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Advertiser Tidbits for the week of 5/02/05

Automotive:

• All indications are that General Motors and Ford are going to have another bad month. Automotive News says each of those will be down in an otherwise up market, and Toyota could post gains as high as 20%. Edmunds.com predicts large SUVs will be down, but only by about 1%. Incentives for large SUVs have been roughly triple those for some other models, which has kept that segment afloat despite the high gas prices.
• Just how bad are things at General Motors? It’s got a winner in the Pontiac Solstice, selling 1000 online after an Apprentice appearance. But Automotive News says GM will miss its summer target date for the convertible, and won’t ship a significant amount to dealers until September, due to “fit problems” at the manufacturing plant.
• According to USA Today, Toyota has quietly doubled its average sales incentives over the last year, to their highest level ever. On the other hand, Toyota’s chairman said this week it might raise prices in then U.S. so as not to incite any government action to protect ailing GM.

Retailing:

• Wal-Mart is sticking to its prediction that same store sales will be flat to +2% in April. The chain also announced a new service, available at www.walmart.com, that allows customers to order custom CDs, with songs of their choice, compiled and delivered to them by mail.
• Kohl’s may be getting ready for its entry into Florida; the South Florida Business Journal says the chain has locked up three locations in Jacksonville.
• Best Buy has raised the number of stores it eventually expects to operate to 1,200 from the previously planned 1,000. The company currently operates 833 stores in the U.S. and Canada. Most of the new locations will be larger stores that only fit into the larger markets. The chain also plans to open 20 to 50 stand-along Geek Squad stores in urban areas over the next year and a half. And it will step up its advertising for that service, which currently is used for in-house computer repair.
• Tweeter Home Entertainment is closing 19 of its underperforming stores, which, says the company, represent 11% of the store base but only 4.7% of revenues.
• Sak’s Inc. is the next major retailer to go through big changes. As we had speculated, it’s selling the Proffitt’s and McRae’s operations, 47 stores, to Belk’s. Bergner’s, Boston Store, Carson Pirie Scott, Herberger’s, Younkers, and Club Libby Lu are officially up for sale. It will retain Saks Fifth Avenue and Saks Off 5th, and its 38 Parisian stores, as well as four McRae’s in Alabama that will be converted to Parisians. And Parisian will continue its planned expansion into the Memphis and Little Rock markets.
• Two related retail chains had widely varying results. MarineMax, which sells boats, was up 11% in same-store sales last quarter, while West Marine, which mostly sells accessories and boating apparel, was down 6.8% in comp stores.
• Aaron Rents also had a good quarter, with same-store sales up 8.3% in rent-to-own operations. Aaron expects to add 29 more franchise units this year.
• Best Buy is adding locations for eq-life, the health and wellness store it’s testing in hometown Minneapolis.
• Tractor Supply has been on a roll for a while, and had another same-store gain, 4.2%, in the first quarter. Counting expansion units, total sales were up 14%.
• Movie Gallery has completed its acquisition of Hollywood Entertainment. The Hollywood Video stores are expected to keep that brand name.

Drug Store & Supermarket Chains:

• Cold Stone Creamery is expanding in Illinois. Seventy-five locations are expected to open in the next few years, with many in Chicago, Evanston, Rockford and other markets slated for this year.
• 7-Eleven same store merchandise sales rose 4.6% in the first quarter, but, while gasoline revenues were up 16.4%, profit was down 4.3%, indicating that stores were not able to pass on cost increases to customers.
• Ahold USA has sold off its 198-location convenience store chain, operating under the Wilson Farms, Sugarcreek Stores and Tops Xpress names in Western and Central New York. It’s being bought by an investment corporation called WFI Acquisition Group.
• We have previously reported on MinuteClinic, a walk-in clinic that had opened in some Target and Cub Food stores in the Minneapolis and Baltimore markets. The idea seems to have been successful so far, and the company is now teaming up with a drug store for the first time, opening in two CVS stores in Minneapolis and one in Annapolis, MD. Nurse practitioners and physician assistants offer diagnoses, screenings, and some vaccinations. More to follow, according to CVS.

Fast Food & Restaurant Chains:

• Brandweek says a commercial produced by Mendelsohn/Zien for Carl’s Jr. that stars Paris Hilton is having trouble getting clearance from some stations, with one source telling the magazine, “It couldn’t be more pornographic.”
• Nation’s Restaurant News says Outback is evaluating slowing down the expansion of its secondary formats like Carrabba’s and Bonefish Grills to focus on bringing back the numbers at the flagship chain, where same-store sales were down 0.4% last quarter.
• Advertising Age says KFC will be less defensive about how healthy its food is and will go back to original name Kentucky Fried Chicken, bringing back its “Finger Lickin’ Good” tagline. Meanwhile, sibling chain Pizza Hut is starting its first-ever NASCAR team sponsorship, and has a new commercial with several drivers as stars.
• Jack in the Box will convert back two of its JBX test stores in San Diego to the original J-I-T-B format. But the JBX test is not over - the format is still in test in Bakersfield and Boise.
• Denny’s had a great quarter. Same-store sales were up 6.3% at company-owned units and 7.1% at franchises. That makes six quarters with gains both in guest counts and average guest checks.
• Roadhouse Grill, with 68 company-owned and 11 franchised locations, has hired an investment firm to explore strategic alternatives, meaning it could be preparing for a sale.
• Outback Steakhouse, which is concentrating on its main brand going forward, announced that that chain’s March same store sales fell 1.1%. All of its smaller chains were in the plus column.
• Wendy’s company-owned same store sales fell 2.2% in the first quarter, and franchised locations were off 1%. Baja Fresh did worse, off 6.1%. The company said the since-discredited claim by a women to have found a finger in her chili hurt the results.
• Firehouse Subs, headquartered in Jacksonville, already has 185 locations, mostly in Florida and the Southeast, and is hoping to expand to 500 units by the end of 2006 and 1,000 by the end of 2008. To reach that number, it will have to open a new restaurant every 3.5 days. That sounds like a lot, but competitor Blimpie, which is launching a new ad campaign next week, adds a new store every day, Quiznos every 22 hours, and Subway every 5.5 hours.
• Southwestern burger chain Whataburger next month launches a new TV campaign in support of its breakfast menu. The effort is created by McGarrah/ Jessee, Austin, TX.
• Analysts are downplaying rumors that Wendy’s could buy Dunkin’ Donuts and merge it with Tim Horton’s. Dunkin (and sibling Baskin-Robbins) may be on the block as parent Allied Domecq is selling out to Pernod Ricard, primarily for Domecq’s beverage business.
• CKE, parent of Hardee’s and Carl’s Jr., had its first annual profit since 1999, with fourth-quarter same store sales up 4.4% at Hardee’s and 4.9% at Carl’s.

Telecommunications:

• In the saga of who will get MCI, Qwest’s latest bid is now leading, according to MCI’s Board of Directors. Another bid by Verizon is likely before the end of the week.
• Verizon added 385,000 net new broadband subscriptions last quarter, and Verizon Wireless got 1.64 million net new customers bringing it to 45.5 million total as churn hit a record-low 1.33%. The company is reiterating it will offer fiber optic TV in some areas before the end of the year.
• SBC added 504,000 DSL customers in the first quarter, its best-ever one-quarter increase. Over a million long-distance lines were added. But only a relatively-modest 71,000 customers added Dish Network to their bundles; perhaps indicating the Project Lightspeed TV-via-phone project is a higher priority for SBC.
• Sirius Satellite Radio added 174,202 subscribers during the first quarter, bringing its total up to 1.49 million. It raised its expectations of year-end subscriber base to 2.7 million. But while revenues were up 355% compared to first quarter 2004, losses increased by 34%.

Other Categories:

• Coke will roll out its Rockstar energy drink into territory handled by the Coca-Cola Enterprises bottling operation. “We are serious about the energy drink category,” CCE’s president said.
• Coke is buying out Danone from a joint venture that distributed bottled water in the U.S. under the Dannon, Sparklets and other brands. The deal is expected to result in a 20% increase in advertising and promotion for Danone’s own Evian brand here. Sales of bottled water in this country reached 6.8 billion gallons in 2004, an 8.6% increase over the year before.
• Dr. Pepper, already title sponsor of the Big 12 and SEC football championship games, will also be the title sponsor of the new Atlantic Coast Conference championship game that starts up this year.
• Kimberly-Clark had a record first quarter, with sales of its consumer tissue products, such as Kleenex and Scott leading the way. The company was also able to successfully establish some price increases, so revenue gains outpaced volume gains.
• Disney is pulling its MovieBeam video-on-demand service out of its 3 test markets (Jacksonville, Spokane, and Salt Lake City). The Mouse House claims the idea is not dead, instead they’re upgrading systems while looking for potential partners.

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