12/29/97

Action thriller in ‘98 for Regal Cinemas?

Analysts are casting Knoxville-based Regal Cinemas (REGL) for a starring role in the drama of movie theater acquisitions ("Wall Street Journal" 12/24). Regal’s rapid growth and relatively low stock make it a tempting target and "a screaming value," according to analyst Gordon Hodge at NationsBanc Montgomery Securities. Nashville is a prime example of the growth strategy that has made Regal the nation’s third largest movie theater chain in just eight years of operation -- the company opens a giant 27-screen theater adjacent to 100 Oaks mall on January 15 and a second, smaller theater is being built in Green Hills ("Nashville Business Journal" 12/8). According to SEC filings, Regal plans to develop as many as 600 new screens in 1998 at a cost of up to $225 million. This rapid growth means that Regal is giving market leader Carmike Cinemas (CKE) a run for its money in Nashville and other cities. Regal’s strong management team, clean theaters and good concessions are a hit with analysts, who say Regal is a better investment for shareholders than Carmike. With movie theater companies going for prices as high as 10 times cash flow, Regal shareholders will be sitting in the front row for this financial thriller. Potential investors may want to keep an eye on Regal’s mega-theater at 100 Oaks, to see whether the company can fill enough seats at the 27 screens to turn a profit.

12/22/97

Shoney's loses 74 cents a share in 4th quarter

Shoney's, Inc., the Nashville-based restaurant company whose stock has skidded most of the year, reported a 4th quarter loss of 74 cents per share today. Shoney's has struggled through a proxy fight this year as well as charges related to the closure of 75 underperforming restaurants. Shoney's stock (SHN) was rebounding slightly at midday after reaching a low of nearly $3 per share last week. The restaurant chain ended its fiscal year October 26, 1997, with revenues of $1.2 billion, an increase of 12% from revenues of $1.1 billion in fiscal 1996. Revenues were affected by restaurants acquired during 1996, a decline in comparable store sales of 3.4%, and the Company's closure of 75 under-performing units during 1997. Revenues for the 12-week fourth quarter of fiscal 1997 were $274.2 million, a decrease of 4% as compared to revenues of $284.8 million in the same quarter of 1996. Comparable store sales declined 4.1% during the fourth quarter of 1997 with no menu price increase during the period. On November 11, 1997, following the close of the Company's fiscal year, Michael Bodnar was named CEO and President of Shoney's, Inc. "Going forward," Bodnar said, "Shoney's, Inc. is following a strategy for Shoney's Restaurants that focuses on increasing restaurant supervision and training of our restaurant staffs, achieving a significant improvement in cleanliness and food quality, and delivering a consistent, reliable customer experience system wide." As of October 26, 1997, the Company had a total of 1,387 restaurants in 34 states, including 893 company-owned and 494 franchised restaurants.

Brown shoes, blue skies for Genesco

Casual shoes and loafers are "in" and sneakers are "out." The so-called "brown shoe phenomenon" makes Nashville-based shoe retailer Genesco (GCO) a good investment, according to the partners at Entrust Capital, an up- and-coming investment firm started by three former Goldman Sachs brokers. In an interview with Barron's Online, the Entrust partners pointed to strong sales and profits at Genesco-owned Journeys, the leading Generation X shoe retailer, and Johnston & Murphy, which caters to young to middle-aged executives. Journey's sales are growing at about 35% a year, and the trend-driven, teen-targeted footwear retail chain was recently selected as Chain Retailer of the Year by Footwear News. At $12 a share, Entrust considers Genesco stock to be a good value with profits and earnings expected to continue their upward trend of the past year. Overall, Entrust investments have beaten the S&P 500 during the past six months, so other investors may pay attention to the firm's recommendation. The Genesco turnaround is no secret to local Genesco shareholders, who saw their shares sink below $5 a share in 1995 before rebounding to the low-to-mid teens this year. Selling off its clothing division helped Genesco boost profits, and it has been rumored that Genesco may also spin off its struggling western boot division.

12/19/97

CorporateFamily Solutions stock enjoys a White House lift

A Clinton plan to give tax breaks to family-friendly businesses appears to be sending the stock price of Nashville-based CorporateFamily Solutions to its highest level since the company went public last summer. CorporateFamily (CFAM), which provides companies with employee benefits such as work-place child care and family-support programs, closed Thursday (12/18) at $21 per share. That compares to a previous high of $18.25. Analysts say the stock is up because of this week’s news that President Clinton is expected to propose tax breaks for companies with on-site child care -- one legislative proposal calls for a 50 % credit on as much as $150,000 in total annual day-care expenses. "The overall trend of the needs of families is staring you right in the face," NationsBanc Montgomery Securities analyst Michael Moe told Dow Jones News. His firm was one of the underwriters in the company’s initial public stock offering. "(CorporateFamily) is really right at the crest of the wave that is going on for those services." CorporateFamily also benefited from a positive report by analyst Andrew Lanyi, head of Lanyi Research at CIBC Oppenheimer Corp. Lanyi’s report predicts an earnings growth rate of 25% to 35%, noting that CorporateFamily “cookie-cutter concept” for corporate child care centers keeps overhead low as the company grows. CorporateFamily already has an impressive client list -- the 94 corporate "family centers" it manages include major corporations like Johnson & Johnson, Boeing and Chase Manhattan. This is a golden opportunity for CorporateFamily to promote its services to a national audience. In a press release issued this week, the company notified the media its executives were ready and waiting for media interviews about the President’s proposals, as well as the need for workplace child care and work/family employee benefits. Media interest in the company should increase as we get closer to the State of the Union address in January, when President Clinton is expected to unveil his workplace child care package.

