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.

“If Volvo disappears, what will liberals drive?”

“Smart” cars,Fiat 500s, Volts and Leafs?

Looks to me like libs have quite a few choices left.

They're way premature with JCP. With the Sachs loan, JCP can afford to lose at the current rate for three more years.

BTW, check this out:

JCP Increases Prices Before Sales

That is a beauty but imo just a little bit too much.

I think the maybe early to mid 60s Corvette was great and also the Jaguar XK-E.

I drive a 2001 Diamante. 5 years no interest. Good size. 5 adults can be comfortable. 6 cal gets up the hills and mountains quickly.

Put a transmission in about 2 years ago.

241,000 miles.

Parked in the garage paint looks good, dash board in great shape. I use sun screens in my cars.

Routine maintenance.

Like it very much.

I think that year, Mitsu was trying to copy BMW’s front look,

You have to remember, that was a pure race car, not a pimped up street machine. Pretty much how they were designed back then. The Birdcage Maserati was another gorgeous car in the same manner.

Of course, once the AC Cobra came out, I switched car worship instantly.

Never could afford a Cobra, but did buy a 1967 Sting Ray, that I could also not afford to keep longer than two years. Sucks to like hot cars when you do not have much disposable income.

Not too long ago they had a program on auto racing back in the pre WWII era. The Auto Unions, Mercedes, British names that I can’t recall off hand.

There was one horrible accident at maybe LeMans or maybe it was Nurburgring. Anyway the car was made of magnesium which obviously was a bad idea.

That car wrecked and caught on fire. One guy showed up pretty fast with an extinguisher then a couple more. The one guy just tired as hard as he could to put it out but all the extinguisher did was just barely affect the fire exactly where it was aimed. As soon as it sprayed one area, the fire would immediately flame up again.

They had to just watch as the driver was burned probably to just ashes.

Wow Subaru. What a great call.

Subaru does make one hell of a good car these days. But I have noticed that every one driving them are über liberals. The bumper stickers, bike rack, granny glasses on 25 year old women and boxes of granola in the back give it away.

I have relatives on both sides of my family that own a total of three Subaru’s. They are the the most liberal of the crew. I think all three still have their Obama 2008 bumper stickers on.

I’m not sure there is a car brand in America with as many cars on the road and as high a percentage of liberal owners of said car line.

If I recall, they were the first cameras permitted in the court rooms, because their shutters were so quiet.

I think those were Leica rangefinders, but I could be wrong. The Olympus I had was quieter than my Nikon, but it wasn't that quiet.

But I really loved to design too, and like I said earlier, they were substantially smaller than other SLRs of the time.

Mark

There was a famous crash in the ‘55 Le Mans that featured a magnesium alloy Mercedes, although the details are not as describe.

Dutch Gran Prix in the early ‘70s had a spectacular magnesium burn crash.

The first time I wondered about Subaru’s was around 1987. I worked with two lesbians. Well not actually with them, they were in our group and I only saw them about every two months.

One of them was actually very attractive, the other was plain. Not hideously ugly but not pretty either. I just happened to notice they both drove Subaru’s. Since that was a fairly uncommon car back then it did make me wonder if there was a connection and over the years it became more and more clear.

Neither of them were actually hostile to men but they gave off the right impressions so you knew even if you had not been told that they were lesbians.

I guess it could have been 55 but I still think in the 30’s.

They did show it all. The film was B&W but it still could have been B&W in 55 too. I do remember quite clearly the first guy with the extinguisher going to great effort and heroism. He did everything he possibly could and subjected himself to real danger. He finally just ran out of extinguisher and went away weeping.

I knew a professional photographer who worked for the Southern Baptist Convention. He used Leica rangefinders because he often worked during services and did not want to disturb them.

The OM-1, OM-2 3 and 4 were in fact very quiet. The designer whose name I can’t recall, (it was something like Maitaini) put shock absorbers in the mirror mechanism which did make that mirror flap much smoother and quieter. Probably still louder than the Leica.

That pro photographer also used Hasselblads. I still have a lot of pics his assistant made of my wife and Daughter when she was a baby, and of course some had me in them.

The Pro actually wanted to use my wife as a model, she was that photogenic, but we lived to far away. He did take some of her while we were visiting the retreat.

Yeah, Subaru is also the brand of lesbians,

I’ve driven them and the recent vintage outbacks are really top tier vehicles. But no, I am not able to comprehend why the liberals love them.

A Subaru to a liberal is like a Browning shotgun or Ford F150 to us.

I’ve got an Olympus Stylus Epic. That thing has a heck of a telephoto lens for a little point & shoot. I took it on a cruise and got sharper photos than I did from a far more expensive camera.

I hate to see the brand fail.

I have a Mitsubishi Montero Sport that I bought new in Nov 1999...it's a 2000 model.I have driven this vehicle hard over the years and it now has 270,000 miles on it.

While it has a few minor issues it's still rollin' along...I can honestly say it's the best car I've ever owned...and I've owned 23 different vehicles over the years!!

Yeah, Subaru is also the brand of lesbians,

Well, my wife might say I have some tendencies that way.....

Other than that, you must come from a strange area with few modified turbo cars. WRX Subarus are among the most popular for tweaking to absurdly high horsepower levels with a few aftermarket parts and computer tuning.

Losing Olympus is sad...
My first 35mm SLR was an Olympus OM-2n, the camera was tiny compared to most other SLRs, and it had a metering system that was absolutely DEAD-ON. I don’t remember ever taking a bad photo with that camera.

Of course, I haven’t seen a 35mm camera for sale in quite some time, although there are still a few out there.

My first, and only 35mm SLR was an Olympus OM1 which I bought used from a civilian contractor who was working where I was stationed in Saudi Arabia in 1980. I then took the camera on my photo safari expedition to Kenya in July of that year. I loved that camera, and the pictures I took with it.

Yes, Olympus will surely be missed, indeed...

the infowarrior

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