Latest Industry Headlines
Martha Stewart Swings to Profit
Martha Stewart Living Omnimedia swung to a Q2 profit as the company managed to cut expenses, masking continued revenue declines. Publishing revenue declined 8.1% to $22.2M, vs. $24.2M year-ago. Lower print advertising revenue offset a 9% increase in digital revenue. Publishing's operating loss narrowed to $1.8M, vs. $5.7M year-ago. Broadcasting revenue fell 64% to $672,000, as the prior-year quarter included revenue from the second season of Martha Stewart's Cooking School, vs. no comparable revenue in this year's quarter. The merchandising segment's revenue fell 8.7% to $14.7M, due to the timing of the recognition of royalty revenue from the company's commercial agreement with J.C. Penney. The segment posted operating income of nearly $11M in Q2, down from $11.7M year-ago. Overall, MSLO posted a profit of $1.8M, or three cents a share, vs. a year-earlier loss of $1.2M, or two cents a share. Revenue fell 11% to $37.6M. Production, distribution and editorial costs fell 20% to $15.3M; selling and promotion expenses -17% to $10.2M.
Conde Nast Seeks Publisher for Details
Condé Nast has more than one job to fill as a result of Details magazine publisher Kevin Martinez jumping ship two weeks ago to join rival Maxim in the same role. According to sources, Martinez has looted Condé Nast of eight employees--six from Details and two from sister titles Lucky and Wired--most of them from the advertising side. The mass exodus from Condé is a rare occurrence, and one insider speculated that it could be linked to the fact that Details has yet to name a publisher. Insiders said they were surprised that the role remains vacant. According to the rumor mill, however, potential replacements for Martinez include Teen Vogue VP and publisher Jason Wagenheim and ex-Condé Naster Patrick Connors, SVP and publisher of American Media's Men's Fitness. But Wagenheim denied he was heading to Details, and Connors pointed out that he's just been promoted to SVP at MF (declining to elaborate further on the timing of that promotion in relation to Details’ publisher search). An insider noted that Details could promote its associate publisher, Christopher Cormier, but also floated a second scenario, which could include the promotion of GQ VP and publisher Chris Mitchell to a men’s group publisher role spanning both magazines. The formation of such a position would be out of character for Condé Nast, though, which, unlike Hearst, keeps its titles as singular entities.
Flynt: Hustler Magazine's Days Are Numbered
Larry Flynt says Hustler magazine is still making money, and he'll continue to publish it as long as that's the case, but he doesn't think it will be around much longer, because "most people are getting their information from the Internet." But publishing now accounts for under 10% of his company's revenue, because it's diversified into the Net, broadcast TV and casino gambling. He says that LFP is the largest content provider for cable and satellite TV in the world (67 countries).
Capital NY Profiles Enquirer's New Chief Editor
Capital NY's Joe Pompeo interviews and profiles The National Enquirer's new editor-in-chief, Dylan Howard, who took over as the tabloid was being relocated from Boca Raton, Fla. to NYC's financial district. After being scoffed at and dismissed by "legitmate" media for decades, the Enquirer has had ups and downs in cred since the 90's--including, under chief editor David Perel, being a probable contender for a 2010 Pulitzer Prize for uncovering Sen. John Edwards' adultery. Four years later, the brand is trying to recover from the major embarrassment of its false story about Phillip Seymour Hoffman's supposed gay lover, published under subsequently ousted chief editor Tony Frost. Howard says he wants to break "the next John Edwards story," and insists that the Enquirer’s reporting is rigorously fact-checked, "despite," writes Pompeo, "sourcing that sometimes has a price-tag attached or looks thinner than a supermodel’s waistline." Howard, "a charismatic Aussie whose polished looks and cocksure demeanor seem to announce a high-low sensibility that is common at the upper echelons of the tabloid world, believes that his regime won’t be known for goofs, but for the type of shoe-leather sleuthing he says the Enquirer has gotten away from over the past few years," the piece continues. "The rowdy band of pirates he’s recruited for the mission range from New York City tabloid alums like Doug Montero, Lachlan Cartwright and Jessica Guzman to Fleet Street staple Mike O’Brien, Hollywood reporter Andrea Simpson and former Maxim executive editor Mike Hammer." Howard, like other Enquirer editors over the years, makes no apologies for paying for information. "Anyone who has information and wants to get paid, call me,” he says. “My checkbook is open.” Piece describes recent Enquirer scoops, including one about Angelina Jolie that's being questioned by some competitors, even as they repeat the information and in some cases repost the video.
