Copies of CLN Newsbriefs that were
emailed to subscribers between regular issues of CLN.
December 2, , 2009
MICHAELS: SALES, PROFITS UP
Highlights of the earnings report for third quarter ended Oct.
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 cited a strong Halloween season and categories
that had been reset – bakeware, bead and jewelry making, and
impulse – being top performers.
Net sales for the quarter, up 2.5% to $929 million; same-store
sales, up 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
Gross margin, up 180 basis points to 37.3% ... Selling, general,
and administrative expense, up $12 million to $259 million. ...
Operating income, up $16 million to $84 million (9.0% of sales) from
7.5% a year ago.
Interest expense, down $15 million, due to a lower average
interest rate and lower average debt levels. ... Adjusted EBITDA
(cash flow), up 5.4% to $118 million ... Debt levels, down $272
million to $3.911 billion. ... Average inventory per Michaels store,
inclusive of distribution centers, down 5.0% to $971,000.
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.
JO-ANN: SALES, PROFITS UP
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.
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, see the current issue
of CLN 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 of which four were transitioned
from a small-format to a large-format layout. During the first nine
months of the year, the company remodeled 26 stores, of which five
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 less than the 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
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.
HANCOCK: SALES, PROFITS UP
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
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 loan of $25 million and outstanding letters of credit of $6
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
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.
Hancock will a conference call tomorrow, Thurs., 10:00 CST. To
participate, call 800-599-9816 and give the operator #81066171. A
replay will be available: call 888-286-8010 use Pin #80450652. The
replay will be available approximately 1:00 p.m. CST on Thurs., and
will remain available through Thurs. Dec. 17.
THE UNIVERSAL APPEAL OF SCRAPBOOKING
How universal is it? This Sunday the season finale of the E!
Network's Girls Next Door will be about scrapbooking, highlighting
the hobby, the supplies, the joys of scrapping with friends, and the
pleasure of having and giving the final product. Where is it filmed?
The Playboy Manor in California. Turns out Hugh Hefner and his, uh,
girlfriends are hardcore scrapbookers. Check your local listings.
Products used in the segment, according to a friend who saw an
advance screening, were from K&Co., WeRMemory Keepers, Bazzil,
Zig Memory System, Stickles, Adhesive 3L, and Fiskars.
August 29, 2009
JO-ANN'S SECOND QUARTER RESULTS
For the quarter ended Aug. 1, there was a net loss of $3.2
million ($0.13/diluted share), versus a net loss of $11.7 million
($0.47) a year ago. Analysts polled by Thomson Reuters, on average,
expected a loss of $0.39/share on revenue of $419.4 million.
As a result, the company increased its previously announced
expectations for fiscal 2010 to $1.35-$1.50/diluted share. Analysts
were expecting full-year earnings of $1.09/share.
Wall Street liked the results. Following the announcement, the
stock gained 3.14% in the after-hours trading at the New York Stock
Exchange, and the following day Jo-Ann's stock hit a 52-week high.
Net sales increased 4.1% to $419.4 million and same-store sales
Large-format stores' quarterly sales increased 7.7% to $226.1
million and same-store sales increased 0.1%. Small-format stores'
sales decreased 0.1% to $185.8 million and same-store sales
increased 3.9%. Internet sales through Joann.com increased to $7.5
million from $7.1 million a year ago..
Net sales for the six-month period ended Aug. 1 were $879.4
million versus $849.1 million in the prior year. Same-store sales
increased 1.4% for the six-month period compared with a 3.9%
increase for the same period last year.
For the first two quarters, large-format store sales increased
6.7% to $470.7 and same-store sales decreased 0.2%. Small-format
store net sales decreased 0.3% to $391.7 and same-store sales
increased 3.4% versus a 5.2% increase in the prior year.
Chair/President/CEO Darrell Webb said, "Jo-Ann Stores
achieved strong financial improvement in the second quarter of
fiscal 2010 through continued sales growth, margin expansion, and
expense leverage. Our strategy to revitalize the store portfolio,
enhance our merchandise offering, and constantly improve store
conditions is making a meaningful difference in the shopping
experience we provide and is continuing to attract customers."
"We continue to be encouraged by the sales trends in our
core sewing and craft categories, which we believe point to
sustainable long-term growth for our business," Webb added.
"Seasonal products continue to experience sales declines and we
have limited visibility into how customers will respond as we move
into the second half of the year, when this category becomes a more
important component of our business. We continue to plan cautiously
for the remainder of fiscal 2010, but our progress in the first half
leaves us confident that sales and earnings will exceed our original
expectations for the full year."
Gross margins for the quarter increased approximately 170 basis
points to 49.3% due to reduced product costs from global sourcing
initiatives, reduced freight costs, and lower clearance levels.
Selling, general and administrative expenses increased to $193.3
million from $191.6 million, but as a percentage of sales they
improved by approximately 140 basis points to 46.1%.
Operating loss for the second quarter was $3.4 million compared
to an operating loss of $16.5 million for the prior year’s second
The cash balance for the quarter improved by $39 million to $80.2
million. Long-term debt totaled $50.5 million, down $49.5 million
from a year ago.
During the second quarter the company opened one large-format
store and two small-format stores and closed eight small-format
stores. Year-to-date, the company opened 12 large-format and three
small-format stores and closed one large-format store and 20
small-format stores. For the entire year, the company expects to
open approximately 20 new stores and close approximately 30 stores.
Thirteen stores have been remodeled thus far this year, and the
company expects to remodel approximately 30 stores during the year.
HANCOCK'S SECOND QUARTER RESULTS
Net sales for the quarter declined from $63.8 million to $59.6
million, and same-store sales decreased 4.2%. However, operating
income increased by $1.6 million.
There was a net loss was $2.3 million ($0.12/share) compared to a
net loss of $10.9 million ($0.57) a year ago, and EBITDA was $0.9
million, an increase of $1.5 million over the same period last
For the first half of the fiscal year net sales were $123.7
million, down from $127.6 million a year ago. Same-store sales
decreased 0.9%. Operating income increased by $4.4 million as a
result of the $0.1 million loss in this first half compared to a
$4.5 million loss in the previous year’s first half. The net loss
was $3.2 million ($0.16) compared to a net loss of $16.2 million
($0.85) a year ago, and EBITDA increased $4.3 million to $3.1
President/CEO Jane Aggers said, "Despite a very challenging
retail environment and lower revenue, our year over year results of
operations have improved dramatically. This is the result of
lowering our SG&A costs and improved management of the balance
sheet. Since exiting from bankruptcy on August 1, 2008, we have paid
down approximately $27.5 million of debt and pre-petition
liabilities. As we further refine our internal planning and
operational processes, we are optimistic we can combine our cost
reduction initiatives with a meaningful top line improvement."
Gross margin for the quarter improved to 45.8% from 43.4% of the
prior year, thanks to reduced merchandise and freight costs. For the
first half, the gross margin improved 140 basis points to 45.5%.
Selling, general and administrative expenses for the quarter
decreased to $26.9 million (45.2% of sales) from $28.9 million
(45.3% of sales) in the prior year. For the first half, SG&A
expenses declined by $4.5 million to $54.1 million (43.8% of sales),
driven by increased labor efficiency, reduced store operating
expenses, and savings of professional fees.
During the first two quarters, the company opened two stores and
remodeled four. The current store count is 264.
Workshop applications for the CHA winter show in Anaheim are due
Aug. 28, and applications to conduct a seminar are due Aug. 31.
Email Education Manager Amie Kolodziej at email@example.com
CPSC: YARN IS EXEMPT
The Consumer Product Safety Commission has exempted yarn and
fabric from the lead testing and certification requirements for
children’s products under the Consumer Product Safety Improvement
Act. The exemption does not include snaps, buttons, zippers, etc.
The CPSIA says it decided after studying hundreds of test reports
and ... "After reviewing and verifying this test data, the
staff was able to determine that most textile products are
manufactured using processes that do not introduce lead or result in
an end product that would exceed the CPSIA’s lead limits,"
said a statement released by the CPSC.
August 26, 2009
MICHAELS: BACK TO PROFITS
Net income for the quarter ended Aug.1 was $2 million, compared
to a $30 million loss for the quarter a year ago. For the first half
of fiscal 2009, the net income of $6 million, compared to a $50
million loss last year.
CEO John Menzer said, "A corporate-wide focus on sales and
creating a fun customer environment in our stores, coupled with a
strong emphasis on expense control, has led to improved sales and
operating results for the quarter. The customer continues to be
value oriented and selective about what she buys. She has responded
favorably to newness and events introduced this year including, our
Impulse, Bakeware, and Beads & Jewelry Making categories."
Sales for the quarter rose 1.4% to $807 million, but same-store
sales declined 0.8% due to a 7.0% decrease in average ticket and a
6.2% increase in transactions. Canadian currency translation
adversely affected same-store sales for the second quarter by
approximately 100 basis points.
Sales for the first two quarters rose 1.0% to $1.659 billion, but
same-store sales declined 1.4%, due to a 5.2% decrease in average
ticket, a 4.0% increase in transactions, and a negative 0.2% impact
from deferred custom framing revenue. Canadian currency translation
adversely affected same-store sales for the first six months of
fiscal 2009 by approximately 130 basis points.
The second quarter gross margin increased 50 basis points to
35.4%, driven by a merchandise margin improvement of 20 basis points
related to the company's "profit optimization efforts" and
a 30-basis-point reduction in occupancy costs due to lower utilities
and amortization expense. Year-to-date gross margin decreased 60
basis points to 36.2%, driven by a decrease of 50 basis points in
merchandise margin and a decreased leverage of 10 basis points in
occupancy costs. The decrease in merchandise margin was principally
due to clearance and promotional programs associated with the
introduction of new product for merchandise reset activities.
Selling, general and administrative (SG&A) expense in the
second quarter decreased $14 million to $232 million, or as a
percent of sales, from 30.9% to 28.7%, primarily due to reductions
in payroll, severance, and depreciation expense, and the prior year
included non-recurring consulting expenses for studies related to
consumer insights and other strategic initiatives. Year-to-date, SG&A
expense decreased $40 million to $478 million, or as a percent of
sales to 28.8% of sales from 31.5%.
Operating income for the quarter increased $23 million to $50
million, or 6.2% of sales, compared to 3.4% a year ago. Year-to-date
operating income was $114 million, or 6.9% of sales, versus $75
million, or 4.6% of sales, for the first half of fiscal 2008.
Interest expense was lower by $14 million and $29 million for the
quarter and first half, respectively, due to a lower average
interest rate on our floating rate debt and lower average debt
Adjusted EBITDA for the second quarter of fiscal 2009 increased
16.4% or approximately $12 million to $85 million, from $73 million
for the same period last year. Year-to-date Adjusted EBITDA was $192
million, or 11.6% of sales, versus $170 million, or 10.3% of sales,
in the first half of fiscal 2008.
As of Aug. 1, the company's cash balance was $36 million. Second
quarter debt levels declined $70 million to $3.964 billion compared
to$4.034 billion as of the end of second quarter of fiscal 2008.
Availability under the revolving credit facility was $526 million.
During the quarter, the company also made a $5.9 million
amortization payment on its Senior Secured Term Loan.
Average inventory per Michaels store at the end of the quarter,
inclusive of distribution centers, was down 1.1% to $889,000, due
primarily to lower freight costs.
Year to date, capital spending totaled $17 million, with $12
million attributable to real estate activities, such as new,
relocated, existing, and remodeled stores, and $5 million for
strategic initiatives and maintenance activities. During the first
half of fiscal 2009, the company opened 14 new stores and relocated
four Michaels stores and closed six Aaron Brothers stores. The
current store count is 1,023 Michaels stores and 155 Aaron Brothers
MICHAELS NAMES VENDORS, CARRIERS OF THE YEAR
At Michaels' 12th Annual CEO Summit in Dallas, the company
announced its Vendor and Carrier Partnership of the Year Awards.
Winners of the vendor awards were American Oak Preserving, ColArt
Americas, Gartner Studios, Halcraft, Horizon Group, and
iLOVEtoCREATE (Duncan Ent.). The Carrier awards went to China
Shipping Container Lines and Interstate Distributor Co.
JULY 20, 2009
WILTON PRESSURED BY CREDITORS
This morning Reuters reported that creditors of Wilton Holdings
asked a court to place the company in Chapter 11 involuntary
bankruptcy due to $208 million in debts.
Founded in 1929, Wilton has been the dominant cake-decorating
company for decades. It and Dimensions, a major needlework company,
were sold to GTCR Golder Rauner, a private equity firm, on Aug. 1,
2007. GTCR had previously acquired EK Success in Feb., 2006. Wilton
became Wilton Holdings, an umbrella firm under which were GTCR's
other industry-related acquisitions, including EK Success and
JGF Credit LLC, an affiliate of yet another private equity firm,
TowerBrook Capital Partners, had acquired $104.3 million of
unsecured claims against Wilton. Deutsche Bank Trust Co Americas of
New York also joined the petition. Deutsche is acting as an
administrative agent for an additional $104.3 million claim.
Wilton is not just cake decorating. Other divisions include The
Weston Gallery, a picture frame company, and Copco, a producer of
tea kettles and kitchenware. Today's issue of CLN includes a report
that Wilton had to recall about 142,000 tea kettles because of a
Dimensions is not just needlework. The company's other divisions
include K&Co., a scrapbook supplier; Paintworks, a
paint-by-number producer; Perler Beads, a supplier of beading
activities for kids; and Inkadinkado, a supplier of rubber stamp
Late last year Standard & Poor's warned that Wilton was
highly leveraged, vulnerable to fads and a slowing economy, and was
behind on a plan to cut costs, Reuters reported. In March Wilton was
included in Moody’s list of 283 "Troubled Companies"
which Moody’s believed were most likely to default on their debt.
Also in March, Wilton announced that it would close the
Dimensions' facility in Reading, PA, which employed 118, and would
outsource production by year's end. At the time Wilton CEO Richard
Conti said, "The current economic environment and competitive
forces require us to increase efficiency and effectiveness in order
to maintain the health of the overall company."
This afternoon Wilton issued the following statement:
Woodridge, Ill., - (July 20, 2009) - We are aware of recent
reports that Wilton is going into chapter 11 restructuring. Here are
First, and most importantly, Wilton Brands Inc. is not in chapter
11. Further, it has not been petitioned into chapter 11 nor have any
of the other operating companies that market and sell our products.
As a result of certain breaches of our loan covenants that have
been previously disclosed, creditors of the parent company of Wilton
Brands Inc. filed an involuntary petition against that holding
company (Wilton Holdings, Inc.). While that company bears the Wilton
name, the petition was not filed against any of the operating
companies and does not affect their day-to-day operations.
The company's owners and lenders are working diligently to
resolve this matter. Management is monitoring these discussions and
our primary focus remains on running our business as usual.
The company’s operating results are solid in spite of the
challenging economic environment. Operating income is ahead of last
year's strong results, partially due to the achievement of our cost
savings initiatives. Wilton Brands Inc. will continue to conduct its
business in the ordinary course and will continue to honor its
obligations. We value our relationships with all of our customers
and suppliers and look forward to continued growth together.
Today's issue of CLN includes an article about the financial woes
of CIT, a major lender to thousands of small and medium-size vendors
and retailers. When the issue went online, it looked like CIT was on
the verge of bankruptcy because of its inability to pay $1 billion
to bondholders in August.
Since then, however, CIT's board has reportedly approved a deal
for a $3 billion short-term bridge loan and should avoid bankruptcy,
BECKY JONES RESIGNS
Becky Jones, VP/General Merchandise Manager - Crafts, for Jo-Ann,
is leaving the end of the month for a position at Hibbett's, a
sporting goods chain. She has also resigned from the Craft &
Hobby Association's Board of Directors.
June 4, 2009
MICHAELS FIRST-QUARTER RESULTS
Net income for the first quarter ended May 2 was $4 million, up
$24 million from a net loss of $20 million in the first quarter a
year ago. Total sales were up 0.6% to $852 million, but same-store
sales declined 2.0% of which 1.7% was related to the negative impact
of foreign exchange rates.
John Menzer in his first quarterly report as CEO, said, "Our
operating units performed relatively well, which were offset by the
continued negative impact of a weakened Canadian dollar. We were
very encouraged with the sales in a number of key categories,
including Beads and Jewelry Making, Impulse items, and Wall Frames.
Our new marketing and merchandising programs are connecting with the
Michaels customers and have helped drive an increase in customer
transactions, even in today's difficult retail environment.
"I have challenged the Michaels team to renew their
commitment to be the destination of choice for 'Where Creativity
Happens,'" Menzer added, "and continue to provide strong
customer service in our stores. This is the clearest path to
increase sales, and where our energy and efforts must remain
The 2.0% decline in same-store sales was the result of a 5.2%
decrease in average ticket, a 3.6% increase in transactions, and a
negative 0.4% impact from deferred custom framing revenue.
The gross margin rate, inclusive of occupancy costs, was 37%,
down 150 basis points from a year ago. It was caused by a 100 basis
point decline in merchandise margin primarily because of a greater
sales mix of promotional and clearance items, and a de-leveraging in
occupancy costs against declining same-store sales and average store
Selling, general and administrative expense decreased $26 million
to $246 million; as a percent of sales, it decreased 320 basis
points to 28.9%, due primarily to lower store and corporate salaries
and benefits, bonus, and severance expense.
Operating income rose $16 million to $64 million, or 7.5% of
sales, compared to $48 million, or 5.7% of sales, a year ago.
Interest expense down $15 million to $63 million, due to a lower
average interest rate on variable-rate debt and lower average debt
Adjusted EBITDA for the quarter was $107 million, or 12.6% of
sales, compared to $97 million, or 11.5% of sales, for the same
period last year.
The company's debt at the end of the quarter was $3.957 billion,
down approximately $22 million from the prior year. By quarter's
end, Michaels had $32 million in cash and approximately $539 million
of availability under its revolving credit facility. As of June 2,
it's approximately $530 million.
Average Michaels store inventory, inclusive of distribution
centers, was up 3.1% to $833,000, in part due to timing of inventory
plan-o-gram resets scheduled for the first half fiscal 2009.
Capital spending for the quarter totaled $11 million, including
$8 million for real estate activities, such as new, relocated,
existing, and remodeled stores, and $3 million for merchandise and
supply chain systems enhancements.
During the quarter, the company opened 11 Michaels stores and
relocated 4; it also closed 5 Aaron Bros. stores. The current count:
1,022 Michaels stores and 156 Aaron Brothers stores.
To read the complete report, visit www.michaels.com,
scroll down and click on Corporate Information.
HANCOCK FABRICS' FIRST-QUARTER REPORT
Net sales for the quarter were $64.1 million compared with $63.8
million in the first quarter last year; same-store sales increased
2.3%. Operating income was $0.6 million, up $2.8 million from a year
There was a net loss $0.9 million ($0.05/share), compared to a
net loss of $5.3 million ($0.28) a year ago. EBITDA was $2.2
million, an increase of $2.8 million over the same period last year.
Inventories have been reduced by $3.6 million since fiscal year
end and $17.7 million compared to the same period last year.
At quarter end, the Company had outstanding borrowings under its
Revolver of $31.8 million and outstanding letters of credit of $7.1
million. Additional amounts available to borrow at that time were
President/CEO Jane Aggers said "Although the retail
environment is still challenging, we continue to make progress on
our key operating initiatives: improving operations and reducing
debt. Our efforts have resulted in the significant increase in
EBITDA and the narrowing of our loss. We will continue to focus on
these initiatives, while providing our customers with the products,
services, and value they desire as we strive to return to
Gross margin improved to 45.1% from 44.8% a year ago, thanks to a
40 basis-point reduction in merchandise cost and a 40 basis-point
reduction in freight costs offset by reduced supply chain leverage
as store count and inventory levels have diminished from prior
Selling, general and administrative expenses decreased to $27.2
million (42.4% of sales) from $29.8 million (46.6% of sales) in the
prior year, thanks to increased labor efficiency, reduced store
operating expenses, and savings of professional fees.
During the quarter Hancock opened 1 store and remodeled 2 l. The
store count is 264 stores.
To read the complete report, visit www.hancockfabrics.com,
scroll down the page, and click on Investors.
February 10, 2009
You may be able to breathe a temporary sigh of relief regarding
the Consumer Product Safety Improvement Act – I THINK. Yesterday
the Consumer Product Safety Commission issued a one-year stay of
enforcement on certain requirements in the CPSIA legislation. Some
of the CPSIA requirements were to go into effect today.
But don't take my word for it: read the statement in the Federal
It's written in lawyer-speak, of course. It might be best if you had
a lawyer and a chemist read it, too.
Yesterday the CPSC also issued "Standard Operating Procedure
for Determination of Phthalates." (You will need a chemist for
this one.) Visit http://www.cpsc.gov/about/cpsia/phthalatesop.pdf.
The statements came the same day USA Today published a cover
story, "Changing safety rules perplex and polarize." The
article reported that four members of Congress, Sen. Jay Rockefeller
(D, WV), Sen. Mark Pryor (D, AR), Rep. Henry Waxman (D, CA), and
Rep. Bobby Rush (D, IL), sent a letter to President Obama imploring
him to ask for the resignation of CPSC acting Chair Nancy Nord.
Late Friday the CPSC adopted an enforcement policy regarding lead
limits that reportedly expanded exclusions and placed greater
reliance on manufacturer good faith. In a legislative update the Toy
Industry Association said, "The action appears to provide some
of the relief that has been requested by the makers of toys and
other children’s products, at least insofar as lead enforcement is
To read the update, visit http://tia.informz.net/tia/archives/archive_235330.html.
February 6, 2009
UPDATE: THE CONSUMER PRODUCT SAFETY IMPROVEMENT ACT (CPSIA)
As reported in the current issue of CLN (www.clnonline.com),
the U.S. Consumer Product Safety Commission issued a one-year stay
of enforcement of the new standards included in the CPSIA. However,
the stay apparently did not effect the provision that products
produced before the law and its testing requirements now have to be
off the shelf by Tuesday, February 10.
In a Jan. 31 message to members and industry contacts, Toy
Industry Assn. President Carter Keithley said "The testing and
certification requirements are deferred for one year, but compliance
with the new CPSIA standards begins in just over a week . . . and
the only way to demonstrate this compliance is through
Senator Jim DeMint (R, SC) has offered an amendment to the
American Recovery & Reinvestment Act of 2009 that would postpone
for six months the implementation requirements of the CPSIA. That
bill (the economic stimulus bill) has been passed by the House of
Representatives and is currently being debated in the Senate.
Efforts by various groups are being made to bombard Congress with
letters, faxes, and phone calls urging Congress to include Sen.
DeMint's amendment in the bill. The bill is expected to eventually
pass, but the amendment is in question. For more, visit http://tia.informz.net/tia/archives/archive_232715.html.
To contact Congress, visit http://capwiz.com/toyassociation/issues/alert/?alertid=12548611.
Furthermore, the CPSC's General Counsel had issued an opinion
regarding the non-retroactive application of the phthalate ban,
saying it would not apply to products manufactured prior to February
10, but two consumer advocacy groups, the National Resources Defense
Council and Public Citizen, filed a lawsuit in the District Court
for Southern District of New York against the interpretation, and
the court ruled against the Counsel's opinion. The Court said the
phthalate restrictions in the law would, in fact, apply to all
products offered for sale and distribution after February 10 –
including existing inventory.
Meanwhile, Representative Pete Hoekstra and Representative Henry
Waxman, Chair of the
House Committee on Energy and Commerce, have written letters to
the CPSC. Hoekstra's letter requested "that it provide my
office with clearly stated rules and standard procedures concerning
CPSIA. I have also requested that it consider exemptions where
reasonably appropriate for component part testing, as well as the
testing and certification requirements for small manufacturers and
businesses, resellers, and consignment stores."
One vendor told CLN this afternoon, "We are taking a product
off shelves as we speak."
December 3, 2008
JO-ANN'S PROFITS RISE
Net income for the third quarter ended Nov. 1 was $10.2 million
($0.40/diluted share), up 27.5% versus a year ago. The current
quarter net income includes a $1.3 million after-tax gain ($0.05)
related to the repurchase of a portion of the company’s senior
subordinated notes. Excluding this gain, net income was $8.9 million
The company has lowered its full-year guidance from
$0.95-$1.05/share to $0.75-$0.85 due to flat same-store sales
compared to the previously announced gain of 2.0%-3.5%. However, the
gross margin rate and selling, general, and administrative expense
as a percentage of net sales are expected to improve.
Net sales for the quarter were $480.1 million, essentially equal
to the $480.2 million sales a year ago. Same-store sales decreased
1.5%. Large-format store net sales decreased 2.1% to $247.2 million,
and same-store sales decreased 3.8%. Small-format store net sales
decreased 1.2% to $224.8 million and same-store sales rose 1.2%.
Net sales for the first three quarters were $1.33 billion versus
$1.29 billion a year ago, and same-store sales increased 1.9%.
Large-format store sales increased 1.7% to $687.5 million, and
same-store sales increased 0.3%. Small-format store net sales rose
slightly to $618.3 million, and same-store sales increased 3.7%.
Chair/President/CEO Darrell Webb said, "Strong execution in
the areas of our business that we can control enabled Jo-Ann Stores
to deliver earnings growth in the third quarter despite the
challenging economic environment. Our balance sheet continued to
strengthen as we generated improvements in both debt and inventory
positions. Prudent inventory management also helped us achieve gross
margin expansion in the quarter. Our core sewing and craft
businesses remained stable, as our sales decline was primarily due
to weakness in seasonal merchandise and higher ticket
categories." Mr. Webb concluded, "We remain committed to
our long-term strategic plan and will continue to proactively manage
our business to optimize results through the current economic
Gross margins for the quarter increased approximately 1
percentage point to 49.0%, due to reduced sales of clearance
merchandise and lower costs from global sourcing initiatives,
particularly on fabrics.
Selling, general and administrative expenses for the quarter
increased to $199.5 million from $199.1 million – up slightly at
41.6% of net sales compared with 41.5% due to de-leveraging of net
sales and training costs related to the new point-of-sale system,
offset to a large extent by initiatives to manage operating costs.
Operating profit for the quarter was $17.3 million, up from $16.7
million a year ago. During the third quarter the company repurchased
$20.4 million of its senior subordinated notes at a discount of
approximately 12% to par value, and recorded a $2.1 million pre-tax
gain including the write-off of deferred finance charges.
During the third quarter of fiscal 2009, the company opened six
new large-format stores and six small-format stores and closed 12
small-format stores. Year-to-date, the company has opened nine
large-format stores and six small-format stores and closed two
large-format stores and 19 small-format stores. For the entire
fiscal year the company expects to open 21 new stores, close
approximately 30 stores, and remodel 129 stores. (28 have already
been remodeled.) The current store count is 208 large-format stores
and 560 small-format stores.
The official press release will be available at www.joann.com and
a replay of today's conference call will be available at
www.joann.com and at http://www.streetevents.com or by phone at
800-642-1687, conference ID # 69142549.
December 2, 2008
MICHAELS: SALES, EARNINGS, EBITDA DOWN
Michaels reported a net loss for the third quarter ended Nov. 1
of $20 million, compared to an $18 million loss a year ago. However,
the net loss for the first three quarters is $70 million, compared
to $85 million a year ago.
Net sales declined 3.0% to $906 million, and same-store sales
fell 6.5%, due to a 2.8% decrease in average ticket, a 3.9% decline
in transactions, and a 0.2% increase in custom frame deliveries.
Fiscal year to date, sales are down 0.5% to $2.549 billion, and
same-store sales are down 4.1%, due to a 1.2% drop in average ticket
and a 2.9% drop in transactions.
CEO Brian Cornell said, "We continue to face difficult
economic conditions, and the results for the quarter reflect the
softness in spending on higher ticket items, particularly within the
seasonal and home decor categories. However, we were encouraged by
the relative strength of our core arts and crafts business which
declined only slightly for the quarter While our long-term strategic
initiatives remain a priority, in order to manage through near-term
challenges, our immediate focus is on delivering a value message
through our merchandising and marketing efforts, controlling
expenses, and preserving liquidity."
(Note: The softness in seasonal and home dec sales is similar to
what Bob Ferguson reported in his article, "Why Industry Sales
Are Down" in the current issue of Business-Wise. Visit
www.clnonline.com and click on Business-Wise in the left-hand
The gross margin rate for the quarter declined to 35.5% from
36.7% primarily due to "a deleveraging in occupancy costs
partly offset by a 10 basis point increase in merchandise margin.
Year to date, the decline was driven by "a deleveraging in
occupancy costs and a 40basis point reduction in merchandise
Other highlights of the quarter: Selling, general, and
administrative expense fell 5.4%, or $14 million, due to a reversal
of year-to-date bonus accruals. ... Operating income increased
approximately $1 million to $68 million (7.5% of sales) from $67
million (7.2% of sales). The increase was due primarily to lower
selling, general and administrative expense and transaction
expenses, partly offset by the reduction in gross profit. ...
Interest expense was lower by $18 million ($54 million less for the
first nine months) due to a lower average interest rate on the
company's floating rate debt and lower average debt levels.
Adjusted EBITDA for the third quarter was down to $112 million
(12.4% of sales), versus $118 million (12.6% of sales) a year ago.
Year-to-date, it's down to $282 million (11.1% of sales) from $321
million (12.5% of sales).
(Note: For more on EBITDA, return to www.clnonline.com and click
on Kate's Collage in the left-hand column to read "So, What IS
Third quarter debt levels totaled $4.183 billion, largely flat
compared to last year's $4.181 billion. During the quarter, the
company made a $5.9 million amortization payment on its Senior
Secured Term Loan. At the end of the third quarter, Michaels had $92
million in cash and $510+ million of availability under its
revolving credit facility, compared to $57 million in cash and $509
million of availability a year ago. As of Dec. 1, availability under
the credit facility increased to approximately $630 million.
Year to date, capital spending is down to $66 million versus $86
million a year ago. "In light of the current economic
environment, the Company will be evaluating its capital expenditure
plan for 2009 and currently expects its real estate activity to be
significantly reduced by scaling back the new store opening program
and focusing on the best opportunities available in the
Year to date, the company opened 50 new Michaels stores,
relocated nine stores, and remodeled 11 stores. It also relocated
one and closed three Aaron Brothers stores.
