Date: December 7, 2009
Vol. XII, No. 23

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TABLE OF CONTENTS

COMMENTARY: DIRECT IMPORTING 

One of the year's major trends is the increase by the chain stores in what is called "direct importing." The goal is to increase margins, something every retailer wants to accomplish. It's a logical, smart thing to do, right? In the short term, probably yes, but long term, maybe not. Let's take this trend to its logical conclusion and consider the law of unintended consequences:

1. Chain X's current vendors have helped it grow and prosper, but if they are eliminated because the chain is doing its own importing, Chain X is on its own. The vendors will move on to other customers, other industries, or shut down completely.

2. Chains currently received substantial revenue from their vendors, thanks to charge-backs, shipping fines, ad allowances, etc. All that will be gone if Chain X is doing its own manufacturing/importing. And forget about guaranteed sales.

3. Collectively, Chain X's vendors have access to hundreds, if not thousands, of designers and new product developers. When they're gone, Chain X will have to rely on its own staff of 20-40 U.S. and Chinese employees. With so much less variety, Chain X's inventory will begin to look the same, no matter the product category.

4. Occasionally a product becomes a huge hit, surprising both retailers and vendors. When that happens, but everything is made in China, how quickly will Chain X get reorders? If the product is made in the U.S. and the manufacturer has access to raw materials, he can ramp up production and ship the item to Chain X much quicker than any Asian factory.

5. If Chain X runs into cash flow problems, as every business does at one time or another, will the Asian factories be as willing to accept later payments or lower the prices?

Mike's Blog. The first trade-sponsored consumer show in Anaheim occurred more than 25 years ago, and it was one of the most significant events in the history of the industry, changing the very nature of the trade association. To read this history lesson, click HERE.

Newsbrief. The Dec. 2 Newsbrief with highlights of the third-quarter reports by Michaels, Jo-Ann, and Hancock – and news that Playboy's Hugh Hefner is, gulp, a scrapbooker.

Kizer & Bender. Think your store gives good customer service? Your opinion doesn't matter; only the customers' judgment is important. Plus, descriptions of K&B three seminars at the upcoming CHA show in Anaheim.

The N Files. A conversation about the state of Professional Crafters between Maria Nerius and Janet Perry of Napa Needlepoint.

(Note: To read the columns, click on the column title; if it's not the column you expected, click on the Reload or Refresh button of your browser.)

The Thanksgiving weekend with its Black Friday and Cyber Monday is over and we're well into the critical holiday selling season. There are numerous reports about how retailers in general fared, but nothing specific about our industry. So, we'll have to create our own report: Retailers, are you happy or disappointed with your store traffic and sales? Vendors, what are you hearing about how well your retail customers are doing? To vote, click on Industry Polls in the right-hand column or click HERE.

The results of CLN's unscientific poll indicate CHA's decision to return the summer show to Rosemont was wise, but the results may offer an ominous threat on the horizon. Almost three-fourths of the voters, 73.6%, said they were very pleased with the decision, and only 3.8% were unhappy with the show's return to the Chicago area.

However, 22.65% said they didn't care one way or another. That could mean they will attend/exhibit at the show no matter where it is, or that they won't attend regardless of the location – Rosemont, Orlando, or elsewhere.

For the third quarter ended Oct. 31, net income rose to $15 million, compared to a $20 million loss a year ago. For the first nine months of the fiscal year, there is a net income of $21 million versus a $70 million net loss a year ago.

CEO John Menzer said, "Our strong focus on execution, including the Halloween season, helped drive improved sales, gross margin, and reduced per-store inventory levels. In addition, a number of categories reset earlier this year continue to perform above expectations, with bakeware, bead and jewelry making, and impulse being our top performing departments. Also, we expanded our operating margin by 150 basis points to 9.0% of sales, driven by strong cost-control efforts and improvement in our gross margin rate."

Net sales for the quarter rose 2.5% to $929 million, and same-store sales rose 1.3%, due to a 4.7% increase in transactions, a 3.5% decrease in average ticket, and a positive 0.1% impact from deferred custom framing revenue. Canadian currency translation positively affected same-store sales for the second quarter by approximately 20 basis points.

Year-to-date, net sales are up 1.5% to $2.588 billion, but same-store sales have decreased 0.5%, due to a 5.1% decrease in average ticket, a 4.7% increase in transactions, and a negative 0.1% impact from deferred custom framing revenue. Canadian currency translation adversely affected same-store sales by approximately 80 basis points.

The quarter's gross margin increased 180 basis points to 37.3%; year-to-date it's up 30 basis points to 36.6%, due to improvements in merchandise margin and lower distribution and freight costs.

Selling, general and administrative expense in the third quarter increased $12 million to $259 million, 27.9% of sales; year-to-date, it decreased $28 million to 28.5% from 30.0%.

Operating income for the quarter increased $16 million to $84 million, 9.0% of sales, from 7.5% a year ago. Year-to-date, operating income was $198 million, 7.6% of sales, versus $143 million, 5.6% of sales.

Interest expense decreased $15 million and $44 million for the quarter and year-to-date respectively, due to a lower average interest rate and lower average debt levels.

Adjusted EBITDA (cash flow) for the third quarter increased 5.4% to $118 million, from $112 million for the same period last year. Year-to-date, adjusted EBITDA was $307 million, 11.9% of sales, versus $282 million, 11.1% of sales.

By the end of the quarter, Michaels' cash balance was $49 million and debt levels declined $272 million to $3.911 billion. A total of $799 million is available under the revolving credit facility. During the quarter, Michaels also made a $5.9 million amortization payment on its Senior Secured Term Loan.

Average inventory per Michaels store, inclusive of distribution centers, was down 5.0% to $971,000.Year to date, capital spending is $26 million – $18 million for real estate activities and $8 million for strategic initiatives and maintenance activities.

Year-to-date, Michaels opened 18 new stores and relocated five Michaels stores and closed nine Aaron Brothers stores. The current store count is 1,027 Michaels stores and 152 Aaron Brothers stores.

The complete earnings report is available at www.michaels.com. To listen to a recording of the conference call Michael execs held after the report was released, visit the website or call 800-642-1687, PIN #79813922.

For the third quarter ended Oct. 31, net income was $24.1 million ($0.90/diluted share), versus $10.2 million ($0.40) a year ago, which included $1.3 million after-tax gain ($0.05), related to the purchase of a portion of the company’s senior subordinated notes. The $0.40 earnings exceeded analysts' expectations by a penny.

As CLN reported, net sales for the quarter rose 6.0% to $509.1 million and same-store sales rose 4.3%. Large-format store's sales rose 8.7% to $272.0 million and same-store sales increased 2.3%. Small-format store's sales increased 3.0% to $228.5 million and same-store sales rose 6.7%. Sales at Joann.com increased 6.2% to $8.6 million. (To read more of Jo-Ann's sales, read the 11/23 issue in the CLN Archives at www.clnonline.com.)

Chair/President/CEO Darrell Webb stated, "We achieved strong sales, margin, and earnings improvement in the third quarter, with our financial results exceeding original expectations. Positive customer response to our core sewing and craft merchandise continues to drive sales growth, while our sourcing, inventory management, and expense control initiatives allowed us to achieve gross margin expansion and expense leverage.

"As a result of our solid financial position and the favorable commercial real estate leasing environment," Webb added, "we plan to increase our new store development and remodeling activity next fiscal year."

For the quarter, gross margins increased approximately 200 basis points to 51.0% due to reduced product costs from global sourcing initiatives, lower clearance levels, and reduced freight costs. Selling, general, and administrative expenses increased 1.3% to $202.0 million; as a percentage of net sales, it improved approximately 190 basis points to 39.7%. Operating profit for the quarter was $41.5 million, versus $17.3 million a year ago.

The cash balance for the quarter improved by $72.9 million to $97.7 million compared to a year ago. Long-term debt was $47.5 million, down $65.2 million. This $138 million improvement in cash, net of debt, was primarily the result of cash generated from operations and improvements in working capital.

During the quarter, the company opened three large-format stores and one small-format store and closed one large-format store and three small-format stores. For fiscal 2010, the company expects to open approximately 20 new stores and close approximately 30 stores. For fiscal 2011, the company expects to open approximately 30 new stores and close approximately 30 stores. The current store count is 228 large-format stores and 531 small-format stores.

The company remodeled 13 stores four of which were transitioned from a small-format to a large-format layout. During the first nine months of the year, the company remodeled 26 stores, five of which were transitioned from a small-format to a large-format layout. The company expects to remodel approximately 30 stores during the year, of which six are expected to transition from a small-format to a large-format layout. For fiscal 2011, the company expects to remodel at least 40 stores during the year.

For the year, the company expects a same-store sales increase of 2.3% - 2.7%; the gross margin rate to improve even more than it has in the first nine months of the year; selling, general, and administrative expenses, as a percentage of net sales, to improve, but to be less than it was for the first nine months; and capital expenditures, net of landlord allowances, to be approximately $30 million. As previously announced, the company expects earnings/diluted share to be $1.95 - $2.05 (excluding any gains on debt purchases).

The complete report is available at www.joann.com and a replay of the exec's conference call with analysts is available by calling 800-642-1687, ID #40533836.

Net sales for the quarter were $72.7 million, up from $70.6 million a year ago, and same-store sales increased 4.0%. Operating income increased $3.6 million as a result of a $4.5 million profit compared to a $0.9 million profit in the previous year’s third quarter.

Net income was $3.0 million ($0.16/share), compared to a net loss of $0.3 million ($0.02) a year ago. EBITDA for the quarter was $6.1 million, an increase of $3.5 million. Inventories have been reduced by $10.0 million compared to the same period last year.

At quarter's end, Hancock had outstanding borrowings under its Revolver of $25 million and outstanding letters of credit of $6 million.

Year-to-date, net sales were $196.4 million compared with $198.2 million a year ago, and same-store sales increased 0.9%. Operating income increased by $8 million. Net loss was $0.1 million ($0.01), compared to a net loss of $16.5 million ($0.87). EBITDA was $9.2 million, an increase of $7.8 million over the same period last fiscal year.

President/CEO Jane Aggers said, "We are beginning to experience meaningful top line improvement in combination with significant operating cost reductions. Our strong quarter and year-to-date results are a testament to the hard work of all of our associates and management team. We are cautiously optimistic that we can continue to execute our business plan throughout the remainder of the year and into 2010."

Gross margin for the quarter was 46.5%, up 350 basis points, due to a 220-basis-point reduction in merchandise cost, a 50-basis-point reduction in freight costs, and an 80-basis point reduction in sourcing and warehousing. Year-to-date, gross margin improved by 210 basis points to 45.8%.

Selling, general, and administrative expenses for the quarter decreased to $28.2 million (38.8% of sales) from $28.3 million (40.1% of sales) in the prior year. Year-to-date, selling, general, and administrative expenses have been reduced by $4.6 million to $82.3 million (41.9% of sales) from $86.9 million (43.9% of sales). Third quarter reductions were driven by increased labor efficiency, reductions in current quarter ad expenses offset by certain incremental retail operating costs.

During the fiscal year, the company opened 3 stores, closed 1, remodeled 5, and ended the quarter with 265 stores.

To listen to a replay of the conference call Hancock conducted with analysts, call 888-286-8010 and enter pin #80450652. It will remain available through Thurs., Dec. 17.

The crowds were larger but they spent less over the Thanksgiving weekend. According to the National Retail Federation's survey, 195 million shoppers visited stores and websites, up from 172 million last year. But the average spending dropped to $343.31/person from $372.57 a year ago. And given the door-buster sales, there's the question of whether retailers made much profit.

One surprise: shoppers’ destination of choice seemed to be department stores; nearly half (49.4%) visited at least one department store, up 12.9% from last year. Fewer consumers, 43.2%, visited discount stores.

The survey said a higher percentage of consumers bought toys, sporting goods, personal care/beauty items, and gift cards than last year. Clothing and books, the most popular categories, remained nearly unchanged over last year. Nearly a third of shoppers (31.2%) were at the stores by 5 am, compared with 23.3% last year. But not everyone flocked to the mall; on Black Friday alone, QVC received $32+ million in orders, a 60% increase over last year, the largest in the tv retailer's 23 years.

There were isolated problems, of course: Protestors temporarily picketed the Michaels store in Martinsburg, WV because the store wouldn't allow Salvation Army bell-ringers to solicit donations outside the store (Martinsburg Journal); JoAnn.com crashed over the weekend (Scrapbook Update); and Wal-Mart had to temporarily close a store in Upland, CA when shoppers became too rowdy (CNNMoney.com).

Because of the website's problems, Jo-Ann.com extended its Thanksgiving weekend sale to Dec. 2.

Cyber Monday sales rose 14% this year; consumers also bought nearly 30% more items per order, according to research firm Coremetrics, CNNMoney.com reported. Coremetrics said shoppers bought 10% more items per order online than they did in stores on Black Friday, and an average of 4.3 million consumers per minute visited e-commerce sites throughout the day.

A survey by The NPD Group for the National Retail Federation asked consumers why they stayed away from store and e-commerce retailers over the Thanksgiving weekend. The most common answers: No Money (27%) ... Not Shopping Yet (25%) ... Couldn't Find What I Wanted (23%) ... Sales Not Good Enough (16%) ... Lines Too Long (10%) ... Out of Stock (8%).

"The big question for those saying they had 'no money' is will they find some and spend it on holiday?" asked Marshal Cohen, NPD Group's chief industry analyst. "The rest of the answers are an additional indication of the fact that consumers are planning to shop later this year then in prior years."

The Thanksgiving weekend sell-a-thon did not salvage November sales, however. Thomson Reuters reported industry-wide same-store sales grew only 0.5%, far below analysts' expectations of 2.1% growth. A survey by the Int. Council of Shopping Centers revealed a 0.3% decline.

November same-store sales from a sampling of chains: TJX, +8.0% ... Ross Stores, +8.0% ... Walgreen's, +3.9% ... Kohl's, +3.3% ... Nordstrom, +2.2% ... BJ's Wholesale Club, +1.0% ... Gap, 0.0% ... Target, -1.5% ... J.C. Penney, -5.9% ... Macy’s, -6.1% ... Children's Place, -13% ... Abercrombie & Fitch, -17% ... Saks, -26.1%.

(Note: Wal-Mart and industry-related chains such as Michaels, Jo-Ann, and A.C. Moore no longer issue monthly sales figures.)

A special tree at the Renwick Grand Salon of the Smithsonian American Art Museum in Washington, D.C. was decorated Friday with 500 ornaments, hand-painted by members of the Society of Decorative Painters. Each ornament was inspired by an individual painting in the Renwick Permanent Collection, and painted by artists varying in experience from beginner to Master Decorative Artist, and in age from six years old to eighty-something.

To celebrate the tree, a reception was held last Saturday in the Grand Salon with a performance by the Smithsonian Encore Chorale; SDP’s Nation’s Capital chapter provided cookies and cider. The chapter also supplied paints and brushes to to help visitors create own ornaments. The decorated tree will be on display in the Renwick Grand Salon until Jan. 3.

This is not the first time SDP members brightened the capital. In 1994 members painted ornaments and decor for a tree in the White House; the following year they painted ornaments for the holiday tree in the Vice President's mansion. In 2004 SDP members painted 350 miniature musical instrument ornaments with gold stroke-work for the Blue Room Christmas tree in the White House. The following year SDP members created more decor for the White House, including a planter by Toni McGuire. Last year six SDP artists created 36 decorations for the White House, including drum-shaped planters that held topiary Christmas trees.

1. The show schedule and online registration is now available. Visit www.chashow.org.

2. Dr. Martha Beck will be the keynote speaker (8:30–9:45 am Sun., Jan. 24). Author of Finding Your Own North Star and frequent contributor on Oprah, Beck's address will be "Finding Your Right Life No Matter What!" Tickets are $20 for members, $40 for non-members.

3. Celebrities: The artist Wyland will be in the Fredrix Artist Canvas/Tara Materials (#2131) on Sun., 1:00 - 3:00 pm ... Deborah Norville will discuss her yarn line, Serenity, in the Premier Yarns booth (#4117) Sun., 1:00 - 2:00 pm. ... Vanna White will host the Lion Brand Yarn fashion shows on Mon., 12 pm and 1 pm in the Lion booth (#4001). ... Kathy Ireland will craft projects using materials from the Kathy Ireland Home® line in the Belagio Ent. booth (#3813) on Sun., 3:00 – 4:00 pm.

4. For Craft SuperShow exhibitors who would like to conduct consumer focus groups at the show, CHA will provide a one-hour time slot, a free meeting room equipped with tables and chairs, and 10-15 pre-screened consumers that match the exhibitor's focus-group needs based on selection criteria CHA is using during the pre-show ticket registration process, and a list of local professional moderators available for hire. Each company must provide each focus group participant with a gift valued at a minimum of $25. For info or to request a time slot, email Allison Adoff at aadoff@craftandhobby.org or call 201-835-1218.

