JACKSONVILLE, Fla. — Discount retailer Stein Mart named Hunt Hawkins COO and expanded his responsibilities to include store operations and e-commerce at the 263-unit chain. Hawkins previously served as EVP and chief administrative officer with responsibility for information technology, supply chain and human resources, responsibilities he will retain in his new role.
“Hunt has been an important part of Stein Mart since 1994 and has had a key role in our significant operational improvements over the last several years,” said Jay Stein, the company’s interim CEO. “This is a great reward for his many years of quality service.”
The appointment of Hawkins is noteworthy because it follows an announcement the prior week that Stein Mart was noncompliant with NASDAQ listing requirements because it failed to file its quarterly report with the Securities and Exchange Commission in a timely manner due to an information technology issue, which understated the impact of permanent markdowns in third-quarter results. The issue caused the company to increase the size of its previously reported third-quarter net loss of $1.8 million, or four cents a share, by an additional $1.3 million to $1.6 million, or three to four cents a share.
Accordingly, the company declared the breakdown in control, which caused the issue a material weakness, and said it planned to put enhanced controls in place to prevent a similar situation from recurring. As it was explained at the time, July and August merchandise unit balances in the company’s legacy perpetual inventory system were understated as a result of a planned, but improperly executed, one-time override of an automated records purge process. The legacy perpetual inventory system is scheduled to be replaced with a new system, which is anticipated to go live in the first quarter of 2012. The company said transactions recorded in the retail stock ledger, which is the accounting system of record for inventory and cost of merchandise sold, were correct except for permanent markdowns.
Stein Mart has had a tough go of it lately, and third-quarter sales reflect the company’s challenge. Same-store sales declined 2.9%, and total sales declined 3.5% to $258.5 million. The sales challenge continued during November when the company reported a 4.6% decline in same-store sales on top of flat prior-year results. The diminished performance was due in part to an effort to get off the promotional roller coaster and revert to more of an every day low price value proposition.
As interim CEO Stein noted when results were released, “We made progress in reducing our reliance on coupons this month, but not without some adverse impact to our sales. Our day-to-day business was satisfactory, however, we realized major shortfalls as we anniversaried our largest events. It is important for our long-term competitive position that we differentiate ourselves by re-establishing the value of our merchandise offering through everyday low prices."