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Jax Daily Record Monday, Jan. 9, 201712:00 PM EST

Stein Mart expects fourth-quarter loss

by: Mark Basch Contributing Writer

The fourth quarter is generally the best time of the year for Stein Mart Inc., with the Jacksonville-based fashion retailer often making more money in that three-month period than it does in the other nine months combined.

However, Stein Mart on Friday said after a disappointing holiday season, it is expecting to report a loss for the fourth quarter ending Jan. 28.

The company said total sales for the last nine weeks of the calendar year fell 1.9 percent and comparable-store sales dropped 4.8 percent. Comparable-store sales are sales at stores open for more than one year and are considered a key indicator of a retailer’s performance.

Stein Mart operates 290 stores in 31 states, up from 278 stores at the end of fiscal 2016.

“Our sales in November and December were particularly difficult,” interim CEO Hunt Hawkins said in a news release.

“We have been aggressive with our promotions and markdowns to manage our inventory levels. This has impacted our gross profit rate and, as a result, we are now expecting to report a loss for the fourth quarter but will be profitable for the (fiscal) year,” he said.

Hawkins was named interim CEO in September after the sudden resignation of Dawn Robertson, who left after only six months on the job amid concerns she was moving too quickly with new marketing strategies.

Stein Mart’s stock dropped sharply after Robertson’s resignation, and the company ended 2016 as one of the few Jacksonville-based companies to decline in value, down 18.6 percent.

After Friday morning’s announcement, Stein Mart’s stock fell to a 52-week low of $4.50 in early trading and closed Friday at $4.51, down 75 cents on the day.

The three analysts following Stein Mart had been expecting a profit of between 1 cent and 16 cents in the quarter, according to Yahoo Finance.

Big gains for Jacksonville stocks

While Stein Mart dropped, stocks of most Jacksonville-based companies posted some remarkable gains in 2016, with many of them jumping higher in the last two months of the year in the post-election rally.

Sixteen of the 22 stocks finished the year higher and 14 produced double-digit gains.

The biggest gain came from Rayonier Advanced Materials Inc., which rose 57.9 percent. But that was basically a rebound as earnings improved after two disappointing years sent the stock plummeting.

Most of Rayonier AM’s gains came early in the year but the second- and third-best increases came from two stocks that surged in November and December.

Landstar System Inc. rose 45.4 percent and CSX Corp. increased 38.5 percent, as transportation stocks seemed poised to benefit from President-elect Donald Trump’s policies.

Ameris Bancorp, which has its executive offices in Jacksonville, rose 28.3 percent as bank stocks rallied on expectations the Trump administration will loosen financial regulations.

The next-best rise was Fidelity National Information Services Inc., or FIS, up 24.8 percent. FIS provides technology services for financial institutions and would benefit from an improved environment for banks.

TapImmune drops after reverse split

The biggest decline in 2016 came from immuno-oncology company TapImmune Inc., which has several cancer treatments under development but no products on the market.

TapImmune was trading under $1 for most of the year before increasing its price with a 1-for-12 reverse split in September, leading to a Nasdaq Capital Market listing in November.

While that increased the stock’s visibility, the price fell over the last few months of the year and it ended down 46.1 percent.

TapImmune CEO Glynn Wilson issued an update to shareholders late Dec. 30 after the market closed for the year and said he is optimistic about 2017.

“We expect our solid clinical progress to be the primary value driver for TapImmune and we are looking forward to several catalysts as we focus on advancing our clinical pipeline as efficiently as possible,” he said.

WFOX and WJAX not always together

Although both sides had been warning viewers for days, many Jacksonville area subscribers to DirecTV and AT&T U-Verse were surprised to wake up Jan. 1 and discover WFOX TV-30 and WJAX TV-47 were not available.

It should have been more of a surprise two days later to find WFOX was back, but CBS affiliate WJAX was still missing from those satellite and cable television services and remained off the air for days before returning to the systems Friday.

The two stations have been operating together since 2000 so it was understandable that a dispute over a new contract would take both off the air at the same time. But why would one station come back without the other?

Well, in the complicated regulatory environment of the Federal Communications Commission, the negotiation of retransmission fees is one of the few areas where WFOX and WJAX are not allowed to operate together.

