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Advertiser Tidbits for the week of 10/25/04

Automotive:

• General Motors was planning to do something new in the first World Series game, running a commercial in Spanish for the Chevy Silverado. It’s part of the brand’s biggest ever marketing push aimed at Hispanics. Another GM effort is a new offer in which new-home buyers who finance the house through GMAC or GM-owned Ditech.com get a $500 coupon for the purchase of a new GM vehicle. Research has shown people are 20% more likely to buy a car when they buy a new home.
• Ford reported a $266 million profit for the third quarter. That was all because of its credit division. The auto sales division actually lost $609 million. The company is raising its 4th quarter spending by 50%, under the new tagline “Built for the road ahead.”
• Also boosting ad spending is Suzuki, whose brand image right now “borders on invisibility,” according to J.D. Power & Associates. The automaker is upping its budget by 20%. Colby & Partners is the agency behind the new effort. The target for the ads is also expanding as the company positions itself as a “broader, mainstream car company.”
• Automotive News reports General Motors now wants to position Saturn as “upscale of Chevrolet and Pontiac,” the territory formerly held by the Oldsmobile brand. To get there, Saturn (which is down 21% so far this year), will utilize styling developed by sibling Opel in Europe. And it will add about 80 dealerships in the next couple of years to the 454 locations it currently has.
• Advertising Age says Ford has increased spending in non-traditional media to 20% of it budget this year, up from just 2% ten years ago.

Retailing:

• Sears stock fell sharply this week as the retailer reported a $61 million loss for the third quarter. The results were not up to analysts’ expectations. Same store sales were off 4% for the period. The company said contributing factors for the downturn included “softer retail demand, larger than expected cost associated with seasonal transitions and a slower ramp-up of sales following certain business resets.”
• A mixed bag for the Queer Eye guys. Pier 1, which recently changed agencies, is likely to drop interior designer Thom Filicia as its spokesperson, but L’Oreal has signed on Kyan Douglas as a spokesperson for its full line of women and men’s cosmetics.
• RadioShack credits strong wireless sales for its 22% jump in third quarter profits. Total sales rose 4% but wireless communications department sales were up 19%.
• Rent-Way had a relatively soft quarter compared to its prior successes; same-store sales were up just 3.4%. The chain has 67 stores in Florida, however, so it does have a legitimate weather claim.
• TiVo has picked up Target as a new retailer and will be available in about 4,000 stores for the holiday season. After rebate, it will be priced under $100 for the first time.
• The Children’s Place and Disney have finally entered into a definitive agreement for the former to buy out the 113-unit Disney Store retail chain. The two parties had initially agreed a couple of months ago.
• Forrester Research predicts that online retail sales will increase 20% during the holiday shopping season. That’s an impressive number, but down from last year’s 31% increase.
• At least one retailer is saying that October could be a very good month. Target has raised its predictions for monthly same store sales to +4% to +6%. The previous estimate had been +2% to +4%.
• Chain store sales fell a bit last week, 0.2%, from the week before, but that was still 3.4% higher than the same week last year.
• Checkers is having a great year. Same-store sales in company-owned stores were up 15.3% in the latest quarter.

Drug Store & Supermarket Chains:

• Tough times continue for Winn-Dixie. The company had a net loss of more than $100 million last quarter and identical store sales (even including expansions in those stores) were down 3.8% in the quarter.

Fast Food & Restaurant Chains:

• California Pizza Kitchen has become one of the restaurant industry’s stars in growing same store average unit volume. It stayed that way in the 3rd quarter, reporting same-store growth of 8.7%, though it, too, was impacted by hurricanes.
• Real Mex Restaurants, based in Long Beach, CA, parent of the El Torito chain, has agreed to buy Chevy Inc’s 106 unit Chevy’s Fresh Mex and 10-unit Fuzio Universal Pasta chains. Chevy’s has been in bankruptcy for about a year.
• Lots of restaurant chains are adding menu items that will likely be the subject of promotions. Pizza Hut is introducing an extra big pizza called the Full House XL. TV spots, supporting the new item, break this week. Captain D’s is introducing a new lighter fare menu for calorie and carb counters, and McDonald’s is testing a new premium chicken menu in Florida. McDonald’s also says that tests of new Oven Selects hot sandwiches are being expanded to 400 locations in four states. The company thinks the new items could be “huge” if it works out how to make them more quickly.

Telecommunications:

• Cingular Wireless is also taking advantage of the wireless boom. It added 2.8 million customers during the third quarter, its best performance ever. But the company it is about to take over, AT&T Wireless, reported a drop in revenues. While 170,000 new customers were added, anther 2.3 million others dropped out. “It’s a growth industry and they’re not growing. They’re unique in that regard,” said one analyst.
• Office Depot has begun selling Qwest Communications’ high speed DSL service at its locations within Qwest’s 14-state service area.
• SBC Communications added over 400,000 DSL lines and more than 1.3 million long-distance lines during the quarter.

Other Categories:

• AP says a price war is coming in DVD rental fees, as both Netflix and Blockbuster have just lowered their fees.
• Estee Lauder is creating three new brands, American Beauty, Flirt, and Good Skin, all Kohl’s-exclusive products. The brands will be priced in between mass markets brands like Cover Girl and Maybelline and higher-end brands like many other Lauder products. It’s Lauder’s first entry into the discount realm, according to the New York Times.
• 7UP Plus is going the celebrity route for its introduction. Regis and Kelly appear in one spot for the brand, and Kristin Davis and Cynthia Nixon of Sex and the City are in another commercial.
• Coke is introducing a new energy drink early next year, although the initial media plan does not appear to include TV. Full Throttle, targeted at men 20-30, will mostly be available in convenience stores. Coke has also had a lot of trouble with its new C2 low-carb soda. The Wall Street Journal says C2 sales are off close to 60% since its late-June, early-July peak.
• Bicycle maker Huffy Corp. has filed for Chapter 11; the company says operations will continue as before.
• According to the New York Post, Delta Airlines is “hurtling” toward bankruptcy, after announcing a $425 million operating loss in the third quarter. The continuing rise in fuel costs is not helping.
• After several lean years since the attacks of 9/11, the cruise industry is seeing a recovery. Royal Caribbean reported record third quarter earnings (despite a lot of disruption from the hurricanes). Occupancy was up, as was average price and on-board spending.
• Cooper Tire also reported a record third quarter in sales. Demand for replacement tires was soft, but the company feels it’s gaining share against its competitors.
• Here’s something different: MinuteClinic is starting its first TV campaign in two markets, Minneapolis and Baltimore. MinuteClinic is a walk-in medical facility located in Target and Cub Foods stores.
• Dean Foods is launching 80 ‘N Sunny, a mix of low-fat milk and fruit juice aimed at kids. Currently only made in a Dean facility in Minnesota, the initial campaign will be limited to Minneapolis, Chicago, and Milwaukee.
• Nestle will introduce a new Lean Cuisine line called Spa Cuisine. It’s made with 100% whole-grain rice and pastas.
• With many conglomerates selling off some brands, the New York Post reports Kraft could be next to slim down. The paper says Oscar Meyer is a likely candidate for a sale, with companies like Hormel, ConAgra, Smithfield, and Tyson viewed as possible candidates. Post cereals could also go if there were a buyer interested. Leaders General Mills and Kellogg probably wouldn’t make bids, but Pepsi, which got into the cereal business when it bought Quaker Oats to get Gatorade, might be a possibility--unless it can sell Quaker to someone else.
• Speaking of Pepsi, the Atlanta Journal-Constitution says both that company and Coke are revamping labels to show calories for what’s in the bottle. It’s a voluntary move, but based on earlier recommendations from the government that they do so. And just-drinks.com says Coke is reducing the price differential between C2 and the parent brand. In some markets, C2 came out about 40% higher than Coke.

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