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Creative Leisure News
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Email: mike@clnonline.com
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Date:
May 6, 2002 TABLE OF CONTENTSCOMMENTARY: PAINTING ISSUESMuch of this issue is devoted to decorative painting. I like the category and love many of the people, but more importantly, I think its vitality is critical to the industry's ongoing growth -- and could serve as a lesson for other categories.I had been concerned ever since the HIA show in January, so when I received a couple of emails on the subject, I printed them in my last issue and invited comments. The responses I received comprise much of this issue -- and any and all additonal comments (i.e., yours) are more than welcome. (309-925-5593; mike@clnonline.com)
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A.C. MOORE'S SOLID FIRST QUARTERNet income for the quarter ended March 31 was $875,000 ($0.10/fully-diluted share), compared to a net loss of $62,000 ($0.01) a year ago. Income from operations was $1.45 million, versus a loss of $69,000 in 2001. EBITDA more than doubled to $2.9 million from $1.1 million.Sales jumped 29% to $85.9 million and same-store sales rose a whopping 14%. CEO Jack Parker said, "We are very pleased with the company's performance ... [which] has positioned us to present very positive guidance for the rest of 2002." Look for 12-14 more new stores this year, including three in the Washington, D.C. area. Officials are projecting sales to increase 20-22%, same-store sales to rise 5-6%, and earnings/share to be $1.45-$1.47 -- that's an increase in net income of 44-46%.
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RAG SHOPS ON THE RISENet income for the second quarter ended March 2 was $129,000 ($.03/diluted share), compared to $44,000 ($.01) for the same period last year. Net income for the six months was $1,519,000 ($.31), versus $1,326,000 ($.28).Sales for the second quarter rose 12% to $28.9 million and same-store sales rose 7.2%. For the first half of the year, sales rose 10.2% to $55.8 million and same-store sales rose 3.9%. Officials credit the increases to stronger Christmas sales and better leveraging of expenses. The gross margin dropped slightly, "due principally to an increase in clearance markdowns that resulted from management's decision to increase its seasonal clearance program and reduce the amount of holiday seasonal inventory on hand at the end of the period." President Jeff Gerstel said, "We are pleased with the continuing progress of our company. We achieved record sales for both the quarter and the six months driven by same-store sales increases, accomplished our goal of a strong sell-through of seasonal inventory, and positioned ourselves well for the remainder of our fiscal year." Rag Shops now operates 66 stores, with plans to open three new stores and close one store during the remainder of the fiscal year ending August 31.
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HIA: "INDUSTRY SALES UP 11% IN 2001"A new research study commissioned by the Hobby Industry Association claims overall sales grew 11% to $25.7 billion in 2001.The leading specific categories of consumer participation were Cross Stitch (19%); Home Decor Painting (15%); Scrapbooking (13%); Floral Arranging (13%); and Crochet (12%). Other highlights: percentage of U.S. households with at least one crafter: 58%, up from 54% a year ago ... A new version of the old 80/20 rule: "Heavy users" account for only 24% of the participants, but spend 69% of all the money ... Crafts garnered 43% of the sales, followed by Needlecrafts (29%), Painting/Finishing (17%), and Florals (11%). The Executive Summary of the study is available at the HIA site, www.hobby.org. The complete survey is available to HIA members there and is available to non-members for $500. (Note: HIA recently emailed the new password to members, allowing them access to the member level of the site.) The information is updated quarterly. For information about subscriptions and raw data, call 201-794-1133 or email hia@hobby.org.
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A NEW PROGRAM FOR INDEPENDENTSHot Off The Press has launched a new program, For Independents Only, which will offer independent retailers "exclusive product, marketing information, online business opportunities, and exclusive sales and promotional materials."The program includes products not available at chain stores ... A bi-monthly newsletter, For Independents Only ... Business-to-Business online resources ... Fixtures, racks, and headers for easy merchandising ... Regional retail training seminars presented by HOTP President Paulette Jarvey ... Exclusive class project ideas for scrapbook and card classes ... Quarterly promotional materials ... Personal HOTP sales associates ... Low minimums. The program is free. For more info call Lyallyn Temple or Carol Ferguson at 800-227-9595.
