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Vol 1141, July 24, 2014
NEWS STORIES
Hanesbrands Posts 12% Sales Increase
Keyed by a combination of acquisitions, activewear sales and operational efficiencies, North Carolina-based HanesBrands (asi/59528) has announced total revenues for the quarter ended June 28, 2014, increased 12% to $1.34 billion.
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Operating profit jumped 27% to $231 million, and adjusted diluted EPS rose 44%. Gross margin also nudged higher to 37.6%, up from 36.3%.

"Our record first-half results are a testament to the value we are creating through our Innovate-to-Elevate, self-owned supply chain, and acquisition strategies," said Richard A. Noll, CEO of Hanes. "We remain confident in our business model and our performance momentum."

Hanes' acquisition of Maidenform Brands, Inc., last October contributed mightily to its second-quarter results, adding $141 million in sales. Excluding the Maidenform totals, net sales increased nearly 1% year-over-year. The company said it was on track, as well, with its integration of Maidenform Brands. Hanes also announced during the quarter that it intends to acquire DBApparel, a European marketer of intimate apparel, hosiery and underwear that used to be a sister division to Hanes under previous corporate ownership.

Each Hanesbrands' business segment saw Q2 sales growth. Activewear posted net sales increases of 8% in the quarter and 9% for the first half of the year. The segment, which includes retail, branded printwear and the company's Gear for Sports business, saw increased channel penetration and leveraging of its supply chain through higher internalized production. Operating profit for activewear grew 23% in the quarter and 33% for the first half of 2014. Innerwear net sales also rose 15% during Q2.

On the strength of its second-quarter results, the company has raised its adjusted EPS, adjusted operating profit and net cash outlook from operating activities. Hanes is now forecasting 2014 sales of $5.075 billion, with earnings of $5.20 to $5.40 a share.

American Apparel Names New Board
Counselor Top 40 supplier American Apparel (asi/35297) has announced plans to appoint four new members to its board of directors, following a recent agreement with investment firm Standard General.

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As part of that deal, which provided American Apparel with $25 million in financing and gave Standard General a 44% stake in the California manufacturer, embattled CEO Dov Charney agreed to resign from his board position.

The newly-proposed directors are Radio Shack executive Joseph Magnacca, investor Thomas J. Sullivan, Standard General’s David Glazek, and Colleen B. Brown, the former CEO of Fisher Communication. Brown would become the first woman ever appointed to American Apparel’s board of directors. The board is poised to retain directors Allan Mayer and David Danziger, who in June drove an effort to suspend Charney for alleged misconduct.

“This slate of directors brings significant financial, retail, and corporate turnaround expertise to the board,” Glazek said, in a statement.

According to SEC documents and media reports, Standard General selected two of the new directors, while two others were jointly chosen by American Apparel’s current board and the investment firm. Formally, the new directors will be appointed in early August. One empty board seat remains and Standard General could add a director to fill the void, per prior agreements between the parties involved.

In the midst of this week’s board announcement, Standard General, along with a special committee, continues to investigate Charney’s alleged behavior and will ultimately determine his future role in the apparel firm. Presently, Charney is serving as a paid American Apparel consultant. Mayer, Danziger and others on American Apparel’s board have accused Charney of misusing company funds and acting inappropriately toward employees, particularly women. Charney has maintained the board ousted him unfairly.

American Apparel’s deal with Standard General prevented the apparel company from potential default on a loan with Lion Capital. If American Apparel had defaulted, millions of dollars of other debt could have become due.

Wolfmark Acquires Creative Imprints
Wisconsin-based Wolfmark (asi/98085) has acquired Creative Imprints, the companies have announced. Financial terms of the deal, made public this week, were not disclosed. Per the agreement, Creative Imprints’ entire operation – equipment included – has been moved into Wolfmark’s facility in Neenah, WI.
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"We are excited about the additional imprinting capabilities that this acquisition brings to Wolfmark's customers," said Boyd Sterling, managing partner of Wolfmark. "The acquisition of Creative Imprints continues our initiative to offer creative and quick turn solutions for imprinting our extensive inventory of stock items."

The deal, according to a company statement, will allow Wolfmark to offer customers added decoration capabilities like laser etching, de-bossing, pad printing and appliqué options for complex embroidery. "Every item we stock will be able to be decorated by one of these methods in house," Sterling said. "This will save our customers both time and money by removing the need to ship our items to other locations to be imprinted."

Founded 70 years ago, Wolfmark produces promotional items including aprons, ties, scarves, hats, vests and blankets.

The Joe Show: Products From ASI Chicago
In this episode of The Joe Show, Managing Editor Joe Haley shows off several new items that caught his eye last week in the Windy City. Looking for a multi-function wallet that holds more than just cash and cards?
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Want to see a unique product that’s great for the fitness industry or sun-drenched outdoor events? Need a fresh promo idea every dentist will appreciate?

Click here to watch the latest episode of The Joe Show.

Want more videos? Subscribe now to our YouTube videos.


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Counselor Commentary: Celebrate The Failures
It sure sounds counterintuitive – if not downright ridiculous – to make merry after a project floundered or an order got colossally screwed up. Yet, one of the themes from top firms at last week's Best Places to Work Conference in Chicago was exactly that – stuff happens, so deal with it ultra-positively, instead of plunging morale into the toilet. Sure, it may be Hollywood-esque to throw a chair, bang a wall or launch a curse-laden tirade. You'll look tough and staff will fear you. Whoa – big win there.

Let's put it all out on the table. Employees know when they mess up. Do you really need to remind them, rub it in, threaten their job, or worse give them the extended silent treatment? And please don't hold 15 meetings about whatever the issue was or is. Yes, there should be consequences for repeated employee mess-ups, but isn't it your fault for hiring the wrong person to begin with? (You don't have to think too hard, the answer is yes.)

So what can you do to celebrate a failure? Some things work better than others. For example, people usually don't like to belt out tunes after a misstep, so karaoke is probably out. Food always makes people feel better, though. Order some pizza, have a cookout, eat a little ice cream, break out a few bottles. The key is to make it unexpected and spontaneous so employees can recognize you support them when times are rough. It's also OK to inject some humor – a bit of friendly razzing never hurt anybody. It might even start to take the scarlet letter off the person most responsible for the office headache.

By the way – and this is easy to miss – sometimes failures come from staff trying extra hard to be creative or unorthodox. This is good. You should be embracing a culture of experimentation, where staffers will push themselves to do things differently. Our industry, you know, is supposed to be fun. Why make it plain? Cookie cutter? Uninventive?

Whether every attendee realized it or not, there were a bunch of statements and stories during the Best Places Conference that should be remembered and reiterated often. Included in the mix is this simple line from David Woods, the president of AIA Corporation (asi/109480), delivered in his firm, but gentle, grandfatherly way. "What's so important," Woods said, "is that people at the top have to be committed to the effort."

Which then begs the question: What do you stand for as a leader in your company? Here's hoping you stand with your staff, instead of over them. Now go find something to celebrate. 

PRODUCT SPOTLIGHT
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Mobile Ad Spending To Rise 83%
Marketers will spend more on mobile advertising this year than they will on newspaper and radio ads, continuing a dramatic marketplace shift, according to a new study from research firm eMarketer. Data shows spending on mobile ads will leap 83% in 2014 to nearly $18 billion. Newspapers will generate $17 billion, while radio will bring in $15.5 billion.

“As more eyeballs are going to mobile in larger numbers, the dollars are starting to follow,” Cathy Boyle, an eMarketer mobile analyst, told The Wall Street Journal.

Nonetheless, mobile’s ad share growth has failed to keep pace with how much people use their smartphones and tablets. While adult Americans spend nearly a quarter of their media time on mobile devices, the medium will capture just 9.8% of the total ad market in 2014, eMarketer says. Meanwhile, newspapers – which only get about 2% of people’s media time – will secure just under 10% of the entire market.

Such numbers indicate that advertisers are yet to fully embrace mobile, a phenomenon prompted at least in part by uncertainty about the effectiveness of the medium and reluctance to pull dollars from traditional platforms. Still, with mobile ad products improving all the time, mobile advocates are bullish that marketers’ investments will accelerate substantially in the years ahead.

“I think it’s going to take a very big bite out of all the advertising dollars,” Yariv Ron, chief executive of mobile ad company Appwiz, told The Journal. “The infrastructure is not there yet. Only now is it starting to take form and shape.”

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Cargo Spikes Amid Shutdown Worries
The ports of Los Angeles and Long Beach reported a significant surge in cargo flow last month, mostly fueled by retailers' fears of a potential work stoppage. In Los Angeles, cargo volumes were up 13.9% in June, year-over-year, to 736,438 container units, while Long Beach saw an 8% rise, with 610,516 units. Overall, about 40% of U.S. imports, including some promotional items, pass through several West Coast ports. The sites have been seeing traffic increases over the last few months in anticipation of the much-publicized labor contract affecting dockworkers expiring.

Nearly 20,000 dockworkers at 29 West Coast ports have been working without a new deal since July 1. Experts say retailers have been rushing goods into the country, not wanting to risk being out of stock during the busy back-to-school and holiday seasons.

The International Longshore and Warehouse Union (ILWU), which represents dockworkers, and the Pacific Maritime Association (PMA), which represents port operators, have been negotiating a new contract since May. Among the issues under review are wages, jurisdictional claims and health care costs. The two sides temporarily stalled talks earlier this week, agreeing to resume talks yesterday, to allow the ILWU to gather for the previously scheduled Longshore Division Caucus in San Francisco.

In a joint press release, the sides also announced that they would not be meeting from July 28 to August 1, during which time the ILWU will be engaged in negotiations in the Pacific Northwest unrelated to the main contract talks. Both sides have stressed their commitment to getting a contract signed without a business disruption. "While there is not a contract extension in place, both parties have pledged to keep cargo moving," according to the joint release.

Even a short port strike could have far-reaching consequences for the U.S. economy, analysts say. Reports from trade groups show that a 10-day work stoppage would cost the country $21 billion and 169,000 jobs.

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Napa Bans Single-Use Plastic Bags
City councilors in Napa, CA, have voted to prohibit local retailers from distributing single-use plastic bags at checkout, beginning in January of next year. The decision to enact a ban – which will affect grocers, convenience shops, liquor stores and even clothiers – followed a 90-minute public hearing on Tuesday.

While officials will begin enforcing the new law on January 1, Napa will transition to the ban by letting retailers charge 10 cents per paper bag this year. As with plastic bag bans in other cities, Napa will provide exemptions. Dry cleaners will still be able to protect clothes and restaurants can wrap food – both with plastic bags. Newspapers and prescription drugs can be packaged in plastic bags, as well, officials say. Additionally, Napa residents who are receiving financial support can receive free paper bags or reusable bags.

According to state agency CalRecycle, people in the city of Napa discard about 27 million plastic bags each year. Within California alone, leaders in more than 100 communities – including San Francisco, San Jose and Long Beach – have passed ordinances outlawing single-use plastic bags. Leaders have encouraged residents to shop with reusable totes.

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Counselor Names Fastest-Growing Companies
While many companies in the ad specialty market have grown their sales over the past few years – including overall distributor growth of 5.3% in 2013 to reach a total of $20.5 billion in industry revenues – some firms have shown exceptional success. Those companies are now honored in Counselor's 2014 Fastest-Growing Companies program.

The top-ranked distributor for this year is Richmond, VA-based firm Brandito (asi/325944), which grew its revenues by 145% over the past two years (sales results between 2011 and 2013). Plus, the company expects further growth of more than 40% this year to reach revenues of more than $2 million. To view the top 10 Fastest-Growing Distributors, click here.

On the supplier side, with a two-year revenue growth rate of nearly 2,000%, the top-ranked company is T-Shirt Tycoon Solutions (asi/87000), which is based in Garland, TX. In fact, sales at T-shirt Tycoon jumped from $220,000 to $2.2 million in a single year and will top $4.6 million this year, according to Mima Cavan, marketing manager for the company.

Click here to view the complete Fastest-Growing Supplier list.

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Industry Votes for Top Ads and Best-Designed Products
In separate contests run by Counselor, industry professionals recently voted to name the winners in Counselor's Product Design Awards and Best Ads competitions. The Product Design Awards honor suppliers in 13 different product categories, ranging from apparel and writing instruments to drinkware and technology products. Click here to view the winners of Counselor's 2014 Product Design Awards.

The magazine's Best Ads competition considers all advertisements that were published in Counselor and Advantages magazines throughout 2013, as well as the ads that were placed in catalogs, on ESP, and through E-Mail Express. Industry professionals then voted for their favorites in the nine different print and digital categories to determine winners.

Click here to view the winners of Counselor's Best Ads competition.

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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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Take Counselor's Second-Quarter Sales Survey Now
In an effort to gauge the performance of promotional products firms in the second quarter of 2014, Counselor is currently polling the market. The Second-Quarter Sales Survey is now live – and we need your input.

Click here to take the brief survey. Responses are completely confidential and will only be used to calculate overall industry numbers. The results of the survey will be published next month in Counselor PromoGram, and survey participants will be entered to win an iPad Mini or $500 gift card.

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ASI Radio: Six Years And Counting
On a special edition of the Tuesday Morning Show this week, the hosts celebrated their sixth anniversary on the air, toasting the occasion with trivia, replays of past memorable moments and even a leading industry guest.

If you missed the show or want to relive the fun, a recording is now available at www.asicentral.com/radio. And, don't forget to join us for our next broadcast – Tuesday, July 29. 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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In The News
Penn Emblem Company (asi/77120) is now offering embroidered, woven and transfer patches for motorcyclist clubs. Visit www.pennemblem.com/motorcycle-patches for more information.

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People On The Move
GroupeSTAHL has appointed Chris Lawson as CEO, effective immediately. He is the former CFO and executive vice president of Ross Roy Advertising, a billion-dollar private advertising/marketing services company.

Harris Media Group, Inc. has hired Megan Unterschute as director of marketing and development. The company has also entered into a strategic relationship with James Macfarlane and Diversified Printing to enhance customer experience.

Hub Pen Company (asi/61966) welcomes David Selsberg as supply chain and inventory manager.

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PRODUCT SPOTLIGHT
Product Spotlight: Proforma

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Proforma (asi/300094)

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ASI NEWS
Out with a Bang
ASI Chicago, the last national trade show of the season, attracts over 4,300 distributors from firms based in 42 states and eight countries.
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The Best of the Best
Counselor® magazine celebrates the most innovative and unique companies in $20.5 billion ad specialty industry and names top 90 companies.
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THE ASI SHOW

The following are the dates and locations for The ASI Show in 2015:
Orlando, January 4-6, 2015
Dallas, February 3-5, 2015
Long Beach, March 24-26, 2015
New York, May 5-6, 2015
Chicago, July 14-16, 2015

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NEWS QUICK LINKS
Counselor Commentary: Celebrate The Failures | Mobile Ad Spending To Rise 83% | Cargo Spikes Amid Shutdown Worries | Napa Bans Single-Use Plastic Bags | Counselor Names Fastest-Growing Companies | Industry Votes for Top Ads and Best-Designed Products | Counselor Product Close-Up: Safety Items | Take Counselor’s Second-Quarter Sales Survey Now | ASI Radio: Six Years And Counting | In The News | People On The Move
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