<PAGE> 1
Filed Pursuant to Rule 424(b)(4)
Registration No. 333-10895
PROSPECTUS
3,850,000 SHARES
(LOGO) STEIN MART(R)
COMMON STOCK
The shares of Common Stock of Stein Mart, Inc. ("Stein Mart" or the
"Company") offered hereby (the "Offering") are being sold by the selling
stockholders named herein (the "Selling Stockholders"). See "Principal and
Selling Stockholders and Stock Ownership of Management." The Company will not
receive any of the proceeds from the sale of the shares offered hereby. The
Company's Common Stock is traded on The Nasdaq Stock Market's National Market
(the "Nasdaq National Market") under the symbol "SMRT." On September 16, 1996,
the last reported sale price of the Common Stock on the Nasdaq National Market
was $22.50 per share. See "Price Range of Common Stock and Dividend Policy."
SEE "RISK FACTORS" APPEARING ON PAGES 5 THROUGH 7 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT(1) STOCKHOLDERS(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share......................... $21.75 $.761 $20.989
- -------------------------------------------------------------------------------------------------
Total(3).......................... $83,737,500 $2,930,813 $80,806,688
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $200,000 payable by the Selling
Stockholders.
(3) One of the Selling Stockholders named herein has granted the Underwriters a
30 day over-allotment option to purchase up to 577,500 additional shares of
Common Stock on the same terms and conditions as set forth above. If all
such shares are purchased by the Underwriters, the total Price to Public
will be $96,298,125, the total Underwriting Discount will be $3,370,434,
and the total Proceeds to Selling Stockholders will be $92,927,691. See
"Underwriting."
---------------------
The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale and to the Underwriters' right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about September 20, 1996.
---------------------
J.C. Bradford & Co.
NatWest Securities Limited
Wasserstein Perella Securities, Inc.
September 17, 1996
<PAGE> 2
Omitted Graphic and Image Material
The following is a narrative description of graphic and image material
contained in the printed version of the prospectus which has been omitted from
the version filed electronically.
Inside front cover:
1. The heading "Stein Mart - Map of Store Locations."
2. A map of the Continental United States with dots representing the
location of each of the 110 Stein Mart stores open as of August 27, 1996,
as well as dots indicating stores to be completed during the remainder of
1996.
Gatefold layout behind inside front cover:
1. Five pictures (clockwise from the upper left) depicting (i) an interior
view of the "Boutique" section of a store, (ii) an interior view of
ladies' merchandise, (iii) an exterior view of a store front, (iv) an
interior view of ladies' sportswear and (v) an interior view of the
"Exterior" department.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. SEE "UNDERWRITING."
FOR UNITED KINGDOM PURCHASERS: THE COMMON STOCK MAY NOT BE OFFERED OR SOLD
IN THE UNITED KINGDOM OTHER THAN TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE
THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS, WHETHER AS
PRINCIPAL OR AGENT (EXCEPT IN CIRCUMSTANCES THAT DO NOT CONSTITUTE AN OFFER TO
THE PUBLIC WITHIN THE MEANING OF THE PUBLIC OFFERS OF SECURITIES REGULATIONS
1995 OR THE FINANCIAL SERVICES ACT 1986), AND THIS PROSPECTUS MAY ONLY BE ISSUED
OR PASSED ON TO ANY PERSON IN THE UNITED KINGDOM IF THAT PERSON IS OF A KIND
DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES ACT 1986 (INVESTMENT
ADVERTISEMENTS) (EXEMPTIONS) ORDER 1995 OR IS A PERSON TO WHOM THE PROSPECTUS
MAY OTHERWISE LAWFULLY BE PASSED ON.
2
<PAGE> 3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere or incorporated by reference in this Prospectus. Except as
otherwise indicated, all information in this Prospectus assumes no exercise of
the Underwriters' over-allotment option. All references in this Prospectus to
the "Company" or "Stein Mart" refer to Stein Mart, Inc., a Florida corporation.
THE COMPANY
Stein Mart is a 111-store retailer offering fashionable, current-season,
primarily branded merchandise comparable in quality and presentation to that of
traditional department and fine specialty stores at prices typically 25% to 60%
below those regularly charged by such stores. The Company's focused assortment
of merchandise features moderate to designer brand-name apparel for women, men
and children, as well as accessories, gifts, linens, shoes and fragrances.
During the last five years, the Company has more than doubled the number of
Stein Mart stores from 45 in 15 states at year-end 1991 to 111 in 20 states at
September 16, 1996.
The Company's strategy is to (i) increase the total number of stores by
opening new stores in selected markets across the country, (ii) maintain the
quality of merchandise, store appearance, merchandise presentation and customer
service levels typical of traditional department and fine specialty stores, and
(iii) offer value pricing to its customers through its vendor relationships,
tight control over corporate and store expenses and efficient management of
inventory.
Stein Mart opened 20 new stores in 1995, and plans to open 24 new stores in
1996 (of which 12 were open as of September 16, 1996), 25 to 28 in 1997, and
approximately 25 to 30 in each of the next several years
thereafter. The Company has made substantial investments in information systems,
store facilities and management personnel to support its continued expansion.
Stores will be added in new metropolitan markets, including those markets with
the potential for multiple stores, and in existing markets to capture
advertising and management operating efficiencies. The Company locates its
stores, which average approximately 38,000 gross square feet, primarily in
neighborhood shopping centers, ideally with co-tenants that cater to a similar
customer base.
THE OFFERING
Common Stock offered by the
Selling Stockholders.......... 3,850,000 shares
Common Stock outstanding
before the Offering........... 22,593,767 shares(1)
Common Stock outstanding after
the Offering.................. 22,893,767 shares(2)
Use of proceeds............... The Company will not receive any proceeds from
the sale of Common Stock offered hereby.
Nasdaq symbol................. SMRT
- ---------------
(1) Excludes 2,511,657 shares of Common Stock reserved for issuance upon
exercise of options outstanding under the Company's stock option plans at
August 26, 1996.
(2) Includes the sale in the Offering by one of the Selling Stockholders of
300,000 shares of Common Stock to be issued upon the exercise of options
under the Company's Employee Stock Plan, thereby reducing to 2,211,657 the
number of shares of Common Stock reserved for issuance upon exercise of
options outstanding under the Company's stock option plans.
3
<PAGE> 4
SUMMARY FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED(1)
-------------------------------------------- --------------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1993 1994 1995 1995 1996
------------ ------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................... $342,730 $419,220 $496,006 $204,239 $257,917
Income from operations.............. 27,920 31,213 30,408 6,925 12,383
Net income.......................... 16,682 18,419 17,758 3,968 7,148
Net income per share(2)............. $ 0.70 $ 0.78 $ 0.76 $ 0.17 $ 0.31
Weighted average shares
outstanding(2).................... 23,895 23,721 23,454 23,586 23,430
SELECTED OPERATING DATA:
Stores open at end of period........ 66 80 100 89 109
Average sales per store
(000's)(3)(4)..................... $ 6,429 $ 6,335 $ 6,129 $ 2,700 $ 2,708
Average sales per square foot of
selling area(4)(5)................ $ 205 $ 196 $ 189 $ 83 $ 84
Comparable store net sales increase
(decrease)(6)..................... 2.3% 2.4% (0.7)% (2.6)% 6.8%
</TABLE>
<TABLE>
<CAPTION>
JUNE 29,
1996
-----------
(UNAUDITED)
<S> <C>
BALANCE SHEET DATA:
Working capital.................................................................. $ 93,933
Total assets..................................................................... 196,406
Long-term debt, less current portion............................................. 28,527
Total stockholders' equity....................................................... 106,647
</TABLE>
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(1) The business of the Company is seasonal, and results for any period within a
fiscal year are not necessarily indicative of the results that may be
achieved for a full fiscal year. See "Risk Factors -- Seasonality and
Quarterly Fluctuations."
(2) A three-for-two stock split in the form of a 50% stock dividend was effected
on September 10, 1993. Weighted average shares outstanding and net income
per share for all periods presented reflect the effect of this stock split.
(3) Average sales per store (including sales from leased shoe and fragrance
departments) for each period have been calculated by dividing (a) total
sales during such period by (b) the number of stores open at the end of
such period, in each case exclusive of stores open for less than 12 months.
(4) The average sales per store and average sales per square foot of selling
area decreased from 1992 through 1995, primarily as a result of the
Company's store base including a higher proportion of younger stores as a
percentage of total stores. The Company's more mature stores historically
have produced higher average sales and average sales per square foot than
its younger stores. Accordingly, management believes that as stores mature,
their average sales and average sales per square foot should increase.
(5) Includes sales and selling area of the leased shoe and fragrance
departments. Selling area excludes administrative, receiving and storage
areas.
(6) Comparable store information for a period reflects stores open throughout
that period and for the full prior year. Stores remodeled or relocated
continue to be included if no more than 20% additional square footage is
added, the store continues to serve the same market, and a same or similar
market strategy continues.
4
<PAGE> 5
RISK FACTORS
Investors should carefully consider the following matters in connection
with an investment in the Common Stock in addition to the other information
contained or incorporated by reference in this Prospectus. Information contained
or incorporated by reference in this Prospectus may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may," "will," "expect," "anticipate," "estimate" or "continue" or the
negative thereof or other variations thereon or comparable terminology. The
following matters constitute cautionary statements identifying important factors
with respect to any such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
reflected in any such forward-looking statements.
COMPETITIVE NATURE OF THE RETAIL INDUSTRY
The Company faces intense competition for customers, access to quality
merchandise and suitable store locations from traditional department stores,
specialty retailers and regional and national off-price retail chains. Many of
these competitors are larger and have significantly greater financial and
marketing resources than the Company. In addition, many department stores have
become more promotional and have reduced their price points, and certain finer
department stores and certain of the Company's vendors have opened outlet stores
which offer off-price merchandise in competition with the Company. Accordingly,
the Company may face periods of intense competition in the future which could
have a material adverse effect on its results of operations. See
"Business -- Competition."
EXPANSION STRATEGY
The Company expects to open a total of 24 new stores in 1996 (of which 12
were open as of September 16, 1996), 25 to 28 in 1997, and approximately 25 to
30 in each of the next several years thereafter. The Company's future operating
results will depend to a substantial extent upon its ability to open and operate
new stores successfully. Expanding into new markets may present competitive
challenges that are different than those currently encountered by the Company in
its existing markets. In addition, the Company's ability to open new stores on a
timely basis will depend upon a number of factors, including the ability to
properly identify and enter new markets, locate suitable store sites, negotiate
acceptable lease terms, construct or refurbish sites, hire, train and retain
skilled managers and personnel, and other factors, some of which may be beyond
the Company's control. There can be no assurance that the Company's new stores
will be profitable or achieve sales and profitability levels comparable to the
Company's existing stores. Assuming the Company's planned expansion occurs as
anticipated, the Company's store base will include an increased proportion of
younger stores, which historically have produced lower average sales per store
than more mature stores. Expansion within existing markets could adversely
affect the financial performance of the Company's existing stores within those
markets, negatively affecting comparable store net sales. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- General" and "Business -- Expansion Strategy."
To manage its expansion, the Company will need to evaluate continually the
adequacy of its existing systems and procedures, including financial controls,
information systems and store management. There can be no assurance that the
Company will anticipate all of the changing demands that its expanding
operations will impose on its existing infrastructure. The failure of the
Company's infrastructure to support its expansion program could adversely affect
its future operating results. In addition, the Company currently intends to
finance its store expansion program primarily through its operating cash flow.
If the Company does not generate sufficient operating cash flow to support its
store expansion program or cannot obtain financing on acceptable terms, the
Company may not achieve its targets for opening new stores. See "Business --
Expansion Strategy."
5
<PAGE> 6
SENSITIVITY TO ECONOMIC CONDITIONS; CHANGING CONSUMER PREFERENCES
The retail apparel business is dependent upon the level of consumer
spending, which may be adversely affected by an economic downturn or a decline
in consumer confidence. An economic downturn, particularly in the Southeast and
other regions in which the Company derives a significant portion of its net
sales, could have a material adverse effect on the Company's results of
operations. In addition, the Company's success depends in part upon its ability
to anticipate and respond to changing consumer preferences and fashion trends in
a timely manner. Although the Company attempts to stay abreast of the fashion
tastes of its customers and provide merchandise that satisfies customer demand,
poor merchandise selection or changes in fashion trends could result in
overstocked inventory and/or higher markdowns which could have a material
adverse effect on the Company's results of operations. See
"Business -- Merchandising" and "Business -- Competition."
ADEQUATE SOURCES OF MERCHANDISE SUPPLY; VENDOR RELATIONSHIPS
The Company's business is dependent to a significant degree upon its
ability to purchase designer and other brand-name merchandise at prices
substantially below normal wholesale. The Company does not have any long-term
supply contracts with its vendors. The loss of certain key vendors or the
failure to establish and maintain relationships with popular vendors could have
an adverse effect on the Company's results of operations. The Company believes
it currently has adequate sources of designer and brand-name merchandise;
however, there can be no assurance, especially given the Company's expansion
plans, that the Company will be able to acquire sufficient quantities and an
appropriate mix of such merchandise at acceptable prices.
SEASONALITY AND QUARTERLY FLUCTUATIONS
The Company's business is affected by the seasonal pattern common to most
retailers. Historically, its highest net sales and profit levels occur during
the fourth quarter, which includes the holiday selling season. During the past
three years, approximately 37% of the Company's annual net sales and
approximately 64% of its income from operations were generated during the fourth
quarter. The Company's operating results depend significantly upon net sales
generated during the fourth quarter, and any factor that negatively impacts this
selling season could adversely affect the Company's results of operations for
the entire year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General."
The Company's quarterly results of operations also may fluctuate materially
depending on, among other things, the timing of new store openings, net sales
contributed by new stores, adverse weather conditions, shifts in timing of
certain holidays and changes in the Company's merchandise mix. For instance,
Thanksgiving Day in 1996 is one week later than in 1995 and 1994 which shortens
the 1996 holiday shopping season. Because of these types of factors, the results
of operations for any quarter are not necessarily indicative of the results that
may be achieved for a full fiscal year or any future quarter.
RELIANCE ON KEY PERSONNEL
The Company believes that its continued success will depend to a
significant extent upon the efforts and abilities of its senior executives, and
the loss of the services of any single one of such executives could have a
material adverse effect upon the Company. These executives are Jay Stein,
Chairman of the Board and Chief Executive Officer, John H. Williams, Jr.,
President and Chief Operating Officer, Mason Allen, Senior Executive Vice
President and Chief Merchandising Officer, Michael D. Fisher, Executive Vice
President, Stores, James G. Delfs, Senior Vice President, Finance and Chief
Financial Officer, and D. Hunt Hawkins, Senior Vice President, Human Resources.
The Company's continued success is also dependent upon its ability to attract
and retain qualified employees to meet the Company's needs, especially given the
Company's expansion plan.
CONTROLLING STOCKHOLDER
Following the completion of the Offering, Jay Stein will beneficially own
42.5% of the outstanding Common Stock (39.9% if the Underwriters exercise their
over-allotment option). While not holding a majority of the Common Stock, Mr.
Stein will retain sufficient voting power to have working control with
6
<PAGE> 7
respect to the election of the Board of Directors of the Company or the outcome
of corporate transactions or other matters submitted to the stockholders for
approval. See "Principal and Selling Stockholders and Stock Ownership of
Management."
SHARES ELIGIBLE FOR FUTURE SALE
The market price of the Common Stock could be adversely affected by the
availability for sale of additional Common Stock beneficially owned by the
Company's principal stockholder, Jay Stein. The Selling Stockholders (consisting
of the Stein Ventures Limited Partnership and John H. Williams, Jr.), Jay Stein,
individually, and the Company have agreed not to sell shares of Common Stock for
a period of 180 days following the effective date of the Registration Statement
of which this Prospectus is a part without the prior written consent of the
representatives of the Underwriters. In addition, a charitable foundation (which
owns 314,100 shares of Common Stock) over which Mr. Stein has sole voting and
investment power as trustee has agreed not to sell shares of Common Stock for a
period of 90 days following the effective date of the Registration Statement
without the prior written consent of the representatives of the Underwriters.
After expiration of such 180 and 90-day periods, respectively, such shares may
be sold in accordance with the volume and other limitations of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
or sold upon registration under the Securities Act without regard to the volume
limitations of Rule 144. The sale of a substantial number of such shares could
adversely affect the market price of the Common Stock. See "Principal and
Selling Stockholders and Stock Ownership of Management" and "Underwriting."
VOLATILITY OF MARKET PRICE
From time to time after the Offering, there may be significant volatility
in the market price for the Common Stock. In addition to quarterly operating
results of the Company, changes in earnings estimates by analysts, general
conditions in the economy, the financial markets or the retail industry, or
other developments affecting the Company could cause the market price of the
Common Stock to fluctuate substantially. In addition, the stock market recently
has experienced extreme price and volume fluctuations. This volatility has had a
significant effect on the market prices of securities issued by many companies
for reasons unrelated to their operating performance.
7
<PAGE> 8
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares of Common Stock offered hereby.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is listed on the Nasdaq National Market under
the symbol "SMRT." The following table sets forth, for the periods indicated,
the high and low sale prices for the Common Stock as reported by the Nasdaq
National Market:
<TABLE>
<CAPTION>
HIGH LOW
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<S> <C> <C>
1994:
First Quarter........................................................ $20.25 $15.25
Second Quarter....................................................... 21.50 16.50
Third Quarter........................................................ 18.00 13.25
Fourth Quarter....................................................... 18.25 12.25
1995:
First Quarter........................................................ $15.00 $ 9.25
Second Quarter....................................................... 13.88 9.88
Third Quarter........................................................ 14.75 10.50
Fourth Quarter....................................................... 13.13 10.50
1996:
First Quarter........................................................ $15.25 $ 8.50
Second Quarter....................................................... 20.75 14.38
Third Quarter (through September 16, 1996)........................... 24.75 15.63
</TABLE>
On September 16, 1996, the last reported sale price for the Common Stock on
the Nasdaq National Market was $22.50 per share. On August 23, 1996, there were
approximately 1,050 stockholders of record of the Common Stock.
The Company anticipates that all future earnings will be retained for the
development of its business. The Company does not anticipate paying dividends on
its Common Stock in the foreseeable future. The payment of future dividends will
be at the sole discretion of the Company's Board of Directors and will depend
on, among other things, future earnings, capital requirements, the general
financial condition of the Company and general business conditions.
