 |
                |
Creative Leisure News
2677 Ashley Ct.
Tremont, IL 61568
Phone: 309-925-5593
Fax: 309-925-9068
Email: mike@clnonline.com
|
|
|
|
|
Date:
May 20, 2002 TABLE OF CONTENTSCOMMENTARY: TURNING AROUND A CATEGORYI hope all of you who are not involved with decorative painting will read the comments, analysis, and possible solutions of the painting situation compiled in this issue. Why? Because many of the trends affecting painting are happening to other categories, too.The solutions may also be similar. For example, both decorative painting and knitting require some basic instructions, there aren't as many teaching shops as there used to be, neither category is particularly inexpensive, and some claim society perceives the categories as hobbies for older ladies. Knitting and crochet have turned all those "problems" around and is booming. Painting can do the same thing. So can any category.
[ top ]
APRIL SALES SOAR -- FOR CRAFTSApril meant sluggish sales compared to April 2001, thanks to an earlier Easter this year. That was true for retailers in most industries, but not true in crafts.Jo-Ann's April sales rose 19.9% to $117.2 million and same-store sales jumped 19.6%. Net sales for the first quarter, ended May 4, increased 13.2% to $372.4 million and same-store sales increased 13.5%. Because of the strong performance, Jo-Ann's officials said they expect first quarter earnings of approximately $0.40/share and raised their earnings estimates for the year to $1.40 - $1.50/share. Earnings will be reported tomorrow and there will be a conference call broadcast over the Internet at 10 am EDT. Go to www.joann.com for info on listening to the call. Michaels ' April sales rose 13% to $173.0 million and same-store sales increased 5%, two percentage points higher than previous expectations. First quarter sales rose 15% to $603.2 million and same-store sales were up 5% -- at the high end of the company's expectations. As a result, Michaels raised its first quarter earnings estimate by $.02 to $.20/diluted share. Michaels will release its first quarter earnings on May 30 and will host a conference call at 4 pm CDT. To participate, call 973-633-6740 or visit www.michaels.com. If you can't listen to the live call, you can access a replay until June 7 at www.michaels.com or call 973-341-3080, PIN # 3121432. Hancock's sales were $30 million and same-store sales rose a strong 8.0%. The company will release its first quarter earnings this Wednesday and hold a conference call at 9 am CDT. To listen, visit www.hancockfabrics.com, click on "Investor Relations", then "Conference Call". A replay will be available on the site through May 29 and via phone by dialing 800-615-3210 and using PIN # 5821516. (Note: A.C. Moore reports sales quarterly, not monthly.) Other retailers: Wal-Mart's store/supercenter division had a same-store sales increase of 3.2%; Target's rose 0.4%, and ShopKo's increased a mere 0.1%.Duckwall-ALCO's same store sales rose 5.9%, and officials named crafts as one of the better selling departments. The positive reports from our industry attracted the attention of the Reuters news service, saying the sector had "moved beyond the stereotype that its customers are little old ladies to attract suburban moms and even teens." The article, posted online and in various newspapers, cited as causes the post-Sept. 11 "nesting" phenomenon, attracting younger consumers, decorating for more holidays, reasonable prices, the robust housing market, and retailers staying in stock.
[ top ]
JO-ANN'S NAMES THREE VP'SJo-Ann's appointed three new regional vice presidents as part of a realignment designed to provide closer oversight of store operations. Michael Edwards, exec vp of operations, said, "The new alignment allows us to more sharply focus the responsibilities of the regional vice presidents, who now oversee approximately 120 stores instead of the previous 160 to 170."The new regional vp's are Mary Hultgren (Central); Eric A. Kovats (Southeast); and Cheryl L. Warobick (Midwest). They join the current regional vp's Mike Aaronson (Northeast); Dennis Hickey (Great Lakes); Kevin Kneeshaw (Northwest); and Ron Mapp (Southwest). Hultgren was sr. vp of store operations for Office Depot. Kovats comes to Jo-Ann's from Service Merchandise, where he was sr. vp for the store sales organization. Warobick was most recently the Northeast region director of merchandising and operations for Toys R Us. "... we now have a high-caliber senior operational team in place -- all with the appropriate experience, drive and desire to improve operating disciplines and take our company to the next level," said Chair/CEO Alan Rosskamm.
[ top ]
CALL FOR NEW PRODUCTSThe summer trade shows will be here soon -- ACCI, SILK, TNNA, NATS, and others. Manufacturers: if you have new products you'll be unveiling at any of the summer trade shows, send the info to me. Because CLN is an online and fax newsletter, I can get the information to readers from Hong Kong to the Netherlands and from one corner of the U.S. to another in a matter of hours, even at the last minute.Send info to mike@clnonline.com or mail to 2677 Ashley Ct., Tremont, IL 61568. I won't publish photos, but I will add a link to your website if you have one. Also, include at which show you'll be exhibiting, and your booth number. CLN is published the first and third Mondays of each month, and the deadlines are the previous Fridays.
[ top ]
MORE ACCI HIGHLIGHTSThe ACCI show is July 19-21, with education beginning July 18, in Rosemont (Chicago), IL.1. Emmy award winning author/designer/TV star Christopher Lowell will speak on Friday from 6-7 pm and do a book signing Saturday at 1 pm in the "At Home" Interactive Zone. The host of The Christopher Lowell Show is the Discovery Channel's highest-rated daytime personality. Friday he'll speak on his book, Seven Layers of Design: Fearless, Fabulous Decorating. Tickets are required. 2. Exhibitors: If you will be offering any show specials, go to the site, www.accicrafts.org and you can add your "special" to the list. Retailers: this list, which can help you with your advance planning, will grow as we get closer to the July show dates. Check it periodically. 3.Buyers: ACCI members can start registering for classes online now. 4. The "Product Premiere Party" on Thursday should be a fun evening of food, dancing, and networking among retailers and exhibitors, while retailers get a sneak peek at the newest products being unveiled at the show. Free to ACCI Members. 5. Buyers can combine lunch and learning with "Afternoon Delights" on Friday and Saturday. Friday they'll hear George Whalin (brought back by popular demand) speaking on "Stop, Look, Touch, Buy: The Dynamics of Merchandising", and on Saturday hear Adrienne Weiss speaking on "Branding is Storytelling." A box lunch is included each day. 6. Babysitting for infants through teens will be available for the first time at "Camp ACCI" operated by a professional, bonded service specializing in child care at trade shows. Pre-registration is requested. To attend or exhibit call toll-free at 888-360-2224 or visit www.accicrafts.org.
[ top ]
DECORATIVE PAINTING: BACKGROUNDWe've been bombarded with responses to the comments regarding decorative painting in our last issue. The following articles summarize the problems, the opportunities, and some solutions.Consumer market research indicated that decorative painters comprised about a fourth of all consumers who purchase acrylic paint, but they buy more than half of it. One manufacturer's rep said, "An artist' will buy six tubes of paint and mix his own colors, and own about four brushes he treats like his children. A decorative painter will have 50 bottles of paint and 20 brushes. Whom would you rather have as a customer?" Plus, anecdotal evidence indicates once someone gets "hooked" on decorative painting, they stay that way, because painting is one craft in which there is always something new to learn. Clearly, this is the type of consumer the industry can't afford to lose.
[ top ]
DECORATIVE PAINTING: PROBLEMS1. A consumer doesn't become addicted to painting without first receiving some basic instructions. But chains have wiped out many of the independent paint shops who were the primary teachers.2. Retailers continue to use paint as a major weapon in their price wars. The resulting squeeze on margins leaves manufacturers with less money to promote the category. If vendors and retailers don't make any money on decorative painting, they start promoting other, more profitable departments. 3. The influx of attractive, painted readymades means consumers can buy a painted item for less than the cost of supplies to paint it themselves -- and makes it more difficult for decorative painters to help support their hobby by selling their finished work. 4. Changes in the way retailers sell instruction books have made it more difficult for painter/publishers to prosper. 5. Many observers believe the category needs more fresh, modern designs to appeal to younger potential painters. 6. The nation-wide Learn To Paint program sponsored last year by the Society of Decorative Painters (SDP) was excellent. More promotions of this type are needed. 7. Discounting at shows by manufacturers, publishers, and distributors simply makes life more difficult for retailers.
[ top ]
DECORATIVE PAINTING: HOPEFUL SIGNS1. One of the major companies in the category was to announce a huge new teaching program at last weekend's SDP convention. (More on this in our next issue.)2.There is evidence that some of the chains are paying more attention to painting classes. 3. Painting pioneer/guru Priscilla Hauser, whose classes are as full as ever, believes the keys are "quick and easy" projects to attract younger people. (Sterling will publish her book, Painting in an Afternoon, next year. 4. "We need those soon-to-retire folks, with the time and the resources to participate in this art form," suggests one distributor. "Let's face it, decorative painting is not an inexpensive hobby. Most young women work as well as take care of home and children, and the resources of time and money are scarce."