First Look Media to Double Edit Staff, But Slow Expansion
Nine months after launching, eBay founder Pierre Omidyar and his new venture First Look Media are still committed to building a sustainable news organization that relies on quality reporting over clickbait, but expansion is going to be a more deliberate process than expected. While the company plans to double its editorial staff to 50 by the end of this year, according to a blog post Monday morning from Omidyar, "rather than immediately launching a large collection of digital ‘magazines' based on strong, expert journalists with their own followings, as we imagined earlier, we'll begin by building out the two we've started and then explore adding new ones as we learn." He adds: "We're entering a phase that demands we spend more time and resources focusing on technology and how it can enhance the impact of journalism."
Amazon, Alloy Partner on Digital Imprint
Amazon Publishing and Alloy Entertainment have partnered on a new digital-first imprint to be called Alloy Entertainment. The unit will focus on young adult, new adult, and commercial fiction, which are Alloy's specialty areas in its book packaging business. The first three titles under the imprint were released today as part of Amazon Publishing’s Powered by Amazon program, which facilitates global distribution. The three titles are "Imitation" by Heather Hildenbrand, "Every Ugly Word" by Aimee Salter, and "Rebel Wing" by Tracy Banghart. At present, titles released under the imprint will be digital only, but Alloy hopes to add a print run at a later date.
Apple Buys BookLamp to Battle Amazon on E-Book Front
Apple secretly acquired BookLamp, a startup based in Boise, Idaho that developed big data-style book analytics services, in recent months.BookLamp’s most well-known product was the Book Genome Project, a platform that let users find suggestions for books to read based on natural language analysis of other titles. BookLamp’s tech and talent could help Apple improve its iBooks service with better recommendations, search and categorization. Amazon talked with BookLamp prior to acquiring GoodReads, another competitor in the book-recommendation space.
BuzzFeed Wants to Change the Definition of Branded Content
With hits like Purina's "Dear Kitten" (nearing 14.7M million views) and A Cat's Guide To Taking Care of Your Human (5.8M) and counting) and Clean & Clear's Awkward Things We All Do In Our Teens But Would Never Admit (almost 1.8M), BuzzFeed Video is among the biggest names producing millennial-targeted branded content. BuzzFeed EVP of video Ze Frank says the industry has to get away from the mentality that branded content is just a Web infomercial for advertisers and topics are just editorial ideas the staff never got around to doing. "We shouldn't short-sell the importance of brand messaging and the brand goals," he says. "If we keep thinking in terms of, 'Here's an amazing piece of editorial, let's just put a brand stamp on it,' I don’t think that’s serving the future of the industry necessarily." He says that to create successful content, the first goal for marketers shouldn't be whether the piece of content will spread on social media, but whether it's exceptional enough that the reader would want it regardless. He believes that will raise consumer expectations—and gain their loyalty. "We should get it to a point where consumers are following brands’ content ecosystems because its good content," he says.
OTHER NEWS OF NOTE:
Battle for Poor Shoppers Fuels Dollar-Store Merger
The battle for America's poorest consumers intensified Monday with Dollar Tree's agreement to buy rival Family Dollar Stores for about $8.5B. The chains thrived during the recession as the number of working Americans living in poverty increased by nearly 40%, according to the U.S. Bureau of Labor Statistics. Total expenditures by U.S. households that earned less than $30,000 has been flat at an annual total of just over $1 trillion since 2008, the Bureau reports. The sluggish recovery among at the lowest economic rung surprised even Family Dollar, which made a poorly timed bet on a new strategy that involved raising prices and offsetting them with some deep discounts. In January, Family Dollar reversed course by cutting prices on nearly 1,000 items. It also planned to close 370 of its more than 8,000 stores this year and slow down its expansion plans. Over the past two years, Wal-Mart nearly doubled the number of smaller stores it operated to 407, and analysts say it could have as many as 2,000 smaller stores in the coming years. Meanwhile, Target opened its first TargetExpress store last week aimed at shoppers who want to pick up a few items rather than commit to a bigger, stock-up trip. The consolidation of Family Dollar and Dollar Tree could offset the pains of market saturation while leaving the combined company in a better position to fight off W-M's move into dollar stores' territory.
