The new "Star Wars" film has smashed records at the U.S. box office, but some promotional partners are seeing less-than-stellar results.
"Episode I-The Phantom Menace" amassed $303 million in its first 28 days in theaters, a feat it took "Titanic" 44 days to accomplish. While the film has met the entertainment industry's expectations, though, its corporate partners are facing a different reality four weeks after its premiere.
Licensed apparel in department stores has seen a flimsy 5% sell-through, far from the breathlessly anticipated 15% estimates. Tricon Global Restaurants, meanwhile, has seen sales rise 4% for its KFC and Taco Bell chains, and 7% for its Pizza Hut unit; several restaurant analysts had forecast gains of 10% for each.
One executive with a KFC franchise said the chain has had trouble selling "Star Wars" toys in his East Coast outlets, while a Taco Bell franchisee said the promotion "didn't get above the clutter."
While no one is calling the project a failure, even tie-in partners are not using glowing language to describe results.
"Fine" is how Brock Leach, president of Frito-Lay North America's development group, described his company's promotion results, which he added "have met expectations."
In a report issued last week, Merrill Lynch analyst Peter Oakes said the Tricon promotion has "moved the needle maybe an incremental 1% or 2%, hence the upside is disappointing."
Added Lehman Bros. analyst Mitchell Speiser: "Sales are strong but not gangbusters, which is what the market expected."
LUCASFILM IS 'PLEASED'
Even Lucasfilm executives admit to soft sales in some markets.
"We are seeing some of our points of distribution aren't working, such as department stores," said Howard Roffman, VP-licensing.
Still, Mr. Roffman argues, virtually all other Lucasfilm merchandising efforts have seen robust sales, including interactive games, publishing and the top license revenue generator, toy action figures.
"By and large I'm extremely pleased," said Mr. Roffman.
He said toys sales-the most highly visible category for a entertainment license property-are running two to three times that of "Star Wars'" best year ever, 1997, when the original film was re-released. Toy sales could reach $350 million by yearend, a number that would rival some of the best-selling toy properties ever.
T-SHIRTS REGISTER STRONG SALES
And, although some high-end apparel doesn't seem to be working, Mr. Roffman added that T-shirt sales are moving at a healthy 15% to 25% sell-through clip. Sell-through is how much is sold as a percentage of inventory in a given week.
Additionally, he notes that Pepsi collectible "Star Wars" cans are moving briskly, as are sales of special Frito-Lay package products that contain "Star Wars" trading cards.
"It's too early to get a read on this yet," Mr. Roffman said in talking about the effectiveness of promotions in driving sales at Tricon restaurants.
Yet, he isn't the only corporate hopeful to have faith in George Lucas' force. Adds Merrill Lynch's Mr. Oakes: This is "not the beginning of the end."
TBWA/Chiat/Day, Playa Del Rey, Calif., developed a single TV campaign, Tricon's first joint advertising for all three of its restaurants. The plum assignment was estimated at $30 million to $50 million.
An executive close to TBWA/Chiat/Day said there are no additional joint ad