Date: December 20, 2004
Vol. VIII, No. 24

Printer Version

TABLE OF CONTENTS

COMMENTARY: A Holiday Story

Recently the Peoria Journal Star reported on "the Abington Ladies," five women who have been making about 250 lap robes a year for the "old folks" in nursing homes in central Illinois. Oh, and the ladies themselves are 80, 84, 77, 85, and 68.

Groups like this – around the country and the world – use our products to make the world a better place. Ultimately it's why this is a great industry and attracts great people.

And remind us of the true meaning of this season.

Business Wise. It's been a tumultuous year. Mike Hartnett sums up 2004's top stories.

Designing Perspectives. Why do artists create art? The answers in their own words.

"Vinny Da Vendor". A list of 10 practical, simple tips to make the 2005 CHA Winter Show more effective for exhibitors.

"Benny Da Buyer". In the previous issue in Designing Perspectives, an anonymous Michaels employee/teacher described what she didn't like about the company; in this issue she describes what she likes about her local Michaels.

Note. If you surf to a column and it's an "old" column, click on your "Refresh" or "Reload" button on your browser.

For vendors and retailers: if you haven't yet voted on how the season has – or hasn't – met your expectations, the poll is still open. The poll will continue for another two weeks and the final results reported in the Jan 3 issue of CLN. For the preliminary returns, see below. To vote, click on Industry Polls in the right-hand column or click HERE.

Votes in the CLN poll report they're not having that great a holiday selling season. A whopping 51.4% of the retailers and vendors said the season has been below their expectations. Those who claimed the season has been better than expected comprised only 5.7%; the remaining 42.9% reported the season's sales were as expected. For more on the season thus far, see below.

Hancock hired well known industry veteran Jane Aggers as PresidentCEO and to its board of directors, and named a member of the board Wellford Sanders, Jr. as Non-Executive Chair of the board. They replace Larry Kirk who had previously announced his retirement.

Aggers is best known from her 24-year tenure at Jo-Ann's, finally as Chief Marketing, Merchandising and Supply Chain Officer. Sanders has been a Managing Director with Wachovia Securities since 1997.

Kirk commented, "Jane is admired and respected in our industry and among the ranks of our senior officer team for her creative marketing, merchandising, and management abilities. I've known her for several years, and I am pleased to be turning over the reins at Hancock to such capable hands."

Norm and Dianna Carlson have sold Crafter's Home to Shane Cullimore, who has been working with the Carlsons for about a year. He had been Director of Sales for Making Memories. Norm said Shane "has been involved in the scrapbooking industry for several years and has some great ideas about making Crafters Home the voice in the craft industry for the independent specialty retailer."

Charles Craft is exiting the kitchen textile business which will result in the closure of one plant and a reduction in the Laurinberg NC plant where cross stitch fabric is manufactured. An article in the Laurinberg Exchange implied that the Laurinberg plant would be closed, causing rumors throughout the industry that the company was exiting the cross stitch business. Not true.

"The restructuring of our company will enable us to channel more of our efforts on our core competencies and make our cross stitch business even stronger than before," said President Clifton Buie.

The closure was announced about two weeks before tariffs on textile imports from China are to be eliminated as part of an agreement with the World Trade Organization. And while China announced in would impose a tax on exports (see "Imports" in Miscellaneous News), the writing was on the wall.

Charles Craft was the last U.S. manufacturer of kitchen towels and other textiles. A company spokesperson told the Laurinberg Exchange, "The closing was the direct result of our inability to compete against very tough and very cheap imports."

The closing date is Feb. 12, the Exchange reported.

The long awaited debut of Purple Tree has arrived. It is a traditional home-party-plan operation, but markets a remarkably wide variety of types of kits – jewelrymaking, framing, cardmaking, scrapbooking, home dec, clockmaking, lamp decorating, pursemaking, and knitting.

Party attendees are given a make-it/take-it that demonstrates basic craft techniques, then are sold the kits.

