After three months of disappointing sales numbers and a spectacular fall in its stock price, Body Central Corp. announced Friday that CEO Allen Weinstein resigned.
Body Central did not give a reason for the 65-year-old Weinstein’s departure but said in a news release that he “advised the company’s board of directors that he is retiring and, therefore, effective Aug. 16, 2012, has resigned.”
“Mr. Weinstein had been CEO of the company for the past three years, and we believe his retirement likely stemmed from a decision by the board of directors to take a new look at leadership given declining same-store sales trends this year,” William Blair & Co. analyst Sharon Zackfia said in a research note.
Chief Financial Officer Thomas Stoltz was promoted to chief operating officer and named interim CEO while the board searches for a permanent replacement. Stoltz has only been with the company since September 2011 after previously serving as CFO of Jacksonville-based sports apparel company Fanatics LLC.
“During the interim, we are confident in Tom’s ability to manage the company given his extensive experience in high growth specialty retail and e-commerce channels,” Chairman John Haley said in the news release.
Haley himself has only been chairman of the board for six weeks after Martin Doolan retired from the nonexecutive position, citing health concerns.
Body Central seemed like it could do no wrong after going public in October 2010, with strong sales reports fueling a sharp rise in its stock after the initial public offering.
However, things have unraveled in the past three months for the Jacksonville-based fashion retailer. The company still is profitable, but after recording double-digit percentage increases in comparable-store sales in 2010 and 2011, Body Central in May announced that comparable-store sales are declining this year.
Twice since May, Body Central has said the decline in comparable-store sales would be even steeper than its previous projections. The company now expects to post a decline of 8 percent to 10 percent for the full year, after an 11.3 percent increase last year.
Comparable-store sales, which measure sales at stores open for more than one year, are considered a key statistic in analyzing a retailer’s performance.
Once the sales started dropping, Body Central’s stock went down with them. After peaking at $30.93 at the beginning of May, the stock has been trading near the $9 level recently. It moved little on Friday after the announcement of Weinstein’s resignation, which came before the stock market opened.
“Today’s announcement does not materially change our viewpoint on the stock. While we see value for longer-term investors from nine times our 2013 EPS estimate, we will continue to wait on the sidelines pending greater sales and earnings visibility,” Zackfia said in her note on Friday.
Stein Mart sales trends look encouraging
Sales trends are looking up at Jacksonville’s other fashion retailer. Despite reporting lower earnings, Stein Mart Inc. officials are happy with the company’s second-quarter results.
Stein Mart last week reported net income for the quarter ended July 28 of $730,000, or 2 cents a share, down from $1.3 million, or 3 cents a share, in the second quarter of 2011.
However, total sales rose 2.3 percent to $276.4 million and comparable-store sales rose 1.6 percent in the quarter.
In a conference call with analysts, interim CEO Jay Stein said the company’s new strategy of replacing coupons with everyday low prices, along with “great merchandise,” boosted sales in the quarter.
“Our strategy is working well for us. In fact, we made substantial progress in all areas of our business — comp sales, margins, merchandise and presentation,” he said.
“We’re getting back to our old self — a specialty store environment and discount prices,” Stein said.
While the trends are encouraging, SunTrust Robinson Humphrey analyst Robin Murchison said in a research note that she is maintaining a “neutral” rating on Stein Mart’s stock.
“The company’s progress is commendable, but improvement is not yet consistent. Further, we note that current year estimates, though in line, remain below beginning of the year expectations,” she said.
Stein Mart also has been searching for a new CEO since Stein took over on an interim basis last fall.
Stein did not give any more news on the company’s effort to find a permanent CEO, except to say that the search is continuing.
He told the Daily Record in June that the company was negotiating with a potential replacement and was hopeful of reaching an agreement soon.
Atlantic Coast Financial receives new order to raise capital
Atlantic Coast Financial Corp. said in a Securities and Exchange Commission filing last week that federal regulators have increased the capital requirements for its subsidiary, Atlantic Coast Bank.
The Jacksonville-based company said it entered into a consent order with the Office of the Comptroller of the Currency that has several conditions, including a provision that its core capital must be at least 9 percent of assets by Dec. 31.
Under a previous agreement with regulators, Atlantic Coast’s capital level was supposed to be at 7 percent of assets. However, the capital level was only at 5.36 percent as of June 30, so the bank already was below regulators’ requirements.
New investor for Dick’s Wings
American Restaurant Concepts Inc., the Jacksonville-based franchisor of the Dick’s Wings restaurant chain, announced a new investor last week.
Seenu Kasturi, CEO of a Louisiana investment firm called Blue Victory Holdings Inc., agreed to buy 15.53 million shares of American Restaurant Concepts from CEO Michael Rosenberger for 3.2 cents each.
The deal will give Kasturi 45.3 percent of the company and reduce Rosenberger’s stake to 13.3 percent.
The transaction values the entire company at $1.1 million. American Restaurant Concepts’ stock is traded in the over-the-counter market under the ticker symbol “ANPZ.”
The Dick’s chain currently has 15 restaurants in Florida, one in Georgia and two in Canada, all owned by franchisees.
American Restaurant Concepts late in July filed a delayed annual report showing a net loss of $1.65 million and revenue of $433,627 in 2011.
Fortegra reports higher earnings
Fortegra Financial Corp. last week reported second-quarter earnings of $4 million, or 19 cents a share, up from $1.5 million, or 7 cents, the previous year.
Revenue for the Jacksonville-based insurance services company rose 9 percent to $58.7 million.
“With an in-line second quarter, Fortegra is extending its streak of solid quarterly performances following an expense-related miss in the second quarter of 2011,” SunTrust Robinson Humphrey analyst Mark Hughes said in a research note.
“Margins improved across all three business units, and with the company’s largest, most profitable segment now entering its seasonally strongest period, we believe Fortegra is well positioned to post upside to revenue and earnings,” he said.
Fortegra’s stock has been stuck near the $8 level recently, below its December 2010 IPO price of $11 a share.
“We continue to view Fortegra as a uniquely positioned insurance services company with a strong growth outlook and an impressive profitability profile, and we view Fortegra shares as undervalued at current price levels,” Keefe Bruyette & Woods analyst Frank Lee said in his research note after the earnings report.
Lee rates the stock at “outperform” and Hughes rates it as a “buy,” with both analysts having a price target of $10.
Still waiting on ParkerVision
It sounds like a broken record, but another quarter passed with no revenue from ParkerVision Inc.
The Jacksonville-based company, which is developing wireless technology, has a two-pronged plan to bring in money.
One is an ongoing relationship to use its technology in mobile devices through a partnership with Via Telecom. ParkerVision is working with an unnamed Via customer to manufacture products in the Asian market.
During the company’s quarterly conference call, CEO Jeff Parker said the customer is hoping to bring the products to market “sooner than later” but he would not be more specific on the timetable.
The second part of its strategy is a patent infringement lawsuit against Qualcomm Inc., but that isn’t scheduled to go to trial until August 2013.
Fidelity increases stake in Remy
Fidelity National Financial Inc. last week said it bought an additional 1.18 million shares of Remy International Inc., giving it 50.2 percent of the Indiana-based auto parts company.
Now that it’s a majority-owned subsidiary, Fidelity will now be including Remy’s quarterly results with the company’s overall results.
Jacksonville-based Fidelity, which is mainly a title insurance company, recently began doing the same thing with its American Blue Ribbon Holdings restaurant business after acquiring a majority stake in that company.
Remy had filed a registration statement for an IPO, with Fidelity planning to retain a stake in the public company.
“We continuously pursue avenues to unlock the value of Remy for FNF shareholders,” Fidelity CEO George Scanlon said in a news release.
“Given the current market valuation, we believe our shareholders are best served by FNF increasing our stake and taking a majority ownership position to best control the future of our investment. We are confident the increased transparency of a consolidated Remy will be beneficial in ultimately realizing the maximum value of this investment for our shareholders,” he said.
Kraft spinoff set for Oct. 1
Kraft Foods Inc. last week said its board of directors has approved the spinoff of its North American grocery business into a separate company and said the spinoff will be effective on Oct. 1.
The grocery business, to be called Kraft Foods Group Inc., manufactures a number of food and beverage products, including Maxwell House coffee made at its Downtown Jacksonville plant.
The rest of Kraft’s current business, which it refers to as global snacks, will become a company renamed Mondelez International Inc. after the spinoff.
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