Andersons Make New Bid to Buy Books-A-Million
For the second time in a little more than two years, the Anderson family has made an offer to take Books-A-Million private. BAM announced late Thursday that it had received a proposal from Clyde Anderson, the company’s executive chairman, stating that his family wants to buy all of the outstanding shares in BAM for $2.75 per share. In mid 2012, the Anderson family attempted to buy back full control of the nation’s second largest book chain, but withdrew the offer after it became the target of a number of lawsuits that charged that the offer was undervalued. Although the $2.75 per share offer is lower than the $3.05 per share bid the family made in 2012, the new offer maybe more appealing to outside shareholders. At the time of the 2012 offer, BAM’s stock was trading at $2.49 per share, making the bid a 20% premium; with BAM’s share price closing at $1.68 per share on January 29, the new proposal gives shareholders a 64% premium. In his letter to BAM, Clyde Anderson said that if the merger is approved by BAM, the company would continue to be run by its existing management team, headed by CEO Terry Finley. The letter also stated that the family had no interest in selling its shares to an outside party if BAM viewed the offer as too low. In its acknowledgement of its receipt of the offer, BAM said that it intends to promptly review the proposal.
Conde Nast Names Phillips Its Chief Revenue Officer of the Year
Connie Anne Phillips, who rejoined Condé Nast in June 2013 as Glamour VP and publisher after a successful 2009-2013 stint as publisher of Time Inc.'s InStyle, was awarded magazine-brand Chief Revenue Officer of the Year by CN CEO Chuck Townsend and president Bob Sauerberg during the company's Jan. 25-27 publishers and executives conference in Miami. Phillips was cited for leading the 76-year-old Glamour to "impressive ad-revenue and ad-profit growth." The monthly "was significantly up in every metric year-over-year." At Vogue, editor-in-chief Anna Wintour and chief revenue officer Susan Plagemann were cited for increasing profits 2.5% over a record-breaking 2013. But CN's bottom-line percentage leaders were Teen Vogue editor-in-chief Amy Astley and chief revenue officer Jason Wagenheim. The 12-year-old Vogue spinoff's 20% revenue increase came primarily from a 60% increase in digital revenues. MIN and WWD also report the other CN executives recognized for 2014 achievements.
Golf Magazine's Ad Sales Team Absorbed Into Sports Illustrated
After noting personnel changes at Time Inc.'s InStyle and StyleWatch (reported here yesterday), NY Post reports that the Golf magazine ad sales team was this week absorbed into Sports Illustrated. The piece says that Dick Raskopf, 57, a 32-year veteran of Time Inc., is out as publisher of SI’s Golf Group, and that at least four people on the Golf ad sales team were let go, according to sources. Time Inc. EVP Evelyn Webster said the changes to the sports portfolio are “designed to build upon the group’s momentum by allowing it to further leverage its resources and scale.”
Conde Nast Feels Heat Over Native Advertising Venture
NY Post writes that a "firestorm" of controversy has followed Condé Nast's announcement of its creation of an in-house native advertising unit called 23 Stories, because staff editors will for the first time be made available to write sponsored content. A memo signed by CEO Charles Townsend and president Bob Sauerberg and Anna Wintour, editor-in-chief of Vogue and CN's artistic director, said that 23 Stories “will leverage the best-in-class talent of the designers, writers and marketers who comprise the 23 stories we now occupy at our new headquarters at 1 World Trade Center to develop proprietary content, videos, insights and experiences for our advertising partners.” Sources told Post that editors' roles in native advertising "has been a delicate one for months and that Wintour "had been tip-toeing around the subject for months." Post piece continues in part: "One insider said that in reality, there is no iron-clad rule that any magazine is automatically included--or automatically excluded. But sources said the New Yorker is not likely to make its editors available to work on ads...Wintour in her statement said, 'The industry is evolving and so too is our way of story-telling'...There is a clear gold rush for native ads. Hearst and Time Inc. already unveiled native ad units within their corporations. Nylon, the edgy fashion magazine, recently said this week it was going to make editor-in-chief Michelle Lee, who came in with the new ownership change last year, in charge of the magazine’s native ad push as well. 'Were going to help brands tell their stories,' she said in no uncertain terms. 'If I’m working on an ad campaign, I don’t think there is any danger I am going to mix it up with editorial. The key here is transparency.'"
Modern Farmer Hires Interim Operations Director
Modern Farmer's former paid editorial staffers left, but the magazine has hired Sarah Gray Miller to oversee its operations on an interim basis, it announced today. Miller, most recently the editor in chief of Hearst Corp.'s Country Living, will work with the quarterly publication's remaining staff to print its summer issue and recruit more editorial staff members. In today's release, the magazine's majority owner, Canadian mining magnate Frank Giustra, said he remains committed to the magazine's future.
