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Jax Daily Record Tuesday, Sep. 6, 201612:00 PM EST

Shoe Carnival drops on disappointing earnings

by: Mark Basch Contributing Writer

In a pre-holiday week with little market-moving news, Shoe Carnival Inc. grabbed attention by reporting lower-than-expected sales and earnings.

The footwear chain controlled by former Jacksonville Jaguars owner Wayne Weaver reported earnings of 22 cents a share for the second quarter ended July 30, 2 cents lower than last year and also below analysts’ forecasts of 26 cents to 28 cents, according to Thomson Financial.

Sales rose 1.8 percent to $231.9 million, lower than the average analysts’ forecast of $237 million. Comparable-store sales (sales at stores open for more than one year) rose 0.5 percent.

Shoe Carnival’s stock reached a record high of $30.13 a week before the earnings report, but the stock dropped $3.48 to $26.18 Thursday after the disappointing results.

In the company’s conference call with analysts, CEO Cliff Sifford expressed confidence in Shoe Carnival’s sales trends, noting this was the eighth straight quarter of comparable-store sales increases. Comparable-store sales are considered a key indicator of a retailer’s performance.

“Even though we fell short of our expectation, we believe the initiatives we have executed over the past several years such as Shoe Perks and our multichannel enhancements will continue to help us drive comparable store sales increases throughout the year” Sifford said.

Shoe Perks is a customer rewards program offered by Shoe Carnival.

The company is in the middle of one of its most important periods of the year, as parents buy shoes for students heading back to school. The timing of those purchases affected second-quarter results, Sifford said.

“As we entered the key back-to-school sales season at the end of the second quarter, we saw a strong trend where our customers shop not only closer to the start of school, but continue to shop well after school began,” he said.

“This isn’t the first time customers have waited to buy their footwear closer to need. However, this year, it was more pronounced than we have seen in previous years,” Sifford said.

Chief Financial Officer Kerry Jackson said the company expects third-quarter comparable-store sales to rise by a low single-digit percentage. Shoe Carnival is projecting comparable-store sales for the full fiscal year to rise by 1.5 percent to 2 percent.

Despite the lower second-quarter earnings, the company maintained its earnings forecast for the full fiscal year of $1.58 to $1.65 a share, up from $1.45 last year.

It said share repurchases by the company, which reduced the number of shares outstanding, will have a positive impact on earnings per share.

Weaver is chairman of Shoe Carnival and its largest shareholder, owning 25.2 percent of the stock along with wife Delores.

Evansville, Ind.-based Shoe Carnival operates 412 stores in 35 states and Puerto Rico.

Nielsen executive named Acosta CEO

Jacksonville-based Acosta last week said it is bringing in a former Nielsen Co. executive as its new president and CEO.

Steve Matthesen starts as president and CEO on Tuesday, succeeding Robert Hill, who will become vice chairman.

Matthesen was most recently president of Global Retail for Nielsen and has more than 20 years of experience in consumer data, analytics, business strategy and operations.

Acosta provides sales and marketing services for the consumer packaged goods industry.

“In a world where data is directly impacting the purchasing decisions of retailers and shoppers more than ever before, Steve brings an analytical perspective that will accelerate Acosta’s strategies and enhance the value Acosta provides to our clients and customers,” Hill said in a news release.

Fitch upgrades city’s rating

A day after Duval County voters approved the half-cent sales tax to pay off the city’s $2.7 billion pension debt, Fitch Ratings upgraded its ratings on certain bonds issued by the city.

Fitch said Wednesday it upgraded up to $75 million in commercial paper notes that are backed in part by sales tax revenue from AA-minus to AA.

The ratings agency did not say the upgrade was tied to the vote or the outlook for the pension debt. However, it said in a news release “the rating upgrade on the bank notes reflects the combined pledge of the local half-cent sales tax and excise tax revenues and the resilience of the security,” based on Fitch’s analysis of the impact of a possible economic downturn.

