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Creative Leisure News
2677 Ashley Ct.
Tremont, IL 61568
Phone: 309-925-5593
Fax: 309-925-9068
Email: mike@clnonline.com
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Date:
December 3, 2001 TABLE OF CONTENTSCOMMENTARY: CONDESCENSION IS DANGEROUSI'm irritated by Morley Safer's profile of painter Thomas Kinkade and his fans on the November 25th broadcast of 60 Minutes. The piece was clearly condescending, implying that Kinkade's paintings were of little artistic value and that his fans have poor taste.I dislike Kinkade's work, too. If I look at his paintings too long I worry about getting a sugar overdose because they are so unrelentingly sweet. But so what if I don't like Kinkade's work? His paintings give pleasure to millions of people, some of whom may have learned how much enjoyment a painting can give the owner. Gee, maybe some of them might try painting themselves. I bet if Morley Safer ran a gift or craft store, he'd stock it with items that fit his personal taste. It would probably be a very nice store -- but wouldn't stay in business very long.
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HOLIDAY SEASON: FINE FOR CRAFTS, BUT...The first week of the Christmas season appeared to be feast or semi-famine for retailers. Our industry-related retailers were pleased, but for many others the results weren't so positive.Thanksgiving weekend resulted in heavy traffic but lackluster sales for many retailers, despite longer store hours and heavy markdowns. The general consensus was that business was meeting retailers' low expectations. High-end, department, and specialty stores bore the brunt of the consumers' increased caution due to September 11 and the recession. E-commerce sites reported substantially more traffic than a year ago, but no sales figures were reported. The season seems to be separating the men from the boys. Wal-Mart said the day after Thanksgiving was the biggest selling day in company history -- more than $1.25 billion. Meanwhile, Kmart sales were lackluster despite being open 66 straight hours over Thanksgiving weekend, and the company's third-quarter report showed a net loss of $224 million.
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MICHAELS: PROFITS UP 20%For the third quarter ended Nov. 3, net income was $18.8 million ($0.28/diluted share), compared to a net income of $15.7 million ($0.22) last year. The earnings were $13.5 million ($0.20) after an extraordinary charge of $5.3 million for early extinguishment of debt.Sales for the quarter increased 16% to $611.9 million; same-store sales rose 7%. For the year, sales are up 13% to $1.623 billion and same-store sales have risen 4%. Excluding one-time, non-recurring charges, net income for the first three quarters was $34.1 million ($0.52 -- 8 cents better than the previous year). In a conference call, CEO Michael Rouleau attributed the success to the improved infrastructure, more so than to the post Sept. 11 increase in store traffic. Rouleau cited Halloween, ribbon, needlework, and kids crafts as strong categories, and expressed concern about candles and books. As examples of Michaels' ongoing improvements in its infrastructure, officials pointed to a) having thousands of SKU's currently on perpetual inventory (quicker replacement), and an automatic replenishment system scheduled to be implemented next year; b) a new distribution center in Pennsylvania which will open next year; c) a seasonal inventory reduction of 12% per store this year, which should result in fewer post-season markdowns. "...we remain optimistic about the outlook for the balance of the year." Rouleau said. Rouleau's ultimate goal is for stores to average sales of $5 million. More than 10% of the stores have already reached that figure. During the quarter, Michaels opened 37 and relocated 9 Michaels stores, and opened 6 and relocated 3 Aaron Brothers stores. By fiscal year's end there will be 695 Michaels stores and 139 Aaron Brothers stores. November sales figures will be released this Thursday, and there will be a conference call at 7 am CST. To participate, call 973-628-6885. To listen, visit www.michaels.com/webcasts. The call will be archived until Dec. 13; access the replay at the same website, or call 973-341-3080, PIN 2765764.
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JO-ANN'S: PROFITS TO RISE, SOME STORES TO CLOSEWhen Jo-Ann's released its third-quarter sales/earnings report, officials said they expected "a solid return to profitability in the fourth quarter of this year and continuing into next fiscal year."But it hasn't happened yet. The report included a store-closing charge totaling $19.7 million, $12.2 million after tax, or $0.66/diluted share. The charge includes asset write-downs associated with the closing of 102 traditional stores, and either the downsizing or buyout of the remaining lease obligation of four underperforming etc superstores. The charge also includes the estimated closing costs of 77 of the closings that are expected to be completed in the next year, 27 of which will occur in the fourth quarter of this year. Excluding a charge for store closings, net income for the third quarter was down 71% to $0.9 million ($0.05/diluted share). A year ago, the net income was $3.1 million ($0.17). Including this charge, the net loss for the quarter was $11.3 million ($0.61). Officials said they expect this to be the final charge related to initiatives undertaken as part of its turnaround plan. Sales for the period were up substantially -- 13.9% to $413.0 million; same-store sales rose 8.0%. The increased sales but smaller profits is a manifestation of the company's SKU Reduction Initiative (clearance sale). Sales for the first three quarters of the fiscal year rose 8.6% to $1,072.1 million and same-store sales increased 5.2%. Chair/CEO Alan Rosskamm said, "Our sales performance in the third quarter exceeded our internal expectations, with strong performances coming from our hardlines and home decor categories." During the quarter, the company opened five superstores, relocated two traditional stores, and closed four traditional stores. Officials expect to close 30 traditional stores this quarter.
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MICHAELS STOCK MOVES TO NYSEMichaels will move the listing of its common stock from NASDAQ to the New York Stock Exchange on December 12. The stock symbol will also change, from MIKE to MIK. As part of the change, Michaels Chairman Charles Wyly, Jr. will ring the opening bell that day."We are pleased to join the global companies listed on the world's most prestigious stock exchange," Wyly said. "Our NYSE listing marks an important milestone for Michaels. Not only will it broaden our potential investor base, it will raise our visibility within the financial community and align us with top companies worldwide. Due to the leadership of our CEO, Michael Rouleau, we are a much stronger company today than we were just a short time ago, and we are increasingly convinced that we have the business model and management team to deliver long-term, sustainable growth, and profits for our investors."
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RIGHT START BUYS FAO SCHWARZTalk about a shopping spree! In August The Right Start purchased the Zany Brainy chain and now, two months later, announced the acquisition of the famous toy store, FAO Schwarz.Right Start is buying the flagship store on Fifth Avenue in New York, 22 stores around the country, Internet and catalog operations, and rights to the FAO Schwarz name from the owner, Royal Vendex KBB of the Netherlands. As part of the transaction, The Right Start agreed to issue preferred stock convertible into 5 million common shares and an $18 million four-year note, and to assume certain liabilities. The deal is expected to close in January. FAO Schwarz is a 140-year-old company, but Right Start will be the eighth owner since the founding Schwarz family sold out in 1963. The Wall Street Journal reported the company has been unprofitable recently, thanks to competition from Wal-Mart and Toys R Us. The stock (RTST) is trading close to its 52-week high of $6.20, closing Nov. 30 at $5.29.
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HIA ANNOUNCES AWARD WINNERSThe HIA Awards Committee, chaired by Marie Clapper of Clapper Communications, announced the following winners of the annual HIA awards, which will be presented at the Awards Banquet on Tuesday, Jan. 29 during the trade show.The Craft Yarn Council of America will receive the President's Award for the innovative and creative promotion of knitting and crochet through the Knit Out and Crochet consumer events. The annual event began in 1998 under the leadership of the chair at the time, David Blumenthal of Lion Brand Yarn. Since then, the event has successfully been expanded throughout the country. Both David and CYCA will be honored. Moe Gherman, founder of Hobby Publications, will receive the Lifetime Member Award for his 60+ years of service in the craft & hobby industry. Hobby has published various art and craft magazines such as CNA and Procrafter (now produced by Krause Publications), Hobby Merchandiser, Rubber Stamper, ArtTrends, and Picture Framing Magazine. Connie Platte of Crop-In-Style will be remembered with a posthumous Special Recognition Award for her dedication to promoting scrapbooking and paper crafting activities. Connie died after a car accident earlier this year. TV personality Vanna White will receive an Honorary HIA Membership for her promotion of the joys crocheting to consumers. For ticket information, visit http://www.hiashow.org or call 201-794-1133.
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NEW HIA EXHIBITORS, PT. ISince our trade shows are so darn big, we thought we'd give you a chance to do a little homework before the show. Here are the web addresses of some of the first-time exhibitors:Aloha Memories: www.alohamemories.com ... Island theme scrapbook designs. Ann-ticipations: www.ann-ticipations.com ... Rubber stamps with wide range of themes. Art Bloom Imports: www.artbloomimports.com ... Ribbons, netting, and floral accessories. Brewster Wallcovering: www.brewp.com ... Wallpapers, borders, fabrics, accessories. Collected Memories Scrapbooks: www.collectedmemories.com ... Scrapbook supplies, ideas. CraftCote: www.craftcote.com ... A versatile material for sculpting, casting, etc. Day Runner: www.dayrunner.com ... Organizers and planners, supplies. Dedeco International: www.dedeco.com ... Rotary tools for jewelry, hobby, etc. Deluxe Cuts: www.deluxecuts.com ... "Laser cut shapes for grownups." Folex Imaging: www.folexusa.com ... Specialized films and papers.
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CALL FOR NEW PRODUCT INFOIn the next three issues of Creative Leisure News, we'll report on new products being unveiled at the January trade shows. If you have a new item/line, email the info to mhartnet@netcom.com or mail to Creative Leisure News, 2677 Ashley Ct., Tremont, IL 61568. Please include the shows (and booth numbers, if you know them) where the product will be shown. We won't print photos, but if you have a website that has a photo, we'll link the report to the photo. Note: we're particularly interested in new product info that you couldn't get to the trade magazines in time for their January issues. Here are two examples:EZ DOTZ. (HIA, booth #4038). Will introduce its new Mini Dotz painting tool which will be free with the company's primary product EZ Dotz, used by painters to make precise dots of various sizes. For more info, see www.ezdotz.com. SYNDICATE SALES. (HIA, booth #5310; Holiday Expo, Rm. #1f348). Is expanding its Garden Collection floral container line with the addition of 7 new clear glass vases -- the 7-3/4" and 9" "Celebrity" vases for single stems; the wide-mouth "Serenity" vases (5-3/4" and 7-1/8"); a 10-5/8" "Gathering" vase; the curved 8" "Athena"; and the 10-5/8" "Contemporary Urn" for drop-in bouquets and full rose arrangements. Syndicate is also expanding its Classic Traditions floral container line with two new vases, the 9" "Cascade" vase and the 10-5/8" "Gallery" vase.
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RANDOM NOTES, RANDOM THOUGHTSThis is a very critical time for two of our larger retailers. The holiday season is always important, of course, but especially so this year for Ames and Jo-Ann's.Ames is still in the throes of bankruptcy for the second time -- at a time when some discounters (Wal-Mart) are doing fine but others (Kmart) are not. We'll know more on Dec. 17 when Ames files its latest statements of financial affairs and assets and liabilities. Jo-Ann's officials have been saying for a year that all of their turnaround efforts will bear fruit in this, the company's fourth quarter. Wall Street has been patient -- even approving -- of the store closures, layoffs, and clearance sales. As I write this, the stock is trading around $7, about where it was a year ago. If Jo-Ann's has an excellent fourth quarter, I think you'll see the stock rise much the way Michaels', Hancock's, and A.C. Moore's stock has risen this fall.
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EMAIL: A MINI-REVIEW OF HEMISPHERESIn our last issue we reported on Hobby Lobby's new test store for home dec/furnishings, Hemispheres. Here's a first-hand review from a subscriber:"Just read your newsletter. I went to Hemispheres last week. For the most part it wasn't my kind of decor, but it was definitely impressive. The center area (inside the raceway) of the store is room vignettes; that area is surrounded by racks/shelves/displays of merchandise. Definitely high end. "Plenty of friendly help and about a zillion dollars worth of inventory. Although it's on the Northwest Expressway in Oklahoma City, it is actually behind several free-standing buildings -- it may have been a former home improvement store or department store. "I bought a couple of accent items and at checkout they put them in a nice Hemispheres paper tote with some tissue paper to make it look gifty -- a nice touch. "If Hobby Lobby expands this concept, I don't see many of them -- probably one per major city or upper-income population area." -- Industry manufacturer
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MISCELLANEOUS NEWSSALES. Hancock reported same-store sales for November were up a solid 9%. Other retailers should be reporting their November sales this week.HIA. As of November 16, more than 1300 buyers have registered for the HIA show Jan. 27-30, up 30%. This includes buyers from 15 countries. In addition, 24 SuperShops and workshops are sold out and other sessions are filling up fast, officials said. Call 201-794-1133 or visit www.hiashow.org. The deadline for preregistration is Dec. 14. SHOPA. Email from a craft veteran: "Just got back from SHOPA. Most said it was slow; however, we talked to several who were having great results. In other words, it was the same positive-negative stuff you hear at all trade shows." HARRY. Plaid has unveiled a wide range of Harry Potter stickers and stamps. For more info, visit www.plaidonline.com. TNNA. Results of the election for the Board of Directors: Carol Gantz of Associated Talents, Deborah Wilson of Beau Geste, and Kenneth Bridgewater of Westminster Fibers were elected to their first full terms as Directors. Maria Gornatti of The Handworks Gallery was elected as the Assoc. Member Director for the Southwest, and Jan Stahl of The Crafty Lady was re-elected as the Assoc. Member Director for the Midwest Region. The winter show is Jan. 12-14 in San Diego. Call 740-455-6773, email tnna.info@offinger.com, or visit www.tnna.org. AWARDS. Martha Campbell Pullen (Martha Pullen Inc.) won the 2001 Golden Needle Award, presented by Schmetz Needle and Euro-notions. ACCI. "Assembly Required" is the theme for the 2001 show July 19-2 -- positioning it as "the premier place for retailers to network, form strategic alliances, conduct focus groups, participate in expert education, and take advantage of the exceptional business opportunities...," officials said, promising it will be "more focused and more rewarding for participants." For show info, call Erica McKenzie at 740-452-4541, ext. 3214, or visit www.accicrafts.org. DOLLMAKING. ABC News reported an increase in teddy bear sales after September 11. As we'd reported previously, look for sales to grow next year when the teddy bear is 100 years old. Hallmark says there are 2.5 million arctophilists (teddy bear collectors) nationwide. (Note: if the demand for readymade bears increases, can bear-making be far behind?) HIA SHOW. Crafter's Pick will supply HIA exhibitors with any and all glue necessary -- free -- for make-it/take-its, classes, and demos. Call Dennis Miller at 800-776-7616. AMES, I. Is closing its Columbus, OH distribution center which serviced the 16 Midwest stores the company had already announced would close. About 450 employees will be laid off. AMES, II. If you are a creditor of the discounter, you may want to subscribe to the AMES BANKRUPTCY NEWS, an email newsletter that reports on the court proceedings. ABN says Ames' next key deadline, for filing statements of financial affairs and assets and liabilities, is Dec. 17. Call 609-392-0900; email peter@bankrupt.com; visit www.bankrupt.com. BOOKS. Grace Publications is donating a portion of the proceeds of Pat Olson's My Favorite Patriotic Projects to Sept. 11 charities. Visit www.gracepublications.com.
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WHY FILE A FORMAL COPYRIGHT REGISTRATION?Editor's Note: In light of the copyright violations by consumers posting projects on the Internet, we asked a lawyer familiar with our industry, Eva-Marie Boyd, for a primer on copyrights. Eva-Marie is married to veteran sales rep C Boyd and, yes, she copyrighted this article:Most of us know a horror story of someone setting up a business or some other venture and, in the interest of saving money up front, choose not to draft an agreement reflecting the understanding of the parties. Everyone's word will be sufficient and nothing will go wrong. Well, you know the rest of the story. By analogy, the same is true of filing a formal copyright registration. In most instances, copyright ownership vests in the creator the moment the hand leaves the page, so to speak. However, the advantages of obtaining formal registration are numerous and some are lost forever if the work is not registered correctly in a timely manner. Formal copyright registration establishes a public record of the copyright claim. It is also necessary before filing any action for infringement. Should an infringement action be filed, what damages can be obtained? In general, the copyright owner, if he/she prevails, is entitled to actual damages and the profits of the infringer that are attributable to the infringement. The burden of proving the profits claimed is on the copyright owner and can often be difficult to prove. But if the work has been registered within three months of publication, the owner is entitled to attorney fees and statutory damages (those automatically granted by law) if he/she prevails. Statutory damages of up to $150,000 for each infringement can be awarded if the court finds that the infringement was willful. Protect your works. Copyright and trademark registrations afford the holder the full protection of the law.
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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*: 28.66 ... Change**: +4.49Ames (AMES). Last*: 0.69 ... Change**: -0.09 Hancock Fabrics (HKF). Last*: 13.75 ... Change**: +3.00 Jo-Ann Stores (JAS.A) [a]. Last*: 6.80 ... Change**: +1.46 Michaels (MIKE). Last*: 30.05 ... Change**: +3.60*** Rag Shops (RAGS). Last*: 2.39 ... Change**: +0.10 Wal-Mart (WMT). Last*: 55.15 ... Change**: -0.05 CLN Retail Index. Last*: 100.501 ... Change**: +8.2% Dow Jones Index. Last*: 9,851.50 ... Change**: -0.8% *December 3 ** from November 16 [a] voting share Note: Prices are exclusive of dividends *** Adjusted for stock split Prices for HKF and ACMR are 52-week highs
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A THOUGHT FOR THE HOLIDAY SEASONEmailed to us by a friend:If we could shrink the earth's population to a village of precisely 100 people, with all the existing human ratios remaining the same, it would look something like the following: There would be 57 Asians, 21 Europeans, 14 from the Western Hemisphere, both north and south, and 8 Africans ... 52 female, 48 male ... 70 non-white, 30 white ... 70 non-Christian, 30 Christian ... 89 heterosexual, 11 homosexual. Six people would possess 59% of the entire world's wealth and all six would be from the U.S. ... 80 live in substandard housing ... 70 are unable to read ... 50 suffer from malnutrition ... One is near death, one near birth ... One has a college education ... One owns a computer. If you have more health than illness, you are more blessed than the million who will not survive this week ... If you have never experienced battle, imprisonment, torture, or starvation, you are ahead of 500 million people in the world ... If you can practice your religion without harassment, arrest, torture, or death, you are more blessed than three billion people in the world ... If you have food, clothes, and a roof overhead, you are richer than 75% of this world ... If you have money in the bank, you are among the top 8% of the world's wealthy. The moral of all this: Work like you don't need the money. Love like you've never been hurt. Dance like nobody's watching. Sing like nobody's listening. Live like it's Heaven on earth.
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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, December 17th.
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