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SEWING TECHNOLOGY ... "ON THE CUTTING EDGE"Beginning next Sunday, a customer at the Fabric Depot in Portland will step into the future when she walks into a special booth. There, for 90 seconds Softwear Design Group's bodyskanner will scan her using structured lights and lasers. The result is a three-dimensional image within 1/16" accuracy.Once the measurements have been taken, the customer can choose from a collection of patterns from Unique Patterns Design that are plotted to the measurements. The three-dimensional image can also be uploaded to the Internet at www.thevirtualyou.com where consumers -- using the online, photo-realistic, garment-try-on application -- can "see" how various fashions would look on their image. Butterick, Husqvarna Viking, Palmer/Pletsch, Sew News magazine, Sulky, and Prym-Dritz, are co-sponsors with Unique Patterns of the special promotion which runs through June 30. Customers can make an appointment at www.sewingevolved.com or call 800-543-4739. Unique Patterns is owned by Softwear Design Group (www.softweardesign.com). It's the world's largest custom pattern company, and the custom pattern arm for McCall's for the Butterick and Palmer/Pletsch brands of patterns.
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KIDS' RETAILER PLANS BIG CHANGESFAO, formerly Right Start, the company which purchased Zany Brainy and FAO Schwarz, will open 1500-sq.-ft. Right Start boutiques in Zany Brainy stores; that could result in less shelf space for kids' crafts. However, FAO does plan to open Zany Brainy/Right Start combo stores and launch a Zany Brainy catalog. Meanwhile, FAO arranged a new $127 million line of credit with Wells Fargo Retail Finance.For the fiscal year, the company posted a net loss of $11.3 million from $7.7 million a year ago, despite revenues increasing from $53.6 million to $247.4 million (due primarily to adding the FAO Schwarz and Zany Brainy stores). The Zany Brainy stores' same-store sales fell 15.6% in the five months that they were owned by FAO. For the fourth quarter, there was a net income of $1.3 million, compared to a loss of $461,000 a year ago. Sales jumped to $162.5 million from $15.6 million, but Zany Brainy stores same-store sales fell 18.2%. FAO stock is traded on NASDAQ under the symbol FAOO.
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JO-ANN'S ADDS NEW VPJo-Ann's named Charles Domingue to the newly created position of vice president, general merchandise manager, home decor. Domingue had been divisional merchandise manager of Sears' bed, bath, and window division."The addition of Charles Domingue reflects our strong commitment to the continued growth of the home decor merchandise segment," said Chair/CEO Alan Rosskamm. "His understanding of home furnishings and textiles is ideally suited to our retail approach, which combines fabrics and crafts with a particular emphasis on home decor in our Jo-Ann etc superstores." From 1996 to 2001, Domingue was responsible for the sales growth and profitability of the Sears $750 million bed, bath and window division, where he developed and implemented a private-brand strategy that grew from 20 to 50% of the total business in two years. Prior to Sears, Domingue worked at Dayton Hudson and May Department Stores. "Charles has an outstanding track record of success that comes from knowing what customers want and providing the right product mix," said Dave Bolen, Jo-Ann's exec. vp for merchandising and marketing. "His perspective will be invaluable as we continually assess our merchandise assortment." (Comment: It will be interesting to see if Domingue develops a private label program like he did at Sears.)
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ACCI INFO -- FOR EXHIBITORSThe ACCI show (July 19-21) in Chicago is offering a number of interesting, unique opportunities for exhibitors:1. The Interactive Zones are a special chance for exhibitors to showcase products and designs -- outside their booths. Vendors can take advantage via demos, idea stations, and book signing/speaker tables. Most time slots are already filled and the deadline to participate is June 1. The exhibitor-participation form is available at the ACCI website, www.accicrafts.org. The Zones are Crafts; Fabrics; Yarn & Sewing; Florals; Art Materials & Framing; Gifts & Home Decor; and Cards, Paper & Stationery. 2. ACCI's Retail Interview Series has new interviews -- two interviews with key chain and independent buyers are added each week at the website. The interviewees speak bluntly about what they're looking for at summer trade shows. The interviews will also be published in the June issues of CNA and Craftrends. 3. Beginning about May 15th, exhibitors can put their ACCI show specials on the ACCI website -- including a hot link to their own site. Participating exhibitors will be able to complete the form online at the ACCI website. About the end of June, ACCI will "email blast" word of the show specials at the ACCI site to 8,500+ retailers, plus "fax blasts" to thousands of other retailers in adjacent industries (gift, stationery, home dec, florals, etc.). 4. Your Guide to the Craft Industry (manufacturers' version) will be available online by May 10th. It's written primarily for new exhibitors, but you might find it worth a look. For more show info: call 888-360-2224 or 740-452-4541, or visit www.accicrafts.org.
