Stein Mart to restate results dating back to 2009
JACKSONVILLE, Fla. (AP) — Stein Mart Inc. said Friday that it will restate its financial results for the past three years because of mistakes in how it accounted for marked down merchandise and store improvements.
The discount retailer will correct financial reports for 2009, 2010, 2011 and the first fiscal quarter of 2012, which ended in April. A board committee is reviewing what caused the errors.
The company's merchandise accounting mistakes came about because it accounted for some markdowns as temporary discounts rather than permanent ones, affecting how it valued its unsold clothing. As a result, inventories were overstated by about $3 million through July 28, while the costs of sold merchandise were understated by the same amount.
In addition, Stein Mart is reviewing how it accounts for store improvement costs that are reimbursed by its landlords, because it now believes that changes to stores did not increase the value of its landlords' properties. It had previously believed the opposite.
It said that its accounting methods had understated write-downs the company took on the value of its stores by about $11 million from 2006 to 2009, and overstated rent expense by about $6 million. As a result, Stein Mart said it overstated its net assets by $5 million and its cumulative pretax earnings through July 28 by about 7 cents per share.
The company will file an amended 2011 annual report with restated data for the years in question. It will also refile a report for the first quarter of this year.
Shares of the Jacksonville, Fla., company rose 5 cents to $7.12 in midday trading Friday.