Date: April 5, 2004
Vol. VIII, No. 7

Printer Version

TABLE OF CONTENTS

COMMENTARY: Turning Around a Category

Perhaps the biggest success story in the industry in recent years has been the turnaround in yarn. It wasn't that long ago knitting and crochet were our grandmothers' hobbies. What happened?

The Craft Yarn Council of America is what happened. And it's still happening, because once a trend takes hold, it snowballs. Here's what CYCA's Exec. Director Mary Colucci has been doing, just in the last two months:

As part of a Cool New York celebration of the city's arts and parks, CYCA taught free knitting classes at three rec centers, in lieu of free rent for next year's annual Knit-Out. The students learned to knit and created afghans for Warm Up America! Consumers of all ages, men and women, took the classes. The Staten Island Advance (circulation 70,000+) and the New York Daily News (circulation 800,000) published articles and photos of the events.

Mary coordinated a crochet workshop for NYC's Museum of Arts & Design (formerly the American Crafts Museum) ... At Michaels' request, CYCA sponsored a mini Knit-Out & Crochet event in a Michaels store on Long Island. The company has now asked for help lining up teachers for all Michaels stores ... CYCA will contribute how-to projects for the kit HIA will send to retail members for its September promo.

Mary, Soho Publishing's Carla Scott, and Debbie Stoller, author of Stitch 'n Bitch were interviewed by FOX News. Mary receives two calls a week from newspapers for articles on knitting/crochet. The latest came from San Diego Times Union, Burlington County Times (NJ), The Advocate (CT), The Columbus Dispatch (OH), and Nikkei, the Japanese financial daily. Even a new music video, Walkietalkie Man, is filled with yarn.

Meanwhile, Mary is planning the 2004 Knit-Out & Crochet event which will return to New York's Union Square Park Oct. 3, with a nice plug from Woman's Day in its Sept.14th issue. The Washington, DC Knit-Out is Sept. 19 and the LA Knit-Out is still TBA..

Wouldn't it be nice if we had comparable groups, such as the Painting Council of America, or the Needlework Council of America?

NEW COLUMNS THIS ISSUE

Tech Topics. Learn how Google can change your business – much more so than you might think.

Scene & Heard. Design pro Ellie Joos toured the New York Textiles Show and reports on themes and trends.

Kate's Collage. Sometimes you make your employees sick. Here's why.

(Note: If you visit one of the columns mentioned above and it appears to be an "old" column, click the "Refresh" or "Reload" button on your browser.)

NEW FEATURE: TAKE THE CLN POLL!

CLN has added new polling software to the site that allows you to vote on various industry issues. It will work like this: in each issue we'll pose a question and a link. Click on the link and it will take you to one or more multiple-choice questions. You vote and then can see the up-to-date tally. The final results will be reported in a future issue.. You can only vote once, it's completely confidential, and the results are not scientific – but it should be interesting!

This issue's question: If the Presidential election were held today, for whom would you vote? Choose from George W. Bush, John Kerry, Ralph Nader, and Other. (We'll repeat the question just prior to the election to see how much the voting changed.) To vote, click HERE.

FIRST QUARTER STOCK REPORT, PT. I

Our industry's public retailers and the Dow went in opposite directions in the first quarter. The stocks comprising CLN's Retail Index rose a solid 19.0% from Dec. 31 to Mar. 31, while the Dow slipped 0.9%. (Both figures are exclusive of dividends.)

A.C. Moore led the way, up 39.7%. Jo-Ann's was a close second, rising 37.5%. Rag Shops, which announced hiring a company to pursue various options, including selling, was third at 31.1%. Wal-Mart rose 12.7%; Michaels increased 10.0%; and Hancock was up 9.7%.

Not all retail sectors performed as well. Target rose 17.3%, but Duckwall-ALCO fell 7.0% and ShopKo dropped 4.1%.

Industry-related publishers went in slightly different directions, too. Meredith rose 3.6% while Primedia slipped 4.6%.

Martha Stewart's stock rose 11.7% in the first quarter, which would somehow indicate that being found guilty of four felony counts is apparently good for stock prices.

FIRST QUARTER STOCK REPORT, PT. II

Top execs and company board members often receive stock options as part of their compensation packages. Options allow an exec to buy company stock at a pre-determined price. If the exec can increase the value of the stock, he can then exercise his option to buy at the lower set price and sell at the current price. This is a common practice designed to protect shareholders' investments and often results in large profits for execs at profitable companies.

Federal law requires execs and directors of public companies to report each time they exercise options (buy stock at a predetermined price) and sell stock, either directly or indirectly. The following execs sold company stock during the first quarter of 2004:

Michaels: Sam Wyly, 165,991 shares, $7,471,052 ... Michael Rouleau, 80,000 shares, $3,833,804 ... Charles Wyly, 79,795 shares, $3,581,199 ... Richard Hanlon, 6,100 shares, $268,522.

A.C.Moore: Jack and Patricia Parker , 183,000 shares, $4,126,285 each.

Hancock: Jack Busby, 3,500 shares, $58,310.

Jo-Ann's: Alan Rosskamm, 2,500 shares, $66,950.

Wal-Mart: Lee Scott, 84,600 shares, $4,970,428 ... David Glass, 38,327 shares, $2,302,000 ... John Menzer, 34,039 shares, $2,046,595 ... Michael Duke, 17,587 shares, $1,057,588 ... Jack Shewmaker, 25,000 shares, $1,496,250 ... Tom Coughlin, 17,146 shares, $1,016,306.

Federal law requires such public disclosures so shareholders can learn if a company's leaders are "bailing out." However, there are numerous reasons why an exec might sell some of his stock – taxes, other investments, re-adjusting his portfolio, etc., and in the above cases, almost all of the execs still own thousands of shares.

JANLYNN ACQUIRES SANOOK PAPER

Janlynn continues to branch out. Once known strictly for its needlework kits, the company unveiled an extensive scrapbook line, Moments 'n Memories, at the HIA show in February and now has acquired Sanook Paper Co. Terms were not disclosed.

"By adding the Sanook brand to the base of products already found in Janlynn’s Moments ‘n Memories collection, we can now offer the scrapbook industry an exciting, full-line assortment," said President/CEO John Kozub.

Sanook specializes in the design and importing of milled and handmade mulberry paper and papercraft accessories. Mulberry paper, also known as saa paper, is an environmentally friendly, acid-free, lignin-free, handmade paper produced only in remote villages of Northern Thailand. "Our production operation base in Thailand will allow Janlynn greater access to the highest quality hand made paper products," said Sanook CEO Tad Lague.

The Sanook product line includes 12"x 12" sheets of handmade and milled mulberry paper, paper combination packs, scrapbooking page sets, mulberry diecut shapes, and a variety of handmade mulberry paper 3-D leaves and flowers. To learn more, visit www.sanookpaper.com. For more about Janlynn, visit www.janlynn.com.

Beginning May 1, all Sanook products will be shipped from Janlynn’s Chicopee, MA facility. The company plans to feature an entirely new line of scrapbook and papercraft products at the July ACCI show and the September Memory Trends show.

Among the other actions taken by John in recent years: Announced an exclusive partnership with Kooler Design Studio, a premier needlework design firm (Mar. 2003) ... Introduced the Paint Pottery line of ceramic, ready-to-paint kits (Jan., 2003) ... Moved the Janlynn facilities to a modern building in ....... (Dec. 2002) ... Acquired the kit and accessories divisions from Leisure Arts (Jan. 2002) ... Acquired the American Design Group, manufacturer of printed and blank fashion apparel and accessories (Oct. 2001) ... Signed a license agreement with Gary Patterson for a line of cross-stitch kits, joining other Designs by Gloria & Pat kit licenses Precious Moments, Cherished Teddies, Raggedy Ann and Andy , and Sesame Street (July 2001) ... Expanded the Cre8 ComputerCrafts line (Dec. 2000) ... Introduced Driveway Designs, a sidewalk chalk activity kit.

LOEW-CORNELL: AN AMERICAN SUCCESS STORY

Loew-Cornell has been acquired by Jarden Corp. for an undisclosed price. In conjunction with the transaction, Michael Cornell was named President of Loew-Cornell replacing his father, Alan, who has retired.

"We are excited to join the Jarden family. This combination will allow us to take advantage of numerous strategic opportunities for growth and development, building upon our solid foundation as a market leader," said Michael Cornell.

The Loew-Cornell story is a great American success story. Alan's parents, Ernest and Frida, fled to Holland from their home in Germany in 1937. They hid from the Nazis, much like Anne Frank, from 1941 until the end of the war in 1945, and came to New York in 1947.

There Ernest teamed up with a relative, Sam Loew, who was himself a Holocaust survivor. Sam sold brushes in New York City, and Ernest expanded the business into Long Island and New Jersey. The company grew from there. Alan joined the company and became president in 1986. Sam, Ernest, and Rita have passed away, leaving behind a remarkable legacy.

Jarden is a publicly traded company (NYSE: JAH) which produces a wide variety of products for the home. Its brand names include Forster, Ball, Bernardin, Crawford, Diamond, and others. Jarden is a market leader in various consumer household categories.

Jarden had been in negotiations to acquire Dixon Ticonderoga, the well known pencil manufacturer, but talks broke off last week.

Loew-Cornell is primarily known for its artist brushes, tools, and accessories, but has expanded its product offerings to more than 2000 items under the brand names Loew-Cornell, American Painter, Arttec, and Contemporary Crafts. For the fiscal year ended Dec. 31, Jarden's sales rose 60% to $587.3 million.

For more info, email loew-cornell@loew-cornell.com or visit www.loew-cornell.com.

SCRAPBOOKING & HOME RETAILERS/CONSULTANTS

ScrapBiz is a new company designed to help people start their own home-based business selling scrapbook supplies – and has already raised the ire of some retailers. Essentially founder Kim Guymon is selling a start-up guide for home retailers/consultants.

An excerpt from the FAQ section of the ScrapBiz website: "Just like a small scrapbooking store, [ScrapBiz consultants] buy products at wholesale prices and then resell them at retail prices. Our members are doing more than just consulting, though. They run the full spectrum of the industry from e-tailing, to brick and mortar stores, to planning crops and events, to developing products, to wholesaling their own products. We are a microcosm of the total scrapbook business community - most of us just run our businesses from our homes."

The site lists a number of well-known scrapbook and stamp companies involved in the program. "Probably the BIGGEST advantage [for vendors], though, "is the opportunity to have your product demonstrated and put into the hands of potential buyers," the website says.

A new retail group, the National Independent Scrapbook Store Assn., circulated a letter at the HIA show which prompted ScrapBiz founder Kim Guymon to talk to the Federal Trade Commission. "According to the FTC officer I spoke to, the suggestion by a certain group of businesses (who stand to benefit from such an arrangement) that wholesalers not sell to another group of competitive businesses IS an illegal attempt to restrain free trade...."

Guymon reports that more than 250 women have signed up for the program. For more info, visit www.scrapbiz.com or call 425-750-6677.

BLUMENTHAL FORMS NEW DIVISION

Blumenthal Lansing has created a new division, Blumenthal Crafts, to develop creative products for the craft and quilting markets. This new division encompasses product lines from the former Westwater Industries division, including paint brushes, canvas and jute tote bags, and Pawz teddy bears and clothing.

According to Blumenthal's Sr. VP of Sales/Marketing Gerry Rogers, "This new division benefits from the recognized company name of Blumenthal Lansing in its many years in the home sewing and craft industry."

Blumenthal Lansing has manufactured and distributed buttons, buckles, appliques, and related products for the apparel, sewing, and craft markets for 125+ years. Brand names include Favorite Findings, La Mode, La Petite, Le Bouton, and Streamline. For more info, call Gerry at 800-448-9749, x 306.

PROTECTING YOUR WEBSITE

The following advice is from Debba Haupert of BoBella Marketing & Creative Solutions:

Google Yourself. Periodically search for your corporate name and brands online. Monitor where you are listed, make sure the competition doesn’t refer to your product on their sites, and, heaven forbid, find out if an angry consumer has written a poor review of your company/product on the web.

Be a Geek. Want to impress your Programmer? Ask him/her about your meta tags. Meta tags and descriptions are key words/statements included in your web site code to tell Search Engines who you are. Programmers can hide these, but for most sites, you can easily see them. Look at your code (and your competitors’!) to see the key words.

It is unethical for companies to list competitors and other brand names in their code – but some have done this. (For example, consider if Pepsi included "Coke" in their key words. Anyone searching for Coke could be referred to Pepsi.com!) By looking at their code, I was able to alert a craft manufacturer that one of their "partner sites" was using sexual terms in their code to increase traffic! Not necessarily a site you should want linked to yours.

To look at the code (using a PC), go to the web pages and click VIEW, then SOURCE. Meta information is generally in the first 10-20 lines of code. www.searchenginewatch.com is a great resource for information on meta tags and promoting your web site.

News Alert. Want to know when your company (or your competitor!) is mentioned in an online news article? Google provides a free news alert service that sends you an email daily or as it happens. Just enter your info at http://www.google.com/newsalerts?hl=en.

Note: BoBella Marketing and Creative Solutions provides marketing, product development, and design services. Her book, The New Book of Image Transfer, published by Lark Books, will be released in May. Debba has represented vendors on Carol Duvall, QVC, and A.C. Moore videos and developed products sold in Michaels and Hobby Lobby. For more info, visit www.bobella.com or email debba@bobella.com, or call 513-533-0793.

MORE PERSONNEL CHANGES AT MICHAELS

Wayne Stockton resigned as VP of Merchandising for floral, seasonal, garden, and wedding.

Until a replacement is named, Greg Sandfort, Exec VP of Merchandising, will have direct responsibility for floral, seasonal, and garden. Reporting to him are Ami Hutchings, Beth Raley, Gwen Edwards, Laura Sturm, Brigid English, and Celeste Morales.

Merchandising VP Sherry Lay oversees frames, candles, bakeware, books, art, and wedding. Her staff includes Susan Watson, Donna Griffith, Meredith McEwen, Rich Gartmann, Michele Orr, Kristin Mense, Sandy Stewart, and LoAnn Campbell.

Merchandising VP Eric Dickenson's responsibilities are wood, yarn, general crafts, party, kids, and scrapbooking. Reporting to him are Jay Beckman, Kathy Lacks, Sue Barnhill, Patsy Toth, David Beadle, David Mitchell, Courtney Landry, and Jessica Noble.

CEO Michael Rouleau also announced the promotion of Mary Kuniski to VP for Vendor Relations and Teri Williams to VP for Tax.

SO, HOW MANY INDEPENDENTS ARE THERE?

CLN is often asked this question, and has no concrete answer. Here's why:

1. The answer depends on the definition of "crafts." There are "craft" stores; then there are also stores devoted specifically to one category – knitting/crochet, cross stitch, beading, scrapbooking, quilting, art materials, stamping, paper, florals, and sewing.

2. Then there's the definition of "independent." CLN knows of at least three operations with 5-15 stores whose owners are adamant that they are NOT chains.

3. There are independent stores that aren't "our" stores, but sell bits and pieces of "our" products -- variety, drug, gift, stationery, book, photography, and toy stores.

4. There are independently owned franchise stores – Ben Franklins. Some are all-crafts, but some are craft/variety.

Meanwhile, so many small independents arrive on the scene while many others are departing, so if it were possible to publish a number today, that number would be wrong tomorrow. The overall number is irrelevant anyway because no manufacturer makes a product that would be sold by all these stores.

EMAIL: A VENDOR THANKS HOBBY LOBBY

Note: The following is a letter that had been sent to David Green at Hobby Lobby. When the vendor read the previous issue of CLN with vendors' comments about HL, he sent a copy of his letter to us, but asked to remain anonymous.

I have been trying to get new product into a couple of chains this season, and the strain and sweat and complication and difficulty and aggravation of it all makes me realize how nice it is to work directly with Hobby Lobby.

The way you add and merchandise product in your area makes so much sense to us, and working with you has always been easy and straightforward.

You buy the product from us at a fair price and then assume the risk of selling it and making a profit. That’s exactly what we do. We manufacture our product at a fair cost and take the risk of selling it for a profit.

Some of these chains complicate matters so much, and toss around so many percentages, that it’s impossible to TRACK if you’re making a profit, let alone actually MAKE one.

I think others could learn from looking at how Hobby Lobby operates. I’d like to think HL and its employees and customers profit on many levels as a result of how you do business. We just wanted to tell you how much we appreciate working with you. – Name withheld

RANDOM NOTES, RANDOM THOUGHTS

1. When Saturday Night Live began broadcasting, Spanish dictator Francisco Franco had just died. And each week during the "News" portion of the show, the announcer would say, "And Francisco Franco is still dead."

