Creative Leisure News
306 Parker Circle
Lawrence, KS 66049
December 18, 2000
Vol. IV, No. 24
TABLE OF CONTENTS
"There's only about six customers left in this
marketplace," is a commonly heard refrain these days. Common,
but wrong. The independents are still out there, and can provide a
viable source of sales for even the largest vendor. Two cases in
1. I recently finished a profile of the Sierra Pacific
Crafts group that will run in the January issue of CNA
magazine. SPC consists of 24 independents operating 58 stores from
Illinois to Japan. The collective size struck me and I wrote,
"If these stores were owned by a single entity, they would
comprise the fifth largest craft/sewing chain in the industry, after
Michaels, Jo-Ann's, Hobby Lobby, and Hancock."
2. Karen Ancona, CNA's Editor, recently faxed me the
basic data of a new study CNA commissioned regarding the impressive
sales of independents. The results may surprise you.
The bottom line is this: if you're ignoring the independent, you do
so at your own peril.
Karen will announce the highlights of the survey at our HIA
seminar ("The State of Retailing: Independents Speak Out")
in January, and publish the complete study in February.
Ever since I reported in the last issue about the seminar, Karen and
I have received calls from manufacturers wanting to attend. Turns
out, HIA rules prohibit manufacturers from buying workshop tickets!
So Karen is getting some seminar tickets (4-5:30 pm, Tuesday,
January 30th). If you're not a retailer and would like to attend,
email me or Karen
and we'll get you a ticket.
WANG'S FILES FOR BANKRUPTCY
Wang's International filed for bankruptcy protection under
Chapter 11 on December 5th. The company has been a major industry
force almost since Robert Wang began selling macrame cord from the
trunk of his car. He soon became a distributor and a leader in the
craft and home dec industries.
Robert said, "The company appreciates the support of its
communities, thousands of customers, vendors, and all associates of
the company. Unfortunately, the company suffered enormous losses as
a result of business interruption during a system conversion in
"The company remains committed to restoring
profitability," Robert added, "and obtaining a confirmed
plan of reorganization during 2001."
(Comment: Many companies don't make it out of bankruptcy, but
I wouldn't bet against Robert. He probably is the best trend-spotter
the industry has ever seen.)
CHRISTMAS: NOT SO HOT
Holiday sales are so mediocre that some economists are predicting
the Federal Reserve will actually lower interest rates early next
year to energize the economy. The International Council of Shopping
Centers reported sales growth at specialty stores in the nation's
malls actually decreased 9.8% for the second full week of the
Meanwhile, Salomon Smith Barney retail analyst Richard Church told
Dow Jones News that sales at the discount stores he tracks,
including Wal-Mart, are falling below his expectations. In
fact, Wal-Mart said it expects December same-store sales to be at
the low end of its 3-5% increase target for the fourth quarter
because of below-plan sales the first week of December.
The lackluster sales have caused more frequent promotions and deeper
discounts -- and now bad weather has hit much of the country.
TOP STORIES OF 2000
2000 was yet another eventful year for our ever-changing industry.
Here's a summary of the events and people who made headlines:
1. Product Trends. The year didn't see any particularly hot
new categories, but memories, candles-candlemaking, soapmaking,
beads, stamping, jewelry, kids, and glass led the way. Painting and
quilting remained strong, and knitting and crochet sales grew. In
general, strong 1999 sales carried into 2000, but slowly cooled as
the year progressed.
2. Decline of Ames' Stock. Chair/CEO Joe Ettore was named the
turnaround retailer of the decade by Discount Store News about the
time problems arose with the recently acquired Hills chain. End
result: at press time the stock had lost about 95% of its value
since its 52-week high in December, 1999. Layoffs, and a 32 store
closures were announced late in the year.
3. Industry Consolidation. The trend continues. Westrim to
Bemiss Jason ... Wright's to Conso ... Noodle Kidoodle to Zany
Brainy ... Wholesale Florist to Michaels ... The European
distributor, Jonco, to Plaid ... ArtCraft to MacPherson's ... Binney
& Smith's Liquitex brand to ColArt ... Pfaff to Husqvarna ...
and numerous smaller mergers and acquisitions.
