Moore Promotions: Challenges Abound, But Pressing Forward

Kelly Moore, owner

Kelly Moore is normally an upbeat, positive person, but she admits she’s feeling a bit discouraged.

The solo-operating owner of independent Florida-based distributorship Moore Promotions (asi/601617) shares that her sales in the second quarter of 2021 were lower than in 2020. The decline was a result of lack of PPE revenue that she had the year prior, as well as the fact that the average size of her orders is considerably smaller than in the past.

“It’s funny because I’m extremely busy, but it’s all with super small orders,” Moore says. “I’ve also had to lower my margins drastically, as people seem to be price shopping online more than ever.”

With reports that COVD-19 cases are on the rise in the United States as the delta variant spreads, Moore is worried that clients and prospects could get cold feet about investing in promo and other marketing initiatives. “People are growing cautious again, and even the mention of another wave of the virus could be bad for business,” she says.

As with other distributors, Moore notes that issues on the supplier side of the industry are hurting her sales. Inventory shortfalls resulting from supply chain disruption, delays in order fulfillment due to labor shortages and transport issues, and other related problems have been a constant hassle for Moore.

“I’ve had quite a few missed deadlines due to suppliers, and I’ve had to discount orders even more for those clients,” Moore says. “Sometimes, I just don’t charge them at all if they missed their event. I have never, in all my 22 years in this business, missed a deadline until this year. It stinks.”

Moore has been in search of new partners because of what she describes as longer lead times, mistakes and missed deadlines from previously reliable suppliers. “I’ve been speaking to associates in the industry and shifting my business to the suppliers who can still deliver in all areas,” she says.

Last year, the third quarter was Moore’s worst for sales. She doesn’t, at this point, anticipate that revenue in Q3 2021 will improve much over 2020’s performance. Still, she’s taking a glass-half-full outlook. “Nonprofits, schools, advertising/marketing agencies and events for summer have all been a consistent source of business for me,” Moore says. “Despite the challenges, I feel very fortunate to be busy.” – Christopher Ruvo

Jack Nadel International: The Great Back-to-Work Migration

Craig Nadel, president

In last month’s post-pandemic webinar hosted by ASI President and CEO Tim Andrews, which featured the same four Top 40 distributor CEOs Andrews spoke to as COVID was taking hold in March 2020 (Geiger’s Jo-an Lantz, BAMKO’s Phil Koosed, Overture Promo’s Jo Gilley and JNI’s Craig Nadel), Nadel surprised the audience with his candor by saying he wanted all JNI team members back in the office as soon as possible. It was a risky proposition, for sure, especially in a tight labor market with competitors fighting for top talent. So how was Nadel’s initiative received by his company’s team members? “We mostly came back last week [mid-July], and it’s gone well,” Nadel reports. “There are people with medical exceptions, but almost everyone is back, and it’s great.”

And that’s not the only good news for the Los Angeles-based distributorship: Its sales are currently double where they were in 2020 and on par with 2019’s. “We’re seeing business pick up for client events and trade shows, and back-to-work kits are starting to be shipped to just one address and not to people’s homes as much, which is a really good sign,” Nadel says, though he does note that the industry’s supply chain, inventory and staffing issues aren’t dissipating. “I would say they’re getting worse even, or at best they’re the same,” he adds. “In general, the higher-end goods, brands and higher-quality pieces are the bigger problems.”

When asked about mask mandates returning in cities like Los Angeles and a few others, based on COVID’s delta variant, Nadel is hesitant to say whether the industry will see another wave of demand for the PPE that bolstered so many companies’ sales last year. “As Yogi Berra once said, ‘Predictions are hard, especially, about the future.’ My guess is no, the demand for PPE won’t return – the reason being that for the most part the people getting the delta variant are the people who aren’t vaccinated … and they also tend to be the same people who don’t want masks,” he surmises.

