Meredith's Q1 EPS +23%; Management Addresses Print Spin-Off Question
Meredith Corp.'s overall revenue rose 4% to $371M, and its earnings per share increased 23%, to $0.65, vs. $0.53 year-ago, in its fiscal 2015 first quarter, ended Sept. 30. The Local Media Group (television) saw record fiscal Q1 operating profit and EBITDA, driven by an overall revenue increase of 39%, to nearly $125M. The Local group saw a 43% advertising revenue increase (political advertising was nearly $13M, vs. $511,000 in the year-ago Q1, and the group's non-political ad revenue rose 24%) and revenue increases from TV station acquisitions and higher retransmission fees. In the National Media Group, total revenues were down 7.7% to $246.3M and EBITDA was $32.5M (-1.5%). The group's total advertising revenue declined 6.3% to $125.2M (with about one-half of the decline due to the transition of Ladies' Home Journal to a newsstand-only publication), but digital advertising revenue grew 17% (a Q1 record), to account for a record 17% of the group's total advertising revenue. Circulation revenues declined 13% to $66M, from $76M, primarily due to the LHJ transition and wholesaler disruption in the newsstand channel. These factors were partially offset by the addition of Allrecipes magazine, which increased its rate base by 40% to 900,000 starting with the Oct./Nov. 2014 issue. Also, Meredith Xcelerated Marketing's operating profit increased significantly, and brand licensing revenue (primarily Better Homes and Gardens products in Walmart stores) grew 8% (another Q1 record). Combined with a reduction of 9% in operating expenses, the National Media Group's operating profit grew 3% to $29M and operating margin grew to 12%...In statements that echoed his remarks in a Q&A with WWD published (and cited here) earlier this week, Meredith chairman and CEO Stephen Lacy, asked during yesterday's earnings call if the company would consider splitting off its print business (as Time Warner, Tribune Co. and News Corp. have), said: "We are not opposed to it," but that Meredith would need to be sure that "there's a larger opportunity on one side of the house that would create value for shareholders" instead of just separating for the sake of it, according to a report in Ad Age. The business units share costs, and "We want to make sure we're not doing something to make shareholder value decline," he said, adding that Meredith is "not locked in stone." Lacy also noted again that Meredith had planned to separate its magazine unit from its TV business had a merger with Time Inc. gone through. In addition, he reported that Meredith has a "hit list" for potential future acquisitions. Ad Age points out that the Q1 digital advertising performance was a stark reversal from the previous quarter, when Meredith's digital ad revenue fell 4%, due largely to downward pressure on ad rates from real-time bidding and automated auctions. This time ad tech played in Meredith's favor, at least in terms of total revenue: Sales from programmatic ad buys were up more than 100% YOY, though Meredith said the number a year earlier was small. Meredith also said that it's ramping up its audience targeting capabilities for advertisers. The largest growth driver in digital is AllRecipes.com, which Meredith bought for $175M in January 2012 and expanded with the print magazine in 2013. "AllRecipes is performing absolutely lights out at the moment," Lacy said. Unique visitors to AllRecipes.com across desktop and mobile devices hit 29.8M in September, +6% vs. the previous year, per ComScore.
Men's Journal Publisher Out After One Year
Post reports that Vincent Krsulich is out after a year serving as publisher of Wenner Media's Men's Journal. He was the title's fifth publisher in six years. Prior to being promoted to publisher last August, Krsulich had served as associate publisher for six years, under four different publishers. The magazine's ad pages through September of this year were down 11.87%, to 496.17, per MIN. A Wenner spokeswoman offered no details on a replacement.
Popsugar Launching Shopping Magazine
Popsugar, one of the top lifestyle sites aimed at millennial women, plans to launch a shopping magazine next month. Shopstyle will be based on its fashion search engine of the same name with 1M+ copies distributed. The 50-page debut edition has five ad pages. “It’s a test, we’ll see how it goes,” said CEO Brian Sugar, who founded the company eight years ago with his wife Lisa, who is the editor-in-chief. “If it works out, we may go quarterly next year.”
Opinion: Reimagining Magazines for Data Driven Times
This week, The New Single Copy published the full text of a presentation that CDS Global chairman Malcolm Netburn prepared for the recent Act5 conference at the University of Mississippi's Magazine Innovation Center. With NSC's permission, CDS's Facebook page has posted a link to the NSC issue on Slideshare, provided below. The in-depth presentation is based on the premise that "for our industry to thrive, we must shift from a focus on extracting more revenue and profit from our customers to a focus on enhancing the lifetime value of our customers...The concept is simple: The more that we understand about our audience, the more value we can provide. The more we strip away the noise, eliminate the friction between publishers and consumers, the sooner we can create an environment where the magazine and the audience are truly connected." Netburn continues: "We do that by offering high-quality engagement and loyalty-engendering experiences. We do that by using data to better understand and support consumers. And we then accomplish this by changing our approach to sales and marketing...With the powerful databases and data analysis capabilities we have available today, we have the potential to build and field fully dynamic and fully personalized interactions with our customers at the individual customer level, in real time, millions of times a week, affordably." Doing this will require three things, he says: "We need to develop and foster a collaborative approach to data, including new, national micro-targeting [predictive] models to help predict and shape media purchasing behaviors. Keeping our data in silos, only tracking our own activities, won't be sufficient. We need to work together as publishers to outline a strategy based on the principle that we can identify "likely magazine buyers" and then engage them in a direct, tailored way across multiple mediums and platforms. Optimization has a place, but there are bigger, more important opportunities to pursue. We must be more aggressive about pursuing innovation, not just for individual companies, but industry-wide. We have to break down the silos, build operations that are specifically designed to test assumptions, learn in real time, and continuously inform our use of smart data." The presentation also reviews the evolution of the magazine industry's customer data and targeting capabilities, and argues that while highly effective, optimizing cross-selling and upselling marketing techniques to the industry's existing, "sure-fire" universe of customers and expires has reached its limits.
