Image source: Stein Mart, Inc.
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Shares of Stein Mart Inc. (NASDAQ: SMRT) were down 20% as of 2 p.m. Thursday, after the designer fashion, accessories, and home decor retailer announced weaker-than-expected third-quarter 2016 results.
Quarterly revenue fell 0.4% year over year, to $299.5 million, including a comparable-store sales decline of 4.6%. That translated to a net loss of $11 million, or $0.24 per diluted share, compared to a net loss of $0.2 million, or $0.01 per share in last year's third quarter.
Analysts, on average, were anticipating Stein Mart would turn in a narrower net loss of $0.15 per share on higher revenue of $304.1 million.
"We introduced new marketing and promotional changes, as well as new merchandising strategies, during the quarter which were not embraced by our customer," explained Stein Mart interim CEO Hunt Hawkins, who took the helm after former CEO Dawn Robertson resigned in September. "[...] As a result, we took significant markdowns to liquidate spring inventories."
As such, Stein Mart told investors it expects full-year gross profit to be lower than in 2016, compared to previous guidance for 2016 gross profit to be roughly 50 basis points higher than in 2015. Stein Mart also anticipates selling, general, and administrative expenses will be slightly below its prior estimate of $360 million for the year.
"As we look forward to the fourth quarter," Hawkins continued, "we have returned our marketing and promotions to what has worked in the past as we explore a better strategy, but the challenging retail environment will likely continue to drive higher markdowns as we diligently work to enter 2017 with light inventories."
To Stein Mart's credit, Hawkins also noted new fall stores are performing better than expected. But after an already painful third quarter, he doesn't paint an encouraging picture of the crucial holiday season, as the company searches for a more effective approach to succeed in this tough market. As such, it's no surprise to see investors taking a big step back today.
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