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Counselor PromoGram
Vol 1149, August 21, 2014
NEWS STORIES
Staples, Inc. Reports Q2 Financials
Massachusetts-based Staples, Inc., the parent company of Top 40 distributor Staples Promotional Products (asi/120601), has announced total sales for the quarter ended August 2 declined 2% to $5.2 billion. Same-store revenues in North America, excluding Staples.com, slipped 5%. Gross margins fell to 25.2%, year-over-year, as a result of aggressive discounting.
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"We're accelerating growth in our delivery businesses as customers turn to Staples for more products beyond office supplies," said Ron Sargent, CEO of Staples. "At the same time, we have more work to do to stabilize our retail business, and we're taking action to improve customer traffic, reduce expenses and close underperforming stores."

Staples' Q2 net income decreased 20% to $82 million, down from $103 million a year earlier. As part of an ongoing cost reduction plan, Staples closed 80 stores in North America during the second quarter and expects to shutter about 140 stores in 2014. In a bright spot, the company's North American commercial operations increased sales to almost $2 billion, a 2.6% jump, on the strength of higher demand for facilities supplies and furniture. North American online revenue at Staples also rose 8% in the second quarter. 

For Q3 of 2014, Staples, Inc. expects sales to decrease year-over-year compared to the third quarter of 2013. The company is also forecasting Q3 earnings of 34 cents to 39 cents a share.

In its Q2 earnings release, Staples did not break out ad specialty revenues. In Q1, Staples Promotional Products reported "mid-single digit growth" to Counselor. In 2013, Staples Promotional Products generated North American ad specialty sales of $434 million, a year-over-year increase of 6%, according to Counselor estimates.

American Apparel Posts Quarterly Results
In a delayed second-quarter earnings report, Top 40 supplier American Apparel (asi/35297) announced a larger-than-expected loss in net sales of $16.2 million and flat Q2 revenues of $162 million. This week’s filing follows a preliminary report released last week that showed a $15 million quarterly loss.
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Sales at retail stores open for at least one year fell by 6% and online sales decreased 3%. Meanwhile, revenue from wholesale operations – which includes promotional apparel sales – increased sharply by 9% in Q2.

"There was a lot of cold weather and the [apparel] industry as a whole is challenged," said Dov Charney, the supplier's recently-ousted CEO, in an interview with Bloomberg TV. "We're going to have to take market share from competitors to grow sales."

While American Apparel is still losing money, the Q2 net sales results are an improvement over the $37.5 million loss the California-based firm reported in the second quarter of last year.

Charney maintained the firm's latest 2014 results show he's fit to be the company's CEO going forward. Charney was dismissed two months ago amid allegations of misconduct and is fighting to regain his role with American Apparel. Three American Apparel directors will review a company-initiated investigation to determine a recommendation for Charney's future with the firm he founded.

Charney has aligned himself with hedge fund Standard General, which provided $25 million in financing and recently took a 44% ownership stake in the company. On Monday, American Apparel said it is working "as soon as practical" to strike a credit agreement with Standard General and at least one foreign subsidy. The company must pay bondholders $13.5 million in interest in October.

American Apparel previously delayed its Q2 earnings statement to give new board directors time to review financials. Ranked by Counselor as the 14th largest supplier in the industry, American Apparel reported 2013 North American ad specialty sales of $99.2 million, a year-over-year increase of 2.5%.

Gill Bebco To Open Next Month
Top 40 supplier Gill Studios (asi/56950) has announced it has finalized its deal to acquire the assets of recently shuttered firm Barton Nelson (BNI). Newly-created Gill Bebco, which will operate out of Barton Nelson’s former facility in Kansas City, will re-open on September 2, the company said.
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"We have been working hard and quickly to rehire employees to preserve the Bebco expertise and passion," Gill said, in a statement. "We are also very excited to announce that Gill-line has decided to build and maintain the necessary equipment in the Bebco facility to ensure all of Bebco's products will be made in the USA." 

Bebco plans to launch its products in stages. Adhesive notes and scratch pads will be available as early as September 2; adhesive and non-adhesive cubes on September 15; and 12 month calendar desk pads on November 1. Additional product and customer service contact information can be found at www.bebco.com.

Earlier this month, Gill said it planned to hire approximately 40 former BNI employees for Bebco operations. Going forward, Gill Studios and Bebco offerings will be marketed and sold separately as different lines.

As recently as 2013, Barton Nelson was ranked as the 35th largest supplier in the industry by Counselor. Gill, meanwhile, reported 2013 North American ad specialty sales of $44.1 million, a year-over-year decrease of 14.5%, as the company is normally impacted by non-election year revenue fall-off. Over the last five years, Gill has grown revenues by 11.4%.

The Joe Show: A Rainbow Of Products
In this episode of The Joe Show, Managing Editor Joe Haley shows off several items that can add some style to your next campaign. Looking for a fun promo to pitch to beverage companies? How about a sleek, practical planner? Have any mass media clients?
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Click here to watch another episode of The Joe Show.

