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Advertiser Tidbits for the week of 11/21/05

Automotive:

• GM CEO Rick Wagoner sent a message to all employees saying “there is absolutely no plan, strategy, or intention for GM to file for bankruptcy.”
• After swearing it would stick it out for 90 days without heavy incentives, GM changed its plan again and revived its Red Tag Event, with heavy incentives, from now through 1/3/06. But some dealers may not be happy. One told Automotive News GM will give them $400 gross profit per vehicle, even less than they received with employee pricing.
• Ford has responded to GM’s new incentives with a raft of new offers of its own. Under the slogan “Keep it Simple”, the carmaker is offering deals on most models similar to those given to vendors and suppliers. Those deals, effective through 1/3/06, are a little less generous that the employee discounts offered previously.
• Automotive News reports that even though GM had a terrible month in October and its inventory of unsold vehicles soared, it’s using overtime in some plants to build up inventory even more. But GM is denying doing that because of a possible strike against its main part supplier Delphi.
• AutoNews reports Volkswagen will delay next year’s introduction of the Eos convertible from March to May, due to quality issues.
• Ford is increasingly marketing its Mercury brand to women, especially young, fashion-conscious women. The company arranged for a giveaway of the new hybrid Mariner last week on Ellen DeGeneres’ talk show, and has been sponsoring sweepstakes in Glamour magazine and makeovers during Fashion Week in New York City. The carmaker, however, claims to be gender-neutral in its promotions.
• DaimlerChrysler will answer GM’s and Ford’s latest incentives with a Miles of Freedom offer that starts today and runs through 1/3/06. Buyers get a debit card for $2,400, the amount Chrysler calculates is the cost of gas for two years.
• VW is pulling its luxury sedan, the Phaeton, from the U.S. market after poor sales for the three years it was available. On analyst says the move is a tacit admission that the company’s strategy of going upscale is “in disarray.”
• Comerica Bank’s quarterly study of automotive affordability found the average new vehicle in the third quarter cost 26.2 weeks of median family income. Despite all the deals during the quarter, that makes autos the least affordable in the last four years, up 1.5 weeks from the prior study.

Retailing:

• The National Retail Federation says shoppers’ reliance on credit cards is dropping and cash is replacing credit cards as the second most popular payment method, behind debit cards. A Federal Reserve Governor confirmed that, saying debit cards are the fastest growing retail payment segment.
• Target says that November sales are pacing below its previous 4% to 6% estimates. The head of retail consultants Retail Forecasting Group thinks part of the problem is higher heating costs. “A lot of consumers are worried,” he says.
• Wal-Mart reported a good fiscal third quarter, with profit up 4%. It’s also optimistic about holiday sales, citing increased advertising and an improving economy.
• Lowe’s also had a very good quarter, with comp store sales up 6.2% and total sales up 16.9%.
• Target will expand on a program it started last Thanksgiving of having celebrities make recorded wake-up calls to shoppers on Black Friday. This year customers can also get “Tuck In” calls on Thanksgiving night, reminding them to get up early the next morning. Calls from Brad Paisley to Kermit the Frog are among the choices.
• The New York Post reports Gap, after a TV test it said did not improve traffic, will move more dollars into print and the internet. But sibling chains Old Navy and Banana Republic will continue with TV.
• Gander Mountain, the outdoor specialty retailer, reported an 8.5% decline in same store sales for the third quarter. But that is not keeping it from expanding. Three new stores are set to open in the spring, in Fridley, MN, Mooresville, NC and Tyler, TX.
• Stein Mart is also in expansion mode, planning to open 20 new locations in the coming year. Third quarter comps rose 0.4%, but profit was up 9% because of “improved mark-up and decreased markdowns.” Two chains in the middle of acquisitions also reported third quarter results. ShopKo, being bought by a an investment firm, said same store sales fell 5.8% and total sales were off 5.6% for the period. And The Bon Ton, which has agreed to purchase part of the Saks department store chain, reported total sales and same store sales were off 4.1%.
• A couple of sporting goods chains reported quarterly results. Hibbett’s comparable store sales were up 8.4%, Sports Authority was much more modest at up just 1.2%.
• Comp sales were up 6.6% for Men’s Wearhouse in its latest quarter.
• Wal-Mart will offer personalized gift cards, with photos and/or phrases from the giver.
• Ad Age notes that even though the Sears/Kmart deal was hyped as a big chance for cross-selling brands like Craftsman and Martha Stewart, neither chain is talking about that in holiday campaigns, using instead generic themes like “Wish Big” and “Everything On Your List.”
• After a losing third quarter last year, Dick’s Clothing and Sporting Goods recorded a profit of $4.2 million. Comps increased 2.9%, and the company also opened 16 new stores during the period. Sales from the recently acquired Galyan’s were not included in same store sales.
• Profits at the Home Depot rose 20% in the third quarter, on sales that rose 10.5% and same store sales that were up 3.6%. The company attributes its success to “focusing on fundamentals.”
• Minnesota-based Golf Gallery continues in expansion mode and is opening in new markets like Denver, Omaha, and Tulsa. With 11 new stores opened earlier this year, the chain is up to 49 stores in 23 states.
• Although big boxes Home Depot and Lowe’s each had good quarters, so too did the hardware co-ops. True Value revenue was up 2.6% last quarter, and Ace was up 5.4%.

Fast Food & Restaurant Chains:

• Panera Bread continues very strong; same-store sales were up 8.2% last month. And at CKE, Carl’s Jr. comps returned into positive territory (+3.2%), but Hardee’s was still a bit negative at -0.9%.
• Tampa-based Beef ‘O’ Brady’s Family Sports Pub is a 180-unit chain that has been posting same-store sales gains well above industry averages, as high as +11.2% in September. The company credits a new media-buying strategy and family-themed TV spots showing kids and adults having fun together in the restaurants.
• Wendy’s will close as many as 60 underperforming stores of its major chain.

Financial Services:

• H&R Block cut its outlook for 2006, saying rising interest rates will hurt its home-loan business. But it’s still planning to open about 1000 offices for tax preparation, 700 standalone offices, the rest in retailers like Wal-Mart, Sears, etc.

Telecommunications:

• Alltel will buy Midwest Wireless, which provides service to 400,000 customers in the upper Midwest. There’s speculation that Alltel will then shed its local phone business and become a candidate itself for a takeover by a larger wireless company.
• We’ve already mentioned Sirius Satellite Radio’s big campaign from now until Howard Stern launches, but competitor XM will not stay silent while Sirius blitzes the market. XM’s campaign will utilize a wide range of celebrities and is part of this week’s Apprentice episode.

Other Categories:

• How does the market list for political spots get determined? It varies, but the Committee for Justice, a group supporting Samuel Alito for the Supreme Court is advertising in seven “red states” that have a Democratic Senator, NB, ND, SD, WV, MT, AR, and CO. Ad Age says the “mud slinging” has accelerated over Alito, with both sides fielding "shrill commercials."
• The battle over beer creative continues; Anheuser-Busch has asked networks not to run the latest Miller commercials due to “unsubstantiated claims.” Ad Age reports at least ten cable networks have pulled the spots.
• Miller is revising the TV spot Anheuser-Busch had objected to, dropping references that suggested Bud had changed its formula.

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