As it explores additional sources of financing, Stein Mart Inc. has secured millions of dollars in stimulus aid.
The discount chain announced in its first-quarter earnings report this week that it had received $10 million through the Small Business Administration’s Paycheck Protection Program as part of the federal government’s CARES Act. The company originally disclosed the loan in a Form 8-K filed with the Securities and Exchange Commission on June 23.
“The company will continue to evaluate the provisions of the CARES Act for ways to improve its liquidity,” it added in a statement on Tuesday.
The report comes two weeks after Stein Mart told the SEC 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. At the time, the retailer said that it was considering a possible sale — a disclosure it reiterated in Tuesday’s financial report.
“The company is also actively exploring additional sources of financing and other strategic alternatives, including a sale of the company,” it recently added.
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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.
As of mid-June, all of the company’s locations have reopened and are operating with reduced hours. It added that the coronavirus pandemic continues to have a “negative effect” on its business, resulting in lower in-store traffic.
“While sales are exceeding our expectations, they continue to be down to last year, and we expect it will take some time for them to fully recover,” shared CEO Hunt Hawkins.
However, he added, “Although we are facing a period of uncertainty regarding the continued impacts of COVID-19, we have charted a path forward to proactively address these near-term challenges and preserve our business. While these challenges are significant, they are not insurmountable but will require much from our teams, as well as the continued support of our external partners.”
For the three months ended May 2, revenues at Stein Mart declined 57% to $134.3 million. It recorded a net loss of $65.7 million, or $1.38 per diluted share, compared with profits of $4 million, or $0.08 per diluted share, for the first quarter of 2019.