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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended April 29, 2006

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 0-20052



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STEIN MART, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Florida                                                        |  | 64-0466198                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



|                                             |  |           
|-------------------------------------------- |  | ----------
|1200 Riverplace Blvd., Jacksonville, Florida |  | 32207     
|(Address of principal executive offices)     |  | (Zip Code)

Registrants telephone number, including area code: (904) 346-1500



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Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes ̈No  x.

The number of shares outstanding of the Registrants common stock as of May 26, 2006 was 43,591,358.



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##### Table of Contents

STEIN MART, INC.

TABLE OF CONTENTS



|           |  |                                                                                                |  |     
|---------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                |  | PAGE
|PART I     |  | FINANCIAL INFORMATION                                                                          |  |     
|           |  |                                                                                               
|Item 1.    |  | Financial Statements (Unaudited):                                                              |  |     
|           |  |                                                                                               
|           |  | Consolidated Balance Sheets at April 29, 2006, January 28, 2006 and April 30, 2005             |  | 3   
|           |  |                                                                                               
|           |  | Consolidated Statements of Income for the 13 Weeks Ended April 29, 2006 and April 30, 2005     |  | 4   
|           |  |                                                                                               
|           |  | Consolidated Statements of Cash Flows for the 13 Weeks Ended April 29, 2006 and April 30, 2005 |  | 5   
|           |  |                                                                                               
|           |  | Notes to Consolidated Financial Statements                                                     |  | 6   
|           |  |                                                                                               
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations          |  | 10  
|           |  |                                                                                               
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                     |  | 13  
|           |  |                                                                                               
|Item 4.    |  | Controls and Procedures                                                                        |  | 13  
|           |  |                                                                                               
|PART II    |  | OTHER INFORMATION                                                                              |  |     
|           |  |                                                                                               
|Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                    |  | 13  
|           |  |                                                                                               
|Item 6.    |  | Exhibits                                                                                       |  | 14  
|           | 
|SIGNATURES |  | 15                                                                                            



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##### Table of Contents

Stein Mart, Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands)



|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | --------------- | - | ------- | ------------- |  | - | ------- | -
|                                                                                                                                               |  | April 29,2006 |         |   | January 28,2006 |   |         | April 30,2005 | 
|ASSETS                                                                                                                                         |  |               |         |   |                 |   |         |               |  |   |         |  
|Current assets:                                                                                                                                |  |               |         |   |                 |   |         |               |  |   |         |  
|Cash and cash equivalents                                                                                                                      |  | $             | 33,553  |   |                 | $ | 20,200  |               |  | $ | 25,147  |  
|Short-term investments                                                                                                                         |  |               | 25,000  |   |                 |   | 104,935 |               |  |   | 62,000  |  
|Trade and other receivables                                                                                                                    |  |               | 11,510  |   |                 |   | 11,121  |               |  |   | 9,685   |  
|Inventories                                                                                                                                    |  |               | 287,627 |   |                 |   | 265,788 |               |  |   | 302,892 |  
|Prepaid expenses and other current assets                                                                                                      |  |               | 15,615  |   |                 |   | 13,672  |               |  |   | 13,798  |  
|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  
|Total current assets                                                                                                                           |  |               | 373,305 |   |                 |   | 415,716 |               |  |   | 413,522 |  
|Property and equipment, net                                                                                                                    |  |               | 95,156  |   |                 |   | 87,106  |               |  |   | 75,678  |  
|Other assets                                                                                                                                   |  |               | 16,791  |   |                 |   | 17,023  |               |  |   | 14,777  |  
|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  
|Total assets                                                                                                                                   |  | $             | 485,252 |   |                 | $ | 519,845 |               |  | $ | 503,977 |  
|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                           |  |               |         |   |                 |   |         |               |  |   |         |  
|Current liabilities:                                                                                                                           |  |               |         |   |                 |   |         |               |  |   |         |  
|Accounts payable                                                                                                                               |  | $             | 125,213 |   |                 | $ | 88,408  |               |  | $ | 107,030 |  
|Accrued liabilities                                                                                                                            |  |               | 73,603  |   |                 |   | 80,337  |               |  |   | 71,974  |  
|Income taxes payable                                                                                                                           |  |               | 2,294   |   |                 |   | 5,453   |               |  |   | 6,842   |  
|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  
|Total current liabilities                                                                                                                      |  |               | 201,110 |   |                 |   | 174,198 |               |  |   | 185,846 |  
|Other liabilities                                                                                                                              |  |               | 21,833  |   |                 |   | 21,908  |               |  |   | 21,755  |  
|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  
|Total liabilities                                                                                                                              |  |               | 222,943 |   |                 |   | 196,106 |               |  |   | 207,601 |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                  |  |               |         |   |                 |   |         |               |  |   |         |  
|Stockholders equity:                                                                                                                          |  |               |         |   |                 |   |         |               |  |   |         |  
|Preferred stock - $.01 par value; 1,000,000 sharesauthorized; no shares issued or outstanding                                                  |  |               |         |   |                 |   |         |               |  |   |         |  
|Common stock - $.01 par value; 100,000,000 sharesauthorized; 43,587,650; 43,516,372 and 43,222,966 shares issued and outstanding,
respectively |  |               | 436     |   |                 |   | 435     |               |  |   | 432     |  
|Additional paid-in capital                                                                                                                     |  |               | 23,392  |   |                 |   | 21,967  |               |  |   | 19,016  |  
|Unearned compensation                                                                                                                          |  |               | (6,002  | ) |                 |   | (3,704  | )             |  |   | (2,210  | )
|Retained earnings                                                                                                                              |  |               | 244,483 |   |                 |   | 305,041 |               |  |   | 279,138 |  
|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  
|Total stockholders equity                                                                                                                     |  |               | 262,309 |   |                 |   | 323,739 |               |  |   | 296,376 |  
|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  
|Total liabilities and stockholders equity                                                                                                     |  | $             | 485,252 |   |                 | $ | 519,845 |               |  | $ | 503,977 |  
|                                                                                                                                               |  |               |         |   |                 |   |         |               |  |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

Stein Mart, Inc.

