The Dow may still be lurking above 21,000, but this bullish stock market does not shed its grace on all publicly traded companies. These five — three are locally based and two are prominent players here but have headquarters in other states — are finding the recent economy has not been as kind to them as others. Some of these businesses are in industries undergoing rapid change and intense competition. Others — well what's the best way to put this? — seem to be suffering from a failure to execute. They are all big companies with uphill climbs of variable steepness ahead. Like the five well performing companies profiled earlier this week, there's much to appreciate and learn from these firms and their challenges.
1. Bloomin' Brands, Tampa: Searching for sizzle in aging chains
The parent of Outback Steakhouse, Carrabba's, Bonefish Grill and Fleming's recently reported a sales decline, a fourth quarter loss, another drop in customer traffic and plans to close 43 underperforming locations. Which warning sign is most worrisome? It's troubling in recent years that each time this column has raised questions about Bloomin's inability to build fresh traction for its major chains, Tampa Bay Times readers are quick to email me about their generally mediocre dining experiences. Wrote Mike in one recent email: "Outback has been my favorite restaurant for over 20 years. Their steak was always incredibly tender. But, the last 2 times I've ate there, their signature 'Outback Sirloin' has been as tough as shoe leather."
While I might contest the shoe leather description, apparently many readers who were loyal in the earlier days of these steakhouse, Italian and fresh fish chains now seem equally passionate to complain: The chains are not what they used to be.
CEO Liz Smith, speaking with analysts, recently praised the innovative quality of its newer "Loaded Bloomin' Onion" which adds cheese fries atop its signature deep-fried onion appetizer. That addition, by the way, bumps the original Onion's calorie count to 2,360 from 1,954. Bon appetit!
2. Duke Energy, Charlotte, N.C.: A monopoly's falling revenue, quarterly loss
Like many monopolies, Duke closely resembles the goose that lays golden eggs. The giant power company's practically assured a fat bottom line by setting the electric rates it charges millions of customers in multiple states (including Florida) with a profit margin agreed upon in advance by often malleable regulators. Nice gig. So it's especially interesting to look at some of Duke's financial numbers of late.
Last month it reported $2.1 billion in 2016 earnings. That's a 23 percent drop from the $2.8 billion of the previous year. In its fourth quarter, Duke suffered an actual loss of $227 million as a result of selling off its volatile Latin America business.
Duke CEO Lynn Good, speaking to analysts last month, said: "We will relentlessly pursue our goal of achieving and sustaining top quartile customer satisfaction, placing the customer at the center of everything we do."
That comment may fly in North Carolina. But not in Florida. The last J.D. Power annual survey to gauge residential customer satisfaction of big electric companies was not kind to Duke. Among 10 majors competitors in the South, three Duke units (Duke Energy Progress, Duke Energy Carolinas and Duke Energy Florida) all ranked below the regional average in satisfaction. And Duke Energy Florida, as it has for years, ranked dead last. That's a long, long way from the top quartile.
3. Frontier Communications, Norwalk, Conn: Did it bite off more than it can chew?
Eleven months ago and just days after Frontier entered the Tampa Bay market by taking over Verizon's FiOS business here, the cable TV/Internet company felt compelled to issue an apology. "Given the size and scope of this transaction, some of our customers experienced service disruptions," Frontier said last April. "This is not the result we intended, and we apologize to our customers experiencing any problems."
As we close in on its first year anniversary, is Frontier finding its footing? For all of 2016, it lost $587 million. In the fourth quarter 2016, it posted a $133 million loss. The number of residential customers decreased 2.9 percent sequentially to 4.9 million. And the average monthly residential revenue per customer was $80.33, down 2.5 percent compared to the prior quarter. Frontier shares a year ago traded over $5. Now they are nearly half, in a range not seen in decades..
Frontier's arrival here was part of a three-prong expansion by the firm into parts of California, Texas and Florida, a trio called the "CTF" footprint. Frontier says its latest quarterly results were hurt in part by writing down $45 million worth of nonpaying CTF customers. Maybe there's a reason so many did not pay up.
4. HSN, St. Petersburg: Is it possible to clone Joy Mangano?
For those unfamiliar with Mangano's fame, the inventor/pitchwoman of the self-wringing Miracle Mop and Huggable Hangars is such a legend of mega-selling products that A-list actress Jennifer Lawrence portrayed Mangano in the 2015 bio-pic movie Joy. HSN could use another dozen like Mangano to jumpstart the TV/online/catalog business.
HSN had positive momentum until last year when the wheels fell off its sales machine.
Net sales fell 3 percent in 2016 to $3.6 billion, and slipped 2 percent in the fourth quarter to $1.1 billion. Net income last year plummeted 30 percent to $119 million. In the fourth quarter, it dipped 27 percent to $43.5 million. Those are big hits in just one year.
HSN CEO Mindy Grossman blames last year as one that distracted consumers, with TV time spent fixated on the Summer Olympics and one of the more unusual presidential elections in history. HSN's also fighting the same battles as Macy's, Sears, JCPenneys and other major retailers who see fewer customers in their stores. And those that are there are only buying goods when they are on super sale. Thanks, Amazon.
HSN shares closed Thursday at $37.80. A year ago, the stock traded over $54.
Ahead, Grossman's putting a strong bet on the smart phone as a primary conduit into a shopper's heart. "We believe that a mobile device is no longer just a point-of-sale or a means of check out," she told analysts. "It's increasingly our first point of contact, and may be the only form of engagement we have with certain consumers."
That's a phrase about to be repeated by retailers around the globe.
5. Walter Investment Management, Tampa: Stuck in a rut?
The mortgage servicer and originator has been down and out with a struggling stock price, and legal and regulatory headaches for years. Though its latest quarterly and annual performance will not be unveiled until March 14, signs are not suggesting a turnaround looms in the near future.
Here's what we do know. Revenues for the nine months ended Sept 30, 2016 were $551.6 million. That's a 41 percent drop of $391.1 million from the same period in 2015. That's the draconian environment facing this Tampa firm.
Anthony Renzi came aboard in November as Walter Investment's latest CEO of many. He succeeds interim chief George Awad, who took over for Denmar Dixon who — after resigning as CEO after only eights months — had taken over for Mark O'Brien.
Running Walter is apparently a demanding job. Its board of directors was recently shaken up as well with former CEO O'Brien, ex-USF banking professor Jim Pappas and former real estate expert Shannon Smith stepping down.
Four years ago, Walter investment shares were trading over $45 at their peak. The stock closed Thursday at $3.40.
Contact Robert Trigaux at [email protected] Follow @venturetampabay.