On chain stores direct sourcing: I get it. I understand they are looking solely at the bottom line. We have just finished working with a chain store for the first time, and after this experience, hope to never do it again. A while back they had ordered a few products from us, and were a huge account. We made pricing and packaging concessions that we probably shouldn’t have.

Not too long ago, I called and emailed, asking for a meeting with our buyer, and after several exchanges, was told they are no longer carrying our product. Not because it didn’t sell well, but because they are going to source it offshore to increase their margins.

To us, and especially with the way the economy is right now, sourcing offshore was the biggest slap in the face. Our products proudly say, "Made in the USA." – Small Manufacturer

1. Scrapbook Update recently published a report indicating the three major newsstand scrapbook/paper craft magazines suffered sharp circulation declines this year. Is that a sign scrapbooking is way down? Not necessarily. More likely, it's yet another example of enthusiasts using their stash. They "stash" to-do projects just like they stash products. As an industry publisher told CLN, "When times are tough, enthusiasts will reduce the number of magazines they subscribe to." But that doesn't mean they've stopped scrapping, beading, knitting, etc.

2. The Martinsburg Journal online article about protesters picketing a Michaels store for not allowing a Salvation Army kettle at the front door drew some interesting responses from readers. Rather than the expected rants about the mean old chain store, readers were generally supportive, pointing out Michaels' charitable efforts and that a business has the right to decide such issues.

SEWING. Liberty of London, the famous U.K. department store, will re-launch its former sewing class program early next year, English Home magazine reported.

MODERN TIMES. Wal-Mart is selling caskets on its website at lower prices than many funeral homes, the Associated Press reported. Returns are not accepted, the company says, unless the casket was damaged during shipping. (Comment: Gee, just in time for Christmas.)

LABELS. The American Family Assn.'s annual "Naughty or Nice" report of retailers who do or do not use "Christmas" in their ads includes Hobby Lobby, Michaels, and Wal-Mart as "Nice" stores, Tulsa Today reported. No other industry stores were listed one way or the other.

GIFTS. Southeastern University received an $8 million gift, the balance of a $10 million pledge made earlier this year, by the Green family, owner of Hobby Lobby, The [Lakeland, FL] Ledger reported.

QUOTATION. "The world recovery is going to be led by Asia, although it's going to be very challenging. I think this recovery is going to be a slow one." – Robson Walton, Chair of the Wal-Mart Board of Directors (Associated Press)

SIGN OF THE TIMES. Yowza!, a mobile local coupon service/iPhone application, announced the addition of coupons from new retail partners including Hobby Lobby, according to IntoMobile.com.

CHRISTMAS SHOPLIFTING. Two Nova Scotia women were stopped for speeding and police found approximately $5,000 worth of property taken from Winner's, Wal Mart, and Michaels, Naponee (Canada) Guide.com reported.

HEALTH. In January Hobby Lobby will open a health and wellness center for employees at its corporate offices in Oklahoma City. The facility will be open weekdays from 7:30 a.m. to 5:30 p.m. and will be staffed by a physician and a medical assistant or licensed vocational nurse. More than 3,000 employees – and dependents – will have access to the center. It's being operated by Concentra Health Solutions. For more on Concentra, visit www.ConcentraTotalCare.com. (Comment: No wonder HL has a reputation for a high rate of employee retention.)

THE JOYS OF RETAIL. Last week a kidnap victim who had escaped from her captor rushed into a Hancock store in Salem, OR and told the staff to call 911. The kidnapper eventually committed suicide and the victim was not seriously injured.

JO-ANN. Opened its first store in Meridian, MS. Jo-Ann now has stores in 48 states.

PEOPLE. A.C. Moore named Richard Arthur VP of Marketing and Advertising. Most recently, he had been Sr. Director of Marketing for Michaels.

BENEFITS. One easy-to-give employee benefit is a discount on purchases in the store. But how large a discount? The new 2009 U.S. Retail Compensation and Benefits Survey, conducted by Mercer for the National Retail Federation, revealed the average retail employee discount is 32%.

QUOTATION. "I'm probably averaging five [job] applications a day and have been for two months. It's been incredible" – Joel Crouch, Hobby Lobby store manager. He hired five seasonal employees. (Sheboygan, WI Press)

STOCKS. A.C. Moore: $2.93, down $0.43 ... Hancock: $1.73, up $0.41 ... Jo-Ann: $32.49, down $0.43 ... Wal-Mart: $54.24, down $0.04 ... Dow Jones: 10,388.90, up 0.6%. (Note: All changes in price are since 11/28 and are exclusive of dividends.)