The complete earnings release is available on the Michael's
November 20, 2008
MICHAELS SALES DROP
Michaels reported total sales for the third quarter were $906
million, down 3.0%, and same-store sales declined 6.5%. Same-store
sales were lower because of a 2.8% decrease in average ticket, a
3.9% decrease in transactions, and a 0.2% increase in custom frame
For the first three quarters, sales have decreased 0.5% to $2.549
billion, and same-store sales are down 4.1%. – thanks to a 1.2%
decrease in average ticket and a 2.9% decrease in transactions.
Canadian currency translation reduced the average ticket for the
third quarter by approximately 0.7% and added approximately 0.3% for
the first nine months of fiscal 2008.
The company also announced that its cash position at the end of
the third quarter was approximately $92 million. In addition to its
cash balance, the company has an asset-based revolving credit
facility, which provides senior secured liquidity of up to $1.0
billion subject to a borrowing base as described in the company's
annual 10K report. As of the end of the third quarter, the company
had borrowings outstanding under this credit facility of $407
million and had additional $510 million of availability.
In the current issue, CLN reported A.C. Moore's third quarter
sales declined 4.9% to $116.7 million, and same-store sales
decreased 9.4%. Jo-Ann reported third quarter sales were flat at
$480.1 million, and same-store sales decreased 1.5%;
Michaels will release its third quarter results on Tues., Dec. 2.
July 21, 2008
THE CHA SUMMER SHOW
The show was smaller in terms of exhibitors, booths, and buyers,
but larger than CLN expected, given the state of the economy and
reports of substantial declines at the Atlanta and Dallas gift
shows. This morning there was a report that even convention
attendance in Las Vegas is down 10%. CLN should have specific
show numbers in the next issue.
Despite the smaller size, a member of Sierra Pacific Crafts, the
industry's most successful group of independent retailers, told CLN
that SPC members who attended all reported finding exciting new
products for their stores. Buyers were was cautious, but definitely
Scrapbooking is down, but leveling. One key scrapbook vendor told
CLN, "Attendance was down, but the market is where it
should be. We no longer have retailers rushing in, placing a big
order, then going out of business in six months."
There were three major topics of conversation.
1. Inflation. Some vendors seemed almost in a state of
shock as they told CLN how the cost of their raw materials
has skyrocketed. Double-digit increases two and three times this
year were not uncommon– and warnings that more increases were on
"If there is any good news in all this," a major vendor
told CLN, "it's that the retailers finally realize we have to
pass along some of these increases. For a long time they wouldn't
accept any increase; now they finally are beginning to
Part of the chains' more-understanding attitude is that they are
feeling it first hand. As they attempt more direct importing, they
are seeing price increases as inflation increases in China. The
products cost more, as does the shipping.
2. Recession. Every retailer CLN talked to said sales were
down. In some cases traffic was up, but the average sale was lower.
One craft retailer told CLN, "I sell Yankee candles. One of the
more expensive candles is a half-tank of gas. Customers are thinking
like that these days."
3. Orlando. The '09 Summer Show is moving to Orlando, on a
Tues., Wed., Thursday in late July, followed by a two-day consumer
show. (As CLN understands it, trade exhibitors will not be
required to exhibit at the consumer show.) The majority of attendees
CLN talked to opposed the move, but that might be because they could
drive to Chicago. The next issue of CLN will include an opportunity
for you to vote on the move.
Many of the specific issues of the consumer show – who can
exhibit, who can sell, how will the show be promoted, etc., have not
been completed, but that didn't stop the rumors from spreading like
wildfire. (Advice: Withhold judgment about the consumer show until
all of the details have been determined.)
May 28, 2008
CRUNCH TIME FOR THE ORPHAN WORKS BILLS
Next week (June 4-5) a group of concerned citizens opposed to the
Orphan Works bills in Congress will lobby members of the Senate and
House of Representatives. The organizations officially opposed to
the legislation are the Craft & Hobby Assn., The National
NeedleArts Assn., the Society of Decorative Painters, and a wide
range of groups representing artists, designers, photographers,
illustrators, and cartoonists.
CLN has learned from David Brog, former Chief of Staff for
Senator Arlen Specter (R, PA), that to get the attention of a member
of Congress, the magic number of communications (phone calls,
letters, emails, postcards, etc.) is 1,000.
It would be particularly helpful if there were 1,000 or more
communications received by the time the lobbying group meets with
All of the members of the House and Senate have an easy, quick
way to email them through their websites. Fax and phone numbers will
be on the site, too. (If you call, make sure the staffer writes down
To send a postcard to your Senator, all you need write is
"Please vote NO on S-2913," and your name and address.
However, do NOT send it to his/her office in Washington, DC, where
it takes as long as two weeks (because of scanning and screening)
before it's delivered to the Senator's office. Instead, go to www.senate.gov
and click on "Find Your Senator" in the upper right-hand
corner. That will lead you to your Senators' websites. There look
for the address of a district office (one in your home state) and
mail the postcard there.
The procedure is similar for contacting members of the House. Go
to be directed to your House member's website. The House version of
the bill is H.R. 5889. Again, send it to a local office, not
The two Senators who introduced the Senate version are Orrin
Hatch (R, UT, http://hatch.senate.gov/public)
and Patrick Leahy (D, VT, http://leahy.senate.gov).
Want to join the lobbying effort in Washington in person?
(Appointments have been made with various Senators.) For info about
the trip and how you can participate, call Joanne Fink or Marisa
Shapiro at 407-330-4465 or email firstname.lastname@example.org.
To learn more about the harm the Orphan Works bills would cause:
1. Go to CLN's site, www.clnonline.com,
and read "More on the Orphan Works Bills" in the current
issue. 2. Click on Designing Perspectives in the left-hand column.
3. Click on Newsbriefs, also in the left-hand column, and read the
May 8 issue.
May 8, 2008
ORPHAN WORKS BILLS TO PASS?
The Orphan Works bills are moving through Congress. These bills
(H.R. 5889 in the House of Representative and S. 2913 in the Senate)
could do serious harm to the industry, making it impossible for
designers and manufacturers to protect their designs. The House
version passed unanimously in a subcommittee and the Senate version
is being considered now by a subcommittee.
To read an explanation of the harm these bills could do to the
industry, visit www.clnonline.com
and click on Designing Perspectives in the left-hand column.
To read the current status of the bills, visit http://capwiz.com/illustratorspartnership/home.
The site also makes it remarkably easy (less than five minutes) to
email your House and Senate representatives.
Brenda Pinnick of Brenda Pinnick Designs and a member of the CHA
Designer Council and on the Professional Advisory Committee for the
Art Institute of Atlanta, summed up the problem:
"In my wildest imagination, I cannot imagine how a
designer/artist will be able to continue offering art and design for
this industry. People who have spent all their lives and devoted
their professional expertise to this industry will be left without
protection and a livelihood. EVERYTHING will become "clip
art" and it will put the art into the hands of people who can
and will, claim it as their own."
JO-ANN: STRONG FIRST-QUARTER SALES
Jo-Ann reported net sales for the first quarter ended May 3,
increased 5.2% to $446.1 million from $424.2 million in the prior
year. Same-store sales increased 4.5%. The company will report
earnings for its first quarter on May 28.
APRIL SALES: BETTER THAN EXPECTED, SORT OF
According to Thomson Financial, 19 retailers beat same-store
sales estimates, while nine missed.
Thomson Reuters said more than two-third of the 33 reporting
retailers exceeded estimates, while one-third missed, MarketWatch
reported. However, "More retailers discount more heavily than
in the past," warned Sherif Mityas, a partner at consultant A.T.
Kearney. "What they are picking up in sales they are giving
back in margins. This is not a fundamental shift that we've hit
bottom and now all is rosy."
The annual problem with evaluating March and April same-store
sales is the ever-shifting date of Easter. Plus, because of a quirk
in the calendar, this April had one extra shopping day compared to a
year ago. Combining March/April sales and comparing them with 2007
figures, the overall growth was only 1.5% percent, in line with the
average sales growth since the beginning of the industry's fiscal
year, the Associated Press reported.
According to PR Newswire, Jo-Ann's same store sales rose 4.5%.
April same-store sales figures from a sampling of retailers:
Sam's Club, +6.6% ...Costco, +5% ... Family Dollar, +4.3% ...
Kohl's, +3.5% ... Wal-Mart, +3.2% ... Target, +3.1% ... J.C. Penney,
-1.7% ... Nieman Marcus, -1.9% ... Nordstrom, -3.8% (Reminder:
Michaels, Hobby Lobby, and A.C. Moore do not report monthly sales
A number of retailers reported disappointing sales of jewelry.
(Perhaps this could be a prime time for consumers to save money by
making their own?)
March 19, 2008
MICHAELS' FOURTH QUARTER EARNINGS
Total sales for the quarter declined 4.4% to $1.301 billion from
the fiscal 2006 fourth quarter, which was a 14-week quarter. The
extra week a year ago accounted for $59 million. Same-store sales
The gross margin rate is down to 40.0% versus 41.8% a year ago,
due primarily to "lower sell-through of seasonal products and a
de-leveraging of occupancy costs due to negative comparable-store
sales performance," the company said. Selling, general, and
administrative expenses (SG&A) as a percentage of sales were
flat. Operating income increased to 15.4% of sales from 3.1% a year
ago, primarily due to the absence of $218 million in merger-related,
transaction, and related party expenses in the prior year, partly
offset by a $22 million goodwill impairment charge related to the
company's Aaron Brothers division.
Net income increased $120 million, from a net loss of $67 million
to a net income of $53 million, primarily due to the absence of
merger-related expenses. Adjusted EBITDA for the quarter was $266
million or 20.4% of sales.
CEO Brian Cornell said, "Sales performance in the fourth
quarter was below the company's expectations as customer traffic was
softer than planned and Christmas and holiday categories
underperformed. While discretionary spending was down significantly
on higher ticket, seasonal items, we experienced solid performance
in many of our core business lines."
"In the face of a challenging fourth quarter sales
environment," Cornell added, "we continued to operate
prudently. Through aggressive efforts across the company, we were
able to control costs, reduce our average store inventory levels,
and strengthen our financial position, with a reduction in our debt
level of approximately $100 million since last year and nearly $400
million since our peak post-closing level.
"Most importantly," Cornell concluded, "we
continued to make significant progress on our key strategic
initiatives, particularly the global sourcing and consumer insights
programs. As a result, we are confident in our approach to drive
long-term profitable growth as we capitalize on significant margin
enhancement opportunities and begin to transition into a more
consumer focused organization."
MICHAELS' FISCAL YEAR EARNINGS
Sales for the year rose 0.5% to $3.862 billion, but same-store
sales decreased 0.7%. The gross margin rate decreased from 38.5% in
fiscal 2006 to 38.3% in fiscal 2007, primarily due to the
"de-leveraging of occupancy expense, which increased by 50
basis points as a percentage of sales," the company reported..
SG&A expenses as a percent of sales increased 50 basis points
to 27.1%, primarily due to consulting fees and higher advertising
expense. Operating income as a percent of sales increased from 5.4%
to 9.2%, due to the absence of significant merger-related expenses.
Net income decreased $73 million from $41 million to a net loss
of $32 million. Adjusted EBITDA was $587 million or 15.2% of sales,
compared to $620 million or 16.1% a year ago.
The cash balance at the end of the year was $29 million, down $1
million from the previous year. Average inventory/Michaels store at
the end of the fourth quarter, inclusive of distribution centers,
was down 4.5% to $830,000, primarily due "to appropriate
management of inventory in light of the challenging sales
environment," the company said..
For the year, net cash provided by operating activities was up
$111 million to $268 million. Capital spending was down $43 million
to $100 million.
The debt level at year's end is down $96 million to $3.863
billion, and $392 million lower than the peak post-closing borrowing
level of $4.255 billion on Nov. 9, 2006.
During the year the company opened 45 new Michaels stores,
relocated 11, and closed three; it opened two and closed two Aaron
Brothers stores; and closed its 11 Recollections and three Star
Decorators' Wholesale stores. The current store count is 972
Michaels stores and 164 Aaron Brothers stores.
For this year same-store sales are expected to be flat and net
cash from operations and Adjusted EBITDA are expected to be
consistent with fiscal 2007 levels.
MICHAELS' CFO RESIGNS
Michaels also reported President/CFO Jeffrey Boyer will resign
effective April 4. The company will conduct an internal and external
search for a CFO; in the interim, Michaels named Sr. VP-Finance and
Treasurer Lisa Klinger to be Acting CFO and VP Finance and Corporate
Controller Richard Jablonski to be principle accounting officer.
February 17, 2008
CHA WINTER SHOW REPORT
If a trade show is produced and marketed effectively, then the
show becomes an accurate reflection of the state of the industry.
The Anaheim extravaganza was just such an event.
The show was smaller than last year. Some returning exhibitors
took fewer booths and scrapbooking is not generating as many new
vendors as it did a few years ago. Attendance was down, too. While
final figures are not yet available, the number of buyers was down
about 15%, due to the economy and a smaller number of scrapbook
retailers. There was a large group of international buyers – not
surprising given the weak U.S. dollar.
Mood. Better than expected: a) The national recession
that's apparently looming on the horizon does not frighten our
industry's independents; b) Many independents seemed to have a
better holiday season than national chains such as Wal-Mart, Macy's,
etc.; c) They were relatively pleased with January sales, too.
Scrapbooking. The aisles weren't as crowded, but a number
of exhibitors said attendees placed larger orders than usual. ... At
a CHA task force luncheon for scrapbook retailers, the consensus was
that the category's top, crucial priority must be attracting new
scrappers. ... Most attendees agreed scrapbooking seemed to be
slipping. ... The Two Peas message boards are filled with positive,
enthusiastic reports and photos from the show, while the Scrapsmack
blog is filled with its typical negative, snide comments about the
people and the products.
Crafts. Very little order writing, as usual. Many vendors
to the chains are worried by the chains' increasing attempts to go
direct to the Orient, particularly Michaels and A.C. Moore. To
maintain relationships with the chains, U.S. vendors and importers
will have to add value to their product lines. ... The extensive Crafty
Chica line from Duncan was the most unique new line CLN saw at
the show – the first attempt by a large vendor to address the
growing Hispanic population. ... There seemed to be an increase in
beads, wearable art, and basic products.
Miscellaneous. The industry is going green. There were
enough new eco-friendly products to provide a year's worth of
material for Creative Home Arts magazine's new column, "Make It
Green." ... Those looking for "the next big thing"
didn't find it. ... There was lots of talk about the Summer Show.
Summary. As is true at every show, most vendors who
introduced appealing new products had a good show; those who didn't,
February 7, 2008
JANUARY RETAIL SALES: UH OH
National retailers generally reported disappointing sales last
month, perhaps symbolized by Wal-Mart, which reported a 0.5% gain in
same-store sales. Analysts surveyed by Thomson Financial had
expected a 2.0% increase, the Associated Press reported. Same-store
sales in U.S. Wal-Marts rose only 0.2% and the company predicted
same-store sales in February would be flat to +2.%. Target's
same-store sales declined 1.1%.
Industry retailers such as Michaels, Jo-Ann, and A.C. Moore do
not report monthly sales figures.
Retailers blamed the economy, citing cases of consumers using
gift cards to purchase necessities, the AP concluded. Wal-Mart said
staples such as groceries remained strong, but home furnishing sales
were weak. One of the few retailers to exceed analysts' expectations
was Costco, which reported a 7.0% gain in same-store sales.
"Clearly, this is a reflection of a very difficult
environment for the consumer," Ken Perkins, president of the
research company RetailMetrics, told the AP. "It looks like
consumer spending is stalling."
For the next several months traffic at the nation’s major
retail container ports will see weak growth or a decline compared
with last year due to the nation’s economic slowdown, according to
the monthly Port Tracker report released by the National Retail
Federation and Global Insight.
JO ANN REPORTS 4TH QUARTER, FISCAL YEAR SALES
Net sales for the fourth quarter ended Feb. 2 decreased 2.5% to
$585.9 million but the previous year included a 53rd week, which
added $28.8 million to last year's net sales results. On a
comparable 13-week basis, fourth quarter same-store sales increased
3.3% versus a same-store sales decrease of 6.0% last year.
Net sales for fiscal year increased 1.5% to $1.879 billion. On a
comparable 52-week basis, same-store sales increased 3.5% versus a
same-store sales decrease of 5.9% last year. Jo-Ann will report its
fourth quarter and full-year results Mar. 12.
HOME SEWING ASSOCIATION SHUTS DOWN
Creative Leisure News received the following press release
We regret to advise you that after 80+ years of service to the
sewing industry, the Home Sewing Association will officially close
its doors at the end of the year.
As your elected representatives, we have endeavored to keep the
Association operating to fulfill its mission to "Get People
Sewing!" Recent marketing programs – including Sew Trendy,
Trained Sewing Educator and the Girl Scout kit promotion have shown
great promise. In addition, members and sewers alike have benefited
from our informative newsletters and website, together with our
range of industry and consumer services.
However, we have not been able to absorb the costs – and
potential liabilities – of a wrongful termination lawsuit which
was filed against the Home Sewing Association in 1996. The lawsuit
was tried before a jury in the state of New York in October 2006 and
an unfavorable verdict was rendered against HSA.
The Board has engaged in a year-long assessment of the options
available to deal with this unfavorable judgment and the additional
cost of an award for plaintiff’s attorney’s fees in the case. It
is our determination that the Association can no longer provide a
viable level of industry service given this enormous financial
Therefore, the Board of Directors of the Home Sewing Association
has made the difficult decision to cease operations as of December
31, 2007. The dissolution of the Association and its remaining
assets, such as the National Sewing Show, will be managed under the
guidance of a chapter 7 bankruptcy of the Court of New York. Updates
will be provided when information becomes available from the Trustee
on the disposition of assets. We will be filing a bankruptcy
petition for HSA in that court shortly.
We wish to thank you for your membership support and wish you
continued success in your sewing industry endeavors in the years
Dan Covitt, A.E. Nathan & Co.
Stephanie Dell’Olio, Marcus Fabrics
Martin Favre, Bernina of America
Jim Hankins, Textile Creations
Eric Herman, Air-Lite Manufacturing
Peter Isaacson, Fabric Place
Eric McMaster, Kwik Sew Pattern Co., Inc.
June Mellinger, Brother International
Johan Starrenburg, Prym Consumer USA, Inc.
Dale Sutherland, Coats & Clark
Andrew Sylvia, Cranston