I feel that way, reporting to you that, yes, the ACCI/HIA merger is still not completely finished, as the lawyers performing the due diligence are taking their own sweet time. For more info, email HIA Exec. Dir. Steve Berger at steve@hobby.org.

2. Kmart says sales of its Martha Stewart lines have not been hurt by her four felony convictions, but she's in a tricky position now. Judges and sentencing/probation officers like to hear some contrition from convicted felons. But on her website after the verdict was announced she said, "I am obviously distressed ...but I continue to take comfort in knowing that I have done nothing wrong." Her lawyer quickly had that comment deleted from the site.

MISCELLANEOUS NEWS

ECONOMY. The good news: tax refunds mean consumers have more money in their pockets to spend on our products. The bad news: they're spending it on gas.

TV. Contrary to rumors, Carol Duvall will be back! HGTV is not cancelling the show, and has contracted for another series of 65 shows, and then another 24 – all filmed this year.

ACCI. Advance registration for the July 16-18 show begins today. The popular Retail Summit has been expanded to six seminars beginning July 15, and there will be 15 Mega (4-hour) workshops and 60 technique classes. Also returning by popular demand will be the House That Crafts Built in conjunction with the Society of Craft Designers. Class schedules, descriptions, and detailed info is available at www.accicrafts.org. Exhibit and attendee info is also available via email, accishow@offinger.com, or by calling 888-360-2224 or 740-452-4541. Advance registration ends June 18. Booth space is still available – the # of exhibitors is up 6% compared to a year ago, and the # of booths is up 15%.

HOME DEC. Laurie Smith, the designer star of cable's Trading Spaces, will create several product lines, including a children's line, for Hancock. "I have been a Hancock Fabrics customer since I was a child...," said Smith. "I also love a good buy; Hancock helps me prove that good design is about ideas and style, not necessarily spending a lot of money." Hancock COO Jamie Austin said, "[Smith] understands how fabric can transform a room.... Hancock Fabrics has been steadily increasing home decorating products as a percentage of our mix. Our exclusive Laurie Smith line will diversify our offerings in a high-growth segment that appeals to both sewing and non-sewing customers." The first lines will be in stores early next year.

SCRAPBOOKS. The number of attendees and exhibitors for the Las Vegas Memories Expo 2004 was down, but the ratio of attendees to exhibitors was up, so the vendors were happy. This could be a sign that the growing number of consumers shows is dividing the pie – which is still growing, we think – into smaller pieces. The Chicago Expo was held this past weekend. Future Expos are scheduled for April 30-May 1, in New Jersey; and Oct. 7-9 in Orlando. For exhibit/attendee info, email memories@offinger.com, call 740-452-4541, or visit www.memoriesexpo.com.

WAL-MART. There will be a "New Supplier Fair" May 12-13 in Bentonville, for manufacturers who are not currently selling Wal-Mart. For info, call Jim Corbin at 479-936-5160, email jcorbin@nwacc.edu, or visit www.nwacc.edu/scwt/fair/.

YARN. Barnes & Noble is currently selling yarn kits called Knit Kits. There are kits for scarves, afghans, etc., which include the yarn, needles, and instructions.

CANDLES. The U.S. Dept. of Commerce ordered a 95.95% duty margin on petroleum wax candles from China. The National Candle Assn. had petitioned the action, claiming China's dumping had caused the price of Chinese candles to fall from $1.52 to $0.92, which allowed China to quadruple its sales. The duty affects Chinese scented and unscented dinner candles (tapers, spirals, and straight-sided), plus rounds, columns, votives, wax-filled containers, and pillars. It does not cover birthday and novelty candles, Gifts & Decorative Accessories reported.

HISTORY. HIA is looking for more emails from members telling how their business started. for a new feature, "Share Your History with the Industry," to be published in future issues of the Horizons newsletter. Email your history to Don Meyer at dmeyer@hobby.org.

NEEDLEWORK. Jeanette Crews Designs' March releases have been posted on the website at www.jeanettecrews.com/results.cfm?SubCategory=101.

