Advertiser Tidbits for the week of 8/23/04

Automotive:

• General Motors, admitting its long-term share declines are a problem, has made several personnel changes to reverse, or at least slow down, the trend. Through July, this year’s share is 27.1, down from 27.6 last year, despite the biggest incentives in the industry.
• DaimlerChrysler has sold its stake in Hyundai, as it said it would.
• Ford is raising the incentives on two of its F-series pickup trucks by about $500. The company might be reacting to a further slowing of auto sales. CarMax said this week that August sales were below plan and the company reduced its expectations for the rest of the year. Autos are already cheaper than they have been in 25 years, according to the latest study from Comerica Bank. Purchase of a vehicle in the second quarter of 2004 took 20.6 weeks of income; down 0.5 weeks from the first quarter.
• Ford has announced that it is reducing dealer bonuses paid under the Blue Oval program by half, as of April. New bonuses will be paid for sales performance and will not be tied to any certification program.
• It only happened once before, last August, but Toyota again passed DaimlerChrysler in July to become number three in U.S. automotive sales. Including Lexus, Toyota sold 200,206 units last month to Chrysler’s 189,619.

Retailing:

• Wal-Mart reiterated its +2-4% same-store increase for August, saying back-to-school sales looked good. But it’s up against a +6.9% jump from last year, when tax rebate checks were coming in.
• Add Spartan Stores to the list of retailers wanting to sell gas; the company said it will add c-stores and gas pumps at many of its Family Fare and Glen’s Markets locations.
• After closing its 188 retail stores earlier this year, Gateway has been looking for some chain retailers to replace that distribution. Best Buy had already signed on and now CompUSA will sell the brand in its 226 stores.
• Lowe’s second quarter comp store sales were up 5.1%, and total sales up 17.3%. Comps were actually behind the first quarter, but Lowe’s said “robust housing turnover, record home ownership, attractive mortgage rates and improving consumer confidence” gave it a “solid performance.”
• Target says August same store sales are still on track to come in flat to +2% for the month.
• Home Depot reported a 19% increase in profit for the second quarter, beating industry forecasts. The company said improved service and store renovations drove increases in all categories. The chain also raised its expectations for the entire year.
• Costco has started selling caskets in two Chicago warehouses as a test. Believe it or not, they’re located adjacent to the bedding displays.
• Another Minneapolis-based retailer is prospering and expanding. Gander Mountain, the self-proclaimed “fastest-growing outdoor lifestyle retailer,” had total sales up 35% last quarter, comp sales up 1.8%, and expects to add 19 stores this year to its current 70 store base.
• Goody’s had a tough second quarter with comp sales “well below plan” at -2.2%. And Big Lots said, “After a solid May, sales and customer traffic slowed abruptly during June and July.” Comps were essentially flat at +0.2% for the quarter.
• Petco continued its string of same store sales increases with a 6.7% jump in the second quarter. The pet store chain is also embarking on a new public service campaign that will urge customers to consider adopting a pet as the first option. The stores themselves do not sell dogs or cats.
• Travis Boats says that, excluding yacht sales which have been eliminated, same store sales were up 4% in the second quarter.
• General Growth Properties, the country’s second-largest mall operator, will buy the Rouse Co. in a $12 billion deal. Rouse operates 37 regional malls, including some upscale sites in high-traffic downtown locations.
• Quarterly earnings at Gap Inc. were down for the first time in two years, with flat same-store sales. The company said it would close 150 stores by early next year, most of them Gap locations. But it does plan to open 125 new stores, most of those being Old Navy units.
• There has been some good news recently from the sporting goods retail segment, and Hibbett reported same-store sales up 2.5% last quarter (although that was behind the prior quarter). Hibbett opened a net of 16 new stores during the quarter and plans on 65 for its full fiscal year.

Drug Store & Supermarket Chains:

• CVS will be the first to offer a new kind of disposable digital camera, with a bright color viewing screen that allows users to preview pictures, for $20. One-use digital cameras currently on the market do not have the viewing screen.
• Still struggling through a reorganization that will see it close 156 locations, Winn-Dixie reported a loss in the most recent quarter of $22.7 million, compared to a $62.5 million profit a year ago. Comp store sales fell 4.3% for the period.

Fast Food & Restaurant Chains:

• Burger King’s largest franchisee, Carrols Corp. has been loudly complaining about the parent company and its advertising. But while the BK chain on the whole has seen same store sales in the double digits lately, Carrols reported such sales for the second quarter were up just 4.2%.
• Chilli’s has signed franchise agreements with Valenti Management, based in Memphis that will bring 20 new restaurants to Alabama and Mississippi.
• Here’s an example of the power of television. Dairy Queen recently began advertising its new menu item, the Cheese Cake Blizzard. “We started advertising....on a Monday and by the next Tuesday we had reports from franchisees that they had run out of product in the first week,” said a company spokesperson. “The results have been instantaneous.”
• McDonald’s will test MasterCard PayPass at some locations in the New York and Dallas markets, with additional locations to be added next year. The “contactless” payment option utilizes radio frequency technology to accept payment without swiping a card.
• Blimpie told franchisees it will “revitalize” the brand and transform itself from a sandwich shop to a “contemporary deli.” A new prototype unit is in the works.
• CKE reported the 14th straight month of same-store sales growth, +6.4% at Carl’s Jr. and +6.1% at Hardee’s.
• Lenny’s Sub Shop, based in Memphis, with locations in 55 units in eight states, has been sold to a group of investors who plan to expand the chain. Florida will be the locations for 15 to 20 new shops over the next few years.

Telecommunications:

• The Los Angeles Times reports AOL will market a subsidized low-cost computer to Latinos. Including printer and monitor, the unit will go for $300 if the customer commits to a 1-year AOL subscription.
• The Mexican Tourism Board has launched a campaign on Univision and Telemundo in U.S. markets to attract Hispanics to visit the land of their cultural heritage.

Other Categories:

• The airline industry is going through another very rough patch. Delta Airlines this week presented its Board of Directors with a reorganization plan, the details of which have not been released. But a company spokesperson said the plan is “not simply to mimic low-cost carriers, nor is it to continue to struggle for another few years as a traditional legacy carrier.” Rather, Delta intends to “carve out new and previously uncharted airline territory.” U.S. Airways, on the other hand, is trying to avoid another bankruptcy the old fashioned way, by getting salary concessions from its workers. The company is now threatening “liquidation” if costs are not curtailed.
• The Missouri Lottery, whose ad budget was cut from $8.2 million in 2002 to zero in the upcoming fiscal year, has shifted $2 million from other funds to pay for an ad campaign. The ads may be created in-house to save money.
• Hershey will launch SmartZone nutrition bars next month, after a judge rejected Abbott Labs’ request for an injunction against the product. Abbott had claimed SmartZone infringed on its trademark for a competitive product called ZonePerfect.
• P&G is launching a new product that combines two of its major brands called Tide with a touch of Downy. Another recent introduction from the one-time largest supporter of local market TV has turned out to be a huge success. Prilosec, which went over-the-counter last fall via a very large ad campaign, is reported in short supply in some stores by Supermarket News. AstraZeneca, which supples the drug to P&G, says it’ll be fixed in a month or two.
• 7Up Plus is expected to hit store shelves next week. The soda, Cadbury Schweppes’ effort to take a piece of the “healthy” soft drink market, includes fruit juice and vitamins. Sales of the lemon-lime segment, where 7Up competes, are down 4.6% this year, much more than the overall 1.7% for all carbonated soft drinks.

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