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Creative Leisure News
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February 18, 2002 TABLE OF CONTENTSCOMMENTARY: WHY VOLUNTEER?I recently was voted onto the ACCI Board of Directors, and someone asked me why I agreed to serve. The answer is easy, and it's the same one I gave years ago when I was voted onto the HIA board: someone nominated me and I accepted, willingly.Yes, serving on a committee or board takes some time, and yes, occasionally someone complains to you about something the association did or did not do. So why bother? This answer is easy, too. This industry gives us our livelihood; the least I -- or anyone -- can do is give back a little. It's not all altruistic, though. Your business gains added visibility, and trust me, you learn. By meeting periodically with other volunteers, you gain a much better insight into vendors and retailers. Your company will benefit because you'll be a more knowledgeable employee. And you'll make some wonderful friendships. So choose one or more appropriate groups, call the office, and offer to serve on a committee. You, your company, and the industry will be the better for it.
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HIA: INDUSTRY GREW 11% IN 2001The U.S. craft industry grew 11% to $25.7 billion in 2001, according to new research released by the HIA. The number of residents in U.S. households who participated in crafts in 2001 rose from 54% to 58%, and households reporting having one or more members who have ever crafted climbed to 76% from 70%.Major categories were General Crafts (42%); Needlecrafts (36%); Painting & Finishing (32%); and Floral Crafts (20%). With the exception of Needlecrafts, the major categories grew in 2001. Yet the most popular specific craft continues to be cross-stitch, followed in order by home dec painting, scrapbooking/memory crafts, floral arranging, and crochet. Craft chains gained significant market share, HIA says. Craft chains and discount stores each account for 24% of sales, with the fabric/craft chains accounting for 13% of sales. Crafters are more likely to be married with children, have more education, and earn more than non-crafters. Women in these households tend to be younger and employed part-time. Most participants completed up to 20 projects in 2001. "Heavy users", which comprise 24% of the total participants in the survey, account for 69% percent of total dollars sales. Participants said selection was their primary reason for store choice. The complete report can be downloaded by HIA members on the member level of the website at www.hobby.org (username and password required). Printed copies are available to members for $10. Members and non-members may also purchase subscriptions to the quarterly tracker. For more info, call Pat Koziol at 201-794-1133 or email pkoziol@hobby.org.
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JANUARY SALES: A BLOCKBUSTERCraft related retailers had a far better January than their non-craft colleagues. Jo-Ann's same-store sales rose a whopping 11.6%. Results were so strong that the company has raised its 4th-quarter earnings estimate to $1.00/per share.Other positive signs include year-end inventory levels $50+ million below last year's level and improved cash flow, which generated $80+ million for debt reduction. Chair/CEO Alan Rosskamm said, "By successfully implementing our turnaround initiatives to improve inventory in-stocks of our best-selling products, eliminate non-productive inventory, eliminate under-performing stores, and maximize the performance of our existing store base, we are much better positioned to benefit from this trend.... We remain committed to further reducing debt and improving overall performance in fiscal 2003." Michaels continued on its recent roll, reporting its same-store sales rose 8% and its fiscal 2001 sales hit a record $2.25 billion. CEO Michael Rouleau said, "We are very pleased with our strong sales performance again in January. Sales far exceeded our original estimate in spite of the elimination of two planned promotional events in the month. Given the better-than-expected sales performance and a very successful seasonal clearance program, we are raising our earnings estimate for the quarter by an additional two cents." That's the second time this quarter the company has raised its earnings estimate. Wal-Mart (up 8.3%) and Target up (7.6%) both benefitted from Kmart's bankruptcy woes, but Wal-Mart officials also said crafts were one reason for the better-than-expected sales. A spokesperson for Duckwall-ALCO also attributed the company's strong same-store sales figure, +9.3%, in part to strong craft sales.
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FRANK'S REVEALS REORGANIZATION PLANLast week Frank's filed its reorganization plan for emerging from bankruptcy. It's 40+ pages of lawyer-ese, but the bottom line for unsecured creditors (i.e., vendors): they'll receive about 10.5 cents on the dollar, either in cash or stock in the new Frank's (which will be a public company). Officials have not yet determined on which exchange the stock will be traded.The reorganization plan is available for viewing at www.franks.com. It has not yet been approved by the creditors or the bankruptcy court. Officials are projecting a 5.2% increase in same-store sales for fiscal 2002 and 2003, and a 6% increase in 2004 with margins to remain the same. According to the company's projections, there would be a $10.56 million loss for the year ending in January, 2003; a $2.35 million profit a year later; and an $8.78 million profit the following year. Frank's also announced it was changing its buying policies to a net/net strategy. "This means," CEO Steven Fishman wrote to vendors, "that all allowances, rebates, and discounts (other than payment discounts) will be incorporated into the unit cost of each item on our purchase orders. Therefore, in the future we will not have to bill merchandise vendors back for defectives, co-op advertising, purchase volume discounts, or any other purchase reductions. This will be a win-win' situation where both parties benefit."