8
<PAGE> 9
CAPITALIZATION
The following table sets forth the total capitalization of the Company at
June 29, 1996. No "as adjusted" column is provided as the Offering will have no
effect on the Company's capitalization.
<TABLE>
<CAPTION>
JUNE 29, 1996
----------------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C>
Long-term debt:
Notes payable to bank................................................... $ 28,527
Stockholders' equity:
Preferred Stock, $0.01 par value; 1,000,000 shares authorized, no shares
outstanding.......................................................... --
Common Stock, $0.01 par value; 50,000,000 shares authorized, 22,172,171
shares issued and outstanding(1)..................................... 222
Paid-in capital......................................................... 34,220
Retained earnings....................................................... 72,205
--------
Total stockholders' equity...................................... 106,647
--------
Total capitalization.......................................... $135,174
========
</TABLE>
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(1) Excludes 2,933,253 shares of Common Stock reserved for issuance upon the
exercise of options outstanding under the Company's stock option plans as
of June 29, 1996.
9
<PAGE> 10
SELECTED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
The following selected financial data for the five years ended December 30,
1995, are derived from the audited financial statements of the Company, which
have been audited by Price Waterhouse LLP, independent accountants, and which
are incorporated herein by reference. The selected financial data as of and for
the six months ended July 1, 1995 and June 29, 1996 are derived from unaudited
financial statements as of such dates and for such periods, but, in the opinion
of management, include all adjustments (consisting of only normal recurring
entries) necessary for a fair presentation of the financial position and the
results of operations for these periods. Operating results for the six months
ended June 29, 1996 are not necessarily indicative of the results that may be
expected for the entire year ending December 28, 1996.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED(1)
------------------------------------------------------------------------ --------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1991 1992 1993 1994 1995 1995 1996
------------ ------------ ------------ ------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................. $225,389 $278,254 $342,730 $419,220 $496,006 $204,239 $257,917
Cost of merchandise
sold.................... 164,879 201,129 247,334 305,672 366,781 152,023 190,234
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 60,510 77,125 95,396 113,548 129,225 52,216 67,683
Selling, general and
administrative
expenses................ 48,392 58,064 71,468 87,397 105,195 48,038 58,919
Other income, net......... 2,881 3,234 3,992 5,062 6,378 2,747 3,619
-------- -------- -------- -------- -------- -------- --------
Income from
operations............ 14,999 22,295 27,920 31,213 30,408 6,925 12,383
Interest expense, net..... 2,238 852 464 744 1,289 420 665
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes................... 12,761 21,443 27,456 30,469 29,119 6,505 11,718
Provision for income
taxes................... 207 7,522 10,774 12,050 11,361 2,537 4,570
-------- -------- -------- -------- -------- -------- --------
Net income................ $ 12,554 $ 13,921 $ 16,682 $ 18,419 $ 17,758 $ 3,968 $ 7,148
======== ======== ======== ======== ======== ======== ========
Net income per share
(2)..................... -- -- $ 0.70 $ 0.78 $ 0.76 $ 0.17 $ 0.31
Pro forma net income
(3)..................... $ 7,942 $ 13,293 -- -- -- -- --
======== ========
Pro forma net income per
share(2)(3)............. $ 0.44 $ 0.61 -- -- -- -- --
Weighted average shares
outstanding (2)......... 18,242 21,785 23,895 23,721 23,454 23,586 23,430
SELECTED OPERATING DATA:
Stores open at end of
period.................. 45 51 66 80 100 89 109
Average sales per store
(000's)(4)(5)........... $ 5,901 $ 6,452 $ 6,429 $ 6,335 $ 6,129 $ 2,700 $ 2,708
Average sales per square
foot of selling
area(5)(6).............. $ 186 $ 206 $ 205 $ 196 $ 189 $ 83 $ 84
Comparable store net sales
increase
(decrease)(7)........... 4.7% 10.9% 2.3% 2.4% (0.7)% (2.6)% 6.8%
BALANCE SHEET DATA (AT
PERIOD END):
Working capital........... $ 27,269 $ 35,751 $ 42,489 $ 53,668 $ 63,685 $ 75,093 $ 93,933
Total assets.............. 69,884 87,198 116,401 154,039 173,517 158,406 196,406
Long-term debt, less
current portion......... 11,953 1 1 1 1 21,830 28,527
Total stockholders'
equity(8)............... 31,534 50,176 66,858 85,277 101,436 88,509 106,647
</TABLE>
10
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(1) The business of the Company is seasonal, and results for any period within a
fiscal year are not necessarily indicative of the results that may be
achieved for a full fiscal year. See "Risk Factors -- Seasonality and
Quarterly Fluctuations."
(2) A three-for-two stock split in the form of a 50% stock dividend was effected
on September 10, 1993. Weighted average shares outstanding and net income
per share for all periods presented reflect the effect of this stock split.
(3) From February 1, 1987 until its initial public offering in April 1992, the
Company was treated for federal income tax purposes as an S Corporation and
elected S Corporation status in all but three states in which it operated
during the period. The pro forma information has been computed as if the
Company were subject to corporate federal and state income taxes for all
periods presented, based on the tax laws in effect during the respective
periods.
(4) Average sales per store (including sales from leased shoe and fragrance
departments) for each period have been calculated by dividing (a) total
sales during such period by (b) the number of stores open at the end of
such period, in each case exclusive of stores open for less than 12 months.
(5) The average sales per store and average sales per square foot of selling
area decreased from 1992 through 1995, primarily as a result of the
Company's store base including a higher proportion of younger stores as a
percentage of total stores. The Company's more mature stores historically
have produced higher average sales and average sales per square foot than
its younger stores. Accordingly, management believes that as stores mature,
their average sales and average sales per square foot should increase.
(6) Includes sales and selling area of the leased shoe and fragrance
departments. Selling area excludes administrative, receiving and storage
areas.
(7) Comparable store information for a period reflects stores open throughout
that period and for the full prior year. Stores remodeled or relocated
continue to be included if no more than 20% additional square footage is
added, the store continues to serve the same market, and a same or similar
market strategy continues.
(8) Net of historical stockholder distributions during periods the Company was
an S Corporation.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion includes certain forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties, including without limitation, those discussed in "Risk Factors."
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this Prospectus will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
GENERAL
The Company experienced significant growth in number of stores and net
sales over the three years ended December 30, 1995. During this period, the
number of stores increased from 51 to 100, and annual net sales increased from
$342.7 million to $496.0 million. However, average sales per square foot of
selling area decreased during this period from $205 in 1993 to $189 in 1995
because of the increasing proportion of younger stores as a percentage of total
stores. The Company's more mature stores historically have produced higher
average sales and average sales per square foot than its younger stores.
Accordingly, management believes that as stores mature, their average sales and
average sales per square foot should increase. As the Company expands its store
base pursuant to its current expansion plan, average sales per store and per
square foot may continue to decrease as the proportion of younger stores
continues to increase.
The Company's business is seasonal in nature with the fourth quarter, which
includes the holiday selling season, historically accounting for the largest
percentage of the Company's net sales and operating income in any given year.
During the past three years, the fourth quarter accounted for an average of
approximately 37% of the Company's annual net sales and approximately 64% of the
Company's income from operations. Accordingly, selling, general and
administrative expenses are typically higher as a percent of net sales during
the first three quarters of each year.
In 1995, the Company changed its fiscal year from a calendar year to a
52-53 week fiscal year ending on the Saturday closest to December 31. The change
did not have a material effect on the Company's 1995 operating results. The
Company's 1996 fiscal year will end on December 28.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of the Company's net sales represented by each line item presented:
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
------------------------------------------ ------------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1993 1994 1995 1995 1996
------------ ------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C>
Net sales.......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold........... 72.2 72.9 73.9 74.4 73.8
----- ----- ----- ----- -----
Gross profit..................... 27.8 27.1 26.1 25.6 26.2
Selling, general and administrative
expenses......................... 20.9 20.8 21.2 23.5 22.8
Other income, net.................. 1.2 1.2 1.2 1.3 1.4
----- ----- ----- ----- -----
Income from operations........... 8.1 7.5 6.1 3.4 4.8
Interest expense, net.............. 0.1 0.2 0.2 0.2 0.3
----- ----- ----- ----- -----
Income before income taxes......... 8.0 7.3 5.9 3.2 4.5
Net income......................... 4.9% 4.4% 3.6% 1.9% 2.8%
</TABLE>
12
<PAGE> 13
Six Months Ended June 29, 1996 Compared to Six Months Ended July 1, 1995
Ten stores were opened and one store was closed during the first six months
of 1996 and nine stores were opened during the first six months of 1995,
bringing the total number of stores to 109 at June 29, 1996 and 89 at July 1,
1995.
Net sales for the first six months of 1996 were $257.9 million, a 26.3%
increase over net sales of $204.2 million for the first six months of 1995. The
10 stores opened during the first six months of 1996 contributed $13.1 million
to net sales, as compared to the $10.1 million contributed to net sales by the
nine stores opened during the first six months of 1995. Comparable store net
sales for the first six months of 1996 increased by 6.8% compared to the first
six months of 1995.
