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"Vinny Da Vendor"
"Benny Da Buyer"
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Creative Leisure News
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Phone: 785-760-5071
Email: mike@clnonline.com



Date: August 15, 2011
Vol. XIV, No. 16, #332

Printer Version


bulletCommentary: What Happened to SDP?
bulletNew Columns This Issue
bulletTake the CLN Poll: S&P and the Stock Market
bulletCLN Poll: Who Got the Blame?
bulletCharles Wyly Dies in Car Crash
bulletA.C. Moore: Sales Down
bulletDarice To Launch Tori Spelling Jewelry Line
bulletJuly Sales: Not Bad, But ....
bulletSome Troubles for Wal-Mart
bulletDecorative Painting I: What Happened
bulletDecorative Painting II: Why the Decline
bulletDecorative Painting III: Signs of Hope
bulletCHA News: People & Shows
bulletCards, Cuts, Michaels & the Military
bulletEmail: "What Got Us into This Mess"
bulletFinal Comment on CHA's Summer Show
bulletRandom Notes, Random Thoughts
bulletMiscellaneous News: Retail
bulletMiscellaneous News
bulletThe Creative Network: Job Openings
bulletThree Nuns at a Yankee Game


This issue is unusual because it contains three articles about decorative painting – why the Society of Decorative Painters will be sponsoring a separate convention/show for the last time next year. You may not be involved in painting and conclude you can skip the articles. Don't. There are lessons here for every category, every group, and every business.

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Designing Perspectives. Ever wonder how a brainstorm by a designer becomes a huge product line in stores across the country, and world? As CLN reported in the last issue

Jean Kievlan and Ellie Joos and Prym created the Babyville Boutique™ line. How did that happen? Ellie and Jean take CLN every step of the way on this two-year odyssey.

"Vinny Da Vendor". Looking for a new way to dispose of overstocks or closeouts? Or a unique way to introduce a new product? Try "Flash Sales," the newest form of e-commerce. It's available now and you can read all about it HERE.

 (Note: If you click on the column and it's not the column you expected, click the Reload or Refresh button of your browser.)

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The debt-ceiling brouhaha, followed by the S&P downgrade, followed by incredible gyrations in the stock market. It's been a wild two weeks since CLN's last issue. It hasn't been good for our blood pressure or our 401Ks, but what has it meant, if anything, for your business? Has it affected sales? Are your customers pulling back on spending?

On Friday the Commerce Department's report on retail sales in July was better than expected, but, "On the downside, sales fell at department stores, bars and restaurants, leisure and hobby stores, and building-materials suppliers," MarketWatch reported.

To vote, click on Industry Polls in the right-hand column or click HERE.

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CLN voters accurately predicted whom the American people would blame for the debt ceiling mess in Washington. The percentages in CLN's unscientific poll: 36.5% predicted the GOP and the Tea Party would receive most of the blame, while 32.7% thought citizens would blame the Democrats. Only1.9%  were unsure, while the remaining 28.9% thought both groups would receive equal blame.

According to a New York Times poll, a record 82% disapprove of how Congress is performing, the highest percentage since the newspaper began asking that question in 1977. Republicans in Congress fared worst; 72% blamed the Republicans, while 66% blamed the Democrats.

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Billionaire Charles Wyly, 77, was killed in Colorado as he was pulling his Porsche onto a highway and was hit by oncoming traffic, the Dallas Morning News reported. Behind the scenes, he was extremely influential in the modern craft industry and American politics.

Charles and his brother Sam were major stockholders in Michaels and served on the board of directors before the company was taken private by The Blackstone Group and Bain Capital. At one time the situation at Michaels was somewhat chaotic due to acquiring various retail chains (Leewards, H&H Craft and Floral, Oregon Crafts and Floral, Craft and Floral Warehouse, Aaron Brothers, and Helens's Creative Crafts) and trying to merge them into one cohesive unit.

The Wylys brought in Michael Rouleau as CEO and pumped millions, perhaps as much as $50 million, into the company for infrastructure projects such as perpetual inventory programs. That laid the foundation for the company's subsequent turnaround and growth.

The Wylys were major GOP contributors, including donating $1+ million to the Republican National Committee between 2000 and 2004, the News reported. After George W. Bush lost the GOP primary election in New Hampshire, the Wylys made major contributions to the Bush campaign, helping him win the South Carolina primary and go on to win the GOP nomination and eventually the Presidency.

Charles and Sam were raised on a Louisiana cotton farm and made their fortunes by buying, building, and selling companies such as Michaels, Bonanza and Ponderosa steakhouses, and software and energy companies. Charles was a patron of the Dallas art scene, and one year arranged for Barbara Bush to be the keynote speaker at the HIA winter show when it was in Dallas.

Both brothers, however, are under investigation by the Securities and Exchange Commission for insider trading and misusing offshore tax shelters. Those investigations continue.

Industry veteran Peter Heinsimer told CLN, "Charles was really one of the good guys, not only for Michaels but for the many good deeds he did and the many important causes he supported."

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For the quarter ended July 2, sales were $99.0 million, down 0.8%; same-store sales dipped 0.7%. There was a 1.1% decrease in transactions and a 0.4% increase in the average ticket. Strong departments included cake/candy making; floral; and needlework, including yarn. Declining categories were scrapbooking and kids' crafts, which suffered because of the drop in interest in silly band-related products.

The net loss for the quarter was $7.9 million ($0.32/share), compared to a net loss of $9.7 million ($0.40) a year ago. Analysts had expected the loss to be 29 cents. The gross margin was 43.8%, a 0.6 percentage point improvement over a year ago. Inventory ended down 1.6% at $116.5 million at cost, a reduction of $1.9 million.

For the first two quarters of the fiscal year, sales were $201.7 million, down 1.7%; same-store sales were down 1.7%. Net loss was $15.3 million ($0.62), compared to a net loss of $17.2 million ($0.71) a year ago.

CEO Joseph Jeffries, “As we move toward our peak selling season, we are focused on executing our merchandising and operating plan.”

During the conference call, execs said they would not comment on the February announcement that the Board is exploring strategic alternatives. Execs predicted that for the fiscal year the loss will be less than the previous year and the company will end the year with $30 million.

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Darice announced its partnership with Tori Spelling for a fashion jewelry line, Styled by Tori Spelling, interchangeable jewelry components that allow customers to create their own personalized styles.

Tori Spelling is nothing if not versatile. In 2004, Spelling launched her fashion jewelry line, Maven, which is sold at high-end stores and boutiques. She's an actress, and currently shooting the sixth season of her series, Tori & Dean: Home Sweet Hollywood for the Oxygen network. She's written three memoirs and a children's book; has launched an online magazine/community (www.torispelling.com); and operates a retail store, InvenTori, in Los Angeles. Her latest readymade jewelry designs from The Tori Spelling Collection are available exclusively on HSN.

"I love designing jewelry and I love crafting," Spelling said. "With this line I’ve combined both my passions. I give the styles and tools and women can use their creativity to design their own jewelry."

"Bringing Tori Spelling’s new product line into the Darice family of products allows us to continue to provide the most comprehensive and highest quality jewelry-making assortment for our retail partners," said Mike Birkholm, Darice’s President.

The line is scheduled for release in early 2012.

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Retailers reporting monthly sales results performed better than analysts expected. The Int. Council of Shopping Centers reported same-store sales rose 4.6%; analysts had expected the increase to be 4.1%, according to Thomson Reuters.

"Early going, July looks like it's shaping up to be a solid month despite all the economic headwinds," Ken Perkins, president of the research firm RetailMetrics, told the Associated Press. "But the concern is whether shoppers will buy back-to-school items at full price."