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ACCI INFO -- FOR BUYERS1. Buyer registration is now available online at www.accicrafts.org. If buyers register before June 14, they'll receive their badges, a pre-show planner, floor-plan, and exhibitor list with booth numbers mailed to them prior to the show.2. The website will include the educational brochure with a detailed list of seminars and workshops, schedule, special events, and fees. ACCI members can register online beginning this Wednesday; non-members can begin registering May 31. 3. ACCI's Retail Interview Series has additional interviews (see above) at the website. For more show info, call 888-360-2224 or 740-452-4541, or visit www.accicrafts.org.
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PAINTING: AGING PAINTERS, TRENDS(Note: The following four articles are comments from industry professionals who are knowledgeable about decorative painting.)I see two reasons why decorative painting seems stagnant: One, the hobby is not attracting new painters. The average decorative painter is in her 50's, and many of the designers and instructors are as well. While the industry has tried to attract younger women, with Society of Decorative Painters' Learn To Paint program etc., the long-term success has been limited. Younger women are crafting, but instead of painting they are investing in scrapbooking in droves. Why? Reason #2: The decorative painting industry is woefully behind on trends. Clothing, giftware, and home dec manufacturers long ago learned that NEW is critical to ongoing sales and is defined by new trends in style, color, shape, motif, etc. The scrapbooking industry learned this early on, and they are reaping the benefits with a growing consumer base. The decorative painting industry tends to work in its own vacuum. Many trends pass it by, and when they do pick up on a trend, it is often at the tail end of the trend. The industry also tends to hold on to trends long after the general market has grown tired of them. Hence, painters see nothing new on the market, sales decrease, and shops close. In my own design business, my classes at painting conventions, and my local SDP chapter, I am hearing comments that frighten me for the future. One consumer commented about a recent convention, "I had a wallet full of money but I only spent $4. I wanted to spend more, but there's nothing to buy. It's all the same old thing." Suppliers notice the lack of sales and as a result turn to discounting to boost sales, which in turn makes everyone in the chain of supply less profitable. Many have noticed that the scrapbooking conventions are packed and no discounting is needed for excellent sales. Why? One major reason is because the scrapbooking industry gives the consumer a reason to buy. Core products are available as well as new and on trend options. -- Michelle Temares
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PAINTING: LOWER MARGINS, LESS MARKETINGI think what's ailing decorative painting is part of a larger, more insidious problem that our industry faces, although some segments are more susceptible to it than others.I'm referring to the consolidation of independents and the growth of the public chain stores. As the pressure builds to show gross margin and bottom line growth for the sake of share price, there appears to be much more focus on the buy side of the buy-sell equation than there is on the sell side. The bottom line: there seems to be more focus on price than there is on market growth. Is the predominance of "marketing" activity today really just price advertising? Remember when manufacturers offered improved in-store, point-of-purchase materials; in-store demos; consumer classes; ads that featured finished products or even "big name" decorative artists; road shows featuring painter/teachers such as Jillybean, Peggy Caldwell, Sue Scheewe, Priscilla Hauser, Dorothy Egan, etc.? I also recall regional, almost franchised teacher programs sponsored by the major paint companies. It's my guess that manufacturers have been so squeezed to lower prices that they can't afford to develop as many new products or sophisticated (i.e., costly) marketing programs. I think another casualty of lower prices is consumer's perception of quality. I remember when Binney & Smith introduced a new watercolor line to compete with Winsor & Newton. It was a comparable grade of watercolor paint at half the price. It was placed in the market with key art material retailers and it died. Watercolorists perceived the lower price to mean lower quality. The consumer quickly lost confidence and sales suffered. -- Former paint manufacturer