12/18/97

Aftershocks at Service Merchandise

The Christmas blues are worsening at Service Merchandise (SME) after the company warned shareholders that holiday sales numbers will fall short of projections. Standard & Poors has lowered its ratings on the Nashville-based catalog showroom retailer's debt to double-B-minus because the weak sales and earnings trends are expected to lower measures of cash flow protection. Service Merchandise typically operates at a loss the first three quarters of each year and counts on the holiday rush to make its money, so it is particularly vulnerable to holiday weakness. S&P acknowledges Service Merchandise's efforts to improve merchandising and close money-losing stores, but discounters and specialty stores have changed the marketplace. Its gloomy projections continue a five-year trend of declining earnings. One analyst estimates this year's earnings per share at 10 to 15 cents, a long slide from the 83 cents per share the company earned in 1992. The company's stock dropped 1/4, or almost 10%, to 2 5/16, following Tuesday's loss of 1/2. By releasing preliminary sales figures, Service Merchandise gets out the bad news early and takes a hit to its stock now instead of February when official year-end earnings are released. While investors may receive less of a shock in 1998, they are still faced with declining profits, a weak stock price and questions about Service Merchandise's future in the marketplace.

12/17/97

Holiday fear at Service

Analysts are pulling back and executives are circling the wagons at Service Merchandise, with a Dow Jones report calling it "one of the first casualties of a so-far lackluster holiday shopping season." In a news release Tuesday, Service Merchandise said its fourth-quarter earnings would fall significantly short of estimates, in a year when sharp losses have marked the first three quarters. The Nashville-based catalog showroom retailer (SME) traded down to the $2.50 range in heavy volume following the company announcement, reaching a 52-week low. The company still says it will show a profit for the quarter and year, but Morgan Keegan analyst Craig Weichmann told Dow Jones he is expecting only a 10 to 15 cent a share profit for the year, down from expectations of 30 cents or more. After a year of change under the leadership of CEO Gary Witkin, including increased advertising, a shift in product emphasis and elimination of the familiar, self-serve clipboard order method, customers are just not responding. Some point to the success of the category superstores as a factor. Analysts still say Service is nowhere near the fate of its former direct competitor Best Products Co., which filed for bankruptcy in 1996 and is liquidating under a court-approved plan.

Sky-High airfares

A recent national survey on airfares confirms what Nashville business travelers already know--despite the expansion of no-frills carriers like Southwest Airlines (NYSE:LUV), air fares are sky-high. American Express Travel Related Services reported on Tuesday that airline fares jumped 3.3% in October, which adds up to an incredible 38% increase in the average one-way published domestic fare since February 1996. Nashville executives with business in Dallas pay nearly $1,000 for a round-trip airline ticket, while flights to Atlanta and Memphis cost $696 and $596 respectively, according to Sally Davenport, owner of Nashville Express Travel in Hendersonville. The major airlines aren't popular with almost anyone right now. Not only are businesses unhappy with high fares, but travel agents are organizing a union to protest a reduction in their commissions. Some companies may vote with their feet and fly less often, but many business people cannot afford to stay on the ground. The only happy people may be airline shareholders. United Airlines reported this week that fourth-quarter earnings will meet or beat analysts' estimates, and the company hopes to post a double-digit percentage increase in earnings per share.

12/16/97

Why fight it?

A group of angry, well-organized neighbors can make a formidable opponent for business, a but Hoover Inc. is preparing for another round in its 10 year old fight to locate a rock quarry in Davidson County (Nashville Banner 12/15). Hoover has been looking for a place to blast rock since 1987, when the airport expansion forced the company to close its quarry. Hoover struck out three times in its attempt to find a quarry location in 1991 and 1992, when angry neighbors defeated plans to rezone land in locations near the airport, in the Bell Road area, and finally at a site off Nolensville Road close to the Williamson County line. Now the Tennessee Supreme Court has ordered Metro's Board of Zoning Appeals to reconsider quarry operations at the Nolensville Road location, without considering the impact of development that has occurred in the area since 1992. Expect the Nolensville neighbors group, known as "Stop the Quarry," to be as loud and politically savvy in their opposition this time around as they were in 1992 when they held rallies, organized letter-writing campaigns and even wrote songs to keep the Hoover quarry out of their neighborhood. The long-running Hoover quarry fight proves that a passionate grass roots campaign of Not In My Backyard (NIMBY) neighbors can win against a business with deep pockets and expensive legal talent, even when the law seems to be on the side of business. Apparently the company still believes it's worthwhile to go for another round, but we have to ask why.

12/15/97

Nashville company smiling over Clinton child-care plan

A presidential initiative on child care should benefit Nashville-based (NASDAQ:CFAM), one of the country’s leading providers of employer-sponsored child care programs. President Clinton will unveil a series of child care proposals in January’s State of the Union message, including a new tax credit for businesses that build or operate child-care centers for their employees (NY Times, 12/14). The Clinton administration is singing from the same songbook as CorporateFamily Solutions by promoting workplace child care centers as an economic issue--employers gain a more motivated, loyal and productive workforce when they help employees balance the demands of work and family. Treasury Secretary Robert Rubin has even visited several companies with on-site child care, including Eli Lilly, whose center is managed by CorporateFamily Solutions. These latest government initiatives come on the heels of the White House Conference on Child Care in October, which CorporateFamily Solutions CEO Marguerite Sallee called incomplete because it didn’t address workplace issues ("White House Conference Need for Future Focus: Changing Workplace"). The presidential focus on workplace child care comes at a good time for the Nashville company, which went public last summer and recently expanded its business to include developing public and private workplace schools. Child care is a business with narrow profit margins, and financial incentives combined with high profile attention should encourage more businesses to invest in work-family programs. CorporateFamily Solutions also has the support of at least one high-profile Republican -- presidential hopeful and former Tennessee governor Lamar Alexander was co-founder of the company.

12/12/97

Asian contagion

Asia sneezes and Federal Express catches a cold... will Tennessee get it too? Analysts cited Asia's financial crisis as one reason the Memphis-based air-express company reported flat profits in the second quarter compared with year-earlier results (Dow Jones 12/11). FedEx (FDX) is among several U.S. companies facing lower demand for their products in Asia. High tech and banking companies have also been affected by the economic turmoil in that region, and stocks in these sectors slid on Thursday. Alan B. Graf Jr., FedEx chief financial officer, told Reuters that the company is holding off on planned expansion in Asia next year, but he's optimistic that Asian exports will ultimately increase as a result of the currency devaluation. FedEx closed down Thursday (12/11) $5 to finish at $62.375, off about 26% from its September peak of $84.50. The hometown impact of the financial crisis in Asia shows the risks of expanding business overseas, particularly in the region once known as the "Asian miracle." Tennessee has been promoting business ties with Korea and Japan for 22 years through its participation in the Southeast/U.S. Japan Association. 30 corporations from Tennessee have spent $1.25 million to help pay for the Volunteer State's participation in economic development summits with Korea and Japan over the last two years, and Governor Don Sundquist made an economic development trip to China in 1996.

12/11/97

No, the hotel is staying open

Bad news -- including wrong news -- travels faster than good news, and the latest developments at Opryland are apparently causing confusion among Nashville-bound tourists. Charles "Butch" Beckwith, chairman of the American Bus Marketplace, told a bus industry group that some people thought the Opryland Hotel was shutting its doors when they heard national news reports about the closing of the Opryland USA theme park. Beckwith blamed overly simplified news reports for the misunderstandings among people living outside the Nashville area. He said tourists responded more positively when they learned that the theme park would be replaced with Opry Mills, a $200 million dollar retail complex or "shoppertainment" center. Beckwith believes that shopping attracts tourists, which is why his tour bus company is developing a series of shopping trips to the Mall of America in Minnesota. The catch is that Opry Mills won't be open for another two years, during which time the tour groups will have to settle for Nashville's existing tourist attractions. This fact isn't lost on Dolly Parton (NewSource, 12/10). Through the Partnership 2000 program and other marketing initiatives, economic leaders have reinforced the Nashville / Music City tie to garner "top of mind" media awareness. Heres the other side of that coin.

12/10/97

They've got "shoppertainment" too!

Dolly Parton courted 2,100 tour group operators Tuesday at The American Bus Marketplace '97, a convention for the motorcoach industry held at Opryland Hotel. The country singer's theme park, Dollywood in Pigeon Forge, hopes to increase attendance after Opryland USA closes at the end of this month to make way for Opry Mills megamall. Dollywood's attendance, with 2.1 million people annually, has already passed Opryland's attendance by about 5 percent. Nashville's been in the American Bus Association's top-five destinations in the country for several years, and Pigeon Forge now might gain in popularity. No one knows yet how much Opryland's closing will help Dollywood, but it's sure got a lot going for it. Pigeon Forge already has the state's major outlet offerings and Dollywood will soon be the state's only theme park. In fact, "shoppertainment" -- what Opry Mills will bring to Nashville a couple of years from now -- already exists in Tennessee. It's called Pigeon Forge and Gatlinburg.

Twitty estate still not settled

The IRS says properties left by the late Conway Twitty are worth $7.9 million -- more than twice what the estate's lawyers estimated (Washington Post 12/09/97). The government wants almost $2.3 million in additional taxes, and the lawyers for Twitty's estate are appealing to the U.S. Tax Court in Washington. Twitty, who died in 1993, lived in Hendersonville on land now part of Trinity Broadcasting Network, the religious cable station.

Banking on technology savings

Cost cutting is a major benefit of mergers, but Nashville-based First American Bank has fewer places than usual to trim costs when it acquires Deposit Guaranty of Mississippi. Because there is little market overlap, job cuts are expected to number 500-900, at most 12% of the combined workforce. First American may be banking on technology to help cut costs. The company says it expects to slash $68 million, or 25%, of Deposit Guaranty's annual operating costs, and to boost revenue by about $20 million, or 7.5%, by using its superior technology and investment products to target Deposit Guaranty customers. The need to upgrade expensive computer technology was cited in First Union Bank's pending $16.3 billion takeover of CoreStates Financial Corp. and the $9 billion merger between U.S. Bancorp and First Bank System. Mergers give smaller banks access to the technology they need to survive in this competitive industry.

Spontaneous knighthood?

First American may not have had much time to analyze potential cost savings prior to Monday's merger announcment. When Deposit Guaranty put itself on the selling block last week, First American wasn't even among the banks rumored as a possible buyer. As late as the morning that First American's offer was announced, the Wall Street Journal published an article naming Union Planters as the leading contender. First American emerged as the White Knight that saved Deposit Guaranty from a hostile offer made by a bank that Deposit Guaranty's chairman has not named - but is most likely Union Planters. The aggressive Memphis bank could have realized much greater cost savings than First American, given the overlap of the bank markets. But it would have been bad news for thousands of bank workers.

12/9/97

Bank deal comes with fat pricetag

Nashville-based First American Bank's $2.7 billion stock deal to acquire Deposit Guaranty of Mississippi looks fat to some analysts, but bank executives say the deal represents a good value. Stifel Nicolaus & Co. analyst Joseph Stieven called First American's offer, which is about 25 times 1998 estimated earnings and 4.2 times book value, "one of the highest-priced deals I've ever seen." (Dow Jones 12/8). The hefty price tag may explain the 9% drop in First American's stock (FATN) after Monday's announcement. First American said the pricing of its deal with Deposit Guaranty compares favorably with that of other recent transactions. Recent mergers between similar-sized banks include the $3.25 billion sale of Richmond's Signet Banking Corp. to First Union Corp. In acquiring Deposit Guaranty, First American beat out a bid from Memphis-based Union Planters reported Monday (Wall Street Journal, 12/8). One analyst pointed out that the acquisition of Deposit Guaranty will allow First American to pursue bigger deals down the road, particularly during a time of increasing consolidation in the banking sector. Mergers allow banks to quickly acquire large customer bases and cut costs fn an effort to increase profitability in a competitive industry. As we pointed out (NewSource, 12/4), First American was a prime merger candidate. Monday's merger announcement was a pre-emptive strike that shows the bank isn't ready to be swallowed up yet.

More or less attractive take-over candidate?

Reports indicate yesterday's buyout of Deposit Guaranty by First American Corp. may make the Nashville-based bank holding company less attractive to larger ones looking to buy. One reason is its increased size, according to today's. After the merger, First American's assets will jump from $10.6 billion to $17.4 billion, ahead of rivals like Union Planters ($14.8 billion assets) and First Tennessee ($14.1 billion). Another reason is the process of the merger itself. "I think nothing will happen while they are in the process of completing the acquisition and doing the integration," analyst Joseph Roberto told The Tennessean today. The merger is expected to have no effect on First American's per-share earnings next year and a 6 percent increase in 1999. But after a couple of years, the effects are unknown. Deposit Guaranty's presence is mainly in Mississippi, Arkansas and Louisiana -- states with economies not as impressive as Tennessee's. If Union Planters did miss out on this acquisition, will it rest for long? Hilliard Lyons Inc. analyst Alan Morel said it may actually be more sensible for the company to let First American digest Deposit Guaranty and then buy the bigger entity. "It wouldn't be too big of a lump for them to swallow," Morel said (Dow Jones, 12/8). "Maybe they can let First American do the work, and then get both companies." Monday's merger puts First American on top for now, but it is still a long way from its stated goal of being counted among the nation's top 16 banks. The merger places it at No. 44, and is only the seventh-largest bank merger of the year.

First American merges with Mississippi bank

First American Bank joined the wave of consolidation in the banking industry today by announcing that it will acquire Deposit Guaranty Corp. of Mississippi. The $2.7 billion transaction will create the Midsouth's fourth-largest bank holding company, and will lead to the loss of 500 to 900 jobs, officials announced at a news conference today. "First American has been principally a Tennessee institution," said Dennis C. Bottorff, chairman and chief executive officer of the financial services company, said in a report in today's Nashville Banner. "Now, what you have is a major Midsouth institution. This creates the potential of having the leading Midsouth financial institution in Middle Tennessee." The company will be headquartered in Nashville. Will this merger make First American an even more attractive candidate for takeover by a megabank? (NewSource, 12/3)

Icy reception

Nashville business leaders trying to warm the corporate community to the notion of season tickets for the Nashville Predators should cast an eye to the east. The Carolina Hurricanes, the NHL's new Raleigh, N.C., franchise are struggling with low ticket sales and empty seats, despite heavy promotions and a seemingly supportive Raleigh business community (NewSource, 11/13, "Will NASCAR drive hockey fans to Hurricanes?". Average attendance of about 8,500 at the 20,800-seat Greensboro Coliseum is the lowest of the NHL's 26 teams. (The team is playing in Greensboro until a new facility is ready in Raleigh). The problems, according to today's Wall Street Journal, stem from the fact that Raleighites can't stomach the expensive ticket prices ($50 to $100 for decent seats) and are too accustomed to national college basketball titles. Nashville, often considered an economic peer to Raleigh, could face similar problems with the Predators. As of mid-November, the team had only sold about 4,000 season tickets of the 12,000 that must be sold by the end of March (Nashville Banner 11/18/97). The cheap tickets are gone. Of the 4,000 sold, only about 20 percent were from corporations, and usually 70 percent of season tickets are held by businesses. Perhaps the Oilers already got the bulk of support that's available from the local business community. Public interest in the Predators seems high, but like Raleighites, Nashvillians probably won't be go for expensive season tickets, especially when other choices -- Vanderbilt basketball and the Oilers -- will be available.

12/5/97

Smacked again

Shoney's Inc. is facing yet another lawsuit, this time from employees in its Captain D's division. A group of managers from the seafood restaurants is suing the company over pay and labor issues. The suit, filed Wednesday in U.S. District Court, is on behalf of all former and current salaried managers of the 370-store Captain D's chain. It deals with similar overtime issues as two other suits representing workers of Shoney's Restaurants, filed in 1995 and 1996, which are in the evidence-gathering phase. This is a company plagued with lawsuits. A racial discrimination suit against Shoney's, which occurred during Ray Danner's leadership and was settled in 1993, cost the company $134.5 million. That penalty has contributed to the company's significant debt load. Perhaps more important, the lawsuit "negatively impacted the reputation of the company and the morale of the employees and created an enormous public relations challenge," Carol Hoover, a Shoney's director since 1990, told the Nashville Banner in July. The effects of this latest class action suit, along with the other two suits that are still in progress, are likely to be the same. And the last thing a company that's attempting a turnaround needs is thousands of disgruntled workers.

Retailer's sales strong

Dollar General Corp. says its same-store sales rose 9.3 percent in November. The Nashville-based retailer's sales for the four weeks ended Nov. 28 rose 26 percent to $247.4 million from $196.3 million a year ago. Same-store sales for the year-to-date increased 7.6 percent, and total sales for the same period rose 21.7 percent over last year to $2.01 billion.

12/4/97

Slip-sliding away

Will this company ever see a turnaround? Nashville-based Shoney's Inc. reports its same-store sales fell 4.1 percent in the fourth quarter and 3.4 percent in the fiscal year. Same-store sales is a key indicator of profitability in the restaurant industry. Shoney's said the results included no menu price increase in the fourth quarter and a 1.2 percent price increase for the fiscal year. The company's Captain D's concept rose 0.2 percent in same-store sales in the fourth quarter and fell 1.1 percent in the fiscal year. Shoney's Restaurants same-store sales dropped 6 percent in the fourth quarter and 4 percent in fiscal 1997. The company's problem is clearly in its Shoney's Restaurants division. The new management -- Michael Bodnar replaced Stephen Lynn (NewSource 11/13/97) -- is considering upgrading Shoney's food and selling stores outside its focus region. But these are tactics we've heard already during the 10-year revolving door of CEOs that has taken place since Ray Danner left the office. And there is no sign of progress. The company's stock (SHN) hit a 10-year low of $4.38 last spring, and closed Wednesday at $4.125. Turnarounds in the restaurant industry usually take a painfully long time, but a decade? Bodnar, with his hands-on management style similar to Danner's, may be the one, but should he succeed, it will be nothing less than a miracle.

12/3/97

Is First American next?

With a new wave of bank acquisitions recently, Nashville's largest bank may be next for the taking. First American has long been considered a takeover candidate, and many wonder just how long it can hold out in an industry that's consolidating quickly. Hope Willard, an analyst with J.C. Bradford & Co., says mergers in the banking industry have mostly been seller-driven so far. And while First American may have plenty of suitors, like First Union, NationsBank and Wachovia, it isn't interested in selling, Willard adds. "They're very much focused on running the shop independently now." At the same time, Willard says that any regional, independent bank that doesn't consider itself ripe for a takeover is "naive."First American will be appealing to larger banks, because it holds the top market share here in Nashville, a city among the country's top economic growth markets. And economic growth drives the banking industry. The bio of First American's leader, Dennis Bottorff, may also shed light on what's in store for the bank. He has held top management postions with two other regional banks, Commerce Union and C&S/Sovran, that were sold to larger suitors.

12/1/97

Retail strong in Nashville

Vacancies are low and sales are high in the Nashville retail market, indicating a strong segment of the area's economy. Only 6.6 percent of the city's overall shopping center space was vacant in the third quarter of this year, one of the lowest vacancy rates in the country, according to the CB Commercial National Real Estate Index. Cities on the survey with lower retail vacancies were: Raleigh, N.C. (5.3 percent); northern New Jersey (5.3); Detroit (4.9); Pittsburgh (4.8); and Portland (4.7). Cities with the highest vacancies were: Nassau-Suffolk (19.0); Jacksonville, Fla. (16.3); and Houston (14.2). For the first day of the holiday shopping season (Friday) consumers boosted same-store sales nationwide by 2.2 percent over the same day last year and by 3.2 percent in Nashville, says TeleCheck Services, a leading check acceptance company. The day-after-Thanksgiving shopping rates are thought to be a key indicator of upcoming holiday retail business. Nashville's healthy retail cycle is a few years old and could level out soon, as new developments -- especially Opry Mills -- oversupply the demand for space. Consumer demand, however, may continue to increase due to the city's growth and its tourist appeal, which seems to more and more retail-oriented.

Columbia, Shoney's make "worst boards" list

Columbia/HCA and Shoney's show at No. 11 and No. 25, respectively, on a national magazine's list of the nation's worst boards of directors. Both Nashville-based companies have weathered bad publicity and dwindling earnings for months, in the case of Columbia, and year's for Shoney's. The Business Week magazine report ("The Best and Worst Boards") faults Columbia for having overextended directors who failed to oversee the mounting problems at the beleaguered company. Shoney's board is faulted for failing to reverse the flagging stock performance. A recent proxy fight led to management changes, including the appointment of CEO Michael Bodnar (NewSource 11/10). No Tennessee companies appeared on the list of 25 best boards of directors.

11/26/97

Regal Cinemas charged with union-busting

Knoxville-based Regal Cinemas, a fast-growing multiplex movie chain, has fired cinema workers in Ohio, Virginia and Indiana and refused to renegotiate contracts with union workers, a movie projectionists' union says. The International Alliance of Theatrical Stage Employees is calling for a nationwide boycott of Regal theaters and is asking Hollywood to avoid screening its pictures in Regal venues during the holiday season. It charged the chain with union-busting at a press conference in Washington, joined by AFL-CIO president John Sweeney, the Akron Beacon Journal said, and said it would meet today with the Rev. Jesse Jackson in Chicago. A Regal spokesman said the union's action would have no effect on movie-goers. Regal operates 260 theaters in 22 states, most, including those in Tennessee, without union representation.

11/25/97

PMT grows again

Nashville-based PMT Services Inc. has acquired American Heritage Bankcard, a $26 million credit card authorization provider. Started in the mid-80s, PMT offers electronic credit card authorization to the small merchant market. Capitalizing on consumers' growing credit car use, PMT is experiencing significant growth. From 1989 to July of this year, the company's revenues increased from $4.3 million to $284.2 million. A lot of its growth has been the result of acquisitions. American Heritage is PMT's third this year. The transactions' aggregate effect is 100 new sales people and more than $80 million in annual revenues for PMT.

Knoxville company named in 'spam' suit

One of the nation's largest providers of free email has sued five internet companies, including a Knoxville firm, for allegedly forging its address on the automated junk email advertising known as "spam." The Wall Street Journal reported today that IMS, of Knoxville, is one five companies that Juno Online Services, L.P., is suing for $1 million each. The companies allegedly used Juno's name on email advertising to disguise the true origin. IMS has become known as a spam advertiser, with reports filed on internet sites (Spam Sites) that track spam as well as the Tennessee Department of Consumer Affairs.

11/24/97

Low-skill jobs needed

Nashville is one of many U.S. cities that may not have enough low-skill jobs available to get welfare recipients back to work. According to a 34-city survey, commissioned by a U.S. Conference of Mayors task force, 92 percent of the countryís cities wonít have the jobs to meet the requirements of the new federal law requiring more welfare recipients to work longer hours. States that donít comply face federal funding sanctions. Other hurdles to meeting the requirements include lack of public transportation and affordable child care. Along with Nashville, Louisville, New Orleans and Knoxville were among the cities that participated in the survey. Hard to believe this is the case, especially with the Midstateís low unemployment rate. But those on welfare will have a hard time breaking free of the system with a job at a fast-food restaurant or convenience mart. The jobs, though still low-skill, will have to pay enough to justify the cost of child care and transportation. Employers may be called on to help solve the problem by hiring more welfare recipients.

11/20/97

Small business, big voice

Nashville-based NFIB, the National Federation for Independent Business (www.nfibonline.com), is the fourth-most powerful lobby in the country, according to a survey commissioned by Fortune magazine. Fortune surveyed 2,200 Washington insiders to come up with a list of "Washingtonís Power 25." NFIB's grassroots campaigns, in which it surveys the 600,000-business membership and builds initiatives by consensus rather than committee, makes it among the most effective political and policy issue groups, the article says. NFIB is currently in the news with its campaign to garner one million signatures in favor of abolishing the IRS code. What doesn't work in Washington, Fortune says, is campaign contributions, fake grassroots campaigns deluging Congressional offices with last-minute post cards and calls, high-prices issue and image commercials and high-priced, high-profile Washington-insider lobbyists. Loser on the list: the Business Roundtable. Its CEO-driven tactics don't work anymore, the magazine says. Top 10 on the lobby list: the American Association of Retired Persons, 1; the American Israel Public Affairs Committee, 2; AFL-CIO, 3; NFIB, 4; Association of Trial Lawyers, 5; the National Rifle Association of America, 6; the Christian Coalition, 7; the American Medical Association, 8; the National Education Association, 9; and the National Right to Life Committee, 10. See the whole story in Fortune

11/19/97

Nashville No. 5

Nashville is listed as the fifth-hottest city for businesses, according to Plants Sites & Parks magazine, a national publication covering corporate site location strategies. The publication's annual survey is thought to be a strong indicator of where businesses might be headed in the next year or so. Atlanta was chosen as the No. 1 city for setting up shop, followed by Dallas, Chicago and Los Angeles. That Nashville is right behind four large cities is impressive, and the fact that Plants Sites & Parks is based in Music City doesn't seem to have anything to do with the results. The magazine, published bimonthly by BPI Communications, claims it covered a wide demographic/geographic range, surveying readers and CEOs. Rounding out the top 9: Las Vegas, 6; Phoenix, 7; Houston, 8; New York, 9. See www.bizsite.com

11/18/97

Hedge funds outperform market in recent dip

Hedge funds, widely considered one of the riskiest forms of investment, were among the safest places to be during the October stock market downturn, a Nashville investment advisor says. George P. Van, chairman of Van Hedge Fund Advisors, maintains a database of 2,500 hedge funds in the U.S. and overseas managing $130 billion in assets and uses faculty members of the Owen Graduate School of Management at Vanderbilt University to check his research. Van said the average U.S. hedge fund lost 0.7 percent in October, compared to losses of 6.3 percent by the Dow Jones Industrials, 5.6 percent by the average U.S. equity fund and 3.3 percent by the S&P 500.

Entertaining prospect

Regal Cinemas Hollywood is scheduled to open around the first of the year at the former Megamarket grocery store site at 100 Oaks mall. With 27 screens, the theater will seat 5,000 and be the largest in Tennessee. Even with competition from a 16-screen cinema opening next year next to The Mall at Green Hills, the attraction will draw big crowds to visit and shop the booming 100 Oaks area, and increased business for 100 Oaks, the once-abandoned mall that was reborn as an outlet center.While the Regal Cinemas Hollywood will enhance the success of 100 Oaks mall by bringing in potential shoppers, it also adds an entertainment component that will likely make 100 Oaks a viable competitor to Opry Mills, especially for local dollars.

11/14/97

Opry Mills and outlet mall softnessAiming to please disappointed investors, two major factory-outlet mall companies with sagging stock values are merging their strongest properties in a $365 million stock transaction, leaving their worst properties to trade separately, according to today's Wall Street Journal. "The property shuffle follows the fall from favor of REITs (Real Estate Investment Trusts) that specialize in factory-outlet centers, which house retailers selling a single manufacturer's brand, at a discount, from vacation spots or off-the-highway locations," the Journal reports. "Overbuilding and competition from other discounters have restricted share-value growth of the largest factory outlet REITs to just 2 percent this year, compared to 10 percent for REITs overall, according to PaineWebber Group Inc." Not good news for the Nashville company that, along with Virginia-based Mills Corp., is building a $200 million outlet mall. Is Gaylord investing in a slowing trend?

11/13

Shoney's power shift turns Lynn to "Mr. Outside"

Just three months after Ray Schoenbaum joined the Shoney's board, CEO Stephen Lynn has stepped aside and been replaced by Michael Bodnar, one of Schoenbaum's chosen men. Longtime financial whiz Craig Barber also resigned with no where to go. Commenting on the managment change, Lynn told The Tennessean (11/13), "It's the right time and (Bodnar's) the right guy." Sounds like Schoenbaum got what he came for, successfully ousting Lynn and Barber. Lynn will remain as chairman, describing his role in the Banner (11/12) as "Mr. Outside," concentrating on Shoney's community and civic relationships. But that's what a company's public relations department is for. Clearly, Lynn's been reduced to a Shoney's figurehead, and Barber left because he was dissatisfied. Lynn's trying to put a positive spin on it, talking about his "great new partner" (Bodnar), but anyone who's been watching the company since the proxy fight began earlier this year knows Lynn can't be pleased with being stripped of his power. "I will not go quietly in the night," he told the Banner earlier this year. Well ... he just did.

A Danner clone

Michael Bodnar may actually be the right man to turn the company around. He's being described as a mirror image of former CEO Ray Danner, who was known for his hands-on approach. Unlike Stephen Lynn, Danner was always working the stores, keeping employees on their toes. He was a real operations guy, only he had a little problem with the diversity issue and ended up in a racial discrimination lawsuit. It wasn't until Danner left that Shoney's stock began a nosedive. Now, five CEOs - make that six CEOs - later, the company's stock can't seem to resurface from almost $5 a share. Analysts and former customers have said over and over that Shoney's will only see a turnaround when it improves its food and service. If Bodnar's approach is the same as Danner's, maybe the result will be the same, and the older, more successful Shoney's will finally resurface.

11/12

What is Gaylord?

Gaylord Entertainment CEO Terry London spoke at the Rotary Club of Nashville to "reassure critics of (the company's) new direction," according to the Nashville Banner (11/11). With cash from the sale of its cable networks - TNN and CMT - Gaylord plans to focus on its remaining properties, particularly the Grand Ole Opry, which will get a new facade and entrance to improve visibility and accessibility. What London doesn't seem to understand is that we don't get what Gaylord's "new direction" is in the first place. Gaylord is one of Nashville's most visible companies, marketing Music City to the world through its TV networks and making this smaller city a bigger tourist destination. Within a year, it's sold off or closed down three of its biggest assets. What's left is the Grand Ole Opry, the Opryland Hotel, The General Jackson showboat and a 51 percent stake in the Wildhorse Saloon. Two high-profile projects - the Opry Mills mall and the race track - have been announced, but as minority partner in the deals, Gaylord's influence is unknown. If the company would just make its direction clear, the people who used to be its biggest fans might not be so critical.

Who is Chad Holliday?

That's the most common question investors have about DuPont Co. since it announced Charles O. "Chad" Holliday's promotion to president on October 29, the Wall Street Journal says (11/12). The answer: a native Nashvillian. Holliday, 49, "retains a Southern lilt," the newspaper says, and as a boy did yardwork for a Grand Ole Opry singer in exchange for guitar lessons. Holliday, who is expected to also become CEO and chairman of the $44 billion chemical giant, has worked most recently in DuPont's Asian operations and is expected to focus attention on biotechnology and expansion into new world markets.

11/11

True love for Gaylord and Dover?

It's not a soap opera, but proposed race track partners Gaylord and Dover Downs got to know each other through TV. Delaware-based Dover Downs' NASCAR races are televised live by TNN. Now that TNN has been sold to Westinghouse, it's unclear what Gaylord offers Dover Downs as its minority partner, other than money. Dover Downs earned more than $100 million in revenues last year, while Gaylord's revenues were about $415 million, not counting its cable networks. Only about 20 percent of Dover Downs' revenues come from auto racing, a seasonal business. The rest is made from gambling: horse and dog races and slot machines, activities which won't be allowed in Nashville anytime soon and don't exactly fit with the "family entertainment" values of the new GaylordPerhaps Dover Downs wanted local representation in its Nashville project and recognized that Gaylord, with its country music offerings, was a good fit. Gaylord, on the other hand, perhaps sees a new speedway as a good investment that could bring in a whole bunch of NASCAR fans who also love country music... and who might want to go shopping at Opry Mills between races.

11/10

Racing for what?

The timing of Gaylord Entertainment's co-announcement with Dover Downs Entertainment that a superspeedway will be built in Davidson County raises questions about why, and especially, why now. The companies say they're investing $25 to $30 million into the future auto racing facility, yet they have secured no land and have received no commitment from NASCAR that Winston Cup race dates will be awarded. Perhaps Gaylord wanted a boost in local popularity - residents upset that Opryland USA is being replaced with "shoppertainment" have received prominent coverage on TV and letters to editor. Or Gaylord and Dover Downs could be gauging interest, both from race fans and NASCAR officials. While NASCAR says the region is saturated with big tracks, with races in Atlanta, Bristol, Talladega and Indianapolis, Nashville seems to be a perfect fit in many ways. The demographics of fans of NASCAR and country music are practically the same, so offering auto racing in a city that already attracts country fans seems reasonable. But why announce it before a location is identified, without Winston Cup prospects, and with a lower budget than that of other recent superspeedway projects?

11/06

Opry Mills innovation: Food Court becomes Fair Court

One of the biggest unanswered questions about Opry Mills remains, how much entertainment is there in "shoppertainment?" For up-and-coming singers, dancers, composers, the musical revues at Opryland were their first big break. With the Gaylord entertainment talent base, the Opry Mills experience could be fundamentally different from Mills offerings in Dallas, Chicago or Tempe. Gaylord CEO Terry London didn't shed much light on the subject in comments to the Nashville Banner (11/05). A Virgin Records superstore could create "an opportunity for small groups," he told the Banner's Jim Molpus. An Opry Mills brochure promotes "Fair Court" - "the center of excitement, with live shows, dancer parties, movies and Nashville's greatest concentration of casual dining." Opry Mills may succeed as a shopping destination, but it looks like young musicians may be out of luck, unless they want to run the cash register.

11/05

Mills takes the wheel

In addition to the amazing onslaught of gushing headlines, the official Opry Mills press conference (11/4) produced some new information about the $200 million "mega-mall." As surmised by NewSource (11/3), Gaylord takes back seat, landlord status in this deal. Now we know to what extent: For 40 acres of park land and use of the Opry franchise, the shrinking entertainment giant becomes one-third partner in the new development. Mills Corp., in addition to managing and operating the facility, gets the rest. While neither of the dailies has addressed how Gaylord will profit from the concept, it will presumably earn a pro-rata share of income from leasing fees and a distribution of entertainment proceeds. Will Gaylord keeps all or part of the gate from the Grand Ole Opry, which is being billed as the centerpiece of the project?

Doing the math

Gaylord and Mills Corp. officials estimate Opry Mills will draw 17 million people annually, increasing Opryland USA's 2 million visitors more than eight-fold. Where are these people going to come from? It's expected that 60 percent will be locals and 40 percent will be tourists and conventioneers, many from Opryland Hotel. Even with its massive Delta expansion, the hotel's annual crowds hit 3.1 million. While the roster of retailers has not yet been announced, many of the outlet stores in the Mills' other five malls are already in Nashville. The Grand Ole Opry, bowling alleys, movie theaters and skating rinks are also not new. Yet the one-stop advantage "shoppertainment" concept is enough to draw 15 million extra people?