Consolidated Statements of Income

(Unaudited)

(In thousands except per
share amounts)



|                                             |  |                               |         |                               |   |        
|-------------------------------------------- |  | ----------------------------- | ------- | ----------------------------- | - | -------
|                                             |  | 13 Weeks Ended April 29, 2006 |         | 13 Weeks Ended April 30, 2005
|Net sales                                    |  | $                             | 364,831 |                               | $ | 380,654
|Cost of merchandise sold                     |  |                               | 267,245 |                               |   | 268,959
|                                             |  |                               |         |                               |   |        
|Gross profit                                 |  |                               | 97,586  |                               |   | 111,695
|Selling, general and administrative expenses |  |                               | 90,536  |                               |   | 88,968 
|Other income, net                            |  |                               | 4,153   |                               |   | 3,966  
|                                             |  |                               |         |                               |   |        
|Income from operations                       |  |                               | 11,203  |                               |   | 26,693 
|Interest income, net                         |  |                               | 891     |                               |   | 394    
|                                             |  |                               |         |                               |   |        
|Income before income taxes                   |  |                               | 12,094  |                               |   | 27,087 
|Provision for income taxes                   |  |                               | 4,535   |                               |   | 10,293 
|                                             |  |                               |         |                               |   |        
|Net income                                   |  | $                             | 7,559   |                               | $ | 16,794 
|                                             |  |                               |         |                               |   |        
|Net income per share:                        |  |                               |         |                               |   |        
|Basic                                        |  | $                             | 0.17    |                               | $ | 0.39   
|                                             |  |                               |         |                               |   |        
|Diluted                                      |  | $                             | 0.17    |                               | $ | 0.38   
|                                             |  |                               |         |                               |   |        
|Weighted-average shares outstanding:         |  |                               |         |                               |   |        
|Basic                                        |  |                               | 43,228  |                               |   | 42,905 
|                                             |  |                               |         |                               |   |        
|Diluted                                      |  |                               | 44,074  |                               |   | 44,202 
|                                             |  |                               |         |                               |   |        

The accompanying notes are an integral part of these consolidated financial statements.



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Stein Mart, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)



|                                                                                  |  |                               |          |   |                               |   |          |  
|--------------------------------------------------------------------------------- |  | ----------------------------- | -------- | - | ----------------------------- | - | -------- | -
|                                                                                  |  | 13 Weeks Ended April 29, 2006 |          |   | 13 Weeks Ended April 30, 2005 |  
|Cash flows from operating activities:                                             |  |                               |          |   |                               |   |          |  
|Net income                                                                        |  | $                             | 7,559    |   |                               | $ | 16,794   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                               |          |   |                               |   |          |  
|Depreciation and amortization                                                     |  |                               | 6,029    |   |                               |   | 4,510    |  
|Store closing charges                                                             |  |                               | 331      |   |                               |   | 498      |  
|Deferred income taxes                                                             |  |                               | (714     | ) |                               |   | 501      |  
|Share-based compensation                                                          |  |                               | 891      |   |                               |   | 137      |  
|Changes in assets and liabilities:                                                |  |                               |          |   |                               |   |          |  
|Trade and other receivables                                                       |  |                               | (389     | ) |                               |   | 1,695    |  
|Inventories                                                                       |  |                               | (21,839  | ) |                               |   | (25,728  | )
|Prepaid expenses and other current assets                                         |  |                               | (1,943   | ) |                               |   | (873     | )
|Other assets                                                                      |  |                               | (225     | ) |                               |   | (110     | )
|Accounts payable                                                                  |  |                               | 36,805   |   |                               |   | 7,867    |  
|Accrued liabilities                                                               |  |                               | (7,294   | ) |                               |   | (7,269   | )
|Income taxes payable                                                              |  |                               | (3,159   | ) |                               |   | 1,753    |  
|Other liabilities                                                                 |  |                               | 227      |   |                               |   | 580      |  
|                                                                                  |  |                               |          |   |                               |   |          |  
|Net cash provided by operating activities                                         |  |                               | 16,279   |   |                               |   | 355      |  
|                                                                                  |  |                               |          |   |                               |   |          |  
|Cash flows from investing activities:                                             |  |                               |          |   |                               |   |          |  
|Capital expenditures                                                              |  |                               | (12,981  | ) |                               |   | (8,868   | )
|Purchases of short-term investments                                               |  |                               | (463,750 | ) |                               |   | (550,800 | )
|Sales of short-term investments                                                   |  |                               | 543,685  |   |                               |   | 561,275  |  
|                                                                                  |  |                               |          |   |                               |   |          |  
|Net cash provided by investing activities                                         |  |                               | 66,954   |   |                               |   | 1,607    |  
|                                                                                  |  |                               |          |   |                               |   |          |  
|Cash flows from financing activities:                                             |  |                               |          |   |                               |   |          |  
|Cash dividends paid                                                               |  |                               | (68,117  | ) |                               |   |         |  
|Excess tax benefits from share-based compensation                                 |  |                               | 180      |   |                               |   | 1,710    |  
|Proceeds from exercise of stock options                                           |  |                               | 1,542    |   |                               |   | 5,381    |  
|Repurchase of common stock                                                        |  |                               | (3,485   | ) |                               |   | (4,156   | )
|                                                                                  |  |                               |          |   |                               |   |          |  
|Net cash (used in) provided by financing activities                               |  |                               | (69,880  | ) |                               |   | 2,935    |  
|                                                                                  |  |                               |          |   |                               |   |          |  
|Net increase in cash and cash equivalents                                         |  |                               | 13,353   |   |                               |   | 4,897    |  
|Cash and cash equivalents at beginning of year                                    |  |                               | 20,200   |   |                               |   | 20,250   |  
|                                                                                  |  |                               |          |   |                               |   |          |  
|Cash and cash equivalents at end of year                                          |  | $                             | 33,553   |   |                               | $ | 25,147   |  
|                                                                                  |  |                               |          |   |                               |   |          |  
|Supplemental disclosures of cash flow information:                                |  |                               |          |   |                               |   |          |  
|Income taxes paid                                                                 |  | $                             | 8,211    |   |                               | $ | 6,452    |  

