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- 2016 - March - 22nd -

Fresh Market stock slumping before buyout





By Mark Basch, Contributing Writer

The Fresh Market Inc. is growing in the Jacksonville market, after opening its fourth area store on Riverside Avenue in 2014 and planning a fifth store on Fleming Island this year.

However, sales were lagging and its stock price had dropped sharply from its 2012 peak. So shortly after new CEO Rick Anicetti joined the specialty grocery chain in September, Fresh Market basically put itself up for sale.

Last week, it announced a $1.36 billion buyout agreement by funds managed by Apollo Global Management LLC.

Apollo agreed to pay $28.50 for each Fresh Market share, which the company noted was 24 percent higher than the stock’s trading price before the deal was announced and about 53 percent higher than its price in February prior to “press speculation regarding a potential transaction.”

That speculation was conventional supermarket chain The Kroger Co. was interesting in buying Fresh Market, but then Kroger at one time or another is rumored to be interested in just about every grocery chain.

The buyout price is less than half the stock’s value in the low $60s when it peaked in 2013. The stock had fallen back close to its 2010 initial public offering price of $22 when Fresh Market announced in October it was undergoing a strategic review of alternatives, which could include a sale.

Greensboro, N.C.-based Fresh Market operates 186 stores in 27 states and as it opens new stores, it increased total sales by 5.1 percent to $1.34 billion in the first nine months of fiscal 2015.

However, comparable-store sales dropped by 1.6 percent in the nine-month period. Comparable-store sales are sales at stores open for more than one year and are considered the key indicator of a retailer’s sales performance.

Apollo hopes to complete its acquisition of Fresh Market during the second quarter.

Robertson sees higher pay as CEO

New Stein Mart Inc. CEO Dawn Robertson is getting a significant bump in pay compared with her predecessor, according to a Securities and Exchange Commission filing last week.

Former CEO Jay Stein is the company’s largest stockholder with 32.8 percent of the stock, according to Stein Mart’s 2015 proxy statement, so he really didn’t need a big salary.

Not only was his base salary lower than Robertson’s, but Stein also voluntarily reduced his salary in 2014, the last year for which data is available.

Stein retired last week as CEO for the second time (he originally retired in 2001) after more than four years in this term.

Stein Mart announced Tuesday the appointment of Robertson, a longtime executive with several department stores and apparel retailers, to succeed him as CEO, while Stein remains as chairman of the board.

Robertson received a five-year contract with a base salary of $700,000 a year, plus the ability to earn incentive bonuses, according to last week’s SEC filing.

She also was given an option to buy Stein Mart shares, valued at an estimated $1.7 million.

Stein was scheduled to receive a base salary of $553,200 in 2014 but asked to reduce it by $270,000, or $1,000 for every Stein Mart store open at the time.

He also requested his annual incentive bonus be reduced to zero, according to last year’s proxy.

The Jacksonville-based fashion retailer has not yet filed its 2016 proxy statement, which will provide 2015 compensation information for top executives.

Haskell expands with acquisition

The Haskell Co. is expanding its geographic footprint with an acquisition announced last week.

The Jacksonville-based design, engineering and construction firm agreed to acquire Leidos Constructors LLC, a century-old company that will add offices in Oklahoma City, Tulsa, St. Louis, St. Paul, Houston and Charlotte to Haskell.

Leidos operated under the name Benham before 2007 and Haskell said its operations will operate as a business unit under the Benham brand.

Haskell already has offices in 11 other U.S. cities besides Jacksonville and one in Mexico City. The privately-owned company said it has about $600 million in annual revenue.

Terms of the deal, which is expected to close in the second quarter, were not announced.

Report says McKesson cutting 1,600 jobs

McKesson Corp. last week told employees it planned to cut 1,600 jobs, or about 4 percent of its workforce, according to a Bloomberg News report.

The media relations department of the San Francisco-based health care services company did not respond to an email about how the job cuts may affect its Jacksonville operations.

McKesson acquired Jacksonville-based medical supply distributor PSS World Medical Inc. three years ago. At the time of the acquisition, PSS employed about 780 people in Jacksonville.

Ameris completes Jacksonville Bank deal

Ameris Bancorp last week said it completed its acquisition of Jacksonville Bancorp Inc., parent company of The Jacksonville Bank.

Ameris said Jacksonville Bank will operate as a division of its bank until the conversion of Jacksonville Bank’s systems is completed in May. Jacksonville Bank has eight branches.

Once the conversion is complete, Ameris will operate 14 branches in the Jacksonville market.

“Acquiring The Jacksonville Bank is a great opportunity for Ameris Bank to expand our Southeastern footprint and significantly increase our presence in the Jacksonville market,” Ameris CEO Edwin Hortman said in a news release.

Ameris is officially headquartered in Moultrie, Ga., but its top executives have moved to offices in the Riverplace Tower on the Southbank and the company has put its name atop the building.

Analysts says coal affecting CSX goal

CSX Corp. last week revealed more job cuts in its network, due to continued declines in coal shipments on its railroad.

One analyst said the drop in revenue from coal, historically CSX’s biggest business, will make it difficult for the company to meet its goal of reducing its operating ratio (operating expenses divided by revenue) to a mid-60s percentage.

“We worry that, in the absence of a recovery in coal, CSX will need to restructure its coal network significantly, which is a difficult process,” Scotiabank analyst Turan Quettawala said in a research report as he initiated coverage of CSX with a “sector perform” rating.

Quettawala projects the operating ratio to fall from 69.7 percent last year to 68.6 percent by 2018, a slow trajectory that will not get CSX close to its goal of about 65 percent.

“While we applaud CSX’s cost-cutting efforts, we note that they are generally offset by natural inflation, which suggests that, to get a clear decline in its operating ratio, CSX will need to improve revenue. As such, we see the network as being over-resourced despite a relatively grim revenue growth outlook,” he said.

Jacksonville-based CSX has announced several job cuts in recent months throughout its network in the eastern U.S., because of declining traffic as coal volumes drop.

Last week it told workers at a Russell, Ky., facility it expects to cut 101 out of approximately 430 jobs at that site.

CEO Michael Ward told the Daily Record in January he expects the company’s total employment to fall by about 2 percent in the first quarter this year.

Main Street America earnings jump

Main Street America Group last week reported 2015 net income of $91.4 million, well above 2014 earnings of $37.9 million.

Jacksonville-based Main Street America is a mutual insurance holding company that operates nine property/casualty insurers.

Net written premiums of $967.6 million were slightly lower than 2014 sales of $968.6 million.

“We began 2015 with the most winter storm losses incurred in our company’s 92-year history,” CEO Tom Van Berkel said in a news release.

“However, we stayed on course by remaining a stable and consistent market for our independent agent-customers — while maintaining our underwriting and pricing discipline — and finished the year strong,” he said.

International Baler sales rise in first quarter

International Baler Corp.’s sales rose 12.4 percent to $3.58 million in the first quarter ended Jan. 31, according to a report filed with the SEC last week.

With the sales increase, International Baler had net income of $68,531, or 1 cent a share, reversing a loss in the first quarter last year.

The Jacksonville-based company produces industrial balers used for recycling and disposal.

The quarterly report said the increased sales resulted from higher shipments of two-ram balers, its largest balers that range in price from $160,000 to more than $500,000.

Michaels beats forecasts

The Michaels Companies Inc.’s stock jumped higher Thursday after reporting better-than-expected fourth-quarter earnings.

The Texas-based arts and crafts retailer, which has a distribution center in Jacksonville, reported earnings of 87 cents a share for the fourth quarter ended Jan. 30, 12 cents higher than last year and better than analysts’ forecasts of 82 cents to 85 cents, according to Thomson Financial.

Total sales rose 4.6 percent to $1.7 billion and comparable-store sales rose 3.1 percent in the quarter.

Michaels’ stock rose $3.12 to $27.44 Thursday after the earnings report. The company went public at $17 a share in mid-2014.

The company operates 1,340 stores in the U.S. and Canada under the Michaels, Aaron Brothers and Pat Catan’s brands.

BAE cuts 30 jobs

BAE Systems Inc. on Friday said it will cut 30 jobs at its two Jacksonville area shipyards by April 1, as part of a layoff announced in January.

Another 180 workers could be laid off in May, the company said in a news release. It said two separate layoffs may be needed to address “short-term workload fluctuations.”

BAE, which operates shipyards at Mayport Naval Station and on Heckscher Drive, had originally said it could cut 300 of its 700 Jacksonville jobs.

This follows a layoff of 100 people in the fall of 2015.

mbasch@baileypub.com

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