Craft Business News Briefs - April 2006
Michaels Stores Up for Sale
Michaels Stores Inc., an arts and crafts retail chain, put itself up for sale Monday, March 20, and said its longtime president and chief executive, R. Michael Rouleau, is retiring.
Michaels said its decision to put itself up for sale as part of its broader exploration of its strategic options was driven by a desire to boost shareholder value and improve its financial performance.
The Irving-based retailer said it would leave the CEO post vacant, and named Jeffrey N. Boyer and Gregory A. Sandfort as co-presidents to succeed Rouleau in that position. The company said Rouleau was leaving "after a decade of exemplary service."
Boyer was previously executive vice president and chief financial officer, while Sandfort was formerly executive vice president and general merchandise manager. Boyer will continue to hold the finance chief's post, while Sandfort will take on the role of chief operating officer. Both co-presidents will report to Chairman Charles J. Wyly Jr. His brother Sam is vice chairman. The Wyly's are Texas financiers who took control of Michaels in 1984 and own more than 8 percent of the company.
Michaels Stores owns and operates 896 Michaels stores in 48 states and Canada, 165 Aaron Brothers stores, 11 Recollections stores and four Star Wholesale operations.
Rouleau, a former Lowe's Companies Inc. executive, has been CEO since 1996. Michaels was losing money, but within a few years resumed aggressive expansion of the Michaels and Aaron Brothers chains and bought a wholesale decorators' company. More recently, it opened stores targeting scrapbooking enthusiasts.
Lewiscraft Files For Bankruptcy
Lewiscraft, the 90-store Canadian chain, filed for bankruptcy and will close approximately 10 stores, according to the Canadian Press. The chain has 200+ full-time and about 400 part-time employees. "I believe that any restructuring will include store closures and employee terminations, and potentially, lease renegotiations," said President John Wilcox. "The objective of management at this time will be to keep Lewiscraft operating and to close only those locations which are clearly not viable."
Lewiscraft was founded in 1913 in Toronto to sell leather-crafting supplies and expanded into crafts in the 1970s. It was bought out of receivership by Lance Cove Investments in 1996. Wilcox told the Canadian Press the company has been seeking a buyer since last July, has lost money in six of the last eight years, and probably will again this fiscal year, which ends Apr. 30.
Society of Creative Designers Votes To Dissolve
Prior to the recent CHA show, the board of the Society of Creative Designers voted to dissolve the organization pending a vote by the membership. During the show a committee representing SCD, CHA, and CHA's designer section met to discuss unification efforts.
Plaid Celebrates 10 Years of One Stroke Painting
Plaid celebrates the 10th anniversary of FolkArt One Stroke Painting with Donna Dewberry with the publication of a new book, Ten Wonderful Years, and a new Anniversary Brush Set - embellished with rhinestones in a signature case.
Simply Quilts Cancelled
HGTV announced it will not be producing new episodes of Simply Quilts. Reruns will air on HGTV and DIY at least through 2006.
Rosen Media Acquires Crafts Business Magazine
Rosen Media, a division of The Rosen Group, has purchased Crafts Business magazine from founding publisher Larry Hornung. Hornung will step down as publisher after the upcoming May/June issue, which mails to subscribers in mid-spring.
Wendy Rosen, president and founder of The Rosen Group, praised Hornung for his work in creating a business magazine specifically for artists. "Larry has built a strong foundation, and we will expand on it, continuing to provide readers with successful arts business role models in the magazine's feature pages while staying true to its editorial mission," Rosen said in a statement. "Our goal is to develop an editorial advisory board that will guide the magazine's development and growth."
First published in July 2004, the magazine is available by subscription and is distributed nationally at major retail and wholesale craft shows, including the Smithsonian Craft Show, the Philadelphia Museum of Art Craft Show, Paradise City Arts Festivals, and the Philadelphia Buyers Market of American Craft, which is produced by The Rosen Group.
Primedia Considers Selling Crafts Unit
Primedia Inc., a publisher of car and other special interest magazines, said it has hired investment bank Goldman Sachs to help it explore selling its crafts division. The crafts division publishes magazines, Web sites and other material for scrapbook, sewing and quilting enthusiasts. The business generated about $60 million in sales last year.
"While our crafts division is a market leader with an extremely loyal customer base, a sizable roster of advertisers and multiple revenue streams including events, licensing and merchandising, we are increasingly focused on growing our properties dominating the male, 18-34 market," said Dean Nelson, chairman, chief executive and president, in a statement. Primedia said it hasn't made a decision about whether it will sell the business, adding it could not assure that any transaction will occur, or the terms of a sale.
Jo-Ann Stores Posts Loss
Fabric and craft retailer Jo-Ann Stores Inc. posted a quarterly loss as it took a $27 million charge for goodwill impairment. The company cited a "challenging" upcoming year and said sales at stores open at least a year would decline in the first half.
Jo-Ann said gross margin contracted in the quarter to 41.9 percent of sales from 45.4 percent a year earlier because of higher markdowns. General and administrative expenses rose due to an increase in advertising and logistics costs. "The challenges of a slowing market and declining traffic were exacerbated by merchandising and marketing decisions that proved to be ineffective as we tried to counter negative industry trends during the year," Chairman Alan Rosskamm said in a statement. The company said it expected same-store sales to fall 4 percent to 5 percent in the first half, with slight improvement in the second half.
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