Gross profit for the first six months of 1996 was $67.7 million, or 26.2%
of net sales, compared to $52.2 million, or 25.6% of net sales, for the first
six months of 1995. The increase in gross profit as a percentage of net sales
resulted primarily from a slight improvement in markup and leveraging of
occupancy costs.
Selling, general and administrative expenses were $58.9 million, or 22.8%
of net sales, for the first six months of 1996, and $48.0 million, or 23.5% of
net sales, for the first six months of 1995. The $10.9 million increase in
selling, general and administrative expenses was primarily due to the additional
stores in operation during the first six months of 1996 as compared to the
number of stores in operation during the first six months of 1995. The decrease
in selling, general and administrative expenses as a percentage of net sales
resulted from leveraging of selling, general and administrative expenses.
Management does not anticipate the recent legislation increasing the minimum
wage will materially affect the Company's payroll expense during the balance of
1996 or in 1997.
Other income, primarily from in-store leased shoe and fragrance
departments, increased to $3.6 million for the first six months of 1996 compared
to $2.7 million for the first six months of 1995. The increase resulted from the
additional stores in operation during the first six months of 1996 and from the
fragrance department, which became a leased operation at the beginning of the
second quarter of 1995.
Interest expense was $665,000 for the first six months of 1996 and $420,000
for the first six months of 1995. The increase in interest expense resulted from
increased borrowings for working capital for the additional stores, partially
offset by lower interest rates.
The effective tax rate of 39.0% remained constant for the first six months
of both years.
Net income for the first six months of 1996 was $7.1 million, or $0.31 per
share, compared to net income of $4.0 million, or $0.17 per share, for the first
six months of 1995.
Fiscal Year 1995 Compared to Fiscal Year 1994
Net sales of $496.0 million were achieved in 1995, an increase of $76.8
million, or 18.3%, compared to net sales of $419.2 in 1994. The 20 new stores
opened in 1995 contributed $50.4 million to net sales. Comparable store net
sales in 1995 decreased by 0.7% from 1994.
Gross profit for 1995 was $129.2 million, an increase of $15.7 million over
the gross profit of $113.5 million for 1994. Gross profit as a percentage of net
sales decreased 1.0% to 26.1% from 27.1% in the prior fiscal year. This decrease
was primarily the result of increased markdowns reflecting a higher level of
promotional activity, notably in the fourth quarter, and a slight increase in
occupancy costs as a percentage of net sales due to lower than expected sales.
Selling, general and administrative expenses were $105.2 million, or 21.2%
of net sales, for 1995, as compared to $87.4 million, or 20.8% of net sales, for
1994. The increase in such expenses was primarily due to the additional stores
in operation during 1995 as compared to the number of stores in operation in
1994. The increase in selling, general and administrative expenses as a
percentage of net sales was due to lower sales productivity. Included in
selling, general and administrative expenses were pre-opening expenses
(primarily advertising, stocking and training) for the 20 stores opened in 1995
in the amount of $2.3 million and for the 14 stores opened in 1994 in the amount
of $1.7 million.
13
<PAGE> 14
Other income, primarily from in-store leased shoe and fragrance
departments, amounted to $6.4 million in 1995, an increase of $1.3 million over
the $5.1 million for 1994. The increase was due to the addition of 20 stores in
1995 and the change during 1995 to operating the fragrance department as a
leased department instead of an owned department.
Interest expense for 1995 was $1,289,000, compared to $744,000 in 1994.
This increase was due to a combination of higher interest rates and increased
average borrowings.
The effective tax rate for 1995 was 39.0% as compared to 39.5% for 1994.
The lower effective tax rate resulted from federal income tax audit adjustments
included in 1994.
The factors discussed above resulted in net income for 1995 of $17.8
million, a decrease of 3.6% from net income of $18.4 million in 1994.
Fiscal Year 1994 Compared to Fiscal Year 1993
Net sales of $419.2 million in 1994 represented an increase of $76.5
million, or 22.3%, over net sales of $342.7 million in 1993. The 14 new stores
opened in 1994 contributed $38.7 million to net sales. Comparable store net
sales increased 2.4% in 1994 over the prior year.
Gross profit for 1994 increased to $113.5 million from $95.4 million in
1993. Gross profit as a percentage of net sales decreased to 27.1% in 1994 from
27.8% in 1993. This decrease was primarily the result of an increase in
occupancy expense as a percentage of net sales caused by lower than expected
sales and certain additional expenses related to the renovation, enlargement
and/or relocation of six stores.
Selling, general and administrative expenses were $87.4 million, or 20.8%
of net sales, in 1994, as compared to $71.5 million, or 20.9% of net sales, in
1993. The increase in expense dollars was primarily due to the additional stores
in operation during 1994 as compared to the number of stores in operation in
1993. Included in selling, general and administrative expenses were pre-opening
expenses for the 14 stores opened in 1994 amounting to $1.7 million and for the
15 stores opened in 1993 amounting to $2.0 million.
During 1994, other income, primarily from in-store leased shoe departments,
amounted to $5.1 million, an increase of $1.1 million over the $4.0 million in
1993.
As a result of higher interest rates and increased average borrowings,
interest expense for 1994 increased to $744,000, as compared to $464,000 in
1993.
The effective tax rate for 1994 was 39.5% as compared to 39.2% for 1993.
The higher effective tax rate reflects an increase in state income taxes due to
higher rates, net of the federal tax benefit.
Net income in 1994 was $18.4 million, an increase of 10.4% over net income
of $16.7 million in 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are to support capital and
inventory investments for the opening of new stores, to meet seasonal working
capital needs and to maintain and improve existing stores. The Company's capital
requirements and working capital needs are funded through a combination of
internally generated funds, a bank line of credit and credit terms from vendors.
During the course of the Company's seasonal business cycle, working capital is
needed to support inventory for existing stores, especially during peak selling
seasons. Historically, the Company's working capital needs are lowest in the
first quarter and peak in either the third or fourth quarter in anticipation of
the fourth quarter selling season.
Net cash used in operating activities was $28.7 million and $31.4 million
during the first six months of 1996 and 1995, respectively. During the first six
months of both years, cash was used to acquire inventory for the additional
stores in operation and to reduce the net amount of current liabilities.
Net cash provided by operating activities for 1995 amounted to $9.2
million, compared to $22.9 million for 1994. During both years, cash was used
primarily to acquire inventory for new stores.
14
<PAGE> 15
During the first six months of 1996 and 1995, cash flow used in investing
activities totaled $6.7 million and $6.1 million, respectively, reflecting the
acquisition of fixtures, equipment, and leasehold improvements for new stores,
information system enhancements and improvements to existing stores. For 1995
and 1994, cash flow used in investing activities amounted to $13.8 million and
$11.5 million, respectively, primarily for the acquisition of fixtures,
equipment and leasehold improvements for the opening of new stores and for
information system enhancements.
Cash flow provided by financing activities was $26.6 million for the first
six months of 1996 and $21.1 million for the first six months of 1995,
reflecting net borrowings under the Company's revolving credit agreement to meet
seasonal working capital requirements in both periods. Also during the first six
months of 1996, cash was used to repurchase 270,000 shares of Common Stock for
$2.6 million. Cash flow used in financing activities in 1995 was for the
repurchase of 166,500 shares of Common Stock partially offset by proceeds
received from the exercise of stock options. There was no effect on cash flow
from the line of credit during 1995 or 1994 as the balance due under the credit
agreement, pursuant to its terms, remained unchanged at $1,000 at year-end 1995,
1994 and 1993.
The cost of opening a prototypical new store generally ranges from $450,000
to $650,000 for fixtures, equipment, leasehold improvements and pre-opening
expenses (primarily advertising, stocking and training). Pre-opening expenses
are expensed in the year of opening. Initial inventory investment for a new
store is approximately $1 million (a portion of which is normally financed
through vendor credit). New stores typically generate operating profit in the
first year of operation. The Company's total capital expenditures for 1996
(including amounts budgeted for new store expansion, improvements to existing
stores and information system enhancements) are anticipated to be approximately
$15.0 million. Through the six months ended June 29, 1996, capital expenditures
were $6.7 million.
The Company may borrow up to $40 million under its current revolving credit
agreement, and an additional $10 million seasonal line of credit is available
each year from March 15 through June 30 and from September 15 through December
31. Due to the seasonal nature of the Company's business, bank borrowings
fluctuate during the year, typically reaching their highest levels during the
third or fourth quarters as the Company builds its inventory for the holiday
selling season. The outstanding loan balance at June 29, 1996 was $28.5 million.
At December 30, 1995, the loan balance was reduced to $1,000, the minimum
balance required to avoid termination of the loan agreement. The Company had
cash and cash equivalents of $15.1 million at December 30, 1995 and $6.3 million
at June 29, 1996.
The Company believes that expected net cash provided by operating
activities, bank borrowings and vendor credit will be sufficient to fund current
and long-term anticipated capital expenditures and working capital requirements.
INFLATION
Inflation affects the costs incurred by the Company in the purchase of
merchandise, the leasing of its stores, and in certain components of its
selling, general and administrative expenses. The Company has offset the effects
of inflation through the control of expenses during the past three years.
However, there can be no assurance that inflation will not have a material
effect on the Company's operations in the future.
15
<PAGE> 16
BUSINESS
Stein Mart is a 111-store retail chain offering fashionable,
current-season, primarily branded merchandise comparable in quality and
presentation to that of traditional department and fine specialty stores at
prices typically 25% to 60% below those regularly charged by such stores. The
Company's focused assortment of merchandise features moderate to designer
brand-name apparel for women, men and children, as well as accessories, gifts,
linens, shoes and fragrances. Stein Mart operated a single store in Greenville,
Mississippi from the early 1900's until 1977, when it began its expansion
program. During the last five years, the Company has more than doubled the
number of Stein Mart stores from 45 in 15 states at year-end 1991 to 111 in 20
states at September 16, 1996. The Company's stores, which average approximately
38,000 gross square feet, are located primarily in neighborhood shopping centers
in metropolitan areas. The Company's principal executive offices are located at
1200 Riverplace Boulevard, Jacksonville, Florida 32207 and its telephone number
is (904) 346-1500.
EXPANSION STRATEGY
The Company's expansion strategy is to add stores in new markets, including
those markets with the potential for multiple stores, and in existing markets to
capture advertising and management efficiencies. The Company has opened 12
stores in 1996 and expects to open 12 new stores during the remainder of 1996,
25 to 28 in 1997 and approximately 25 to 30 in each of the next several years
thereafter. See "Risk Factors -- Expansion Strategy."
The Company targets metropolitan statistical areas with populations of
125,000 or more for new store expansion. In determining where to locate new
stores, the Company evaluates detailed demographic information, including, among
other factors, data relating to income, education levels, age, occupation, the
availability of prime real estate locations, existing and potential competitors,
and the number of Stein Mart stores that a market can support. As a result of
processing only 10% of its merchandise through its distribution center, the
Company is not constrained geographically or by the capacity limits of a central
facility. This allows management to concentrate on the best real estate
opportunities in targeted markets.
The Company refurbishes existing retail locations or occupies newly
constructed stores, which typically are anchor stores in new or existing
shopping centers situated near upscale residential areas, ideally with co-
tenants that cater to a similar customer base. The Company's ability to
negotiate favorable leases and to construct attractive stores with a relatively
low investment provides a significant cost advantage over traditional department
and fine specialty stores.
BUSINESS STRATEGY
The Company's business strategy is to (i) maintain the quality of
merchandise, store appearance, merchandise presentation and customer service
levels typical of traditional department and fine specialty stores and (ii)
offer value pricing to its customers through its vendor relationships, tight
control over corporate and store expenses and efficient management of inventory.
The principal elements of the Company's business strategy are as follows:
Timely, Consistent, Upscale Merchandise. The Company purchases
upscale, branded merchandise primarily through preplanned buying programs
similar to those used by traditional department and fine specialty stores.
These preplanned buying programs enable the Company to offer fashionable,
current-season assortments on a consistent basis.
Appealing Store Appearance and Merchandise Presentation. The Company
creates an ambiance in its stores similar to that of upscale retailers
through attractive in-store layout and signage. Merchandise is displayed in
lifestyle groupings to encourage multiple purchases.
Emphasis on Customer Service. Customer service is fundamental to
Stein Mart's objective of building customer loyalty. Management believes
that the Company offers customer service superior to off-price retailers
and more comparable to traditional department and fine specialty stores.
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<PAGE> 17
Value Pricing through Vendor Relationships. In negotiating with Stein
Mart, vendors do not build into their pricing structure anticipated returns
or markdown and advertising allowances which are typical in the department
store industry. Stein Mart passes these savings on to its customers through
prices which are typically 25% to 60% below those regularly charged by
traditional department and fine specialty stores.
Efficient Inventory Handling. Stein Mart does not rely on a large
distribution center or warehousing facility. Rather, it primarily utilizes
drop shipments by common carriers from its vendors directly to its stores.
This system enables the Company to receive merchandise at each store on a
more timely basis and to save the time and expense of handling merchandise
twice, which is typical of a traditional distribution center structure.
Operating Efficiencies. Management believes that there will be
opportunities to create additional operating efficiencies as the Company
continues to add stores in new and existing markets.
MERCHANDISING
Stein Mart's focused assortment of merchandise features moderate to
designer brand-name apparel for women, men and children, as well as accessories,
gifts, linens, shoes and fragrances. Branded merchandise is complemented by a
limited private label program that enhances the Company's presentation of
current fashion trends and provides key items in complete size ranges and
assortments.
Management believes that Stein Mart differentiates itself from typical
off-price retailers by offering (i) a higher percentage of current-season
merchandise carried by traditional department and fine specialty stores at
moderate to better price levels, (ii) a stronger merchandising "statement,"
consistently offering more depth of color and size in individual stockkeeping
units, and (iii) a merchandise presentation more comparable to traditional
department and fine specialty stores.
The Company identifies and responds to the latest fashion trends. Within
each major merchandise category, the Company offers a focused assortment of the
best-selling department and fine specialty store items. Stein Mart's merchandise
selection is driven primarily by its own merchandising plans which are based on
management's assessment of fashion trends and market conditions. This strategy
distinguishes Stein Mart from traditional off-price retailers who achieve cost
savings by responding to unplanned buying opportunities. The Company's
merchandise is typically priced at levels 25% to 60% below regular prices at
these stores, therefore offering distinct value to the Stein Mart customer.
The following reflects the percentage of the Company's revenues by major
merchandise category for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
------------------------------------------ ------------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1993 1994 1995 1995 1996
------------ ------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C>
Ladies' and Boutique apparel....... 33% 33% 35% 37% 38%
Ladies' accessories................ 11 10 11 10 11
Men's and young men's.............. 22 21 20 19 19
Gifts and linens................... 18 19 18 17 16
Shoes (leased department).......... 9 9 8 10 9
Children's......................... 6 6 6 5 5
Other.............................. 1 2 2 2 2
--- --- --- --- ---
100% 100% 100% 100% 100%
=== === === === ===
</TABLE>
17
<PAGE> 18
Ladies' apparel, the Company's largest contributor of revenues, consists of
distinctive presentations of dresses, sportswear and other apparel in ladies',
petites, juniors and women's sizes at moderate to upper-moderate prices. Stein
Mart's distinctive Boutique is a key element of the Company's merchandising
strategy to attract more fashion-conscious customers. The Boutique, a
store-within-a-store department, carries better to designer ladies' apparel and
offers the presentation and service levels of a fine specialty boutique. Each
Stein Mart store has its own Boutique, staffed generally by women employed on a
part-time basis who are civically and socially prominent in the community. The
Boutique highlights the Company's strategy of offering upscale merchandise,
presentation and customer service at value prices.
The Company's typical store layout emphasizes ladies' accessories as the
fashion focus at the front of the store. The key merchandise in this department
is fashion-oriented, brand-name, designer and private label jewelry, as well as
scarves, hosiery, leather goods, bath products and fragrances.
Men's and young men's areas together provide the second largest
contribution to revenues. Menswear consists of sportswear, suits, sportcoats,
slacks, dress furnishings and a Big and Tall assortment. The Company believes
that its merchandise presentation is particularly strong in men's dress
furnishings, including branded and private label neckwear and dress shirts.
In 1995, the Company changed the merchandise mix of its traditional junior
girls and young men's departments. This department, named "Exterior," presents a
more contemporary fashion-forward attitude designed to appeal to all ages.
Stein Mart's gifts and linens departments consist primarily of a broad
assortment of fashion-oriented gifts (rather than basic items) for the home and
a wide range of table, bath and bed linens and, in some stores, decorative
fabrics. The presentation in this distinctive department emphasizes fashion,
lifestyle and seasonal themes and includes the full range of merchandise
available in a typical department store. The strength of this category has been
the consistent presentation with a higher percentage mix of better goods.
Stein Mart's children's department offers a range of apparel for infants
and children.
The Company's shoe department is a leased department operated in individual
stores by one of two shoe retailers. The merchandise in this department is
presented in a manner consistent with the Company's overall presentation in
other departments, stressing fashionable, current-season footwear at value
prices. This department offers a variety of men's and women's casual and dress
shoes, which complement the range of apparel available in other departments.
Shoe department leases provide for the Company to be paid the greater of an
annual base rent or a percentage of sales. Almost all of the leases currently
pay on the percentage of sales basis.
In 1995, the Company began leasing its fragrance department to a
third-party operator. The operating agreement requires the third-party operator
to pay the Company the greater of an annual base amount or a percentage of
sales.
STORE APPEARANCE
Stein Mart's stores are designed to reflect the upscale ambiance and
appearance of traditional department and fine specialty stores through
attractive layout, displays and in-store signage. The prototypical store is
approximately 36,000 gross square feet with convenient check-out and customer
service areas and attractive, individual dressing rooms. The Company seeks to
create excitement in its stores through the continual flow of brand-name
merchandise, sales promotions, store layout, merchandise presentation, and the
quality, value and depth of its merchandise assortment.
The Company displays merchandise in lifestyle groupings of apparel and
accessories. Management believes that the lifestyle grouping concept strengthens
the fashion image of its merchandise and enables the customer to locate desired
merchandise in a manner that encourages multiple purchases.
