The 2014 Counselor Power 50 is made up of the executives who have the most influence over how business is done in this market – both currently and into the future. It contains distributors and suppliers, as well as some traditional market outsiders who, no doubt, impact the industry's operations. This year's Power 50 also includes five newcomers to the list: Amin Rahman and Alan Tabasky from BEL USA, Mitch Mounger from Sunrise Identity (asi/339206), Mark Godsey from Gold Bond (asi/57653) and Justin Zavadil from American Solutions for Business (asi/120075).
To see the complete ranking of the 2014 Power 50, click here. And, to view pictures and videos from this week's ASI Power Summit in Arizona, go to www.asicentral.com.
Power 50 Panel Looks to 2015
In the final 2014 Power Summit session, four of the industry's most influential leaders offered their views on the current ad specialty market and on the 12 months ahead. Much of the discussion centered on the topics of consolidation, sourcing, margin pressures and rapidly evolving technologies.
"After hearing the futurist talk this week, I realize we have some work to do as a company," said Bill Korowitz, CEO of supplier The Magnet Group (asi/68507). "We need to make even more tech improvements. We'll get there."
Kim Newell, another panelist, spoke extensively about mergers and partnerships. In the years ahead, she feels more suppliers especially will combine strengths to better serve customers. "We recently made the deal with Gold Bond (asi/57653) and it was attractive to us because they have a physical presence in China and we don't," said Newell, president of World Wide Line (asi/98290). "I think you'll see companies partnering in the future."
Alan Chippindale, a third panelist and the chief business development officer at distributor BrandAlliance (asi/145177), said he continues to see growth opportunities in large accounts. Meanwhile, panelist Dave Thompson is gearing his firm's strategy toward smaller customers. "We target small businesses and our average order size is $200," said Thompson, president of National Pen (asi/281040). "We are expanding globally, though, with this model. In fact, in 17 days we're even going to try to sell to small businesses in China."
Following the session, Counselor caught up with Thompson to learn more about his firm's 2015 plans. Click here to watch the interview.
McCabe Promotional Advertising, M.P. Russo Announce Merger
McCabe Promotional Advertising Inc. (asi/264901), based in London, ON, and one of Counselor's Best Places to Work in Canada, and Clinton, ON-based M.P. Russo & Associates announce that the two companies have merged. M.P. Russo will continue operations out of its Clinton offices under the McCabe banner and the two companies will use the same software program. Both companies are Partners in Facilisgroup.
"We have clients in every professional discipline but our largest market segment is within the automotive industry," says Jamie McCabe, president of McCabe Promotional Advertising. "Our focus is on building relationships with those companies that recognize our value and service component when purchasing promotional products. Through the Facilisgroup, I developed a friendship with and respect for Michael Russo, president of M.P. Russo. There was a lot of synergy between our two companies, and I believe we can achieve much more together."
For more information, contact Jamie McCabe at email@example.com.
Cotton Prices Near Five-Year Low
Driven down this summer by strong U.S. output and weak demand in China, cotton prices are hovering around their lowest level since 2009. After moderating slightly, cotton was priced at 63 cents per pound last month after being around 90 cents per pound earlier in 2014.
Meanwhile, cotton futures are trading below the 10-year average of about 74 cents per pound and the 20-year average of 69 cents a pound.
Following seasons of drought, key cotton-growing areas in the U.S. – like Texas – have seen better recent weather. Because of increased rainfall, government forecasters have raised their estimate for U.S. cotton output during the 2014-15 season by 10% to 16.5 million 480-pound bales. Officials in India – the world's second-largest cotton producer behind the U.S. – have announced production of the fiber is set to climb to an all-time high this season as typical monsoon rains have yet to arrive.
In China, where the government has been stockpiling cotton for years, imports of the commodity fell 42.2% in the first half of 2014 to 1.39 million tons. Along with that trend, the U.S. Department of Agriculture reported in July that foreign buyers had canceled some of their cotton orders. Net U.S. export sales of common upland cotton were cut by almost 2,000 bales during the week that ended July 17 alone.
Economic expectations are also pushing cotton prices lower. The International Monetary Fund has reduced its 2014 global growth forecast to 3.4%, down from 3.7%. Cotton is one commodity sensitive to economic forecasts as demand is tied to consumer spending, like apparel. Some analysts believe the overall drop in cotton prices could next spark defaults from mills that contracted cotton at higher prices. With further declines, the price of cotton could even reach a threshold that would allow farmers to receive U.S. government loan repayment assistance.
Wearable Tech Shipments To Rise 129%
Shipments of wearable technology products are surging this year, with a new study predicting a 129% rise over 2013. The global wearable technology market forecast from analysts CCS Insight predicts shipments will soar from 9.7 million to 22 million by year's end. By 2018, cumulative sales of the techy accessories will top 370 million, the study projects. Products that can be used for wellness campaigns are currently among the most popular items, and are likely to remain so toward the end of 2014.
