Stein Mart Inc. concluded 2014 with its third-best quarterly comparable sales increase since 2010, helping it to fourth-quarter sales and profits that exceeded prior-year levels and analysts’ consensus estimates.
With comps up 5.6 percent in the quarter, net income for three months ended Jan. 31 rose 65.8 percent to $12.3 million, or 27 cents a diluted share, from $7.4 million, or 16 cents, in the year-ago period. Eliminating special items, such as expenses related to its 2012 financial restatement and associated Securities and Exchange Commission investigation, adjusted EPS was 32 cents, 3 cents above the consensus estimate.
Sales rose 7.3 percent to $387 million from $360.8 million in the year-ago quarter, beating Wall Street’s expectations for $386.2 million. Gross margin in the quarter dipped to 29.4 percent of sales from 30.9 percent in the 2013 period.
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The only superior comp performances in the last five years came in the second quarter of 2013, when comps were up 6.4 percent, and the fourth quarter of 2012, when they were up 6 percent.
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On a conference call with analysts Thursday morning, Greg Kleffner, chief financial officer of the company, said that sales increases in the quarter came from improvements in average unit retail prices, the number of transactions and average units per transaction, compounded by a 2 percent increase in traffic during the fourth quarter.
Additionally, the Jacksonville, Fla.-based off-price department store began to achieve leverage from its e-commerce efforts, which grew to 1.2 percent of sales in the quarter, or about $4.6 million.
“For 2015, we’re continuing to focus on driving traffic to our site,” he said. “As we’ve previously stated, our e-commerce business is a long-term initiative and it’s going to take several years of continued growth before this business is profitable.”
Stein Mart recently disclosed plans to open at least 11 stores this year, the first of which, in Cupertino, Calif., opened Thursday. It’s the first store in the San Francisco Bay Area for the company, which will also enter the suburban Detroit and Long Island markets this year.
Stein Mart, which operates 271 stores, plans to open at least 10 units a year for the foreseeable future.
For the full year, net income grew 5.3 percent to $26.9 million, or 59 cents a diluted share, while revenues expanded 4.3 percent to $1.32 billion. Comparable sales were up 3.3 percent.