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Basch Report
Jax Daily Record Thursday, Sep. 26, 201905:20 AM EST

Fanatics hires Nike executive as new CFO

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Michener Chandlee’s hiring comes amid reports company is considering an IPO.
by: Mark Basch Contributing Writer

Fanatics Inc. hired a longtime Nike Inc. executive as chief financial officer last week amid speculation about the sports merchandise giant heading for an initial public offering.

Michener Chandlee joined Fanatics as CFO after spending 18 years with Nike. He will work from the company’s West Coast headquarters in San Mateo in the Silicon Valley region of California.

Fanatics, which began as a retail store in the Orange Park Mall in 1995, has its East Coast headquarters at 8100 Nations Way in the Baymeadows area of Jacksonville.

The company was founded by brothers Alan and Mitchell Trager with the store called Football Fanatics, which opened a second location in The Avenues mall in 1997.

Fanatics early on saw the potential for selling merchandise online.

It grew over two decades into a dominant company in the sports merchandise industry through exclusive licensing arrangements with numerous professional and college teams and leagues.

Although the company is privately owned and doesn’t disclose finances, its annual revenue is believed to exceed $2 billion, leading to speculation that it is headed toward an IPO.

A story last week by CNBC on Chandlee’s hiring said Fanatics is valued at $4.5 billion.

At the end of 2018, many financial news websites, including Kiplinger’s Personal Finance and MarketWatch, cited Fanatics on lists of big companies that could go public this year.

Fanatics is part of a holding company called Kynetic, which is headquartered near Philadelphia.

The Tragers sold Fanatics in 2011 to GSI Commerce Inc. for $277 million. Just two weeks after that deal was completed, GSI agreed to a $2.4 billion buyout by eBay Inc.

As part of the eBay deal, Fanatics and two other GSI businesses were spun off into Kynetic, which was formed by GSI Chief Executive Michael Rubin.

Rubin ranks No. 271 on Forbes magazine’s list of richest Americans with an estimated net worth of $2.9 billion.

According to CNBC, a Fanatics spokesperson responded to questions about a potential IPO by saying it is focused on building the company.

Whether the company goes public or not, Fanatics continues to grow. Its news release about Chandlee’s hiring said he is joining at an “opportune” time with several initiatives coming, including a deal to manufacture and distribute Nike NFL and MLB fan gear sold across all retail channels starting in 2020.

“They’ve unlocked endless opportunities to reinvent the licensed sports industry and fan experience for the on-demand economy,” Chandlee said in the release.

“As Fanatics continues to rapidly scale into a leading global, vertical, customer-focused brand, Mich brings an ideal skill set and experience base to lead and scale our finance organization ahead,” Fanatics CEO Doug Mack said in the release. 

“He understands the economics of the sports apparel industry and the power of product, brand, technology and channel innovation – which are key as he guides our financial future.”  

Chandlee succeeds Lauren Cooks Levitan, who left Fanatics last week to join San Francisco-based Faire, a company that helps local retailers find wholesale merchandise.

Levitan had been chief financial officer at Fanatics for four years, working at the West Coast office.

Analyst cuts CSX earnings forecast on freight volume

Jacksonville-based CSX Corp. is one of the first big U.S. companies to report earnings every quarter, and the railroad company’s performance often is taken as a harbinger of the overall economy’s outlook.

According to at least one analyst, CSX’s third-quarter report three weeks from now may raise concerns about the economy.

UBS analyst Thomas Wadewitz lowered his earnings forecast for CSX and other major railroads because of signs of lower freight volume.

“Softness in rail volumes has been broad-based, affecting industrial-related segments like metals and forest products, consumer segments like intermodal, and also coal and grain,” Wadewitz said in his report.

He said the two major Eastern U.S. railroads, CSX and Norfolk Southern Corp., have been most affected by the volume softness.

Wadewitz slightly lowered his third-quarter forecast for CSX but he reduced his 2020 forecast from $4.74 a share to $4.40.

Wall Street already has noticed the trend, with “modest” declines in stock prices, he said.

CSX, trading at $72.39 at the time of his report, was down 10% from its peak price.

“We note, however, that even with volumes down year over year for much of 2019, the rail stocks remain at higher levels than they were in 2018. We attribute the resilience in U.S. rail stocks to cost reduction taking place under PSR, which was absent in prior cycles of weaker volume,” he said.

PSR, or precision scheduling railroading, is a system implemented by late CSX Chief Executive Hunter Harrison to improve efficiency. 

As CSX improved its efficiency under Harrison’s successor, Jim Foote, other major railroads also are implementing PSR.

Moody’s upgrades Regency debt rating to ‘positive’

Moody’s Investors Service upgraded its debt rating outlook on Jacksonville-based Regency Centers L.P.  last week from “stable” to “positive.”

The limited partnership is the operating partnership of publicly traded shopping center developer Regency Centers Corp.

“The positive rating outlook reflects the high likelihood that Regency Center’s prudent approach to managing its portfolio performance and its capital structure would help maintain leverage ratios at about current levels, even in the prevailing retail environment,” Moody’s said in a news release.

Moody’s said that retailer bankruptcies and store closings will continue to “strain” the performance of shopping centers.

While that raises concerns, Regency’s “track record with releasing the vacant spaces has been commendable,” it said.

Regency last month announced Hap Stein is retiring as CEO and will be succeeded by President Lisa Palmer, which gives confidence to Moody’s.

“Regency Centers’ longtime CEO has decided to retire from executive leadership at the end of the year, but the succession plan announced by the company includes many experienced Regency Centers executive managers ensuring a seamless transition to the new management team,” it said. 

Ameris Bancorp raises dividend

Ameris Bancorp last week said its board of directors voted to increase the quarterly dividend on its common stocks from 10 cents a share to 15 cents.

The banking company, which has its executive offices in Jacksonville, grew with the July 1 acquisition of Fidelity Southern Corp.

Ameris recently filed financial statements showing what its pro forma results would have been if it had owned Fidelity Southern all year. Ameris reported earnings of $1.66 a share in the first half of 2019, but the addition of Fidelity Southern would have reduced earnings to 92 cents.

Ameris is expecting earnings to grow next year as cost savings are fully realized after integrating operations of the two banking companies.

The addition of Fidelity Southern would have raised the company’s total assets from $11.9 billion to $17.1 billion as of June 30, according to the pro forma statements.

Shoe Carnival shuffles managers

Shoe Carnival Inc. announced last week a realignment of its top management, including CEO Cliff Sifford giving up his role as president and becoming vice chairman of the board.

Former Jacksonville Jaguars owner Wayne Weaver is chairman of the board. His family is the largest shareholder of the Evansville, Indiana-based footwear chain with 34% of the stock.

Mark Worden, executive vice president and chief strategy and marketing officer, was promoted to president.

Worden also was appointed to the newly created position of chief customer officer, focusing on all customer-facing activities including store operations and e-commerce activities. 

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