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PAINTING: NEED MORE CONTEMPORARY DESIGNSWe tried classes for over a year but it just was not worth it. The customers want classes but they do not sign up.I think it will be some time before decorative painting ever comes back. The future will be painting for home dec, such as stenciling or custom painting on walls of homes. I really don't see the tole painted cute stuff being popular again. The younger generation likes more contemporary looks. It appears the cute, country painting designs that were so popular six years ago is gone. This is why some companies got out of category. -- Regional chain buyer
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PAINTING: CAN'T MAKE MONEYPart of the problem is painters used to support their hobby by selling their work at weekend craft shows. I have friends who could make $18,000 - $20,000 in a weekend at the War Eagle craft show. Now there are many more shows, so the pie is divided into too many pieces. Plus, the shows are longer and more expensive.Then there's the problem of so many more handpainted readymades that are cheaper than a decorative painter can sell her projects for. In addition, there isn't as much money selling books. The retailers want bigger discounts than they used to; plus, the books would stay on the racks for two years; now it's a couple of months. You're lucky if you sell 5,000 rather than 15 - 20,000. I think, too, there is a void in the levels of projects. There are plenty of fast, cutesy projects, and many very difficult projects, but not much for the painter who's beyond a beginner but not up to the higher level. -- Former well known decorative painter.
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RANDOM NOTES, RANDOM THOUGHTS1. Regarding the paint situation: I'm not sure if this analogy holds water, but here goes: For a while in the 1980's, plastic canvas was very, very hot. Then it cooled off considerably. I asked Pete Rutley what happened. Pete was the VP at Craft World when Craft World, a distributor, was the most powerful company in the industry. Pete said it was because of the price wars. Manufacturers and retailers had cut the prices so drastically that no one was making any money. So the vendors and storeowners stopped pushing it.Many of the comments on painting are complaints that no one is making money. 2. I just shake my head over big business, and our bankruptcy laws. The Associated Press reported Kmart paid more than $3.7 million in severance to former president/coo Andrew Giancamilli, and $4 million to former ceo Charles Conaway. Lead the company to the largest retail bankruptcy in history, and become millionaires. Meanwhile, Kmart has filed more than 10,000 pages of financial data with the bankruptcy court. Think how much money the lawyers and beancounters are making.... Despite the 10,000 pages, Kmart has asked the judge for more time to complete its annual report, saying its annual losses will be "significantly higher" than the $244 million loss of a year ago. And Kmart may restate earlier disclosures "to reflect certain aspects of its previously announced investigation concerning various accounting matters." Now the AP reports that the company has suspended the severance payments to top execs (but not Conaway), because the company received anonymous letters, supposedly from employees, claiming irregularities regarding the accounting practices of vendor payment and rebates, and general liability reserves.