The accompanying notes are an integral part of these consolidated financial statements.



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STEIN MART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 29, 2006

(Unaudited)

(Dollars in tables in thousands, except per share amounts)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the 13-week periods are not
necessarily indicative of the results that may be expected for the entire year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Stein Mart, Inc. annual report on Form 10-K for the year
ended January 28, 2006.

As used herein, the terms we, our, us, Stein Mart and the Company
refer to Stein Mart, Inc. and its wholly owned subsidiary.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123R,
Share-Based Payment, which replaced SFAS No. 123 Accounting for Stock-Based Compensation and superseded Accounting Principles Board No. 25 Accounting for Stock Issued to Employees. SFAS No. 123R
requires companies to recognize expense in the financial statements for the fair values of all share-based payments to employees over the employees requisite service periods. The pro forma disclosures previously permitted under SFAS
No. 123 no longer are an alternative to financial statement recognition. The Company adopted SFAS No. 123R as of January 29, 2006. See Note 2 for additional information.

2. Share-Based Compensation

Effective January 29, 2006, the Company adopted the provisions of SFAS
No. 123R and elected to apply the modified prospective transition method to all past awards outstanding and unvested as of that date. Accordingly, financial statement amounts for the prior periods presented in this Form 10-Q have not been
restated to reflect the fair value method of expensing share-based compensation.

For the 13 weeks ended April 29, 2006 and April 30, 2005, the
Company recorded share-based compensation expense of $891,000 and $137,000, respectively, net of income tax benefits of $334,000 and $52,000, respectively. Share-based compensation expense is included in selling, general and administrative expenses
in the Consolidated Statements of Income. The adoption of SFAS No. 123R caused a $0.01 decrease in basic and diluted earnings per share for the 13 weeks ended April 29, 2006.

SFAS No. 123R requires tax benefits resulting from share-based compensation in excess of compensation cost recognized to be classified as financing cash flows in the Consolidated Statements of Cash Flows. Prior
to the adoption of SFAS No. 123R, such tax benefits were classified as operating cash flows. The prior period has been adjusted to conform to this presentation.

Share-Based Compensation Plans

The Company has an Employee Stock Purchase Plan (the Stock Purchase
Plan) whereby all employees who complete six months employment with the Company and who work on a full-time basis or are regularly scheduled to work more than 20 hours per week are eligible to participate in the Stock Purchase Plan.
Participants in the Stock Purchase Plan are permitted to use their payroll deductions to acquire shares at 85% of the lower of the fair market value of the Companys stock determined at either the beginning or the end of each option period.

In 2001, the shareholders approved a stock option plan (the Omnibus Plan), which replaced the Companys Employee Stock and Director Stock
Option Plans (the Previous Plans). After the approval of the Omnibus Plan, no further options have been or will be issued under the Previous Plans. The term of the Omnibus Plan is indefinite, except that no incentive stock option award
can be granted after the tenth anniversary of the plan. In 2002, the Board of Directors determined that it was appropriate to undertake an overall review of the Companys compensation strategies. As part of this review, it was decided that
starting in fiscal 2003 restricted stock awards as provided for in the Omnibus Plan, in addition to stock options, would be granted.

The Omnibus Plan,
consistent with the Previous Plans, provides that shares of common stock may be granted to certain key employees and outside directors through non-qualified stock options, incentive stock options, stock appreciation rights, performance awards,
restricted stock, or any other award made under the terms of the plan. The Board of Directors, or its



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STEIN MART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

delegated authority, determines the exercise price and all other terms
of all grants. In general, one-third of the options granted become exercisable on the third, fourth and fifth anniversary dates of grant and expire seven years after the date of grant. No stock appreciation rights have been granted under this or the
prior plan.

The following table presents the number of stock options and restricted stock awards initially authorized and available to grant under the
Omnibus Plan (shares in thousands):



|                                                               |  |       
|-------------------------------------------------------------- |  | ------
|                                                               |  | Shares
|Stock options and restricted stock awards initially authorized |  | 4,500 
|Stock options and restricted stock awards available for grant: |  |       
|January 28, 2006                                               |  | 2,495 
|April 29, 2006                                                 |  | 1,852 

Stock Options

The fair value of each stock option granted during the 13 weeks ended April 29, 2006 was estimated at the date of grant using the Black-Scholes options pricing model with the following assumptions: expected volatility of 47.5%,
expected dividend yield of 1.4%, a risk-free interest rate of 4.6% and an expected option term of 5.2 years. The expected volatility is based on the historical volatility of our stock prices over assumed expected terms. The risk-free interest rate
is estimated from yields of U.S. Treasury instruments of varying maturities with terms consistent with the expected terms of the options. The expected term of an option is calculated from a lattice model using historical employee exercise data.