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Counselor Commentary: The Power Of A Cause
By now you've heard about the wild success of the Ice Bucket Challenge – a viral video juggernaut that's raising awareness of ALS, also known as Lou Gehrig's Disease. People around the world have donated more than $15 million for ALS research, and many have been doused with cold water in the name of a good cause.

While the social media campaign is brilliant, the disease itself is indescribably awful – it paralyzes the body, while leaving the mind intact. People who watch loved ones die from ALS suffer great emotional and physical anguish themselves – it's easy to feel helpless as the disease has no cure.

Far too many people involved in the ad specialty industry have witnessed the effects of ALS –ask around and you'll be surprised at the stories you'll hear. That's why it's so heartwarming to see so many industry companies, reps and CEOs accept the Ice Bucket Challenge. One the most recent challenges was issued by Genumark's (asi/204588) Mark Freed – a former Bess Cohn Humanitarian Award winner. Freed wants the entire industry to take on the Ice Bucket Challenge – we'll certainly oblige at Counselor. By the way, you can click here to see Freed's challenge and many others that have been issued throughout the promotional products world.

As the Ice Bucket Challenge soars in popularity, there are many great lessons to be learned. For one, there's incredible power in working for a social cause. People follow their hearts more than their minds, which in turn makes cause marketing such a positive force. When your clients are able to support nonprofits as part of a promotional campaign or project, everyone benefits. While some would have you believe the world is all about backroom deals, getting ahead, and stomping out competitors, the reality is most people enjoy helping each other.

Marketers should take note, as well, that at least one study has shown that 89% of young Americans aged 13 to 25 would switch from Brand A to Brand B just because the latter is involved in a good cause. The data, released by firm Cone Communications in 2013, also points out that 88% of consumers want to hear how companies are supporting social and environmental issues. There is clearly a business case and a do-the-right-thing case for cause marketing.

A final thought: there will come a time – maybe a week or two from now – when the Ice Bucket Challenge spotlight dims. But there are other causes you and your business can get behind. The value of doing so will be far greater than you can imagine.

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Coley Resigns From AlphaGraphics
Utah-based distributor AlphaGraphics (asi/373000) has announced its president and CEO Art Coley has resigned from his leadership role at the firm. Coley will stay on with the company as a full-time consultant and Gay Burke, board executive chair of AlphaGraphics, will serve as interim president.

"This change will allow me to spend much more time with my family in Texas, and, as a part owner, allow me to continue working for the company I've been associated with for the last seven years," said Coley. "During my last two and a half years as president and CEO, there have been a lot of changes and many great accomplishments across every division of the company. I'm proud of what all of us have done working as a team and as a network."

AlphaGraphics, which provides print services, marketing communications and promotional items, operates about 250 franchise locations throughout the U.S.

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Small Biz Owners Unprepared For Retirement
Think you're ready to retire? If you're like most small-business owners in the U.S., you may need to think again. Entrepreneurs are largely shortchanging their personal financial futures, in favor of deeper investments into their business, according to a survey released this week by CNBC and the Financial Planning Association (FPA). The majority of small-business owners' wealth (70%) goes into the business, data shows. The balance was invested into stocks, real estate, bonds, commodities and other sectors, according to the survey.

"Small-business owners are very myopic and tend to focus on the viability and growth of their business, ignoring much else, including their long-term financial needs," FPA Chairman Michael Branham told CNBC. "There needs to be balance between their personal and professional money goals."

The Small Business and Financial Planning Survey, a first for CNBC and FPA, sampled 178 financial advisers nationwide who service small-business clients between the ages of 35 and 70. The survey found that developing a retirement plan and exit strategy is the most pressing challenge facing small-business clients today. Other concerns include managing cash flow, business tax issues, health insurance, raising working capital, growing revenues and succession planning.

Financial planners who participated in the survey had three pieces of advice for their small-business clients: Diversify, prepare for the worst, and plan for succession. Small-business owners shouldn't rely solely on the eventual sale of the business to fund retirement, they say, instead diverting some of the funds that would have gone into business expansion to other investment assets.

More than half of the advisers surveyed believe their small-business clients don't have enough protection against financial risks, like the owner's disability or premature death, which could leave the owner's family with little or nothing. The survey also revealed that only about 20% of small-business owners had a succession plan in place. "It's hard for a business owner to think about turning over the reins of the business to someone else," said Branham. "Their personal identity is tied to their company. As a result, they don't adequately prepare an exit strategy."

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Market Watch: Homebuilder Sentiment Spikes
Confidence among U.S. homebuilders increased in August to its highest point in seven months, according to new data released this week. The National Association of Home Builders/Wells Fargo (HMI) sentiment measure rose to 55, up from 53 a month earlier, easily beating forecasts.

"As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market," NAHB Chairman Kevin Kelly said, in a statement. "However, builders still face a number of challenges, including tight credit conditions for borrowers and shortages of finished lots and labor."

All three index components made gains in August, data showed. The index gauging traffic of prospective buyers increased three points to 42, while the indices for current sales conditions and expectations for future sales each rose two points to 58 and 65, respectively. Every U.S. region improved its three-month moving average HMI score in August, with the Midwest measure alone jumping seven points.

"Each of the three components of the HMI registered consecutive gains for the past three months, which is a positive sign that builder confidence appears to be firming following an uneven spring," said NAHB Chief Economist David Crowe. "Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand."

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Counselor Product Close-Up: Safety Items 
In the latest episode of the video series Counselor Product Close-Up, the focus turns to safety products. What markets should distributors target for this growing product category? What demographics are best suited for safety-product promotions? 

Click here to watch the video and find out. Featuring advice from Counselor editors Andy Cohen and Dave Vagnoni, plus a product segment with Managing Editor Joe Haley, this edition of Counselor Product Close-Up has ideas to help you pitch and sell more safety products in 2014.

Click here to watch the video report.

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ASI Radio: Make Service Personal
On this week's Tuesday Morning Show, the hosts gave callers advice on how they can fine-tune their customer service offerings. How can your company be more responsive with limited staff? Is e-mail really the best way to stay in touch with clients? What are some ways to win loyalty from customers?

Click here to listen to the complete call-in segment. If you missed any other part of the show, a recording is now available at www.asicentral.com/radio. And, don't forget to join us for our next broadcast on Tuesday, August 26. Log on at 10:30 a.m. ET to listen to the show – and give us a call at (215) 953-4979 to hear your voice on the air.

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Call for Nominations: Supplier Sales Rep/Supplier CSR Of The Year 
Supplier Global Resource, the industry's only magazine dedicated to ad specialty suppliers, is holding its 5th annual Supplier Sales Rep of the Year contest to recognize outstanding performance, exemplary service and top-notch professionalism. In addition, the magazine will recognize the best supplier customer service rep – a person who continually goes over-and-above for his or her distributor clients.

Distributors, do you work with a supplier customer service rep who makes your job infinitely easier, more streamlined and pleasurable to do? Do you have a supplier sales partner who always puts you and your customers' needs first and has a "do whatever it takes" attitude to make you shine? If you know the perfect contenders for both awards, e-mail the nominees' names and details regarding what makes her or him award-worthy to Michele Bell (mbell@asicentral.com), editor of Supplier Global Resource, by Friday, September 5, 2014.

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In The News
Charles River Apparel (asi/44620) announces that President & CEO Barry Lipsett took part in the ALS Ice Bucket Challenge on August 6. Click here to see the video.

JP Promotional Products (asi/232668) has received an award for Small Business Excellence from 914INC magazine, which took into account companies' consistent and significant success, loyal customer bases and dedication to their surrounding communities. Read the full article here.

Pop! Promos (asi/45657) announces that President Sterling Wilson participated in the ALS Ice Bucket Challenge. View the video here.

Prime Line (asi/79530) has introduced its 68-page 2014 Gift Collection catalog with 64 new items, including 22 new tech products, and both U.S. and Canadian prices. View the digital version here.

Royce Leather (asi/52390) is ranked No. 4475 on the 8th annual Inc. 500|5000, a listing of the nation's fastest-growing private companies. This is the second consecutive year that Royce Leather has been ranked by Inc. magazine. 

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People On The Move
SnugZ USA (asi/88060) has announced that Sydra Newell, formerly vice president of sales, has decided to step down to spend more time with family, and is now business development manager. Additionally, former national sales manager Brittany David has been promoted to the position of vice president of sales. Stevie Clark, previously customer support manager, has been promoted to the position of director of customer relations. 

Chocolate Inn/Taylor & Grant (asi/44900) announces the following employee promotions: Judy Molina, customer service lead; Ashlee Cravotta, operations manager; and Jeff DePalma, vice president of sales for the U.S.

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PRODUCT SPOTLIGHT
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THE ASI SHOW

KEEP YOUR SALES MOMENTUM GOING
Attend the Advantages Roadshow for FREE when it visits the Midwest in October. Delivering leading suppliers and hot money-making products for your clients' end-of-year projects, the Roadshow is the most cost-effective and time-efficient way to stay on top of your game.

►Monday, October 13 • Minneapolis, MN • DoubleTree by Hilton Minneapolis - Park Place
►Tuesday, October 14 • Des Moines, IA • Embassy Suites Hotel Des Moines - Downtown
►Wednesday, October 15 • Omaha, NE • Ramada Plaza Hotel & Conv. Center & Coco Key Water Resort
►Thursday, October 16 • Kansas City, MO • Courtyard Kansas City at Briarcliff
►Friday, October 17 • St. Louis, MO • DoubleTree by Hilton St. Louis - Westport

Come on over. All distributors are invited to attend the Advantages Roadshow for FREE. The morning schedule features distributor education from 7:45 a.m.-9 a.m. and tabletop exhibits from 9 a.m.-1 p.m.

Visit www.advantagesroadshow.com to register for free and to review the complete Advantages Roadshow schedule. Distributors can register on show site with a valid business card.

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NEWS QUICK LINKS
Counselor Commentary: The Power Of A Cause | Coley Resigns From AlphaGraphics | Small Biz Owners Unprepared For Retirement | Market Watch: Homebuilder Sentiment Spikes | Counselor Product Close-Up: Safety Items | ASI Radio: Make Service Personal | Call for Nominations: Supplier Sales Rep/Supplier CSR Of The Year | In The News | People On The Move
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