What big brands will disappear next year?

As the recession deepens each quarter, more and more companies close their divisions. Some big brands have already gone out of business - Circuit City, ATA, Aloha airlines, Gateway Computers. What company will be next?

24/7 Wall St. analyzed 100 big brands that are facing serious economic difficulties. They took into consideration their sales information, experts’ prognosis, brand histories and the level of competition in their industries. 

The company believes that the following brands will disappear by the end of next year:
1.    Avis/Budget operates two car hire companies. They lost money each of the last three years. In 2008 the losses reached $1.1 billion. As the travel industry continues to falter, problems at Avis/Budget will become worse. 

2.    Borders, the second book store operator after Barnes & Noble, lost $157 million on revenue of $2.8 billion last year. The company was going to cut the number of Walden bookstores in 6 times, but it is not enough. The competition from online book stores is overwhelming. In the last quarter of 2008, sales at Border’s stores dropped 15.3%. 

3.    Crocs lost $43 million in the fourth quarter of 2008 after earning $55 million in the same period the year before. Its profits dropped from $225 million in the last quarter of 2007 to $126 million. At the end of 2009, Crocs extended their critical credit facility for 6 months. However, analysts still doubt whether the brand can survive.  

4.    Saturn was established by former GM CEO Roger Smith to be the company’s platform for marketing innovation and manufacturing. In the first quarter of 2009, Saturn sales fell 59%. As GM is moving closer to bankruptcy, it is likely to close its brands with poor sales. 

5.    The Chrysler brand of Chrysler LLC faces similar problems. Through the first quarter, its sales dropped 61%. The car manufacturer knows that it can’t support product design, manufacturing, and marketing for all of its brands. And Chrysler LLC sales are much worse than sales of Dodge or Jeep. 

6.    Esquire Magazine is one of the weakest major men’s magazines on the basis of advertising page performance. Its ad pages fell 27% in April. Hearst, which is having substantial problems in its newspaper and magazine divisions, will have to close some of its unprofitable magazines. 

7.    Architectural Digest Magazine has lost nearly half of its ad pages this year. Who needs magazines about expensive redecorating in today’s economic uncertainties? High-end home sales have been driven out of the market, so the magazine will likely to close. 

8.    Gap is a three-brand company – Gap, Old Navy and Banana Republic. In the last quarter of 2008, Gap had less than a 6% operating margin on $4.1 billion in revenue. If their sales continue to drop each month, Gap will have serious financial problems. The company will close it weakest brand - Old Navy.

9.    Eddie Bauer lost $128 million on revenue of $369 million in the fourth quarter of 2008. Its stock trades at just $0.38 now (last September they cost more than $8). The company has said that it may default on credit payments this year. 

10.    Palm’s profits dropped from $312 million to $91 million. The company can’t compete with Apple and RIM to get share on the smartphone market for its new device. In the first quarter of 2009 Palm sold only 482,000 handsets, down 42% from the same quarter last year. 

11.    AIG is now a “toxic” brand for its operating groups. They will take measures to distance themselves from this name. Since most of the companies owned by AIG have different names, it won’t be difficult to do.

12.    United Airlines, AMR and US Air are the weakest carriers in the U.S. Since the travel industry has been significantly damaged by the recession, there is almost no doubt that they will merge with stronger airlines to avoid bankruptcy.