As JNI is a distributor with a global footprint, Nadel just returned from the company’s office in London, and was able to see first-hand how the U.K. is faring. “The business climate feels very optimistic as best as I can tell from our group,” Nadel shares. “I think the main reason is the emergence from COVID, but also because they’re finally working out the issues surrounding Brexit.”

And when asked how the North American promo market, which ended 2019 at $25.8 billion and 2020 at $20.7 billion, will end up regarding its sales at the end of this year, Nadel is optimistic. “My guess is the industry will end 2021 about what is was last year with ‘normal’ business replacing the PPE,” he says. “I think next year will be fantastic and, in fact, I think later this year will be fantastic too – but the start of the year was pretty slow.” – Michele Bell

Full Line Specialties: Anxious for Provincial Reopening

Sam Singh, president and CEO

Things are gradually getting back to normal in British Columbia, the home of Full Line Specialties (asi/199688). The province is now in the third of four reopening phases, which means masks are optional indoors for the fully vaccinated and offices are beginning to welcome employees back, along with in-person meetings. President and CEO Sam Singh says they’re still giving employees options in terms of the setup that works best for them (back in the office, remote work or a hybrid of the two).

Meanwhile, the Canadian government has announced a reopening of the U.S. border on Aug. 9 for fully vaccinated Americans and permanent citizens living in the U.S, which Singh hopes will help bring back more American tourism for the area and business for his company. However, the Biden administration said it will extend its restriction on Canadians coming into the U.S. until at least Aug. 21, because of a rise in cases of the COVID delta variant.

“It’s definitely helped business, but the economy has a long way to go,” says Singh. “Ontario just entered Phase 3 of its reopening, and we’ve been flooded with requests for back-to-work kits from our national accounts.”

But it’s been a tough few weeks for the Pacific Northwest, where unheard-of heat indexes affected a normally temperate area and recent wildfires have destroyed whole swathes of land, including communities; 90% of the village of Lytton, BC, was decimated. Full Line has also been busy gathering supplies and extra product samples to send to those who lost their homes.

While July sales for the distributor are down about 5% from the same month last year, Singh says July 2020 was a huge month for them for PPE sales. The company’s gross processing margin for the month has ticked higher, which indicates recovering profitability. Same-store sales are about the same as they were in July 2019, which was a robust year for the industry.

Meanwhile, Singh and the team are bracing for a “challenging” Q4, in terms of supply chain logistics and inventory. “We’re booking holiday orders already to ensure deliveries for clients,” says Singh. “Next year should be much better as more people will have completed their second dose of the vaccination and international travel and events will open back up.”

Full Line continues to focus on opportunities in fulfillment and warehousing services for logistics, manufacturing, tourism and events customers. “We’re looking to add three more national fulfillment clients to our roster, which will help with future budget forecasting,” says Singh. “We’ll also look to hire new employees, which has been a challenge recently.” – Sara Lavenduski

Custom Logos: A Drastic Improvement

Jeff Golumbuk, co-founder/owner

After enduring a sluggish start to the year, San Diego-based Custom Logos (asi/173183) has seen business drastically improve. However, ongoing disruptions in the supply chain continue to plague the distributorship.

“We’ve been suggesting customers place their holiday orders now in order to secure product for the season,” says Jeff Golumbuk, co-founder/owner of Custom Logos. “Due to our warehouse and full-service capabilities, we’re able to store orders, which gives us a leg up in the marketplace.”

To prepare for the mad dash of Q4, Custom Logos has been looking to increase staff. Golumbuk anticipates expanding his workforce by 10% in the next six months. – John Corrigan

Whitestone Branding: ‘We’re on the Same Team’

Joseph Sommer, owner/founder

The way Joseph Sommer sees it, communication between suppliers and distributors needs to improve.

“The blame can be shared by all, but we’re seeing a lot of suppliers not being transparent about issues with production, stock and other things, which ultimately is hard to manage when we’re playing from behind,” says Sommer, the owner/founder of Whitestone Branding (asi/359741), a distributorship with New York City roots that has a remote workforce around the country. “Suppliers and distributors are on the same team, and I think we need to remember that.”

