Special Report

10 Brands That Will Disappear in 2015

1. Lululemon

It is not hard to identify when the fortunes of the women’s athletic apparel company changed. On March 18, 2013, Lululemon recalled a large number of its yoga pants because they were too sheer and, as a result, too revealing. The problems did not end there and led to management changes, revenue drop offs and a collapse of the company’s share price.

The fallout cost CEO Christine Day her job a few months later, and the founder and chairman, Chip Wilson, announced that he would step down in December of 2013. Wilson briefly returned earlier this year to solicit interest from investors in taking the company private. However, in August Wilson sold half of his shares to a private equity company, Advent International, likely ending the threat of such a bid.

Lululemon’s latest quarterly earnings show the extent of the company’s decline. While revenue rose by 13%, total comparable sales — composed of direct-to-consumer and comparable store sales — were flat. Also, net income fell from $56.5 million to $47.8 million from the second quarter of 2013 to the second quarter of 2014.

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2. DirecTV

AT&T’s plan to buy satellite TV giant DirecTV is an example of a broadband carrier trying to extend its reach into American households. AT&T’s U-verse TV product has only been modestly successful. It has 6.1 million customers as of the most recent quarter, versus DirecTV’s 20 million in the U.S. and over 32 million globally.

The deal, worth $48.5 billion, excluding net debt acquired at the time it was announced, still needs federal regulatory approval. Some members of Congress have sharply questioned AT&T’s management about the consumer benefits. While the two companies have argued that their marriage would lower consumers’ costs, some consumer groups believe that prices would actually go up and the new company would be able to control access to popular programming, like NFL games.

AT&T has reason to fight for the deal and make sure it closes. Its attempted bid to add wireless broadband capacity via a buyout of T-Mobile was blocked by the government in 2011.

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3. Hillshire Brands

Hillshire Brands, which markets Ball Park hot dogs and Jimmy Dean sausages, the top-selling products in their categories, has been on the radar of several food packagers. The company reached an agreement to buy Pinnacle Foods in May for $4.23 billion. But the agreement sparked interest in Hillshire, itself, and triggered a bidding war among the largest food packagers in the country, Tyson Foods and Pilgrim’s Pride.

Hillshire accepted Tyson’s final offer of $63 per share, or over $8.5 billion including debt. To close the Tyson deal, Hillshire had to terminate the Pinnacle agreement. Despite regulatory concerns regarding the deal, the Department of Justice cleared the acquisition after Tyson agreed to sell its sow-buying business. The deal closed in late August.

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4. Zynga

Zynga has been unable to match the success of Farmville, its first hit. Facebook also ended its relationship with the gaming company in 2012, effectively limiting Zynga’s access to the social network’s one billion users (at the time) and making it harder for the company to promote its games.

The company moved slowly into the mobile platform, and after it failed to create big hits of its own, it acquired popular titles, such as Draw Something and Words with Friends. But the recent struggles of mobile gaming rivals, such as Candy Crush Saga maker King Digital and Angry Birds maker Rovio Entertainment, show that continued success in casual gaming can be elusive.

Zynga reported daily active users in the third quarter of 2014 had fallen to 26 million, down from a high of 72 million in the second quarter of 2012. Zynga lost $57 million in the most recent quarter of the year, bringing its total yearly losses to over $190 million. So far this year, shares are down by more than 28%, which could make Zynga cheap enough for a takeover.

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5. Alaska Air

Alaska Air Group Inc. (NYSE: ALK) is one of the few remaining independent airlines in the U.S. that is not owned by one of the largest industry players. Even larger airlines have been acquired: Northwest was bought by Delta, Continental merged with United and U.S. Airways joined with American Airlines. Alaska Air, with its profits and customer service reputation, is the last real prize left.

Alaska Air is particularly strong in the busiest western markets, especially in Salt Lake City, Los Angeles and Seattle. It has also begun to challenge carriers in East Coast markets, including several cities in Florida. Revenue and net income have risen steadily over the past few years. And Alaska Air often ranks highest in customer satisfaction among traditional carriers.

There has been speculation in the past that Delta would buy Alaska Air for its West Coast routes. Currently, Delta is looking to dramatically expand its presence at Seattle-Tacoma International Airport, often considered Alaska Air’s home turf, in order to support more flights to Asia.

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