18
<PAGE> 19
CUSTOMER SERVICE
Customer service is fundamental to Stein Mart's objective of building
customer loyalty. The Company's stores offer most of the same services typically
found in traditional department and fine specialty stores such as menswear
alterations and a liberal merchandise return policy. Each store is staffed to
provide a number of sales associates to properly attend to customer needs. Stein
Mart also offers a distinctive customer service through its Agenda program for
career women. This program provides the services of an in-store personal shopper
who maintains a record of customers' sizes and style preferences so that
merchandise can be pre-selected for shopping by appointment.
The Company's training program for sales associates and cashiers emphasizes
attentiveness, courtesy and the effective use of selling techniques. The Company
reinforces its training program by employing an independent shopping service to
monitor the associates' success in implementing the principles taught in sales
training. Associates who are highly rated by the shopping service receive both
formal recognition and cash awards. Management believes this program emphasizes
the importance of customer service necessary to create customer loyalty.
VENDOR RELATIONSHIPS AND BUYING
Stein Mart buys from over 3,500 vendors. Many of these are considered key
vendors, with whom the Company enjoys longstanding working relationships that
create a continuity of preplanned buying opportunities for upscale,
current-season merchandise. Most of the Company's vendors are based in the
United States, which generally reduces the time necessary to purchase and obtain
shipments and allows the Company to react to merchandise trends in a timely
fashion. The Company does not have long-term or exclusive contracts with any
particular vendor. In 1995, less than 2% of Stein Mart's purchases were from any
single vendor.
The Company employs several purchasing strategies to provide its customers
with a consistent selection of quality, fashionable merchandise at value prices:
(i) Stein Mart commits to its purchases from vendors well in advance of the
selling season, in the same manner as department stores, unlike typical
off-price retailers who rely heavily on buys of close-out merchandise or
overruns; (ii) the Company's information systems enable it to acquire
merchandise and track sales information on a store-by-store basis, allowing its
buying staff to respond quickly to customer buying trends; and (iii) an in-house
merchandise development department works with buyers and brand-name vendors to
ensure that the merchandise assortments offered are unique, fashionable,
color-forward and of high quality.
Stein Mart negotiates favorable prices from its vendors by not requiring
advertising and markdown allowances or return privileges that are typical in the
department store industry, resulting in savings that the Company passes along to
its customers in the form of prices that are typically 25% to 60% below those
regularly charged by traditional department and fine specialty stores.
The Company's buying staff is headed by the Chief Merchandising Officer,
who is supported by four Vice Presidents -- General Merchandise Managers, seven
Divisional Merchandising Managers and 28 buyers. In addition to base salary, the
buying staff receives incentive compensation for achieving certain sales goals
within their areas of responsibility. Historically, the Company has had very low
turnover within its buying staff, enabling it to capitalize on an experienced,
respected group of buyers capable of maintaining and enhancing the Company's
vendor relationships.
INFORMATION SYSTEMS
The Company's information systems provide daily financial and merchandising
information that is used by management to make timely and effective purchasing
and pricing decisions and for inventory control.
The Company's inventory control system enables it to achieve economies of
scale from bulk purchases while at the same time ordering and tracking separate
drop shipments by store. Store inventory levels are regularly monitored and
adjusted as sales trends dictate. The inventory control system provides
information that enhances management's ability to make informed buying decisions
and accommodate unexpected
19
<PAGE> 20
increases or decreases in demand for a particular item. The Company uses bar
codes and bar code scanners as part of an integrated inventory management and
check-out system in its stores.
The Company is in the process of phasing in an upgraded merchandise
planning and allocation system, which will enable the Company to better utilize
individual store data. The Company expects the system to be operational by the
end of fiscal 1996. When fully operational, merchandise buyers will use the
system to customize their merchandise assortments at the individual store and
department level, based on selected criteria, such as a store's selling
patterns, geography and merchandise color preferences. The ability to customize
individual store assortments presents the Company with new opportunities to
effectively manage inventory, capitalize on sales trends and reduce markdowns.
The Company is also implementing a computerized time management system in
1996 which will assist management in scheduling store associates' hours based on
an individual store's own customer traffic patterns and necessary tasks. This
improvement should maximize customer service levels and enhance efficiency.
STORE OPERATIONS
The Company has six Vice Presidents -- Regional Directors of Stores, each
overseeing between 6 and 14 stores, who report to the Executive Vice President,
Stores. Two of the Vice Presidents have District Directors of Stores reporting
to them, who are each responsible for overseeing 9 to 12 stores. Each Vice
President's and District Director's compensation includes an incentive component
based on overall performance. Each Stein Mart store is managed by a general
manager who reports directly to a Vice President or a District Director. Store
general managers are responsible for individual store operations, including
hiring, motivating and supervising sales associates; receiving and effectively
presenting merchandise; and implementing price change determinations made by the
Company's buying staff. Store general managers receive incentive compensation
based upon operating results in several key areas, including increases in store
sales. In addition to the store general manager and two assistant store
managers, each Stein Mart store employs an average of 60 persons as department
managers, sales associates, cashiers and in other positions.
Stein Mart stores typically are open 11 hours per day, six days a week, and
on Sunday afternoons. The store hours are extended during the holiday selling
season.
ADVERTISING AND SALES PROMOTION
The Company's advertising strategy stresses the offering of upscale,
branded merchandise at significant savings. The Company generally allocates the
majority of its advertising budget to newspaper advertising, employing a
combination of image, price-and-item and sales event approaches. Stein Mart's
per-store advertising expense is reduced by spreading its advertising over
multiple stores in a single market. Management believes the Company also enjoys
substantial word-of-mouth advertising benefits from its customer base.
During 1995, the Company tested a new image campaign in national print
media. The results from a subsequent market survey indicated an increased
recognition of the Stein Mart name. Newspaper will continue to be the dominant
advertising media, however, some emphasis will shift to national and regional
magazines and local radio.
STORE AND CORPORATE FACILITIES
The Company leases all of its store locations and therefore has been able
to grow without incurring indebtedness to acquire real estate. Management
believes that the Company has earned a reputation as an "anchor tenant," which,
along with its established operating history, has enabled it to negotiate
favorable lease terms. Most of the leases provide for minimum rents, as well as
percentage rents that are based on sales in excess of predetermined levels.
The table below reflects (i) the number of the Company's leases (as of
December 30, 1995) that will expire each year if the Company does not exercise
any of its renewal options, and (ii) the number of the
20
<PAGE> 21
Company's leases that will expire each year if the Company exercises all of its
renewal options (assuming the lease is not otherwise terminated by either party
pursuant to any other provision).
<TABLE>
<CAPTION>
NUMBER OF LEASES NUMBER OF LEASES
EXPIRING EACH YEAR EXPIRING EACH YEAR
IF NO RENEWALS IF ALL RENEWALS
EXERCISED(1) EXERCISED(1)
------------------ ------------------
<S> <C> <C>
1996........................................................ 1 0
1997........................................................ 2 0
1998........................................................ 6 0
1999........................................................ 8 0
2000........................................................ 7 0
2001-2005................................................... 43 6
2006-2010................................................... 30 17
2011-2029................................................... 1 75
</TABLE>
- ---------------
(1) Excludes the Greenville, Mississippi store, which, at December 30, 1995, was
owned by the Company, and the Plantation, Florida store, which was closed
in February, 1996. The Company relocated its Greenville, Mississippi store
in August, 1996 to a leased location.
The Company has made consistent capital commitments to maintain and improve
existing store facilities. During 1995, approximately $3.2 million was spent to
upgrade computer equipment, fixtures, equipment and leasehold improvements in
stores opened prior to 1995.
The Company leases approximately 46,600 gross square feet of office space
for its corporate headquarters in Jacksonville, Florida. The Company also leases
a 56,000 square foot distribution center in Jacksonville for the purpose of
processing a limited amount of merchandise (approximately 10%).
The Company continually evaluates underperforming stores and may choose to
close selected underperforming stores. In accordance with this policy, the
Company closed its Denver, Colorado store in May, 1992, but opened a new store
at a different location in Denver in March, 1996, and closed its Plantation,
Florida store in February, 1996.
COMPETITION
Management believes that the Company occupies a market niche closer to
traditional department stores than typical off-price retail chains. The Company
faces competition for customers and for access to quality merchandise from
traditional department stores, fine specialty stores and, to a lesser degree,
from off-price retail chains. Many of these competitors are units of large
national or regional chains that have substantially greater resources than the
Company. The retail apparel industry is highly fragmented and competitive, and
the off-price retail business may become even more competitive in the future.
The principal competitive factors in the retail apparel industry are the
assortment, presentation and quality of merchandise, price, customer service,
vendor relations and store location. Management believes that the Company is
well-positioned to compete on the basis of each of these factors.
EMPLOYEES
At August 17, 1996, the Company's work force consisted of approximately
6,500 employees (4,300 40-hour equivalent employees). The number of employees
fluctuates based on the particular selling season, peaking during the holiday
selling season.
TRADEMARKS
The Company owns the federally registered trademark Stein Mart(R), together
with a number of other marks used in conjunction with its private label
merchandise program. Stein Mart primarily sells branded merchandise. However, in
certain classifications of merchandise, the Company uses several private label
programs to provide additional availability of items. Management believes that
its trademarks are important but, with the exception of Stein Mart(R), not
critical to the Company's merchandising strategy.
LEGAL PROCEEDINGS
The Company is involved in various routine legal proceedings incidental to
the conduct of its business. Management does not believe that any of these legal
proceedings will have a material adverse effect on the financial condition or
results of operations of the Company.
21
<PAGE> 22
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the executive
officers and directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------- ---- -----------------------------------------------------------
<S> <C> <C>
Jay Stein...................... 50 Chairman of the Board and Chief Executive Officer
John H. Williams, Jr........... 58 President, Chief Operating Officer and Director
Mason Allen.................... 52 Senior Executive Vice President, Chief Merchandising
Officer and Director
Michael D. Fisher.............. 48 Executive Vice President, Stores
James G. Delfs................. 50 Senior Vice President, Finance and Chief Financial Officer
D. Hunt Hawkins................ 37 Senior Vice President, Human Resources
Robert D. Davis................ 64 Director
Albert Ernest, Jr.............. 66 Director
Mitchell W. Legler............. 53 Director
James H. Winston............... 62 Director
</TABLE>
MR. STEIN has been with Stein Mart since 1967, serving as a director since
1968 and as President from 1979 until 1990. He assumed the position of Chairman
in 1989. Mr. Stein is also a director of American Heritage Life Insurance Co.
and Barnett Bank of Jacksonville, N.A., both based in Jacksonville, Florida, and
Promus Hotel Corporation based in Memphis, Tennessee.
MR. WILLIAMS joined Stein Mart in 1980 and was appointed President in 1990.
Mr. Williams has been a director of the Company since 1984 and is also a
director of SunTrust Bank, North Florida, N.A.
MR. ALLEN joined Stein Mart in 1986 as Executive Vice President and General
Merchandise Manager and was promoted to Senior Executive Vice President and
Chief Merchandising Officer in 1990. Mr. Allen was elected to the Company's
Board of Directors in June 1991.
MR. FISHER joined the Company in August 1993 as Executive Vice President,
Stores. From 1988 to 1993, Mr. Fisher was Senior Vice President of Stores for
Millers Outpost, Inc., a California based chain of apparel stores.
MR. DELFS joined the Company in May 1995 as Senior Vice President, Finance
and Chief Financial Officer. From 1993 to 1994 he was Vice President, Chief
Financial Officer for Helzberg's Diamond Shops, Inc., a chain of jewelry stores,
and from 1988 to 1992 he was Vice President, Chief Financial Officer for
Abercrombie & Fitch, Inc., a division of The Limited, Inc.
MR. HAWKINS joined the Company in February 1994 as Senior Vice President,
Human Resources. From 1984 to 1994 he was employed by Genesco, Inc., a
publicly-held apparel and footwear manufacturer, in various human resources
positions, most recently as Director of Employee Relations.
MR. DAVIS is Chairman of D.D.I., Inc., Jacksonville, Florida, a
family-owned investment firm. He is a director of Winn-Dixie Stores, Inc., a
publicly-held retail supermarket chain. He served as Chairman of Winn-Dixie
Stores, Inc. from 1983 to 1988 and Vice Chairman from 1988 to 1990. Mr. Davis
also is a director of American Heritage Life Investment Corporation, Florida
Rock Industries, Inc., a publicly-held construction materials company, and First
Union Corporation, a bank holding company headquartered in Charlotte, North
Carolina. He was elected to the Company's Board of Directors in August 1992.
MR. ERNEST is Managing Partner of Albert Ernest Enterprises, a consulting
and investment partnership. He served as President and Chief Operating Officer
of Barnett Banks, Inc. from 1988 until 1991, and as Vice Chairman from 1984 to
1988. Mr. Ernest is also a director of Florida Rock Industries, Inc., Florida
Rock Industries' affiliate, FRP Properties, Inc., a transportation and real
estate company, The Emerald Fund, a
22
<PAGE> 23
bank directed mutual fund group, Wickes Lumber Company and Regency Realty
Corporation. He was elected to the Company's Board of Directors in June 1991.
MR. LEGLER is the sole shareholder of Mitchell W. Legler, P.A., general
counsel to the Company. He was a senior partner in the law firm of Commander
Legler Werber Dawes Sadler & Howell, from 1976 until its merger with Foley &
Lardner in 1991 and a partner in that firm until 1995. Mr. Legler is a director
of IMC Mortgage Company, a mortgage banking firm. Mr. Legler was elected to the
Company's Board of Directors in June 1991.
MR. WINSTON has served as Chairman of LMPC, a real estate investment firm
based in Jacksonville, Florida, since 1979, and as President of Omega Insurance
Company, Citadel Life & Health Insurance Company and Wellington Investments
since 1983. Mr. Winston is a director of Barnett Bank of Jacksonville, N.A., FRP
Properties, Inc. and Winston Hotels. Mr. Winston was elected to the Company's
Board of Directors in June 1991.
23
<PAGE> 24
PRINCIPAL AND SELLING STOCKHOLDERS
AND STOCK OWNERSHIP OF MANAGEMENT
The shares of Common Stock offered hereby are being sold by (a) the Stein
Ventures Limited Partnership (the "Stein Partnership"), a limited partnership
100% controlled by Jay Stein, the Chairman of the Board and Chief Executive
Officer of the Company, and the limited partners of which consist of Mr. Stein
and his wife, and (b) John H. Williams, Jr., President and Chief Operating
Officer (the "Selling Stockholders"). The following table sets forth certain
information regarding the beneficial ownership of shares of Common Stock as of
the date of this Prospectus by (i) the Selling Stockholders, (ii) each person
known by the Company to beneficially own more than 5% thereof, (iii) each
director and executive officer, and (iv) all directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
BEFORE THE OFFERING AFTER THE OFFERING(1)
-------------------------- --------------------------
NUMBER OF SHARES BEING NUMBER OF
NAME SHARES(2) PERCENT OFFERED SHARES(2) PERCENT
- -------------------------------- ---------- ------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
Jay Stein(3)(4)(5).............. 13,270,709(6) 58.7% 3,550,000 9,720,709(6) 42.5%
John H. Williams, Jr.(4)(5)..... 446,500(7)(8) 1.9 300,000 146,500(7)(8) *
Mason Allen(4)(5)............... 20,900(9)(10) * -- 20,900(9)(10) *
Michael D. Fisher(4)............ 10,400(11) * -- 10,400(11) *
James G. Delfs(4)............... --(12) -- -- --(12) --
D. Hunt Hawkins(4).............. --(13) -- -- --(13) --
Robert D. Davis(5).............. 78,960(14)(15) * -- 78,960(14)(15) *
Albert Ernest, Jr.(5)........... 12,960(14) * -- 12,960(14) *
Mitchell W. Legler(5)........... 9,960(14)(16) * -- 9,960(14)(16) *
James H. Winston(5)............. 12,960(14)(17) * -- 12,960(14)(17) *
All directors and executive
officers as a group (10
persons)(18).................. 13,863,349 60.1% 3,850,000 10,013,349 43.4%
</TABLE>
- ---------------
* Where percentage is not indicated, amount is less than 1.0% of the
outstanding Common Stock.
(1) The Stein Partnership, which is 100% controlled by Mr. Stein and which is
one of the Selling Stockholders, has granted the Underwriters an option to
purchase up to 577,500 additional shares of Common Stock. If such option is
exercised in full, upon consummation of the Offering, Jay Stein would be
deemed to beneficially own 9,143,209 shares (39.9%) and all directors and
executive officers as a group would be deemed to beneficially own 9,435,849
shares (40.9%).
(2) Excludes shares subject to options that are not exercisable within 60 days
of the date of this Prospectus held by all individuals listed on the table
other than Mr. Stein, who holds no options. Shares of Common Stock
underlying options that are exercisable within 60 days are deemed to be
outstanding for the purpose of computing the outstanding Common Stock owned
by the particular person and by all executive officers and directors as a
group, but are not deemed outstanding for any other purpose.
(3) The business address of Jay Stein is 1200 Riverplace Boulevard,
Jacksonville, Florida 32207.
(4) Executive officer.
(5) Director.
(6) Consists of 12,956,609 shares held by the Stein Partnership and 314,100
shares held by the Jay and Cynthia Stein Foundation Trust, over which Mr.
Stein has sole voting and dispositive power as trustee, of which 3,550,000
shares will be sold in the Offering.
(7) Includes 443,500 shares subject to presently exercisable options, of which
300,000 will be exercised and sold in the Offering.
(8) Excludes 331,500 shares subject to options that will become exercisable in
1997.
(9) Includes 20,000 shares subject to presently exercisable options. Excludes
150 shares held by Mr. Allen's wife in an Individual Retirement Account.
(10) Excludes 102,000 shares subject to options that will become exercisable in
1997.
(11) Includes 9,900 shares subject to presently exercisable options. Excludes
50,100 shares subject to options which will become exercisable between 1997
and 2000.
24
<PAGE> 25
(12) Excludes 25,000 shares subject to options which will become exercisable
between 1998 and 2000.
(13) Excludes 30,000 shares subject to options which will become exercisable
between 1997 and 2000.
(14) Includes 3,960 shares subject to presently exercisable options. Excludes
2,040 shares subject to options which will become exercisable in 1997.
(15) Mr. Davis has shared voting and investment power over 52,500 shares in his
capacity as a member of the investment committee of the corporation that
owns the shares. In addition, he holds sole voting and investment power
over 22,500 shares held by a revocable trust of which he is the trustee and
beneficiary.
