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Craft Business News Briefs - June 2005

RoseArt to Pay $300,000

Arts and crafts company has agreed to pay $300,000 to settle charges it belatedly reported problems with soap-making kits that resulted in burns to 10 children.Glamour Gear Soap Making Kits, sold by RoseArt Industries Inc. for children age 8 and older, included soap, molds and a plastic cup to microwave the soap. Heat could deform the cup or create a hole in the bottom, according to the Consumer Product Safety Commission. Between Jan.1998 and Jan. 2002, the company received 10 reports of children suffering burns from hot soap when they picked up the cup, the company did not tell the government of the problems and ensuing litigation until Feb. 2002, the safety agency said. Federal law requires that companies immediately inform the CPSC after discovering any product defects that pose injury risks or violate standards. 125,000 of the soap kits sold from 1997 through 2001. They were recalled March 2002.
Mega Bloks to Buy Rose Art Industries

Mega Bloks Inc., the world's second- biggest maker of toy building blocks, agreed to purchase privately held arts-and-crafts company Rose Art Industries for $315 million in cash and stock. Rose Art makes items under brands including Fun Dough, Fuzzy and Magnetix and manufactures products for companies including Eastman Kodak Co., Montreal-based Mega Bloks said in a statement.

The company will also assume $35 million in debt held by Livingston, New Jersey-based Rose Art. The purchase will allow Mega Bloks to expand in the U.S. and make it "one of the largest players in the U.S. arts and crafts market,'" Mega Bloks Chief Executive Officer Marc Bertrand said.
Counterfeit Postal Money Orders: 160 arrests have been made in the United States since October in connection with fraudulent US postal money orders, according to the US Postal Inspection Service. Many are "good quality" counterfeits coming from Nigeria and Ghana, Africa, and Eastern Europe. For more information on identifying counterfeit money orders go to

PayPal Expands Services

Online payment processor PayPal anounced Website Payments Pro. The new product suite will feature express checkout purchases, offer an application programming interface (API) for implementing PayPal services, and support for phone, fax and mail orders. Website Payments Pro is expected to cost $20 per month. Transaction fees range from 2.2 to 2.9 percent plus 30 cents. The company plans to waive the $20 monthly until later this year.

Express Checkout: Fast checkout and buyers are not asked to enter personal data.

PayPal Direct Payment API: Using the API, merchants can process credit card payments directly on their Web sites. Buyers can choose to pay with PayPal or by credit card, buyers don't need to have a PayPal account. While the payment is being processed, PayPal is invisible to the user. Third-party shopping carts supported at launch include CityMax, CoolCart Pro, eMartCart, iBuilder, Mal's E-commerce, My eBiz, 1ShoppingCart and LaGarde's StoreFront, according to PayPal.

Virtual Terminal: Designed for merchants who need to accept payments from customers not placing orders online, it supports sales made by phone, fax and mail, or in-person. Businesses don't need to maintain a separate merchant service account. After the order is made, merchants process the sale using a PayPal-hosted payment form.
Innovo Group Announces Sale of Craft Accessory Business

Innovo Group Inc. has finalized the sale of its Innovo Inc. craft business to Loew-Cornell, Inc. the sale of the craft business is consistent with and furthers the Company's intention to focus its principal business activities on branded and private label denim and denim-related apparel products.

Marc Crossman, President and CFO of the Company, stated, "As we have previously stated when we announced our plan to dispose of our craft and accessory business segment, we were committed to continue to service our craft customers with the same dedication and at the same performance level as we have historically. Therefore, we are pleased that this transaction with Loew-Cornell, a company with long history and experience in the craft and accessory industry, has allowed us to sell to a buyer that is committed to growing the craft business
Advent International Acquires Making Memories: The Making Memories management and design team will remain in place. David Mussafer, Managing Director, and Steven Collins, Principal, at Advent International, will join Making Memories board of directors.

Longaberger Baskets
NEWARK, Ohio - This Spring the Longaberger Co. anounced it was laying off about 360 workers because of lower than expected sales at the nation's largest handmade basket-maker. Company spokeswoman Bonny Fowler said Longaberger laid off manufacturing and distribution employees to make its operation more efficient. Longaberger employed about 4,000 people before the layoffs. Newark-based Longaberger, founded in 1973, sells handmade baskets, pottery and other home products through 70,000 individual consultants who sell the products from their homes. Since 2000, the privately held company has eliminated more than 4,000 jobs, including 999 cut between September and December 2004
Miller Woodcrafts Calls it Quits: After 13 years, Miller Woodcrafts announced they will be leaving the Tole Painting business.

Montana Arts Council Study

According to a recent study, art in Montana generates $233 million in spending and brings in an estimated $179 million annually in out-of-state money. That's enough to provide the equivalent of 4,200 full-time jobs, according to Ann Adair, chief economist at the Center for Applied Economic Research at Montana State University-Billings, which conducted the study for the Montana Arts Council. The 2000 Census found 5,840 Montanans who declared art as their profession, according to the study released in March. That means the state has 1,000 more artists than it does miners and slightly more artists than sawmill workers.

The study's definition of artist : craftspeople, visual artists, photographers, "traditional artists," musicians, dancers, actors and writers of all forms of literature. Half of those surveyed said art accounted for 100 percent of their personal income. Forty percent of those surveyed reported sales of $5,000 a year or less. One-third reported sales of $25,000 or more. 3 percent reported sales of $250,000 or more.
Frank's Nursery & Crafts, Inc. Announces Reorganization

Frank's Nursery & Crafts, Inc. announced that on June 15, 2005, the United States Bankruptcy Court for the Southern District of New York entered an order confirming its Second Amended Chapter 11 Plan of Reorganization, paving the way for the Company to consummate its restructuring and emerge from Chapter 11 as a real estate development company. Frank's Nursery & Crafts, Inc., headquartered in Troy, Michigan, formerly operated the largest chain (as measured by sales) in the United States of specialty retail stores devoted to the sale of lawn and garden products.

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