4. Bankruptcies. The legal aftermath of the MJDesigns
case continued, although it doesn't affect the "new"
MJDesigns ... Some e-commerce startups, including CraftShop.com
... Singer continued in bankruptcy ... World Bazaar
... Artis went bankrupt for the second -- and last -- time.
The remaining assets were sold to Duncan, which plans to
continue the popular tv series, Aleene's Creative Living ... Wang's
(see story above).
5. The Passing of Pioneers. Delta's founder, Wally Raley, and
Zim's co-founder, Cliff Zimmerman, passed away within days of
each other ... Longtime retailer and NAMTA leader Stan
Obermiller also passed away, as did a number of other industry
personalities, including Jim Fiege, Linda Watson, and Bob Elder.
6. Computer Snafus. Changing computer systems can be a mess,
as proven with the Jo-Ann's case, although the company is
well along the road to recovery. However, Wang's did not
escape so easily, and some well known vendors are also struggling
with the problem.
7. Jail for Perlmutter. Bob Perlmutter, the president of the Pearl
Arts & Crafts chain in New York and Florida, pled guilty on
tax evasion charges for skimming money from the stores and paying
contractors under the table for building his mansion, the largest
home in Broward County, Florida.
8. National Promotions. The Society of Decorative Painters'
Learn To Paint day ... The Craft Yarn Council of America's
Knit Out 2000 in New York and cities across the country ... HIA's
National Craft Month and "Crafts. Discover Life's Little
Pleasures" branding campaign brought the pleasures of our
industry's products to millions of consumers.
9. National Publicity. Whether it was Rosie O'Donnell raving
about Modge Podge and decoupage on her tv show, actress Julia
Roberts telling national magazines she'd like to open a craft store
someday, Katie Couric crafting on NBC's Today Show, the
growth of industry related television series on PBS, or celebrities
raving about knitting and crochet, the amount of publicity in
national, mainstream media was unprecedented.
Latest example: the January, 2001 issue of McCall's contains
a complete how-to to knit Julia Roberts' sweater. The how-to's intro
quotes Roberts saying she's teaching other movie stars to knit.
McCall's got the pattern from L'Atellier, a knit shop in
10. Copyright Problems. Consumers scanning copyrighted books,
projects, and charts and posting them on Internet sites grew to such
proportions that it attracted national publicity. But the industry
rallied and formed groups through the Home Sewing Association
and the International Needlework Retailers Guild to fight the
problem through consumer education, working with the host sites, and
planning/threatening legal action.
11. E-Commerce. As we reported in our last issue, the bubble
began to burst soon after the 2000 HIA show. Survivors
include Michaels.com, Joann.com, MisterArt.com,
Craftopia.com, and sites operated by independent
brick-and-mortar retailers and mail order companies.
12. Growth of Independents. Are there more independents than
there were five years ago? No, but their number increased this year.
The growth is coming primarily from new scrapbook and rubber stamp
stores, but we've seen some new needlework shops, too.
13. Wal-Mart. The retailing behemoth continued to increase
sales at a rate of more than $1 billion per month, but it was not
without problems. For example, a test of packaged, pre-cut fabric
was abandoned. The e-commerce site which originally contained a
smattering of craft and sewing supplies was re-designed and the
products related to our industry were dropped.
Challenges for the Chains in 2001
A.C. Moore. The company has always been known for its
well-stocked shelves. As the company expands further and further
away from its base, can it maintain that reputation?
Ames. Stop history from repeating itself. In the late 80's
Ames bought the Zayre discount store chain. The ensuing problems put
the company in bankruptcy. That bankruptcy started the chain of
events which eventually led to the death of Craft World, the
Maryland distributor that was once our industry's most powerful
Joseph Ettore led Ames out of bankruptcy and was so successful, Discount
Store News named him turnaround retailer of the 90's. But Ames
bought the Hills discount chain. Problems ensued, and the stock fell
more than 90% this year.
Hancock. The company made significant progress in
restructuring its inventory, rather than opening a large number of
stores. Can those changes be sustained and pay off as the national
Hobby Lobby. A similar challenge as A.C. Moore's: As the
company expands further and further away from its Oklahoma City
base, can it maintain the same high level of inventory
Jo-Ann's. The company was plagued with computer foul-ups due
to a systems conversion. Many of them appear to be solved, but all
the bugs must be eliminated. The new California warehouse needs to
be integrated into the system, and a replacement for VP Jane Aggers
must be found.
