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Advertiser Tidbits for the week of 2/27/06

Automotive:

• eMarketer predicts in a new report that by 2007 auto-makers will likely devote 15% of their advertising budgets to the internet. Currently, just 2.5% of those funds are devoted to online ads. eMarketer says the move will come at the expense of traditional media.
• A number of automakers discussed advertising plans with dealer groups at the National Automobile Dealers Association meeting. Subaru is starting a new program that goes around independent distributors and goes straight to dealerships with $500 per car sold in co-op funds. Suzuki breaks a new campaign for the Forenza next month, and told dealers its ad budget is up 15-20% this year. Mitsubishi dealers can now get up to $25,000 in monthly co-op funds after they spend an initial $10,000 of their own money. But Nissan told dealers not to expect too much TV for the launch of the Versa--that launch will be heavily tilted to interactive marketing.
• Edmunds.com has a rosier view of February auto sales than J.D. Power’s PIN estimates which we reported last week. The company predicts that for the month, Honda will be up 13% and Toyota, up 7%. Nissan is seen as off one percent. Among domestic makers, Edmonds says General Motors will be up almost six percent, Ford, down 8% and Chrysler, off 6%. The U.S. makers’ share of the market is expected to fall to 57.3% in February from last Feb’s 57.6%. But that’s up from January’s 55.6 share.
• Automotive News reports Honda will introduce a hybrid version of its low-cost Fit as early as next year, priced under $12,000.
• General Motors told its dealers that it will discontinue the GTO coupe at the end of this model year. Sales of the model were off 14.6% last year.
• The Detroit News says Ford plans to come out with redesigned versions of the Escape and the Mercury Mariner SUVs. Ford’s Japanese partner Mazda will also redesign the Tribute. All three vehicles share the same platform.
• J.D. Power and Associates’ Power Information Network says auto sales were off 8% year-over-year in the first 12 days of February. Only Honda was positive, up 4% compared to February 2005. Still, GM, Nissan and Toyota picked up share of the U.S. market because they were down less than the industry as a whole. Ford and Chrysler were off more than the market and lost share through the 12 days of the month.

Retailing:

• Trans World Entertainment reached a deal to buy the Musicland assets, looking to gain those store locations for growth opportunities. The agreement is subject to approval by the bankruptcy court handling the Chapter 11 filing done by Musicland last month.
• Supervalu is selling its Deal$ chain to Dollar Tree Stores to concentrate on the geographic expansion of its Sav-A-Lot combination format that integrates general merchandise into its grocery stores.
• Another expanding retailer is Tractor Supply Company. It has just opened its 600th store and projects an eventual list of 1300 stores.
• The Marmaxx Group (Marshall’s and T.J. Maxx) completed its fiscal fourth quarter with a 4% comp store sales gain. Also within parent TJX, HomeGoods stores were up 4% in comp store sales, and A.J. Wrights were up 6%. But the once fast-growing company closed more stores than it opened during the year.
• True Value says its fourth quarter revenue was up 6% and earnings were the best since 1996. Comp store sales rose 1.9% for the year.
• Ikea’s first Florida store will be located in Sunrise in Broward County; it’s expected to open in the Summer of 2007.
• Target said last week that it would incorporate larger food sections in most of its 1,239 stores around the country. In a bid to more directly compete with Wal-Mart, the renovated stores will have as much as 50% more space for food to “be a destination for food rather than just a place to pick up a few staples.”
• Sage Stores will acquire small market Southeast chain B.C. Moore & Sons. Sixty-nine of the Moore locations will be converted into Peebles stores; the remaining nine will be closed.
• Marshall Field’s will officially be renamed as Macy’s on the weekend of 9/9-10, Federated’s CEO said this week. The company has also recently hired a new marketing chief, Anne MacDonald, who is expected to transform the chain from a traditional department store to a “national icon.”
• Floor & Decor Outlets will break its first campaign from the Hauser Group next month. The 12-store chain in GA, FL, TX, and AZ is adding six more stores this year, including locations in Houston, Tampa, and Phoenix.
• Sears Essential stores will be re-branded Sears Grand, as the company decided the difference between the smaller Essentials and the larger Grand stores was becoming “increasingly marginal.”
• Group 1 Automotive, with 95 dealerships handling 139 franchises and 31 brands in 12 states, had profit up 44% last quarter. New vehicle sales were down 1.5%, but used was up 1.8%, and parts and service revenue rose 3.9%.