The projects were created by Craft Marketing Connections, led by Cindy Groom Harry. "This Purple Tree Plan is a huge feeding program for craft retailers," Cindy says. "Once people who have always claimed they 'aren't creative,' discover that they are – when given the right instruction and materials – they'll look for more. Of course we want them returning to Purple Tree because of the continually changing product mix (we're just completing the Spring '05 line!), but we fully expect that they will develop advanced interests in certain areas that can best be served by craft retailers."

More information and step-by-step instructions for the kits are available at www.purpletree.com.

The first three weekends of the holiday selling season have been generally lackluster, causing numerous retailers, including Wal-Mart, to slash prices. Sales at luxury stores are doing well, Forbes reported, but for "the rest of the merchants, sales were even with last year or rose a modest single-digit percentage from a year ago."

Marshal Cohen, retail analyst at NPD Group told the Associated Press, "For the luxury market, it feels like Christmas, but to everybody else – the mid-level and lower-end customer – it is not going to be a great Christmas."

An example of retail desperation: Bed, Bath & Beyond will accept coupons from craft stores Michaels and AC Moore for comparable items such as flower arrangements and picture frames, the Baltimore Sun reported..

One reason for the disappointing sales: the Associated Press reported that gift card sales are running as much as 40% higher than last year, but those sales aren't counted until the cards are used. (Comment: Many husbands of scrapbookers would probably like to buy something appropriate, but have no idea which products to buy. A gift card could be the perfect solution.)

The Craft & Hobby Assn. has been testing an outdoor billboard ad campaign. The test was implemented in Portland and Richmond at various times from May through September. Five creative executions, rotated at random among over 100 locations, portrayed various crafting activities and used the CHA tagline "Crafts. Discover life’s little pleasures." The URL for CHA's consumer website, www.i-craft.com, was included.

Results were measured in pre-and post-test phone surveys compared with identical surveys implemented nationally and in two control markets (San Diego and Greensboro) with similar demographics.

Results are encouraging, so there will be more tests in 2005. There was a 6% increase in awareness vs. the pre-test survey, and a 3% increase vs. the control markets. Increased participation in six of eight categories – seasonal/home dec, floral arranging, knitting & needlecrafts, decorative painting, beading/jewelrymaking, and woodworking – was noted, plus increased intention to shop at craft stores. In addition, web traffic at the website was up 90%.

CHA WINTER SHOW DEADLINES

The Winter Show may be Feb. 12-15, but some of the deadlines are fast approaching:

1. Online registration for the Atlanta show is now available. To receive tickets via mail for workshops and seminars, registration should be completed by Dec. 31. Pre-registration is open until Feb. 4, but if you register after Dec. 31, you'll have to pick up your badge/tickets at the convention center. To register visit www.chashow.org or call 201-794-1133.

2. CHA has launched a new Product Spotlight program to promote trends, products, and demos. Up to 250 craft and hobby industry buyers will attend. To learn more and download the registration form, visit www.chashow.org or call Isabella DeCesare at 201-794-1133, ext. 218. The deadline is Dec. 31.

3. The annual CHA Foundation Charity Golf Tournament will be held Thurs., Feb. 10 at The Heritage Golf Club in Norcross. There are various sponsorship levels available, from $125 for individual golfers to $10,000 for Presenting Sponsors. The deadline for registration and sponsorships is Jan. 14.

The floral and home accessories categories have been relatively, uh, "quiet" recently, but Decorative Concepts Inc. (DCI) is doing something about it. Armed with a new $60 million credit facility, the parent of Aldik, Teters, and other home accent and decorative outdoor product divisions, has launched a variety of efforts to fuel renewed growth in the categories.

