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Creative Leisure News
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Email: mike@clnonline.com
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Date:
January 15, 2001 TABLE OF CONTENTSCOMMENTARY: WHERE'S THE HONESTY?As the industry prepares for the HIA show, I received two phone calls that illustrate a problem:1. "I'm afraid to show my product to anyone," the vendor told me. She owns a small company and has developed some new products, but doesn't have the manpower to produce and market them. She has a great track record, so I trust the products do have excellent potential. Why is she afraid? She's worried the ideas will be ripped off. 2. Less than a day later, a vendor faxed me a cease-and-desist letter detailing a company who is advertising a ripoff of his product. "To whom can I show new products safely?" he asked. I've also heard allegations of buyers taking a sample from Vendor A, then giving it to Vendor B or an importer and saying, "Go make this for me, but cheaper." We're an industry that requires new products to survive and grow. When some of our most creative minds are afraid to show anyone their new products, what is our future? I was shocked when I first went to the old WF&FSA floral show and saw vendors with walls around their booths to keep out prying eyes. I was amazed at the exhibitors' paranoia. But it looks like we're coming to that, aren't we?
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REMINDER: PRINTING THIS ISSUEIf you want a hard copy of this issue, scroll to the top of the page and click on "Printer friendly issue". Then print it; the resulting hard copy will be easier to read than printing this version.
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CHRISTMAS 2000: SANTA WASN'T KIND TO RETAILERSMICHAELS. The big winner in December, reporting a same-store sales gain of 5%. Overall sales increased 16% to $357.6 million. Year-to-date sales have surpassed $2 billion.JO-ANN'S. Overall sales rose 2.7% to 211.4 million, but same-store sales were flat. Management said sales were in line with the previously announced expectations. WAL-MART. Same-store sales rose only 0.5%, the lowest increase in recent years. Because the Sam's Club division actually dropped 0.3%, the overall company was up only 0.3%. Analysts had expected the increase to be 2-3%. PAMIDA. The division's parent, ShopKo, reported its same-store sales fell 4.2%. Pamida's sales were $118.7 million, up 14.5%, but that includes new stores, too. Next month Shopko will report Pamida's same-store sales figures. AMES. Same-store sales fell 2.6%. Officials said shoppers were more "bargain conscious" and did not cite crafts as one of the strong categories. HANCOCK. December sales fell 3.9%, but CEO Larry Kirk claimed a good sell-through of seasonal merchandise without deep discounting, and bank debt declined to $13 million from $31 million a year ago. A.C. MOORE. President/CEO Jack Parker said, "The Christmas season was not what we anticipated. December, the key month in the period, was disappointing. We were unable to gather any momentum as we felt the impact of lower consumer confidence and adverse weather conditions. On a positive note, while traffic was down, our average sale was up." (The company does not report monthly sales figures.) OTHERS. Toys R Us same-store sales rose 3.5%, Kmart's sales rose 0.7%, Target's fell 0.1%, and Duckwall-ALCO's fell 5.5%. ZANY BRAINY. Excluding Noodle Kidoodle sales and sales from Pokemon products, which accounted for 10% of holiday sales last year, same-store sales increased 7%. Its Internet sales grew 5% without the cost of heavy discounts, free shipping, and $6 million in marketing the company spent during last year's season.
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IDEAFOREST DOWNSIZESIdeaForest laid off 40 of its 66 employees due to "the difficult funding environment for e-commerce ventures and the company's decision to lower expenses and preserve its cash resources," officials said. All laid-off employees receive severance pay and outplacement support.The remaining staff will continue with day-to-day operations of IdeaForest's e-commerce site, joann.com, launched in September, 2000. Since that launch, joann.com has become the second most visited arts & crafts website with 531,000 unique visitors during the month of December, according to PC Data Online. The site is the result of a partnership between IdeaForest and Jo-Ann Stores. IdeaForest CEO/President Rich Bergsund said the workforce reduction was a "difficult but necessary action", due to the current e-commerce environment and projections for business-to-consumer funding. IdeaForest went online last year with its own e-commerce site, after hiring some of the most well known designers and retail executives in the industry. In June the company announced another round of funding, $21 million, including a $6.5 million investment by Jo-Ann Stores. At that time, IdeaForest dropped its e-commerce site and has operated the joann.com site ever since. In return for its investment, Jo-Ann's received a 28.5% ownership in IdeaForest with options to increase its ownership percentage through the vesting and exercising of warrants. "We believe in the long-term viability of our clicks-&-mortar business model," Bergsund said. "This action will give us the best opportunity to continue to build the leading online resource for creative enthusiasts."