Fast Food & Restaurant Chains:

• KFC is fighting the DVR-enabled skipping of commercials in a unique way. It has embedded a “secret code” within the latest spot that can only be viewed in slow motion. The code can be traded for a free sandwich coupon at the company’s website.
• Applebee’s CEO told investors last week that the best thing about 2005 was “that it’s over.” The company intends to continue to introduce “crave-able” food items to its menu, which, says the CEO, helped the chain to a 6.3% same store sales level in January.
• At press time, the winner of the massive Power Ball lottery hadn’t come forward yet, but Long John Silver’s has already offered that person an endorsement offer, as spokesperson for its new Buttered Lobster Bites.
• Checkers Drive-In Restaurants is being acquired by a private equity firm, Wellspring Capital Management. A company spokesperson says Checkers is confident it will benefit from “Wellsping’s innovative operational strategies and financing expertise.” The new owners plan to continue the expansion of the Checkers and Rally’s concepts.
• Also in expansion mode is women’s wear retailer Chico’s. It plans to open 60 Chico’s, 70 White House | Black Market and 20 Soma stores over the next year. The company recently bought the 12-store Fitigues chain, targeted toward younger, hipper women that Chico’s.

Drug Store & Supermarket Chains:

• Safeway profits fell 14% in the fourth quarter, but the company still had some good news. Identical store sales were up a healthy 5.1%, with the Texas stores, Tom Thumb and Randalls beating their expectations “by a country mile.” The company also said it was seeing good results from its new Lifestyle store format, and Safeway execs see the breakup of Albertsons as “loaded with opportunity.”

Telecommunications:

• AOL is stepping up its offerings, hoping to compete with some of the hot internet companies like MySpace and Skype. The company will use its popular AIM instant messaging platform to establish a community like MySpace and full voice capability like Skype. All the initiatives are survival techniques. AOL lost 625,000 subscribers in the fourth quarter.
• EarthLink will market satellite services from both DirecTV and EchoStar, giving it the ability to compete for bundles against telcos and cable systems offering such packages.

Other Categories:

• Reuters reports Sony’sPlayStation 3 video game console has been delayed and may not even be ready for the holiday season in the U.S. That could be good news for rival Microsoft and its Xbox, which has been in short supply.
• The US Airways Group reported a loss of $261 million last quarter, compared to $69 million at stand-alone predecessor America West a year ago. But the loss was less than had been expected, and each of the former lines lost less than it did a year ago.
• Cadbury Schweppes, owner of brands as diverse as 7Up and Dentyne, had profits go up over 45% on strong sales growth for almost all its products.
• Gillette sold some of its deodorant brands, including Right Guard, Soft & Dri and Dry Idea, to the Dial Corp.
• Just a few days after it announced it would begin distributing Danish Grolsh beer, Anheuser-Busch said it was also introducing its own Chinese brew Harbin beginning next week. The company raised its outlook for domestic beer volume growth after a successful first two months when shipments were up 2.9%. As a result, the company has begun raising prices again.
• Six Flags New England is introducing two new rides this summer, the Catapult and Splash Water Falls. While the rides are filled with thrills, says the company, they are also ones “the entire family can do together,” in keeping with its new emphasis on family fun. Six Flags also made a recent agreement with Sunkist Growers for Sunkist to be the “official fresh fruit” of the parks. The deal includes advertising and promotional aspects highlighting both companies.

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