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MISCELLANEOUS NEWSAMES. In a report filed with the bankrutpcy court, Ames reported that for the four weeks ended March 2, the company lost $12.1 million, on sales of $181.9 million.SCRAPBOOKING. National Scrapbook Day was last Saturday. As far as we can tell, it was started in 1995 by Creative Memories. INVESTMENTS. We've heard unconfirmed reports that it looks like HIA will recover 80-85% of the $2.4+ million in reserve assets that have been frozen due to the Securities & Exchange Commission investigation of Bentley Financial Services, the company through which HIA had been purchasing certificates of deposit. TOYS. The toy industry grew 5.1% to $30.1 billion in 2001, accord to The Toy Retailer Report, produced by Unity Marketing. For more info, visit www.unitymarketingonline.com. TNNA. The June 8-10 show in Columbus, OH is sold out with 211 exhibitors, including 18 first-timers, in 489 booths. The staff is looking for extra space for additional exhibitors. (Note: the largest summer show of all time had 497 booths). Buyer registration looks strong, too. Added highlight: TNNA's Yarn Group has resurrected its Fashion Show on Friday evening, prior to the opening of the Galleria. Call 800-889-8662; fax 740-452-2552; email tnna.info@offinger.com; or visit www.tnna.org. TESTS. Wal-Mart is testing selling used cars at two stores in Houston. (Note: we never heard the results of the discounter's test of selling major appliances. We assume the test was a failure, or it would have been rolled out into more stores by now. That's significant, because officials at the time talked about putting the department in the back of the store -- where the craft-sewing department is.) CANDLES. The Wall Street Journal intimated that the stocks of candle companies such as Yankee Candle and Blyth may drop, not so much because of a decline in interest, but due to a recent big increase in the stock prices, and company execs selling off some of their stock. The article cited the National Candle Association which said candle sales were $2.3 billion last year, more than double the sales six years ago. It also cited Unity Marketing, a research firm which claimed candles are the fifth most common discretionary purchase. PEOPLE. Bob Standard joined FloraCraft in the newly created position of Business Development Manager. Standard is from Weyerhaeuser, Indiana Glass, and Smithers-Oasis. PROMOS, I. HIA's National Craft Month promotion in March generated publicity in a numerous local and national media, and HIA claims material was "prominent on a wide variety of web sites and on-line publications. As a result, over 500 million people viewed National Craft Month on the Internet alone." In conjunction with NCM, eBay held a celebrity crafts auction with proceeds going to the HIA Foundation. PROMOS, II. HIA's next event will be Celebrate America with Crafts, June 16-29. During that time stores are encouraged to offer classes, demos, and projects geared to the July 4th theme, culminating with Celebrate America with Crafts Day on Saturday, June 29. To support retail efforts, HIA will send news releases to the print media and will supply spokespersons for tv shows. For more info, visit HIA's website at www.hobby.org. If you plan to participate in the promotion, contact Kristin Degnan (degnan@rfcp.com) at the Craft & Hobby Information Bureau to make her aware of your event schedule. WEBSITE. One of the most impressive websites we've seen for a craft designer, rep, marketing consultant, is www.bobella.com, the site of Debba Haupert. COPYRIGHTS. There is a new website for designers and others concerned about the problem of consumers distributing copyrighted patterns: www.groups.yahoo.com/group/copy_rights. TV. The 6th series of Hands On, the excellent kids craft show, uplinks June 16th. Contact your local PBS station to carry it. TRANSFERS. BoBella is the U.S. marketing office for England's Lazertran (www.lazertran.com), which produces transfer paper for silk, satin, metal foil, and polyclay -- and waterslide decal paper for use with color copiers . Call Debba Haupert at 513-919-8939 or email debbahaupert@hotmail.com. CATALOGS. Janlynn has a new catalog detailing the company's extensive product lines, and Herr's has published a special, large scrapbook catalog. JOB OPENING. Plaid is looking for a Design Director to identify design resources and translate design into appropriate Plaid product categories, including all Plaid, Bucilla, and All Night Media products, including licensed and proprietary designs. Requirements: Undergraduate degree in Fine or Liberal Arts and at least 5 years experience in consumer package goods design, preferably in craft/DIY industries. Contact Plaid's Robin Dissen at 678-291-8168 or email rdissen@plaidonline.com. JOB HUNTING. Industry veteran with accomplished record with kids crafts, florals, and served as a chain buyer ... An industry pro with extensive experience with needlework, sales management, and selling to majors. Based in the South, but can