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Advertiser Tidbits for the week of 2/21/05

Automotive:

• Volkswagen reported a 31% drop in net profit for the recently completed fiscal year. Automotive News reports that company is betting on a redesigned Jetta to boost its U.S. sales. That new car reaches showrooms next month.
• The Wall Street Journal is reporting Mitsubishi is looking for a buyer for its U.S. assets, including its factory in Illinois, and its 600-dealer distribution network. Headquarters in Tokyo issued a statement calling the Journal story “groundless.”
• General Motors is off to a slow start with two of the models it hoped would give it a boost this year - the Pontiac G6 (the car Oprah gave away), and the Buick Lacrosse. Both now have more than a 4-month supply in stock, double the normal amount. Regional incentives have been raised on both models, with the Southeast currently offering the best deals. And instead of the usual GM “loyalty” bonus, now buyers who trade in cars made by other manufacturers get an extra $1000 off.
• Nissan is just 174,922 vehicles from selling 1 million in the U.S. for its fiscal year which ends in March. So the company is launching an ad blitz called "Race to a Million", including TV. Individual dealers may also be adding to their efforts.
• Most reports from the auto aftermarket business have been good; Advance Auto Parts produced a 9.7% same-store increase in the fourth quarter.
• With the farm economy in generally good shape, John Deere reported a worldwide boost of 26% in agricultural equipment last quarter. It’s expecting a 7-9% gain this year, with domestic sales stronger than international.
• Bridgestone Tires is starting its first brand campaign in about twenty years, a $65 million effort that utilizes five different TV spots.

Retailing:

• We recently reported that occupancy rates at regional malls have been strong. USA Today is reporting a fact that goes a long way to explain the tightness - very few new malls are being built. Only four new regional malls opened in all the U.S. last year, and only five are being built this year.
• In one of the largest deals of its kind, a partnership of Regency Centers Corp. and Macquarie CountryWide Trust of Australia, have agreed to buy 101 shopping centers now owned by First Washington Realty and the California Public Employees’ Retirement System. The majority of the open-air centers are located in the Washington, DC market and in California.
• Wal-Mart posted better than expected numbers for the most recent quarter, total sales were up 16% based on opening 389 new stores in the last year. But its CEO said the company “left a lot on the table” because it didn’t have enough inventory on hand in some hot medium- and premium-priced items. Total domestic comp store sales were up 1.5%.
• Wal-Mart same store sales continue on pace to be up 2% to 4% in February.
• Target’s quarterly same-store sales were up a more impressive 5.4%, producing an overall 11% increase.
• J.C. Penney launches its new campaign during the Oscars, with a theme of “For All the Sides of You.” Penney’s fresh assortment of clothing and home furnishings will be the focus of the campaign.
• Negotiations between Federated and May have broken down, reportedly over price. Some observers now think Federated might go after a buyout of Saks instead.
• Circuit City received an unsolicited buyout bid from an investor group that already had a large stake in the company. No word yet if it’s inclined to sell.
• Circuit City has announced it will close 19 of its under-performing stores, and Friedman’s, the jewelry retailer that recently declared bankruptcy, is closing 165 of its locations, leaving 481 stores in 20 states remaining in the chain. On the other hand, Best Buy has announced the signing of leases for 28 new locations. With that move, the company is entering seven new markets, Bend and Springfield, OR; Honolulu; Sioux City, IA; St. Joseph, MO; Tupelo, MS and Victoria, TX.
• Largo, FL-based More Space Place currently operates 28 locations specializing in wall beds. The company is moving into expansion mode, will open seven new locations in the current quarter, and plans to add 10-15 stores annually “until we have expanded into every viable market nationally.”
• Serta plans to add more than 100 Serta-only sleep shops this year, adding to its current 400 franchised units operating under a variety of names including America’s Mattress. “We are committed to helping our dealers capture more business,” says a Serta spokesperson. Competitor Select Comfort reported last week that its comps rose 16% in 2004.
• Smart & Final reported a fourth quarter same-store decline of 1.3%, but says that’s a result of competing with numbers from last year when some competitors were on strike. 2004/2002 comparisons show a +9% comp store growth rate.
• The FTC has OK’d the merger of Movie Gallery and Hollywood Video.

Drug Store & Supermarket Chains:

• In an industry where any comp sales increases are good, Ingles Markets continues to shine, reporting an 8.2% jump for the fourth quarter and 6.7% for the fiscal year.

Fast Food & Restaurant Chains:

• Buffalo Wild Wings is adding an option of table service at all of its company-owned and franchised locations, according to Restaurant Business. At a press conference announcing fourth quarter results (comps +7.6%), company execs said that “We were directing our guests to the counter, and we got some feedback from our guests that they really wanted the opportunity to sit down and have someone take their order.”
• Continuing to buck the trend toward healthier menu items, Hardee’s is introducing a Loaded Breakfast Burrito it says is “bodacious enough to satisfy the biggest appetites.”
• Red Lobster is making its health-conscious LightHouse Menu permanent.
• IHOP has signed on franchisees to develop 56 new restaurants in California, Illinois, Kentucky, Michigan, Missouri, New York, North Carolina, South Carolina and Tennessee.
• Popeyes Chicken & Biscuits sees expansion and “re-imaging” existing restaurants as its key initiatives for the year.

Financial Services:

• With the mortgage business slowing down, some lenders are utilizing creative tactics such as adjustable rate mortgages that start as low as 1%. And some lenders are offering payment choices including interest-only, minimum payments, or 15- or 30-year traditional payments.

Telecommunications:

• Qwest is reported to be readying another bid to get MCI, even though that company’s board had already accepted a competing bid from Verizon.
• Verizon did in fact win the bidding to take over MCI. Apparently its offer was not as large as Qwest’s, but MCI’s board thought Verizon was in a better financial condition than Qwest.

Other Categories:

• Ask Jeeves is returning to TV after a four-year absence, promoting its search capabilities. “We really see this as a first step in a marketing program,” said the company’s VP of marketing.
• Exxon-Mobil is breaking its biggest effort to date with a $50 million budget to differentiate its motor oils based on longer intervals between oil changes. Its competitor Shell said sales of Shell Gift Cards doubled in 2004 over the previous year, and more than a third of those sales came in December.
• Coca-Cola plans to do a “major reemphasis” on its diet sodas this year, spending about double last year’s expenditure on diet drinks. As we’ve noted, Diet Coke sweetened with Splenda comes out in the spring, but the variation with traditional sweetener aspartame will remain on the market. Bottling company Coca-Cola Enterprises is going along with the plan and will feature the Splenda drink, Coke with Lime, and package innovations in its efforts this year.
• Brandweek reports Coke will launch its Vault competitor to Mountain Dew in June. In another Coke note, the company has renegotiated its deal with Danone and will continue as the Evian and Dannon water distributor in the U.S.
• Dean Foods is bringing Cremora back to television after an 8-year hiatus. Coffee-Mate holds about a 51 share of the category, but Cremora will go into more than 40 markets where it’s strongest, with shares in the teens and twenties.
• General Mills’ Yoplait is launching Healthy Heart yogurt, which contains ingredients that help to lower cholesterol.
• Anheuser-Busch is taking three of its old commercials out of mothballs to support its retro-can campaign. The effort is being rolled out this week.
• That Sara Lee reorganization we reported on recently, in which the company said it would spin off Hanes and some other brands, may turn out to be good news for what’s left. Promo magazine reports the company will add about $250 million to its marketing and R&D budgets. Its Chief Marketing Officer is now CJ Fraleigh, who made a lot of news when he was a top exec at General Motors.

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