A summary of stock option activity since January 28, 2006 is as follows (in thousands except per share amounts):



|                                            |  |                  |   |  |                                 |       |                           |   |      
|------------------------------------------- |  | ---------------- | - |  | ------------------------------- | ----- | ------------------------- | - | -----
|                                            |  | Number of Shares |   |  | Weighted-Average Exercise Price |       | Aggregate Intrinsic Value
|Outstanding at January 28, 2006             |  | 2,775            |   |  | $                               | 12.63 |                           |   |      
|Granted                                     |  | 492              |   |  |                                 | 17.32 |                           |   |      
|Exercised                                   |  | (121             | ) |  |                                 | 12.70 |                           |   |      
|Forfeited                                   |  | (4               | ) |  |                                 | 9.94  |                           |   |      
|                                            |  |                  |   |  |                                 |       |                           |   |      
|Outstanding at April 29, 2006               |  | 3,142            |   |  | $                               | 13.58 |                           | $ | 6,976
|                                            |  |                  |   |  |                                 |       |                           |   |      
|Exercisable stock options at April 29, 2006 |  | 1,508            |   |  | $                               | 11.61 |                           | $ | 6,318
|                                            |  |                  |   |  |                                 |       |                           |   |      

The following table summarizes information about the weighted-average remaining contractual life (in years) and
the weighted-average exercise prices for fixed-price stock options outstanding at April 29, 2006 (shares in thousands):



|                         |  |                     |  |                     |  |                |       |                    |       |                |   |      
|------------------------ |  | ------------------- |  | ------------------- |  | -------------- | ----- | ------------------ | ----- | -------------- | - | -----
|                         |  | Options Outstanding |  | Options Exercisable
|Range of Exercise Prices |  | Number Outstanding  |  | Remaining Life      |  | Exercise Price |       | Number Exercisable |       | Exercise Price
|$ 5.00  8.95            |  | 890                 |  | 5.5                 |  | $              | 7.57  |                    | 494   |                | $ | 7.98 
|$ 8.96  13.43           |  | 436                 |  | 5.2                 |  |                | 11.00 |                    | 284   |                |   | 11.04
|$13.44  17.91           |  | 1,386               |  | 4.1                 |  |                | 15.52 |                    | 730   |                |   | 14.29
|$17.92  22.39           |  | 430                 |  | 5.8                 |  |                | 22.35 |                    |      |                |   |     
|                         |  |                     |  |                     |  |                |       |                    |       |                |   |      
|                         |  | 3,142               |  | 4.9                 |  | $              | 13.58 |                    | 1,508 |                | $ | 11.61
|                         |  |                     |  |                     |  |                |       |                    |       |                |   |      

As of April 29, 2006, there was $4.7 million of unrecognized compensation cost related to stock options which
is expected to be recognized over a weighted-average period of 4.9 years. The weighted-average grant-date fair value of options granted during the 13 weeks ended April 29, 2006 was $7.38. The total intrinsic value of stock options exercised
during the 13 weeks ended April 29, 2006 was approximately $0.5 million. Cash received and the total tax benefit from the exercise of stock options during the 13 weeks ended April 29, 2006 was $1.5 million and $0.2 million, respectively.

Restricted Stock

The Company has issued
restricted stock awards to eligible key employees and directors. All awards have restriction periods tied primarily to employment, service and performance. Shares awarded under the plan entitle the shareholder to all rights of common stock ownership
except that the shares may not be sold, transferred, pledged, exchanged or otherwise disposed of during the restriction period. For most awards, vesting is based on the service period and vesting occurs (1) 100% at the end of seven years
following the date of grant, (2) at the rate of 33%, 33% and 34%, respectively, at the end of each of the first three years, (3) 100% at the end of the third year, or (4) at the rate of 33%, 33% and 34%, respectively, at the end of
the third, fourth and fifth years. For awards that fully vest at the end of seven years following the date of grant, vesting is accelerated to the end



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STEIN MART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of the second fiscal year if certain defined Company performance goals
are achieved. Unvested shares are forfeited upon termination of employment. The total value of compensation expense for restricted stock is equal to the closing price of the Companys stock on the date of grant.

A summary of restricted stock activity since January 28, 2006 is as follows (shares in thousands):



|                               |  |        |   |  |                                        |      
|------------------------------ |  | ------ | - |  | -------------------------------------- | -----
|                               |  | Shares |   |  | Weighted-Average Grant Date Fair
Value
|Non-vested at January 28, 2006 |  | 262    |   |  | $                                      | 17.75
|Granted                        |  | 154    |   |  |                                        | 17.26
|Vested                         |  | (6     | ) |  |                                        | 13.45
|Forfeited                      |  | (2     | ) |  |                                        | 21.02
|                               |  |        |   |  |                                        |      
|Non-vested at April 29, 2006   |  | 408    |   |  | $                                      | 17.61
|                               |  |        |   |  |                                        |      

The total fair value of restricted stock vested during the 13 weeks ended April 29, 2006 was $101,000. As of
April 29, 2006, there was $6.0 million of unrecognized compensation cost related to non-vested restricted stock awards which is expected to be recognized over a weighted-average period of 5.1 years.

