Fourth Quarter Industry Sales Drop 3.6%
According to ASI's fourth quarter industry sales report, which was released this morning, the industry suffered a year-over-year decline of 3.6%. The number, coming from traditionally the industry's busiest quarter of the year, follows a 1.6% decline in Q3 and a loss of $207 million in ad specialty sales compared to one year ago. Only 31% of distributors reported an increase in sales in the quarter, compared to nearly half (48%) who claimed a decrease. For full-year 2008, ASI is estimating industry revenues of $20 billion. While this number is subject to further analysis, ASI's 2008 revenue estimate puts the industry's growth for the calendar year at about 2%, an increase from $19.6 billion in 2007. The industry expanded by 3.4% in the first quarter of 2008 and by 3.7% in the second quarter.

The negative result in the fourth quarter, while hardly a surprise, may in fact be a source of general optimism. "I think if the whole industry came out somewhere in that range," says Marc Simon, CEO of Counselor Top 40 distributor Halo/Lee Wayne (asi/356000), referring to the 3.6% figure, "the industry ought to be pretty pleased."

On the heels of the credit crisis, stock market free falls and rampant talk of government bailouts, it was clear that continued economic emergencies had a visible impact on the ad specialty industry. "It is an emotional economy," says Mark Ziskind, chief operating officer of Caliendo-Savio Enterprises (asi/155807), a Counselor Top 40 distributor. "When everybody believes and everybody's optimistic, the economy seems to do better. And there certainly wasn't a lot of good economic news in Q4."

Those reporting an increase in sales fell 9% from the previous quarter. Yet despite the negative climate, 47% say they anticipate an increase in sales in 2009 versus 2008. That optimism, however, is reduced among larger distributors (with over $1 million in revenue). Only 30% of those distributors believe that 2009 sales would increase, while 57% of smaller distributors ($250,000 and under) had the same expectation.

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New England Supplier Closes
After 81 years in business, Providence-based supplier The Colibri Group (asi/45700) has abruptly closed its doors and laid off roughly 280 workers. The jewelry manufacturer owes creditors and vendors close to $33 million, and it is now in receivership overseen by the Rhode Island Superior Court. "It is my understanding that the economy has been a disaster for them," says Allan Shine, the court-appointed attorney serving to supervise and manage Colibri's assets. "There was a reduction of orders and they ran into a cash flow crunch."

According to court records, Colibri had spent several months trying to orchestrate a three-way-merger with two other companies, but failed. Employees learned of the company's closure through e-mails and phone calls last week. In the last two years, the demand for Colibri's products sharply declined. In 2007, the company generated revenues of $80 million. In 2008, revenues dwindled to $64 million. During both years, operating expenses far exceeded revenues, resulting in a loss of $20 million.

Looking to capitalize on perceived value, close to 20 companies have already called Shine inquiring about a full or partial purchase of Colibri. "Large numbers of companies have contacted me asking about buying all or part of the business," says Shine. "It's a bit surprising to see this so early."

Colibri has been best known for making high-end jewelry, clocks and cigarette lighters. Through a licensing agreement, it also supplied the Movado brand. As recently as 2003, the company employed 500 workers and reported sales in excess of $100 million. The now-defunct Colibri should not be confused with industry supplier Calibre International (asi/43442), the makers of High Caliber Line. The two companies are not associated in any way.

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ASI Internet Radio Is On The Air
Every Tuesday morning from 10:30am eastern time to 11:00am, a team of ASI editors will be debating the most important topics facing the industry. Oh, and we'll also be offering our own off-beat look at the market. This morning, we broadcast live from our home studios in Trevose, PA. We celebrated the Presidential Inauguration, and talked about things you should never say to anyone. Plus, we helped callers handle their most difficult prospecting challenges.

If you missed the show, don't worry. A recording is now available at www.asicentral.com/radio. And, don't forget to join us next Tuesday morning, January 27, at 10:30 am eastern time. Of course, we'll also be taking calls from the audience, so please do give us a ring at 215-953-4979 to hear your voice on the air.

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Cyrk Begins Liquidation Process
A month after laying off the majority of its staff, former Top 40 distributor Cyrk (asi/173519) is now planning to sell its equipment and inventory and will likely vacate its headquarters, Counselor has learned. An auction will be held this Friday at the company's main office in Monroe, WA. "This will be a big auction and there are a lot of late model machines up for bid," says Terry Moore, spokesman for James G. Murphy Inc., the company conducting the auction. "There will be no minimum bids, so we'll find out on Friday what the value is. I'd guess there are 1,500 to 2,000 lots of items."