Michaels. In the early 90's an aggressive store-opening plan
brought the company close to bankruptcy. The company is in the midst
of another aggressive plan, but this time management seems to have
the internal structure in place to handle the growth. Still, the
company is finding itself competing in more and more cities with
Hobby Lobby, Jo-Ann etc, and strong independents.
There's also the challenge of keeping Wall Street happy, which seems
to punish Michaels for the least little glitch in its progress.
Rag Shops. A similar situation to Hancock's. The company has
focused on internal and inventory improvements which seem to be
paying off. Can the company continue to sustain the progress it's
Wal-Mart. The company keeps pushing to maintain a successful
sewing department with less inventory and personnel. How much can
you cut and still have a viable department? If the major appliance
test is successful and rolled out nationwide, critical decisions
will need to be made concerning the departments in the back of the
HOW THE INDUSTRY HAS CHANGED
Bill Shugarts left Fibercraft in 1994 and now leads Reynolds
Consumer Products' craft effort. I interviewed Bill for an
article appearing in the January issue of CNA and asked him
how the industry has changed in the past six years.
Bill said, "The industry is more sophisticated now in terms of
designing, marketing, and manufacturing, which is good for growth
and positioning into other related industries ...."
Proving Bill's point, a few days later Plaid President Mike
McCooey commented about the personnel changes at Plaid. Mike said
accurately, "With the advent of category management, channel
marketing, and customer-specific programs, the lines between sales
and marketing are increasingly blurred."
Talk about changes! When Bill left Fibercraft, no one had even heard
of the terms, "category management" or "channel
Your username and password are case sensitive. In other words, if
your password is Mike, mike or MIKE will not work. 2. If you
forget your username and password, click on "Forget Your
Password?" in the left-hand column.
RANDOM NOTES, RANDOM THOUGHTS
1. Here's an example of how the Midwestern storms are
affecting holiday sales: Peoria, Illinois has one of the most
successful (in terms of sales/sq. ft.) shopping malls in the
country. It closed early twice last week because of the weather --
and a tv news report interviewed a store manager who said sales were
2. It's now too late to send new product info to the trade
magazines in time for their January, trade show issues. But there
will be two issues of Creative Leisure News before the HIA
show, so send info to me.
(Please, only info that didn't make it to the trade magazines in
time. This is a newsletter and I don't want to turn it into an epic
filled with material readers can get elsewhere.)
The magazines will no doubt have post-show product coverage, but
don't assume the editors will make it to your booth to pick up the
new product material. They will, however, scoop up everything in the
press room, so make sure you have about 50 copies of your press
releases in the press room.
3. Karen Ancona, the Editor of CNA, is looking for
interesting occupations people had before they entered our industry.
So far we've collected a college dean, an undertaker, numerous
teachers, an engineer, a cab driver, a florist, and a nurse. Know of
any? Send me a note and I'll pass it along to Karen.
When she has enough, she'll do an article in CNA.
4. Our world is getting entirely too complicated. I received
an email last week from an industry friend whose computer
automatically lists his "numbers" at the bottom. He has
business and home addresses, an 800 phone number and a regular
business number, a fax number, and another fax number to his laptop,
a home phone, a mobile phone, and two websites. Then, of course he
has a Social Security number, driver's license number, and probably
numerous usernames and password.
It's no wonder some of you forget your passwords to this site! If
you do, just click on the "Forget Your Password?" button
in the left-hand column of your main page.
The annual directory issues of the trade magazines are not as
profitable as they were because all that was necessary was the
company's name, address, and phone. Now it includes an 800 number,
fax number, email, and website. Each listing now takes twice as much
FABRIC. We've received unconfirmed reports that Wal-Mart
has stopped its test of pre-packaged fabric.
