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5 Brands That Will Disappear in 2013

05/28/2013

Going Out of BusinessBusiness is a tough…well, business. 

If you believe that is an obvious statement – congratulations! You may be on the front lines of business yourself and know first-hand how challenging a business or brand sustainability really is.

Each year, 24/7 Wall St. identifies 10 important brands sold in America that they  predict will disappear before 2014. This year’s list reflects the brutally competitive nature of certain industries and the importance of not falling behind in efficiency, innovation or financing.

The list also reflects how industry trends can accelerate the demise of certain brands. This year, includes two magazines — Martha Stewart Living and Road & Track. With print advertising in a multiyear decline, some magazines have weathered the decline better than others. These two, however, have suffered sharp drops in advertising revenue over the past five years. Magazines also carry the heavy legacy costs of printing, paper and distribution — a problem not shared by online-only competition.

Here are our picks from the Top 10:

1. JC Penney – It’s been well documented here and elsewhere that JCPenney is in deep trouble. There are those who believe a $2.5 billion loan from Goldman Sachs will help. We’re not buying it. 

Even in a less competitive environment, a J.C. Penney comeback could not be sustained. For the year ended February 3, the company reported that comparable store sales dropped 25.2%, revenue fell 24.8 % to $12.985 billion and Internet sales were $1.02 billion, a plunge of 33% from the previous year. While the most recent quarter was considered an improvement with sales down 16.4%, in reality it was nothing more than a brief reprieve. There is absolutely no reason to believe that J.C. Penney’s prospects will improve.

2. Nook – Barnes & Noble’s e-reader was destined to struggle from the start. It was launched in October 2009, roughly two years after Amazon.com’s Kindle, which was, and has remained, the market leader. Both products were hit by competition from Apple’s iPad before the e-reader business even hit its stride. Adoption of tablets is forecast to grow 69.8% in 2013, while e-readers are expected to drop 27%.

3. Martha Stewart Living  – Martha Stewart Living Omnimedia Inc. has three divisions: publishing, broadcasting and merchandising. In the five years up to the end of 2012, publishing revenue fell from $179.1 million to $122.5 million. Last year, the division lost $62 million.

The main problem at the company’s flagship magazine, Martha Stewart Living, is the precipitous drop in advertising pages. According to the Media Industry Newsletter, the magazine’s advertising pages fell from 1,306 in 2008 to 766 last year. Pages are up to 404 through the first half of the year, but even if the full year runs at this rate, it is not enough. The company does have a good opportunity to retrench.

4. Volvo – In the United States, Volvo was never a giant manufacturer with a large number of models or ultra high-end brands. It made a name for itself as the ‘safest’ car back in the 80’s which gave the brand a niche to own. But Volvo did little to maintain its edge in safety. As of April, its market share in America had dropped to 0.3%

The company’s models compete directly with mid-luxury offerings from every large auto company in the United States, including giants General Motors and Toyota. It also has more direct competition from low-end models made by BMW, Mercedes and Audi. With all that competition, consumer demand just is not there for Volvo cars. In the first four months of this year, Volvo sold 19,571 vehicles in the U.S., down 8% — in an overall market in which sales rose almost 7% to 4,974,000. A mid-market car company without a broad range of sedans, SUVs and light trucks would find it hard to make any progress in the United States. Volvo’s model line is too small to allow it any chance.

5. WNBA – The champion and protector of the Women’s National Basketball Association, David Stern, will retire in February 2014. He has been the all-powerful commissioner of the NBA for three decades. It is hard to imagine how the WNBA could have survived without his support, and that will soon be gone.

The league was founded in 1996, and currently has 12 teams. Six teams have disappeared since the league’s beginning, and three have been relocated. Attendance has been awful. Average regular season attendance by team per game was only 7,457 in 2012, compared to about 18,000 for the NBA. The WNBA attendance number was below 6,000 in Atlanta, Chicago and Tulsa. Even in New York City, the New York Liberty could not break the 7,000 barrier. Attendance for half of the teams dropped by double digits between 2011 and 2012. Owners have little financial reason to support the league. The Chicago Sun Times reported in 2011 that “The majority of WNBA teams are believed to have lost money each year, with the NBA subsidizing some of the losses.” TV viewership is so low it only makes matters worse.

 

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