[ top ]
DECORATIVE PAINTING: SUGGESTED SOLUTIONS1. Retailers need to realize they're giving painters a better price than consumers are asking for. Sales won't go to hell in a handbasket if prices were raised a nickel a bottle, the extra money was shared with manufacturers, and both used it to promote painting.2. Teaching is the key. We have to have classes! SDP, manufacturers, and others should do everything possible to help retailers find good teachers. 3. Show sponsors should not allow discount selling by exhibitors who aren't retailers. 4. Leading companies should consider forming a paint version of the Craft Yarn Council of America. It's no accident that so many celebrities tell so many women's magazines about their newly discovered love for knitting and crochet.
[ top ]
RANDOM NOTES, RANDOM THOUGHTS1. I had an interesting assignment recently. ACCI asked me to write a guide to the craft industry. Actually two guides, one for manufacturers and one for retailers. ACCI wanted it directed to newcomers to the market and writing it reminded me of how much jargon we use ("make-it/take-it", etc.). I'd write a section, realize I'd used jargon, re-write it, find more jargon, and so on. It's just been posted on the ACCI website at www.accicrafts.org. Click on "Members", then "Your Guide To the Craft Industry".2. ACCI is doing some clever, innovative things to entice industry people to repeatedly re-visit the web site. Each week officials add two more retailers to the "Retailer Interview" section. This week's additions are Jim Bremer, the owner of four large Tall Mouse stores and a distributorship in California and Barb Kornely of Kornely's Craft & Hobby Center in Wisconsin. Previous interviews, still on the site, are with buyers and/or merchandise managers from Michaels, Hobby Lobby, Jo-Ann's, Rag Shops, and many of the industry's top independents. They speak bluntly about what they're looking for from exhibitors this time of year. The interviews are worthwhile reading for manufacturers who are formulating their trade show strategy. Go to www.accicrafts.org/interview.htm. 3. The Kmart plot thickens. Now the FBI is investigating the loans made to top execs in the four months up to the bankruptcy filing. It's a mere $23 million, reports Chain Store Age. The company reported a 2001 loss of $2.42 billion, but the FBI thinks they may have cooked the books and are looking at the money paid by suppliers that Kmart called "vendor allowances." You cook the books and STILL lost $2.42 billion? 4. Actually, the investigation into Kmart's accounting practices could have major ramifications for our industry. How ARE vendor rebates, ad allowances, and shelf-space payments accounted for? Stay tuned.
[ top ]
MISCELLANEOUS NEWSQUOTATION. "How's this for irony? I've made more money in the last six months buying the stocks of our chains than I have selling products to them." -- Long time industry manufacturer.WAL-MART. For the quarter ended April 30, sales rose 14.4% to $54.96 billion and net income rose 19.7% to $1.65 billion. Earnings/share rose six cents to 37 cents. The Wal-Mart store division had a sales increase of 15.2% to $35.42 billion. Profits rose 16.1% to $2.55 billion. President/CEO Lee Scott said he expected "another record year in sales and earnings." RESIGNED. Michaels' Exec. VP/CFO Brian DeCordova resigned, saying he was looking for a new challenge. He remains until a successor is found. When he was hired, people said "that you can't make money selling little Styrofoam balls," he told TheStreet.com. "But you can if you mark them up enough and sell enough of them." TheStreet.com reported DeCordova earned $256,154 in salary in 2001 and received a $120,000 bonus, and in February had about $1.9 million worth of unexercised stock options. AMES. In a filing with the bankruptcy court, the discounter lost $20 million more in March, on sales of $215 million. DISTRIBUTION. Hancock acquired a 473,000 sq. ft. warehouse near its Tupelo, MS corporate headquarters. The price for the building, land, fixtures, and equipment was $7.7 million. CEO Larry Kirk said the warehouse would help solve the need to distribute some of its new merchandise groups differently than the traditional fabric and notions. "Home accents, foam/batting, a growing cross-docking operation, a large seasonal program, and a higher percentage of imported merchandise" are a few examples, Kirk said. EUROPE. Plaid is closing its company-owned European distribution facility, formerly known as Jonco, in the Netherlands. Soft economic conditions and a strong dollar were the primary reasons, said Mike McCooey, Plaid's president. Plaid will sell through existing distributors, and Bryan Bolin, vp/international sales and customer service, will be in charge. FINALIST. Alan Rosskamm, chair/ceo of Jo-Ann's, is a finalist for DSN Retailing Today's "Specialty Retailer of the Year" award. The other finalists are execs from Bed Bath & Beyond, Best Buy, Gart Sports, and Petco. (Comment: Jo-Ann's stock has tripled since the beginning of the year. I bet the other finalists can't say that about their stocks.) SCRAPBOOKING. Attendance at the New Jersey Memories Expo rose 28% to 2745. The Friday night "crop party" sponsored by A.C. Moore was a sellout. (Note: Education proposals for the Denver Expo Sept. 6-7 are due June 3rd. Call 888-878-8728 or visit www.memoriesexpo.com.) FRANK'S. The bankruptcy court confirmed Frank's second amended reorganization plan, which is expected to be effective today. Unsecured creditors, who voted 98% to approve the plan, receive 10 cents on the dollar or stock in the reorganized company. Read the plan at www.franks.com/filing.asp. Frank's operates 170 stores in 14 states. ACQUISITION. MagEyes added Body-Rite, The Posture Pleaser to its product line of magnifiers. The Body-Rite is an easily wearable item designed to solve the back, shoulder, and neck pain problems caused by hobbies that require one to work for a long periods with the hands extended in front of the body. For more, visit www.mageyes.com. HIA. Tim Valentyn, president of Walnut Hollow, has been named to fill the vacancy on the board of directors caused by the resignation of Hobby Lobby's Steve Stringer. PEOPLE. Sandy Stewart was promoted to Sr. Buyer, Fine Art Materials at Michaels ... Don Meyer is HIA's new Director of Consumer and Public Relations. Meyer had worked at Panamsat, the Magellan Corp., and the Los Angeles Times ... Marci Whitford is the new Midwest region director for Memories Community. AWARDS. Congrats to industry veteran Jim Weissenbom who was named to NAMTA's Hall of Fame. MACRAME. Characters on the Dawson's Creek tv series, popular with the under-30 crowd, have been doing macrame, and Lark Books just published Macrame in its "Weekend Crafter" series. Very fashionable projects. (Note: This is the kind of news we saw early in knitting/crochet's rebound.) BOOKS. Martha Inc. is an unauthorized biography of Martha Stewart, and according to the reviewers, author Christopher Byron does not paint a pretty picture of Martha. TV. The second series of the PBS show, Quilt Central, has been taped and will be uplinked to stations this summer. A third series of shows will be taped in the fall. The initial series is currently being broadcast, either for the first time or in reruns, by stations in 21 states. MEDIA. Freddy Moran, author of C&T Publishing's Freddy's House, is the cover story in the July issue of Romantic Homes magazine ... Cover blurb on the new June issue of Rosie: "Martha vs. Rosie: The Great Crafts Showdown." 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 ... Sales-marketing exec with extensive experience in ribbon, craft, floral, and retail packaging products seeking a career opportunity. For more info on these fine folks, call Mike Hartnett at 309-925-5593 or email mike@clnonline.com. BUYER WANTED. Crafts & Stuff, a growing Florida craft chain, is looking for a buyer with a stable career background and at least 2+ years experience building programs for a multi-unit retailer. Fax your resume to 561-622-8337 or email julie@crafts-n-stuff.com. Visit www.crafts-n-stuff.com for company background.
