Stein Mart Inc. was unable to translate a 7.5 percent increase in first-quarter sales into an improvement in its bottom line.
For the three months ended May 2, the Jacksonville, Fla.-based off-price specialty store reported net income of $13.6 million, or 29 cents a dilute share, 3.6 percent below the $14.1 million, or 31 cents, reported in the comparable quarter last year. On an adjusted basis, earnings per share were 31 cents, 3 cents below the analysts’ consensus estimate of 34 cents.
Top-line results surpassed Wall Street’s expectations. Sales were up 7.5 percent, to $353.5 million from $328.9 million, and comparable sales rose 4.8 percent, with growth in e-commerce sales adding 80 basis points to the total comp figure.
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The consensus estimate for revenues was $348 million.
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The company said traffic was up more than 2 percent during the quarter, marginally higher than the increase registered during the fourth quarter.
However, gross margin pulled back to 30.7 percent from 31.7 percent a year ago.
Inventories grew less rapidly than sales, rising 2.6 percent to $302.8 million from $295.2 million a year ago.
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Jay Stein, chief executive officer, said the firm was pleased with the performance of its new stores and expected sequential improvement in gross margin.
“Our inventories are in great shape,” Stein said. “As planned, our gross profit rate will improve as the year proceeds and our expenses will continue to leverage against our higher sales. This should be more evident beginning with our second-quarter results.”
Stein Mart cited higher markdowns on fall goods and the timing of markdowns to clear inventories for stores being closed or relocated in its discussion of the margin decline.
At the close of the quarter, Stein Mart operated 270 stores.
Shares shed 5.4 percent to $10.97 in morning trading on the Nasdaq Thursday.