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Advertiser Tidbits for the week of 6/20/05

Automotive:

• Malcolm Bricklin, likely bowing to pressure from General Motors, has decided not to use the Chery name for the Chinese automobiles he is importing into the U.S. He also says that he will announce his first 25 dealers by the end of this month. He has apparently backed off his demands for $15 million for a dealership franchise and for stand-alone stores.
• General Motors finally has a winner in the Pontiac Solstice, according to the Detroit News, with about 9,000 advance orders, half of what it’s going to build this year. Pontiac is asking dealers to not sell the car above its sticker price (which is their right if they choose to), saying “please consider more than just the near term...we are at a critical point in Pontiac’s resurgence and encourage a long-term perspective of the total Pontiac opportunity.”
• Chrysler is reviving the Aspen name for its new SUV, says the Detroit News. The name, last used for a not-so-popular passenger car in the 1970’s, has apparently been enthusiastically greeted by test audiences. The new Aspen SUV is scheduled to be introduced next summer.
• Automotive News reports that Mitsubishi is switching a good portion of its advertising budget from television to other media like events, sponsorships and direct marketing. But in what is likely a good sign for local television, the automaker is upping the share of its budget it devotes to dealer ad groups from 15% to 23%. Part of the “alternative” media the company is concentrating on is a new online game called Thrill Ride Challenge, which allows web users to drive some of the most famous and dangerous roads throughout the world.
• Another name being revived is Zephyr, once a Mercury model but now the name being given to a Lincoln five-passenger sedan being launched this fall. The car, priced at under $30,000, is an attempt to make the Lincoln brand “more relevant to the new generation of customers who are ready to move to a luxury vehicle.”
• Dodge is planning a new model that would compete with Ford’s popular Mustang. According to Automotive News, the new car is likely to be called Challenger, a name last used from 1970-1974.
• Ford will spin off its Hertz subsidiary into a separate company, and will divest its share of the new company once the IPO is completed.
• Automotive News reports Toyota will raise its prices 2-3% in the fall, “out of fear of a possible U.S. political backlash” because it’s doing so well while American carmakers struggle.
• Chrysler is giving its PT Cruiser a mild restyling and more power for the 2006 model year.

Retailing:

• Target says that June same store sales are pacing at the high end of its 4% to 6% forecast.
• In its quarterly report, Home Depot claimed $43 million in gift-card “breakage,” the amount of unused gift cards that have expired or been lost, but never used. And that’s just the value of cards sold from 1998-2001.
• Excellent results from Best Buy, up 8.3% in comp stores in its latest quarter, while opening 11 new stores (to 679 now). But very bad news from Pier 1, where same-store sales were down 12%, and the company lost money in a quarter in which it was profitable last year.
• Circuit City reported a quarterly loss that was more than double that of last year. While sales were up slightly and comp sales flat, inventory and consulting expenses offset any gains.
• Equity One, a North Miami Beach developer of neighborhood and community shopping centers, plans to sell its 46 centers in Texas and Louisiana, hoping to use the proceeds to expand in mid-Atlantic and Northeast states as well as its core Florida and Atlanta markets. The company likes the idea of mixed use centers, those with residences, offices and retail space co-located, and thinks the markets along the Atlantic coast are most interested in that design.
• PriceSmart had a great May and a great year so far. Same store sales increased 15.5% for the month, and 10.5% in the first six months of the year.
• The Electronic Retailing Association claims that’s a win for its self-regulation program, as it turned Great American into the government when it refused to substantiate claims to the ERA.

