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Creative Leisure News
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November 5, 2001 TABLE OF CONTENTSCOMMENTARY: ADAPTING IS THE KEYI am amazed and proud of how quickly the industry has responded to the needs of consumers after September 11th. The incredible array of Americana and patriotic designs and products at Quilt Market (see the report, below) is the most recent example. Another is the current (November) issue of CNA, which went to press just a few days after September 11th. Karen Ancona, the Editor, and I quickly wrote more appropriate columns, but manufacturers responded, too, with an array of patriotic projects on incredibly short notice.Our industry's ability to turn on a dime to meet the consumer's changing needs always has been a key to our growth. Let's never get too bureaucratic, or timid, and lose that edge.
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AMERICA TURNS TO OUR INDUSTRYSales reports since September 11th have been almost universally positive. Retailers across the spectrum of our industry have benefitted from consumers' need to return to basics and express their patriotism. An independent craft retailer in the northwest reported sales have risen 18%, and wholesalers are reporting double-digit increases.Needlework has apparently benefitted, too. Jim Hedgepath, who operates the Needlecraft Showcase (www.stitching.com), the portal for numerous retailers and e-commerce sites, reports his clients are doing well, and he expects business to get even better. "I really expect that we may see an overall increase in business due to all of this [the aftermath of September 11], and particularly in online sales since people never have to leave the house." The success of the craft chain stores has even (finally) caught the attention of Wall Street, due in part to extensive coverage in the national media (see following article). Both Michaels and A.C. Moore stocks have reached 52-week or all-time highs recently. Just days before the Michaels stock split (see below), Dennis Bryan, a portfolio manager for First Pacific Advisors told Dow Jones News, "I would short Bed Bath & Beyond and Home Depot and go long on Michaels." A.C. Moore reported an excellent third quarter. For the period ended September 30, net income was $255,000, or $0.03 per fully-diluted share (after $0.01 impact of $100,000 donation to national relief efforts), compared to a net loss of $91,000 a year ago. Sales grew 25% to $76.2 million and same-store sales rose 7%. CEO Jack Parker said, "Our merchandising and marketing plans are in place for the fourth quarter, and our stores are in excellent position to execute those plans. Our continued commitment to these goals puts us in a position of being both operationally and financially stronger than ever." Two new stores are planned in the fourth quarter. Officials expect fourth-quarter sales to rise 26-28% and same-store sales to increase 5-6%. This success is not typical. High-end department stores are suffering, and a retail analyst at Merrill Lynch predicted retailing in general would have the worst Christmas in 33 years, the Associated Press reported. For example, home dec retailer House2Home reported sales are 25-30% lower since September 11.
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MICHAELS ANNOUNCES STOCK SPLITLast Wednesday, the board of directors approved a two-for-one split on its common stock, which will be effected as a stock dividend. Stockholders of the common stock, as of the close of business on November 12, will be entitled to one additional share for every share held at that time. The stock dividend will be paid on November 26, 2001.Board chair Charles Wyly said, "As a result of the outstanding accomplishments of our management team, led by CEO Michael Rouleau, in developing and executing strong initiatives for short and long-term growth, we confidently take this action which we believe will reward our shareholders with greater market liquidity and wider distribution." The 10-store chain went public in 1984 at $2.50/share. When the split was announced, the share price was $52.63 and the store count was 825.
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INDUSTRY EARNS MEDIA RAVESThe industry's strong post-September 11th sales have not gone unnoticed by the national media.1. In an article carried by newspapers throughout the U.S., the Associated Press wrote, "Consumers are pulling away from big-ticket luxury items and other discretionary purchases and more toward cocooning merchandise as they retreat to their homes. Sales of knitting needles and other arts and crafts, as well as home decor, have picked up at stores such as Michaels ...." 2. Dow Jones Newswires, the news service for the Wall Street Journal, published an article claiming crafts are hot, but most stock brokers know so little about the industry that they overlook undervalued stocks such as Michaels and A.C. Moore. The article claimed Michaels and A.C. Moore stocks were selling at about 18 times earnings, compared to the average of 29 times earnings for specialty retailers. The article cited new HIA research claiming industry sales of $23 billion, that more than half of U.S. households engaged in at least one craft project, and that 23% had spent $1,200+ on crafts in the year. 3. The New York Times published an article detailing how Manhattan's high society (and Hollywood's) is turning to painting, sewing, needlework, and even cooking in the wake of September 11. It's not to save money, the Times wrote, but for relaxation and to feel a greater sense of control over their lives and their environment. The Times quoted trend guru Faith Popcorn: "In the aftermath of 9/11, people want to feel resourceful ... This is not about saving money. For people, especially those who have been used to having things done for them, it's about being in control of your situation." The article included a report from Erica Wilson, veteran needlework designer and teacher, that her stores in Manhattan and Nantucket haven't been so crowded since the mid-1980's. 4. The Denver Post profiled Shellie Lubowitz, owner of Coppelia's Needlepoint Collectible Dolls & Bears, whose store was "very, very busy, right after September 11," and who had her best fall sales day in nine years on October 6. The article also profiled Tracy Bragg, co-owner of Needlepoint of View Gallery; Cari Adams of Diversions Needlepoint; and Sharon Sturm, owner of Showers of Flowers (a knit/crochet store). They have all seen increased business due to consumers' growing need for comfort and relaxation. 5. The November 1st broadcast of the ABC Evening News reported that knitting was one way consumers were finding comfort in these troubling times. (Another way, ABC reported, was adopting a puppy!)
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QUILT MARKET REPORTA very positive show, although the attendance "felt" a little down, possibly because of concerns over air travel. The following is a report from industry veteran Ellie Joos:The Grand Old Flag was visible in all its glory at Quilt Market. From the cover of the buyer's directory to the design on the tote bags, it was evident the Market was responding to the tragedy with patriotic, American themes in a big way. A spontaneous exhibit of 240 quilts, many made since September 11th, was added to the show, and I found it necessary to look at the quilts and read the stories in small doses. The emotions and feelings expressed were very moving. Many of these quilts were being auctioned with proceeds donated to relief agencies. Although quilting and Americana themes always go hand in hand, suppliers pulled out the stops this year in showing their products. Many exhibitors displayed existing but remerchandised designs. Others showed products in the works and launched earlier than planned. While others created products made after September 11th for this market. Many companies contributed some or all proceeds from certain products to relief organizations: An eight-month-old company, Easy Quilt Kits, which sells charming quilt kits, displayed a United Flag kit, with $2 from each kit being donated ... Concord Fabrics auctioned a quilt ... Gutterman sold beaded flag-motif pins for a $1 donation; the pins were made by volunteers, using pins donated by B&G Lieberman ... Kings Road offered wool blocks to be assembled into throws for victims' families ... Viking had free patriotic designs available on its website ... Starry Pines Pattern donated a portion of proceeds from kits and patterns. Some new products: Mokuba offered "free form lace", a sticky-surfaced adhesive to apply on ribbons, cover with see-through paper, stitch on machine, then dissolve in water ... Fabric Cafe unveiled 3/8" wide chenille by the inch in 14 colors ... Collins had wash-away foundation paper ... Viking launched a new "Quilt Gallery" ... Bernina is now the producer of the fashion show formerly sponsored by Fairfield ... Sulky has new cotton thread in two weights ... Expo International offered beautiful beaded trims by the yard ... Michael Miller Fabrics and E.E. Schenck both displayed strong Oriental themes. As always, Quilt Market was a visually beautiful show, and the inner beauty of quilters and suppliers in their response to the tragedy of September 11th confirms what a special market and industry this is.
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BUYING HOW-TO'S ONLINEOne of the industry's leaders in fighting Internet copyright violations, Dynamic Resource Group has launched ePatternsCentral.com, a website where consumers can choose among hundreds of projects, pay a small fee, and download the pattern, instructions, photographs, and materials lists. The URL is https://www.e-patternscentral.com and offers more than 1,000 crochet, cross-stitch, plastic canvas, knitting, sewing, tatting, quilting, and craft patterns for $1.99 - $2.99.DRG is the parent company of some of the industry's major needlework publishers: The Needlecraft Shop, House of White Birches, Annie's Attic, and True Colors. "Crafters typically pay $6 to $10 or more for a set of designs in a printed pattern book," said Scott Moss, DRG's Marketing Director, "when they really only wanted one or two of the designs. Now they can pick and choose from single-pattern selections." One of DRG's problems in creating the site, CEO John Robinson said, was protecting the company's intellectual property sold over the Internet. "To address that issue, our DRG Web-development team partnered with Tempe, Ariz.-based Integrated Information Systems {http://www.iis.com}. IIS proposed a solution using Adobe Acrobat eBook Reader and real-time approval of credit-card purchases. Customers first download the eBook Reader and install it on their computer. The reader is available free from Adobe.com." "When the customer orders a pattern or series of patterns," said Janet Perrin, DRG's web-development manager, "a special commerce-enabled server encrypts the downloaded files with certain restrictions, based on optional business rules determined by DRG. "Adobe's technology permits the downloaded files to be opened only on the buyer's computer," added Perrin. "Once purchased, you can print the file twice and open it on your computer an unlimited number of times. However, you cannot copy and paste the file's contents." A link to the purchased eBook files can be forwarded, but recipients can't open the file. "Instead," Perrin said, "when the individual attempts to open the shared file, she is taken via her browser to the e-PatternsCentral.com site where she can purchase the pattern if she chooses." The system also has a capability to allow a visitor to buy a pattern as a gift for a friend to download on her own computer. Because DRG is 75 years old, it has an enormous archive of projects. "If we see that our customers respond favorably to this medium," Robinson said, "we could quickly grow our searchable database to multiple thousands of full-feature print-on-demand patterns."
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THE INDUSTRY KEEPS ON GIVINGFor the countless industry stores and companies, take note: The Red Cross announced that as of November 1, any contributions received will go into the organization's general fund. If you want your contributions to be used for the victims of September 11, you must specify that the money should go to the Liberty Fund. Here are a few more examples of industry efforts:American Art Clay is donating 50% of the company's profits from the sales of red, white, and blue FIMO and Friendly Plastic between October 1 and December 31. The Society of Craft Designers and Krause Publications has produced United We Craft, a 24-page project book filled with patriotic designs. Proceeds from the book, scheduled for release today, will be donated to the Red Cross. The project grew from an idea posted on the SCD website (www.craftdesigners.org) discussion list. Hot Off The Press has 12" x 12" American flag paper in bulk with all sales donated. Retailers can order shrink-wrapped pages of 25 sheets (HOTP-20081), which retail for $0.49/sheet. C&T Publishing donated books, and author Jean Wells her own quilts, for auction on eBay with proceeds being donated. Visit www.ebay.com and search for Quilt Books or Jean Wells in "Auction for America" auctions. C&T also donated 5% of book sales at Quilt Market. Brother International and Brother companies in Japan and the United Kingdom have contributed $500,000 to the September 11th Disaster and Relief Funds. Design Originals introduced a new line of American Spirit books with red, white, and blue for every age, skill level, and taste -- and fund-raising products, too. There's also red, white, and blue acid-free album papers. See them at www.d-originals.com/patriotic.html. Design Originals will continue the Good Luck Gecko Club and encourage kids to contribute their handmade red, white, and blue geckos. Every gecko sent to Design Originals will be given to a child in need. Info, the pattern, a mailing label, and gecko name tag is in the new book, LET FREEDOM RING: Beadie Babies Pony Beads and Cord (#2516).
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STAMP, PAINTING SHOW REPORTS1. From Warren Gruenig (Posh Impressions), whose wife, Dee, was the featured presenter at the recent Stamp It UK show in Great Britain:"The show was sponsored, well organized, and well run by Roger Button, owner of Artstamper's World. He does two shows a year and they are the largest stamp shows in Europe. "Attendance was 2,100, less than the expected 2,500, but up from last year. There were 70 booths. The English were enthusiastic and supportive of Dee's presentation. "Stamping is definitely stronger in England than in other countries in Europe, with Germany and Holland a distant second. Some feel that scrapbooking will finally take hold, too. "The stamping was somewhat sophisticated. The English don't seem to need the developmental time that Americans have had with so many years of rubber stamping. "I admired the spirit and friendliness of the British activity. It is admirable that they are standing by the U.S. As one cab driver said, We owe ya one mate, for without you, we'd be speaking German now!'" 2. From Doxie Keller: "The mood at the Reno [painting] show was very somber, but as the classes got under way, the mood improved and by the end of the 3rd day, it was a jovial crowd. I feel that what I have always thought is really true. Painting or any hobby helps you to forget your troubles and brings joy to your soul. "Those who signed up for the show came but there was a lack of walk-ins. The trade show was slow and Jay Sharp announced this would be the last Reno show he would sponsor."
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INDEPENDENT SEMINAR ON TAP FOR HIACNA magazine and Promotions Unlimited/Herr's will once again sponsor a workshop seminar at the HIA show, featuring some of the industry's top independents speaking bluntly about the state of independent retailers."We received such positive feedback from last year's seminar, and from the transcripts that were later published in CNA, that we decided to sponsor a seminar again," said Editor Karen Ancona. "Vendors and retailers appreciated the chance to hear independents talk honestly about the state of their industry." The seminar, "What Works in My Store? Independents Speak Out," will be Sunday, January 27 from 4-5:30 pm. The panelists: Dick Broecker, who, with his wife, Erica, has owned Erica's Craft & Sewing Center in South Bend, Indiana, for 27 years -- and one of the industry's best retail sites at www.ericas.com. Emma Gebbo has had her store, Crafts Inc., in Pocatello, Idaho for about 10 years. She is President of the Sierra Pacific Crafts group and is a former college professor and administrator. Cindy Kemp operates a Ben Franklin store in Ojai, California and was a popular, outspoken panelist at last year's seminar. Michelle Schmirler has operated her Ben Franklin Crafts store in Plover, Wisconsin for 8 years. She has recently expanded the store and is active in the Midwest craft retail group. Adrian Taylor started Ben Franklin Crafts & Frameshop in 1975 and the operation has grown to stores in Monroe, Bonney Lake, and Bellingham, Washington, and a website at www.bfranklincrafts.com. Ticket information will be available at a later date.
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RANDOM NOTES, RANDOM THOUGHTS1. Prediction: I don't think scrapbooking has benefitted as much from the post-September 11th change in consumers as most other categories, but it will. Look for more family holiday gatherings, which will mean more photos, and scrapbooking will benefit in January.2. The January trade shows will be here soon. In fact, the deadlines for our trade magazines' January issues are upon us. CNA's deadline is November 15th and no doubt Craftrends has a similar date. You can email press releases and photos to CNA's Bill Stephani at stephanib@krause.com. If you can't get your materials to the magazines in time, there's still hope. The two January issues of Creative Leisure News will be primarily devoted to new products, and I won't need your materials until January 4th and January 18th.
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MISCELLANEOUS NEWSHIA. New officers for the Hobby Industry Assn. board of directors: Bill Reed (Better Homes & Gardens Craft Group/Meredith), President ... Tom Ware (BagWorks), VP/ Finance ... Jim Bremer (Tall Mouse), VP/Member Education & Services ... Michael Rouleau (Michaels Stores), VP/Marketing & Communications ... Andrew Carter (AMACO), VP/Trade Shows & New Business Development.ACQUISITION, I. Janlynn purchased American Design Group, manufacturer of printed and blank fashion apparel and accessories. ADG president Gerald Straf remains as Janlynn's VP of Promotional Products. Look for an expanded line of sewn promo items at the HIA show in January. Founded in 1979, Janlynn is a family-owned business located in Springfield, MA. The website is janlynn.com. ACQUISITION, II. Novtex acquired Heritage Trimming. Novtex was founded in 1968 and operates in an 80,000 sq. ft. facility in Adams, Massachusetts with 50+ employees. Heritage president Gene Wheeler will assume the merchandising responsibilities for Heritage products. PEOPLE. Sierra Pacific Crafts named Bob Williams as Import Manager and Tammy Gilley as Marketing Manager. Williams worked for Nike in China and Indonesia. Gilley has 15 years experience in retail. KNITTING. The Fashion Square mall in California is offering free knitting classes in hopes consumers stay longer when they shop at the mall. MEMORY. Based on the largest pre-registration ever, officials expected record-breaking attendance (5,000+) for the Memories Expo show in Orlando last weekend ... The recent Denver show attracted 2,100+ scrappers. COLOR/DESIGN. "We'll continue to see the transparent and translucent look of glass and plastic; textures and natural botanicals like rocks, bricks, wood, etc.; and furry, fuzzy, and funky that appeals to teens and tweens. And of course we'll see a renewed sense of patriotism and nationalism. Watch for brighter, more pure, intense colors," predicts Cindy Groom Harry of Craft Marketing Connections, one of the industry's top marketing, pr, and design firms. Companies interested in using CMC's services should call 712-278-2340. BOOKS. Best wishes to Nancy and Randy Churchwell, now in charge of Grace Publications. Nancy is the daughter of industry pioneers Grace and Doug Herr, who started Grace 26 years ago. Their latest book is Candles By Design in which author Darl Lawson uses Yaley candlemaking supplies, then decals, pressed flowers, paints, and other materials to decorate the candles. There are new craft books with a variety of patriotic projects, too. Visit www.gracepublications.com or call 217-446-0224. FRANK'S. In a letter to vendors, new CEO Steven Fishman said his three major goals were to "rework our merchandising and advertising strategies to increase store traffic ... increase our inventory turns and rid our stores of slow moving merchandise ... [and] develop and execute a plan to emerge from Chapter 11." SHOWS. The TNNA San Diego show, January 12-14, is already sold out and will be the largest TNNA show in 14 years. Call 800-889-8662; email tnna.info@offinger.com or visit www.tnna.org ... New dates: Nashville's Needlework Market Feb. 8-10. Call 706-628-4849. LAWSUIT. Ellison Craft & Design won a trademark-copyright infringement suit against a man for selling dies using original Ellison designs. "We are intent on protecting our artists and customers from the confusion that results from infringing knock-offs," said Ellison President Lisa Corcoran. Ellison developed the first hand die-cutting machine in 1977. QUOTATION. "In the wake of 9/11, people are beginning to re-examine themselves. They are reassessing what is important to them, what was important to their grandparents, and which traditions they are going to bring forward to the next generation. After all, what are you going to pass down to your daughter? A cell phone?" -- Elissa Meyrich, who operates New York's Sew Fast Sew Easy sewing school (N.Y. Times) QUILTING. Kathy Lamancusa's magazine, Quilts Are Forever, is on newsstands and in Jo-Ann stores -- with stories of quilts impacting people's lives. Visit www.lamancusa.com/products.html. The book will be published in March by Simon & Schuster. LOOKING. Industry pro with marketing and product managing experience (memory, art materials) is looking for a position in Northern or Central N.J., New York City, and possibly eastern PA. Call Helen Kovacs at 973-509-0750 or email helenkovacs@home.com. TRANSFERS. H.S.I Manufacturing and MACH III introduced Color-on's, a patented iron-on transfer that absorbs the wax from a crayon, making it possible for kids to transfer any of their designs onto any fabric. H.S.I launches the kit versions in December (canvas products such as back packs, transfer, and instructions) and the open stock program at the HIA show in January. Call 631-366-0183. MEDIA. Craft Home & Style begins its second series of programs on the Hallmark Network (new time: 7:30 am EST) and features Heidi Borchers, Aleene, Clapper Publishing, EZ Craft, ArtSeeds, Environmental Lighting, projects by Tall Mouse Crafts, and more. Email Tiffany at tiffany@tiffanywindsor.com or call 626-403-6677 ... Craft, Home & Style magazine publisher Tony Hershman signed contracts with newsstand distributors, Independent Direct Distributors which covers independent and some chain craft stores, and Ingram Periodicals which distributes to larger craft and book stores. CHS members pay $12-$13/month for the magazine and other membership benefits; Hershman is hoping to work with industry retailers to arrange for special in-store product offers. Call 805-523-7796, ext. 2301.
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EMAIL: AN ANSWER TO COPYRIGHT VIOLATORSIn our last issue we published a letter posted on an Internet site by a "Nicole," who bragged that the industry would never be able to stop her and her friends from posting copyrighted projects on the Internet. Here's a response from a designer:"I read your Internet post, and after wiping my face of the voluminous sputum that you expelled, I wanted to try to get you back to some semblance of reality! "You steal my charts that I spend months on, and that are my sole source of income, and you discuss merely how others cannot stop you from hurting me. It is hard enough to convince manufacturers to take my charts and publish them, then wait to make 25 cents for each one sold. "I fight the loss in retail stores of hooks that are dedicated to my category, due to other leisure activities taking the time from those who used to enjoy the activity I design for. Now I also have to fight those like you who believe they steal only corporate profits when they steal my designs, my livelihood. "I won't go on further, as my points are rather obvious to those who would spend a minute to think through who suffers from your theft. I would like to quote you from your response, however: We all know what sholes trolls are, right? People who have no life so they destroy other's lives.' "Look in the mirror: it is you who destroys the very modest livelihood of designers. Now think of the next step: the loss of future designs because a livelihood can no longer be made from designing -- and the death of the needlecraft chart industry follows. "Besides basic human decency and legal obligation, people should support those who bring us design -- designers, manufacturers, retailers, and mail order houses. Without support, we would have absolutely nothing new to speak of. -- Sincerely, a Troll-hole Designer (soon to be mailroom clerk, I guess)"
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THE CREATIVE NETWORK: JOB OPENINGSTo see a sampling of the current job openings and to contact The Creative Network, click on the "Jobs" button in the left hand column.
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THE CLN RETAIL INDEXA. C. Moore (ACMR). Last*: 22.35 ... Change**: +5.37Ames (AMES). Last*: 0.29 ... Change**: +0.19 Hancock Fabrics (HKF). Last*: 10.90 ... Change**: +1.80 Jo-Ann Stores (JAS.A) [a]. Last*: 4.63 ... Change**: +0.15 Michaels (MIKE). Last*: 51.02 ... Change**: +4.63 Rag Shops (RAGS). Last*: 2.25 ... Change**: +0.02 Wal-Mart (WMT). Last*: 52.97 ... Change**: +0.07 CLN Retail Index. Last*: 144.41 ... Change**: +9.3% Dow Jones Index. Last*: 9,323.50 ... Change**: +0.02% *November 2 ** from October12 [a] voting share Note: Prices are exclusive of dividends
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GOVERNMENT BUREAUCRACYPythagorean theorem: ......................................24 words.Lord's prayer: ..................................................66 words. Archimedes' Principle: ....................................67 words. 10 Commandments: ......................................179 words. Gettysburg address: ........................................286 words. Declaration of Independence: ......................1,300 words. Government regulations on the sale of cabbage: 26,911 words.
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REMINDERS1. Paid subscribers are invited to have their website evaluated by Lynn Carlisle of Carlisle Communications. She'll check the site and provide a confidential assessment and suggestions for improvement. Just email mike@clnonline.com or ljc@carlislecommunications.com.2. If you want a hard-copy of this issue, click on "Printer Friendly version". 3. If your company is a paid subscriber, everyone in the main office is welcome to register, free. 4. If you want to recommend CLN to a friend, use the "Tell Your Friends" box on the home page. 5. Creative Leisure News is published on the first and third Mondays of each month. Your next issue will be Monday, November 19th.
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