Analysts: Other Bids for Family Dollar Possible
Competitive pressures for small-box retailers may intensify if the definitive agreement for Dollar Tree to acquire Family Dollar Stores is completed early next year as scheduled, according to industry analysts--though it’s still possible other bidders could alter the outlook, they added. “The combo certainly shakes up the small-box value space,” Sandy Skrovan, U.S. research director for Planet Retail, London, said. “It’s now [going to be] a two-horse race, with Dollar General and a pumped-up Dollar Tree jockeying for ascendency in the U.S. value channel. Dollar Tree could very well leapfrog long-time market leader Dollar General…[and provide] additional and more formidable competition for Walmart as it accelerates its own small-box expansion via Walmart Express.” Some analysts said it may be too early to count Dollar General out of the picture. Scott Mushkin, managing director for Wolfe Research, New York, said the definitive agreement may increase pressure on Dollar General to make an offer--though despite potential opportunities, "it appears [Dollar General] management is not comfortable with some of the operational challenges or perhaps some of the compromises required to consummate a transaction," he added. Daniel Binder, with Jefferies LLC, New York, believes there would have been more synergies if Family Dollar had merged with Dollar General and suggests the bidding might not be over. “There could be another act to follow [and] it's worth it for shareholders to hang around to see if another bid comes in," he said.
How Market Basket Keeps Prices Low
Feuding cousins aside, three things come up regularly when conversation turns to Market Basket’s business operations: low prices; better-than-industry-norm compensation and benefits; and reported profit margins that are considered among the best in the grocery industry, where margins tend to be razor-thin. On its face, that all sounds a bit contradictory. So, how does the company make it work? According to Kevin Griffin of industry newsletter The Griffin Report, contributing factors include no debt; profit-sharing, benefits and compensation that encourage low turnover; long-tenured managers who can multi-task efficiently and therefore enable MB to have an unusually small headcount at the corporate level; and efficient buying practices.
Meijer's Apparel Offerings Getting a Makeover
Meijer has invested in a major makeover and restyling of its apparel and hired two outside consultants. It is redesigning stores and implementing a multi-media campaign that includes the publication of seasonal Look Books and the purchase of ads in national fashion magazines as it works to spread word of Meijer Style—not unlike competitor Target, which has been a destination for women who want to be fashionable on a budget.
Aldi's Reaches Record Market Share, Catchs Up with Waitrose
Discount retailer Aldi's market share in the U.K. has risen to a record 4.8%, nearly catching up with upmarket retailer Waitrose which stands at 4.9%. "Waitrose has continued to resist pressure from the competition, testament to its policy of maximum differentiation, and has grown sales by 3.4%. This figure is well above the market average and thereby has lifted its market share," Edward Garner, director at Kantar Worldpanel said. Both Aldi and Lidl, which maintained its record market share at 3.6%, have been boosted over recent years as shoppers look to get more for their money in a difficult economic environment. Tesco's market share has fallen to 28.9% in the 12 weeks ended July 20, from 30.3% for the same period last year. Morrison's share has fallen to 11%, from 11.5%, while Sainsbury's share was maintained at 16.6%. Wal-Mart's Asda also maintained its market share at 17%.
Piggly Wiggly in Wisconsin Changes Hands
Piggly Wiggly Midwest, Sheboygan, Wis., said Cowley’s Piggly Wiggly in Milton, Wis., has reached an agreement to purchase Edgerton Piggly Wiggly, Edgerton, Wis., effective Sept. 27. Dave and Sandy Kotwitz, who have worked in the industry for 42 years and who have owned the Edgerton store since 2004, said they plan to retire. Jason and Angie Cowley purchased the Milton store in 2001 after working at the Edgerton Piggly Wiggly store.