(16) Includes 6,000 shares held by Mr. Legler and his wife as tenants by the
entirety.
(17) Includes 6,450 shares owned through corporations of which Mr. Winston is
the sole stockholder.
(18) Includes 489,240 shares subject to presently exercisable options, of which
300,000 will be exercised and sold in the Offering. Excludes 546,760 shares
subject to options which will become exercisable between 1997 and 2000.
25
<PAGE> 26
UNDERWRITING
Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co., NatWest Securities Limited ("NatWest") and Wasserstein Perella Securities,
Inc., as representatives of the several underwriters (the "Representatives"),
have agreed, severally, to purchase from the Selling Stockholders, the number of
shares of Common Stock set forth below opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
- ---------------------------------------------------------------------------------- ---------
<S> <C>
J.C. Bradford & Co. .............................................................. 1,153,350
NatWest Securities Limited........................................................ 1,153,350
Wasserstein Perella Securities, Inc. ............................................. 256,300
Bear, Stearns & Co. Inc........................................................... 71,500
Dean Witter Reynolds Inc.......................................................... 71,500
Donaldson, Lufkin & Jenrette Securities Corporation............................... 71,500
Goldman, Sachs & Co............................................................... 71,500
Lehman Brothers Inc............................................................... 71,500
Montgomery Securities............................................................. 71,500
Morgan Stanley & Co. Incorporated................................................. 71,500
Robertson, Stephens & Company LLC................................................. 71,500
Smith Barney Inc.................................................................. 71,500
Davenport & Co. of Virginia, Inc.................................................. 71,500
William Blair & Company, L.L.C.................................................... 44,000
Allen C. Ewing & Co............................................................... 44,000
Interstate/Johnson Lane Corporation............................................... 44,000
Johnson Rice & Company L.L.C...................................................... 44,000
Legg Mason Wood Walker, Incorporated.............................................. 44,000
McDonald & Company Securities, Inc................................................ 44,000
Morgan Keegan & Company, Inc...................................................... 44,000
Needham & Company, Inc............................................................ 44,000
The Robinson-Humphrey Company, Inc................................................ 44,000
Scott & Stringfellow, Inc......................................................... 44,000
Southcoast Capital Corporation.................................................... 44,000
Stephens Inc...................................................................... 44,000
Wheat, First Securities, Inc...................................................... 44,000
---------
Total................................................................... 3,850,000
=========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions therein set forth, to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.
The Company has been advised that the Underwriters propose initially to
offer the shares of Common Stock to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of $0.40 per share. The Underwriters may allow
and such dealers may reallow a concession not in excess of $0.10 per share to
certain other dealers. After the initial public offering, the public offering
price and such concessions may be changed by the Underwriters.
The offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares.
The Stein Partnership has granted to the Underwriters an option,
exercisable no later than 30 days from the date of this Prospectus, to purchase
up to an aggregate of 577,500 additional shares of Common Stock to cover
over-allotments. To the extent the Underwriters exercise this option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof which the number of shares of
26
<PAGE> 27
Common Stock to be purchased by it shown in the table above bears to the total
and the Stein Partnership will be obligated, pursuant to the option, to sell
such shares to the Underwriters. The Underwriters may exercise such option only
to cover over-allotments made in connection with the sale of shares of Common
Stock offered hereby. If purchased, the Underwriters will sell such additional
shares on the same terms as those on which the shares are being offered.
In connection with the Offering, certain Underwriters may engage in passive
market making transactions in the Common Stock on the Nasdaq National Market
immediately prior to the commencement of sales in the Offering in accordance
with Rule 10b-6A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Passive market making consists of displaying bids on the Nasdaq
National Market limited by the bid prices of independent market makers and
purchases limited by such prices and effected in response to order flow. Net
purchases by a passive market maker on each day are limited to a specified
percentage of the passive market makers' average daily trading volume in the
Common Stock during a specified period and must be discontinued when such limit
is reached. Passive market making may stabilize the market price of the Common
Stock at a level above that which might otherwise prevail and, if commenced, may
be discontinued at any time.
NatWest, a United Kingdom broker-dealer and a member of the Securities and
Futures Authority Limited, has agreed that, as part of the distribution of the
shares of Common Stock offered hereby and subject to certain exceptions, it will
not offer or sell any shares of Common Stock within the United States, its
territories or possessions or to persons who are citizens thereof or residents
therein, provided that NatWest Securities Corporation, an affiliate of NatWest
and a United States broker-dealer, may be a selling broker with respect to the
shares of Common Stock, acting as agent for purchasers within the United States.
The Underwriting Agreement does not limit the sale of the shares of Common Stock
offered hereby outside of the United States.
NatWest has also represented and agreed that (i) it has not offered or sold
and will not offer or sell any Common Stock to persons in the United Kingdom
prior to admission of the Common Stock to listing in accordance with Part IV of
the Financial Services Act of 1986 (the "1986 Act") except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purpose of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 or the 1986 Act, (ii) it has complied and
will comply with all applicable provisions of the 1986 Act with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom and (iii) it has only issued or passed on, and will
only issue or pass on, in the United Kingdom any document received by it in
connection with the issue of the Common Stock, other than any document which
consists of or any part of listing particulars, supplementary listing
particulars or any other document required or permitted to be published by
listing rules under Part IV of the 1986 Act, to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
The Company, the Selling Stockholders, Jay Stein and the Jay and Cynthia
Stein Foundation Trust have agreed that they will not, without the prior written
consent of the Representatives, issue, sell, transfer, assign or otherwise
dispose of any shares of the Common Stock or options, warrants, or rights to
acquire Common Stock owned by them prior to the expiration of 180 days from the
date of this Prospectus (90 days in the case of the Jay and Cynthia Stein
Foundation Trust).
The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters and controlling persons, if any,
against certain liabilities, including liabilities under the Securities Act, or
will contribute to payments which the Underwriters or any such controlling
persons may be required to make in respect thereof.
27
<PAGE> 28
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Stockholders by Foley & Lardner,
Jacksonville, Florida. Certain legal matters relating to the sale of the Common
Stock will be passed upon for the Underwriters by Bass, Berry & Sims PLC,
Nashville, Tennessee.
EXPERTS
The financial statements incorporated in this Registration Statement by
reference to the Annual Report on Form 10-K for the year ended December 30,
1995, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Exchange Act
and, in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied at
the office of the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 or at its Regional Offices located in the Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10007. Copies of such material also may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a web site that contains reports, proxy statements and other
information regarding registrants, including the Company, that file such
information electronically with the Commission. The address of the Commission's
web site is http://www.sec.gov. The Company's Common Stock is listed on the
Nasdaq National Market, and such reports, proxy statements and other information
can also be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3, including amendments thereto, relating to the Common Stock offered hereby.
This Prospectus, which is part of such Registration Statement, does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to the Company and
the Common Stock offered hereby, reference is hereby made to the Registration
Statement and such exhibits and schedules, which may be inspected and copied in
the manner and at the locations described above. Statements contained in this
Prospectus as to the contents of any contract or other document referred to are
not necessarily complete and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or as previously filed with the Commission and incorporated herein by
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference in this Prospectus
except as superseded or modified herein:
1. The Company's Annual Report on Form 10-K for the year ended
December 30, 1995, including portions of the Company's 1995 Annual Report
to Shareholders and the Company's definitive proxy statement for its 1996
annual meeting of stockholders to the extent specifically incorporated by
reference therein.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 30, 1996 and June 29, 1996.
3. The Company's Registration Statement on Form 8-A filed with the
Commission on March 13, 1992.
28
<PAGE> 29
Each document filed by the Company with the Commission subsequent to the
date of this Prospectus pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act and prior to the termination of this Offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such document. Any statement contained in a document
incorporated by reference shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein, or
in any subsequently filed incorporated document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of any such person, a copy of any document described above that
has been incorporated by reference in this Prospectus and not delivered with
this Prospectus or any preliminary prospectus distributed in connection with the
Offering of the Common Stock, other than exhibits to such document referred to
above unless such exhibits are specifically incorporated by reference herein.
Requests should be directed to Ms. Susan Datz Edelman, the Company's Director of
Stockholder Relations, 1200 Riverplace Boulevard, Jacksonville, Florida 32207
(telephone: (904) 346-1506).
29
<PAGE> 30
Omitted Graphic and Image Material
Inside back cover:
1. Two separate pictures depicting (i) an external view
of one Stein Mart store front, (ii) an interior view
of the gifts department.
<PAGE> 31
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SHARES OF COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION OR OFFER. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 8
Price Range of Common Stock and
Dividend Policy..................... 8
Capitalization........................ 9
Selected Financial and Operating
Data................................ 10
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 12
Business.............................. 16
Management............................ 22
Principal and Selling Stockholders and
Stock Ownership of Management....... 24
Underwriting.......................... 26
Legal Matters......................... 28
Experts............................... 28
Available Information................. 28
Incorporation of Certain Documents by
Reference........................... 28
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
3,850,000 SHARES
(LOGO) STEIN MART(R)
COMMON STOCK
--------------------
PROSPECTUS
--------------------
J.C. BRADFORD & CO.
NATWEST SECURITIES LIMITED
WASSERSTEIN PERELLA SECURITIES, INC.
SEPTEMBER 17, 1996
------------------------------------------------------
------------------------------------------------------
