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Jax Daily Record Monday, Jan. 16, 2017 6 months ago

Amazon.com a logistics game-changer for Jacksonville economy

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by: Mark Basch Contributing Writer

Amazon.com Inc. will be a game-changer for the Jacksonville economy, as the online retailer builds two fulfillment centers bringing up to 2,700 jobs to the area.

Amazon also is possibly the leading game-changer in the entire logistics industry, Stifel, Nicolaus analyst John Larkin said in a research report after the company announced its plan for the second Jacksonville facility.

“This extraordinary company has retailers, carriers, and 3PL’s (third-party logistics providers) scratching their collective heads,” Larkin said.

“The company’s entire infrastructure network is geared for speed and in the case where strategic logistics partners are not up to the challenge, the company begins to provide transportation and logistics services itself,” he said.

Its expansion goes beyond the flood of distribution and fulfillment centers it is building in Jacksonville and other U.S. cities.

“Just in the past year or two, the company has rolled out its own trailer fleet, has developed an Uber-like last mile delivery process named Flex, has received its license to operate as a non-vessel owning common carrier in the international container shipper market, has developed its own air parcel hubs with its ‘own’ dedicated aircraft, has been at work developing its own truck brokerage operation, and recently revealed a plan to deliver packages by drone from airborne warehouses,” Larkin said.

He said logistics companies have to come up with an “Amazon strategy” to deal with the growth.

“Either engage in a fully integrated, collaborative partnership with Amazon, or align with more traditional, slower moving customers. It may well prove difficult to serve both of these ‘masters’ sustainably,” Larkin said.

Stein Mart not a ‘little Amazon’

Stein Mart Inc. relaunched its e-commerce web site last year as the Jacksonville-based fashion retailer sought to increase sales.

However, Chief Financial Officer Gregory Kleffner said at an investor conference last week that Stein Mart doesn’t expect its online business to be a big part of its sales strategy.

“There’s not a lot of people making a lot of money on e-commerce,” Kleffner said.

“We don’t want to be a little Amazon and make no money on this stuff and just go for the top line,” he said.

Kleffner and interim CEO Hunt Hawkins spoke at the ICR Conference in Orlando, a major annual investor conference.

Stein Mart, which has 290 stores in 31 states, does not expect to see big growth in its store network this year either. Hawkins said he expects it to increase by less than 10, with store openings offset by closings as leases expires.

“It’s not that we won’t open stores, it’s just that we’re going to be more picky about the stores we open,” he said.

The two executives spoke a few days after Stein Mart said it expects to report a fourth-quarter loss, after disappointing holiday sales. They are working on strategies to rebuild sales this year.

“As a retailer, you’ve got to evolve, you’ve got to continue to flow with your customer and you’ve got to be ready to take advantage of it when she’s ready to start working with you,” Hawkins said.

Shoe Carnival lowers forecast

Shoe Carnival Inc. also had a disappointing holiday season, prompting the footwear chain to lower its earnings guidance during a presentation at the ICR Conference.

The company now projects earnings of $1.36 to $1.38 a share for the fiscal year ending Jan. 28, down from its previous forecast of $1.46 to $1.51. Shoe Carnival earned $1.45 a share in fiscal 2015.

The company said comparable-store sales (sales at stores open for more than one year) fell 1.1 percent in November and December, as an improvement in December was not enough to offset a weak November.

Former Jacksonville Jaguars owner Wayne Weaver is chairman of Shoe Carnival and its largest shareholder, controlling 25.2 percent of the stock along with his wife, Delores.

International Baler CEO Griffin resigns

International Baler Corp. last week announced Roger Griffin resigned as president and CEO and was replaced by William Nielson, who had been chief financial officer.

Griffin had been CEO since 2008 of the company, which makes baling equipment used for waste disposal and recycling. The company said in a news release he resigned to pursue other interests, but gave no other details.

Nielsen had been CFO since 1994.

Regency Centers increases guidance

Regency Centers Corp. last week increased its earnings projections for 2016.

The Jacksonville-based shopping center developer, which will release final results on Feb. 8, said it expects core funds from operations of $3.28 to $3.30 a share, up from its previous guidance of $3.25 to $3.28.