OTHER NEWS OF NOTE:
Albertsons, Safeway Complete Merger
Safeway and Albertsons owner AB Acquisition LLC, controlled by an investor group led by Cerberus Capital Management, completed their proposed merger Friday, the companies announced. The merger will create a network of 2,230 stores, 27 distribution facilities and 19 manufacturing plants with over 250,000 employees across 34 states and the District of Columbia. "Our combined geographic footprint, vast range of brands and products, and service-oriented staff will enable us to meet evolving shopping preferences," said Albertsons CEO Bob Miller who will become executive chairman. Albertsons-Safeway will be comprised of three regions and 14 retail divisions, supported by corporate offices in Boise, Idaho, Pleasanton, Calif., and Phoenix. Banners will include Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Albertsons, ACME, Jewel-Osco, Lucky, Shaw's, Star Market, Super Saver, United Supermarkets, Market Street and Amigos. In December, the companies announced the sale of 168 stores to four separate buyers, as divestitures required in order to secure U.S. Federal Trade Commission approval of the transaction...In related news, Fitch Ratings has withdrawn its ratings for Safeway, saying it does not have sufficient information to provide ratings on the company's post-merger capital structure of Safeway and Albertson's. As indicated in prior commentary, and based on preliminary information indicating pro forma adjusted leverage of around 6.0x, Fitch believes the merged entity would be rated in the "B" category. Fitch currently rates Safeway as a negative rating watch.
Natural Grocers Posts Q1 Sales, Earnings Gains
Increased consumer demand for healthy foods helped to drive quarterly sales and earnings gains for Lakewood, Colo.-based Natural Grocers by Vitamin Cottage. In Q1 ended Dec. 31, sales rose 21% to $145.9M and net earnings rose 22% to $3.6M, both slightly ahead of analysts' estimates. Sales improved as a result of new units and a 6.2% increase in comps. Comps were driven by a 3.4% increase in daily average transaction count and a 2.7% increase in average transaction size. Mature stores saw daily average daily increases of 2.8%.
Costco to pay $2.2B Dividend
Costco said that its board of directors has declared a special dividend of $5 per share payable on Feb. 27. The aggregate payment of approximately $2.2B will be in addition to Costco’s regular quarterly cash dividend of .355 per share. The special dividend will be funded through existing cash and additional borrowings.
Hershey's Plan to Help Revive Candy Impulse Buying
Washington Post summarizes all of the factors that are challenging lucrative impulse sales of candy, magazines and other power categories at supermarkets' front end, including self-checkouts, preoccupation with mobile phones, shorter wait or "dwell" times, and at-curb pickups or home deliveries of online orders. For candy, increased competition from snacks has also slowed sales, Hershey Co. said on Thursday, in addressing its lower-than-expected sales for last year. “Impulse, in an indulgent business, is really important," said Frank Jimenez, Hershey’s senior director of retail evolution, noting that the checkout typically accounts for 1% of supermarket sales but 4% of profits. "But shopping is changing, and impulse is under threat. What happens if and when the checkout goes away?” Hershey has sponsored research into what makes the world’s shoppers reach for chocolaty gratification, and Jimenez says they created what they call the “Eight Human Truths of Impulse” to explain why people succumb to little checkout-aisle urges. The goodies can delight, indulge, recharge or “rescue”; they can spoil (“I worked hard today”) or charm (“That’s a great idea”); they can lead shoppers to aspire (as with food or fitness magazines); or they can simply convince buyers they’ve scored on a good deal. At a meeting of retail executives in New York earlier this month, Hershey senior manager of front-end experience Chris Witham outlined some of the ways the company planned to win back “unplanned purchases,” with tests starting this year. For curbside grocery pickups, Hershey could upgrade kiosks or add menu boards to allow buyers one final candy grab before finishing their order. At self-checkout machines, shoppers could find a special dispenser that spits out chocolate bars on demand. The company could also dispatch an army of vending machines to grab shoppers outside the store, including, potentially, looking to “some dispensing opportunities around [gas] pumps,” Witham said. Glomming back onto the end of the shopping list will take more than just one-off upgrades, and Jimenez said it would take an industry-wide effort tantamount to “retrofitting America.” Late last year, Hershey began running an experiment at a Winn-Dixie in Baton Rouge, replacing the old candy aisle with a bright, sugar-filled “store within a store” of grab-and-go sweets, placed right next to the checkout aisles. “A majority of shoppers find the candy category the hardest to shop and the least inspiring in the store, resulting in many shoppers walking away without any confection in their basket,” said Rick Price, Hershey’s senior manager of center store evolution. The “re-imagined candy aisle,” he said, “makes candy shopping more convenient and memorable.” [Also see link below to a December article in CPGMatters that detailed the innovative candy aisle initiative.]
