NEW YORK Lowe has seen its lead broadcast duties on Macy's shift to project work and lost its Great Atlantic & Pacific Tea Co. account, the Interpublic Group agency confirmed.
Coupled with the previous losses of Century 21 and Unilever's Wisk, the shop has lost an estimated $7-8 million in revenue this year and will likely have to cut staff to get income in line with expenses, according to sources.
An agency representative acknowledged the prospect of personnel cuts but declined to comment on the number or timing. "We're evaluating our staffing needs at this time," the rep said.
Macy's hired the New York shop in late 2003 to create a broadcast campaign in spot markets. The resulting campaign, tagged "Way to shop," tested well and went national last year. But Macy's parent, Federated Department Stores, this summer decided to take Lowe off retainer and instead use the shop, when needed, for projects.
Revenue on the account is estimated at $4 million. An agency rep confirmed the shift but declined further comment. A client rep said, "We just really felt that creatively we should be open to different ideas and agencies." The rep added that in addition to Lowe, which is producing a holiday campaign, Macy's is using Work, an independent shop in Richmond, Va. that is producing a spring campaign.
A&P hired Lowe in the spring [Adweek, March 28] to handle creative and media duties for five of its brands, including A&P, Waldbaum and Food Emporium. At the time, the client, under CEO Christian Haub, wanted to market the chains as specialty-orientated stores offering amenities like organically grown produce and fresh-cut flowers.
In August, however, A&P installed a new CEO, Eric Claus, who has since set about increasing profitability through cost cutting, said sources. [Haub, the previous chairman and CEO, became executive chairman.]
When Lowe won the business, revenue was expected to be in the $1-2 million range. The agency and client split, however, before Lowe was able to produce any work. Sources said A&P had taken its business in-house. A&P could not immediately be reached.
"These two retailers historically produced in-house ads and had never before worked with a [lead agency]. So, I knew going in that this was somewhat experimental for them," Lowe New York CEO Susan Cantor said, in a statement. "In light of the recent major changes going on at both companies, it's not surprising that they would pull more of their work in-house."