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Advertiser Tidbits for the week of 1/31/05

Automotive:

• Automotive News says Honda will introduce a new subcompact, priced around $12,000, “not too far in the future.” It’s designed to compete with Scion, and Honda wants to “bring back the youth we’ve lost.”
• Dodge is dropping the Neon name for the 2006 model year, replacing it with a new nameplate. But Pontiac is terminating its Sunfire model in June, and it will be two years before a replacement entry-level car is introduced.
• Certified used car sales rose 7.4% in 2004 from the year before. The Big Three took 50.3% of the sales, compared with the 31.6% in 2003. Toyota and Honda saw certified used car sales decline for the year. Used car prices were up 3.8% in December, according to ADESA Inc.’s Analytical Services.
• Mitsubishi is getting a $3 billion infusion of cash from a consortium of Japanese companies.

Retailing:

• Wal-Mart says its January same-store sales will be at the upper end of its +2% to +4% range. The retailer also announced a deal with Discover Card to launch a new Wal-Mart Discover card that will offer rebates on purchases.
• The Detroit News reports Kmart will bring back Blue Light Specials, last used three years ago. Flashing lights or store-wide announcements are not part of the current plans, just in-store displays available to help move slow-selling merchandise.
• Sears says comp store sales were down 0.2% in the fourth quarter, with appliances, especially cooking and laundry, doing well.
• Tweeter said same store sales were up 2% in its fiscal 2nd quarter ending 12/31. Not very impressive, but better than the results have been for a while at the chain.
• Blockbuster is testing a new type of store that primarily deals with the sales of previously viewed DVDs. The first Blockbuster Trading Company store has opened in San Antonio.
• Bassett Furniture is launching a new campaign for its John Elway Home Collection. Spots are available to local stores for use in their markets.
• Gateway saw a huge surge in sales during the fourth quarter. PC sales were up 128% to 1.2 million during the period. Net income rose to $94 million compared with last year’s $114 million loss. The company attributes much of its sales gains to increased distribution at national chains.
• Shopping center vacancy rates fell in the fourth quarter to 5.3%, the lowest in 3 1/2 years, from the second quarter’s 5.5%.

Drug Store & Supermarket Chains:

• We’ve seen many of the retail drug chains reporting lower same-store sales gains lately than they have in several years.
• Rite Aid now projects just a 1.2%-2.1% same-store gain for all of this year, which is below most of its major competitors.
• MyWebGrocer, which provides online shopping for various grocery chains, says business is booming. New clients include Key Foods, Harvest markets, VG’s, Walter Stewert and Lee’s Markets.
• H-E-B Central Market, based in Kerrville, TX, is introducing dozens of new food items under the Central Market Organics and Central Market All Natural names. The chain currently has a few dozen private label products on its shelves, but plans over 200 by the end of the year.

Fast Food & Restaurant Chains:

• McDonald’s is using Miami to a line of premium chicken sandwiches, according to Nation’s Restaurant News. If successful, the line would go national later this year.
• Captain D’s is introducing a new promotion, Festival Shrimp, on 1/31. Two new combos featuring festival shrimp will be available through 2/27.
• Also introducing a new menu item is Pizza Hut, which is offering Pizza Hut Dippin’ Strips Pizza.
• Brinker International increased its fiscal second quarter by 5%, but profits were down due to changes associated with the sale of its Big Bowl Asian Kitchen chain. Comp store sales rose 6.9% company-wide in December, with Chili’s up 6.6%, Macaroni Grill, +6.3%, Maggiano’s +6.8% and On the Border, up 9.9%.
• Ted Turner hasn’t lost his touch. His Ted’s Montana Grill chain now has 33 units and earns $70 million a year. Fifteen new restaurants will open this year.
• Steak n Shake reported same store sales up 7.8% last quarter in company-owned locations (about 70% of all units). IHOP is projecting a 2-4% same-store gain in its stores this year, with between 62 and 72 new units expected to open, most owned by franchisees. And Outback had a good 4-week period that ended on 1/22. Its main chain was up 3.2% in comp stores, Carrabba’s were up 4.8%, and Fleming’s were up 11.8%.
• IHOP, which over the last few years has eliminated its worst operators, is now going after those it finds just mediocre. “For some of our franchisees who may have been satisfied with their 'C' ratings, we’ve provided one more motivation for improvement,” said a company spokesperson.

Financial Services:

• Despite some recent profit declines, Washington Mutual is continuing its expansion. It has plans for 250 new branches this year, including 20 in Texas and 20 in Chicago. The bank is also updating another 200 offices to give them a “more consistent look and feel.” WaMu's net income fell 20.7% in the fourth quarter, the third consecutive quarter of decline.

Telecommunications:

• They’ve talked before without tying the knot, but SBC and AT&T are again discussing a possible deal in which the one-time Baby Bell would take over its former parent. Despite selling off much of its businesses like cable and wireless, what’s left of AT&T is still worth over $15 billion.
• Cingular Wireless added 1.8 million new subscribers in the fourth quarter, and company executives say the merger with AT&T Wireless, completed recently, is “everything we had hoped it would be.”
• Verizon added 1.7 million net new wireless customers in the fourth quarter, with record-low churn of just 1.43%. Its wireline division added 306,000 net new DSL customers, and DSL grew by 53% for the full year.
• Internet company Earthlink is getting together with SK Telecom, a Korean wireless company to offer nationwide wireless voice and data service. It expects to have approximately 3 million subscribers by 2009.

Other Categories:

• Dairy Queen is increasing its media spending by about 60% this year, says its marketing chief. After launching its first national campaign recently, the chain is devoting between 30% and 40% of its budget to national advertising.
• Louisiana Tourism will mount a “more aggressive” campaign than in prior years, using TV, billboards, and print in its best markets for tourists.
• Visit Florida, the state’s tourism office, was given about $4.75 million last week from state government to launch a campaign directed at potential visitors and convention planners. Media will include TV.
• Delta Airlines launches a new national television campaign next month, the first from new agency Ogilvy & Mather. The tagline is “Good goes around.”
• Delta’s Song subsidiary is adding 12 planes to its fleet of 36 and 36 new daily flights, bringing it up to 176.
• United Airlines lost $644 million in the most recent fiscal quarter; in response it plans to cutback capacity by 3%.
• We recently reported Anheuser-Busch’s December sales were down, and Advertising Age says the company is expected to “ratchet up discount activity” to get sales up. And it notes that when the King, with about a 50 share of the business, cuts prices, “rivals almost always follow.”
• Anheuser-Busch has been testing its B(E) brew in 55 cities since last fall, and says it’s moving up the launch date based on the test’s success. The drink combines beer with caffeine, ginseng, and guarana.
• Pepsi has gone into national distribution with Aquafina Sparkling, a carbonated water, and FlavorSplash, with fruit flavors. Both products will get ad campaigns in the next couple of months. The Pepsi Bottling Group finished the year with a 2% gain in volume, but an additional 3% gain in net revenue per case sold on top of it.
• Wrigley reported a 9% gain in North American sales last year, with Orbit gum and Eclipse gum and mints the hottest brands.
• Procter & Gamble is buying Gillette, its biggest acquisition ever, worth about $57 billion. Beyond its namesake razor line, Gillette owns Duracell Battery, Right Guard and Oral-B.
• Microsoft’s profits doubled in the three months ending 12/31, the company said. A lot of the increase came from its successful video game introduction for Halo2.

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