relocate. For more info on these two industry professionals, call Mike Hartnett in complete confidence at 309-925-5593 or email mike@clnonline.com. REST IN PEACE. Ruth Handler, who co-founded Mattel in 1945 and created Barbie in 1959, has passed away. SALARIES. Wal-Mart President/CEO Lee Scott receives a salary of $1.1 million, up 13%, and a $5 million restricted stock award, down 18% from the previous year, the Associated Press reported. FINANCING. Duckwall-ALCO has negotiated a new $70 million bank credit facility with Fleet Retail Finance. EMAIL. (Note: we received the following after reporting on the 20th anniversary of the Bob Ross Joy of Painting PBS series.) Thanks for acknowledging Bob Ross in this week's issue. I was a Bob Ross junkie for many years, what with kids, hubby, house, and career, watching his show was the most soothing part of my week. When I began teaching rubber stamping workshops for our retail customers, and later classes in their stores, I was amazed at how much I had truly learned from him. Soothing and non-threatening definitely makes a difference. I used his favorite line all the time: "There are no mistakes, only happy accidents." So very true, and so very empowering. -- Pat Hansen, PSX Design. AN INDUSTRY FIRST? Kathy Peterson has unveiled Wire Impressions with Kathy Peterson, a 30-minute how-to video with wire and rubber stamping projects. There are lots of videos, but available soon will be the DVD version. The DVD will allow the user to view and select from the menu -- one of three wire techniques, one of five wire/stamp how-to projects, or any other of the eleven buttons. Either version retails for $14.95 and includes a free color project sheet featuring Artistic Wire and Premo-Sculpey clay from Polyform. Call 561-744-2086, email kathypeterson1@earthlink.net, or visit www.kathypeterson.com. (Does anyone else have an instructional DVD? If so, let us know.) HALLOWEEN. There are new Halloween projects using Styrofoam brand foam at www.styrofoamcrafts.com. MAY SHOWS. Society of Decorative Painters is May 13-19 in Charlotte. Call 316-269-0500 to register; 316-269-9300, ext. 101 for general info; fax 316-269-9191; email sdp@decoratingpainters.org; or visit www.decorativepainters.org ... The Spring Quilt Market is May 17-19 in Kansas City. Call 713-781-6864; fax 512-377-4001; email edu@quilts.com; or visit www.quilts.com. NAMTA. National Art Materials Trade Assn. is June 5-8 in Philadelphia. The preregistration deadline is May 11. Call 704-948-5554 or fax 704-948-5658.
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THE CLN RETAIL INDEXA. C. Moore (ACMR). Last*: 46.45 ... Change**: +0.16Ames (AMES). Last*: 0.15 ... Change**: -0.04 Hancock Fabrics (HKF). Last*: 20.19 ... Change**: +1.51 Jo-Ann Stores (JAS.A) [a]. Last*: 19.86 ... Change**: +0.15 Michaels (MIK). Last*: 40.60 ... Change**: +2.65 Rag Shops (RAGS). Last*: 4.20 ... Change**: +0.29 Wal-Mart (WMT). Last*: 55.25 ... Change**: -5.98 CLN Retail Index. Last*: 186.70 ... Change**: -0.7% Dow Jones Index. Last*: 10,006.63 ... Change**: -1.8% * May 3 ** from April 12 [a] voting share Prices are exclusive of dividends
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A PARABLE FOR OUR TIMESThis was emailed from a friend:One day a farmer's donkey fell into an abandoned well. The animal cried piteously for hours as the farmer tried to figure out what to do. Finally, he decided the animal was old and the well needed to be covered up anyway; it just wasn't worth it to him to try to retrieve the donkey. He invited all his neighbors to come over and help him. They each grabbed a shovel and began to shovel dirt into the well. Realizing what was happening, the donkey at first cried and wailed horribly. Then, a few shovelsful later, he quieted down completely. The farmer peered down into the well, and was astounded by what he saw. With every shovelful of dirt that hit his back, the donkey was doing something amazing. He would shake it off and take a step up on the new layer of dirt. As the farmer's neighbors continued to shovel dirt on top of the animal, he would shake it off and take a step up. Pretty soon, the donkey stepped up over the edge of the well and trotted off, to the shock and astonishment of all the neighbors! Life is going to shovel dirt on you, all kinds of dirt. The trick to getting out of the well is to not let it bury you, but to shake it off and take a step up. Each of our troubles is a steppingstone. We can get out of the deepest wells just by not stopping, never giving up! Shake it off and take a step up! Remember the five simple rules to be happy: Free your heart from hatred. Free your mind from worries. Live simply. Give more. Expect less. Also, the donkey kicked the daylights out of the farmer who had tried to bury him. Which suggests another moral: When you try to cover your ass, it always comes back and gets you.
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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 Mon. May 20.
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