PROMOS. Knitty City, the New York City yarn shop, was the subject of a promotional video produced by American Express to support independent retailers who are involved in a holiday promotion. It's running on the monitors in the back of taxicabs and other digital media. To see the video, visit www.youtube.com/watch?v=I-nPmH2JewI.

CPSIA. Is the Consumer Product Safety Improvement Act working? An analysis of CPSC recall data by Toy Industry Assn. staff found that the number of instances of toy recalls during the third quarter of 2009 decreased 36% versus the same time period last year. But the Center for Environmental Health tested about 250 children's products bought at major retailers and found lead levels that exceeded federal limits in seven of them, the Associated Press reported. One was a Disney Tinkerbell Water Lily necklace.

QUOTATION. "It's very odd that we seem to have stopped closing stores in this country even though business is so awful." – Michael Exstein, Sr. Retail Analyst at Credit Suisse (Dallas Morning News)

ROLODEX. SOHO Publishing moved to 161 Avenue of the Americas, Ste. 1301, New York, NY 10013. Phone and fax numbers remain the same, as do email addresses.

SHOWS. The Memory Trade Show is scheduled for Oct. 21-22, 2010 in Sandy, UT, sponsored by The SMART Group.

TNNA. The brochure for the Nashville show Feb. 20-21 is available. Click HERE.

CONTEST. The Knitting Guild Assn. and sponsor Yarnmarket.com launched the 2010 TKGA Pattern Design Competition. TKGA knitters can win prizes in several categories; the grand prize is a Yarnmarket.com $1,000 gift certificate. Rules, entry form, and pattern submission format can be downloaded at www.TKGA.com.

RECOMMENDED READING. The Buyout of America: How Private Equity Will Cause the Next Great Credit Crisis, by Josh Kosman. Considering how many major industry companies are owned by private equity firms, this is a sobering, cautionary report.

CORRECTION. The revived Canadian Craft & Hobby Assn. is exploring hosting a trade event. The last CCHA trade show was in 2006. Have any ideas about such a show or are willing to join the event committee? Email Paula Jones at paula.jones@cchacanada.org or call 519-940-5969.

BEADS. The Bead&Button show, June 6-13 in Milwaukee, already has 600+ classes scheduled. Visit www.beadandbuttonshow.com.

PRODUCT SAFETY. A thought-provoking, interesting rant against the Consumer Product Safety Commission is at http://slapstickpolitics.blogspot.com. Look for the Nov. 25 entry, "Child Safety Standards And The Idiocy of ABC."

PEOPLE. Founding Editor Lisa Bearnson announced she is leaving Creating Keepsakes, which she founded in 1996, to spend more time with her family. CK columnist Ally Edwards recently announced this month's Studio A column will be her last, although she didn't rule out writing feature articles in the future.

DESIGNERS. Attending the TNNA Long Beach Show? Don't miss a panel discussion, "Professional Knitwear Design and Industry: Where is it Headed?" It's Fri., Jan. 8, 5:30-6:45 pm. RSVP to Jill Wolcott (jill@y2knit.net) or Leslie Cumming (leslie@urbanfiberstudio.com).

To see the latest listings from only personnel recruitment firm specializing in our industry, click on Jobs in the left-hand column, or click HERE.

It's late fall and the Indians on a remote reservation in South Dakota asked their new chief if the coming winter was going to be cold or mild. Since he had never been taught the old tribal secrets, when he looked at the sky, he couldn't tell what the winter was going to be like.

To be on the safe side, he told his tribe that the winter was going to be cold and the members of the village should collect firewood to be prepared. But being practical, he called the National Weather Service and asked, "Is the coming winter going to be cold?" "It looks like this winter is going to be quite cold," the meteorologist responded. So the chief told his people to collect even more firewood.

A week later, he called again. "Does it still look like it is going to be a very cold winter?" "Yes," the man at the weather service again replied, "it's going to be a very cold winter." So the chief ordered his people to collect every scrap of firewood they could find.

Two weeks later, the chief called again. "Are you positive that the winter is going to be very cold?" "Absolutely," the man replied. "It's looking more and more like it is going to be one of the coldest winters we've ever seen."

"How can you be so sure?" the chief asked.

The weatherman replied, "The Indians are collecting firewood like crazy."

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