OTHER NEWS OF NOTE:
Amazon's Holiday Sales Forecast Misses Expectations
Amazon forecast sales and profit for the holiday quarter that missed analysts’ projections. Q4 revenue is expected to be $27.3B to $30.3B, while profit excluding some items will range from a loss of $570M to a gain of $430M, Amazon said during yesterday's Q3 earnings report. Analysts on average projected sales of $30.9B and profit of $460.5M, according to Bloomberg. WSJ: A surge in spending on new-product development, music and video licensing, expanded same-day delivery and other parts of Amazon's expansion strategy led to a net loss of $437M in Q3, worse than its year-earlier loss of $41M, and its largest quarterly loss in 14 years. The wider loss came despite a 20% jump in revenue to $20.58B (analysts had expected $20.8B, per Thompson Reuters). Amazon also took a $170M charge on its Amazon Fire smartphone, which, according to analysts, has been selling poorly since its release in July. Investors punished Amazon for the disappointing results, released after the close of regular trading Thursday. In after-hours trading, its shares skidded 12%, or $33.43, to $279.75, their lowest level since June 2013. CFO Tom Szkutak struck a more cautious tone than in the past, saying: "We certainly have been in several years now of what I will call an investment mode, but we know that we have to be very selective about which opportunities we pursue.” For years, Amazon won the devotion of investors with quarter after quarter of skyrocketing sales and optimism about long-term projects seen as generators of even more growth. But skepticism about the payoff from some of the investments has been growing, and the company’s shares had sunk 21% since the start of this year before Amazon reported its results Thursday. “Clearly, they’ve been spending money everywhere,” said Michael Pachter, a Wedbush Securities analyst. “They’ve been releasing these new products—the phone, the set-top box, streaming originals—but it’s not clear how that leads to sales.” Piece notes that one increasing expense is adding staff for its new warehouses in Florida, California and Texas: In Q3, Amazon's employee count rose 36%, to 149,500. It also notes that "Amazon is experimenting with making its own package deliveries in San Francisco, New York and London, among other areas. Later this year, it is expected to open its first brick-and-mortar location in Manhattan, allowing for customer returns, pickups and same-day delivery in the largest U.S. city."
Three Top Safeway Execs to Leave After Albertsons Merger
In a memo to staff yesterday, Safeway president/CEO Robert Edwards announced that three of the company's top executives, including two highly ranked women, will be leaving the company shortly after the planned acquisition by Albertsons is completed."The moves are not wholly unexpected, since the three executives had not been mentioned in recent weeks when Albertsons laid out its plans for a post-acquisition leadership team," writes MNB.The three executives are Larree Renda, the company's EVP and chair of The Safeway Foundation, who has been with Safeway for 40 years; Diane Dietz, EVP and CMO, who joined Safeway six years ago after a career at Procter & Gamble; and Pete Bocian, EVP/CFO, who joined the company in 2013.
Wal-Mart Unveils New Shopper Marketing Framework
Wal-Mart SVP of creative Andy Murray, speaking at the Shopper Marketing Conference in Minneapolis, outlined how W-M is becoming focused and structured in its approach to shopper marketing and announced it will be reaching out to its supplier partners to align on the new framework. He outlined key shopper marketing principles, retail moments of truth and trip types the retailer will focus on moving forward. Murray called on brands to retire the “stop, hold and close” approach to in-store activation. Instead of disrupting shoppers, he said brands should seek to inspire and engage them. In terms of displays and PDQs, the retailer wants more value-added messaging at the shelf. P-O-P materials should have a very clear value proposition. Beyond just communicating value, they should create it, actually delivering a benefit. Murray also addressed the fact that so many displays don’t stand up to the rigors of the sales floor, and that manufacturers need to engineer them beyond the sell-in to the sell-through, even considering how the display will look when there are only a few items left. Another key focus for the retailer is to develop more inspiring product demonstrations. Meanwhile, it will be simplifying its own signage and messaging to focus its communication. Additionally, Murray challenged shopper marketers to take the driver’s seat when it comes to content marketing. He sees a need for content that considers the complete customer journey across multiple touchpoints, so that it is easier for a retailer to take a brand’s story and integrate it across the path to purchase. The retailer wants information about brands that it can share in a programmatic way and that it can tailor according to different moments of truth and environments. “These principles are built around what our customers want and need when they shop,” Murray said. “These ideas should shape everything we do.”