DIVIDENDS. The Michaels board approved a 20% increase in the company's quarterly cash dividend, from $0.10 to $0.12/share, payable Apr. 30 to stockholders of record Apr. 15.

CONDOLENCES. Our very best wishes to the family of Ron Gelb, former owner of Inkadinkado, who passed away last month.

YARN. Richard Brown of Spinrite was elected Chair of the Craft Yarn Council of America. He currently also serves on the HIA board of directors.

FLORAL. The Teters division of Decorative Concepts established a new sales unit, Direct Marketing Group (DMG), designed to assist Teters’ field sales reps and develop new customers through direct mail and telesales efforts. Scott Frerichs directs the new group which includes Christy Sims and Jon Dennis. "This new unit holds unlimited possibilities for our current customers," says Frerichs, "but we are more excited about the opportunity that it provides for our under-served markets - the independent floral retailers and wholesalers."

ROLODEX. JW etc. has a new facility and address: 11972 Hertz St, Moorpark, CA 93021. Call 805-529-9500; fax 805-529-9576.

STOCK. Merrill Lynch downgraded a number of retailers, including Wal-Mart, Target, and two dollar-store chains to Neutral from Buy.

PEOPLE. Industry veteran Jim Tierney is Director of Marketing and Sales for the Hearty Clay and Mountain Ideas companies ... PaperKuts' Editor Angie Randall will be writing a column for REAL magazine, a women's service publication.

BUSINESS PROFILE

CLN will often profile one company per issue, which will remain online for at least a year. A Profile is a perfect way for a new company to let itself be known to the industry, or for an established company to enhance its reputation by showing the industry its history, diversity of products, personnel, etc. For more information on how your company can be profiled, call Mike Hartnett at 309-925-5593 or email mike@clnonline.com.

THE CREATIVE NETWORK: JOB OPENINGS

To see the latest job openings listed by the Creative Network, click on Jobs in the left-hand column.

THE CLN RETAIL INDEX

A. C. Moore (ACMR). Last*: 27.16 ... Change**: +4.41
Hancock Fabrics (HKF). Last*: 16.00 ... Change**: -0.85
Jo-Ann Stores (JAS). Last*: 29.32 ... Change**: +2.44
Michaels (MIK). Last*: 48.80 ... Change**: -3.74
Rag Shops (RAGS). Last*: 3.60 ... Change**: -0.21
Wal-Mart (WMT). Last*: 58.60 ... Change**: -3.14
CLN Retail Index. Last*: 183.48 ... Change**: +3.0%
Dow Jones Index. Last*: 10,470.59 ... Change**: -1.0%

Updated Employee Handbook

Emailed from a subscriber:

To All Employees:

Dress Code. Please dress according to your salary. If we see you wearing $350 Prada sneakers, we assume you are doing well financially and therefore do not need a raise. If you dress poorly, you need to learn to manage your money better, so that you may buy nicer clothes, and therefore you do not need a raise. If you dress just right, you are right where you need to be and therefore you do not need a raise.

Bereavement Leave. This is no excuse for missing work. There is nothing you can do for dead friends, relatives, or co-workers. In rare cases where employee involvement is necessary, the funeral should be scheduled in the late afternoon. We will be glad to allow you to work through your lunch hour and subsequently leave one hour early.

Restroom Use. There is now a strict three-minute time limit in the stalls. At the end of three minutes, an alarm will sound, the toilet paper roll will retract, the stall door will open, and a picture will be taken. After your second offense, your picture will be posted on the company bulletin board under the "Chronic Offenders" category.

Lunch Break. Skinny people get 30 minutes for lunch as they need to eat more, so that they can look healthy. Normal size people get 15 minutes for lunch to get a balanced meal to maintain their average figure. Fat people get 5 minutes for lunch, because that's all the time needed to drink a Slim-Fast.

Thank you for your loyalty to our company. We are here to provide a positive employment experience. Therefore, all questions, comments, concerns, complaints, frustrations, irritations, aggravations, insinuations, allegations, accusations, contemplations, consternation, and input should be directed elsewhere.

Have a nice week!

The Management

REMINDERS

1. For more information on how your business can be the subject of a "Business Profile," call Mike Hartnett at 309-925-5593 or email mike@clnonline.com.

2. If you want a hard-copy of this issue, click on "Printer Friendly version".

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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, April 19.

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