There have been personnel changes. Larry Gold returned as CEO of the Aldik division, joining President Mike Stadlberger. President Mark Johnson and Head Merchant Rick Looker continue to lead the Teters division. New Creative hired Jan Slusher for key accounts; Kathi Lentzsch, elected to the DCI board in February, is the Chief Merchandising Officer; and Steve Stolz is CFO. A new comprehensive employee training program is underway, as well.

Teters has developed a completely new line consisting of approximately 250 individual stem SKU’s specifically for the dollar store market. Aldik is revamping its showrooms to display each line in its own environment. The New Creative division will launch hundreds of new SKU's in six product lines – Summer Picnic, Geo Flower, Casual Cove, Gardener’s Journal, Serene Garden, and Earth & Fire – at the Atlanta Gift Show in January.

The Craft & Hobby Assn. Summer Show (formerly the ACCI Show), 15-17 in Rosemont, IL, is now accepting booth reservations. Contracts were mailed to CHA members and to previous ACCI exhibitors. Assignments began Nov. 19, and now are being assigned on a first come, first served basis. Seniority points held by past ACCI exhibitors will be honored in assigning space for the CHA Summer Show. Booth space prices have been reduced.

The deadline for Mega Workshop proposal forms is Dec. 31, and the deadline for technique class applications is Jan. 31. Applications are being processed in the order received, but availability is limited. Info and forms are available at www.chasummershow.com, or by calling 740-452-4541 or emailing chasummershow@offinger.com.

Exhibitor participation is open to CHA members only. Questions regarding membership? Call CHA, 201-794-1133, ext. 213.

(Note: Karen Foster of Karen Foster Designs emailed this suggestion for wholesalers – and it's a good idea for some retailers and manufacturers, too.)

For the last few years, we have donated excess products that we can no longer warehouse to our neighboring school district for teachers to use in their classrooms. The benefit they receive is great because school teachers in our area often have to buy many of their own supplies for art and other projects, or they do without. We receive a nice tax benefit because we are donating to a non-profit organization and are able to write off the products at a higher amount than if we were just removing them from inventory. I had my accountant figure out the financial benefit of hanging on to slow moving items into the next year to just "sell through" them, compared to cleaning house and making room for newer, faster-moving items. Donating the items to a non-profit organization is definitely the better way to go.

The administrators and teachers in our school district have been so excited about this and are very appreciative. Sometimes my children come home from school with projects they have made using our scrapbook products – so I know they are being put to good use.

All we have to do to make this happen is call the school district, and they come over in a truck within a day or two to pick up the palettes. They give us proper paperwork for the accountant at that time. I would recommend that anyone who does this should consult with their tax accountant about it.

A scrapbook retailer wrote CLN: "Australia still seems to be scrapbooking mad here with new stores opening every month. There is still room for good quality stores, however, because a lot of the newer ones are either small sole operators or don't carry a large range. I think eventually some of the shine might dull from the market, and those who are just following the latest fad will drop off. But there will still be a very strong undercurrent of people who genuinely enjoy the craft and will keep it alive for many years to come.

"If it is starting to slow down in the U.S., then it may do so here sometime in the next year or so as well. That's not necessarily a bad thing, though, as it will stop the market from becoming over-saturated. Perhaps this is what's happening in the U.S.? I guess that will mean that there will be a culling of the shops that offer these products." – Lisa McManus

1. The winter trade show season will be upon us very soon with all the new products – and the necessity of publicizing them. To have your products mentioned in CLN, here's the deal: if your new products are on your website, let me know; I'll include a very brief description and a link to the new products' page.

2. The PBS Frontline documentary on Wal-Mart really didn't contain anything we didn't already know: Wal-Mart pressures vendors to move overseas so they can offer lower prices. The result, of course is lost U.S. jobs. A couple of thoughts:

Wal-Mart is blamed for this rather than Kmart because Wal-Mart is so effective at what it does. Aren't most large retailers doing the same thing?

If there's a culprit in all this, it's the consumer, not Wal-Mart. We want everything to be as cheap as possible. That way, we can buy more stuff. Wal-Mart is merely catering to the consumer. So we buy cheaply, then complain about the loss of U.S. jobs.

DESIGNERS. Members of the Society of Craft Designers voted to change the SCD name to the Society of Creative Designers. "The name change was a natural progression for SCD," President Barbie Vasek explained. "Our designers are involved in traditional crafts, but many are involved in other activities, as well – from scrapbooking and quilting to home decor and sewing. We felt that this new name better represented today’s SCD members’ participation in the creative industries as a whole." The next annual SCD Conference is Oct. 5-7 in Atlanta. For info, visit www.craftdesigners.org or call 740-452-4541.

CHANGES. Effective next month, Creativity Inc. will move product development, marketing, graphic arts, purchasing, and certain sales functions for its DMD division to its Van Nuys, CA corporate office. Jerry Payton, Exec. VP, Mergers and Acquisitions will continue as President of the DMD operations in Springdale, AR. DMD products will continue to be sold under the company brand with the appropriate logo, such as Paper Reflections, as is the case with the company's other divisions, Crop in Style, Blue Moon Beads, and Westrim Crafts.

PAINTING. More than 300 Society of Decorative Painters members painted ornaments for display on the official White House Christmas tree for the 2004 holiday theme, "A Season of Merriment and Melody." SDP members from 50 states participated and each artist received an invitation from Mrs. Laura Bush for a White House holiday reception on Dec 1.

CLOSEOUTS. Sam Kurc, a distributor in Australia, is looking to buy closeouts of 12x12 scrapbook papers. Email Sam at riot@mira.net.

MAGAZINES. CLN hears that Michaels has ceased involvement with Michaels Create! magazine. Michaels owns the name and reportedly will consider another magazine in the future ... F & W Publishing, the parent Memory Makers, will debut a new bi-monthly paper-art magazine at the CHA Winter Show and on newsstands on February. Jane Beard, former editor of Michaels Create!, is the editor. Contact her at jane.beard@fwpubs.com.

LEISURE ARTS. Promoted Tom Siebenmorgen to COO and Pam Stebbins to VP of Sales/Marketing for crafts. Management of retail book sales will move to Oxmoor House. Rick Barton, Bob Humphrey, and Ray Shelgosh are leaving Leisure Arts at the end of the year.

BEADS. Offinger Management's Bead & Art Glass Fest will debut in Orlando. Classes begin Sept. 29, a "Trade Buyers Only" day will be Sept. 30, and doors will open to the public Oct. 1 and 2. Daily admission will be $10. For info on exhibiting, teaching a class, or sponsoring an event, call Mary Walter at 740-452-4541, ext. 3312, or email mwalter@offinger.com.

PHOTOS. Apple has unveiled iPod Photo, which can hold photos like iPods contain music. It's only in the U.K. at the moment, but it's coming here. Visit www.apple.com/uk/ipodphoto ... Best Buy now has an online service that allows consumers upload digital images to the company's website and have them printed. The prints can be picked up in store in three days or mailed to the customer. This is similar to programs by Wal-Mart and Ritz Camera. According to Media Digest, 6.6% of digital-camera owners who make prints now use an online-to-store service similar to Best Buy's.

PEOPLE. Industry veteran Gwen Edwards has accepted a position at Prym Dritz ... CHA named John Tomchek to the newly formed position of VP of Marketing, Member Services & Education ... Tom Coughlin will retire as Vice Chair of Wal-Mart. Coughlin was responsible for the U.S. operations of Wal-Mart Discount Stores, Supercenters, etc. His duties will be split up among several current Wal-Mart exes ... Blumenthal Lansing named Laura Mooney VP for product development ... Anita Collins, Dire. Member Programs and Services and Don Meyer, Dir. of Marketing have left CHA.

