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Advertiser Tidbits for the week of 8/9/04

Automotive:

• Automotive News says Honda has changed its strategy of not offering incentives, but is paying them through the back door, giving dealers money that they can use to close deals. Honda incentives increased to $1,011 in the first half of this year, compared to last year’s $479. “The market is as competitive as I’ve seen in the last 10 or 11 years,” said a company spokesperson. It won’t help the automaker that the Consumer Federation of America has released a report that finds that African Americans consistently paid higher “finance markup charges” on average then their white counterparts when they financed their cars through Honda.
• We’ll have July’s car sales results in tomorrow’s issue, but General Motors has already told dealers it’s going to offer expanded incentives for the next month. More 2005 models are included than in the incentives that ended earlier this week, and cash back offers on 2004s will go as high as $5000. The new program will run through 9/7.
• U.S. automakers incentives were at their highest level ever in July; for the first time they topped $4000 per vehicle. GM offered the most, $4,467, Ford spent $3,688 and Chrysler $3,384. Asian brands offered an average $1,498, and European companies, $2,783.
• The hybrid Lexus that was due to be introduced in December has been put off until February of next year. Part of the thinking is to build inventories for dealers, so they can meet what’s expected to be a strong demand. Toyota just confirmed it will raise the production of its Prius from 10,000 monthly to 15,000.
• Although it’s not currently using television as part of the effort, Ford has a new idea about moving its certified used cars. Targeting first-time car buyers, it attacks private sellers, who it says cannot offer buyers the peace of mind that comes from buying a certified car from a Ford dealer. Currently media selection is the internet, some local radio, and some consumer magazines like Rolling Stone and Seventeen. A Ford exec notes young buyers buy used vehicles 75% of the time.
• General Motors will add Spanish and French capabilities to its OnStar service. New hardware is required; it will be available early next year.

Retailing:

• Also completed are the sales of Marshall Field’s to May Department Stores and of Galyan’s Trading Company to Dick’s Sporting Goods. Galyan’s has become a subsidiary of Dick’s suggesting that it’s stores will not be rebranded.
• Best Buy continues its expansion, signing leases for 38 new stores to open by the end of the year. Some new markets are part of it, including Idaho Falls, Salisbury, and Hattiesburg.
• Children’s Place, which reported an excellent July with a 14% same-store sales gain, also said it signed a letter of intent to buy the Disney Store chain.
• Some good news about the retail sector: J.C. Penney sees same-store sales up 8.1%, with strong back-to-school results already.

Drug Store & Supermarket Chains:

• CVS has completed its purchase of 1,260 Eckerd drug stores, mainly in Florida and Texas. The Florida locations will be the first to be rebranded; transformation of all the stores will take as many as 18 months. The rest of the Eckerd chain, acquired by The Jean Coutu Group, will retain the Eckerd name.
• CVS says that it will close fewer than the 200-225 Eckerd stores it had originally planned to shutter. Many of the stores are doing better than they had been. Second quarter profit at CVS rose 17%.
• Walgreen comp stores sales for July were up 8.2%, and Rite Aid had a 2.9% same store increase.
• Albertson’s has created a new division called Extreme Inc. which will operate so-called “price-impact” stores that feature less variety but lower prices than traditional supermarkets. The first locations, operating under the Super Saver name, will open in Dallas, Texas and Baton Rouge, LA. Those stores are currently Albertson’s but are closing 8/26, to reopen as the new format. The chain is expected to expand rapidly.

Fast Food & Restaurant Chains:

• Fast-food companies seem to love football season: Checkers has just become the “official burger” of the Miami Dolphins, and Captain D’s is reviving its Titans Meal to be sold in areas where the Tennessee team is popular. Meanwhile, Carrols, the largest Burger King franchisee, said it’s encouraged by a couple of BK’s new products, and quarterly sales at its comp BK units were up 4.2%.
• Darden is having a tough time getting Red Lobster fixed: same-store sale were down 4-5% there last month. At least sibling chain Olive Garden did well--it was up 6-7% in comp stores.
• Friendly’s which reported its first negative same store sales in quite a while this week, says part of the problem was a change in advertising message. A spokesperson said they need to go back to promoting “the food, ice cream and emotion.”
• Not surprisingly, Schlotzsky’s Inc. has filed for Chapter 11 bankruptcy protection. The chain has been closing many of its company locations; it now has 500 company and franchised stores in the U.S. It says that all of those eateries will continue to operate normally, thought that is often what a chain says at the start of bankruptcy, only to close locations later.
• Outback Steakhouse has purchased the rights to 76 properties of bankrupt Chi Chi’s Inc. Outback is expected to switch many of the locations to its own brand.
• Wendy’s reported July same store sales were up 3.9% for company-owned locations and 2.0% to 2.3% for franchised locations. Tim Horton’s continues to be the company star, recording an 11% increase in comp revenues for the month.
• Burger King’s same store sales were up a very impressive 12.9% in July. Denny’s also had a great month. Comps there rose 9.1%. But T.G.I. Friday’s same store revenues were down 1.6%, a fact that one of its large franchisees, Main Street Restaurant Group, attributes to the company’s failure to advertise its Atkins menu.
• Krispy Kreme which had an untarnished reputation until it announced last week that it was being probed by the SEC, now plans to step up its advertising, and is working on its first ever television campaign.

Financial Services:

• Fifth Third Bancorp, based in Cincinnati, OH, is acquiring First National Bankshares of Florida, with 59 branch offices in Southwest and Central Florida.
• More closings at Washington Mutual. All of its commercial banking offices are being shuttered. Last week, the company announced that many of its lending offices were being closed.

Telecommunications:

• Qwest Communications’ loss widened in the second quarter, mainly because of one-time charges, but the company added 733,000 long distance lines during the period. It now has a 30% penetration in long-distance in its states.
• Sirius Satellite Radio, the official satellite radio partners of the NFL, has hired Monday Night Football anchor John Madden as a spokesperson in a new ad campaign.
• XM Satellite Radio growth has been greater than expected in recent months and the company now thinks it will have 3.1 million subs by the end of the year instead of the previously-estimated 2.8 million.

Other Categories:

• Political action group Media Fund, supporting John Kerry, is purchasing ad time in Florida, Nevada, New Mexico, Ohio and Pennsylvania. AdAge says the organization will spend $2.5 million in just one week.
• The next big prescription drug battle could come in the cholesterol-lowering segment where Vytorin, a combination of Schering-Plough’s Zetia and Merck’s Zocor, will challenge Lipitor and Crestor in a $20 billion annual category. The drug won’t be on sale until next month, but spots from DDB Worldwide are already starting to run.
• Mentor will become the first breast implant to utilize TV in its marketing. The company has bought a schedule in a very-appropriate program, ABC’s Extreme Makeover.
• Movie Gallery reported record revenue and profit for its 2nd quarter, the 12th straight of positive same-store sales. But it’s not optimistic about the 3rd quarter, because of what’s perceived as a weak home video release schedule and viewership defection to the Olympics.
• Pepsi has gotten together with Taco Bell to offer an exclusive soda called Baja Blast. Pepsi is also getting more heavily into what is called “in and out” beverages, those that are offered for a limited time. Mountain Dew Pitch Black, featuring black grapes and spooky graphics on the bottle, will be on shelves between 8/21 and Halloween, and Pepsi Holiday Spice, with ginger and cinnamon, is set for a run from November 1 and December 31.
• Cadbury Schweppes will introduce 7UP Plus by the end of the month, and it will be “light red or pinkish,” says Beverage Digest.
• Amusement park operator Cedar Fair, impacted by cool weather, had a 1% decrease in attendance in the second quarter, but a 2% increase in average spending inside the park.
• Wild Oats Markets is testing the placement of a store-within-a-store in Stop & Shop Supermarkets in the Northeast. Wild Oats has its own line of holistic health items, including vitamins and minerals.
• Tyson Foods is launching a $75 million marketing push for its chicken, beef and pork products. The company hopes to capitalize on the popularity of low-carb, high protein diets. TV is part of the effort created by Arnold Worldwide.

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