Prior Period Pro Forma Presentation

Prior to January 29,
2006, the Company accounted for share-based compensation to employees in accordance with APB No. 25 and related interpretations. The Company also followed the disclosure requirements of SFAS No. 123 as amended by SFAS No. 148,
Accounting for Stock-Based Compensation Transition and Disclosure. The following table illustrates the pro forma effect on net income and earnings per share for the 13 weeks ended April 30, 2005 as if the Company had applied the
fair value recognition provisions of SFAS No. 123 to share-based employee awards prior to January 29, 2006:



|                                                                                                          |  |                               |        |  
|--------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------ | -
|                                                                                                          |  | 13 Weeks Ended April 30, 2005 |       
|Net income  as reported                                                                                  |  | $                             | 16,794 |  
|                                                                                                          | 
|Add: Stock-based compensation expense included in net income, net of related tax effects                  |  |                               | 85     |  
|                                                                                                          | 
|Less: Stock-based compensation expense determined under the fair value method, net of related tax effects |  |                               | (382   | )
|                                                                                                          |  |                               |        |  
|Pro forma net income                                                                                      |  | $                             | 16,497 |  
|                                                                                                          |  |                               |        |  
|Basic earnings per share  as reported                                                                    |  | $                             | 0.39   |  
|Basic earnings per share  pro forma                                                                      |  | $                             | 0.38   |  
|Diluted earnings per share  as reported                                                                  |  | $                             | 0.38   |  
|Diluted earnings per share  pro forma                                                                    |  | $                             | 0.37   |  

The fair value of options granted during the 13 weeks ended April 30, 2005 was estimated on the date of grant
using the Black- Scholes option-pricing model with the following assumptions: expected volatility of 50.9%, expected dividend yield of 0.0%, a risk-free interest rate of 4.0% and expected option term of 5 years. The weighted-average fair value of
options granted during the 13 weeks ended April 30, 2005 was $10.84 per share.

3. Store Closing Charges

The Company closed two stores during the first quarter of 2006 and six stores during 2005, five of which were closed during the first quarter of 2005. Lease termination
and severance costs of $0.3 million and $1.3 million were incurred during the first quarter of 2006 and 2005, respectively, and are included in selling, general and administrative expenses in the Consolidated Statements of Income.



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##### Table of Contents

STEIN MART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables show the activity in the store closing reserve for
the first quarter of 2006 and 2005:



|                            |  |                  |       |         |   |          |  |                |       |  |   |      
|--------------------------- |  | ---------------- | ----- | ------- | - | -------- |  | -------------- | ----- |  | - | -----
|                            |  | January 28,2006  |       | Charges |   | Payments |  | April 29, 2006
|Lease termination costs     |  | $                | 5,522 |         | $ | 99       |  | $              | 502   |  | $ | 5,119
|Severance                   |  |                  | 63    |         |   | 177      |  |                | 83    |  |   | 157  
|                            |  |                  |       |         |   |          |  |                |       |  |   |      
|Total store closing reserve |  | $                | 5,585 |         | $ | 276      |  | $              | 585   |  | $ | 5,276
|                            |  |                  |       |         |   |          |  |                |       |  |   |      
|                            |  |                  |       |        
|                            |  | January 29, 2005 |       | Charges |   | Payments |  | April 30, 2005
|Lease termination costs     |  | $                | 6,898 |         | $ | 954      |  | $              | 1,569 |  | $ | 6,283
|Severance                   |  |                  | 131   |         |   | 371      |  |                | 457   |  |   | 45   
|                            |  |                  |       |         |   |          |  |                |       |  |   |      
|Total store closing reserve |  | $                | 7,029 |         | $ | 1,325    |  | $              | 2,026 |  | $ | 6,328
|                            |  |                  |       |         |   |          |  |                |       |  |   |      

The store closing reserve at April 29, 2006, January 28, 2006 and April 30, 2005 includes a
current portion (in accrued liabilities) of $2.8 million, $2.8 million and $2.5 million, respectively, and a long-term portion (in other liabilities) of $2.5 million, $2.8 million and $3.8 million, respectively.

4. Net Income Per Share

Basic net income per share is computed by
dividing net income by the basic weighted-average number of common shares outstanding for the period. Diluted net income per share is computed by dividing net income by the diluted weighted-average number of common shares outstanding.

A reconciliation of basic weighted-average number of common shares to diluted weighted-average number of common shares is as follows (000s):



|                                                                                      |  |                               |  |                              
|------------------------------------------------------------------------------------- |  | ----------------------------- |  | -----------------------------
|                                                                                      |  | 13 Weeks Ended April 29, 2006 |  | 13 Weeks Ended April 30, 2005
|Basic weighted-average number of common shares                                        |  | 43,228                        |  | 42,905                       
|Incremental shares from assumed exercise of stock options and restricted stock awards |  | 846                           |  | 1,297                        
|                                                                                      |  |                               |  |                              
|Diluted weighted-average number of common shares                                      |  | 44,074                        |  | 44,202                       
|                                                                                      |  |                               |  |                              

Options to purchase approximately 923,000 and 5,000 shares of common stock that were outstanding during the 13
weeks ended April 29, 2006 and April 30, 2005, respectively, were not included in the computation of diluted earnings per share as the exercise price of these options were greater than the average market price of the common shares.



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##### Table of Contents

STEIN MART, INC.

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used herein, the
terms we, our, us, Stein Mart and the Company refer to Stein Mart, Inc. and its wholly-owned subsidiary.

Forward-Looking Statements

This report contains forward-looking statements which are subject to certain risks,
uncertainties or assumptions and may be affected by certain factors, including but not limited to changing preferences in apparel, changes in consumer spending due to current events and/or general economic conditions, the availability of suitable
new store sites at acceptable lease terms, unanticipated weather conditions and unseasonable weather, the effectiveness of advertising, marketing and promotional strategies, ongoing competition from other retailers, adequate sources of merchandise
at acceptable prices, the Companys ability to attract and retain qualified employees to support planned growth, ability to successfully implement strategies to exit or improve under-performing stores, disruption of the Companys
distribution system and acts of terrorism. Readers are urged to review and consider the matters discussed in Item 1A. Risk Factors of our Form 10K for 2005.

Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements of the Company may vary materially from any
future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on beliefs and assumptions of the Companys management and on information currently available to such
management. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to publicly update or revise its forward-looking statements in light of new information or future events. Undue reliance should
not be placed on such forward-looking statements, which are based on current expectations. Forward-looking statements are no guarantees of performance.

Overview

Stein Mart is a retailer offering the fashion merchandise, service and presentation of a better department or specialty store at
prices competitive with off-price retail chains. Our focused assortment of merchandise features fashionable, current-season, moderate to better brand-name apparel for women and men, as well as accessories, gifts, linens and shoes all offered at
prices targeted to be 25% to 60% below the list prices at department stores. Our target customers are fashion-conscious, value-seeking 35-60 year old women with above average annual household incomes. As of April 29, 2006, we operated 263
stores in 30 states and the District of Columbia.

During the first quarter of 2006, we had net income of $7.6 million compared to net income of $16.8
million in the first quarter of 2005. Poor sales during the fall of 2005 necessitated additional markdowns during the first quarter of 2006 to clear fall inventories. The continued repositioning of our home assortment and less-than-appropriate
quantities of transition and spring assortments did not improve our momentum into the first quarter.

During the second quarter of 2006, we expect
comparable store sales to improve modestly and for earnings to approximate last years second quarter results of $0.26 per share. In addition, gross margin opportunities are expected during the second half of 2006 as our markdown optimization
software becomes fully integrated. We plan to open a total of 16 new stores and close six stores during 2006, for a net gain of ten locations.

Stores

There were 263 stores open as of April 29, 2006 and 258 stores open at April 30, 2005.



|                                |  |                               |   |  |                               |  
|------------------------------- |  | ----------------------------- | - |  | ----------------------------- | -
|                                |  | 13 Weeks Ended April 29, 2006 |   |  | 13 Weeks Ended April 30, 2005 |  
|Stores at beginning of period   |  | 262                           |   |  | 261                           |  
|Stores opened during the period |  | 3                             |   |  | 2                             |  
|Stores closed during the period |  | (2                            | ) |  | (5                            | )
|                                |  |                               |   |  |                               |  
|Stores at the end of period     |  | 263                           |   |  | 258                           |  
|                                |  |                               |   |  |                               |  



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##### Table of Contents

STEIN MART, INC.

Results of Operations

The following table sets forth each line item of the Consolidated Statements of Income
expressed as a percentage of the Companys net sales (numbers may not add due to rounding):



|                                             |  |                              |   |  |                              |  
|-------------------------------------------- |  | ---------------------------- | - |  | ---------------------------- | -
|                                             |  | 13 Weeks EndedApril 29, 2006 |   |  | 13 Weeks EndedApril 30, 2005 |  
|Net sales                                    |  | 100.0                        | % |  | 100.0                        | %
|Cost of merchandise sold                     |  | 73.3                         |   |  | 70.7                         |  
|                                             |  |                              |   |  |                              |  
|Gross profit                                 |  | 26.7                         |   |  | 29.3                         |  
|Selling, general and administrative expenses |  | 24.8                         |   |  | 23.4                         |  
|Other income, net                            |  | 1.1                          |   |  | 1.0                          |  
|                                             |  |                              |   |  |                              |  
|Income from operations                       |  | 3.1                          |   |  | 7.0                          |  
|Interest income, net                         |  | 0.2                          |   |  | 0.1                          |  
|                                             |  |                              |   |  |                              |  
|Income before income taxes                   |  | 3.3                          |   |  | 7.1                          |  
|Provision for income taxes                   |  | 1.2                          |   |  | 2.7                          |  
|                                             |  |                              |   |  |                              |  
|Net income                                   |  | 2.1                          | % |  | 4.4                          | %
|                                             |  |                              |   |  |                              |  

For the 13 weeks ended April 29, 2006 compared to the 13 weeks ended April 30, 2005

The 4.2% total sales decrease for the 13 weeks ended April 29, 2006 from the same 2005 period reflects a 5.1% decrease in sales from comparable stores, the
opening of three new stores and the closing of two stores during the first quarter of 2006 and the closing of six stores during the year 2005.

Gross
profit for the 13 weeks ended April 29, 2006 was $97.6 million or 26.7 percent of net sales, a 2.6 percentage point decrease from gross profit of $111.7 million or 29.3 percent of net sales for the first quarter of 2005. Gross profit was
negatively impacted by a 2.6 percentage point increase in markdowns to keep inventories current and a 0.8 percentage point increase in occupancy costs due to a lack of leverage as a result of the 5.1% decrease in comparable store sales. This
decrease in gross profit was somewhat offset by a 0.8 percentage point increase in markup.