According to Moore, among the items to be auctioned off are embroidery machines, office furniture and computers. In addition, remaining inventory, including apparel, will be sold. "They first contacted us in early December and told us they needed to get out of the building fairly quickly," says Moore. "They have high rent."

Even before the current recession, Cyrk's sales plummeted, slipping $88 million over a five-year span. CEO Jeff Werner admitted in November that "changes were likely" at the company, strongly hinting at a merger. Executives at Cyrk's parent company, Sun Capital Partners, refused to comment.

Despite the apparent liquidation process that's underway, according to the U.S. District Court in Seattle, Cyrk has not filed for bankruptcy protection in the state of Washington. The company's Web site, www.cyrk.com, is no longer in operation and nobody at the company's headquarters can be reached.

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The Joe Show: Wristbands
Managing Editor Joe Haley is showing off a versatile and highly useful promotional item this week: wristbands. Do you have non-profit clients or education market customers looking to spread their messages? Wristbands could be the perfect item. Come along as Joe shows off some of the latest varieties and gives you ideas on target clients for each one.

Click here to watch this wristband edition of The Joe Show.

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Flash Drive Prices Increase Dramatically
Flash drive suppliers are taking major hits to their margins after prices jumped precipitously in the past month. Estimates pin the price jumps as low as 30% and as high as 87% ‑ a staggering increase for a product that is notoriously mercurial for its shifting costs. While prices typically surge before the Chinese New Year (occurring on January 26), industry suppliers say that the memory chip manufacturers have severely restricted their production to drive up demand and prices. “Part of it is they can use Chinese New year as a reasonable excuse,” says John Graham, marketing director for Blue Loyal Flash Drives, whose brand in this industry is Flash Drive Direct (asi/40658). “There’s a lot of demand for Chinese New Year, so why not ratchet it up. But the problem is, it’s also a method to get back some of their pricing.”

Both Graham and Lon McGowan, CEO of flash drive supplier iClick (asi/62124), say that flash drive prices plummeted in an unprecedented nine-month decrease before the current rise. McGowan attributes oversupply to the market as the reason for the drop; Graham says the price decreases were a failed gambit by the major chip manufacturers to gain market share.

Regardless of the reasons, suppliers are having a difficult time with prices rising so rapidly. “They’re fluctuating so quickly, they’re really changing dramatically by the day,” says McGowan. “We hold our pricing for customers for the week, from Monday through Friday, so that really hurts us, especially because they’re going up. We’ve had a couple of weeks that have been hard on us.”

In response, suppliers have increased their prices, but not to the same extent that the memory manufactures have; McGowan says his company has raised them 28%-30% in the past couple weeks. “We’re trying to limit that burden as much as possible. We don’t want to lose money, but it’s pretty darn close to it. We’re just trying to maintain our relationship with the customers.” The prospect becomes increasingly difficult, says Graham, because “the flash drive market is a very, very narrow margin business.” In response, Blue Loyal has reduced the period of time it guarantees its pricing.

While prices have stabilized closer to the New Year, it remains uncertain what will happen afterward. McGowan forecasts a small decline after the holiday and then further drops in March or early April. Graham has a more negative view. He says, “It could keep going up. More than going up, I think it might stay up, which we won’t know until three or four weeks after the Chinese New Year.”

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Government Offers Training For Handling A Weak Economy
The United States Small Business Administration is offering several free online courses to help companies withstand the current recession. Course topics include: revising business plans, winning customers in a slowing economy, restructuring debt and diversifying customer bases with federal contracts.

"The SBA is helping small businesses with the resources and tools they need in the current business cycle," said Jeff Andrade, associate administrator for entrepreneurial development. "SBA offers a variety of resources and referrals to small businesses uncertain about what to do in the current economy."

Free Webcast: How To Survive & Thrive In '09
Don't let the uncertain economy stall your sales efforts. There are plenty of distributors who are surviving – and even thriving – as we head into 2009. In this online education session, you'll discover:

• Selling secrets from successful distributors who are forecasting growth
• Strategies for working with clients who are cutting back on their marketing
• Tactics for selling to price-conscious prospects
• New markets and sectors that are projected to thrive in 2009
• Creative ideas for marketing your services in a difficult economy

The live webinar, which is made up of a panel of both distributors and business experts, will take place on Thursday, January 22, from 2pm eastern time to 3pm eastern time.

ASICentral.com Team Blog: The Survey Says
With this month's release of its annual Apparel Sales Survey, Counselor magazine has given the gang at Team Blog some fodder for fun. Play The Family Feud, Promotional Products Edition and test your knowledge of distributor apparel sales now!
Got questions, comments or any type of feedback regarding this feature or anything ASICentral, don't hesitate to contact us at feedback@asicentral.com.

In The News
Global Sourcing Solutions has relocated its headquarters from Mission Viejo, CA to Aliso Viejo, CA.

Imprints Wholesale (asi/62486) will hold its annual open house on February 27 from 4pm-8pm at Wings over the Rockies in Denver, CO. The open house features representatives from 25 manufacturers, plus live embroidery and screen printing demonstrations.

Paquet Marketing Group, Inc. (asi/215323) has changed its address to: 3363 St. Troy Pl., Victoria B.C. V9C 3J3.

SWF East Inc. is hosting its Embroidery Extravaganza and Direct to Garment Showcase in Greensboro, NC on April 3 and 4. The event offers free seminars, equipment displays and marketing training for decorated apparel businesses.

People on the Move
ForeFront Golf Group, Inc. (asi/42745) has named Scott Harris as its new director of marketing.

Indiana Metal Craft (asi/62570) has hired Ty Connally to work in the company's graphic arts department.

SafeHaven Products Inc. (asi/84495) has announced the addition of Jean Rouda, who will cover the southern California territory.

THE FREE REGISTRATION DEADLINE FOR ASI DALLAS EXTENDED TO JANUARY 23
Excitement for ASI Dallas (February 4-6 at the Dallas Convention Center), the largest show in the Southwest, is growing. In fact, due to popular demand, the free registration deadline for ASI distributor and decorator members has been extended to THIS Friday, January 23. Register today and enjoy three action-packed days that include the industry's most comprehensive education conference (Sponsored by Fields Mfg., asi/54100); a free factory tour of ASI supplier ThermoServ; a brand-new Lunch & Learn program entitled STIR THE POT!™ How to Put Marketing Into Action and Turn Your Company Into a Marketing Machine (Sponsored by SHEPENCO/Shelbyville Pencil., asi/86850) and one-on-one time with 550 top suppliers. Additionally, Don Hutson, co-author of the newly released book The One Minute Entrepreneur, will be headlining an inspiring free Keynote on Friday, February 6. (All Keynote attendees will receive a FREE copy of Don Hutson's new book.)

Register today for ASI Dallas at www.asishow.com and order your discounted tickets to the famed Ultimate Texas Bash at Eddie Deen's Ranch. ASI distributor and decorator members can also get a free hotel room.

THE INDUSTRY'S FIRST AND ONLY MAJOR TRADE SHOW IN NEW YORK IS MOVING TO THE FIRST QUARTER
Save the date! ASI New York – the first and only major industry trade show in New York – is moving to the first quarter (March 8-10). Located in one of the world's leading travel destinations, ASI New York will feature hundreds of cutting-edge suppliers, top-notch education (Sponsored by Fields Mfg., asi/54100) and around-the-clock networking. Register today at www.asishow.com and plan to attend the brand-new Evening at The Top of the Rock (a sophisticated night of fun on the 64th floor of Rockefeller Center).

Plus, you'll enjoy an exclusive Keynote by best-selling author of Just Ask a Woman: Cracking the Code of What Women Want and How They Buy, Mary Lou Quinlan. Her interactive program will discuss how customer service excellence will define who wins...and who doesn't in these challenging times.

Register today at www.asishow.com. Or, call 877-ASI-SHOW with any questions. ASI distributor and decorator members who register by February 6 will receive free admission.

THE ASI ADVANTAGES ROADSHOW IS ON THE ROAD AGAIN
The industry's #1 traveling show, the ASI Advantages Roadshow, started its 18-week, 2009 schedule this week in the Northeast (Boston, Jan. 19; Long Island, Jan. 20; New Jersey, Jan. 21; Philadelphia, Jan. 22 and Baltimore, Jan. 23). Next week, the Roadshow will be visiting the Midwest with stops in N. Detroit, Jan. 26; S. Detroit, Jan. 27; Cleveland, Jan. 28; Columbus, January 29 and Concord January 30.

All distributors are invited to attend the Advantages Roadshow for free. Exhibit hours are 9 a.m.-1 p.m., with free education (sponsored by Fields Mfg., asi/54100) from 7:45 a.m-9:00 a.m. and 1 p.m.-2 p.m. Visit www.advantagesroadshow.com for complete details.

The following are the dates and locations for The ASI Show in 2009:
Dallas: February 4-6
New York: March 8-10
Chicago: July 21-23
ASI Holiday & Incentives Expo, Las Vegas: September 16-17