Stein Mart Reports Solid 3rd Quarter; Jacksonville-Based Retailer Blames Weather for Lukewarm Start to Quarter; Announces SEC Inquiry into Accounting

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Byline: MARK BASCH

Stein Mart Inc. Thursday reported improved third-quarter earnings despite hurricane-related disruptions to many of its stores. But the Jacksonville-based fashion retailer also said the fourth quarter got off to a slow start and that the company received an inquiry from the Securities and Exchange Commission about some of its accounting procedures.

Stein Mart said the SEC is seeking information related to its accounting policies for inventory valuation and vendor allowances, or discounts negotiated for certain products, since February 2003. The SEC has advised the company that the inquiry should not be construed as an indication that any legal violations have occurred.

In a conference call with analysts, Chief Executive Officer Michael Fisher said an internal review of Stein Mart's accounting practices found no material errors.

"We feel comfortable with the review of our accounting policies and procedures that were conducted prior to the SEC inquiry," he said. Fisher said he could not comment further on the matter.

As for earnings, Stein Mart reported net income of $1.4 million, or 3 cents per diluted share, for the third quarter ended Oct. 29. Stein Mart had recorded net losses in the third quarter for the previous four years in a period when the company gears up for the holiday season.

"This year was even more of an uphill battle with the hurricane activity all along the Gulf and Atlantic coast," Fisher said.

Stein Mart estimates it lost $5.7 million in sales in the quarter because of stores that were closed for at least one day. Total sales in the quarter rose 1.8 percent to $336.5 million and comparable store sales rose 0.4 percent.

The company said one of its four New Orleans stores remains closed and won't reopen until January, but another New Orleans store that had been closed since August reopened this week. …