Fitch said the city’s growth should continue to increase tax revenue.

“Sales tax revenues have experienced more volatility during the recent economic downturn, but have improved with positive growth occurring annually since fiscal 2011; fiscal 2015 receipts surpassed pre-recession levels,” it said.

AB InBev cutting jobs after merger

Anheuser-Busch InBev expects to cut 3 percent of its global workforce once it completes its acquisition of rival beer-maker SABMiller, according to merger-related documents filed with the Securities and Exchange Commission.

While the company is not announcing specific cuts, they are likely to come from office functions of the combined company and are unlikely to impact operations such as the Anheuser-Busch brewery in Jacksonville.

The company said it employs more than 800 people in Florida, mostly at its brewery and a can plant in Jacksonville.

AB InBev, headquartered in Belgium, employs more than 150,000 people in 25 countries, and SABMiller employs about 70,000, but a Reuters report said total employment of the combined company will be lower because of planned divestitures before the merger.

Reuters said the job cuts are expected to total about 5,500.

The SEC filing said the job cuts will come in phases over a three-year period.

AB InBev plans to maintain its headquarters in Leuven, Belgium, and also maintain its global functional management office in New York.

But some SABMiller offices will close, including a regional headquarters in Miami that is being relocated to Bogota, Colombia, according to the filing.

The companies are hoping to complete the merger in October.

PHH Corp. loses another customer

Struggling mortgage banking company PHH Corp. is losing another chunk of business from a key customer.

PHH disclosed in an SEC filing that HSBC Bank USA is selling servicing rights to 139,000 mortgage loans currently subserviced by PHH, and the purchaser does not intend to retain PHH as the subservicer.

PHH said the HSBC loans account for about 29 percent of its subservicing business, and the loss of that business is expected to reduce pre-tax earnings by about $10 million a year.

The company reported a net pre-tax loss of $69 million in the first half of this year.

The loss of the HSBC business follows a decision by Merrill Lynch Home Loans in the spring to begin servicing loans itself that had been previously been contracted to PHH.

The combined business of Merrill Lynch and HSBC accounted for about 47 percent of PHH’s subservicing business, the company said in the SEC filing.

Merrill Lynch also decided to move the origination of new applications for certain mortgage products to its internal operations.

PHH is headquartered in New Jersey with a major operations center in Jacksonville. However, the company downsized its Jacksonville office as it has reduced employment in the city from more than 1,000 three years ago to 450 last fall when it decided to find a smaller office site.

PHH management has been reviewing possible strategic alternatives for the company, but when the company released second-quarter results last month, CEO Glen Messina said he was not ready to comment on the possible alternatives.

GE Transportation acquires ShipXpress

GE Transportation last week said it acquired ShipXpress, a Neptune Beach-based company that provides logistics software.

ShipXpress was founded in 2000 to provide web-based software for railroads to monitor shipments, according to the company’s website. It has expanded to serve commodities and energy companies.

GE Transportation provides equipment and services to the rail, mining, marine, power and drilling industries. The company said the acquisition of ShipXPress expands its portfolio of logistics solutions for customers.

Terms of the deal were not announced.

JPMorgan settles Washington Mutual cases

JPMorgan Chase & Co. said in an SEC filing it will receive a $645 million settlement for claims involving its 2008 purchase of the failed Washington Mutual Inc.

The acquisition of Washington Mutual, which employed about 2,000 people in Jacksonville in its mortgage banking unit, made JPMorgan a major employer in Northeast Florida.

The company combined Washington Mutual’s mortgage operations with its own Chase home mortgage division, which employed 750 people in Jacksonville, and eventually began building a Chase bank branch network in the area starting in 2013.

The Federal Deposit Insurance Corp. arranged the buyout of Washington Mutual. The $645 million settlement, which will be paid by the Washington Mutual receivership estate, settles four pending lawsuits involving JP Morgan that are related to the deal.

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