Funds from operations are basically earnings excluding noncash charges such as depreciation and amortization expense, and are a key indicator of a real estate investment trust’s performance.

Regency also projected core FFO of $3.42 to $3.48 for 2017, but said that guidance does not include the impact of its pending merger with Equity One Inc. Regency hopes to complete that deal in the second quarter.

Mixed ratings on Rayonier, Regency

As Raymond James analysts Collin Mings and Paul Puryear began the year with a fresh look at real estate investment trust stocks, they upgraded Rayonier Inc. from “market perform” to “outperform” but downgraded Regency from “outperform” to “market perform.”

The Rayonier upgrade came as the analysts upgraded the timber REIT sector to “overweight” within the universe of REIT stocks.

“Since November 2014, Rayonier has undergone significant changes — there have been modifications to management, its real estate strategy, and timberland portfolio (most notably, in the Pacific Northwest),” Mings and Puryear said in a research report.

“Rayonier shares responded favorably in 2016 (after lagging in 2015) to the aggressive, yet deliberate, steps taken to improve the company through portfolio repositioning/capital allocation decisions. We see additional upside in 2017 and an attractive total return proposition — particularly relative to alternatives in the broader REIT universe,” they said.

Regency produced a total return (stock price increase plus dividends) of 4 percent last year, lower than many Jacksonville-based companies that produced double-digit returns.

However, Regency’s total return was better than the overall large-cap shopping center REIT industry, which had a net negative 1 percent return last year, the analysts said.

“We believe this relative performance has translated into a more balanced risk/reward profile entering 2017, especially given its pending merger with Equity One” Mings and Puryear said.

“We continue to believe Regency shares can be held by investors at the current valuation, especially given the quality of its portfolio, but would look to deploy new capital into other alternatives,” they said.

Analyst rates Advanced Disposal ‘outperform’

Oppenheimer analyst Noah Kaye last week initiated coverage of Advanced Disposal Services Inc. with an “outperform” rating.

Kaye set a $25 price target for the stock, which was trading at $22.24 at the time. The Ponte Vedra-based company was priced at $18 in its October initial public offering.

“Relative to its integrated waste management peers, we see Advanced Disposal as a regional growth play with an improving free cash flow profile. We look for return to positive volume and further accretive acquisitions to drive upside to shares,” Kaye said in his report.

He expects the IPO to help the company grow through acquisitions.

“We see increased flexibility as free cash flow improves and IPO proceeds provide Advanced Disposal with dry powder,” Kaye said.

“While we expect management will continue to focus on tuck-in deals, increased flexibility and a more nimble debt load could enable larger deals,” he said. “We believe location will inform strategy, particularly in regions where Advanced Disposal has significant disposal assets and minimal competition.”

Safariland completes international deals

The Safariland Group, a Jacksonville-based provider of safety and survivability equipment, announced the completion of three international acquisitions last week.

The company acquired Pacific Safety Products Inc., which it said is the largest body armor manufacturer in Canada, for 15.4 million Canadian dollars (about $11.7 million).

Safariland also bought two British companies that make protective equipment, Aegis Engineering Ltd. and LBA International Ltd. Terms of those deals were not disclosed.

Safariland was formerly part of Armor Holdings Inc., which was sold to BAE Systems Inc. in 2007. Former Armor CEO Warren Kanders then bought the Safariland business from BAE in 2012.

Invitation Homes files IPO plans

Invitation Homes Inc., a Dallas-based company that leases single-family homes in Jacksonville and 12 other markets, is planning an IPO.

The company controlled by the Blackstone Group filed a registration statement with the Securities and Exchange Commission to sell $100 million in stock in its IPO, but several reports said the deal is expected to exceed $1 billion.

The registration statement says Invitation Homes is concentrated in the Western U.S. and Florida, with 54 percent of its revenue in the most recent quarter coming from Florida and California.

“We invest in markets that we expect will exhibit lower new supply, stronger job and household formation growth and superior net operating income growth relative to the broader U.S. housing and rental market,” the filing says.

The company lists 2,018 homes in its Jacksonville portfolio producing 3.9 percent of its total revenue. It generated $905 million in revenue for the 12 months ended Sept. 30.

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