BOOKS. We've learned that today's issue of Booklist will spotlight "Crafts and Hobbies." Four of the 10 are published by Lark and two are by Sterling. One of the Top Ten is Lark's The New Book of Image Transfer by Debba Haupert ... Design Originals' best sellers for 2004: Cigar Box Purses (#5222) ... Red Hats (#5226) ... Collage Cards (#5218) ... Altered Books 101 (#5167) ... Bead Basics (#3367).

ARCHIVER'S. Two more stores opened in November – Indianapolis and Chesterfield, MO – bringing the store count to 28. Sr. VP Brian Olmstead told the Minneapolis Star Tribune last summer the chain expects to open about 15 stores in 2005, Fun Facts Publishing reported.

TV. The sixth series of Scrapbook Memories uplinks to PBS stations Jan. 16. Sponsors include Fiskars, Epson, 3M, Memory Makers magazine, Die Cuts with a View, Royal & Langnickel Brush, C-Thru Ruler, Paper Pizazz, Heritage Handcrafts, The Vintage Workshop, Polyform, Bound & D/Termined, Craft-T, Generations/Cardinal, Memories in Uniform, Ellison, Jacquard, Junkitz, American Art Clay, ScrapInsanity.com, Scrap N Cube, and Coldwater Creek. Hosts are Julie McGuffee, Michele Gerbrandt, and Beth Madland.

CHA. Dates for future Summer (formerly ACCI) shows: July 15-17, 2005 ... July 21-23, 2006 ... July 20-22, 2007. Education starts the day preceding each show.

GARDEN RIDGE. Reported a profit before bankruptcy costs in November due to better margins, despite a 2.8% decline in same-store sales, Retail Merchandiser reported.

STOCK. Goldman Sachs downgraded Wal-Mart to In-line from Outperform, but AG Edwards maintained its Buy rating ... Wachovia Securities maintain its Outperform rating on A.C. Moore but raised its earning-per-share estimates for the quarter and year ... Hancock declared a cash dividend of 12 cents/share on the outstanding common shares, payable Jan. 15 to shareholders of record Jan. 1.

NEEDLEWORK. The Nashville Needlework Market is Feb.10-13. Visit www.stitching.org, call 706-663-0140, or email nmitradesh@aol.com.

QUOTATION. Hancock CEO Larry Kirk: "The significant investments that we have made in capital expenditures for distribution and systems' infrastructure, $30 million in the last 12 months and $45 million in the last two years, have been the primary cause for the increase in debt to $49 million in mid-October. In the eight weeks since then, seasonal cash flows have allowed us to reduce debt to $36 million. Debt could recede to as low as $25 million in January, or about 16% of total capitalization. We are currently borrowing at an interest rate of 3.6%. As we look ahead to 2005, our capital expenditures should return to a more normal range of $8-$10 million."

ACQUISITION. Steve Graham, owner of Toner Plastics, bought Lunenburg, MA-based Gitto/Global, a bankrupt plastics company, for $8.97 million. Graham told the local newspaper, the Sentinel & Enterprise, he had no plans to move or merge Gitto/Global with Toner. The closing was to have occurred at CLN's press time.

CONDOLENCES. To the family of Edna Nielsen Clapper, founding editor of Pack-O-Fun magazine and Clapper Communications. Edna, with her late husband, John, proved to the industry that kids' crafts was an important, viable category. The Clappers received the Lifetime Achievement award from the Hobby Industry Assn. in 2001 ... And CLN learned of the death of Jack Leonard earlier this year. Jack started Craftsman Supply House, one of the industry's first distributors.

SCRAPBOOKING. The category is abuzz with rumors about a new company, Coterie Scrapbooking, led by Creating Keepsakes' Lisa Bearnson and Becky Higgins. Fun Facts Publishing reports www.coteriescrapbooking.com simply has a logo, "Coterie With Lisa and Becky" and "Coming Soon." Fun Facts says The domain name is registered to Mark Seastrand, former publisher of Creating Keepsakes and Simply Scrapbooking

KUDOS. To DieCuts with a View, named #228 to Inc. magazine's INC 500 (fastest growing small companies). Inc. listed $7.3 million in revenue in 2003 and growth of 648%.

