Friday, May 11, 2007

Mother of all Marketing Plans

In two days phone connections - wired, wireless, and digital - will be overloaded with calls to mothers around the world as Americans celebrate Mother’s Day. The British have their Mothering Sunday during Lent and the Russians set aside the last Sunday in November to honor mothers.

Although celebrating motherhood is not unique to the U.S., nowhere does the day approach the marketing event staged in the U.S. Mother’s Day has a greater impact on retail sales than Valentine’s Day, Easter and Father’s Day. Celebrations in 2007 are expected to top last year, with shoppers spending an average of $140.00 per person.

Where will the money go? The
National Retail Federation says Mother’s Day spending could reach $15.7 billion in 2007. As much as $3.1 billion will be spent on dinner or brunch, $2.3 billion on flowers, $2.1 billion on jewelry, $1.6 billion on clothes, and $1.3 billion on a trip to a spa or beauty salon.

With numbers like that, retailers have to be salivating over the potential business. They have had to wait for the current week to grab their share. Surveys suggest that shoppers procrastinate more in anticipation of Mother’s Day than any other holiday. It is not surprising then that retailers take their Mother’s Day marketing campaigns seriously as they target spenders.

According to
Constant Contact, a market consulting group, husbands shell out 37% of the cash for Mother’s Day followed closely by 35% from daughters. Mothers themselves spend 18% of the dough on themselves and other mothers. Sons apparently keep their hands in their pockets, accounting for only 9% of Mother’s Day purchases. Indeed, at dinner, if dad or the daughter has not already picked up the check, mothers are more likely to pull out their wallets than sons.

Mother’s Day in the U.S. even has a green theme. In parts of the U.S. it is customary to plant tomatoes outdoors after Mother’s Day. My mother, who was a productive organic gardener, never set foot in the garden until the beginning of May, but it was probably more a factor of the weather than any special regard for the holiday.

If investors prefer to play the green theme rather than the retail theme for Mother’s Day, the selections are few. Landscape nursery, Griffin Land & Nurseries, Inc. (GRIF: Nasdaq) is still searching for profits. Nonetheless, GRIF shares are still trading near the 52-week high, suggesting that even with tomato seedling sales, it is not a value stock. The home improvement group is not much more compelling. Lowe’s Companies, Inc. (LOW: NYSE) is profitable, but its forward PE of 15.1 does not offer investors much upside compared to the trailing PE of 16.0 times. Home Depot (HD: NYSE) presents the same picture as analysts apparently expect decline in fiscal year 2008 earnings from the prior year and earnings growth in the year following is expect in the low double digits.

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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