2015, in all likelihood, might see the end of many brands that are in operation currently. However this should not necessarily mean that these brands were inefficient or badly managed. It could simply mean that they might be taken over by bigger names; thus losing their identity. Here is why we might see the beginning of the end of these brands during this year.
Alaska Air
When it comes to airline operations in the western areas of the US, that is the super busy segments like Los Angeles, Seattle and Salt Lake City, Alaska Air (ALK, Financial) has been the most preferred airlines so far. Alaska Air has also given its competitors, a run for their money, by emerging successful in its east coast operations as well. Among the oldest airlines in the US, Alaska Air has been the most preferred by customers, because of its excellent service and hospitality. However, this year could be the last that we hear about them, because in April 2014, Delta Airways and Alaska Airlines announced their merger. If the merger formalities are completed within this year, the company would be known as “Horizon Air”, spelling the end of Alaska Air.
ZYNGA
Zynga (ZYN, Financial), a gaming company, which once created the hit game, Farmville, is at a crossroads now. It has not been able to repeat the success of Farmville with its other games. In 2012, it received a huge bolt, as Facebook terminated its relationship with Zynga, thereby resulting in the latter losing out to millions of users at a single time. Added to this, Zynga is also facing very stiff competition from King Digital (who delivered hits like Candy Crush Saga) and Rovio Entertainment (who delivered hits like Angry Birds) in the mobile gaming segment. Continuing in this segment is becoming tougher for Zynga with every passing day as it reported reduction of active members (72 million in 2012 to 26 million in 2014) and yearly loss of $190 million in 2014. Share prices plummeted by 28% in the single year of 2014, giving out positive clues that it is all set to be taken over. It is only a matter of time now, as the share price chart below indicates:
LULULEMON
Lululemon (LULU, Financial), the brand that makes women’s sportswear, is one of the brands that are sure to make its exit during 2015. Hundreds of yoga pants that the company manufactured were pulled back from the stores during March 2013 as women complained that the fabric of these pants was very thin and revealing. There was widespread resent for the clothes manufactured by Lululemon and its descent started from then onwards. It has never been able to bounce back from this incident as lots of unpleasant consequences followed. These included huge dip in share prices, drop in sales, resignation of top management and many more. Following the pull off of yoga pants from retail outlets, founder and Chairman, Chip Wilson publicly commented that the physical structure of few women do not go well with Lululemon’s Yoga Pants. This angered many consumers to a great extent. Eventually, Wilson did apologise, but the damage was already done. After a few months, he and Christine Day (CEO of Lululemon) resigned from their respective positions, giving clear signals that the company was not going in the right direction. The net income for Q2 2014 was only $47.8 million when compared to $56.5milion during Q2 2013. With sales figures dipping with every passing quarter, there is almost no chance that the Lululemon brand will survive through 2015.
Conclusion
The disappearance of these brands or brand names (in some cases) will only mean that bigger, better and more successful brands are coming into picture this year. For all practical reasons, it is for nobody’s good that these brands should continue to exist in their respective industries, as that would only mean a loss-loss situation for the company and its shareholders.