Although they operate jointly and brand themselves together as Action News, WFOX is owned by Atlanta-based conglomerate Cox Media Group and WJAX is owned by a private North Carolina partnership called Bayshore Television LLC.

Under their agreement, Cox provides a large number of operating services to WJAX.

Retransmission fees are fees paid by cable and satellite providers to television stations for the right to carry the stations on their systems.

They have become a hot-button topic in the industry as providers and stations haggle before contracts are renewed.

Until about a decade ago, cable companies carried local stations for free under the FCC’s “must carry” provision. But stations began to opt out of the must carry rule and seek fees as an additional source of revenue.

WFOX and WJAX could not reach agreements with AT&T (which owns DirecTV and U-Verse) when their contracts expired Dec. 31, so the stations were pulled off the systems.

Cox was actually negotiating agreements for 13 stations in 10 markets, including WFOX.

On Jan. 2, Cox announced it reached a long-term agreement with AT&T for those 13 stations, without providing details, so WFOX returned to DirecTV and U-Verse.

However, Cox was not allowed to include WJAX in the negotiation because FCC rules require Bayshore, the station’s owner, to negotiate the fees itself, said Chris Wolf, director of programming and public affairs for WJAX.

So, the CBS station remained off the systems until Bayshore and AT&T worked out a separate agreement.

WFOX and WJAX (then under different call letters) came together in 2000 when Clear Channel Communications Inc., which owned WFOX, bought WJAX under new FCC rules that allowed companies to own two stations in one market.

Clear Channel sold off its group of television stations in 2008 to Newport Television LLC.

However, Newport was ordered by the FCC to divest one of the Jacksonville stations because its rules prohibited companies from buying a second station if both are rated among the top four stations in the market.

When Clear Channel bought WJAX, it was a low-rated UPN affiliate so the rule didn’t apply. But by 2008, the station had joined CBS and both it and WFOX were top-four stations.

Newport sold WJAX to a partnership called High Plains Broadcasting but continued to operate the station under a joint services agreement.

When Newport decided to sell its stations in 2012, the FCC said again it would have to find separate owners for the Jacksonville stations. Cox bought WFOX and Bayshore bought WJAX from High Plains, with Cox taking over operation of both stations.

Tegna Inc. is allowed to own WTLV TV-12 and WJXX TV-25 in Jacksonville because when Tegna’s predecessor, Gannett, agreed to buy WJXX in 1999, the ABC affiliate ranked fifth in the market.

Graham Holdings Co., owner of WJXT TV-4, agreed last year to buy a second Jacksonville station, WCWJ TV-17, but that CW network affiliate is not a top-four station.

Regency Centers no longer ‘top pick’

RBC Capital Markets analyst Wes Golladay last week lowered his rating on Jacksonville-based Regency Centers Corp. from a “top pick” to “outperform.”

“We continue to believe Regency is well positioned but lack a near-term catalyst for the company to be the top performing REIT in our coverage,” Golladay said in a research note.

Regency’s stock dropped during the fall, before it announced a merger in November with Equity One Inc. that will create the nation’s largest real estate investment trust focused on grocery-anchored shopping centers.

The stock finished 2016 with a gain in price of just 1.2 percent.

As a REIT, Regency pays a strong dividend and when the $2 in dividend payments are added in, Regency shareholders’ total return was 4.2 percent last year.

APR Energy renews General Electric deal

A year after a group of private equity firms acquired Jacksonville-based APR Energy, the company last week announced a renewal of its strategic alliance with General Electric Co.

APR, which provides fast-track power plants around the world, agreed in October 2013 to buy GE’s power rental business for $314 million, including $250 million in APR stock. That made GE a significant investor in APR and created a strategic alliance.

Now as a private company, APR did not announce financial details of its renewal with GE, but it expects the deal to help the company’s business.

“Our partnership will provide APR Energy access to new leads and opportunities throughout the GE global network, helping to support our business growth and thereby increasing demand for GE equipment,” APR CEO John Campion said in a news release.

Atlantic Coast Bank conversion complete

Atlantic Coast Financial Corp. said in a Securities and Exchange Commission filing last week that its Atlantic Coast Bank subsidiary completed the conversion from a federally chartered savings bank to a Florida-chartered commercial bank.

The conversion should have no effect on customers or shareholders. The company said last year it wanted to convert its charter to simplify its regulatory process.

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