JOB HUNTING. Experienced sales/marketing exec seeking involvement with craft industry company. Extensive experience in strategizing and selling majors, with a particular emphasis on Wal-Mart. If interested, please email Mike Hartnett at mike@clnonline.com.

LOOKING TO HIRE. Kandi Corp. in Clearwater, FL is looking for an individual who can develop and manage a force of sales reps and distributors to expand market penetration. This can be a tele-commuting position. Email Dave Riba: dave@kandicorp.com. Call 727-726-6099.

LOOKING TO HIRE. Walnut Hollow is looking for a sales manager with at least five years of industry experience. Will report to the Dir. of Sales and will be responsible for direct selling to major national accounts and for managing independent rep groups. Relocation required. Up to 50% travel. Send resume/salary history and requirements to Walnut Hollow, Human Resources Manager, 1409 State Rd. 23, Dodgeville, WI 53533.

DOLLS. The Washington Times reports that Cabbage Patch Kids have made a huge resurgence this holiday season. (A shortage of these dolls sparked a huge dollmaking trend in the 1980's.) The line was also nominated as the "Girl Toy of the Year" in the annual Toy Industry Assn.'s Toy of the Year awards program, Playthings reported.

BUSINESS PROFILE

Note: CLN will 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.

To read the latest job openings, click on Jobs in the left-hand column or click HERE.

A. C. Moore (ACMR). Last*: 29.83 ... Change**: +0.83
Hancock Fabrics (HKF). Last*: 9.70 ... Change**: +0.55
Jo-Ann Stores (JAS). Last*: 27.00 ... Change**: +0.11
Michaels (MIK). Last*: 28.65 ... Change**: +1.25
Wal-Mart (WMT). Last*: 52.02 ... Change**: -0.91
CLN Retail Index. Last*: 147.20 ... Change**: +1.3%
Dow Jones Index. Last*: 10,649.92 ... Change**: +0.5%

Continuing the current trend of large-scale mergers and acquisitions, it was announced today at a press conference that Christmas and Hanukkah will merge. An industry source said that the deal had been in the works for about 1300 years.

While details were not available at press time, it is believed that the overhead cost of having 12 days of Christmas and eight days of Hanukkah was becoming prohibitive for both sides. By combining forces, we're told, the world will be able to enjoy consistently high-quality service during the Fifteen Days of Chrismukkah, as the new holiday is being called.

Massive layoffs are expected, with lords a-leaping and maids a-milking being the hardest hit. As part of the conditions of the agreement, the letters on the dreydl, currently in Hebrew, will be replaced by Latin, thus becoming unintelligible to a wider audience.

Also, instead of translating to "A great miracle happened there," the message on the dreydl will be the more generic "Miraculous stuff happens." In exchange, it is believed that Jews will be allowed to use Santa Claus and his vast merchandising resources for buying and delivering their gifts.

One of the sticking points holding up the agreement for at least three hundred years was the question of whether Jewish children could leave milk and cookies for Santa even after having eaten meat for dinner. A breakthrough came last year, when Oreos were finally declared to be Kosher. All sides appeared happy about this.

A spokesman for Christmas, Inc. declined to say whether a takeover of Kwanzaa might not be in the works as well. He merely pointed out that, were it not for the independent existence of Kwanzaa, the merger between Christmas and Chanukah might indeed be seen as an unfair cornering of the holiday market. Fortunately for all concerned, he said, Kwanzaa will help to maintain the competitive balance.

He then closed the press conference by leading all present in a rousing rendition of Oy Vey, All Ye Faithful.

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.

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5. Creative Leisure News is published the first and third Mondays of each month. Your next issue will be Monday, January 3. HAVE A HAPPY, HEALTHY HOLIDAY SEASON AND A GREAT NEW YEAR!

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