Stein Mart Explores Possible Sale as Pandemic Batters Business
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Stein Mart Inc. is the latest retailer to warn that the coronavirus pandemic could spell the end of its business.
In a filing this week with the Securities and Exchange Commission, the discount chain disclosed that there was “substantial doubt” that it would be able to survive over the next year. The COVID-19 outbreak, it said, has adversely impacted its cash flow as all of its outposts were shuttered for nearly a month starting mid-March.
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To preserve liquidity, Stein Mart had furloughed most of its store associates and temporarily laid off many corporate workers, as well as reduced the salaries of its executive team and suspended compensation for its board of directors. It added that it was in the middle of discussions with vendors and landlords regarding unpaid accounts payable and rent.
“We are also actively exploring additional sources of financing to provide us with additional liquidity and other strategic alternatives, including a sale of the company,” it wrote in Monday’s filing.
As of the date of the filing, Stein Mart has reopened “substantially all” of its 281 locations in limited capacity but indicated that traffic has not yet recovered to pre-pandemic levels and remain “well below” last year.
“Although omnichannel sales have remained strong, they have not compensated for the loss of in-store sales.,” the company added.
Stein Mart, which had been looking for a buyer over the past two years, struck a deal in late January to be acquired and taken private by Kingswood Capital Management for 90 cents per share — a 38% premium on its stock price at the time. However, the agreement was terminated in mid-April as the health crisis took hold in the United States.
“While we both believed in the benefits of the proposed transaction, we have mutually concluded after careful consideration that given the current environment and significant uncertainty, it would not be prudent to continue to pursue the transaction,” read a joint statement from Stein Mart board director Richard Sisisky and Kingswood managing partner Alex Wolf.
Today, Stein Mart’s shares sit at 45 cents. Its stock has sank more than 30% in the year to date.
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