Amazon Delivers Better-Than-Expected $214M Q4 Profit
Amazon posted higher-than-expected net income in last year’s final quarter, despite sales growth below forecasts. Amazon typically has satisfied investors with rapidly-growing sales and investments, even at the expense of profits. Investors cheered the e-commerce giant’s newfound attention to earnings in the wake of its disastrous Q3, when it posted its biggest loss in 14 years. Still, Amazon had a loss of $241M for the full fiscal year, as operating expenses climbed 20% to $88.8B, essentially wiping out $89B in sales (also up 20% vs. 2013). In Q4, net income totaled $214M, or 45 cents a share, down from $239M, or 51 cents a share, a year earlier. But analysts expected 17 cents per share in profit. Sales rose 15% to $29.3B, vs. the analyst-consensus forecast of $29.7B. Gross margin rose to 29.5% from 26.5% in the year-earlier period. Sales in its core North American market jumped 22% to $18.7B, while overseas they rose just 3.2% to $10.6B. Amazon guided for sales of $20.9B to $22.9 billion, up 6% to 16% from the year-earlier period, compared with the $23.05B projected by analysts. Amazon said that Amazon Prime boosted its worldwide paid membership by 53% last year--50% in the U.S. and at a slightly faster rate internationally. Analysts estimate that Prime has some 40M members worldwide.
PepsiCo's Super Bowl Retail Displays Up 70% This Year
Ram Krishnan, SVP and CMO, Frito-Lay North America, reports that PepsiCo has some 62,000 cross-brand marketing "Better Together" displays around its massive Super Bowl sponsorship and marketing campaigns this year--up 70% from last year's total displays. According to Krishnan, PepsiCo began many months ago to work with its key retail partners to develop customized display and marketing activations around the Super Bowl. Data from advertising tracking firm Market Track about "bundle" ads provides another indicator of just how important and far-ranging cross-brand marketing around the Super Bowl has become to PepsiCo. The research firm defines a bundle print ad as one that promotes two or more products from different but typically complementary categories, like soda and chips. Looking primarily at print ads run to date during January, versus the same pre-game period in January 2014, Market Track found that PepsiCo's "bundle" ads--ones including two or more products from complementary categories, like soda and chips--have jumped 202% this year. Further, fully 75% of soda/chips bundle ads run this month featured Pepsico brands, including Pepsi and Frito-Lay brands, compared with 53% of bundle ads seen in the same period last year. (Coca-Cola's bundle ads are also up--by 128% versus last year's January period--although Dr Pepper's are down 52%, reports Market Track.)
Walmart, Other Retailers Cozy Up To Search Marketing Leading Up To Super Bowl
Brands wanting a little Super Bowl action, whether or not they run TV ads, are relying more on search engine marketing as a way to bridge offline and online advertising. Data from two separate agencies look at keyword terms and how brands use them in paid-search ads leading up to the big game. Clavis Insight data show that Walmart moved into the best retail position by offering the broadest selection of chips and dips, and making it the easiest to find snack categories from their home page. Frito Lay dominated keyword search terms. It placed the company in the top search position in three out of four stores, when consumers searched on the keyword "chips." Pace and Tostitos held the top spots for searches related to "dips," ranking and share of first-page results. This is consistent with most retailers. When it comes to Peapod, more shoppers see brands like Cape Cod in search query results in the Chips and Dips category. AdGooroo also examined paid search text ad impression on 164 Super Bowl-related keywords in the U.S. on Google from Jan. 24 through Jan. 26, 2015, for terms ranging from "super bowl" and "super bowl commercials" to "super bowl tickets." Many of this year’s Super Bowl advertising sponsors are integrating paid-search advertising campaigns. PepsiCo’s Doritos took No. 3, with a 9.1% impression share for its interactive promotion CrashTheSuperBowl.Doritos.com. Anheuser-Busch's Bud Light took No. 4 with 4.6%, offering search ads that direct consumers to its “Real Life PacMan” commercial, which will run during the game. Mars' MyMMs.com will not run a TV ad during the game, but is running paid search advertisements with Super Bowl-related keywords to promote its customized Patriots and Seahawks M&M candies for Super Bowl parties. There are only four Super Bowl TV sponsors in the Top 20 for Paid Search Share of Voice, but Google is helping pick-up slack by directing searchers to YouTube to view videos of Super Bowl commercials. Gaining a 4.5% impression share, YouTube's ads during the period included promotions for Pepsi, Toyota Camry, Snickers, McDonald's, and Budweiser.
New Yorker Article Delves Cracks in the Food Safety System
An article by Wil S. Hylton in the Feb. 2 issue of The New Yorker reports on the failings of the current federal food safety system, where authority is spread out over 15 agencies. It profiles Bill Marler, described as "the most prominent and powerful food-safety attorney in the country," whose firm has filed hundreds of lawsuits against many of the largest food producers in the world. "By his estimate, he has won more than $600 million dollars in verdicts and settlements, of which his firm keeps about 20%. Given the struggles of his clients—victims of organ failure, sepsis, and paralysis—Marler says it can be tempting to dismiss him as a “bloodsucking ambulance chaser who exploits other people’s personal tragedies.” But many people who work in food safety believe that Marler is one of the few functioning pieces in a broken system."
OTHER NEWS OF NOTE: