Ten Brands That Will Disappear in 2014

Each year, 24/7 Wall St. identifies 10 important brands sold in America that we 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, we included 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.

Consumer electronics is another category with disappearing brands. The Barnes & Noble Nook is on the list. It competes with better-selling products made by larger companies — Apple and Amazon.com — and is also in the e-reader business, a shrinking industry. The Olympus digital camera also will disappear from store shelves by the end of 2014. Camera sales, especially point-and-shoot models, have been eroded by smartphones, which have increasingly high-quality cameras.

Yet another industry with two brands on our list is automobiles. Car sales are growing in the United States, but brands with market shares under half a percent cannot compete with companies that either produce high-luxury models like Mercedes-Benz or multiline giants like General Motors. Suzuki pulled out of the American market last year. Mitsubishi and Volvo will follow soon.

Looking back on last year’s calls list, we have had some winners, and some bad calls. Suzuki, MetroPCS and Current TV are all gone in the United States. American Airlines is part of a new company through its combination with U.S. Airways, though the American Airlines name lives on. Talbots was acquired by a private equity firm less than two months after we called it. Research In Motion is no longer a brand, having been renamed BlackBerry. We bungled our predictions regarding Avon, the Oakland Raiders and Salon.

We continue to use the same methodology in deciding which brands will disappear. The major criteria include:

Each brand on the list suffers from one or more of these problems. Each of the 10 will be gone, based on our definitions, within 18 months.

J.C. Penney Co. Inc. (NYSE: JCP) has been in trouble for some time. Those who still believe in its future as an independent retailer point to the company’s ability to get a loan of $2.25 billion from Goldman Sachs and other investors, secured primarily by real estate and leases. That money, optimists claim, will last until CEO Myron Ullman can turn the company around. Ullman recently has returned to the company’s top job.

On the other hand, many believe the company cannot come back from the unprecedented sales losses it has suffered in recent years. The industry is very competitive, both at brick-and-mortar stores and online. Big-box retailers from Walmart to Target and successful department stores such as Macy’s are larger than J.C. Penney and are growing. At the e-commerce level, companies such as Amazon.com and eBay, are gobbling up market share. Amazon has done damage to retailers much healthier than J.C. Penney.

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.

Barnes & Noble Inc.’s (NYSE: BKS) 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%.

The Nook was thrown a lifeline a year ago, when Microsoft invested $300 million in Barnes & Noble’s digital business, but to no avail. It has been downhill since. Sales at the company’s Nook segment, which includes both the e-reader and online books, declined by 26% between the third quarter of 2012 and the third quarter of 2013. The Nook’s disadvantage may have little to do with its hardware or software and more to do with size of its online audience. It competes against much larger e-commerce sites that have access to hundreds of millions of new readers. While Amazon has more than 130 million visitors a month according to Quantcast, Barnes & Noble has just over 6 million visitors.

Martha Stewart Living Omnimedia Inc. (NYSE: MSO) 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. In the first quarter of this year, publishing revenue dropped from $30.8 million to $24.5 million. The unit lost $990,000 in that period. Because of its troubles, the company tried to sell off smaller magazines. Its Everyday Food stopped publication as a standalone title with the December 2012 issue. Whole Living was discontinued after the January/February 2013 issue.

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.

Two of Omnimedia divisions are doing quite well and could sustain a restructured company. Merchandising had revenue of $11.5 million in the first quarter, and an operating income of $5.7 million. Even the small broadcasting operation made money. The company could move the magazine online, as many other newspapers and magazines have done, to avoid the huge costs of paper, printing, and adding new subscribers. Martha Stewart Living lost its ability to be a standalone magazine long ago.

LivingSocial, a daily deals website, has trailed Groupon since it launched. But this is an industry in which trailing the leading company is a very bad sign. As the financial troubles of Groupon demonstrate, the online daily deal industry started to fall apart not long after it began. Groupon’s share price, which reached a high of more than $26 after its initial public offering, was trading as low as $2.60 last year. While the stock is up on improved sales, the company remains unprofitable.

The situation is even worse for LivingSocial. Leading advertising publication AdWeek recently reported that sources would not be surprised if the company “was sold to a larger company or liquidated piece by piece by spring 2014.” That is a long way from when Amazon.com confidently invested $175 million in LivingSocial in 2010. The deal soured as the huge e-commerce company wrote down the investment by $169 million in late 2012. More recently, an Amazon SEC filing indicated that LivingSocial lost $50 million in the first quarter of this year, compared to a profit of $156 million in the same period a year ago.

The biggest competitors to both LivingSocial and Groupon are eBay, American Express and Amazon’s own AmazonLocal service. Each has a huge customer base and significant amounts of data about its customers, which they can use to target deals. LivingSocial does not stand a chance.

In the United States, Volvo was never a giant manufacturer with a large number of models or ultra high-end brands. 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.

Volvo’s future is in question not just in the U.S. The company’s dealerships in China inflated sales numbers to receive cash incentives from the company that never went to customers, according to Brand Channel. In other words, some of Volvo’s dealers committed fraud. China has been the Swedish car maker’s home since Zhejiang Geely Holding bought it in 2010.

Except for market leaders like Canon, Sony and Nikon, no one wants to be in the digital camera business anymore. Worldwide unit sales are down 18% in 2012 since their peak in 2010 and are accelerating this year. It is no surprise then that Olympus, which only has 7% market share, has failed to generate a profit from its imaging business in any of the past three years. The decline caught the company’s management off guard. Actual sales were less than two-thirds of forecasts.

For the next fiscal year, the outlook is grim. Olympus expects compact camera unit sales to fall from 5.1 million to 2.7 million units worldwide. But these declines are hardly a new trend. A major reason for declining sales has been the increased adoption of smartphones — which now offer lenses and chips that capture high-quality images — as an alternative to digital cameras. Based on increased interest in high-end cameras, the company plans to focus on increasing sales of SLR cameras, which accounted for just 35% of its imaging business. Meanwhile, sales of its largest camera segment, compact cameras, will be cut in half. Of concern to investors, the company has pledged to stop issuing dividends until the camera business is restored to profitability.

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.

Leap Wireless International Inc. (NASDAQ: LEAP) was the one loser in the recent telecommunications M&A frenzy. AT&T nearly bought T-Mobile, which eventually combined with MetroPCS. Sprint Nextel is being pursued by both Japan broadband firm Softbank and Dish Network. Since the consolidations have created financially stronger companies, Leap is too small to survive. The best proof is in its subscriber counts and earnings. Wall Street lost confidence in Leap a long time ago. Its shares are down 90% over the past five years, while the Nasdaq is up by 40%. Leap’s management has probably known it needs a partner for some time. It was widely expected that Leap would merge with MetroPCS last year. The T-Mobile-MetroPCS deal ruined that.

In October 2012, Bloomberg BusinessWeek reported, “After reporting net losses for the last six years, analysts are forecasting Leap will remain unprofitable through 2015, according to data and estimates compiled by Bloomberg. It may post a profit of about $43 million in 2016, according to the average estimate.” The risk factors disclosed in Leap’s annual report read like a road map to Chapter 11. Management warns about the company’s ability to build out its 4G network, make debt payments, take on more debt if needed and increase its customer base. Probably the most damaging evidence regarding Leap’s dim future is its subscriber count, which dropped from 5.9 million at the end of 2011 to 5.3 million at the end of last year. By comparison, the new T-Mobile Metro PCS subscriber base is about 43 million, which in turn is smaller than Sprint, Verizon Wireless and AT&T.

While it never had a massive presence in the United States, the niche Japanese automaker has had some success with models like the Lancer and the Eclipse. However, Mitsubishi Motors will soon exit the U.S. market, just as its Japanese rival, American Suzuki Motor Corp., did at the end of last year. Its sales are nose diving. In 2012, Mitsubishi sold fewer than 60,000 units in the United States, down from nearly 80,000 in 2011. That decline was the biggest of any auto brand and has continued this year. In the first four months of the year, sales have fallen by 6.5% to just 20,571 vehicles. The U.S. market share of Mitsubishi was only 0.3% in April. Mitsubishi does not have the advantages of some other companies with low market shares — it is not a luxury car company like Porsche and Land Rover, which sell high-end cars and command high prices. The average price for Mitsubishi’s seven models is under $25,000. One of the company’s weaknesses is this small model lineup. Mitsubishi is further hampered by the public’s perception of its products. In the new J.D. Power vehicle dependability survey, it ranked third from last out of 33 brands.

Founded in 1947, Road & Track is the oldest and most well-regarded automotive magazine in the country, according to Hearst, the publication’s owner since 2011. Road & Track and its better-selling stablemate, Car & Driver, have been among the top brands in the industry for years. However, Road & Track operates in a crowded market, which includes several other large publications and a substantial number of popular car websites. The four dominant magazines have all posted advertising sales drops in the past five years as Car & Driver, Motor Trend and Automobile have each lost hundreds of ad pages. Road & Track has had the worst of it. Ad pages fell from 1,092 in 2008 to 699 last year. Pages are down another 31% to 232 for the first six months of this year, according to MIN. No large national magazine can continue that kind of long-term slide.

Car & Driver has an audience of 10.7 million people, which according to Hearst makes it the world’s largest automobile magazine brand. Hearst does not need to support two magazine brands, each of which is in the midst of a sales slide. Since both magazines are based in Ann Arbor, Michigan, a consolidation of staffs would be a money-saving option. Road & Track subscribers could also be migrated to Car & Driver. Road & Track might continue to live online, but Hearst has no reason to keep two similar titles.

Nah, I gave up on 35mm a long time ago... I do miss Tri-X Pan and different chemistries, including stuff from Perfection Photographic Products, which allowed me to push Tri-X to 6400 and still get grain-free photos with terrific contrast. Great for shooting sports.

Though I had my OM-2, I also had a Nikon FM-2 (I used mostly Tamron Adaptall lenses) I used for sports photos, and it was amazing to be able to freeze the action at f-16 & 1/4000sec outside.

Mark

It won’t happen, because of the “fortune teller paradox”.

That is, most people have a pretty good idea what their fortune holds, so that is not why they go to a fortune teller. Instead they go in the vain hope that somehow, the fortune teller can magically change their future for them.

So fortune tellers will be around as long as there are people who want to get something for nothing.

Oddly, not on the list were:

Liberals.
Democrats.
Liberal Democrats.
Liberal Media.
Liberal Media Democrats.

Thanks SeekAndFind.

Add to the list of decay in motoring magazines: "Motorcyclist" magazine. They used to have funny, non-PC editors and writers, but have gone totally left wing in the last few years. I dropped them after decades when they had not one, but two "green" issues in one year, along with writers making snide comments about "Palinesque statements", and the "questionable war in Iraq".

It was obvious their current crop running things was leftist. Cycle World has been a joke forever. Luckily I have lost interest in these things compared to my younger years, so no great loss.

Look at the ugly uniforms they wear. Not all the players are bull-dyke, hairy-legged beasts. But they certainly have the most unattractive uniforms of any female sports. By contrast, look at women’s volleyball team uniforms. Lots of leg. The WNBA players look like they’re wearing potato sacks by comparison. Not that changing to more attractive unis would make the league, but it couldn’t hurt.

My first 35mm cameras were Minoltas (which I think morphed into the Sony line). I hated to see them go out of business. I wish my Nikon digital SLR was as easy to work as that old Minolta XG-1.

I’ve never owned an Olympus, but I hate to see competition disappear, it keeps everyone on their toes.

“I hope Nook can survive. In my opinion, it’s a superior e-reader compared to the Kindle.”

Nook killed itself. B&N has done a horrible job with authors. Amazon pays on time and pays the correct amount on time, every time.

If you look at the reviews for B&N, you will find non-payment/late payment and mis-payment as the largest grips about the content side of the business.

If you can’t do a good job with the content providers, you will fail.

Volvo

Nonsense.

Volvo Car may go under, but Volvo Semi Truck is still owned by Sweden and is still going strong.

I hope the car doesn't go away we have owned them for years and have always found them to be comfortable, reliable and very safe.

Although we haven't bought one since the company was taken over by the Chinese so all of the above may have changed.

“Really, its just about the only place I learn about new releases.”

Not sure if you are talking about books or music, but being one of those old farts, I still buy CD’s. There’s a store next door that my wife shops at. I’d go to B&N and check out all the new music. They have these listening stations where you just scan the CD and get about a minute of each song.

About a year and a half ago, every time I scanned new CD it came back, ‘not in system.’ Finally one of the employees told me - management had decided to stop paying for the updates, so the newest music on there would be something like Nov of 2011.

Now the punch line.

Of course you can still listen to the new music on line.

(Why don’t they just tell me to go away and be done with it?)

If Volvo disappears, what will liberals drive?

The liberal women (womyns?) might still be able to snap these up at CarMax:

R&T killed itself with the new editorial staff they installed after the takeover & purge. (notice the gratuitous use of the ampersand) I’ll miss Peter Egan’s writing and most of Dennis Simanaitis’, but the rest of the new crowd can take a hike.... er, I guess that is what they will be doing.

Yes, R&T has always been a bit snooty, fawners over Teutonic iron and inflicters of Som Posey on motoring readership. But they are a whole lot better than the sophomores over at C&D.

Too bad someone can’t resurrect Sports Car Graphic.

I don’t know if Minolta is still in business or not.

A few years ago they merged with Konica then a few years after that, they sold their camera division to Sony. I was glad to see that Sony kept the “A” mount lenses as I had a bunch of them.

I thought the company was dead then a couple of years after that, I saw the “Minolta Gator Bowl”. Sort of surprised me as I had assumed they were gone.

Ah, Sports Car Graphic.

The cover of that magazine got me started with car interest in the ealy 60's with a great cover photo of a red (what else?) Ferrari Testa Rossa:

I was smitten forever.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.