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Advertiser Tidbits for the week of 12/20/04

Automotive:

• Automotive News says a lot of General Motors dealers are lukewarm about GM’s current Red Tag Sale. Some unhappiness stems from the program not being available on every vehicle in every region, with brands like Saab and Saturn excluded from some bonuses and Cadillac and Hummer excluded in some regions.
• Advertising Age reports Mitsubishi has cancelled nearly all the print advertising it had scheduled for February and March, with the money being moved into local marketing.
• Ford is discontinuing its largest SUV, the Excursion next year.
• Dodge is readying a hybrid version of the Durango SUV for a 2007 launch.
• DaimlerChrysler and General Motors will team up to develop hybrid engines that either company will be able to use in their future vehicles.
• Automotive News reports Ford will introduce a new subcompact model that will be positioned below the Focus, its current entry-level vehicle. It’s in response to dealer demand for a cheaper car to sell, but isn’t likely to happen until the ‘07 or ‘08 model year.
• Kia intends to concentrate on its Sportage SUV next year, and plans to beef up its advertising on that model. Goal is to sell 35,000 in the U.S. in 2005.

Retailing:

• Wal-Mart says December sales so far are still within its forecast of a 1-3% sales gain, but are rising within that range. Food sales have helped.
• Target says December sales are on track for the 4% same-store sales gain it is expecting.
• CarMax reported an overall 2% comp store gain in its latest quarter. Although used cars represent a huge portion of its businesses, sales of new vehicles are delivering a much-higher percentage gain for the company.
• Circuit City said its same-store sales were down 4.3% last quarter, and said it was “cautious” about the profit outlook for the current quarter, due to discounting in the electronics industry.
• Ultimate Electronics may be headed for bankruptcy. On Monday, the company said declining sales and demands from lenders “raise substantial doubts about its ability to continue as a going concern.”
• QuikDrop, which franchises drop-off locations for items to be sold on eBay, has signed an agreement to bring 26 locations to Kansas, Missouri, Nebraska, Iowa, Oklahoma and Arkansas over the next 36 months. The Carson City-based company actually has contracts for 600 new U.S. stores. At this month’s International Council of Shopping Centers’ convention in NYC, mall developers said they expected to see a proliferation of eBay drop-off stores in the next few years, with iSold It the other big player. Pasadena-based iSold It has at least 300 franchise locations under contract.
• Shop.org reports 91% of online retailers are ahead this holiday season, with 17% seeing sales at least double last year. Some have beefed up shipping departments to push back the date for an order to reach the customer before Christmas.
• Klein’s All Sports is going out of business and closing its 12 stores in New York and Massachusetts.
• Despite a slight increase in revenues, Pier 1’s profit fell about 40% in the third quarter. The company says that the “challenging retail environment” is dragging down margins and same store sales. Comp revenues are off mid-single digits in December. The chain is changing the name of its Cargokids to Pier 1 kids and is replacing Queer Eye’s Tom Filicia as spokesperson.

Drug Store & Supermarket Chains:

• Walgreen will expand into one of its last virgin territories, upstate New York, starting with an outlet in Albany next year. Eckerd/Brooks, one of its targets in that region, will roll out its current test of a copy center integrated within the store to all its units.

Fast Food & Restaurant Chains:

• Darden Restaurants reported the 41st straight quarter of same-store gains at Olive Garden, up 5.5%. And it has turned Red Lobster around--that chain had a 3.4% gain. But Darden’s emphasis is now on expanding the Smokey Bones concept. It expects to open 30-40 of them next year; almost a 50% expansion of the current 88-location base.
• Another expanding restaurant is St. Louis-based Granite City Food & Brewery, which will open about 18 more units in the Midwest in the next few years. That’s tripling the chain’s current size.
• Hardee’s caught a lot of heat (and some strong sales) for its Monster Thickburger, but Restaurant Business reports the chain will introduce a much-healthier product in the first quarter, a grilled chicken sandwich with just 300 calories and 4 grams of fat.
• Carl’s Jr. is introducing a breakfast burger, a meat patty topped by a fried egg, the first in the industry; it says.
• Dairy Queen is focusing marketing on its food offerings. The latest menu item is the Grillburger, which is being rolled out market by market, supported with an ad campaign. National ads are expected to break in the spring.
• McDonald’s is testing a new store prototype in Columbus, OH. The new store design features upholstered armchairs, stools, small tables, plasma screen TVs, wireless computer connection, soft lighting and muted colors.
• Papa John’s announced its “growth plans,” but that was a bit of a misnomer. Same store sales for 2005 are expected to be flat to +2% and, while the chain will open 80 to 100 new stores in the next year, it expects to close about the same number.
• A year after buying back Donato’s Pizza from McDonald’s, founder Joe Grote will resume expansion efforts, according to Nation’s Restaurant News. The business had become “a little out of focus” under McDonald’s ownership, Grote says.
• USA Today says Carl’s Jr. will launch a breakfast burger, and it’s in keeping with a trend of lunch-for-breakfast that’s becoming a growing factor in the fast-food business. Chick-fil-A is expected to launch a chicken breakfast sandwich pack shortly. Sonic, which expanded morning hours this year to almost the whole chain, has found 36% of its pre-11AM business is for non-breakfast items.
• According to Nation’s Restaurant News, while Yum Brands remains committed to building multi-branded restaurants combining two or more of its brands, it’s suspending including KFC in them while it works on fixing operations and reversing same-store sales declines.

Telecommunications:

• As expected, Sprint and Nextel announced they want to merge. But the spectre of a competing bid by Verizon for Sprint is still alive, and the situation will stay fluid for a while. Meanwhile, Advertising Age reports Cingular is spending about $300 million in the current quarter after its takeover of AT&T Wireless. That puts Cingular on a par with Verizon, the most-heavily advertised single brand name for the last few years.
• Verizon has indicated that it may soon make a bid for Sprint Communications, which could effectively end any potential merger between Sprint and Nextel.

Other Categories:

• The Atlanta Journal-Constitution says Coca-Cola may be active in new products again next year. A new diet cola called Coke Zero may be in the works, and another competitor to Pepsi’s Mountain Dew called Vault may be introduced.
• Guthy-Renker will partner with PerfectMatch.com to produce what they say is the first infomercial for an online dating service. Josie Bissett of Melrose Place will serve as the hostess.
• Blockbuster is eliminating late fees on its DVD rentals, although customers will be charged for the full price of the DVD if it is not returned after one week. Shoppers can still return the item within 30-days for a store credit.
• Amusement Business reports attendance at the top 50 North American theme and amusement parks was up 4% this year, the first overall increase since 9/11. But twelve of Six Flags’ 13 parks that were on the list were flat or down, a fact attributed to weather problems and a lack of new rides at many.
• A dot-com comeback? Domain name registrar GoDaddy.com bought a Super Bowl spot for about $2.4 million and is said to have another $10 million to spend next year in an “ambitious TV rollout” after the game. The Ad Store is handling the campaign. Unlike many of the 1999 and 2000 dot-com advertisers, GoDaddy already makes money, according to its president.
• In a filing with the bankruptcy court this week, United Airlines said that without a ruling invalidating its current employment contracts it would be forced to liquidate its assets.
• Coca-Cola is confirming it will launch three new drinks next year, Full Throttle, an energy drink, additional Dasani flavors, and a top-secret “innovation” that doesn’t have a name yet.
• Also in the soda business, bottler PepsiAmericas will buy out Central Investment Corporation, the seventh largest Pepsi bottler, which has franchises in southern Florida and in Ohio.
• Most health clubs and weight loss chains wait until after New Year’s to break their new campaigns, but Curves will get a jump on them, starting on 12/27. The female-only operation has grown to about 4 million members, doubling its base in two years. Publicis Dallas handles the account.

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