When Stein Mart Inc. announced in September that David Stovall retired as CEO, it gave no reason for his departure. But during the company’s recent quarterly conference call, it was clear that Stovall and Chairman Jay Stein didn’t see eye-to-eye on the company’s strategy.
“I’m not satisfied with anything about the business right now,” said Stein, who was named interim CEO while Stein Mart looks for a permanent successor.
Stein thinks the company had strayed from its roots.
“We are trying to re-establish what made us successful in the first place,” Stein said in the conference call with analysts.
Stein’s grandfather founded the company with a store in Mississippi more than a century ago. While Stein didn’t start the company, he was the one who expanded it into a national chain of fashion stores after he took over in 1977. There are now 262 Stein Mart stores across the country.
He moved Stein Mart’s headquarters to Jacksonville in 1984 and took the company public in 1992. Stein stepped down as CEO in 2001 but has remained chairman and is the company’s largest stockholder, controlling 35.5 percent of the stock.
He has remained an integral part of the business and intends to continue that as the company searches for a new CEO.
“I’ve never been more passionate about Stein Mart and the opportunity we have to produce some outstanding results,” he said in the conference call.
“I can assure you I will continue to be an active resource after we complete our search,” he said.
Stein Mart on Nov. 17 reported a net loss of $1.8 million, or 4 cents per diluted share, for the third quarter ended Oct. 29. The quarter was hurt largely by a poor sales performance in August, when comparable store sales dropped by 7.5 percent. Comparable store sales fell 1.7 percent in September and turned positive in October with a 0.1 percent gain.
Stovall’s departure was announced two weeks after Stein Mart announced the big August sales decline.
Stein told analysts that he was unhappy with two strategic moves that impacted August sales. One was a shift in television advertising from national cable to local spot sales, which was “not a good decision.” The other was an attempt to target younger customers, rather than the more mature women who have been Stein Mart’s core customers.
“That was not productive as well,” he said.
Stein also wants to rely less on coupons to generate sales and entice customers with upscale merchandise at discount prices.
“Our everyday prices are the best prices they are going to find,” he said.
In a telephone interview last week, Stein did not want to comment on Stovall’s departure. But he said it’s going to take time to get the company back on track.
“It’s not going to be an overnight fix, but we’re going to fix it,” he said.
Stein Mart is searching outside the company for a new CEO, and Stein said it may take until midyear 2012 to find a replacement.
“We’ve got a lot of work to do and we’re not waiting for the new CEO to get here,” he said.
SunTrust Robinson Humphrey analyst Robin Murchison said Stein Mart is dealing with a difficult sales environment.
“Women’s is the laggard in all of retail right now,” she said.
Stovall had been given high marks by analysts for returning Stein Mart to profitability when he took over as CEO in December 2008. Murchison said she was surprised by his departure and did not know why he left.
“It’s not easy out there. Maybe things weren’t happening quick enough,” she said.
Despite the difficult economy, Murchison said Stein Mart will be able to “muddle through because the balance sheet is so strong.”
Stein noted that the company has no debt and plenty of available cash, so the company is in a “superb financial condition.” He also is encouraged by the company’s strategic direction now.
“We are an everyday low-price retailer and we’re going to get back to that,” he said.
Solar Energy Initiatives acknowledges move
Solar Energy Initiatives seemed to abandon its Ponte Vedra Beach headquarters office in the spring without a forwarding address. The company finally acknowledged that it has moved in its annual report filed last week with the Securities and Exchange Commission.
“The company has moved its operations from Ponte Vedra Beach, Florida to its current address at its Kingstree, South Carolina plant facility,” the report says. The company’s phone number is still listed on the report as the 904-area code number that has been disconnected since the spring.
The solar energy company reported a net loss of $4.9 million on revenue of $1.3 million for the fiscal year ended July 31.
“The company continues to experience cash flow difficulties that were exacerbated by the economy, the long development cycle of project development and lack of private investment capital. As a result, the company has reduced portions of its operations although it continues to pursue its business model,” the annual report said.
Solar Energy Initiatives also said in the report that it has an agreement, scheduled to close on Nov. 30, to acquire the assets of an Internet marketing firm. It also is working to restructure its debt and find more capital.
“There is no guarantee that we will be able to close the acquisition or the restructuring of the debt,” it said.
Trailer Bridge reports loss
After filing for Chapter 11 bankruptcy the previous week, Trailer Bridge Inc. last week reported a third-quarter net loss of $1.9 million. Revenue rose 6 percent to $31.1 million.
Jacksonville-based Trailer Bridge is confident it will be able to restructure its debt and emerge out of bankruptcy early in 2012. Co-CEOs William Gotimer and Mark Tanner said in the third-quarter news release that business trends are looking up.
“Through the first seven weeks in the current fourth quarter, we have seen marked improvement in all aspects of our operations, including higher revenues and volume increases.
We have achieved this in what has been a period of perceived uncertainty regarding our refinancing efforts,” they said.
Because of the bankruptcy filing, Trailer Bridge expects its stock to be delisted from the Nasdaq Stock Market today. But it expects it to continue trading in the over-the-counter market under its current ticker symbol, “TRBR.”
Atlantic Coast Financial faces delisting
Atlantic Coast Financial Corp. is also facing a possible delisting by Nasdaq. The parent company of Atlantic Coast Bank said in an SEC filing that it received a letter stating it is not in compliance with Nasdaq rules because the market value of its shares has fallen below $5 million.
Jacksonville-based Atlantic Coast Financial has about 2.7 million shares outstanding, and the stock has been trading at close to $1 recently.
The company can regain compliance if the market value of its shares rises back above $5 million in the next six months.
Global Axcess deal to add revenue
Global Axcess Corp., which operates automated teller machine and DVD kiosk networks, announced a $1.5 million deal last week to buy 238 ATMs from an unnamed convenience store chain.
The deal is expected to add about $2.4 million in revenue and $880,000 in earnings before interest, taxes, depreciation and amortization next year.
Jacksonville-based Global Axcess reported total revenue of $24.3 million and adjusted EBITDA of $3.5 million in the first nine months of this year.