2.45 (the highest since the start of last May) after closing Wednesday at only 77 cents. The stock hasn't held all the gains, as with about two hours left in the trading day shares have slipped back to $1.33, still representing a gain of 72.73% so far on the day.

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