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Advertiser Tidbits for the week of 8/16/04

Automotive:

• Ford has another public relations battle on its hands. Its Explorer and Mountaineer have been rated among the worst SUVs on the market for rollover risk by the National Highway Traffic Safety Administration. “We’re trying to work through the data and see how NHTSA’s applying these numbers,” said a Ford spokesperson. “We don’t believe (the NHTSA’s rating system) is a good indicator of how a vehicle performs in the real world.” Perhaps in an even worse position is Saturn; its Vue could not even be measured because the wheel kept falling off during the testing maneuvers.
• Rising gas prices may have finally cut into sales of SUV’s according to a new study from the Power Information Network, a division of J.D. Power & Associates. According to the data it has compiled, SUVs sat on dealer showroom floors for an average 73 days in July, 22% longer than a year ago. The larger luxury SUVs were even harder to sell, their “days to turn” jumped 47% year-to-year. Increases in incentives needed to move the vehicles were evident last month, as well. The final “transaction” price of SUVs in general fell 2% from last July; luxury SUV prices were off 5%.
• Toyota management is optimistic about August sales, saying purchases during the month should hit an annualized rate of 17 million.

Retailing:

• Wal-Mart is reiterating that August same-store sales will be in the 2-4% range. The company finished July with a 2.4% gain.
• Costco’s same-store sales increase for July turns out to be very heavily-oriented to gas sales, which were up 12% based on an average sales price 40 cents a gallon higher than last year.
• Although Kohl’s has seen some soft results lately from its existing stores, expansion is still very much a priority with Florida the major target for 2005. The company opened 85 stores last year and is on pace for 95 this year.
• Also launching a new campaign is Carpet One. Franchisees have asked for a united branding effort; the result is a new slogan “The One”, new signage and unified promotions. Television spots start in the fall, and feature a new focus on hard floors. Franchisees are also taking part in “Make a Difference Day” on 10/23, with stores making over school media centers and libraries around the country.
• Blockbuster is getting into the online DVD retail business that is dominated by Netflix.
• Payless ShoeSource plans to close a net 400 stores over the next year in order to improve its financial condition. All 181 Parade stores will close and 230 Payless outlets will relocate or shutter.
• Target, which has had great success with its own brands in its discount stores, is increasing the number of food products it sells under its private labels in SuperTargets. The Archer Farms and Market Pantry lines will both more than double.
• Toys ‘R’ Us, one of the few toy chains left in the retail industry, is considering its alternatives, including the sale of its global toy business. To raise shareholder value, the company is separating the Babies “R” Us business from its main toy chain, and may spin it off altogether. Toys also intends to drastically cut expenses, and write off a good deal of its toy inventory. The company says any decisions about store closings will wait until after the holiday season.
• Home Depot has decided to purchase at least 13 stores from Kmart, rather than the 24 that were originally part of the deal. “Home Depot did a thorough review and decided some of the stores wouldn’t work for them,” said one analyst. “It’s a disappointment to Kmart to be losing any potential revenues from the sale of leases.”
• Despite a slight decline in sales in the second quarter, May Department Stores recorded a profit in the period, compared to last year’s loss. The company recently completed its purchase of Marshall Field’s.
• With a big gain from the sale of the Marshall Field’s chain, Target reported a second quarter profit that was up almost fourfold over last year.
• Ross is testing a new concept called dd’s DISCOUNTS in some California locations. It’s targeting families with HH incomes of $30-40,000, lower than the current customer profile.
• Analysts say that the sales of Mervyn’s to an investment firm does not necessarily mean that the chain will remain intact. “There is not a better retail company than (previous owner) Target but they couldn’t make it work,” suggested George Whalin of Retail Management Consultants “(The new owners) will probably have to close some under-performing stores and take a very hard look at how Mervyn’s is positioned in the marketplace.” Speaking of Target, its same store sales for August are on track to be flat to +2%, as expected.

Drug Store & Supermarket Chains:

• Publix Supermarkets is expanding its Crispers restaurant chain, opening five new stores in Jacksonville, FL next year, and planning to rollout the concept throughout Florida over the next few years.
• Bi-Lo, the supermarket chain now owned by Ahold, has received a number of purchase bids, and a buyer is expected to be named before the end of the year. It is not assured, says Progressive Grocer, that any buyer would keep the locations as supermarkets.

Fast Food & Restaurant Chains:

• The numbers are still quite good at McDonald’s, but after a spate of double-digit increases, it’s tough to keep numbers quite that strong. Mickey D’s U.S. comp store sales were up 7.8% in July, on top of a 9.9% gain in 7/03. According to Nation’s Restaurant News, the company is experimenting with portable packaging for fruits and vegetables to make those items convenient for customers who want “grab-and-go” snacks.
• Bidding has begun for the Captain D’s seafood chain, and a deal could be announced by the end of this month, according to Restaurant News. Despite the potential sale, the chain continues to expand, signing a franchise agreement with The Alpha Group for at least three stores in Detroit. That group already has the rights to eight stores in Toledo.
• Brinker International says it is having trouble with its Macaroni Grill chain. Same store sales there fell 1.7% in July, compared to the 2% increase at the company’s other chains, Chili’s, Maggiano’s and On the Border. Brinker lowered its profit expectation for the rest of the year, and promised investors that changes in marketing are coming.
• Yum! Brands is finally operating on all cylinders. Same store sales at KFC rose 1% in July, the first positive result in a while. Comp sales at sibling chains Taco Bell and Pizza Hut rose 4% and 5%, respectively.
• Red Robin Gourmet Burgers reported second quarter comp sales at company owned locations rose 5.7%. Franchised stores saw comp sales rise 5%. The company sees only a slight falloff from these levels for the rest of the year.
• Panera Bread is rolling out a catering service called Via Panera. All company-owned stores will offer the service by September, with franchised locations following by year’s end.
• California-based AMMC has signed a deal to develop 40 Obee’s soup-salad-sub restaurants in Hawaii over the next seven years.

Financial Services:

• The Puget Sound Business Journal reports that Countrywide Financial and Wells Fargo are stepping up their efforts to sell mortgages in the Puget Sound region, now dominated by the struggling Washington Mutual. The paper speculates that either of these companies might be in the market to take over WaMu.

Telecommunications:

• TiVo has lowered prices and will now offer models as low as $99 after rebate. It’s starting a new ad campaign, and is adding distribution at Sam’s, Target.com, Costco, CompUSA, and Fry’s.

Other Categories:

• All that political money is wonderful, but it often comes with anger from opponents attached. The New York Post reports John Kerry’s lawyers have threatened to file libel suits against stations running the Swift Boat Veterans for Truth spot, telling stations they must “protect the public from false, misleading or deceptive advertising.” The commercial, which is not a “use,” “is an inflammatory, outrageous lie,” according to Democratic lawyers.
• Alice White, a top-selling Australian wine, is launching a television campaign on cable networks and in selected spot markets. M L Rogers Agency, New York, is the creative agency working on the account.
• Apparently the merger of Coors and Molson is not a done deal. Ian Molson, who was formerly deputy chairman of Molson, has filed notice that he intends to make a hostile bid for his old company.
• Kansas City’s four casinos reported $60 million in revenues in July, shattering previous records. The resorts are aggressively marketing their properties, resulting in a sustained double-digit growth.
• At least one analyst says U.S. Airways is once again hovering near bankruptcy.

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