Ever since all its stores reopened on 15 June with reduced working hours, the US fashion retailer Stein Mart saw a decent footfall, but still the numbers aren’t as good as they were during the same period last year.
Consequently, the overall sales have been going down and the retailer is feeling the heat. It’s now leaning on its credit line.
More on this, Hunt Hawkins, CEO, Stein Mart, said that the pandemic has put a strain on its credit facilities as it is now borrowing huge money to cover cash shortfalls from lower sales.
While the retailer had US $ 22 million in its credit facility during this year’s first quarter, it was an impressive US $ 100 million during the same period in the previous year.
This has now led to a situation where Stein Mart has borrowed US $ 10 million under the federal paycheck protection programme with the sole intent to enhance liquidity.
There’s no other way, now that first quarter reports have also been disappointing – though it was expected.
The first quarter ended 2 May 2020 saw the retailer post net loss of US $ 65.7 million compared to net income of US $ 4 million during the same time a year before. The net sales in Q1 2020 were US $ 134.3 million compared to US $ 314.2 million in Q1 2019. That’s a huge gap!
Notably, omnisales rose by 17 per cent this quarter.
With cash flows and revenue hugely hit, and debts rising by US $ 44 million (from last year) to reach US $ 197.8 million in Q1, getting financial aid is only the first step in Stein Mart’s strategy to survive.
Besides selling apparels for men and women, Stein Mart also sells shoes, accessories as well as home décor. It generates revenue of US $ 1.36 billion.