Fast Food & Restaurant Chains:

• McDonald’s has created a new flagship store in Oak Brook, IL, that includes a lot of amenities that, if they prove popular, could be rolled out nationally. The format includes digital kiosks for burning CDs, downloading cellphone ring tones and printing photos, plasma screen TVs, Wi-Fi internet access, new chicken sandwiches, double-lane drivethrus, and an adjoining McCafe that features gourmet coffee and a fireplace. “It’s unlikely you’ll see this exact restaurant replicated,” says a spokesperson. “But you will see elements of this restaurant in some of our new construction. It’s all about keeping our restaurants more relevant for our customers.”
• As part of its effort to create a more health-conscious image, McDonald’s is about to market a line of branded skateboards and bikes at retail outlets like Target. The line is being dubbed McKids and is meant to help “make fitness fun.” On the other hand, the chain has brought back its supersized drinks which were taken off the menu along with supersized fries fifteen months ago.
• Blended sales in the latest 4-week period for Yum Brands came in at +6%, with KFC (+12%) by far the leader. Taco Bell was +7%, but Pizza Hut was flat.
• The Atlanta Journal-Constitution reports that Arby’s, moving its headquarters to that city later this year, has plans to build its current 3,400 store base up to 5-6,000 in the next couple of years. It’s best penetration is in the Southeast and Midwest and a consultant from Technomic says “they have a awful lot of room to grow.”
• A major investor in Wendy’s has hired an investment banker to come up with ways to restructure the company. The AP says that one of the recommendations might be selling part of the business or a general reorganization.
• Outback intends to introduce new menu items over the next few months to jump start sales which have been sluggish. But there will be no wholesale changes because with two many changes customers complain.
• Worldwide Restaurant Concepts is said to be looking for a purchaser for its Pat & Oscar’s chain.
• Hardee’s introduces its Spicy BBQ Thickburger this week, and will debut the controversial Paris Hilton commercial for it on 6/27. To date, that spot has only run in markets served by Hardee’s sibling, Carl’s Jr.
• San Antonio-based Souper Salad Inc., with 91 restaurants in 12 states in the Southwest and Southeast, has filed for Chapter 11 bankruptcy protection. Current owners blame an expansion that was too fast. The company is expected to emerge from bankruptcy in November as a smaller chain.

Telecommunications:

• Once again, T-Mobile has topped the list of cellphone companies in customer satisfaction. The latest survey from J.D. Power & Associates shows the company indexing at 108, with 100 the industry average. Verizon followed with a 104 and Nextel (103) and Alltel (100) both indexed above or at the industry average. Of the national companies measured, Cingular (95) and Sprint PCS (93) indexed below average.
• T-Mobile is doubling the number of hot spots where its customers can use Wi-Fi to about 25,000 places worldwide.
• Sirius Satellite Radio developed a new technology that increases its capacity by about 25%, and Automotive News says some analysts think that may speed up getting video into cars. In a different Sirius note, it will start to provide service via Sprint PCS cellphones.

Other Categories:

• The Federal Trade Commission released a court order forcing Great American Products and Physician’s Choice to pay a record $20 million in redress for claims made in infomercials for Ultimate HGH.
• The Federal Trade Commission reports that the percentage of “obviously false weight-loss claims” in TV, radio and print ads dropped from almost 50% in 2001 to 15% in 2004.
• Carnival Corp. says its second quarter revenues were up 11% year-over-year. Unused berths were down for the period, despite an 8.5% increase in capacity.
• Harrah’s has competed its takeover of Caesars Entertainment. The combined company will have 47 properties in total, most in the U.S.
• Miller Brewing says it will resume marketing efforts using direct comparisons against Bud Light, with two new spots using the theme “the truth hurts.” Miller admits it was “out-executed in discounting activity by both Anheuser-Busch and Molson Coors” over Memorial Day and vowed to “adjust any relative pricing gaps” where the competition cuts prices.
• Coke is beginning a push for its new Coke Zero drink, running a TV ad campaign inspired by its most famous campaign ever, featuring the song “I’d Like to Teach the World to Sing.” This one, called Chilltop, has a group of young people singing new lyrics to the old tune.
• The Wall Street Journal says Northwest Airlines is getting close to a Chapter 11 filing. It would join U.S. Airways and United Airlines who are already in bankruptcy.
• Oracle is breaking a new campaign this week, its first use of TV in nearly a decade, according to Brandweek.

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