IRI Quantifies Shifts in Grocery Trips, Venues
It’s no news that consumers are spending less time and money in traditional grocery stores. And a new report from IRI confirms that as value and convenience emerge as increasingly essential, people are making their CPG purchases in all kinds of unexpected places. E.g., frozen foods are one of the hottest categories in dollar stores; consumers are clamoring for coffee and dog food online; and wine is one of the fastest-selling items in drug stores. “At this point, there are something like 2,500 potential paths to purchase, and any number of steps people can take to research their food purchases,” says Susan Viamari, editor, Thought Leadership, IRI. “With so many options and so much noise, it is more important than ever that marketers carefully tailor their products and their programs. To break through all that clutter, they need to resonate with a solid message of value.” As shoppers continue to shift channels and devices, there is no longer an “average” shopper, with some 80% visiting three or more channels to carry out their grocery and CPG purchase journey. In the past year, IRI reports that trip frequency and basket size have been flat to declining at both grocery and drug stores. Trips to dollar stores were also flat, but the average basket size increased 3%. And while trips to club stores fell a bit, spending in that channel also grew, up about 1%. The way people use these channels is also evolving. For example, shoppers are more inclined to use their trip to Costco and other club stores to stock up the pantry, and they’re more likely to use the drug store for fast fill-in trips. Grocery stores have lost share in such core departments as refrigerated, general foods and beverages. Mass discounters and supercenters have given up ground in home care and GM. (In both cases, clubs have gained as a result.) Certain channels have excelled at making their offerings appealing to important segments. “Younger consumers, for example, view dollar stores in the same way an older shopper might have seen a convenience store, says Viamari. "And club retailers have done a fantastic job driving more frequent footfall by broadening their assortment, and stocking more fresh foods and wellness offerings than they used to. Between the increased assortment, the higher-turn product and a strong value proposition, they’ve got a good mix.” What it all means, both for stores and marketers, is that shopping preferences are “changing so quickly that they can’t afford to get caught up in the status quo. Consumers are more open than ever to buying products in unexpected channels.”
Ahold Simulation Tool Enables Controlled Marketing, Merchandising Concept Testing
Ahold USA is starting to use a virtual shopping simulation tool that enables marketing and merchandising concept tests without store disruption, said Ed Sheedy, director of category management insights, at the Shopper Marketing Conference & Expo in Minneapolis. “We’re able to manage tests more effectively in a controlled environment,” Sheedy said. Ahold recently partnered with Kellogg to test the tool with cereal bars and other snacks. The Internet-based 3D interactive tool, from InContext Solutions, lets retailers and manufacturers visualize a concept without the manual time and labor required for an actual physical set-up. The tool creates 3D images and videos to communicate store changes, like planogram changes and resets. Users can view the entire store, down to individual items seen from all angles. The technology includes heat mapping of product sets to find the most productive layouts. The application can be used across a number of operational areas, including store planning, advertising and category management and merchandising, Sheedy said.
Wal-Mart's Global Operations Are a Testing Lab for U.S.
Wal-Mart Stores’ more than 11,000 retail locations across 27 countries provides the Walmart U.S. division a testing lab stretching across five continents, according to Walmart International CEO David Cheesewright. During an Oct. 15 investor conference, Cheesewright said several ideas being tested in U.S. stores now were first tried in the retailer’s international segment, something he expects will continue. The U.S. business benefits from experience in home delivery operations and private label in the U.K.; the operation of a much more diverse array of formats in international markets, including many smaller-formats (one-third of international stores are under 25K square feet); health clinic experience in Canada; and global logistics, for example. Article provides more specifics.
Target: Leveraging Pinterest, Omnichannel Approach
Target’s partnership with popular blogger/Pinterest pinner Joy Cho exemplifies the retailer’s mission to provide shoppers with inspiration, said Rick Gomez, SVP of brand and category marketing, at the Shopper Marketing Conference & Expo. “We’ve invested significant resources to better understand our guests,” which has confirmed that shoppers are finding inspiration on social media, and Pinterest in particular, he said. So it partnered with Cho to develop Oh Joy!, an exclusive party-inspired line. “We’ve taken party planning from the Pinterest page to the party table,” Gomez said. Target has also formed relationships with other top Pinterest’s top pinners...In another presentation at the event, Molly Hollenkamp, VP at shopper marketing agency Catapult, said that Target has won the omnichannel shopper in the baby category by making the baby shopping experience a personal, curated and educational one. Moms know they can rely on Target in-store, online and digitally to get product information, reviews and deals at the "touch of a button" and through one-to-one in-store help, she said. “Watch the baby category, because Target uses it as a testing ground for ominichannel,” she advised.
OTHER NEWS OF NOTE: