Hits & Misses
(Business 2.0) – [HIT] You're absolutely, positively willing to pony up. Rising fuel costs have kept airline profits grounded. So how has FedEx--which runs the largest cargo jet fleet in the world, as well as 700,000 gas-guzzling trucks--been able to keep its income flying high? Unlike the airlines, FedEx has gotten its customers to foot the bill for gassing up. The company's decision in February to adjust its ground and express fuel surcharges on a monthly basis has done nothing to deter shippers, but it's done plenty to shore up the bottom line: In the most recent quarter, FedEx's revenue jumped 10 percent over the same period last year, to $7.7 billion, while net income soared 9 percent to $448 million.
[HIT] Back with the in-crowd. Just last year, Keds--Stride Rite's iconic 89-year-old sneaker brand--seemed destined to spend fifth period stuck at the dork table in the lunchroom. Though the canvas shoes were a must-have in the late '80s (sales tripled for three straight years after Jennifer Grey donned a pair in Dirty Dancing), sales had fallen by more than 50 percent since their early-'90s peak. But Keds is now hanging with the popular kids again, thanks to new pitchwoman Mischa Barton, the 19-year-old star of Fox's teen drama The O.C. Keds used Barton to great effect in a spring ad campaign (tagline: "Be Cool") for a trendy new line that helped boost sales 7 percent since last year and put the shoemaker on track for its first $200 million year in a decade by 2006.
[MISS] The wrong tune. Creative Technology made lots of noise last November, when it unveiled two new MP3 players that it predicted would help it take 40 percent of the global market this year. But, analysts say, despite spending about $100 million to promote its MuVo and Zen models, the company's market share is still around 10 percent (compared with Apple's 70). Creative posted a $31.9 million loss in its most recent quarter, and though it recently won a patent battle with Apple over iPod's track selection technology, many feel it may be too late to break Apple's stranglehold. Tellingly, Creative has begun shifting its promotional efforts toward its new line of sound cards.
[HIT] A real indie. We've all heard of bands finding success without a major record label, but how about with no label at all? Amazingly, the self-produced, self-titled debut album from Brooklyn-based indie rock band Clap Your Hands Say Yeah has sold more than 20,000 copies and generated as much buzz as a beehive. In August, thanks to glowing reviews on the Web and brisk sales through independent local record stores, Clap Your Hands entered Billboard's "top heatseekers" chart at No. 34--the best performance in history for an album not backed by a label. That sound you hear? One band clapping all the way to the bank. Yeah.
[HIT] Giving new meaning to the term "gross revenue." What to do if you can't crack China? Try Iceland. Sure, it sounds crazy--but it's working for Domino's, whose international business is booming thanks to its penchant for relying on the entrepreneurial drive of its far-flung franchisees. In its most recent quarter, Domino's reported a 32 percent jump in profit from a year earlier, largely on the strength of its overseas operations, which posted their 46th consecutive quarter of same-store sales growth. Unlike rival chains such as KFC and Pizza Hut, which tend to transplant American managers and recipes abroad, Domino's encourages its owner-operators to tweak menus according to regional tastes, leading to pizzas topped with squid and peas in Taiwan, lamb and pickled ginger in India, and tuna in Iceland, which is now home to three of the chain's four highest-grossing outlets.
[MISS] We want our publi-ci-ty. To a magazine editor, it doesn't get much better than having your cover held up to the camera and praised on national TV. Unless, that is, everything is visible except the name of the magazine. Such was the fate that befell Business 2.0 in August, when [redacted], a reality-TV channel once known for playing music videos, featured the magazine on a dating show called Room Raiders. In an episode titled "Secret Crush," contestant Linda was delighted to discover Business 2.0 in the bedroom of one of her suitors, repeatedly holding it up to the camera to voice her approval. Yet the logo was obscured. Why? Adding insult to injury, the network wouldn't explain, despite half a dozen increasingly shrill phone calls. Industry analysts say the exposure could have been worth as much as $100,000.