ACQUISITION. Duncan acquired Wire Art, a Vermont
manufacturer of activity kits featuring coated wire, beads, tools,
and accessories for kids 7-12. Manufacturing, marketing, and sales
moved to Duncan's facilities in Fresno. Wire Art's founder, Chris
Gluck, continues as marketing consultant for the award-winning
PEOPLE. Bill Neu is VP/Sales & Marketing for Jones
Tones. He will also continue with his websites, Homedecorshowcase.com
and neucom.org ... DMC
named Robin Scheer Ettinger as VP, Marketing. Ettinger has held
various marketing positions with companies such as Godiva
Chocolatier, Liz Claiborne, the World Gold Council, and Escada.
AMES. Entered into an amendment agreement with its lenders
that allows Ames to record restructuring charges associated with
closing 32 stores. Subsequently, Ames announced it will take a $140
million charge in the fourth quarter and report a loss for the year.
NEW. Head Starts merged with a private label manufacturer to
form HSI Manufacturing, offering the same product line
(canvas items, denim, etc.), now from a 40,000 sq. ft.,
state-of-the-art facility. Contact Scott Nicholson at 631-366-0183
The address is Brooklyn Navy Yard, Bld. #5, 2nd floor, Brooklyn, NY
ZANY BRAINY. Third quarter revenues rose 0.1% to $76.4 million, and
same-store sales fell 10%. The net loss from continuing operations,
excluding merger-related charges and losses related to
ZanyBrainy.com, was $7.9 million, compared to a net loss of $4.2
million a year ago. There was no hot toy, such as Pokemon,
this season, officials said. On Friday the stock hit a new 52-week
low at 78 cents/share.
RATING. Banc of America Securities initiated coverage of Wal-Mart
at Market Perform ... Standard & Poor's lowered its
corporate credit and senior unsecured debt ratings on Shopko,
owner of the Pamida chain, to double-'B'-plus from
triple-'B'-minus. The ratings remain on CreditWatch
"with negative implications", where they were placed in
PEOPLE. Popular industry veteran Jane Anne Davis left Plaid
to return to school and spend more time with her family. As a
result, Mark Hill is now Sr. VP/Sales & Marketing and Dianne
Woellner-Krupp is VP/ Marketing.
STOCK. Michaels repurchased all five million shares of its
common stock authorized under its 1999 Stock Repurchase Program.
That's about 15% of the approximately 32.3 million outstanding
shares. The board also approved the repurchase of another one
million shares. CEO Michael Rouleau said, "We believe that our
stock is currently undervalued by the market. Given the strength of
our balance sheet and cash flow, we have the flexibility to make
these repurchases ... without compromising our growth plans."
SURVEY. An ACCI Internet survey revealed 51% of
crafters receive their project ideas and motivation from instruction
books; 22% from magazines; 8% from TV series; 6% from in-store
displays and demos. 12% said "none of the above".
TOYS. Consolidated Stores is selling its KB Toys chain
to the KB management team, led by CEO Michael Glazer. The team has
partnered with Bain Capital, the venture capital company that
purchased Tulip and drove it into the ground until selling it
to Duncan. (Now sales are rebounding under Duncan's
HANCOCK. CEO Larry Kirk gave an impressive, positive
presentation about the state of Hancock Fabrics at a recent Notions
Roundtable meeting, attendees tell us.
MEDIA. The December 25th edition of Forbes has an
interesting article on quilting.
DESIGN. ACCI and the Society of Craft Designers will
again sponsor the Designs for Living display and the Designer
Forum at the Chicago ACCI show July 20-23, 2001. Participation
forms will be mailed this month. Call 740-452-4541 or e-mail email@example.com
OVERSEAS. Wal-Mart plans to open another 50 stores in Germany
by 2003 and 5 more in China. The discounter already operates 95
German stores and five stores in the Hong Kong border city of
Shenzhen which do $100 million in sales, reported the Wall Street
INTERNET & E-COMMERCE NEWS
WEB SERVICE. Noted industry magazine editor and web pro
Helene Rush has established a website development service. You can
check out her services at http://www.icreateshop.com
or contact her at firstname.lastname@example.org.
ZANY BRAINY. Ended its Internet joint venture with Online
Retail Partners and will assume full ownership of its e-commerce
SITES. According to Verizon, the number of small businesses
that created a website to establish and promote business increased
by 123% from 1999 to 2000 -- but small businesses going online this
year intending to sell products actually decreased by 48%.
NEW SITE. UnitedStatesCrafts.com
has recently become operational and is recruiting professional
crafters and consumers to sell their projects at the site.
CRASH. The re-designed Wal-Mart site crashed for 90
minutes one day in mid December. That came after Media Metrix
estimated Walmart.com's traffic
to barely be among the top 50 retail sites, eMarketer reported.
THE CREATIVE NETWORK: JOB OPENINGS
The Creative Network is the only personnel recruitment firm
specializing in our industry. Click on "Jobs" in the
lefthand column for the latest job openings and featured job of the
THE CLN RETAIL INDEX
A. C. Moore (ACMR). Last*: 7 9/16 ... Change**: +13/16
Ames (AMES). Last*: 1 9/16 ... Change**: -1/2
Hancock Fabrics (HKF). Last*: 3 9/16 ... Change**: -1/4
Jo-Ann Stores (JAS.A) [a]. Last*: 6 15/16 ... Change**: -3/16
Michaels (MIKE). Last*: 27 1/4 ... Change**: +1 «
Rag Shops (RAGS). Last*: 2 1/4 ... Change**: -1/8
Wal-Mart (WMT). Last*: 49 7/8 ... Change**: -1 «
CLN Retail Index. Last*: 99.000 ... Change**: -0.3%
Dow Jones Index. Last*: 10,434.96 ... Change**: +0.6%
*Dec. 15 ** from Dec. 1 [a] voting share Note: Prices are
exclusive of dividends
NEWSFLASH ... FROM THE FUTURE
The election is finally over, but this email from a friend was too
good to omit:
December 30, 2004
WASHINGTON -- After four years of legal wrangling, George W. Bush
was finally declared the winner of the 2000 presidential election
yesterday. Bush, a Republican, will take the oath of office at noon
today and serve until Jan. 20, 2005, a term of about three weeks.
Then he gives way to the winner of the 2004 presidential election,
New York Sen. Hillary Rodham Clinton.
Facing a drastically shortened presidency, Bush attempted to strike
an optimistic tone last night. "We have a lot to accomplish in
the next three weeks," Bush said. "Reforming Social
Security alone is probably going to eat up four to five hours. Let's
get to work!" Aides yesterday were calling temporary employment
agencies in a frantic effort to fill Cabinet posts.
Bush's victory ends a four-year court battle between him and
Democratic candidate Al Gore over the results of the 2000 election.
While the dispute raged on, the nation installed an interim
president: New York Yankees Manager Joe Torre. Torre admitted
running a country and a baseball team simultaneously has been a
strain. "At times, it's been difficult to keep the two things
straight. Although, in retrospect, trading Jesse Helms to the Red
Sox turned out OK."
Torre's four years in office were marked by continued prosperity at
home and relative calm abroad. His most controversial move was
appointing Yankees bench coach Don Zimmer to the Supreme Court.
Critics charged that Zimmer lacked experience. He also spit tobacco
juice on Antonin Scalia's shoes, angering conservatives. Torre's
boldest foreign policy initiative was making Cuba the 51st state in
an effort to improve U.S. pitching.
Gore, meanwhile, has yet to concede defeat. The former vice
president issued a statement today saying, "It would be
improper and disrespectful to the democratic process to act hastily
before all the facts are known."
Observers said the biggest challenge for the Bush administration
will be working with Congress, which adjourns tomorrow and isn't
expected back until after Bush's term ends. "One day may not be
quite enough time to overhaul the tax system," a Bush aide
admitted. "But maybe we can get started and then finish it
later with a big conference call or something."
Meanwhile, Bush also must work on his legacy and prepare to transfer
power to President-elect Clinton. Clinton yesterday wished Bush well
and asked if she could start moving some boxes into the White House
basement where, she says, she plans to keep her husband.
Note: Creative Leisure News is published on the
first and third Mondays of each month. Your next issue will be
postponed until Tuesday, January 2nd. Because after all, if you're
working on January 1st, you're starting the new year working waaaay
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 email@example.com.
MY VERY BEST WISHES FOR A JOYOUS HOLIDAY SEASON AND A HEALTHY,
PROSPEROUS NEW YEAR!