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HIA REORGANIZES STAFFRick Boale was hired as Director of Meetings and Expositions, replacing Susan Danker, who resigned. Boale served in the same capacity for IPC-Association Connecting Electronics Industries, as program director for general management of the Association for Engineering Graphics and Imaging Systems, and as senior convention manager for Smith Bucklin and Associates, an association management firm.Susan Brandt, a 17-year employee of HIA, moves from assistant executive director of HIA to executive director of the HIA Foundation, HIA's charitable arm. Brandt assumes her new position on April 1. The Foundation was formed in 1995 to provide financial support to non-profit organizations that promote craft education and activities. Last year the Foundation contributed financial support to Youth Art Month, Boys and Girls Clubs of America, Project Linus, and Kids in Need Resource Centers.
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HIA SHOW WRAP-UPFinal buyer attendance: 8,363, down 5.4%, mostly due to fewer international buyers. The international contingent dropped 29.5%. The number of exhibitors rose by 8 to 1,099 in 2,876 booths. There were 218 new exhibitors. 75% of the workshops sold out. HIA is selling audiotapes of many of the seminars and business events. For info on the tapes, call Laura Perez at 201-794-1133 or email lperez@hobby.org.The Nominating Committee, which chooses the board nominees for 2003, is chaired by Jim Bremer (Tall Mouse). Members include board members Robert Workman (Provo) and Andrew Carter (AMACO). HIA members elected Howard Hoffman (Toner Plastics); Maureen Ruth (Better Homes & Gardens Crafts Group); and independent retailer Sandra Wilmot (Books n' Things) -- who also won the Meritorious Service award, HIA's highest honor.
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SUCCESSFUL CRAFTS ARE TIMESAVERSIt seems every major newspaper in America has highlighted how our industry is perfectly situated to capitalize on the consumer's need to cocoon and return to traditional family values. But only The Orange County Register (Anaheim) noticed that part of the industry's recent success is due to products that reduce the time necessary to create a quality project.The post-HIA-show article highlighted the Ultimate Sweater Machine's ability to knit 1,200 stitches a minute. "People want to make heirloom-quality items, but they're still in a hurry, Bond America/CC Product's Cari Clement told the reporter. The article also highlighted Sizzix, the new die-cutter by Ellison; Stone by Stone mosaic kits by Mosaics of the World; candymaking supplies by LorAnn Oils; T-shirt painting kits by Color Fantasy; stamp-making kits by Artisan's Choice; and books such as The 30-Minute Decorator, Quick Quilts, and The 10-Minute Scrapbook. Yes, people see crafts as a way to meet their post-Sept. 11 needs, but jobs and families consume sooo much time. Jim Bremer of the Tall Mouse told the reporter that today many consumers come into his stores wanting to do something, but not sure what. Odds are they will choose a craft that looks like it will produce a quality project in a reasonable amount of time.
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ACCI, SCD NAME 2002 BOARD MEMBERSNew members on the Board of Directors are Gail Czech (The Creative Network); Dotty Grexa (Jo-Ann's); Leigh Edwards (Limited Edition Rubberstamps); Erik Mandelberg (Lion Brand Yarn); and Mike Hartnett (Creative Leisure News). Continuing Board members include Gwen Edwards (Michaels); Tony LaSpada (Activa); Marla O'Dell (Syndicate Sales); and Lisa Oscarson (Crafty Productions).The Board officers are Lynda Musante (Reynolds Consumer Products), Chair; Jim Scatena (FloraCraft), 1st Vice Chair; Emma Gebo (Crafts, Inc. dba Crafts & Frames), 2nd Vice Chair; Steve Graham (Toner Plastics), Treasurer; Craig Zimmerman (Zim's), Secretary; and Ron LaRosa (Delta), Past Chair. For info on the ACCI show July 19-21, call 740-452-4541, ext. 3214, or visit www.accicrafts.org. Recently elected members of the Society of Craft Designers Board of Directors are Fran Rohus Morgan (Fabric Cafe); Beth Wheeler (Beth Wheeler Creative Services); and Linda Wyszynski (Hearthside Creations ) ... The new line-up of Board officers includes Barbara Swanson (Artistic Impressions), President; Tracia Williams (Tracia & Co.), President Elect; Barbie Vasek (Delta ), Secretary/Treasurer; and Kim Ballor (Underground Ideas), Immediate Past President ... Other Directors include Patt Bell; Bev George (Accent by Bev); Barbara Matthiessen (JD Designs); and Donna Robertson (Fabric Cafe). The annual Educational Seminar will be Sept. 25-28 in Schaumburg, IL (Chicago suburb). For info on SCD and its Educational Seminar and Certified Craft Designer Program, call 740-452-4241; fax 740-452-2552; e-mail scd@offinger.com; or visit www.craftdesigners.org.
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TOY INDUSTRY NEWSWhile no official count has been released, reports we've received indicate Toy Fair was smaller and quieter than usual. Among the trends and news:1. In his "State of the Industry" address at Toy Fair, Patrick Feely, the chair of the Toy Industry Association, reported toy sales rose 1.7% last year to $25 billion. The categories showing the largest increases were Action Figures, Licensing, and Dolls. Craft sales rose 12%. 2. The Editor of Playthings told USA Today there's a new interest in craft kits. 3. Like the craft manufacturers, toy vendors are introducing line extensions rather than gambling on new lines, because of the difficulty of getting new lines on store shelves. 4. In light of the bankruptcy of Kmart (which has 7.4% of U.S. toy sales) and the prospect of Kmart closing hundreds of stores, vendors are looking for new markets for their products. Grocery and drug stores top the list, but you can bet some toy vendors will look closely at craft stores. 5. Teddy bears are expected to be big this year, because of their 100th anniversary. 6. There is no "must-have" toy on the horizon like the Furby, Pokemon, etc. 7. Families will spend more time at home, so board games should sell well. 8. Parents will buy smaller, less expensive toys for their kids.
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PUTTING YOUR EGGS IN ONE BASKETApproximately eight short years ago, I moderated a panel discussion of the industry's top retailers at the ACCI show. The panelists were arguably the most powerful people, the "big guys," in the industry at that time, and the discussion attracted more than 800 people!Two of the companies on the panel, the old corporate Ben Franklin and the old MJ Designs, later went bankrupt and died; they re-emerged in a new form, but the original vendors were burned, badly. Also on the panel was Cloth World, later sold to Jo-Ann's. If you sold to Cloth World but not to Jo-Ann's, you were out of luck. Frank's was on the panel, too. The company later de-emphasized crafts and went bankrupt. Now Frank's is offering the pre-bankruptcy vendors the princely sum of 10.5 cents on the dollar. Michaels was the other company represented on the panel. But the panelist, then the merchandising VP, was swept out when a new management team was hired. Those companies were the Michaels, Wal-Mart, Jo-Ann's, A.C. Moore, Hobby Lobby, and Hancock of their day. Imagine if all your sales had been tied up in those five companies?
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RANDOM NOTES, RANDOM THOUGHTS1. I caused a bit of an uproar in my February column in CNA about the danger of imposing your own aesthetic values on your customers. I wrote if you refuse to stock and sell projects you think are "tacky", you lose sales to consumers who don't share your taste.I used my aunt's plastic canvas projects as an example of projects that I personally wouldn't want in my home. But those projects sure made my aunt happy -- and the retailer who sold her the supplies. The customer's happiness is what's important, I wrote. Apparently some readers thought I was saying plastic canvas is inherently tacky. Not true. I think every category has a few tacky projects, but what I think -- and what you think -- doesn't matter. Only my aunt's opinion and the opinions of millions of current and potential customers are what counts. 2. I thought the most interesting part of the new HIA study was the fact that "heavy users" comprise for less than a fourth of all craft consumers, but account for almost 70% of all sales. It's that old 80-20 rule. Years ago Binney & Smith was considering developing a new paint line for acrylic painters, so the company surveyed the market and learned that decorative painters comprised only about 13% of the consumers buying acrylic paint, but they bought more than half of all the paint sold. These people are your hardcore customers. They are the ones who subscribe to consumer magazines, attend consumer shows such as Memories Expos, influence their neighbors, join groups such as the American Sewing Guild or the Society of Decorative Painting, and chat online with fellow enthusiasts. 3. When I heard that attendance at the HIA show by international buyers was down, I assumed it was due to terrorism fears. But the strong U.S. dollar was probably a cause, too. How strong? This from a major Australian distributor: "Many Australian visitors to shows such as HIA are only going to collect ideas and trends, with the buying being done elsewhere. The $US has appreciated some 30% against the $A since early 2000 -- from high sixties to its current 50 cents. Some of my associates (competitors) now import virtually nothing from the USA, yet they attend HIA."
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MISCELLANEOUS NEWSAMES. In figures released to the bankruptcy court, Ames reported it lost $77.2 million in the five weeks ending Jan. 5. That includes a $85.8 million charge for store closings.GETTING TESTY. The Vice Chair of Target , Jerry Storch, labeled competitor Wal-Mart a "vicious predator" in a recent speech, according to the Minneapolis Star-Tribune. MEMORY. The PBS series, Scrapbook Memories (formerly More than Memories), will be filming segments at the Memories Expo show in Chicago, April 5-6. For info call 888-878-8728; email dgordon@offinger.com, or visit www.memoriescommunity.com. ANNUAL REPORTS. Hancock will have a conference call to discuss its fourth-quarter and full year 2001 results this Wednesday at 9 am CST. To listen, log on to www.hancockfabrics.com, click on "Investor Relations", then "Conference Call." A replay will be available on the website through February 27 and via telephone: call 800-615-3210 and use passcode 5821114. Watch for reports from other key retailers soon. AWARD. Petersen-Arne won the Vendor of the Year award presented by the Sierra Pacific Crafts group. QUILLING. Last week Martha Stewart taught Bryant Gumbel how to quill on CBS' The Early Show, after publishing an 8-page quilling article in the current issue of her magazine. Lake City Crafts, the industry's biggest producer of quilling kits and supplies, is the biggest beneficiary of this pr bonanza. Owners Malinda and Jim Johnson say they're receiving up to 300 orders/day and "the phone is ringing off the hook." The company has hired extra people to handle the rush. (Note: Malinda says Martha's staff is excellent and easy to work with.) PEOPLE. Marilyn Duquaine is the new Advertising Manager of the Krause Publications' Craft Division ... Gail Czech of The Creative Network accepted the Chair of the International Div. of National Personnel Assn ... Popular industry veteran Karen Kilbourne joined the national sales force of Dynamic Resource Group as an Ad Account Manager. TNNA. Last month's San Diego show had 530 booths, making it the largest TNNA show in 14 years. TNNA's 2002 summer show will be held June 8-10 at the Greater Columbus Convention Center, Columbus, Ohio. Call 800-889-8662, email tnna.info@offinger.com, or visit www.tnna.org. AWARDS. JHB International's winners of its 2001 include Matthieu Chung of B.M.C. in Paris, International Wholesaler of the Year; Brenda Watson of Lititz, PA, Sales Representative of the Year; and Lois Walker of Traverse City, MI, Honorable Mention. SEWING. There will be a Creative Sewing Seminar May 11 in Portland with speakers, a luncheon, fashion show, and an opportunity to visit with exhibitors. Speakers include Julie Fugate (The Quilt Block); Malah Peterson and Linda Simmons (Sulky of America); Dan Hoffman (Viking); Rochelle Harper; Tanya Shaw-Weeks; Sue Hausmann (Husqvarna/Viking); Linda Griepentrog (Sew News); and Marta Alto (Palmer-Pletch author). For registration info visit www.palmerpletsch.com and click on the "Creative Sewing Seminar" button. It's sponsored by Oregon Consumer Science Business Professionals as a scholarship fundraiser. BEADS. A note from Barbara Burnett: "Good Luck Geckos are still arriving at Design Originals. Last week a school classroom sent over 5 dozen Beadie Babies Good Luck Geckos to Design Originals for distribution to children in need of a little cheer. It's heartwarming to still be receiving them. It's children helping children." FLORALS. Kathy Lamancusa's At Home With Flowers is being broadcast every Friday at 4 pm EST on the Family Net TV Network. KIDS. The Annie's Attic division of Dynamic Resource Group has launched the Creative Girls Club, a craft kit program for 7-12 year-old girls. Members receive two new kits and a newsletter every six weeks. Each kit includes all materials and step-by-step instructions with color photos. The kits cover a variety of categories -- painting, felt/foam crafts, beginning needlework, jewelrymaking and soapmaking, wire art, candlemaking, wearable crafts, etc. For a limited time, the first two kits are $1.99 each, + P&H. The regular member price is $6.99/kit, 30% off the non-member price. The Club includes a website, www.CreativeGirlsClub.com. For more info, call toll-free 877-226-5391. MERGERS & ACQUISITIONS. The Cobble Hill Group is an investment bank that provides a full range of merger & acquisition services -- from formulating a strategy to negotiating and closing a transaction -- to buyers and sellers. It also assists companies in raising private equity, with particular interest in the craft industry. The Cobble Hill founder has been involved in 75+ transactions in 18 years. If you have annual sales of at least $1 million and are considering or already involved in M&A, call Barry Baker at 877-814-4115 or email babaker@attglobal.net. CONDOLENCES. We recently learned that Dennis McKee of Canyon Foam Design has passed away. Our best wishes to Dennis' family. QUOTATION. "The secret to creativity is knowing how to hide your sources." -- Albert Einstein (contributed by Jan Evans) VALENTINE'S. Consumers were expected to increase their Valentine's spending by 14.5%, up to $95 on average, according to a study sponsored by the National Retail Federation. WAL-MART. Looks like it will soon be named the largest company on Earth. Its 2001 sales of $218 billion means it should surpass the former #1, Exxon/Mobil, expected to announce sales of about $213 billion. KIDS. The next Irish export will probably be a cartoon character named Piggley Pooh. A storyteller, Piggley Pooh recounts tales based on Celtic folklore. PBS has signed a 4-year deal to broadcast the series, aimed at pre-schoolers, this September. It is expected to be the next Teletubbies and sell $5 billion in licensed merchandise. The deal was signed only after the originators, Denise and Francis Fitzpatrick, won a copyright court case against Disney.
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EYEWITNESS TO A PRODUCT RIPOFFThe following is a letter sent to Creative Leisure News and to HIA from an exhibitor at the recent HIA show:"I want to make you aware of something that really shocked me at the HIA show, although by now it shouldn't. "I was on hold on a pay phone near the escalator to the new exhibit area when a man came sprinting up the escalator (no badge) and got on the phone next to me. Since I was on hold and we were virtually shoulder to shoulder, I heard most of his conversation. To be honest, once I realized what he was doing, I started eavesdropping. "He had just come from the new exhibitors area and had seen something that he was calling in to his office to copy. He gave the details of it, said he would fax a photo or drawing from a brochure he had picked up from the new exhibitor. He stated that he wanted a prototype on his desk when he arrived home. "I know this happens all the time in our industry, but I was disgusted by the blatant and insensitive way he went about it. I don't think he thought twice about the people he was ripping off or even considered that they may have sunk everything they had into launching their product and bringing it to market. "I do think that the HIA board and association should try to find a way to address this behavior so new exhibitors at least have a fighting chance. Perhaps, no manufacturers should be allowed in the new exhibitor area. I know it is easy to exchange badges, but you could require a photo ID, although it seems a bit militaristic for a craft show." -- Name withheld (Note: It's probably impossible for a trade association, government, or anyone to legislate and enforce ethical behavior. The writer then added: "The dealings in our industry do make me sick sometimes. But for every story like that there are a 100 feel-good stories. Things like that exist in every industry in the world, some more than others. I count my blessings to be in an industry where things like that still shock people!"
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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*: 29.23 ... Change**: +1.63Ames (AMESQ). Last*: 0.16 ... Change**: -0.08 Hancock Fabrics (HKF). Last*: 15.98 ... Change**: +1.23 Jo-Ann Stores (JAS.A) [a]. Last*: 13.10 ... Change**: +2.00 Michaels (MIK). Last*: 32.62 ... Change**: -2.16 Rag Shops (RAGS). Last*: 3.30 ... Change**: +0.15 Wal-Mart (WMT). Last*: 60.03 ... Change**: +0.77 CLN Retail Index. Last*: 154.42 ... Change**: +2.3% Dow Jones Index. Last*: 9,903.04 ... Change**: FLAT *February 15 ** from February 1 [a] voting share Prices are exclusive of dividends
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THE BIRTH OF THE TEDDY BEARNewsday reports that in 1902, while on a hunting trip in Mississippi, President Teddy Roosevelt refused to shoot a black bear. The incident became the subject of a political cartoon, inspiring the wife of Brooklyn retailer Morris Michtom to stitch two bears. Michtom received permission from Roosevelt and displayed them in his store window with the sign "Teddy's Bears."Today the teddy bear market is about $500 million, according to the Toy Industry Assn.
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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, March 4th.
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