Advertiser Tidbits for the week of 9/13/04

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Advertiser Tidbits for the week of 9/13/04

Automotive:

The effects of Hurricane Frances are likely to dampen September auto sales, just as Charley did in August. Many dealers were essentially out of business on Thursday and throughout the weekend in Florida, the country’s second largest auto market, after California. And speaking of car sales, Just-auto.com reports that the average incentive per vehicle was down 5.7% in August from July, though it was still 3.4% above last August’s mark. Chrysler was offering $3,394 in savings per auto, Ford, $3,973 and General Motors, which lost one industry share point during August, lowered its incentives by an average $486 from July, to $3,981.
Honda plans to launch an Acura crossover vehicle and a subcompact in 2006.
Automotive News reports Ford has delayed shipments of its new Five Hundred sedan, Freestyle wagon, and Mercury Montego, even though dealers had been told shipments would start in late August. Ford won’t comment on why the shipments haven’t started, although a source told Automotive News it is not a quality problem. On a more positive note, Ford said ad spending for Ford-branded vehicles would be up by 50% in the fourth quarter.
In a footnote to an old automotive story, a judge threw out a lawsuit by Daewoo Motor America against General Motors. DMA had claimed it had exclusive rights to Daewoo in the U.S., and said GM couldn’t bring in Daewoo-built cars like the Chevy Aveo and Suzuki Verona and Forenza.
Even though everyone says incentives are losing their luster, General Motors is raising its offers again. ‘05s now carry rebates of $500-$2500, and leftover 04s go as high as $4500 back on most trucks, and $3500 back on most cars. In a related note, CarMax said comp store used vehicle sales were down 6% last quarter, but new vehicle sales were up 13%.
Even before Ivan hit, AutoNation was warning its profit would be hurt by the two prior hurricanes that went into Florida. AutoNation gets almost 30% of its business from that state.

Retailing:

Some more retail results from a generally disappointing August: Talbots’ comps were down 4.6%, Dillard’s was off 5%, Chico’s was up 3.6%, and Christopher & Banks was down 6%. CBS MarketWatch reports teenager-oriented chains generally outperformed the rest of the market, with chains like American Eagle, Pacific Sunwear and Bebe producing an average 5.6% same-store boost. The International Council of Shopping Centers computes the full same-store retail market at up just 1.1%.
The acquisition of Mervyn’s by a private investment firm has been completed and the company is now independent. It says it has an “opportunity to differentiate itself within the mid-level retail market.”
In quarterly results, Burlington Coat Factory was up 2.9% in comp stores. June was up just 1.6%, but July and August rose 4.0% and 3.5%, respectively.
The Associated Press reports Sony is currently in discussions with Wal-Mart and Costco to increase its sales via mass-merchandiser outlets. Previously, the company has mostly done its business through consumer electronics stores like Best Buy and Circuit City. U.S. sales account for about 26% of Sony’s global revenue. The discounters have had a positive effect on sales of Sony’s Korean and Chinese rivals, according to the AP.
Troy, MI-based Frank’s Nursery & Crafts has filed for Chapter 11 bankruptcy protection and will liquidate all of its 169 retail locations. One of the first national nursery chains, Frank’s was “not able to survive the invasion of the big box retailers such as Wal-Mart, Home Depot and Lowe’s,” said one analyst.
Radio Shack is launching a new growth initiative that will take about three years to complete. It will roll out a new store format, and will extend kiosk operations.
Haverty Furniture comp-store sales were down 4.1% last month, but are still up 3.1% for the year-to-date.
And in the optical category, comps at Pearle Vision were down 1.7% in the latest quarter.
Circuit City sale store sales in the quarter ending 8/31 rose 2.9%, less than Wall Street expectations. The chain also blamed the shift in Labor Day for slow August sales that dragged down quarterly results.
Wal-Mart says its September same stores sales are on track to meet its 2% to 4% growth projections.
Wingstop has delayed launch of its new TV campaign after disappointing results from test groups. The ads featured football great Troy Aikman in a “training session” with real employees.
The rental business has generally been strong for the last couple of years, but one of the major players, Rent-A-Center, is cutting its profit outlook for the quarter. In what’s becoming a ubiquitous explanation for everyone who has bad news to report, higher gas prices are being blamed.

