Stein Mart calls off buyout plans

[Steve]

Not Good for Stein Mart

Stein Mart Inc. on April 16 called off plans for a buyout by a private equity firm amid the "unpredictable economic conditions" caused by the COVID-19 pandemic.

The Jacksonville-based fashion retailer and Kingswood Capital Management L.P. said the merger agreement was terminated by mutual agreement.

https://www.jaxdailyrecord.com/article/stein-mart-calls-off-buyout-plans

[bl8jaxnative]

I'm curious what their real angle is at that.  They're not flush with cash and the market as a whole isn't exactly interested in investing in retail stores with physical locations.

[Steve]

I'm curious what their real angle is at that.  They're not flush with cash and the market as a whole isn't exactly interested in investing in retail stores with physical locations.

The angle for the buyout to begin with? It's simple: SteinMart, if they could every get their stuff together (stores AND online working in harmony) could be a TJX competitor - their stores feel more upscale than a TJMaxx so they could become the Target of the space.

But they haven't up to this point for MANY reasons.

[jaxlongtimer]

I'm curious what their real angle is at that.  They're not flush with cash and the market as a whole isn't exactly interested in investing in retail stores with physical locations.

For many investors in retailers, they often are more interested in the "hidden value" of their real estate owned or bargain long term leases they can sublease out.  At a minimum, real estate value provides a safety net to the business failing altogether.

By example, the greatest value of traditional department stores in recent years has been their historic downtown city blocks such as Saks Fifth Avenue in NYC valued at well over $1 billion.

Its also why Sears/Kmart stores are closing.  Up to now, most of the locations are more valuable being repurposed instead of continuing as the traditional retail store there now.

[Steve]

I'm curious what their real angle is at that.  They're not flush with cash and the market as a whole isn't exactly interested in investing in retail stores with physical locations.

For many investors in retailers, they often are more interested in the "hidden value" of their real estate owned or bargain long term leases they can sublease out.  At a minimum, real estate value provides a safety net to the business failing altogether.

By example, the greatest value of traditional department stores in recent years has been their historic downtown city blocks such as Saks Fifth Avenue in NYC valued at well over $1 billion.

Its also why Sears/Kmart stores are closing.  Up to now, most of the locations are more valuable being repurposed instead of continuing as the traditional retail store there now.

Stein Mart really didn't have that. It doesn't own any of their stores (unless I'm mistaken), and their strip mall model doesn't really lend itself to the "real estate" play, as there's generally real estate in their locales (they weren't in downtowns or malls).

[Ken_FSU]

Tons of layoffs today.

Lots of friends effected.

Can't be a good sign.

[Steve]

Tons of layoffs today.

Lots of friends effected.

Can't be a good sign.

Oh no. Not surprising but this could be it for them.

[Lunican]

Stein Mart email today:

"Many of your coworkers, majority of the corporate office, were laid off this morning. You are one of the ones who have been selected to stay and move our company forward, but your employment length is unknown. It could be a year, the rest of the year, months or weeks. There is no timeline for this."

[jaxlongtimer]

https://www.jaxdailyrecord.com/article/stein-mart-lays-off-a-substantial-number-of-employees-from-jacksonville-headquarters

[Lunican]

"Stein Mart shall be permanently closing its business operations, including corporate headquarters, distribution centers and retail stores. Over the following month(s) stein Mart will wind down its business. The layoffs are expected to occur over several phases based on the needs of the company to effectively and efficiently wind down the business."

[jaxlongtimer]

"Stein Mart shall be permanently closing its business operations, including corporate headquarters, distribution centers and retail stores. Over the following month(s) stein Mart will wind down its business. The layoffs are expected to occur over several phases based on the needs of the company to effectively and efficiently wind down the business."

Sad for Jacksonville to lose a once well regarded, high profile and growing company that goes back to 1908.  I remember the excitement around the opening of their first store in Jacksonville (following the move of their HQ's to here from Greenville, MS) at University Blvd. W. and St. Augustine Road and their super loyal customers built around hiring local homemakers to work in the stores and network for them.

Our family found many a good deal, even in recent years, there.  In decades past, they often sold high quality items at really low prices.  The mix changed over time to more mid-priced items but generally was appropriately value priced.

I think they were too late to move to on-line shopping.  Would be neat to see someone buy the brand and make it online only going forward.  Unfortunately, its not on par with "Brooks Brothers" so unlikely to see this I guess.

I also wonder if Costco better exploited their space for many items in the clothing arena. For men, I am particularly thinking of button down shirts. Stein Mart was still a great place to get a quality tuxedo or suit at a great price.

After COVID, I am wondering how many retailers remain afloat that were founded much before 1960.  Seems we are seeing a real changing of the guard in retail.

[Steve]

"Stein Mart shall be permanently closing its business operations, including corporate headquarters, distribution centers and retail stores. Over the following month(s) stein Mart will wind down its business. The layoffs are expected to occur over several phases based on the needs of the company to effectively and efficiently wind down the business."

Sad for Jacksonville to lose a once well regarded, high profile and growing company that goes back to 1908.  I remember the excitement around the opening of their first store in Jacksonville (following the move of their HQ's to here from Greenville, MS) at University Blvd. W. and St. Augustine Road and their super loyal customers built around hiring local homemakers to work in the stores and network for them.

Our family found many a good deal, even in recent years, there.  In decades past, they often sold high quality items at really low prices.  The mix changed over time to more mid-priced items but generally was appropriately value priced.

I think they were too late to move to on-line shopping.  Would be neat to see someone buy the brand and make it online only going forward.  Unfortunately, its not on par with "Brooks Brothers" so unlikely to see this I guess.

I also wonder if Costco better exploited their space for many items in the clothing arena. For men, I am particularly thinking of button down shirts. Stein Mart was still a great place to get a quality tuxedo or suit at a great price.

After COVID, I am wondering how many retailers remain afloat that were founded much before 1960.  Seems we are seeing a real changing of the guard in retail.

They never figured out their niche. They wanted to be somewhere between the TJX brands and a Dillard's, so to speak-a market that Kohl's plays in. Kohl's is just doing it better (though not amazingly better).

Being in retail tech, SteinMart was a company that I was interested in working for over about a 4 year period. Now I'm not going to say I'm God's gift to retail/Omnichannel tech, but I felt like (from the outside) they kept making mistake after mistake. Their strategies just didn't make sense to me.

Covid may have put the nail in the coffin but it darn sure didn't put them in the box to begin with.

[jaxlongtimer]

SMRT filed Chapter 11 bankruptcy, all stores likely to close over time:

https://finance.yahoo.com/news/stein-mart-inc-voluntarily-files-120500834.html

[bl8jaxnative]

So it goes

[jaxlongtimer]

Would be neat to see someone buy the brand and make it online only going forward. 

The Company is evaluating any and all strategic alternatives, including the potential sale of its eCommerce business and related intellectual property.

Maybe my wish will come true!

Although unlikely, would be neater still if it happened AND was still Jacksonville-based  !