CEO’s resignation costs Stein Mart a consensus ‘underperform’ rating

The department store chain got two downgrades on Thursday after the fashion company’s CEO abruptly resigned after barely six months into the role.

The Jacksonville-based fashion retailer did not give a reason for Robertson’s departure in its Thursday morning announcement, but did say recent sales results were disappointing, reported local press.

In a “The merchandise and marketing changes implemented by Ms. Robertson have been too disruptive to the organisation, with third quarter performance materially below expectations,” Johnson Rice and Co. analyst David Mann said in a report Thursday, as he downgraded Stein Mart from “accumulate” to “hold.”

“This surprise announcement comes at a critical juncture as the company has been underperforming its peer group for over a year, with potential to fall further behind as bigger off-price players continue to gain share,” Mann said.

Similarly, Sidoti & Co. analyst Anthony Lebiedzinski downgraded Stein Mart from “buy” to “neutral” Thursday, but he said he could not comment further.

Stein Mart stock trades 16 percent lower after CEO´s resignation

Stein Mart Inc. (SMRT), has been trading low by circa 16 percent after the company announced that CEO Dawn Robertson resigned, effective Sept. 27. Chief Operating Officer D. Hunt Hawkins was named interim CEO.

The company has struggled to attract Robertson’s coveted “younger attitudinal” customers, as opposed to Stein Mart’s traditional core customer of women over 35.Its third-quarter same-store sales fell by about 4 percent through Sept. 27. Sales are lower than anticipated, as some improvement in September followed a challenging start and several "missteps" in August, the company said.

"We believe that several of the new merchandising strategies that have been developed this year will positively impact our future sales," Hawkins said. "However, implementation has been too rapid and has been challenging for our customers."

Johnson Rice and Co analyst said Stein Mart is facing a “strategic quandary” in trying to attract younger customers and Robertson’s resignation raises more questions about its plans. Mann further added that “An abrupt CEO departure ahead of holiday season is never a good sign and brings tremendous uncertainty about the company's future strategy and positioning,” he said.

Stein Mart’s stock dropped 1.24 dollars to 6.30 dollars Thursday after the resignation announcement, which came before the market opened.

Image:Stein Mart