Creative Leisure News
306 Parker Circle
Lawrence, KS 66049
December 4, 2000
Vol. IV, No. 23
TABLE OF CONTENTS
As usual, there will be two issues of Creative Leisure News
in January. In both of them I hope to publish information about new
products -- products that couldn't be submitted to the trade
magazines in time for their January, trade-show issues. If you have
such products that won't be covered by the magazines, feel free to
send them to me. The deadlines are the Friday before the first and
third Mondays in January. You need not send photos unless they would
help me describe the products. The quickest way is email: firstname.lastname@example.org;
or mail to 2677 Ashley Ct., Tremont, IL 61568.
Also, if you want to print a hard copy of this issue, don't just
click on the "print" button on your browser. Instead,
click on the "Printer-friendly Version" and then click
"print". It will give you a hard copy with much better
SO FAR, XMAS SALES ARE SO-SO
The holiday selling season is not off to a particularly strong
start, although many retailers, who had recently lowered their
expectations, were pleasantly surprised by the Thanksgiving weekend
traffic. There have been some sketchy reports that basics crafts
were not selling particularly well, but it's too early to make a
generalization about them.
Michaels' sales rose 2.2%. Officials conducted a conference
call to discuss the results last Thursday, but you can still listen
to a replay anytime until this Thursday at http://www.vcall.com or
by phone at 888-888-9543.
Jo-Ann's sales rose only 0.5%. Officials said they expected
December and January same-store sales to be "flat to slightly
positive" compared to the prior year. As a result, they
estimate fourth quarter earnings to be 70-80 cents/share. (That
includes the company's minority investment in IdeaForest.com.)
In commenting on Hancock's results, CEO Larry Kirk stated,
"Sales in comparable stores were down just over 1% in November,
consistent with the general slowing in retail spending that occurred
in September and October. However, we are seeing good conversion of
seasonal inventories thus far without resorting to unusual price
Meanwhile Ames continues to struggle. Sales fell 2.1% and for
the year, sales have declined 1.6%. Chair/CEO Joseph Ettore said,
"We had strong sales in the third and fourth weeks of the month
and we look forward to the balance of the holiday season. We were
particularly pleased with our Thanksgiving holiday weekend, which
met our expectations.... Soft sales in the first two weeks of the
month reduced our overall results."
Wal-Mart stores' sales rose 4.7%. On the day after
Thanksgiving, the company's sales surpassed $1.1 billion (in one
day!). Target's increased 4%, while Kmart's rose 3.3%.
Duckwall-ALCO sales rose 3.0%, but crafts were not listed as
one of the strong selling categories. ShopKo sales rose 6.8%
but the company did not specify sales in its Pamida division.
As we reported earlier, new accounting rules are affecting monthly
same-store sales figures. Now retailers count layaway sales only
when the items are fully paid for, not when they're "laid
away" as was the case a year ago.
Meanwhile, a Goldman Sachs and PC Data Online study reported holiday
shoppers spent $1.132 billion online during the week of November 19.
The National Retail Federation/Forrester Online Retail Index
reports 16+ million households shopped online in October, spending
an average of $268/person, and eMarketer's Holiday Shopping
Report projects e-tailers will amass a record $12.5 billion this
fourth quarter. How much of that will be crafts remains to be seen.
MICHAELS' INCOME SOARS 53%
For the third quarter ended October 28, net income jumped 53% to a
record $16.0 million ($0.44/diluted share), compared to $10.4
million ($0.34/diluted share) a year ago. Total sales for the
quarter rose 14% to $526.5 million and same-store sales rose 3%.
For the first nine months, sales increased 19% to $1.437 billion and
same-store sales are up 6%. Net income is $31.3 million
($0.90/diluted share), compared to $15.7 million a year ago.
CEO Michael Rouleau said, "We are very pleased with the third
quarter and year-to-date results. In view of the prevailing retail
climate, we feel that our financial performance has been
Key product categories included memory, framing, ribbon,
candlemaking, beads, wedding, and seasonal (fall/Halloween)
During the quarter, the company opened 25 Michaels stores and
relocated 8 others, and opened 9 Aaron Brothers stores and relocated
2. The current store count is 630 Michaels stores, 117 Aaron
Brothers stores, and 1 wholesale operation.
CONSO BUYS WM. E. WRIGHT
The deal has finally been consummated. After months of negotiations
and numerous rumors, Conso acquired Wm. E. Wright and
its subsidiary, Lending Textile. Wright's President/CEO, Cal
Gauss, becomes Conso's Exec. VP in charge of consolidating the
companies, and Wright's veteran Mike Fuss will become Wright's COO.
Wrights is a major supplier of ribbon, trims, and notions and had
sales of $70 million in the past year. Conso, which also owns Simplicity
Pattern, produces decorative trimmings for the home furnishings
industry. Formerly a public company, Conso went private earlier this
year via a management buyout supported by Citicorp Venture Capital.
DUNCAN BUYS ARTIS' REMAINING ASSETS
Duncan purchased what was left of Artis from Business
Factors Inc., which had foreclosed on the bankrupt company. Those
assets include the Aleene's Creative Living television series
still running on the Odyssey cable network; the Aleene's Craft Club;
the website; product lines such as Shrink-It, Aleene's
Fusible Web, and the Boxmaker; and a share in the company
formed to license the Aleene's name.
This was the second time Artis had declared bankruptcy in recent
years. As part of the previous bankruptcy, Duncan gained the white
glue business and the license to use the Aleene's name on craft and
ceramic paints and coatings.
Also as part of that previous bankruptcy agreement, Duncan and Artis
had formed the licensing company for other products such as the
Aleene's glue gun. Duncan now owns all of the licensing company.
In an interview with Creative Leisure News, Duncan Senior VP
of New Products & Marketing Mark Peters said Duncan is currently
negotiating with a third party who plans to continue Aleene's
Creative Living television series and the Aleene's Craft Club,
and to re-launch the Aleene's website.
Duncan also plans to re-launch the website and continue the craft
club. The company was still gathering information and sales data
before determining what direction to take with the newly acquired
lines such as the Boxmaker. The licensing operation will
continue and hopefully expand, Peters added.
"Aleene's is still a very, very powerful brand name,"
Peters added. "The Aleene's glue sales continue to grow
substantially. Now, with Duncan's resources behind it, Aleene's will
become a stronger brand than ever."
Any questions should be referred to Mark Peters at 559-294-3210 or
A CEO ROUNDTABLE -- OF INDEPENDENTS
For the last few years a highlight of the HIA show has been a
CEO Roundtable consisting of top execs from the industry's
major chains. As we reported earlier, the Roundtable at next month's
show will focus on e-commerce retailers. Independents have been left
out of the mix -- until now.
CNA magazine and Promotions Unlimited are sponsoring
"The State of Retailing: Independents Speak Out", which
will be held on Tuesday, January 30th, from 4 to 5:30 p.m. CNA's
editor, Karen Ancona, and Creative Leisure News' Mike
Hartnett will be the moderators.
"We just thought it was time for the industry to hear from
independents," Karen explained. The panelists include:
Dennis Assenzo, a Ben Franklin retailer in Naples, Florida
Bob Ferguson of Ferguson Merchandising, who operates one of
the industry's most successful stores in Redmond, Washington. Bob is
also a leader in Sierra Pacific Crafts and 1st Vice Chair of ACCI.
Margo Fraisl, who operates two More Than Memory stores (and
an e-commerce site, more-than-memories.com)
in suburban Chicago with her husband, Mel.
Cindy Kemp, who owns a Ben Franklin store in California.
Tony Simone, owner of Art Cove in New York City and the
e-commerce site, artcove.com.
Bob Wesselman, who owns a Ben Franklin store in Evansville,
"These are bright, outspoken, savvy retailers," Karen
said. "It should be a great seminar."
HIA RE-ELECTS ROSSKAMM, NOMINATES
Alan Rosskamm, Chair/CEO of Jo-Ann's, was re-elected
president of the HIA board of directors; other board officers
will be elected in January. Meanwhile, the Nominating Committee
chose Sandra Cashman (Fiskars) and Theodore Hesemann (Herschnerrs)
for their first three-year terms and Michael Catan (Darice),
Dee Gruenig (Posh Impressions), and Michael Rouleau (Michaels)
for second three-year terms. Their election will also be held in
LEATHER FACTORY BUYS TANDY LEATHER
The Leather Factory acquired Tandy Leather for an
undisclosed amount of cash. Tandy Leather sells leather and
leathercrafting products via mail order, the Internet, and through a
network of authorized dealers in 20 countries. Tandy Leather had
sales of approximately $7.2 million in the fiscal year ended June
30th. The Leather Factory's sales for the first nine months of the
fiscal year were approximately $22.4 million.
Leather Factory Chair/CEO Wray Thompson said, "With the
acquisition of Tandy Leather, we expect our market share to increase
in the retail and wholesale industries, and as well as in the
e-commerce sector. In addition, the proprietary assets developed by
Tandy Leather over the past 81 years, their staff of seasoned
employees, and the economies of scale inherent in a transaction of
this type are major benefits of the acquisition."
The Leather Factory,
Inc.is a multi-national marketer and wholesale distributor of a
broad product line including do-it-yourself leathercraft kits. Its
stock is traded on the American Stock Exchange under TLF. It's
currently trading about $1.25. The 52-week range is $0.75-$1.68.
THE STATE OF E-COMMERCE IN OUR
A year ago Creative Leisure News was filled with reports of a
multitude of e-commerce sites either online or about to become
operational. In the past year millions of dollars were spent; many
of the industry's most well known names were hired; and grandiose
plans -- and promises -- were made. E-commerce was the talk of the HIA
A year later, Craftshop.com, CraftClick.com, Crafts.com,
CraftProducts.com, eBookCafe.com, and others are long gone. Others
were still seeking funding when Wall Street and private investors
soured on e-commerce and never saw the cyber light of day.
The failures apparently prove that just because consumers can
buy online, it doesn't mean they will buy online.
So who's left, and why? What do they have in common? We believe the
survivors are still here because they are affiliated with profitable
operations and/or they've kept their costs low. Either way, they
don't need to sell thousands of dollars worth of products each month
just to break even, or make a profit right away -- or they have
enough ongoing financing.
Chain Sites: Michaels.com
and Joann.com are
supported by billion dollar brick-and-mortar operations. Any losses
would be a drop in the retail bucket, and it's much easier and less
expensive for them to build a cyber brand name and attract web
Independents' Sites: E-commerce sites operated by independent
brick-and-mortar retailers (More-Than-Memories.com,
and others). These sites are backed by successful stores, don't have
to appease impatient investors, and keep their costs down.
has the TV marketing blockbuster behind it. Craftopia.com
has powerful, seemingly patient investors and a very impressive
technical operation. MisterArt.com
is part of ArtisanNetwork.com
and the company has many other profitable irons in the fire. Plus,
the company sells higher-ticket items which makes it easier to
pick-pack-and-ship at a profit.
Consumers will eventually buy lots of products via the
Internet. We just don't know when. It looks like the players
mentioned above are structured in such a way that they can afford to
EMPLOYEES CAN WORK TOO FAST
Are you using a POS system? If so, the system is helpful ONLY if
your checkout clerks scan every single item. For example, if a
customer is ready to buy 15 skeins of floss and there's more than
one color, you and the vendor will have a mess on your hands if the
clerk scans one skein and then punches x15 on the cash register.
If that happens, then the system will tell you and ultimately the
vendor that you sold 15 skeins of a particular color. Re-orders will
be incorrect and soon you'll have excess inventory in one color and
a shortage of others.
Of course you encourage your checkout clerks to work quickly to
minimize customers waiting in line. But if they work too quickly and
WHAT HAPPENED TO INDUSTRY GOSSIP?
Have you noticed there doesn't seem to be as much gossip as there
used to be? The rumors are still out there, as you'll discover when
you attend trade shows next month. Here's why you may not be hearing
them as often:
1. EDI. Computers are doing much of the talking between
vendors and large retailers. The result is less talk between people.
2. Email. If you email someone rather than call, odds are you
don't chat as much. And email can leave a cyber paper trail, which
may inhibit gossip.
3. Because of companies buying other companies, your friend
is now your competitor, so you're not chatting as much.
4. Companies are growing, but becoming more
"efficient"; that's a nice way of saying the employees are
busier, and there may be fewer of them, and they don't have as much
time to talk.
SALES. Zany Brainy releases its third-quarter report today
and hosts a conference call tomorrow at 10:00 am ET. To access the
call, dial 800-491-3127. The call will be simultaneously webcast at
www.zanybrainy.com and www.streetevents.com. A replay of the call
will be available until January 4, and can be accessed at
800-625-5288. The code for the replay is 844341.
RATINGS. First of Michigan rated A.C. Moore stock as Strong
Buy ... PMG and Wedbush Morgan reiterated their coverage of Michaels
at Buy, while Robertson Stephens labeled Michaels' stock as Long
Term Attractive ... Moody's downgraded Ames' debt ratings
based on the expectation of higher average debt levels and a
sluggish retail environment in 2001, Dow Jones News reported.
RESEARCH. An October HIA survey of 300+ consumers at
the association's consumer website, i-craft.com, revealed
"large selection" was rated the most important factor when
choosing a store by 42% of the respondents. Of the respondents, all
avid crafters, 36% shop in chain stores, 19% in independent craft
stores, and 18% in "general superstores."
SCRAPBOOKING. The Memories Expo show in New Jersey
last month had 90+ booths, 176 trade buyers, and almost 2,100
consumers ... Offinger Management has added another Memories
Expo to the 2001 schedule -- Denver, September 28-29. Call Ann
Combs at 888-878-8728, ext. 3141 for information.
BROCHURES. HIA released three new publications which are free
upon request by calling 291-794-1133, or you can download them at
hobby.org: HIA Certified Professional Demonstrators and Teachers:
Your Partners in Promotion; Professional Craft Producers: The
Creative Resource; and Export to Europe -- Are You Ready?
HARDWARE. Ace Hardware is planning to build Ace stores
MEDIA. CNN/FN profiled Lion Brand Yarn company last
TAXES. The business mileage rate rises two cents to 34.5
COPYRIGHTS. The Embroidery Software Protection Coalition
was able to shut down a Yahoo club that was illegally sharing
embroidery designs. The ESPC is affiliated with the Home Sewing
Assn. Call 888-921-5732 or surf to embroideryprotection.org.
MANAGERS WANTED. Exclusive needlework stores, one in the
Northeast and one in Toronto, need store managers. Salaries in the
$50K+ range. For more information, in complete confidence, call Mike
Hartnett at 309-925-5593 or email email@example.com.
RANDOM NOTES, RANDOM THOUGHTS
1. A journalist specializing in scrapbooking called the other
day. As she described the independent memory retailer, I was struck
by how similar her description was to the original mom-and-pop craft
retailers: "Missionaries rather than merchants," as Wanda
Zeagler of Two Needles and Craftrends once described
the independent cross stitch retailers.
My caller thinks we'll see as many as 3,000 more independent
scrapbook shops open, but she worries about their long-term future.
If they remain missionaries and don't become merchants like so many
craft shop retailers, my caller's worries are probably accurate.
2. How high do you stack products on your top shelves? The Inside
Edition tv news program reported Home Depot has been sued 68
times in the past 18 months due to merchandise falling on customers,
Chain Store Age reported. Three customers have died,
including a 79 year-old woman and a three year-old girl. Granted,
falling craft supplies probably won't kill anyone, but in this
INTERNET & E-COMMERCE NEWS
MICHAELS. The second phase of Michaels.com
is functioning -- selling craft books and products now, in addition
to the extensive art print inventory. The product sections are Art,
Crafts, Decorative Painting, Floral & Home Decor, Hobbies, Kids,
Memory Books & Stamping, Needlework, and Wedding. The book
selection is quite varied, but limited to higher-ticket books. The
products are kits -- no single bottles of paint or glue, no single
skeins of floss.
URL'S. VeriSign Global Registry Services, the company in
charge of Internet domain names is now accepting Chinese, Japanese,
and Korean characters for those suffixes. So instead of 37
characters (26 letters of the alphabet, 10 numerals, and a hyphen),
the addition of Asian character sets brings the total of possible
characters to, gulp, 40,282.
THE CREATIVE NETWORK: JOB OPENINGS
For the latest job openings from the only personnel recruitment firm
specializing in our industry, click on the "Jobs" button
in the column on the left. There you'll find the latest jobs -- and
descriptions of "Jobs of the Month".
THE CLN RETAIL INDEX
A. C. Moore (ACMR). Last*: 6 3/4 ... Change**: +3/8
Ames (AMES). Last*: 2 1/16 ... Change**: -29/32
Hancock Fabrics (HKF). Last*: 3 13/16 ... Change**: -3/4
Jo-Ann Stores (JAS.A) [a]. Last*: 7 1/8 ... Change**: +5/8
Michaels (MIKE). Last*: 25 3/4 ... Change**: -3
Rag Shops (RAGS). Last*: 2 3/8 ... Change**: -3/32
Wal-Mart (WMT). Last*: 51 3/16 ... Change**: +2 13/16
CLN Retail Index. Last*: 116.125 ... Change**: -2.3%
Dow Jones Index. Last*: 10,373.54 ... Change**: -2.5%
* Dec. 1 ** from Nov. 17 [a] voting share Note: Prices are
exclusive of dividends
PINK SLIP MEMO
(Note: This was emailed from an industry friend.)
As a result of the reduction of money budgeted for department areas,
we are forced to cut personnel. Under this plan, older employees
will be asked to take early retirement, thus permitting the
retention of younger people who represent our future. Therefore, a
program to phase out older personnel, via retirement, will be placed
into effect immediately.
This program will be known as SLAP (Sever Late-Aged Personnel).
Employees who are SLAPPED will be given the opportunity to look for
jobs outside the company. SLAPPED employees can request a review of
their employment records before actual retirement takes place. This
review phase of the program is called SCREW (Survey of Capabilities
of Retired Early Workers). All employees who have been SLAPPED and
SCREWED may file an appeal with upper management.
This appeal is called SHAFT (Study by Higher Authority Following
Termination). Under the terms of the new policy, an employee may be
SLAPPED once, SCREWED twice, but may be SHAFTED as many times as the
company deems appropriate.
If an employee follows the above procedure, he/she will be entitled
to get HERPES (Half Earnings for Retired Personnel Early Severance)
or CLAP (Combined Lump-sum Assistance Payment) unless he/she already
has AIDS (Additional Income from Dependents or Spouse).
As HERPES and CLAP are considered benefit plans, any employee who
has received HERPES or CLAP will no longer be SLAPPED or SCREWED by
Once again, thanks for all your years of service with us.
Note: Creative Leisure News is published on the first and third
Mondays of each month. Your next issue will be Monday, December
Have any rumors you need checked? Company news or comments on
industry issues? Call Mike Hartnett, in confidence, at 309-925-5593;
fax 309-925-9068; or email firstname.lastname@example.org.