The Week

Published on .

J.C. Penney Corp. hired a former luxury-goods executive as its next CEO, but that doesn't mean the retailer is going upscale. In his first meeting with analysts, J. Myron "Mike" Ullman III, the newly appointed chairman-CEO, said he plans to continue the work begun by Allen Questrom, who piloted the retailer from near-bankruptcy through a successful four-year overhaul of merchandising and marketing. Mr. Ullman will join J.C. Penney Dec. 1 and Mr. Questrom, who was expected to retire in September 2005, will stay on for the transition. Mr. Ullman, 57, a former chairman-CEO of the Macy's retail chain, was most recently a group managing director at luxury goods marketer LVMH Moet Hennesy Louis Vuitton. Industry observers speculated that his selection signals a continuation of JCPenney's strategy of upgrading its merchandise with private labels from the likes of celebrity wedding planner Colin Cowie and home maven Chris Madden.

Cingular ads to fight merger static

Cingular Wireless will try to keep competitors from poaching AT&T Wireless customers, now that the two have merged, with an ad blitz that is expected to be as high at $900 million in 2005. The combined company is keeping the Cingular name, but is changing its "Fits you best" tagline to "Raising the Bar." This new campaign, from Omnicom Group's BBDO, Atlanta and New York, reflects a move to quality positioning (AA, Oct. 25). A second phase, breaking in November, will feature the benefits of the new combined company. The tag references a graphic devised by WPP Group's Ogilvy & Mather, New York, for AT&T Wireless showing five bars which represent the strength of a cell phone signal. BBDO retains the account of the merged company. Some analysts believe that, given the current rate of customer turnover, Verizon Wireless may overtake Cingular and regain the No. 1 slot within one to two years.

P&G holds fire in HPC ad fight

Procter & Gamble Co. doesn't plan to hike its ad spending, even as it continued a run of strong growth. Its net income was up 14%, to $2 billion, on a 13% sales increase, to $13.7 billion, in its fiscal first quarter. Still, P&G shares dropped 4.2% in two days as investors questioned if the company could maintain its strong run amid stepped-up marketing by Unilever and Colgate-Palmolive Co. Both warned last month that they'd miss earnings targets for 2004, as they spend more on marketing. In a conference call with analysts, P&G chairman-CEO A.G. Lafley said the company won't respond by further hiking its own ad spending. He and other P&G executives told analysts it would remain "a little bit over 10%" of sales. P&G reported $5.5 billion in ad outlays, or 10.7% of sales, in fiscal 2004. P&G's industry is hurting, too, largely because of P&G. Kimberly-Clark Corp. last month missed analyst estimates amid increased competition from P&G in several categories, including training pants. P&G has said it had to ration shipments of Pampers Easy Ups due to production constraints, after hitting a record 30% share of the segment.

Grey CEO set for $87M payday

Grey Global Group will pay chairman-CEO Ed Meyer as much as $87 million cash if WPP Group buys Grey in 2004, or about $74.5 million if the deal closes in 2005, according to a Securities and Exchange Commission filing. Grey will pay Mr. Meyer $51.8 million-based on June 30 values-for "deferred compensation and supplemental pension" that he racked up over the past decade, according to a WPP regulatory filing. Mr. Meyer also gets $22.7 million as a "settlement payment" to trade his old contract for a new one-and an additional $12.4 million for "golden parachute excise taxes" if the merger closes this year, according to the filing. WPP expects to complete its takeover of Grey in December or January. QwikFIND aaq07x

Texas Instruments in global review

Texas Instruments may start the new year with a new ad agency. The Irving, Texas-based technology company sent requests for proposals earlier in October to a select group of about 15 agencies, a Texas Instruments spokeswoman said. Jones Lundin Beals, Chicago, is the consultant handling the review; the incumbent, Interpublic Group of Cos.' TM Advertising, Dallas, is participating, the consultant said. A decision is expected by December. In its 2003 annual report, the company said its worldwide advertising expenditures that year were $79 million. QwikFIND aaq08q

Most Popular
In this article: