Stein Mart Inc. (NASDAQ:SMRT) Q3 2019 Earnings Conference Call - Final Transcript

Nov 20, 2019 • 04:30 pm ET

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Stein Mart Inc. (NASDAQ:SMRT) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings, and welcome to the Stein Mart's Third Quarter 2019 Earnings Conference Call. In the course of this presentation, statements may be made as to certain matters that constitute forward-looking information that is subject to certain risks and uncertainties. Additional information concerning those factors that could cause actual results to differ from those in the forward-looking statements can be found in the company's fiscal 2018 Annual Report on the Form 10-K for the year ended February 2, 2019, and other filings with the SEC. At this time, all participants are in a listen-only mode. [Operator Instructions].

I would now like to turn the call over to Hunt Hawkins, CEO of Stein Mart.

Executive
Hunt Hawkins

Good afternoon, everyone. And welcome to Stein Mart's third quarter earnings call. I have with me today our President, MaryAnne Morin; our Chief Financial Officer, James Brown; and our Director of Investor Relations, Linda Tasseff. As usual, I'll begin with some opening comments, and then I'll turn the call over to MaryAnne. And after that, James will review our financial results.

Our third quarter sales trends improved significantly from the first half of the year. While essentially flat, comparable sales were 250 basis points better. The increase reflects traction from our fall initiatives with the most impactful beings the launch of our Kids department and a double-digit increase in omni sales. With the launch of Kids in August, now Stein Mart is once again a one-stop destination for the entire family. It's great to have Kids back in our stores and to see our customers response to the assortment.

We're pleased with early sales results and expect this business to continue to grow throughout the fourth quarter with an enhanced offering for the holiday selling season. Our third quarter omni sales growth was driven by expanded online assortments, drop ship capabilities and technology that has increased customer engagement and importantly conversion.

Ship from store fulfillment increased significantly during the quarter, largely due to the rollout of Smart Fulfillment. And of course, we're extremely proud of our September launch of Buy Online and Pick Up in Store, making Stein Mart the first US off-price retailer to offer this service. While still in its infancy, adoption is growing rapidly and we expect use of this service will increase as we build customer awareness.

We are pleased with the progress we've made with our initiatives during the third quarter, and look forward to the positive impact that they will have as they take greater hold in the fourth quarter and beyond. MaryAnne will expand on these initiatives in more detail in a moment.

Inventories are in good shape as we enter the fourth quarter with an appropriate mix of our regular price and clearance merchandise. Average restore inventories, excluding additional amounts for kids, are comparable to last year's reduced levels, which were 20% lower than the prior year. This is a result of our strong inventory management with a focus on continually flowing receipts and an improved markdown cadence.

For the quarter,