B&N Slashes Nook Investments; Ups Retail Investments
Barnes & Noble’s SEC filing for Q3 fiscal 2014, ended Jan. 25, shows a dramatic scale-back in Nook operations. Nook capital expenditures were $7.4M, -74% vs. same period previous year. For first nine months, Nook capex 55%. Cut 75 Nook jobs since Feb. 3, and 190 total so far in fiscal year. In first nine months, B&N upped capex investment in retail trade stores by 43%, to $45.7M. B&N operated 663 retail trade stores at the end of January and said in the filing that while it may open some new stores in the future, it expects to see a net reduction in the number of outlets. B&N’s investment is following where customers are spending money. Sales of media (physical books, movies, music, and magazines) fell 6% in Q3 but accounted for 67% of sales, up from 64% in year-ago Q3. Sales of other products, which includes B&N’s growing toys and games business plus café and college apparel, had a 3% sales increase and accounted for 24% of sales, up from 21%. Sales of digital products (hardware, accessories and econtent) fell 46% and comprised 9% of revenue, down from 15%.
Another Atlantic Media Exec Leaves; and Hartman Promoted
Bruce Gottlieb, president of National Journal and general counsel of Atlantic Media, will be leaving the company soon to “return to his roots in policy and government affairs,” the company said. Tim Hartman, who currently serves as president of Government Executive Media Group, will now also serve as the CEO of Atlantic Media’s Washington divisions (National Journal Group and Government Executive). Aretae Wyler will take on Gottlieb’s duties as Atlantic Media general counsel while continuing to serve as chief of staff to company chairman/CEO David Bradley. In addition, current National Journal chief revenue officer Poppy MacDonald and current editor-in-chief Tim Grieve will become co-presidents of the National Journal. The move will involve an interesting edit-biz straddling maneuver for Grieve, who according to a company release will “be responsible for editorial strategy and new editorial products for the brand.”
New York Magazine Launches Festival for Its Vulture Site
New York magazine is launching a live event tied to its entertainment site Vulture. The Vulture Festival will consist of 16 events for consumers that are meant to bring the site’s pop culture sensibility to life. It will be held May 10-11 at New York’s Milk Studios. Since its launch as a standalone site three years ago, Vulture has grown to more than 8M monthly uniques (per New York magazine citing Omniture). With a TV-centric slate of programming, the festival was timed to capitalize on the Upfronts, which kick off the TV ad buying season.
Jack Griffin Named Tribune Publishing CEO
Jack Griffin has been named CEO of the new Tribune Publishing Co., leading a group of eight newspapers including the Los Angeles Times and Chicago Tribune. The publishing chain is being spun off as a separately traded public company by Chicago-based Tribune Co., which plans to retain ownership of its TV stations and related broadcast properties. Griffin and the New York consulting firm that he runs, Empirical Media, have served as advisors to Tribune for the past year during its restructuring of the company’s print properties. Griffin co-founded Empirical Media in 2011 after serving for six months as CEO of Time Inc.; before that, he served as president of Meredith Corp.’s National Media Group for about eight years.
Hearst’s Native Ad Approach Starts with Clear Branding
In a Q&A, Todd Haskell, SVP and chief revenue officer, Hearst Magazines Digital Media, talks about the status of Hearst’s native advertising programs. “Our approach is that if it’s going to be branded, it needs to be very clearly branded,” he says. “It needs to say ‘Sponsored by’ or ‘Presented by.’ It needs to be very clear to the reader…There are other publishers that have constructs that are less obvious to the reader. That is the very slippery slope. And, in particular for brands that have been around for decades, the last thing we should do is do something that’s going to confuse the readers.” Hearst also “generally” includes the sponsor’s logo, he says. Says metrics used for native ad programs vary from traditional branding display metrics to “engagement lifecycle” metrics (e.g., time spent with content) to actions such as Facebook “likes” or e-commerce transactions.
OTHER NEWS OF NOTE:
Bi-Lo to Convert 7 Harveys, 3 Winn-Dixies
Bi-Lo Holdings plans to convert seven of the Harveys stores it is acquiring to the Winn-Dixie banner, and convert three Winn-Dixie stores to Harveys. The stores, all located in Georgia, are part of the group of 134 operating stores that Bi-Lo agreed to acquire from Delhaize Group. Bi-Lo previously said it planned to convert the Sweetbay stores it’s buying to Winn-Dixie and the Reid’s store to Bi-Lo. Most of the Harveys locations will retain their current banners. The Harveys stores that are being converted include three in Brunswick, two in Valdosta and one in Saint Marys. The three Winn-Dixies being converted to Harveys are in Americus, Leesburg and Albany.
Two Supervalu Directors Resign After Safeway-Albertsons Agreement
Supervalu said two of its directors, Mark Neporent and Lenerd Tessler, have resigned from the board because of their ties to Cerberus Captial Management, which announced Thursday that it’s buying Safeway, a Supervalu competitor, through its AB Acquisition holdings. Neporent is COO and general counsel for Cerberus; Tessler is co-head of global private equity and senior managing director of Cerberus. They joined the board following the Cerberus-led acquisition of Supervalu’s Albertsons assets and its investment in Supervalu.
Analysts Suggest Kroger Bid on Safeway
Some analysts are suggesting that Kroger Co. submit a rival bid to acquire Safeway. “We believe Kroger, with a partner, should join the bidding process,” said Scott Mushkin, an analyst with Wolfe Resear8ch, New York, in a research report. “If Kroger is able to usurp Cerberus at a reasonable $35-$37 per share for the supermarket business, the short- and long-term economic benefits are significant.” “In our view, a 2,400-store Albertsons/Safeway would create a formidable competitor for Kroger, particularly in markets such as Phoenix, Denver, L.A., and Dallas,” wrote Deutsche Bank analyst Karen Short. “Cerberus has proven to be a highly effective operator, and we expect them to reinvest cost savings/synergies into lower prices, which could erode Kroger’s pricing advantage.”
WSJ Analysis: Deal Gives Safeway Scope to Think Big, Act Locally
Success of merger with Albertsons will depend partly on whether Safeway can operate more like a local grocer. While size and national scale offer advantages to supermarket chains, such as more purchasing power with suppliers, their business largely depends on catering to local demand. One thing Albertsons has done well under its Cerberus-led private-equity owners is to give regional managers more voice in key decisions such as what products to stock, say analysts and industry consultants. That’s an area in which Safeway has sometimes stumbled.
Safeway ay $2.25M to Settle Ad Complaint
California authorities said Safeway has agreed to pay $2.25M in costs and fines to settle a civil complaint alleging it had engaged in false advertising and unfair competition and had defied a 2008 injunction. Safeway officials could not be reached for comment. The complaint, filed by the district attorneys of several California counties, alleged that over the last four years, Safeway had unlawfully charged consumers prices higher than its lowest advertised price; misrepresented the weight of Safeway-branded products; and made statements on in-store signs that gave the impression certain produce was locally grown when it actually came from sources in other countries. The complaint also alleged Safeway had failed to abide by provisions of a 2008 injunction requiring it to initiate and maintain a program to minimize pricing discrepancies by instituting a price-accuracy policy.
Target Data Breach Erodes Penetration; CMO Navigates Around the Crisis
SN: Target’s December data breach not only hurt comp-store sales but contributed to declining shopper penetration, according to a study by Kantar Retail ShopperScape. 33% of households reported shopping at Target or SuperTarget during January, -22% vs. Jan. 2013. “The overall trend in Target’s past four-week shopper penetration has been on a downward trajectory for the past several years,” Kantar said. The breach of its guests’ payment information “proved a critical moment in exacerbating that decline.” Separately, in Ad Age, Target CMO Jeff Jones reports that the breach prompted the retailer to shelve a “good corporate citizen” campaign that was to run during the Olympics. But it’s about to launch a different campaign, “Target Run,” which aims to position Target as a quick stop to pick up essentials.
Supermarket News (shopper penetration)
Ad Age (CMO, marketing strategies)
Chiquita, Fyffes Agree to Merge
Chiquita Brands International and Irish tropical-fruit firm Fyffes PLC have agreed to merge in a $1.07B all-stock deal. New company, ChiquitaFyfffes, will be world’s largest banana company, with $4.6B in annual revenue from sales of 160M+ boxes of bananas.
Amazon Launches App for Sellers
New Amazon Seller app offers a suite of mobile tools enabling sellers to search and ffes PLC scan barcodes o items, check prices, sales ranking and reviews, list items, and communicate with customers. An app designed for sellers has often been called a missing piece in the Amazon seller ecosystem. Merchants have up to now had to pay third party app developers subscriptions in order to make using Amazon’s selling platform easier.
LSD-Tainted Steak Bought at Walmart Sends Family to Hospital
A pregnant Tampa, Fla. woman was forced into induced labor after she and her family unknowingly consumed meat that had been laced with LSD (she gave birth to a healthy baby). The woman’s entire family, including her 6- and 7-year-old daughters, had to be hospitalized after eating the tainted meat purchased at a Walmart store in Tampa last Monday. Police described the store as fully cooperating with their investigation. W-M issued a statement it is “deeply disturbed” about the incident. “It’s unclear where and how the food was tampered with or if the tampering occurred after purchase,” statement added. “However, out of an abundance of caution, we have pulled the remaining product from the store,” the statement continued.
OTHER NEWS OF NOTE:
New Cross-Industry Group Formed to Address Payment Systems Security at Retail, Led by Visa, MasterCard
SN Analysis: Regional Grocery Chains Tackle New Markets (paid sub req.)