Sales at handbag maker, which has a distribution center in Jacksonville, fall 3 percent.
Coach is an international brand of handbags and other accessories that is highly dependent on its Jacksonville distribution center.
So when Hurricane Irma hit the area in September, Coach felt it.
Coach’s parent company, Tapestry Inc., last week reported Coach’s sales fell 3 percent in the first quarter ended Sept. 30 to $924 million and comparable-store sales (sales at stores open for more than one year) fell 2 percent.
The company said the sales drop was due in part to certain “anticipated” issues, including the shift in timing of a Chinese festival into October.
“However, what we did not anticipate were the additional impacts of the hurricanes in North America and the typhoons in Asia,” Coach brand CEO Joshua Schulman said during Tapestry’s conference call with analysts.
“In addition to the direct impact to sales at stores in the hurricane’s path, we also experienced disruption to our Jacksonville, Florida, distribution center, which services all of our North America business,” he said.
“That distribution center had trouble both receiving merchandise from the port and then getting it out to the network of Coach stores across the country.”
Schulman said sales are rebounding so far in the second quarter of Tapestry’s fiscal year.
“That gives us continued confidence in our ability to deliver a strong holiday season,” he said.
The company last month changed its name from Coach Inc. to Tapestry to reflect its broader reach with the acquisition of two other brands, Stuart Weitzman and Kate Spade & Co.
Tapestry reported adjusted earnings of 42 cents in the quarter, 3 cents lower than last year’s first quarter.
Lake City bank buying CBC
Lake City-based First Federal Bancorp Inc. last week agreed to buy Coastal Banking Company Inc., the parent of CBC National Bank.
Coastal is headquartered in South Carolina but its CBC bank subsidiary is headquartered in Fernandina Beach.
CBC has two branches in Nassau County, three in Marion County and one in Sumter County. It also has three branches in South Carolina.
First Federal has 17 Florida branches, including two in Nassau County and one in Baker County.
First Federal will pay $21.50 in cash for each Coastal share, a total of $83.2 million, and repay $8.2 million in debt.
Web.com earnings rise, revenue falls
Web.com Group Inc. reported third-quarter earnings of 16 cents a share, 9 cents higher than the third quarter of 2016, but revenue fell 1 percent to $188.6 million.
Barclays Capital analyst Deepak Mathivanan saw one positive sign in revenue trends for the Jacksonville-based company, which provides website development services for businesses.
Mathivanan said in a research note that Web.com is forecasting a slight increase in fourth quarter revenue, “which is the first sign of positive pro forma revenue growth since the company’s Yodle acquisition in early 2016.”
“Looking ahead, we believe Web.com has the right mix of product offerings and go-to-market strategy in place currently to deliver sustainable revenue growth and healthy free cash flow in fiscal 2018,” he said.
A few days before the earnings report, Web.com expanded its product offerings by purchasing Acquisio Inc., a Montreal-based provider of online advertising management.
“Acquisio has world-class technology that utilizes machine learning to run very efficient and automated online marketing campaigns. They also have a highly skilled team of data scientists with expertise in artificial intelligence and a passion for helping small businesses,” Web.com CEO David Brown said in the company’s quarterly conference call.
“Strategically, this is an investment in both technology and the team at Acquisio that will help cement Web.com’s leadership position in efficiently delivering value-added solutions to the small business market,” he said.
Web.com, which paid $9.7 million for Acquisio, did not give financial projections for the new business.
While Web.com is expanding its services, BWS Financial analyst Hamed Khorsand says acquisitions are hurting its stock price, because investors are concerned about its debt level.
“Web.com will probably have to show some debt reduction along the way to win over some investors,” Khorsand said in his research note last week.
“We continue to believe the equity price is tied to the leverage Web.com is carrying versus the free cash flow the company is generating. Once the debt begins to decline in a meaningful manner there should greater upside to the stock price,” he said.
Web.com’s stock fell $1.40 to $21.90 Wednesday after the earnings report.
Khorsand maintained a “buy” rating on the stock. Mathivanan maintained an “equal weight” rating, saying the shares are fairly valued.
Deutsche Bank CEO sees big cuts
While Deutsche Bank continues to grow its Jacksonville operations center, the global bank’s chief executive in Germany continues to talk about cutting jobs.
Last week, CEO John Cryan said the company could be cutting thousands of jobs as it moves forward.
In an interview with the Financial Times, Cryan said Deutsche Bank employs 97,000 people, but “most big peers have more like half that number.”
He said many jobs could be cut by using technology to replace people and increase efficiency.
Deutsche Bank first came to Jacksonville in 2008 and has grown its operation to 2,100 employees at two Southside campuses. Brian Fay, head of the Jacksonville office, told the Daily Record in September the bank had 180 open positions.
Cryan visited the Jacksonville offices last year and said he could see the operation growing to 2,800, a thousand more employees than Deutsche Bank had in the city at the time.
FirstAtlantic deal closing by year-end
National Commerce Corp.’s acquisition of FirstAtlantic Financial Holdings Inc. has received regulatory approval, and the deal is expected to close by year-end, FirstAtlantic told its shareholders last week.
FirstAtlantic is the only independent commercial bank serving just the Jacksonville market. Birmingham, Alabama-based National Commerce intends to continue operating its area offices under the FirstAtlantic name with its existing management after the deal closes.
In a quarterly letter to shareholders, FirstAtlantic CEO Mitchell Hunt said the acquisition will help the bank grow.
“While we have experienced organic growth, the environment for executing the acquisition strategy has become much more challenging for smaller banking companies such as ourselves,” he said.
“Your board of directors believes that partnering with a company like National Commerce will enable our shareholders to continue their investment in the banking industry while increasing the possibilities for growth.”
FirstAtlantic stockholders can receive either cash or stock for their shares.
FirstAtlantic reported third-quarter earnings rose 47 percent to $1.3 million, or 22 cents a share.
The bank, which opened in 2007, had $465 million in assets at the end of the quarter.
Medtronic sees lower Maria impact
Medtronic PLC last week said the financial impact of Hurricane Maria on its Puerto Rico operations was less than originally forecast.
The medical device maker said it was able to restart its operations on the island faster than expected and it was nearly back to pre-hurricane capacity by Oct. 18, a month after the storm.
Medtronic, which had originally forecast a $250 million hit to its quarterly results, now says Maria reduced revenue in the second quarter ended Oct. 27 by $55 million to $65 million.
The storm impact reduced earnings per share by about 3 cents. Medtronic is forecasting adjusted earnings, excluding the Maria impact, to be flat to slightly higher than last year’s second quarter earnings of $1.04 a share.
Medtronic, which is headquartered in Dublin, Ireland, manufactures surgical instruments for ear, nose and throat doctors at its Jacksonville facility.
The St. Joe Co. doubles earnings
The St. Joe Co. reported third-quarter earnings doubled to $5.9 million, or 8 cents a share.
Revenue for the real estate company rose 24 percent to $33.6 million, due to higher revenue from real estate sales, leasing and timber.
“We believe our third quarter and year-to-date results reflect that our business strategy to increase both recurring revenue and investments in our real estate produced improved results.” CEO Jorge Gonzalez said in a news release.
St. Joe was formerly headquartered in Jacksonville but is now based in WaterSound in the Florida Panhandle, with most of its properties located between Tallahassee and Destin.
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