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Jax Daily Record Monday, Mar. 14, 201612:00 PM EST

Stein Mart hoping for better 2016 results

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by: Mark Basch Contributing Writer

Stein Mart Inc. last week reported disappointing fourth-quarter earnings, but Chairman and CEO Jay Stein is optimistic future trends will work in his company’s favor.

The Jacksonville-based fashion retailer’s adjusted earnings of 17 cents a share for the fourth quarter ended Jan. 30 were 15 cents lower than the previous year and 4 cents lower than the average forecast of analysts, according to Thomson Financial.

Stein said in the company’s conference call with analysts that fourth-quarter results were impacted by trends that affected other apparel retailers.

“Traffic and sales were below what we planned as they were impacted by unseasonably warm weather and lower apparel spending,” he said.

“Our earnings were obviously impacted by the lower sales and a more promotional environment. This resulted in elevated post-holiday seasonal inventories which required more markdowns to properly value our fall merchandise heading into spring,” he said.

Stein wasn’t actually in the company’s office during the Thursday conference call because he was visiting some of the five new Stein Mart stores that opened that day, bringing the total number of stores in the chain to 283.

The company’s store growth and other factors have Stein optimistic about better results this year.

“We’ll continue to believe that our initiatives of store unit expansion enhanced by brand penetration, a credit card program and e-commerce, will continue to drive sales,” he said.

“We believe we can capitalize on market trends that are clearly in our favor, including being off price, off mall and well penetrated in the East and the Southeast,” he said.

Analysts are projecting Stein Mart to earn 57 cents to 73 cents a share this year, compared with adjusted earnings of 58 cents in fiscal 2015.

Beyond 2016, Stein sees another advantage in the age of Stein Mart’s target market, which is older than many retailers tend to chase.

“In the years ahead, the growth in number of our more mature customers is forecasted to be substantial,” he said.

Stein Mart’s stock fell by 99 cents to $7.01 Thursday after the earnings report.

Reuters: FIS seeks sale of division of SunGard

Reuters news service last week reported Fidelity National Information Services Inc., or FIS, is looking to sell a piece of SunGard Data System Inc.’s business it acquired last year.

Citing unnamed sources, Reuters said the financial technology company is trying to sell SunGard’s business that serves the public sector and education markets and hopes to get more than $1 billion from a sale.

Jacksonville-based FIS could use that money to pay off some of the debt from its $9.1 billion buyout of SunGard.

Robert W. Baird analyst David Koning said in a research note the SunGard division produced $217 million in 2014 revenue, or about 8 percent of SunGard’s total revenue.

“We would view the sale positively given the PS&E business does not appear core to FIS’ strategy, and the cash could be used to accelerate debt pay-down,” Koning said.

While FIS is looking for cost savings after the SunGard deal, it is expanding in Jacksonville. The company last week announced it will add 250 jobs to the 1,100 it has in Jacksonville.

Harrison still talking about CSX

It seems that Canadian Pacific Railway Ltd. CEO Hunter Harrison just won’t stop talking about Jacksonville-based CSX Corp.

Last week, Harrison continued to talk about the possibility of Calgary-based Canadian Pacific buying either CSX or the other major eastern U.S. railroad, Norfolk Southern Corp., even though both companies have rejected the idea of a merger.

Canadian Pacific, which operates across Canada and northern U.S. states, would buy either one, given the opportunity.

CSX rejected Canadian Pacific in November 2014, and the Wall Street Journal reported Canadian Pacific approached CSX again in January, even while Canadian Pacific continues to pursue Norfolk Southern.

Harrison said in an interview on Canadian television Tuesday that his company and CSX met to “explore some opportunities,” but he denied CSX rejected a merger offer in January, according to a Bloomberg News story.

“I don’t know how we got rebuffed because we never made an offer,” Harrison said.

Reuters reported last week that a Canadian Pacific spokesman said Harrison did not personally meet with CSX officials in January.

Bloomberg itself interviewed Harrison about his merger efforts Thursday on its cable television station.

“Neither one of them think they fit well with us. So I’ve got a selling job to do if we’re going to make this successful,” Harrison said, according to a story on Bloomberg’s website.

Probably most significantly, Harrison rejected the idea of a hostile takeover attempt if he can’t negotiate a deal with either railroad.

“When you go hostile, it doesn’t create the type of environment, the type of esprit de corps among the teams to get those things (serving customers) accomplished,” he said.

CSX has maintained complete silence on the matter, per its company policy not to discuss merger rumors.

Green Energy announces acquisition

Green Energy Enterprises Inc., formerly known as Quasar Aerospace Industries Inc., announced another new direction for its company last week.

The company, which changed its name last year, has operated a flight training school at Herlong Airport on Jacksonville’s Westside for several years.

In 2014, it decided to get into the legal marijuana business by acquiring a “hydroponic and scientific grow supply store” in Colorado.

Last week, it announced an agreement to acquire a company called BEO-ITS Inc., a bio-medical company that has developed a testing process for sexually transmitted infections.

Jacksonville-based Green Energy did not announce financial details of the acquisition.

The company reported revenue of $242,817 and a net loss of $33,342 for the first nine months of 2015.

Green Energy’s stock trades on the OTC Pink Sheets under the ticker symbol “GYOG.”

Drone Aviation gets government contract

Drone Aviation Holding Corp. last week announced a contract with the Department of Defense worth nearly double its 2015 revenue.

Jacksonville-based Drone Aviation said the contract is for its Winch Aerostat Small Platform tactical system and is worth more than $780,000.

The company, which produces lighter-than-air aerostats and tethered drones, had total revenue of $472,159 last year, according to its annual report filed with the Securities and Exchange Commission.

Drone Aviation ended with a net loss of $8.98 million in 2015.

Yodle reduces Web.com forecast

Web.com Group Inc. on Wednesday completed its acquisition of digital marketing firm Yodle and updated its financial projections for 2016, based on the purchase.

Jacksonville-based Web.com, which provides website development services for businesses, is now projecting revenue of $748 million to $763 million with the addition of Yodle, up from its previous forecast of $570 million to $580 million before the deal.

However, the acquisition reduces Web.com’s adjusted earnings forecast range from $2.62 to $2.76 per share to $2.46 to $2.66.

Web.com said it expects the acquisition to be dilutive to earnings per share in the first three to six months.

However, as the company finds cost savings from combining operations, it expects the deal to produce “low teens percentage accretion” to earnings in 2017.

ACFC chairman retires

Atlantic Coast Financial Corp. announced Kevin Champagne retired as chairman of the board and as a director due to health reasons.

Champagne, a retired CEO of a Massachusetts bank, joined Jacksonville-based Atlantic Coast Financial as part of a management overhaul in 2013.

The company said John Dolan was promoted from vice chairman to chairman of the board and Jay Sidhu was named vice chairman after Champagne’s departure.

Atlantic Coast Financial said it will not bring in a new director to replace Champagne, which reduces the size of its board from eight to seven directors.

FNF adds to board

Fidelity National Financial Inc. increased the size of its board from 10 to 11 by electing Janet Kerr to the board of the Jacksonville-based company.

Kerr is vice chancellor of Pepperdine University and also CEO of Kerr Strategic Consulting.

Fidelity said in an SEC filing that Kerr has experience in areas such as start-up counseling, mergers, acquisitions and venture capital.

Fidelity, while mainly a title insurance company, is known for investing its excess capital in a diverse array of non-title businesses.

PHH reviewing capital alternatives

Financially struggling PHH Corp. last week announced it is undergoing a review of “strategic options, including capital structure and deployment alternatives to maximize value for shareholders.”

The mortgage company did not mention a sale of the company as one of the options, as corporations often do when they announce a strategic review.

PHH last month reported a core loss of $152 million for 2015.

The company has been going through a number of cost-cutting moves, including moving its Jacksonville mortgage operations center to a smaller office in the Baymeadows area after downsizing.

PHH said in November it had 450 employees at its Jacksonville office, down from more than 1,000 three years ago.

PHH said it retained Credit Suisse Securities and J.P. Morgan as financial advisers for its review.

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