Selling, general and administrative (SG&A)
expenses were $90.5 million or 24.8 percent of net sales for the 13 weeks ended April 29, 2006 as compared to $89.0 million or 23.4 percent of net sales for the same 2005 quarter. Included in SG&A expenses for the first quarter of 2006 and
2005 are store closing charges of $0.3 million and $1.3 million, respectively. Also included in SG&A expenses for the first quarter of 2006 is compensation expense from stock options and restricted stock awards of $891,000 and for the first
quarter of 2005 compensation expense of $137,000 from restricted stock awards. The 1.4 percentage point increase in SG&A expenses as a percent of sales is primarily due to a lack of leverage on lower than planned sales during the first quarter
of 2006.

The Company closed two stores during the first quarter of 2006 and six stores during 2005, five of which were closed in the first quarter of
2005. The two stores closed in 2006 and the six stores closed during fiscal year 2005 had sales of $1.1 million and $7.1 million and operating losses of $0.8 million and $1.6 million during the first quarter of 2006 and 2005, respectively.

The Company earned interest income of $891,000 and $394,000 on its cash and short-term investments during the first quarter of 2006 and 2005,
respectively. The increase in interest income is due to higher interest rates and higher average cash and short-term investment balances during the first quarter of 2006 compared to the first quarter of 2005.

Liquidity and Capital Resources

The Companys primary source of
liquidity is the sale of its merchandise inventories. Capital requirements and working capital needs are funded through a combination of internally generated funds, a revolving credit facility and credit terms from vendors. Working capital is needed
to support store inventories and capital investments for new store openings and to maintain existing stores. Historically, the Companys working capital needs are lowest in the first quarter and highest in either the third or fourth quarter in
anticipation of the fourth quarter peak selling season. As of April 29, 2006, the Company had $33.6 million in cash and cash equivalents and $25.0 million in short-term investments.

Net cash provided by operating activities was $16.3 million for the first quarter of 2006 compared to $0.4 million for the first quarter of 2005. More cash was provided by operating activities during the first quarter
of 2006 compared to the first quarter of 2005 primarily due to an increase in accounts payable during the first quarter of 2006, offset by a decrease in net income. The increase in accounts payable is primarily the result of several large vendor
payments paid at the end of April 2006 that remained outstanding at the end of the quarter.



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STEIN MART, INC.

Net cash provided by investing activities was $67.0 million for the first quarter of 2006 compared to $1.6 million for the first quarter of 2005. Capital expenditures were $13.0 million and $8.9 million for the first
quarter of 2006 and 2005, respectively. Capital expenditures were higher in the first quarter of 2006 compared to the first quarter of 2005 due primarily to remodeling costs for existing stores and the continued roll-out of new point-of-sale
equipment. The Company expects to invest approximately $50 to $60 million in capital expenditures in 2006 to open new stores and continue investment in systems and store upgrades for increased productivity and enhanced customer service.

Net cash used in financing activities was $69.9 million during first quarter of 2006 compared to net cash provided by financing activities of $2.9 million during the
first quarter of 2005. More cash was used in financing activities during the first quarter of 2006 as a result of paying a regular quarterly cash dividend of $0.0625 per share in March 2006 and a special cash dividend of $1.50 per share in April
2006; a total of $68.1 million of cash dividends paid. In May 2006, the Company declared a quarterly cash dividend of $0.0625 per share which will be paid on June 23, 2006 to shareholders of record at close of business on June 9, 2006.

Net cash used in financing activities includes cash inflows from the excess tax benefits from share-based compensation of $0.2 million and $1.7 million
during the first quarter of 2006 and 2005, respectively. SFAS No. 123R requires tax benefits resulting from share-based compensation in excess of compensation cost recognized to be classified as financing cash flows in the Consolidated
Statements of Cash Flows. Prior to the adoption of SFAS No. 123R, such tax benefits were classified as operating cash flows.

The Company has a $100
million senior revolving credit agreement with a group of lenders, with an initial term ending January 2011. At April 29, 2006 there were no direct borrowings and no Event of Default existed under the terms of the Agreement.

The Company believes that expected net cash provided by operating activities and unused borrowing capacity under the revolving credit agreement will be sufficient to
fund anticipated current and long-term capital expenditures, working capital requirements and dividend payments. Should current operating conditions change, management can borrow on the revolving credit agreement or adjust operating plans, including
new store rollout.

Contractual Obligations

To
facilitate an understanding of the Companys contractual obligations, the following payments due by period data is provided:



|                 |  |       |         |                  |   |             |  |             |        |               |   |         |  |   |        
|---------------- |  | ----- | ------- | ---------------- | - | ----------- |  | ----------- | ------ | ------------- | - | ------- |  | - | -------
|                 |  | Total |         | Less than 1 Year |   | 1  2 Years |  | 3  5 Years |        | After 5 Years
|Operating leases |  | $     | 385,550 |                  | $ | 67,335      |  | $           | 64,519 |               | $ | 148,043 |  | $ | 105,653
|                 |  |       |         |                  |   |             |  |             |        |               |   |         |  |   |        

At April 29, 2006, the Company had no direct borrowings on its credit facility. Other long-term liabilities
on the balance sheet include deferred income taxes, deferred compensation and other long-term liabilities that do not have specific due dates, so are excluded from the preceding table. Other long-term liabilities also include long-term store closing
reserves, a component of which is future minimum payments under non-cancelable leases for closed stores. These future minimum lease payments total $12.4 million and are included in the above table.

Off-Balance Sheet Arrangements

The Company has outstanding standby
letters of credit totaling $7.0 million securing certain insurance programs at April 29, 2006. If certain conditions occurred under these arrangements, the Company would be required to satisfy the obligations in cash. Due to the nature of these
arrangements and based on historical experience, the Company does not expect to make any payments; therefore, the letters of credit are excluded from the preceding table. There are no other off-balance sheet arrangements that could affect the
financial condition of the Company.

Seasonality

The
Companys business is seasonal in nature with a higher percentage of the Companys merchandise sales and earnings generated in the fall and holiday selling seasons. Accordingly, selling, general and administrative expenses are typically
higher as a percent of net sales during the first three quarters of each year.

New Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123R which replaced SFAS No. 123 and superseded APB No. 25. SFAS No. 123R requires companies to recognize
expense in the financial statements for the fair values of all share-based payments to employees over the employees requisite service periods. The pro forma disclosures previously permitted under SFAS No. 123 no longer are an alternative
to financial statement recognition. SFAS No. 123R also clarifies and expands guidance in several areas, including measuring fair value, defining requisite service period, accounting for liability awards and accounting for tax benefits.



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##### Table of Contents

STEIN MART, INC.

We adopted SFAS No. 123R as of January 29, 2006 and elected to apply the modified prospective transition method to all past awards outstanding and unvested as of this adoption date. SFAS No. 123R is
discussed further in Note 2 to Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For information regarding our exposure to certain
market risk, see Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A of our Form 10-K for the year ended January 28, 2006, filed with the Securities and Exchange Commission on April 6, 2006.
There were no material changes to our market risk during the 13 weeks ended April 29, 2006.

Item 4. Controls and Procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of April 29, 2006 to provide reasonable assurance that the objectives of disclosure controls and procedures are met.

There have been no changes in our internal control structure over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that occurred during the
last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding
repurchases by the Company of its common stock during the 13-week period ended April 29, 2006:

ISSUER PURCHASES OF EQUITY SECURITIES

---



|                                     |  |                                  |  |                             |       |                                                                                     |         |                                                                                |          
|------------------------------------ |  | -------------------------------- |  | --------------------------- | ----- | ----------------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------ | ---------
|Period                               |  | Total number of shares purchased |  | Average price paidper share |       | Total number ofshares purchased
as part of publicly announced plans or programs (1) |         | Maximum number ofshares that may yetbe purchased underthe plans orprograms (1)
|January 29, 2006  February 25, 2006 |  |                                 |  | $                           |      |                                                                                     |        |                                                                                | 1,157,650
|February 26, 2006  April 1, 2006    |  | 200,000                          |  | $                           | 17.29 |                                                                                     | 200,000 |                                                                                | 957,650  
|April 2, 2006  April 29, 2006       |  | 1,466                            |  | $                           | 16.87 |                                                                                     | 1,466   |                                                                                | 956,184  
|                                     |  |                                  |  |                             |       |                                                                                     |         |                                                                                |          
|Total                                |  | 201,466                          |  |                             |       |                                                                                     | 201,466 |                                                                                |          
|                                     |  |                                  |  |                             |       |                                                                                     |         |                                                                                |          

---

|(1) | The Companys Open Market Repurchase Program is conducted pursuant to authorizations made from time to time by the Companys Board of Directors. The shares reported in the
table are covered by a Board authorization to repurchase 2.5 million shares of common stock announced on March 5, 2001; this authorization does not have an expiration date.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table provides information regarding our equity compensation plans as of April 29, 2006:

EQUITY COMPENSATION PLAN INFORMATION

---



|                                                           |  |                                                                         |  |                                                          |       |                                                                                                                                              |          
|---------------------------------------------------------- |  | ----------------------------------------------------------------------- |  | -------------------------------------------------------- | ----- | -------------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Plan category                                              |  | (A) Number of securitiesto be issued uponexercise ofoutstanding options |  | (B) Weighted-averageexercise price ofoutstanding options |       | (C) Number of securitiesremaining availablefor the futureissuance underequity compensationplans (excludingsecurities reflectedin column
(A))
|Equity compensation plans approved by security holders     |  | 3,142,347                                                               |  | $                                                        | 13.58 |                                                                                                                                              | 1,852,194
|Equity compensation plans not approved by security holders |  |                                                                        |  |                                                          |      |                                                                                                                                              |         
|                                                           |  |                                                                         |  |                                                          |       |                                                                                                                                              |          
|Total                                                      |  | 3,142,347                                                               |  | $                                                        | 13.58 |                                                                                                                                              | 1,852,194
|                                                           |  |                                                                         |  |                                                          |       |                                                                                                                                              |          



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STEIN MART, INC.

Item 6. Exhibits



|31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a)
|---- | --------------------------------------------------------------------------------



|31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a)
|---- | --------------------------------------------------------------------------------



|32.1 | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
|---- | -------------------------------------------------------------------------------



|32.2 | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
|---- | -------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.



|                   |  |                  |  |                                                  
|------------------ |  | ---------------- |  | -------------------------------------------------
|                   |  | STEIN MART, INC.
|                   |  |                 
|Date: June 7, 2006 |  | By:              |  | /s/ Michael D. Fisher                            
|                   |  |                  |  | Michael D. Fisher                                
|                   |  |                  |  | President and Chief Executive Officer            
|                   |  |                 
|                   |  |                  |  | /s/ James G. Delfs                               
|                   |  |                  |  | James G. Delfs                                   
|                   |  |                  |  | Senior Vice President and Chief Financial Officer



15