Retail Clinics: Usage Grows, But Challenges Remain
A new report from Walgreens shows that consumers are increasingly relying on retail clinics for help managing chronic diseases, such as diabetes and asthma, as well as preventative care. Typically staffed by nurse practitioners and physician assistants, the clinics are still primarily a place people go for acute care. But the study reports that 17% of visits in 2013 were for preventive services, screening or chronic-illness visits, up from 4% in 2007. Also, more than 50% made return visits in 2013 and 2012, compared with 15% in 2007. However, while the number clinics is growing--there are now about 1,600 in the U.S. with 20M patient visits per year--“their performance has been disappointing: Their growth has been less than expected, they have not expanded care to underserved markets (namely, the poor), and their impact on health care spending--helping to lower it--remains unclear,” write Jason Hwang and Ateev Mehrotra on Harvard Business Review's blog. “Retail clinics exemplify both the potential of and challenges for disruptive innovators to improve value in health care.” In addition to Walgreens, the market includes Walmart, CVS’s MinuteClinics, Rite Aid and Target. One challenge to clinics' profitability has been evening out sales over the year: Most kids’ illnesses occur in the winter months, for example, while demands for check-ups and vaccines soar when school starts. Hence a growing push by the clinics to expand efforts to treat chronic conditions, which not only spreads demands over the calendar year, but is an enormous market. Article provides more detail.
CPGs Linking 3rd-Party Data, Loyalty Programs
While large brands like Coca-Cola and Kraft invest in building up their own programs, smaller marketers are piggybacking on data platforms to gain traction for their loyalty initiatives. “We’re not the size of a Kraft or a Mondelez or a P&G,” said Jennifer Brain-Mennes, director of media and PR, Post Foods. “The resources required to build a CRM database and a loyalty program are pretty high if you don’t have significant scale.” Post Foods’ Grape-Nuts Fit cereal is betting on mobile advertising targeting health enthusiasts to appeal to a younger demographic than the brand is traditionally known for. The cereal maker is running mobile campaigns—powered by fitness app MapMyFitness and mobile reward platform SessionM—that dole out virtual rewards in exchange for watching videos or clicking on ads. The video campaign with SessionM is generating a 35% clickthrough rate and a 90% completion rate. A sweeps that offers prizes like Lululemon gift cards and Fitbit fitness trackers has attracted 68,000 entries. Heinz's Smart Ones and agency Ferrara & Co. are taking a similar approach to loyalty as one of the first brands to use a new tool from coupon and promotion platform SavingStar. Using the SavingStar app, consumers can snap pictures of receipts to redeem Smart Ones offers. The coupons can also be linked to retailers’ loyalty cards. Offers are based on purchase behavior. “If they’re seeing a promotion that says, ‘Hey, we know that you’re already purchasing Smart Ones at Walmart’ or ‘You’re purchasing frozen nutritional meals,’ [the follow-up offer may be], ‘If you spend $40 in Smart Ones over the next two months, you’ll get $10 back,’ and a lot of people are actually doing that,” said Ferrara’s Robert Mills, director of performance marketing.
One-Third of Americans Delinquent on Debt
Thirty-five percent of Americans have debt in collections, according to a study from the Urban Institute, which analyzed the credit files of 7M Americans. Southern states have the highest concentration of people delinquent. In 13 states Southern states, more than 40% of the population with a credit file has debt in collections. But as a single state, Nevada has the highest share, 46.9%. The 77M Americans with debt in collections owe an average of $5,200. That includes debt from credit card bills, child support, medical bills, utility bills, parking tickets or membership fees. When it comes to overall debt levels, most comes from mortgages, which make up 70%, on average. Wealthier states tend to have the highest amount of debt and percentage of debt held in mortgages, but Americans with higher debt often also have higher incomes and better access to credit. Someone with $400,000 in mortgage debt and no other debts could be in much better financial shape than the person with no mortgage debt but $10,000 in consumer debt, the researchers note.
Best Buy Canada Offers Free Shipping on $20 Orders
Canada Post, the country’s national postal service, and Ingram Micro Logistics, the retailer’s logistics provider, are collaborating to help the merchant continue to offer free shipping on orders of $20 or more. Internet Retailer explains how they pull off this tough-to-cost-justify proposition.
OTHER NEWS OF NOTE: