Stein Mart Files for Chapter 11 Bankruptcy, Plans to Close Most Stores

by Kristin Harlow

JACKSONVILLE, FLA. — Discount retailer Stein Mart Inc. (NASDAQ: SMRT) has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Florida. The motion is an effort to maintain operations, including “the payment of employee wages and benefits without interruption, payment of suppliers and vendors in the normal course of business and the use of cash collateral.”

Jacksonville-based Stein Mart expects to close a significant portion, if not all, of its brick-and-mortar stores. The company has launched a store closing and liquidation process but will continue to operate in the near term.

Stein Mart says it is evaluating any and all strategic alternatives, including the potential sale of its e-commerce business and related intellectual property.

In its fiscal first quarter that ended May 2, Stein Mart reported a net loss of $65.7 million. In addition, a merger agreement with an affiliate of Kingswood Capital Management LP terminated in April due to “uncertainty caused by the COVID-19 pandemic,” according to Stein Mart’s quarterly report.

“The combined effects of a challenging retail environment coupled with the impact of the COVID-19 pandemic have caused significant financial distress on our business,” says Hunt Hawkins, Stein Mart CEO and CFO. “The company lacks sufficient liquidity to continue operating in the ordinary course of business.”

Foley & Lardner LLP is serving as restructuring counsel, Clear Thinking Group LLC is restructuring advisor and PJ Solomon is the company’s investment banker.

Stein Mart offers designer and name-brand fashion apparel, home décor, accessories and shoes at discount prices. The company operates 281 stores across 30 states. Stein Mart’s stock price closed at 29 cents per share on Tuesday, Aug. 11, down from 78 cents per share one year ago. The stock has largely declined since a peak of $8.79 per share in August 2016.

Stein Mart joins the more than 40 retailers that have filed for bankruptcy in 2020, including Brooks Brothers, J.C. Penney, Neiman Marcus and Pier 1 Imports.

— Kristin Hiller

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