And now ... Mervyn's?

The latest retailer rumored to be nearing Chapter 11 is Mervyn's:

The company has been trying to persuade vendors to send shipments for the back-to-school season, but if they don't agree, the chain may have to file for bankruptcy soon, the paper said in a report citing unnamed sources.

I mentioned a couple months ago that the poor economy would lead to some bankruptcies (hardly an earth-shattering prediction), but that most of those who hit bottom would be those who were in trouble even when the economy was stronger, and I think Mervyn's fits that description. I seem to recall (memory can play tricks) reading articles about their struggles back when they were part of Target (maybe back to the Dayton-Hudson days).

Baby Boom? Not quite, but ...

The US set a record in 2007 for the most births ever -- 4.3 million. The old record was set in 1957, the top year of the post-WW2 baby boom.

The birth rate, of course, is not at Baby Boom levels -- it is barely half, with American women having just over two kids each, compared to four in the 1950s. Increased population, though, means that the absolute number is the highest ever.

Good news for the Huggies and Gerbers brand managers and, in a few years, for Mattel and Hasbro.

A-B agrees to InBev buyout

Anheuser-Busch has agreed to be bought by InBev, which sweetened its original $65/share offer to $70.

The deal would create the world's largest brewer and the third-largest consumer product company under the name of Anheuser-Busch InBev. [...]

For InBev, the maker of Stella Artois and Beck's, the deal gives an aggressive company an iconic beer brand — Budweiser — to sell into emerging markets such as China and Brazil where it has already established a firm footprint.

InBev is the world's second-largest beer-maker, narrowly behind SABMiller. Swallowing Anheuser-Busch sees it leap ahead, capturing half of the U.S. beer market and a fifth of China and Russia.

InBev says they will sell off some "noncore" assets (e.g., Busch Gardens?) to help finance the purchase.

This might be further bad news for media, since A-B has always been a big spender in advertising, especially sports marketing, while InBev has a reputation for being more conservative. Time will tell on that, and on whether trade promo tactics will change.

Walgreen slowing growth

Walgreen has opened more than 1100 new stores in the past three years, and plans to have 7000 by 2010, but intends to slow down a bit for the next few years.

The company plans to grow store expansion by 6 percent in 2010 and 5 percent in 2011, down from a long-term growth target of 8 percent. That translates into 425 stores in 2010 and 365 in 2011.

In its 2008 fiscal year ending Aug. 31, the company's expansion plans have resulted in 9 percent more stores; Walgreens said new store openings already in the works will result in 8 percent growth in fiscal 2009, or 495 stores.

The move is intended to conserve capital apparently, and will result in a savings of $500 million.

Steve & Barry's files Chapter 11

Well, it finally happened:

Steve & Barry's LLC, once a growing force in low-priced fashion retailing, said Wednesday that it filed for Chapter 11 bankruptcy protection, the latest merchant to succumb to a harsh consumer spending climate. [,,,]

Steve & Barry's also announced that it was considering a plan to sell all or some of its assets to repay outstanding debt.

I'll have to get there to buy a few more pairs of $8.98 jeans before they close.

The lesson to be learned from this: When something seems too good to be true, it probably is. Not original, I know, and one you'd think I'd have learned by now, but sometimes we need to re-learn things.

Average age of TV viewers = 50

According to the latest reports, the average age of people watching television is fifty. Since media buyers always seem fixated on 18-49, they're going to have to look elsewhere. The problem is ,,, where?

The problem, of course, is the same one faced by radio, younger people are getting their entertainment elsewhere -- mostly from the computer or the mp3:

"The median ages of the broadcast networks keep rising, as traditional television is no longer necessarily the first screen for the younger set," Sternberg wrote.

Radio is facing the same problem, as we noted a few weeks ago in regard to a report showing that teens are more likely to listen to music on an mp3 or a computer than on a radio.

Blockbuster withdraws offer for Circuit City

Blockbuster has decided not to make an offer for Circuit City:

The move comes less than two months after Circuit City reluctantly agreed to open its books to the movie-rental chain. In a statement, Blockbuster said that unfavorable market conditions and a closer review of the deal's finances led it to withdraw the offer.

The offer was for $6-$8 per share. The stock price dropped from $2.55 to $2.32 after Blockbuster withdrew.

Other reports, though, indicate that Blockbuster may come back to make another offer:

Blockbuster Inc, which abandoned its offer to buy Circuit City Stores Inc this week, may try to acquire the electronics retailer later, the New York Post said Thursday citing insiders.

One source told the paper that Blockbuster "verified the long-term benefits of a deal," and added that a there was a "real opportunity" to cut costs in combining the two chains' operations.

Presumably the new offer would be lower. Or it might even be a case of buying CC out of bankruptcy:

Will Circuit City join the long list of electronics retailers, like Tweeter Home Entertainment and Harvey Electronics, that have filed for Chapter 11 bankruptcy protection in the past year? Given that shares of the Richmond (Va.) company are trading at just over 2, Wall Street is betting that could be a possibility. "Circuit City is in very serious trouble, and any scenario is possible today," says Nick McCoy, senior consultant at TNS Retail Forward, a research firm.

BusinessWeek points out that waiting until the firm enters bankruptcy would allow a new owner to break leases on CC's many under-performing locations.

Nike: Too much marketing?

I have a professional bias in favor of spending money on marketing. A few weeks ago, I mentioned an article I recently did about maintaining ad/promo levels during a recession. But here's the other side of it:

Nike's increased marketing spend on Olympics efforts and store-related expenses have some analysts concerned about the company's ability to compete in tough economic times.

"It was the two expense issues that drove this worry," said Matt Powell, a footwear and retail analyst for Princeton Retail Analysis, Princeton N.J. "The marketing spend was greater than people expected and it made everybody nervous"

During a conference call with analysts on Wednesday, Nike executives said marketing expenses for the Olympic Games and the Euro Cup soccer tournament would cut hurt fiscal 2009 earnings.

It may just be my bias showing, but I'm also looking at Nike's track (so to speak) record of successful growth. My guess is that this will turn out well for Nike. But perhaps not -- anything can be overdone.

In any case, Nike management seems to take a realistic view:

Nike executives tried to assuage some concerns, noting that the increased spending on marketing in the year of the Olympics is normal and smart. However, they were realistic about challenges the company faces in the U.S., where fourth quarter (ended May 31) revenue grew only 4% to $1.7 billion, compared with 16% to $5.1 billion worldwide.

Wal-Mart's new logo

The hyphen and the star are going, going, and soon (this fall) to be gone.


I like it. The only thing I don't like is that, if they really are doing away with the hyphen, I'll have to go back and change all the tags on "Wal-Mart" articles to "Walmart".

Important question: Is the yellow thing a star (harkening back to the old logo) or, as I've seen it described, a sunburst, a flower, or an asterisk? For now, I'll stay with "yellow thing".