Drug Store & Supermarket Chains:

Part of the problem with August retail sales was the shift of the Labor Day weekend back a week. Rite Aid says the calendar change hurt its same store sales which rose only 1% for the month.
In retail drugs, Walgreen comps were up 9.7% last month, and Long’s was up 1.3%.

Fast Food & Restaurant Chains:

AFC Enterprises is selling its Cinnabon chain, as well as franchise rights to Seattle’s Best Coffee to Focus Brands, parent of the Carvel chain. Focus already has several Carvel-Cinnabon co-branded locations and more are now expected.
CKE Restaurants’ Timber Lodge chain of 24 stores in seven states is being purchased by T-Lodge Acquisition Group, an organization of the chain’s managers and other investors.
Yum! Brands finally appears to have all of its major chains firing on all cylinders. In August, total same store sales rose 5%, with Taco Bell up 7%, Pizza Hut +3% and KFC rising 4%.
Applebee’s will make its franchisees pay 2.75% of gross sales into the national advertising fund next year, according to Restaurant Business. That’s up from 2.25% this year. Franchisees will be permitted to cut back contributions to local marketing if they desire, from the current 1.5% to as low as 1.0%. Separately, Applebee’s said it now sees an ultimate potential of about 3,000 units in the nation, almost double the current 1,633 locations.
McDonald’s had another positive month, but up against improved figures, the percentage gains are moderating. August comps were up 7.2%, but that pulls the year-to-date down to plus 10.4%. Bob Evans Farms comps were down 4.6% for August, after menu prices went up 2.4%.

Telecommunications:

Sirius Satellite Radio reported it reached a subscriber base of 600,000 over the weekend, putting it on track for its projected 1 million customers by the end of this year.

Other Categories:

The Coors-Molson merger could be in trouble. Molson shareholders are balking and there could be another offer on the table soon, according to Molson’s CEO.
Delta Airlines released its turnaround plan on Wednesday, and it included some bad news for the Dallas-Ft. Worth area which the company is abandoning as a hub. On the other hand, hubs in Atlanta, Cincinnati and Salt Lake City will be expanded. Delta is also building up its Song subsidiary, adding 12 new planes to its fleet. 7,000 employees are expected to lose their jobs, and bankruptcy is still a possibility without more compensation concessions from pilots, says the company. U.S. Airways is also telling its pilots to expect a Chapter 11 filing without wage cuts. But American Airlines is taking a different tack, embarking on a $60 million branding effort that is its first in about ten years. New English and Spanish TV ads from TM Advertising, formerly Temerlin-McClain, Irving, TX, are part of the effort.
Savvier, Inc., has agreed to pay back $2.6 million to the customers of the BodyFlex weight loss system, which the Federal Trade Commission had charged was guilty of deceptive advertising. The FTC said the BodyFlex infomercial was one of the most-heavily run last year, with at least 2000 airings between March and September.
Toothpaste maker Toms of Maine has launched its very first television campaign. created by Siegel & Gale, New York.
According to United Press International, the Federal Trade Commission has banned Kevin Trudeau from infomercials for making false claims on his Coral Calcium product. Trudeau has been involved in hundreds of prior shows as talent and/or producer and the report says he’ll be banned from any activity in future shows. He’ll also have to pay a $2 million fine.
Thrivent Financial for Lutherans, a non-profit financial services organization, has produced a customizable TV spot that can be localized and used by its 2500 agents nationwide.
Dean Foods says volumes are strong in both their Dairy Group and Branded Products Group segments. But the bad news is volatility in raw milk prices, a “difficult retail grocery environment,” and higher commodity costs are forcing it to lower estimated profits for the year. The company is looking for ways to reduce costs.
With weather a little better in most of the country, Cedar Fair was able to report a 2% revenue increase for August on a same-park basis.

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