"People are still not comfortable spending," said Erin Armendinger, managing director of the Wharton School’s Jay H. Baker Retailing Center, told MarketWatch. "Gas price has been consistently high. Unemployment rate still hasn’t moved much. Home prices remain low. We also had the debt ceiling debate in the month. That hasn't made people feel secure about their own financial well-being. When you want to get them to spend, you’d better give them a reason."

July same-store sales of selected retailers: Saks, +15.6% … Costco, +10.0% …  BJ's Wholesale Club, +9.2% … Neiman Marcus, +7.7% … Nordstrom, +6.6% … Limited, +6.0% … Macy's, +5.0% … Target, +4.1% … J.C. Penney, +3.3% … Kohl's, -4.6% … Gap, -5.0%.

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The company received some tough pr lately:

1. The stock was downgraded by  Jefferies & Co. Daniel Binder, who appeared on CNBC saying he was concerned about the company's turnaround initiatives (i.e., adding back 8,500 SKUs) not working fast enough.

2. Bloomberg News reported store traffic declined 2.6% during the Feb.-June period.

3. A new research study, How America Shops, by the consulting firm WSL/Strategic Retail said the retailer's reign as price king is over. "The reality is that Walmart will not be what it was any time soon, and maybe never, for lots of reasons; some long-standing. Some recent."

4. That news and the declining stock market caused the company stock to decline to 10 cents above its 52-week low.

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Next year will mark the 40th – and last -- separate convention sponsored by the Society of Decorative Painters. SDP will continue, but beyond 2012 will try to hold its convention in the context of some other group's show. What a change.

To learn what happened, why, and what can be done about it, CLN interviewed retailers, publishers, current and former SDP board members, teachers, and manufacturers.

1. For years SDP's convention would attract as many as 10,000-15,000 members and walk-in traffic, and hundreds of exhibitors. It would last four days, offering hundreds of classes, social events, and the annual business meeting.

2. SDP was an industry powerhouse and its conventions were not-to-be-missed by the industry's major and minor players.

3. Priscilla Hauser's book, For Whom the Brush Toles, remains one of the best selling books in industry history. Her popularity resulted in countless tv appearances, including The Tonight Show with Johnny Carson.

4. A convention vendor told CLN he would leave the event with as much as $100,000 in sales.

5. At one time Binney & Smith (now named Crayola) considered developing a paint line for decorative painters after company research revealed that, while decorative painters comprised only 13% of the consumers buying paint, they purchased 52% of all of the paint.

6. The Bob Ross tv series, The Joy of Painting, was such a popular how-to show on PBS that stations broadcast re-runs for years after Bob died.

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Design trends changed. In the mid/late 70's Americana and folk art themes were very popular, thanks to the bicentennial. Because most folk art was relatively crude, it was fairly easy for a novice to paint an acceptable piece.

Companies changed. When scrapbooking became the rage, some vendors dropped their painting products, such as wood pieces, to jump on the memory bandwagon. Publishers, designers, and others did the same. Fewer new products ultimately resulted in diminished consumer interest.

Retailing changed. The vast majority of consumers need a lesson or two to become hooked on painting. Most of the teaching occurred in small specialty shops. Their decline happened for two reasons: A. For years, exhibitors at the convention charged consumers the suggested retail price, but then a few started discounting. Eventually many exhibitors discounted. That hurt the shops, not only in locales where the conventions were held, but around the country because so many SDP members traveled thousands of miles to attend. B. Once the chains created painting departments with the most popular brands and charged lower prices, the paint shops were doomed.

Consumers changed. Decorative painters (and cross-stitchers) judged the quality of their completed project by how well they duplicated the model. Today, many consumers want to create something unique. Scrapbooking and jewelry-making are classic examples.

Readymades changed. A company hired some popular decorative painters, then took their patterns overseas to have readymades produced. The quality was excellent, and they cost less than the supplies to paint the product. That helped destroy the business done by professional crafters who sold their paintings at art and craft fairs – and those professional crafters once bought huge amounts of supplies.

Finances changed. Financial problems increased as membership declined, but were made worse by the staff committing to far too many convention hotel rooms. A lawsuit stemming from letting go the new exec director midway through his first convention didn't help, and if nothing else, distracted the board from concentrating on issues such as attracting more members.

Margins changed. Chain stores put so much pricing pressure on vendors that their margins shrank. Result? They didn't have nearly as much money to promote painting.

Teachers did not change. The convention book that lists the classes to be taught looks remarkabley similar to the books of 20 years ago. They're teaching the same bowl of fruit.

The leaders didn't change. One vendor told CLN he gave up supporting SDP after a conversation with a board member. He suggested the group try to attract more young people and the board member answered, "Oh, those young women just want to talk about boys."

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1. Decorative painting is far from dead and the industry has seen category turnarounds before: The Craft Yarn Council proved a category can be rejuvenated by appealing to a younger, newer audience.

2. Other painting shows, such as Heart of Ohio Tole, Art Expo Houston, and the paint show in Las Vegas are still doing well.

3. Plaid's new Martha Stewart line will soon be in Michaels' rejuvenated paint aisle and has been introduced on the Home Shopping Network and the Canada Shopping Channel. DecoArt's Social Artworking™ program has been shipped to Jo-Ann and Hancock. These new programs should attract many newcomers. To learn more about the DecoArt program, click HERE. There are videos of Martha explaining the line at www.plaidonline.com.

4. The chains are teaching far more classes now than in the past. If they were to offer painting classes….

(Comment: So what can the industry do to re-vitalize the category, or any category, for that matter? Email your thoughts – on or off the record – to mike@clnonline.com.)

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1. Personnel. Sandra Ghezzi, VP of Marketing, Member Services and Education, has left CHA.  A new position, Director of Communications, has been created and Victor Domine, CHA's public relations manager, will serve as Acting Director.

It's an outgrowth of CHA's new team approach to manage CHA and address concerns within the industry.

"Victor has played a significant role in developing major communications initiatives and strategic direction for the association, while creating and managing an award-winning public relations department. He has demonstrated great leadership in our new Team CHA structure, and I have every confidence in his ability to meet the challenges associated with this new position," says Acting CEO/President Tony Lee.

2. Shows. Info on CHA's Winter Conference & Trade Show, Jan. 29-Feb. 1 is now available at www.craftandhobby.org, including travel reservations and applications for workshops, seminars, and demo-nars. (The deadline for workshops, seminars, and demo-nars to be included in the Show Preview Guide mailed to potential attendees is Sept. 6.) Online show registration begins Nov. 1.

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EKSuccess Brands and Michaels have created a unique way to support the military . They are sponsoring a booth at the Wrigleyville Block Party during the Chicago Cubs vs. St. Louis Cardinals games next weekend where visitors can make holiday cards for U.S. and Canadian service men and women deployed overseas.

There will be K&Co.™ paper and embellishments and EK Tools™ pens and adhesive. All cards will be sent to the Operation Christmas Cards organization, where they will be forwarded to military bases in Afghanistan, Japan, Iraq, Egypt and Germany. According to the organization, these cards will be the only correspondence that about half of these service members will receive during the holidays.

The event is part of EK Success Brands’ multi-level approach to collect 25,000 holiday cards for Operation Christmas Cards. Other efforts include Michaels in-store card making, an online Spotted Canary School™ class, and community and marketing initiatives. Operation Christmas Cards itself has a goal to send 175,000 cards this year.

To learn more about Operation Christmas Cards, visit www.operationchristmascards.org.

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Regarding your commentary on the debt ceiling: With all due respect, I think this good old boy network is what's gotten us into this mess. It's always so easy to spend other peoples' money over drinks and some laughs in opulent surroundings. Raising the debt limit is a con game. I would love to see what would REALLY happen if we didn’t raise the ceiling. We'd see the consequences of a country that spends more money than it takes in and covers that shortfall with a Chinese credit card. We deserve to have our credit rating lowered. We deserve to have to pay a higher interest on all that debt. Apparently, the percentage of GDP that goes to cover the debt isn't yet high enough to scare the people in this country. I, for one, am pleased to see the battles going on in Congress. It's long overdue!  -- Sue Monahan, Masterson Art

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"The upbeat tone of the show was very positive as was the slightly changed mix of vendors. Perhaps it was only my impression but there seemed to be a proportionate decrease in scrapbook focus and an increase in the variety of different craft niches/medium represented.

"Also, the additional show attendance charge may have further eliminated the attendees of the past who got a badge from a friend who qualified and attended the show just for fun. Since I commuted daily, I noticed an obvious decrease in the number of people pouring into the parking garage in the morning. I didn't see the vans filled with happy crafters ready for a day of make-n-take fun.

"That indicates to me that the attendees at the show were all serious buyers, willing to spend money to travel to the show … and then place orders." – Gail Green (posted on the Linkedin CHA discussion board)

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1. Great picture of industry pioneer Aleene (Aleene's Tacky Glue) and daughters Heidi and Tiffany on iLoveToCreate's main page at www.ilovetocreate.com.

2. Sometimes you have to wonder about these financial "experts." A blogger for Zacks Investment Research recently analyzed A.C. Moore's quarterly report. In this profound analysis, it said A.C. Moore's main competitors are Cash America Int. and Hot Topic. Oh? I bet that's news to the folks at A.C. Moore.

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HANCOCK. CLN has learned the company has rolled out its craft department to approximately 60 stores and has quietly added "Crafts & More" to its logo on its national sales flyer.

CRIME. A toy and hobby shop in Novato, CA became so fed up with shoplifting that it now requires all shoppers to fill out membership forms and submit a driver's license, the Marin Independent Journal reported. According to surveys by the National Retail Federation, stores lost about $12.1 billion to shoplifters in 2010, up 3.4% from 2009.

JO-ANN. There are now Jo-Ann apps for iPhones and Androids that allow consumers to receive and load digital coupons, research products and reviews, and check the class schedule of their nearest store.

HOBBY LOBBY. Made a $47.5-million cash offer for Crystal Cathedral, the famous megachurch in Garden Grove, CA, just a mile or two from the Anaheim Convention Center. According to the Christian Post, if HL acquires the property – there are other bidders – the property would be donated to The King's University, a bible college and seminary in Los Angeles. The Cathedral is $50 million in debt and may have to be sold if fundraising efforts cannot ward off bankruptcy. … The day prior to the bid, HL announced it had donated the 170-acre Rancho Capistrano to Saddleback Church in Lake Forest. That church is led by the well known minister, Rick Warren.

CLOSING. Scrap Tales, a retail store in Brighton, MI is closing.

OPENING. The Artful Yarn in Chagrin Falls, OH. Visit www.theartfulyarn.com and read about it HERE.

RANKINGS. Stores magazine, the official magazine of the National Retail Federation just published its annual list of "Hot 100 Retailers." Jo-Ann ranked #95 with a growth rate of 4.4% in 2010 over 2009 with sales of $2,079,000. Hobby Lobby was #96 with a growth rate of 4.4% and sales of $2,093,000. To see the complete list, visit HERE.

STOCKS. A.C. Moore: $1.43, down $0.42 ... Hancock: $1.05, down $0.23 … Wal‑Mart: $49.75, down $2.96 ... Dow Jones: 11,269.02, down 7.2%. (Note: All changes in price are since 8/12 and are exclusive of dividends.)

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COMPANY FOR SALE. Activity Kits including "Color Your Own T-Shirts" and "Color Your Own Posters." Many original designs including science, nature, fun, fine art, etc.  Educational. fun line with solid potential, to be carried in museum, toy, specialty, and chain stores. Very low purchase price which will pay for itself with the inventory included in sale. Great 4th quarter item. Cll 973-477-7370 for detailed info.