[ top ]
PAINTING: LACK OF PRICE DISCIPLINEEmail from a manufacturer: I blame the manufacturers, for the most part. We're so anxious to get our products out in the marketplace that we're giving distributor discounts to everyone. We do this because everyone SAYS he/she is a DISTRIBUTOR.I have a huge problem now where there are several Internet sites that have an everyday price of 40% off our suggested retail. I know everyone is scared to death of the Robinson/Patman Act. However, my brother-in-law who owns a chain of retail bicycle shops has passed on to me several letters from bicycle manufacturers setting a MSRP and dictating the maximum % of discount allowed at the retail level. As a manufacturer, I still have the right to sell or not sell to anyone I want. If a retailer chooses to discount beyond the threshold established, you just cut him off. Of course, there are rules to follow to ensure that everyone is on a level playing field, but it's not that difficult to do. All this discounting just cheapens the street price in general. Why would a brick and mortar retailer even want to carry my products when they know that they're available on the Internet at 40% off? Is it any wonder that many manufacturers want to cut everyone out of the loop and go directly to the consumer? I think that if retailers know that the manufacturer is going to protect the street price on their products, they will want to carry those products in their stores. -- Paint Accessory Manufacturer
[ top ]
PAINTING: AN INDEPENDENT'S VIEWI have owned my shop for several years, and during the late 80's teaching painting and selling the supplies was a large part of my business.Here's my perspective: I think the problem started with paint. When I started, there were two quality acrylics that painters and teachers called for, Delta and Illinois Bronze. Within the space of two or three years the paint market exploded; every time I turned around another paint company appeared and I ran out of space for paint racks. Then the price wars began.... I lost several thousands before I finally pulled the plug. Also, wood was a real pain. I went through at least three local woodcutters who had trouble keeping up with production demands. And I discovered early on that my customers shopped price when it came to unfinished wood. Again, I think I lost money in the process. Finally, the number of students dwindled and the teachers moved on into something else. I loved tole painting and enjoyed taking classes from some wonderful teachers like Priscilla Hauser, but I, too, moved into other directions. Time and interest takes it toll. I got out of the painting business around 94 or 95 mainly because it was losing money. It was strictly a business decision. I now have a granddaughter who loves drawing, and we spend several hours when she visits with crayons, paints, etc. I hope she will continue as she gets older. She is 6. -- Laura Harrison, Ladybug Shoppe, Royal Oak, Michigan
[ top ]
PAINTING: A DISTRIBUTOR'S VIEW(Note: This response from a distributor was almost as long as a regular issue of this newsletter, so we're simply printing excerpts.)* Sales are down. The chains have a lot to do with it, as do the manufacturers who leapt into bed with the chains. Vendors can insist that the chains do not get any better deals than I do, but no one is making up samples for me; providing me with free project sheets with my name on them; or paying for computer time, advertising expenses, etc. And no one is giving me longer terms. When a chain can sell at retail below my cost as a distributor, things are really skewed. * We see fewer genuinely new items being introduced -- they are too busy copying each other-- and sometimes without thinking, "Did this ever sell?" * The thought that a chain store buyer can drive the industry, and determine what art supplies I will be able to buy and use, truly frightens me! I doubt the chains are stuck with discontinued merchandise, but I sure am. * The distributors are not without blame also; many have been selling wholesale to the general public for a number of years. This certainly has not been good for the industry! * We have created a consumer expecting "deals" and "free". This doesn't pay the rent! * More teachers are operating some variation on the home studio theme -- frequently a kitchen table. Some of these are legitimate operations, but some seem to function more as a buying club for their painting friends. * We are also losing the professional craft producers -- they cannot compete with the really good imported finished goods. Why learn to paint when you can buy a finished item for next to nothing?
[ top ]
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.
[ top ]
THE CLN RETAIL INDEXA. C. Moore (ACMR). Last*: 43.75 ... Change**: -2.70Ames (AMES). Last*: 0.14 ... Change**: -0.01 Hancock Fabrics (HKF). Last*: 19.99 ... Change**: -0.20 Jo-Ann Stores (JAS.A) [a]. Last*: 23.00.. Change**: +3.14 Michaels (MIK). Last*: 40.70 ... Change**: +0.10 Rag Shops (RAGS). Last*: 5.19 ... Change**: +0.99 Wal-Mart (WMT). Last*: 58.33 ... Change**: +3.63 CLN Retail Index. Last*: 191.65 ... Change**: +2.7% Dow Jones Index. Last*: 10353.08 ... Change**: +3.5% *May 17 ** from May 3 [a] voting share Prices are exclusive of dividends
[ top ]
EXCLUSIVE! WAL-MART ADDS NEW PRODUCT LINECreative Leisure News has learned from a special inside source at Wal-Mart that the world's largest retailer will begin selling wine. Here's the list of wines emailed from our source:* Big Red Gulp ... * Grape Expectations ... * Domaine Wal-Mart ... * NASCARbernet ... * Chef Boyardeaux ... * Peanut Noir ... * Chateau Des Moines ... * I Can't Believe It's Not Vinegar! ... * World Championship Wriesling ... * Nasti Spumante
[ top ]
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.
[ top ]
xxx |
|
|
|
|
|
|
Printer
Version
|
|
