9 Most Damaged Brands

9 Most Damaged Brands

9. J.P. Morgan Chase

J.P. Morgan Chase & Co. JPM +0.23%   was for years considered the best-run bank in America, and its CEO, James Dimon, the top banker. Dimon steered it through the financial crisis of 2008 in a way its competitors could not match. Unfortunately, J.P. Morgan is one more brand that was tarnished almost overnight. A single trader in J.P. Morgan’s London office lost the bank $6.2 billion, and there are concerns the write-off process isn't over. Dimon erred by saying the incident was isolated and based on management error. The federal government didn't accept that, and neither did investors. The Office of the Comptroller of the Currency and the Federal Reserve made harsh assessments of the bank’s risk management in January. The criticism didn't end there. In March, the Office of the Comptroller downgraded J.P. Morgan’s management rating.

8. BlackBerry

Research In Motion BBRY -4.67%  renamed itself after its most famous product—the BlackBerry—earlier this year. New management has said that the BlackBerry Z10 and the redesigned operating system, which was delayed three times, are critical to turning around the business. But the product, which the company is betting on, is of only limited interest to the public. The BlackBerry brand already has been pressed to near extinction by competitors, including the Apple iPhone and Google Android OS smartphones, led by Samsung products. Apple’s iPhone had about half of BlackBerry’s market share in 2008, and Google Android was in its infancy. By the end of 2011, BlackBerry had less than 9% market share, Apple had almost 24%, and Android OS phones dominated with more than 50%. In the history of smartphones, the 2013 launch of the BlackBerry Z10 may be only a footnote. The release was late, and most reviews have been mixed. Early sales of the new device have been modest and while the Z10 was hardly the start of the downfall of the BlackBerry brand, it may be the final chapter. At left, CEO Thorsten Heins at the launch of the BlackBerry Z10 smartphone in Sydney, Australia.

7. Groupon

Shortly after launching in November 2008, Groupon Inc.GRPN -0.96%  began to revolutionize the coupon business. The company sent retail offers online to customers, which it targeted based on where they lived and worked, as well as their stated interests. Merchants and customers adopted the new model at a blazing pace, at least early on. Revenue increased from $3.3 million in the second quarter of 2009 to $644.7 million in the first quarter of 2011, the company reported. When Groupon went public in November 2011, its trouble with the SEC about overstating revenue already had begun. Another SEC investigation caused the company to restate fourth-quarter 2011 revenue and drove down the share price 10%. In addition to accounting scandals, Groupon is having trouble fending off competition from peers and brick-and-mortar retailers who don't want to be flanked by online coupon competition. Earlier this year, Groupon co-founder and CEO Andrew Mason, (at left, posing with his wife pop musician Jenny Gillespie) was ousted. Rejecting Google’s $6 billion dollar offer (the company is now worth $4 billion), issues with the SEC and zero growth didn't sit well with his board and co-founders.

6. Best Buy

If the stock market is any indication of the success of electronics retailer Best Buy Co. Inc. BBY +4.15% , it is worth remembering that its shares traded just below $49 nearly three years ago. Even after rallying since the start of the year, shares currently trade under $24. Best Buy has been its own worst enemy. CEO Brian Dunn, who was charged with the company’s turnaround, was ousted in May 2012. Founder and chairman Richard Schulze left under a cloud shortly thereafter. Then, last August, Schulze offered to take Best Buy private. Recently, he dropped the deal and rejoined the board. Even Schulze could not make the case that the company was healthy enough to be taken over. One of Best Buy’s problems is that it has become the showroom for Amazon.com Inc. AMZN -1.61%   This was on display when it announced the financials for the quarter that ended on March 3, 2012. The company said that it had lost $1.7 billion, compared with a profit of $651 million the year before, and would close 50 stores. Best Buy also said that the critical marker of same-store sales had fallen, and that it expected the slide to continue.

5. J.C. Penney Co.

The deterioration of one of America’s oldest retailers has been going on for some time. In the five years before Ron Johnson’s appointment in late 2011, the J.C. Penney JCP -0.96%   share price dropped 60% under CEO Myron “Mike” Ullman. Johnson embarked on an expensive turnaround plan, which included a new logo, advertising and the end of deep discounts, coupons and sales events once popular with customers. None of this appears to have worked. Total sales fell 24.8% last year to $13 billion, while same-store sales fell 25.2%. Internet sales, absolutely critical to retailers as e-commerce emerges as a primary source of revenue, dropped 33% during the year. The day after Johnson’s departure, share prices hit a 12-year low.

4. Boeing Co.

The huge aerospace company has turned years of delays in the launch of its 787 Dreamliner into a nightmare for carriers. And passengers have become concerned whether the plane will be safe once it returns to service. Production delays began in 2007. The first passengers didn't step aboard a 787 until an Oct. 26, 2011 flight from Tokyo to Hong Kong—3½ years later than originally planned. However, the events after that flight make the delays seem insignificant by comparison. Incidents of burning lithium-ion batteries caused the entire 787 fleet to be grounded. U.S. regulators recently approved fixes, a move that paves the way for airlines to work with regulators and Boeing BA +0.28%   on their own timetables. As the Los Angeles Times recently reported, “Boeing Co. is now battling on two fronts: fixing the source of the problem and regaining the trust of the flying public.

3. Hyundai

The South Korean vehicle maker KR:005380 +0.41%   and its stablemate Kia KR:000270 +1.08%  have been among the fastest-growing car and light truck brands in America over the past decade. Hyundai’s share of the U.S. market grew from about 2% in 2001 to more than 4% in 2011. During that period, Hyundai and Kia offered what Japanese companies had for decades—high-quality vehicles at affordable prices. They burnished their images with a 100,000-mile warranty package dubbed “Hyundai Assurance.” However, in November 2012, the EPA charged the companies with inflated MPG claims, and they lowered the stated MPG ratings on many of their vehicles. Recently, Hyundai and Kia said they would recall approximately 1.9 million cars in the U.S. to fix a problem with the brake-light switch and other issues.

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2. Apple

Steve Jobs built Apple Inc. AAPL -0.99%  into a seemingly unassailable juggernaut—and the world’s most valuable public company. The reputation was carefully crafted for more than a decade by Jobs, who created entirely new product categories, and then dominated them with devices such as the iPod, iPhone and iPad. Apple’s single most public disaster was its decision to dump rival Google Inc.’s GOOG -1.69%  Maps system and replace it with its own product. Following a huge wave of negative press, Apple CEO Tim Cook wrote a public letter apologizing for the mess and, at one point, even suggested users rely on Google Maps instead. At the heart of Apple’s brand decline is the simple fact that it has lost reputation as the prime innovator in the industries it once led. Apple lost its position as one of the world’s top brands in a remarkably short time. It hasn't launched a revolutionary product in more than two years.

1. Martha Stewart

Leave aside Stewart’s five months in prison for lying about her sale of ImClone stock. Disregard her unbelievably high compensation as nonexecutive chairman of Martha Stewart Living Omnimedia Inc. MSO -3.66%  —even as the company’s revenue has consistently dropped, and its shares have plummeted more than 60% during the past five years, while the S&P 500 has jumped 20%. The domestic diva and her namesake company have landed on the front pages again, this time in a protracted legal battle between Macy’s Inc. and J.C. Penney about which retailer has the rights to sell Stewart-labeled products. The latest legal mess has further damaged a brand that began a downward trend years ago. Read “America’s Nine Most Damaged Brands”at 24/7 Wall St.

Source: http://www.marketwatch.com/