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Creative Leisure News
306 Parker Circle
Lawrence, KS 66049
Phone: 785-760-5071
Email: mike@clnonline.com



Date: September 18, 2000
Vol. IV, No. 18

Printer Version


bulletHoliday Season Predictions, Pt. I
bulletHoliday Seasons Predictions, Pt. II
bulletThe IdeaForest/Jo-Ann Site, TV Series, Premier
bulletSierra Pacific Crafts Expands Again
bulletJo-Ann's Supports Industry Promo Efforts
bulletSelling To Independents
bulletFood For Thought
bulletMiscellaneous News
bulletRandom Thoughts, Random Quotes
bulletE-Commerce Update
bulletWhy Can't We Be More Like Home Depot?
bulletThe Creative Network: Job Openings
bulletCreative Network: Jobs Of The Month
bulletThe CLN Retail Index
bulletConsumers Write...


Just a note to let you know, next month we'll be moving Creative Leisure News to its own new website. Fax subscribers will receive their issues as usual, but everyone else will receive an email telling them a new issue is online. At the site, they will find the latest issue, archives of old issues, and a variety of surprises. The site will go "live" in early October, but we'll deliver the October issues the usual way until we're sure all the bugs have been worked out.
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While the strong economy continues to grow, many consumers' disposable income will be less than a year ago. Heating oil and gasoline prices are substantially higher this year. Interest rates are higher, too, for new homeowners and for consumers with adjustable mortgages.

Other factors include the absence of Y2K fears (remember those?) to boost spending, and heavier debt loads for consumers who have spent more than they have saved in the past year. People aren't making as much money in the stock market this year, either.

The lackluster back-to-school season may be evidence that a slowdown in consumer spending has already started. If so, look for this holiday season to have more retail promotions, which will hurt stores' margins.

A.G. Edwards analyst Robert Buchanan to forecast flat or lower earnings for 9 of the 14 retailers he follows, Business Week reported.
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How will all these general economic trends affect our industry? It may not necessarily portend a tough season. A long-held, if unproven, theory says consumers who feel a need to reduce spending may make more holiday presents instead of buying readymades.

Perhaps it's the unseasonably hot weather under which much of the country has been suffering lately -- or just the typical summer doldrums. Let's hope so.

On the other hand, we're hearing reports from vendors in various categories that business is flat. A major exception to the gloomy talk is scrapbooking, which continues to grow in terms of overall dollars, number of stores, and number of vendors.

Still, it's hard to generalize from complaints by U.S. vendors that more consumers aren't in a buying-and-making mood. Here's why:

1. At least one major chain apparently is continuing to suffer from bugs in its new computer system. Empty peghooks mean lost sales opportunities. Maybe the consumer isn't interested, but if the shelf is empty, we'll never know.

2. Another chain seems to be increasing its use of private-label, imported items rather than buying U.S. products. So the chain might be doing well, but U.S. vendors will never know.

3. We're hearing a growing number of complaints about buyers being far less interested in considering new products. Maybe consumers would love some of these new products that aren't being given enough buyer consideration, but we'll never know.
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IdeaForest has launched the re-designed joann.com for Jo-Ann Stores. If you surf to IdeaForest.com, you'll find the message, "IdeaForest has partnered with Jo-Ann Stores, the nation's leading fabric and crafts retailer, to inspire and serve your creativity, in the comfort of your own home or in the Jo?Ann store near you," and a link to joann.com.

The joann.com site features include a "Project Finder," which allows customers to locate projects based on skill level, time, and budget; access to IdeaForest's panel of craft experts; and Street Fair, where consumers can sell their projects.

And, of course, e-commerce. The major shopping categories are Book Store, Decorative Painting, Floral, General Crafts, Holidays, Home Accents, Kids, Mind & Body, Quilting, Rubber Stamping, Scrapbooking, Sewing, and Yarn & Stitch. A full fabric line will be available soon.

Some examples of the pricing: Ceramcoat and Folk Art are each $1.09. Red Heart Super Saver Yarn is $2.79/skein.

IdeaForest merchandisers will make all decisions regarding product assortment on the joann.com site. Vendors should contact Bob Kendig or Lesley Siegel. 310-62-4472.

The site also includes "Partner Stores" which sell art and framing; art materials, hobbies, woodcrafting, fresh flowers, decorative painting, quilting, and "unique" art and gifts.

IdeaForest also announced joann.com's Creative World, a series of 52 hour-long programs that will air on ValueVision, a home shopping network, over the next 14 months. The network is beamed into approximately 36 million homes. The series, which premiered last Thursday, will center on themes such as Christmas tree decorating, knitting projects, etc. IdeaForest's panel of experts (Dee Grunig, Priscilla Hauser, Kathy Lamancusa, etc.) will be guests on the series.

The next shows will be September 28 and October 12 at 1 pm EST, and every Thursday beginning in November.

IdeaForest officials plan to support the joann.com site with the tv series, "heavy" on-air promotions including a new tv commercial, new print ads in consumer media, a direct mail campaign to Jo-Ann Stores' customers, and in-store promotional displays in the 1,000-plus Jo-Ann and Jo-Ann etc stores.

"We want joann.com to be known as the earth's largest creativity store," said IdeaForest's President/CEO Rich Bergsund. "Our partnerships with Jo-Ann Stores and ValueVision television help us serve consumers whenever and wherever they like to shop."
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Sierra Pacific Crafts (SPC) has added two new members to its exclusive, worldwide network of independent craft retailers: Hannah's Home Accents, of Chicago, and BFS, Inc., of Hawaii.

"We are very fortunate to have these two tremendous companies on our team," says Emma Gebo, SPC board president and Pocatello, Idaho, member store owner. "Both Hannah's Home Accents and BFS are on the cutting edge of retail crafting and will provide a wealth of knowledge to our network."

The additions boost SPC's membership to nearly 60 retailers in 11 U.S. states and Japan.

Hannah's Home Accents is greater Chicago's largest craft/home accents store, covering more than 30,000 sq. ft. Owners Don and Jane Marski bring more than 50 years of retailing experience to SPC. "This is an incredible opportunity for us to be part of such an elite group," says Don Marski. "As independents, it is important to find a group of people in the industry that understand our business. We found that in SPC."

BFS, Inc. is a Hawaii-based retail company operating 18 craft/hardware stores throughout the Hawaiian Islands. The Kamitaki family, BFS owners, opened its first Ben Franklin Craft store in 1951 on the island of Maui.

Based in Woodburn, Oregon, SPC began in the late 1970s as a small Northwest co-op and has since invited select members from around the globe to join its network. SPC strives to maximize the success of its member stores and vendor partners through cooperative strategies in marketing, purchasing, education, operations, networking, and fellowship. Hannah's Home Accents and BFS are the first new members since August, 1999 when four Ben Franklin stores in California and Nevada joined the group.
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We're into the most active promotional month in the industry's history, thanks to special events sponsored by the Society of Decorative Painters (SDP), the Hobby Industry Association(HIA), the Home Sewing Association (HSA), and the Craft Yarn Council of America (CYCA).

Jo-Ann's is taking advantage of most of those efforts by declaring September as Creating a Difference Month. (CYCA's Knit-in takes place in New York.)

* Sew for the Cure (September 9-30): Every customer who donates $1 to breast cancer research receives 12-page Sewing Idea booklet filled with ideas for making everything from evening bags to ribbon pillows. Sew for the Cure is an HSA initiative to raise money for breast cancer research. Last year, Jo-Ann's donated $100,000 to the cause and hopes to increase that amount this year.

* Create a Difference Celebration (September 15-17): A portion of the weekend's proceeds will be donated to breast cancer research. In addition, on September 15 from 5-10 p.m., all customers will receive 10% off all transactions, as a special thank you from the store.

* Learn to Paint Day (September 16): Customers can see finished projects and receive project sheets about painting techniques. Some stores will also host a make-it/take-it class on painting a paper mache heart-shaped box, taught by SDP members, from 10-12 am and 1-3 pm.

* A Family Craft-In (September 23) will include in-store demos from 11 am - 3 pm. Children, parents, and grandparents can learn together to make an autumn leaf picture frame, a photo transfer pillow, a flower pot wreath, valances and swags, and a decorated haunted house cake. They can also create a bookmark as part of the HIA-sponsored promo.

Comment: trade groups spend a lot of money, and volunteers spend a lot of time, to create nation-wide promotional efforts like this. It's a waste of that time and money if retailers don't take advantage of these promotions by creating local, in-store events.
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A leading manufacturer/importer with a nationwide sales organization and a very solid financial standing is looking for opportunities to purchase and/or sell items/lines to its established base of independent businesses. Have a great product but need a sales force and a method of distribution?

This could be a viable solution to an increasingly common dilemma facing many manufacturers these days. They want to lessen their dependence on a handful of large accounts, but don't have the sales force to adequately reach the independent base. The vendor could sell his/her product to this company, which would then re-sell to its independent customer list, or, have this company act as its sales force to independents.

For more info, contact Mike Hartnett, in complete confidence, at 309-925-5593 or email mike@clnonline.com.
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Is your biggest customer your biggest profit source? Not necessarily, says The Selling Advantage, a bi-weekly newsletter for sales professionals. "Recently the correlation between size and profitability has become much less clear," wrote Neil Rackham and John DeVincentis. "The experience of a major U.S.-based component manufacturer provides a typical example. Not long ago it analyzed the profit contribution of its 10 largest accounts. In 1987, these accounts had represented 72% of overall profit. Ten years later, in 1997, this contribution had shrunk to less than 40%. Every one of the top ten accounts was highly profitable in 1987. By 1997, two of these accounts were creating a loss for the company and two others were barely breaking even."
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WANG'S. Responding to rumors circulating through the industry, Suzy Wang said the rumors began when Wang's experienced a system-wide failure during a computer conversion last April. The problem halted deliveries, including most Christmas items, until July. It affected the business "like an earthquake," she told CNA editor Karen Ancona. The system is working now and the company is shipping. She said she thanks the customers who have stood by the company and looks forward to doing business with them in the future. She added that the company intends to stay in the craft industry -- with a re-focused line -- and plans to exhibit at HIA in January.

SEWING. Consumers are beginning to complain on sewing-related Internet sites about Wal-Mart testing the idea of pre-cut fabric replacing bolts. There is even talk of gathering petitions to protest. One woman complained on sewingworld.com that the nearest place she can buy bolt fabric (other than Wal-Mart) is 40 miles away. No official word on how the test is doing.

MEDIA. Watch for an upcoming issue of Time. A reporter interviewed Jim Hedgepath of Pegasus Originals, including a 3-hour photo shoot, about the Internet copyright problem.

PEOPLE. Industry veteran Karen Kilbourne has joined Krause Publications as Account Executive. She'll be working with CNA, Craft Supply Magazine, Arts & Crafts, and Great American Crafts ... Artisan Network, the umbrella for MisterArt.com, StudioSource.com, etc., hired Paula J. Charles as Chief Financial Officer. She had served as Sr. VP, Finance and MIS, for US Franchise Systems.

JOB. Major soft craft manufacturer is looking for a Regional Sales Manager for the Southeast, operating out of Atlanta. Compensation in the high 60's. For more, call Mike Hartnett in complete confidence, at 309-925-5593, or email mike@clnonline.com.

SITES. Duncan has revamped the craft portion of its duncancrafts.com site which offers a wide variety of free painting and craft projects.

STOCK. Wedbush Morgan initiated coverage of Michaels with a Buy recommendation. Michaels repurchased 694,000 shares of common stock for $26.6 million from the end of the second quarter through Sept. 8. In July 1999, the board had approved the repurchase of up to 5 million shares. As of Sept. 8, Michaels had about 36.3 shares of common stock outstanding ... Merrill Lynch reiterated its coverage of Wal-Mart at Near-Term Buy/Long-Term Buy and Banc of America Sec initiated coverage of Wal-Mart at Buy.

PERSONNEL. The excellent newsletter published by The Creative Network, the only personnel search firm specializing in our industry, is now available by email. And it's free! If you'd like to receive it, go to www.creativenetworkinc.com or e-mail gail@creativenetworkinc.com.

DIVIDEND. The Hancock board of directors declared a cash dividend of 2.5 cents/share on the outstanding common shares, payable October 15 to shareholders of record October 1.

RATINGS. Standard & Poor's raised its corporate credit, senior unsecured debt, and bank loan ratings on Michaels to double-B from double-B-minus. S&P said, "The ratings on Michaels Stores reflect the challenges of managing rapid store growth and improving execution at the store level, particularly in inventory management and service," Dow Jones News reported. S&P thought the risks were minimized "by the company's position as the only retailer in the arts and crafts industry with a national scope, and continued improvement in profitability."

LEATHER. In November, The Leather Factory will open two company-owned warehouse sales centers in the Dallas (Mesquite) and Houston (Missouri City) areas.

VOTING. Clerks will hand out federal voter registration forms outside Wal-Mart stores and SAM'S Clubs, September. 21-22. Customers complete the forms, add postage, and mail them. The company also will register employees at its distribution centers. Officials estimate up to 10 million potential voters will pass through 2,300 Wal-Mart stores and SAM'S Clubs during those two days.

STORES. Ames will open 8 stores in the Chicago area and two in Columbus, Ohio area this Thursday. Two additional stores are scheduled for Chicago this year.

NEW. Toys R Us says it will build the world's largest toy store in Times Square in New York, opening in the summer of 2001.
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1. The expansion of Sierra Pacific Crafts is an additional reminder that vendors are foolish to operate on the assumption that there are only a half dozen viable retailers in the industry. Collectively, the SPC members operate about 100 stores; some of them are among the largest-grossing stores in the industry.

2. Why are these SPC stores so good? A few years ago, I had a friendly disagreement with an SPC member who operates 10 stores. I said if you have 10 stores, you're a chain. He disagreed vehemently, claiming he was still an independent. Hmmm. Maybe these stores are so good because of that kind of attitude.

3. One thumb up to Wal-Mart and Kmart for requiring customers to prove they are over 17 before buying mature-rated video games. ("Mature" is a euphemism for very violent.). It would be two thumbs up if they didn't sell such games at all.

4. In the Everything Comes Around Again Department: Mark Lee at AMACO reports a resurgence of Friendly Plastic, which is being used with stamping.

5. I talked to Larry Shook recently. As we reported earlier, Larry closed his distributorship, Craft & Hobby Supplies. "I didn't lose placement; I lost customers," Larry said, referring to the likes of Piece Goods and Old America. He still has Tolin' Station's excellent metal line for sale -- earlier he sold the transfer paper line to Loew Cornell. Interested in buyiing the entire line? Call Larry at 336-370-0670.
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ACQUISITION. CraftClick.com acquired CraftPlanet.com, a community site with an idea library, message boards, columnists, etc. CraftClick will add e-commerce features to the site soon. CraftPlanet was owned by Deborah Sweigart, former webmistress and tv personality for Aleene's Creative Living.

WOMEN. In a recent study by Media Metrix and Jupiter Communications, women now outnumber men, 50.4% to 49.6%, on the Internet, Reuters reported. While the total number of Internet users grew by 22.4% during the past year, the number of female users grew by 34.9%.

STARTUPS. The Seattle Times published a fascinating history of ArtPassion.com, a site selling art prints and posters. It chronicles the company's steps -- and mistakes -- in such detail that it becomes words of wisdom for anyone thinking about starting an e-commerce site in our industry. Surf to http://seattletimes.nwsource.com/news/business/html98/art10_20000910.html.

RESEARCH. Kathy Lamancusa's recent TUESDAY'S TREND TALK TO TRANSFORM TOMORROW reported on the Shopping Index VIII by Greenfield Online. Why consumers are shopping online: Save time, 60% ... Avoid crowds, 47% ... Find the lowest price, 46% ... Buy hard-to-find items, 35% ... Better selection, 29% ... More product information, 22%, ... Easier to ship, 15% ... Good gift ideas, 14%. Why consumers do not shop online: Shipping charges, 51% ... Can't see/touch items, 44% ... Can't return items easily, 32% ... Worried about credit card safety, 24% ... Can't ask questions, 23% ...Takes too long to load screen, 16% ... Worried about delivery time, 15% ... Enjoy shopping offline, 10%. To subscribe to Kathy's free newsletter or to learn about her seminars and consulting services, email kathy@lamancusa.com.
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The following letter is from Lisa Shepard, the Creative Director for HTC, Inc.:

As an insider in the sewing/craft industry, I visit our stores to buy supplies for my projects and survey our industry from the consumer's point of view. I make mental notes about assortment, layout, lighting, displays, sale items, etc. I also pay attention to the staff's level of product knowledge, helpfulness, and friendliness, plus conversations with other shoppers.

During a recent trip to my local sewing/craft store, I overheard an exchange between the sales associate and a customer at the fabric cutting table.

The customer had selected a gorgeous black-and-ivory shantung dress print and described her plans to make dresses for herself and her daughter. Then she asked for interfacing for the fabric. The sales associate replied, "Oh, what kind do you want? I don't know anything about that stuff. I don't use it."


The customer said, "I don't know either, but I want the iron-on stuff; you know, the fast, easy way. Just give me the CHEAPEST one!"


The clerk admitted her ignorance of interfacing again, while claiming she sews regularly. She pulled out two fusibles, one non-woven (craft backing!), and one woven. Naturally, the non-woven was cheaper ($2.55 vs. $3.49), but I could tell it wasn't right for the project.

So I volunteered, "I think that might be too heavy. Maybe there's a better one." I returned from the nearby interfacing area with a much more compatible (and by coincidence, less expensive) alternative, a non-woven priced at $2/yard. The customer was thrilled.

Then I asked the clerk, "So how DO you sew without interfacing?" (You can only take polar fleece so far, I thought).

The clerk admitted she sticks to styles that don't need it, stating again that she didn't understand the need for it. Worse, she didn't seem to care to learn.

When the clerk announced her plans to make a button-down shirt for her boyfriend, both the customer and I tried to explain the need for support in the collar, cuffs, and placket.

I left the store with a sinking feeling about how many times this scenario plays out in fabric stores, not only regarding interfacings, but sewing in general.

Consumers don't expect the store staff to be experts in every phase of sewing or crafts, but dealing with employees who have some grasp of the basics (like interfacings) shouldn't be too much to ask in a specialized retail environment like a fabric store.

When I visit Home Depot, I don't expect every employee to be able to build a house from the frame up. But when I have a question, I receive a useful answer because the employees have at least a basic working knowledge of what they're selling and why.

This is obviously a big part of Home Depot's success. Can the same be said for most of our industry retailers?

Unfortunately, many of our customers complain about encountering sales associates who either don't know or don't care about what they're selling. It's up to the storeowners and managers to promote the Home Depot approach as much as possible, and to make educational resources available to their staff on a regular basis. It's a crucial for retaining current customers and attracting new ones.

Comment: HTC offers a free, 6-page brochure of interfacing products, with selection and fusing tips, preshrinking hints, etc. It's available to retailers, educators, consumers and sewing guilds by written request. Please email info@htc-inc.net, write to HTC, Inc, 103 Eisenhower Parkway, Roseland, NJ 07068, or visit www.htc-inc.net for more information.
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The only personnel recruitment firm specializing in our industry has the following job openings. Call 360-834-0802; fax 360-834-0702; email jessica@creativenetworkinc.com; or check www.creativenetworkinc.com.

CENTRAL: Design Department Manager (crafts) ... Marketing Coordinator (floral, wedding) ... Product Manager (floral, wedding).
CENTRAL/WESTERN: Product Designer (seasonal).
MID ATLANTIC: Director of Sales & Marketing (gift, novelty) ... VP Sales Account Executive (ribbon, trims) ... VP Marketing (trims, fabrics) ... VP Marketing (soft crafts, trims).
NEW ENGLAND: Assistant Art Director (fine art) ... Director of Circulation.
NORTH CENTRAL: Branding Manager (high tech) ... Director of Sculptural Team (3D product design) ... Director of Sports Collectibles ... General Manager (sales & operations) ... Editor/Manager (web/book content) ... Oracle Developer/Web Master ... Product Development/Designers ... Programs Manager (high tech) ... Group Product Manager (direct marketing experience) ... Product Development VP (gifts/collectibles).
PACIFIC: Ad Copy Production Manager (overseas experience) ... Director of Product Management (crafts) ... Senior Product Development Manager (crafts).
SOUTH: Product Manager (school, office supplies) ... Senior Art Director (marketing communications).
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Position: Product Manager (floral, wedding) ... Salary: $55-70K, plus benefits and relocation ... Location: Mid-Central ... Description: Aggressive, fast paced manufacturer ... Responsibilities: Complete management of assigned wedding and floral lines and new product development; provide and maintain the annual strategic plan; create and manage timelines for new product or projects; work with directors to implement merchandising ideas (press releases, displays, plan-o-grams, packaging, etc.) ... Qualifications: 5-10 years experience; and excellent communication, organization, and analytical skills. Some travel (about 25%) required.

Position: Senior Product Manager ... Location: California ... Description: Develop, manage, and execute key product lines; contribute to the product development effort from the concept (sourcing, costing, sampling, and packaging) through the final launch (attaining margin goals and timely manner of delivery of goods); manage projects with multiple items within a line (and often within a package, such as a kit); update and manage a weekly status report; identify new product opportunities and/or line extensions; and work cooperatively with other departments and vendors ... Qualifications: scrapbook/stationery industry experience preferred; strong marketing, communication, organization, and analytical skills; 3-5 years of product management experience; computer literacy; Far East development experience a must; bachelor's degree; an interest in crafts or hobbies a plus.

For more about these positions, contact The Creative Network at 360-834-0802.
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A. C. Moore (ACMR). Last*: 7 7/8 ... Change**: -1 7/32
Ames (AMES). Last*: 5 11/32 ... Change**: +5/32
Hancock Fabrics (HKF). Last*: 5 ... Change**: -1/8
Jo-Ann Stores (JAS.A) [a]. Last*: 6 1/4 ... Change**: -7/16
Michaels (MIKE). Last*: 40 9/16 ... Change**: +4 3/16
Rag Shops (RAGS). Last*: 2 13/32 ... Change**: -3/32
Wal-Mart (WMT). Last*: 51 7/8 ... Change**: +3 1/16
CLN Retail Index. Last*: 119.313 ... Change**: +4.9%
Dow Jones Index. Last*: 10,927.00 ... Change**: -2.8%
*September 15 ** from September 1 [a] voting share Note: Prices are exclusive of dividends
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The consumer is always right, right? Yes, in theory at least, but sometimes when the consumer writes .... you have to wonder. The following is a letter an industry manufacturer received and shared with us:

"I heard that you can wallpaper with fabric. You would use a staple gun and put it up that way and then use trim to cover over the staples. It sounds interesting. Could you tell me how to do this? Also how do you cover over the seams? Also the person said to use a king size sheet. We can not paint because we have a parrot. Thank You. Arlene"

The parrot reminds us of years ago when a Central Illinois retailer told us this story: A woman walked into the store and asked the clerk to special order a frame that was much deeper than a normal frame. The woman's parakeet, Bob, had died and her brother was going to stuff it for her. Hence the need for the frame.

The clerk ordered the frame. The next day the brother came in, wanting to cancel the frame order because his cat ate poor Bob. He said if he had to pay for the frame, he'd get another parakeet that looked like Bob, kill it, stuff it, and fool his sister.

The clerk said no, the brother wouldn't have to pay for the frame. Years later, the store still had the frame in stock.

Do you have a funny, unusual, or touching letter or story about a consumer? Send it to us and we'll share it with CLN readers. We'll protect everyone's privacy and share some smiles.
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Note: Creative Leisure News is published on the first and third Mondays of each month. Your next issue will be Monday, October 2nd.

Need any rumors checked? Company news or comments on industry issues? Call Mike Hartnett, in confidence, at 309-925-5593; fax 309-925-9068; or Email to mike@clnonline.com.

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