"We believe this will fuel strong growth in the final quarter of 2014 for smartbands, particularly fitness trackers, which will account for more than half of the 35 million wearables in use at the end of 2014," said Marina Koytcheva, CCS Insight's director of forecasting, in a statement.
With major technology players like Samsung, Google and now possibly Apple entering the wearable technology arena, wrist-worn devices will account for 87% of wearables to be shipped in 2018, CCS says. That tally breaks down as 68 million smartwatches and 50 million smartbands with no screen or minimal one-line display. The numbers may be impressive, but analysts caution that the devices need to advance more to drive shipments to the stratospheric levels seen by mobile devices.
"The wearables market is in its Stone Age right now," said Koytcheva. "There needs to be huge improvements to broaden their appeal. This is particularly acute when it comes to devices for women: wearables need to quickly move on from black, clunky devices; fortunately we're starting to see the first steps in this direction."
Currently, North America is a leader in the adoption of wearables: 5.2 million wearables were sold on the continent in 2013, and more than 40% of all wearable devices currently in use are there. "This is partially because many wearable companies are based in North America, but also because the region has proven eager to adopt new technology," CCS Insight said in a release. Nonetheless, Western Europe is catching up – from 2016 on, the region is actually expected to buy more wearables than North America.
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 that 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.
"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, Plans to Seat New Director
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. The filing follows a preliminary report released last month that showed a $15 million quarterly loss.
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 Canada native 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 August 18, 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 next month. American Apparel previously delayed its Q2 earnings statement to give new board directors time to review financials.
In addition, the board of directors for American Apparel will soon have its eighth member, following a nomination by the clothing maker's longtime lender Lion Capital.
The equity firm, which holds warrants to buy 12% of American Apparel's stock and the right to two board positions, has designated Rupari Foods' CEO Robert Mintz to fill an open director slot. The decision was made public in a filing earlier this month.
Mintz, according to a report in the Wall Street Journal, is a former schoolmate of Charney. As part of a financial reshuffling, Standard General recently purchased a $10 million loan Lion Capital had previously furnished to American Apparel. Standard General now controls a 44% stake in American Apparel and has committed up to $25 million to support the clothing company. Since the Standard General deal, American Apparel has seated five new board members, including two women – a first for the company. Mintz will become the sixth new director.
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%.
Study: Marketers to Spend More on Brand Awareness
Marketers are breaking out their checkbooks in an effort to build brand awareness. A just-released study reveals that 56% of marketing professionals worldwide plan to increase their spending on brand awareness over the next 12 months. Meanwhile, another 27% of marketers plan to hold steady on spending for brand building, according to the August study conducted by InsightExpress on behalf of e-Marketer.
Analyzing responses from worldwide readers of eMarketer's Daily Newsletter and visitors to eMarketer.com, the survey showed that investment in brand awareness will be especially strong in the Latin American and Asia-Pacific regions, with 59% and 60.6% of marketers respectively saying they anticipate spending more on brand-related activities. The nation least likely to see an increase in brand awareness investment was Canada, but even there a majority of marketing professionals (51%) plan to increase their spend.
"Brand awareness was a higher priority for eMarketer's audience than demand generation, global business expansion efforts or spending on events – none of which attracted a majority to increase spending," e-Marketer said. The study found that 42% of marketers plan to invest more in demand generation, while 35% will increase spending on global business expansion. Nearly 27% expect to devote more dollars to events.
"Overall, the findings suggest that digital display spending, a major component of online branding activities, has a rosy future as marketers look to increase awareness in the coming 12 months," eMarketer reported.
4imprint Makes Q2 Charitable Donations
4imprint (asi/197045) announced that it donated $57,000 in in-kind grants during the second quarter of 2014. A total of 114 nonprofits and charities across the United States and Canada received promotional products grants through 4imprint's One by One charitable giving program, which provides a gift to a nonprofit organization every business day.
Superex Releases Holiday Catalog
Superex (asi/90234) has released its 2014 Holiday Gifts Guide that contains 35 products in eight pages. Product introductions include the 3-Watt LED Headlamp, Emergency Blackout Kit and the 12,000 AMP Power Bank PowerStation. For an order form, click here, or go to www.superex.com to order.
Starline Releases Holiday Catalog
Starline (asi/89213) has released its 2014 Holiday Best catalog with more than 170 gift ideas, including more than 15 new products, such as vacuum drinkware, Bluetooth speakers, wine decanters and more. To view Starline's full range of products, and to order a copy of the catalog, visit www.starline.com.
Ash City/alphabroder Distributes Rabbit Skins, Code V, Tie Dye Brands
Ash City/alphabroder (asi/34063) is now the exclusive distributor of the Rabbit Skins, Code V and Tie Dye clothing brands to the Canadian market. Download the latest catalog here.
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 (firstname.lastname@example.org), editor of Supplier Global Resource™, by Monday, September 22, 2014.