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A.C. MOORE: MORE GROWTH IN 2001Despite a disappointing December (see "Christmas 2000: Santa wasn't Kind To Retailers", above), A.C. Moore reported annual sales of $262.1 million, a 17.5% increase. Same-store sales rose 3% for the year.Sales for the fourth quarter ended December 31 were $93.2 million, up 17.7%, but same-store sales were down slightly, 0.5%. Officials said they expect earnings/share for the fourth quarter to be $0.85 - $0.87, and $0.86 - $0.88 for the full year. Last year it was $0.76 for the year and $0.73 for the quarter. This year's figures would have been 11 cents/share higher, officials said, except for costs associated with opening 10 new stores. Actual earnings will be announced February 22nd. CEO Jack Parker said, "We view 2000 as a year of growth and achievement. Our store count grew by 25% including our four-store entry into the southeastern United States. We plan to continue growth in that region in 2001. Despite the difficult Christmas season, for the year we had significant earnings improvement and our inventories are in excellent condition. "Accordingly," Parker added, "we are in a strong position to continue to expand our business in 2001, during which we expect to add 10-14 stores and grow our earnings per share to a range of $1.08 - $1.10." In a conference call with investors and analysts, officials said plans also call two relocations, in addition to the 10-14 new stores -- including four new stores and one location in the first quarter. Officials predict 2001 sales will increase 23-25%, thanks to the new stores and a 4-5% same-store sales increase. The current store count is 50. Annual gross margins are expected to improve, too -- 70-75 basis points. Approximately one-third of the improvement is anticipated from merchandise margin growth and the remainder from leveraging buying and distribution costs. Operating margins, before pre-opening expenses, should increase by 35 to 40 basis points. Officials are predicting a 4-5 cent loss in the first quarter, however, due to anticipated higher interest costs and increased pre-opening expenses related to two incremental store openings and one relocation. You can listen to a replay of the conference call by surfing to http://www.vcall.com.
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TRADE SHOW PRODUCT PREVIEWSBAGWORKS. Customers placing a $250 order at the show receive a $25 coupon redeemable at the Marriott Starbucks Marketplace or Pizza Hut during the show. There's also a free tote bag, while they last, for customers and prospects stopping at the booth, and an additional 10% discount on show orders for new products. Also a service that will screen-print a store logo on aprons, T-shirts, totes, etc.DMC. Is launching a new line of needlework fabric (aida and linen), which is color coded to match the company's embroidery floss. FAIRFIELD. In unveiling new packaging, including batting that is packaged vertically and a new design-artwork that can be read vertically and a redesigned logo. FLORACRAFT. Will exhibit its Timeless Accents pottery line. It's break and chip resistant, water and weather resistant, and lighter in weight. Its natural bisque color allows the pieces to be left as is, or (because it is non-porous) they can be customized using a variety of creative techniques. Orders taken during the last quarter of 2000 alone already exceed forecasts for 2001, officials report. To meet unprecedented demand, FloraCraft has increased production at its Mexico facility where the pottery is manufactured. GRACE PUBLICATIONS. Has two new books using DecoArt's SoSoft fabric paints. Fashions for Today features a variety of up-to-date projects for adults and kids. Fabric Housewarmings features home decorating designs using SoSoft paints. Also, Pop-Up Paper for Kids and Finishing Touches with Pop-Up Paper use products by Beck Hill Group. JUDY'S STONE HOUSE DESIGNS. Offers a variety of miniature houses and tress, in finished or unpainted versions. JW ETC. Safe-Strip is a non-toxic, paint/varnish remover with no strong odors, safe on hands, and yet strong enough to remove paint from a car in a reported 25 minutes. KRAUSE PUBLICATIONS. Noted designer/author Christopher Lowell will be in the Krause booth on Sunday from 1-2 pm. He is on the cover of the February issue of Krause's Arts & Crafts magazine, and will be autographing copies. During his appearance, there will be a drawing every five minutes for copies of his new book, The Seven Layers of Design. He'll also walk the show floor before and after the booth appearance. LION BRAND YARN. TV star Vanna White will again host the Lion fashion show on Monday at 12, 1, and 2pm at the Lion booth (5901). OFFRAY. The company begins its year-long, 125th birthday celebration. There will be cake and refreshments the first two days and special ribbon promotions throughout the show. POLYFORM. Marie Segal, Cindy Celusta, and Shelly Comiskey have created new line additions to the E-Z Release Flexible Pushmold line. DEE GRUENIG. This is one busy woman. She'll be showing new papers she designed for Paper Adventures in their booth ... 7 new Rainbow Sponge-related products for Ranger Industries ... and showing new stamping products for All Night Media (within Plaid's booth). NOTE, I. At the end of the HIA show, vendors can donate leftover exhibit materials and craft supplies to Kids in Need resource centers in the Los Angeles area, sponsored by the Foundation for Educational Excellence, a charitable division of SHOPA, the School, Home and Office Products Association. To arrange for collection at the end of the show, either a) complete the form that was sent to exhibitors last month and fax it to SHOPA at 937-297-2254, or b) visit the SHOPA booth during the show. NOTE, II. Stop at the HIA booth to learn more about the retailer aids available to take advantage of National Craft Month in March -- and newly announced special promotions June 16-30 ("Celebrate America with Crafts" and September 16-29 (theme to be announced).
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COPYRIGHT FUNDRAISER PUBLISHEDKrause Publications, the publisher of CNA and other industry magazines, has published A Celebration of Stitching and the profits will be donated to the Copyright Protection Fund which has been established to fight the growing copyright piracy that is occurring over the Internet.More than 70 needlework designers donated projects for the 96-page publication that retails for $16.95. Celebration includes a wide variety of projects, plus color keys for DMC and Anchor floss. The problem of people scanning copyrighted needlework and craft instructions, photos, and charts, then posting them on the Internet for the world to copy, has been documented by CNA and numerous newspapers, magazines, and television news shows. For more about stocking A Celebration of Stitching in your store, call 715-445-2164.
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RANDOM NOTES, RANDOM THOUGHTS1. Our industry still suffers somewhat from an image of being "old fashioned" or tacky. For many, the name crafts implies things (for Boy Scouts on a rainy day) that aren't true any more. Here's an example from Cari Clement of Bond America:"I spent this past rainy Saturday afternoon in New York City teaching five 20-year olds how to knit by hand and on the machine. Their determination was amazing and their willingness to try something new was so refreshing. "They mostly wing-it and then get together with their friends to figure out something they don't understand. It's a wonderful passing-of-the-torch. They knit on the subway, in lecture class (college), watching DVD's (let's get beyond the TV thing), and have found room in the tiniest apartment to set up the knitting machine and knit that way, too. "My daughter, who used to grimace whenever I passed a fabric, yarn, or craft store, now makes most of her gifts and apartment decorations. These are city kids who've discovered' that making is far superior to buying -- especially when their friends are so impressed. "But, remember, it's not crafts'...." 2. Journalists are supposed to be objective, but there's one story I can't be objective about: Linda Queen and Wanda Zeagler joining forces with Plaid's Bucilla division. (See "Miscellaneous News" below). Not only are they two of the nicest people in the industry, they are two of the most talented. You combine them with Plaid/Bucilla's resources and marketing savvy, and I'll bet we see the needlework category on the rise.
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MISCELLANEOUS NEWSNEEDLEWORK. Wanda Zeagler and Linda Queen have signed a two-year agreement with Plaid to represent Bucilla as spokespersons, work on product development, and, says Plaid VP Mark Hill, "perhaps most important, reinventing the needlecraft category. The idea is to stimulate participation by current users and attract new consumers of all ages."WANTS TO SELL. Small manufacturer in Southeast with penetration via independent retailers, catalog companies and distributors in needlework and art materials wants to sell. Annual sales-$100,000-$150,000. For more information call or email Mike Hartnett, in complete confidence, at 309-925-5593 or mike@clnonline.com. CONDOLENCES. Our very best wishes to the families of Bette Byrd and Dorothy Mullins who both passed away recently. They both will be missed, particularly by their many fans and friends in the decorative painting community. FLORALS. Receiving flowers does more than make the recipient happy, it improves her/his emotional health, according to a study by Jeannette Haviland-Jones, psychology professor at Rutgers. Study participants reported feeling less depressed, anxious, and agitated after receiving flowers. The study was sponsored by the Society of American Florists. TEACHING. The Society of Decorative Painters announced its Teacher Development Program for Excellence in Teaching, established to improve the teaching skills of experienced teachers and help fellow painters become teachers. It will be launched at the SDP convention in May. For more info, call Shauna Kendrick at 316-269-9300, ext. 106. PEOPLE. Joe Patalano was named VP of Merchandising for Reliance Trading and Artistry Designs. STOCK. Southwest Securities upgraded Michaels to Buy. NEW COMPANY. Ellie Joos, former VP for the publicity and consumer education for Offray, has formed Ellie Joos & Associates, a public relations and marketing consulting firm. For further information, contact 908-459-9258 or email Eleapple@hotmail.com. STOCK. Analysts at Robertson Stephens maintained its Long-Term Attractive rating for Wal-Mart, but lowered its 2001 earning/share estimate from $1.68 to $1.60. "We maintain our reservations on WMT shares and believe the company is more focussed on shoring up long-term competitive position than showing superb earnings growth to investors." STORES. Wal-Mart is opening 48 stores in the U.S. this month. EMPLOYEES. The pressure to find experienced retail clerks should ease somewhat, thanks to a number of retailers closing stores (including Office Depot, 70 stores; Sears, 89 stores; Stage, 121 stores), or going out of business (Bradlees and Wards). SALES MANAGER WANTED. Established Seattle-area publisher of craft and hobby books is looking for an experienced and energetic sales manager to be responsible for key accounts, including planogram management for non-book retail channels. Requires demonstrated ability to identify, evaluate, and develop new business opportunities, as well as excellent oral and written presentation skills. Position will supervise in-house telephone sales team, and reports to director of sales and marketing. Extensive travel required. Minimum of three years sales experience in trade book publishing or craft supplies. Send resume and cover letter to Martingale & Co., Dept S., 20205 144th Ave NE, Woodinville, WA 98072 or fax to 425-486-7596. MEDIA. The new Michaels' consumer magazine, Michaels Creative Touch, will be available in Michaels' stores and on newsstands early next month. QUOTE. Commenting on the Federal Reserve Board's rate cut, Ames' CEO Joseph Ettore said, "Maybe the reality of a slowdown has finally hit." Wishing the Fed had acted sooner, Ettore added, "They had an opportunity to really make some hay before Christmas." -- in Business Week MICHAELS. Regarding the promotions in the buyer department reported in our last issue: Eric Dickenson has Decorative Accents, Yarn & Needlework, General Crafts, and Hobbies reporting to him. Brenda Lugannani has Art, Books, and Apparel. Wayne Stockton has Floral, Ribbon, Christmas, and Seasonal. CALENDARS. HIA members can go to the member level of HIA's site at hobby.org. (Or, easier yet, click on the CALENDAR button on the left-hand column of this site.) AWARD. Laurie Harsh, founder of the Fabric Shop Network was named Entrepreneur of the Year by the Washington State Chapter of The Women Entrepreneurs Organization for transferring her corporate knowledge into a network for independent shops.
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INTERNET & E-COMMERCE NEWSCRAFTOPIA. We've heard from a number of vendors that the e-commerce site has been sold to the Home Shopping Network. The site had been on hiatus for a week or so after New Year's, but is operating again.WEBSITE. The American Booksellers Assn. has an excellent portal/e-commerce site at BookSense.com. Consumers learn about their nearest independent book store, order online from any/all independent book stores, and pick up their order, if they wish, at the store itself. TOYS. eMarketer rated the top 10 toy sites during the first week of the holiday selling season. eToys was first, Zany Brainy was third, and Wal-Mart was tenth. DATA. Byte Level studied the home pages of 150 websites and concluded many were too large, and therefore took too long to download. The company reported the optimum number of KBs per home page is 60KBs.
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REPORT: CHRISTMAS SALES IN GREAT BRITAINThe following was received from Chris Crombie, the Buying Director for HobbyCraft, England's largest craft retailer:"HobbyCraft saw a pleasing trading period in which we gained good ground on our previous year's sales. The Christmas period (7 weeks to New Year's Eve) was especially good, seeing a same-store sales increase of 4.5%. Gains were seen across all departments, especially in our core art & crafts product areas. "Early signs are that January sales activity is also strong, certainly ahead of last year. Many retailers in the UK reported a late surge in Christmas sales. Certainly peak Christmas trading, as in previous years, occurred a few days later than the previous year. "It is interesting to read of U.S. retailers experiencing some slowing down, possibly linked to wider U.S. economic conditions. As you may remember, the start to 2000 was particularly poor in the UK arts & crafts market. Most in our industry experienced worse than expected sales while we watched the U.S. market grow phenomenally. "I believe the UK is now entering a better New Year for arts & crafts, following the US trend as we often seem to do."
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A PLANT FIRE: THE OWNER'S OWN WORDSOn Monday, January 8th, there was a bad fire at the Walnut Hill facilities. Here, in owner Dick Scuderi's own words, is what happened:"At approximately 5:30 a.m. we received a phone call from our plant supervisor telling us that they had a power failure and smelled smoke. We told them to send the employees home until we got the situation corrected. The electric company was called and the problem was remediated. "We proceeded to start up the necessary equipment. "The plant manager, Dee [Dick's wife], and I were the only ones in the building, and we met to discuss when to bring the employees back and what products to run. While we were talking, the plant manager noticed smoke coming from the first floor. Within a few minutes, the second floor was engulfed in smoke, but, thankfully, the three of us got out with no problem. "The plant burned rapidly and destroyed much of our production equipment. We had planned to move the entire Walnut Hill operation to a new location in Falls Township, PA, approximately five miles from our Bristol plant. Unfortunately, we lost most of the equipment for the candlemaking supplies and at this time it is still undecided if this equipment will be replaced. "We want to thank all of our loyal friends, customers, suppliers and employees for their loyalty, support and friendship over the past 30 years that Walnut Hill supplied the craft market."
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THE CREATIVE NETWORK: JOB OPENINGSThe Creative Network is the only personnel recruitment firm specializing in our industry. Click on "Jobs" in the lefthand column for the latest job openings and featured job of the month.
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THE CLN RETAIL STOCK INDEXA. C. Moore (ACMR). Last*: 8 « ... Change**: +10/32Ames (AMES). Last*: 1 7/8 ... Change**: +7/16 Hancock Fabrics (HKF). Last*: 4 1/4 ... Change**: +13/16 Jo-Ann Stores (JAS.A) [a]. Last*: 6 ... Change**: -9/16 Michaels (MIKE). Last*: 34 « ... Change**: +8 Rag Shops (RAGS). Last*: 2 5/16 ... Change**: +1/16 Wal-Mart (WMT). Last*: 52 15/16 ... Change**: -3/16 CLN Retail Index. Last*: 111.375 ... Change**: +9.7% Dow Jones Index. Last*: 10,525.38 ... Change**: -2.4% *Jan. 12 ** from Dec. 29 [a] voting share Note: Prices are exclusive of dividends
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INTERESTING JOBS, B.C. (BEFORE CRAFTS)In a recent issue I mentioned CNA was looking for people who had interesting, unusual jobs. Some wonderful responses:Ed Eggling of Hot Off the Press was the sales/marketing vp for a manufacturer of 250,000-lb. rock crushers which crush up to 1,700 tons of rock per hour. He thought the "leisure craft industry" meant something else and asked during his first interview, "Where are the boats?" Theresa Adinolfi of ColArt worked for a medical marketing research company who dealt with doctors who responded to surveys regarding new medications and treatments. The doctors called Theresa if they didn't understand the wording of a question. "Scary that a 21-year-old marketing major had to explain medical questions to doctors," Theresa commented. "By far the worst part of my job," she added, "was gifting' the doctors. In return for their time, doctors were sent TOKEN gifts such as gift certificates, Lenox, chess pieces, etc. Every time I would be flooded with phone calls from doctors who felt the time they spent completing a survey warranted another $10 gift certificate or $8 chess piece. "My question was," Theresa added, "if their time was so valuable, why were you wasting it on the phone with me!" Jan Kahn of Caron International was a Metallurgical Engineer for U.S. Steel Corp. BJ McDonald, the founder and editor of The Cross Stitcher magazine published by Clapper, spent 13 years as the Operations Manager for a stock brokerage firm. She handled millions of dollars every day, 33 telephone lines, a "hot line" to our New York office, etc. Just as interesting are BJ's other hobbies besides cross stitch: deer hunting and fishing. She once won "Woman Angler of the Year" for the bass-fishing club in Dallas. Bob Ferguson offered these notes about members of the Sierra Pacific Crafts retail group in the Northwest: "Jim Bremer was a lobbyist to the California legislature on behalf of an educators association, and was a high school principal ... Chuck Porter was a lawyer in Los Angeles, and Linda Porter and her brother own and operate a huge potato farm in Idaho; every harvest season Linda is driving tractors instead of selling crafts ... Emma Gebo, current president of Sierra Pacific Crafts, is a Doctor of Education and I believe still is a professor at an Idaho university. "Greg Williams was a CPA ... Mary Reitan was a bank manager ... Russ Trentledge was an engineer (perhaps a hydrologist?) with a nuclear facility ... Dan Weaver was a pilot in the Air Force and flew helicopters in Viet Nam ... Fred Zerell was owner operator of a chain of some 20 fabric stores in California and Oregon, and was a buyer for Macy's department stores. "Dan Little once owned and managed a huge cattle ranch in Texas, a timber company in Colorado, a huge T-shirt printing company in Southern California, oil wells in Texas, and three large craft stores in California (since sold by Beverly Fabrics)." Comment: We're still looking for interesting jobs industry people had before joining our wild, wacky market. If you had one or know of someone who did, let me know.
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Note: Creative Leisure News is published on the
first and third Mondays of each month. Your next issue will be
Monday, February 5th.
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