Designers. Margie Romney-Aslett has returned to Bazzill Basics Paper as the Art Director on the product development team. She will also be traveling and teaching with her own designs and favorite Bazzill products. For detailers, visit www.bazzillbasics.com beginning Sept. 1.

PEOPLE. Industry veteran Erik Mandelberg was named Sales VP for Sullivan's. … Martingale & Co. named Karen Johnson as Director of Marketing and Business Development. She has extensive direct-mail experience with companies such as Hanna Andersson and REI.

JEWELRY. Beadalon has introduced Artistic Wire® which is permanently colored copper wire woven into a mesh tube that be flattened, but can be stretched, wrapped, and twisted to give an alternative dimension to jewelry. Visit www.beadalon.com or call 866-423-2325.

YARN. To see a car like no other – yes, a car covered and decorated in yarn; visit www.yarncar.com.

SEWING. A recent Washington Post article proclaimed "Sewing Is Back" among kids, citing the rise of sewing classes at summer camps and stores. To read it, click HERE.

INTERNET. Craftfoxes.com is a very impressive new website for all types of crafts. Visit www.craftfoxes.com. It's a social network so visitors can upload their creations, download free project instructions,  post comments on discussion boards, check out area craft/art fairs, etc.

QUOTATION.  "Cargo numbers have been down this summer but that’s a reflection of last year’s unusual shipping patterns more than the economy. The economy continues to face challenges, but job growth has been steady and retailers have been adding jobs themselves as sales improve. Cargo figures for this fall clearly show that retailers are expecting a healthy holiday season." – Jonathan Gold, National Retail Federation VP for Supply Chain and Customs Policy

IMPORTS. Retailers are delaying decisions about how much to import for the holiday season because they're worried about being stuck with too much inventory if the economy falls back into a recession, Reuters reported. Read the article HERE.

MAGAZINES. Newsstand sales of U.S. magazines fell 9% in the first half of 2011, according to a report by the Audit Bureau of Circulations, an industry trade group and cited by the Associated Press. The top-sellers? Cosmopolitan, Woman's World, and People, all of whom saw declines.

QUOTATION. "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford

CANADA. Registration forms for CHA's Canada 2011 Fall Trade Exhibition for Quilting and Sewing Oct. 3 can be found HERE. Seminar outlines can be viewed HERE.

ACQUISITION. Teters Floral Products acquired the assets of Napa Home & Garden, a home accents and garden distributor that had filed for bankruptcy last month.

CPSIA. In the midst of the debt ceiling debates, Congress passed and President Obama was expected to sign legislation modifying the Consumer Product Safety Improvement Act that has been such a thorn in the side of vendors and retailers. To see the details, click HERE.

TV. The second Around the House with Matt & Shari series links to PBS stations Sept. 15. The how-to home dec series is produced by KS Inc. Productions and sponsors include The Warm Co, Coats and Clark, and Conso/Simplicity Creative Group.

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To read the latest listings click on Jobs in the left-hand column or click HERE.

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Three nuns were attending a Yankee game. Three men were sitting directly behind them. Because the nuns' habits were partially blocking their view, the three men decided to harass the nuns in hopes they would move to another area of the stadium.

In a loud voice, the first man said, "I want to move to Utah; there are only 100 nuns there."

The second man said, "I'm moving to Montana. There are only 50 nuns there."

The third man answered, "I want to move to Idaho. There are only 25 nuns there."

Then the Mother Superior turned around and said to the men, "Why don't you all go to hell. There aren't any nuns there."

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

2. If your company is a paid subscriber, everyone in the main office is welcome to register, free. Just click on "Work for a paid subscriber? Click Here to register" (center column, near the top).

3. If you ever have trouble with your password, click on "Trouble with your password?" in the right-hand column of the main page. The computer will then email the correct information to you.

4. CLN is published the first and third Mondays of each month. Because August has five Mondays, your next issue will be Monday, September 5. Happy Labor Day!

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