Sommer’s frustrations are being felt throughout the promotional products industry as labor shortages affect customer service and production, and supply chain issues that have fueled inventory shortages continue to plague the market.

Still, Sommer has a lot of positives to report, too. For one thing, the Whitestone team drove record year-over-year growth of 180% in the second quarter. “After COVID turned what’s normally our best quarter into our worst in 2020, we rebounded quite significantly in this year’s Q2,” Sommer says.

While July is typically a slower month for Whitestone, the firm continues to see brisk activity in 2021. “It’s busier than in past years,” Sommer says. “We’re seeing a lot of planning starting for fall and winter live events, which is positive and encouraging. We expect July to break sales records for the month, compared to other Julys.”

Given client buying cycles, Sommer is forecasting a little dip in business come August. However, he believes there will be a surge in activity and sales to conclude Q3.

“I’m expecting September to be busier than ever as we start sooner than usual with holiday ordering,” he says. “We’re educating our customers that holiday purchasing needs to happen sooner this year because of stock shortages and potential shipping delays.”

As Whitestone looks to drive continued sales gains, the distributorship is seeing ample activity with event marketers and planners. “It’s encouraging to see a lot of people being hired by these industries, creating a lot of opportunities for new relationships,” Sommer says.

When it comes to products, clients are increasingly seeking name-brand items, he notes. “A lot of credit needs to be handed out to Gemline, Hirsch Gift, Leed’s and others that are pioneering co-branding in promo and bringing many high-quality notable brands to our industry,” Sommer says. “Clients are receptive to the brands and want to co-brand with them.” – CR

Rockland Embroidery: Working Through a Busy Summer

Andy Shuman, general manager

Despite a holiday week that often causes a lull, July has been a strong month for Rockland Embroidery (asi/83089), the contract decorating firm based in Topton, PA. Compared to last July, says General Manager Andy Shuman, sales are up slightly, even though PPE printing is, for the most part, long gone.

“Last summer was all about how many face masks we could print and how quickly we could print them,” Shuman says. “This summer’s challenges are much different. Generally, they continue to revolve around the increased difficulties caused by vendor and carrier delays, backorders, shortages and the overall supply chain disruption issues. It’s very difficult, if not impossible, to absolutely commit to a firm in-hands date.”

On a positive note, order sizes – other than for fulfillment of “zero-inventory program business” – have been much larger, on average, than typical, according to Shuman.

Growing the Rockland team remains difficult, but Shuman says his current team – which includes a few new employees – “continues to do an absolutely incredible job.”

Despite the challenges facing Rockland and the promo industry as a whole, Shuman continues to be optimistic about 2021 overall. However, he does have concerns about the fourth quarter of the year. “Consumer expectations from both an inventory standpoint, as well as a production standpoint, may not align with reality as we hit the typically hectic holiday season,” he says. – Theresa Hegel

Rowboat Creative: Building a Strong Year

Lucas Guariglia, owner

Rowboat Creative (asi/313715) is busier than ever. The Chicago-based decorating firm is seeing a heavy increase in business this summer, with sales over three times as high in July 2021 compared to July 2020, according to owner Lucas Guariglia.

Live events have returned with a vengeance, and Rowboat’s experiential team has been working on various projects and planning for events into 2022. “We’ll be running a large-scale live on-site branding activation and buildout for Summerfest in Milwaukee this September,” Guariglia says. Billing itself as “the world’s largest music festival,” Summerfest spans the first three weekends in September, and hosts more than 800 bands and 900,000 fans, according to its website.

Still, Guariglia notes, it’s important to keep an eye on rising COVID cases and how that might affect events going forward. “We need to ensure we’re reacting as responsibly as possible for the sake of our teams and client partners,” he adds.

Inventory continues to be an issue for Rowboat. “We’ve been running a lot of custom cut and sew programs to get around this, but eventually stock issues become a barrier,” Guariglia says. The suppliers Rowboat works with are forecasting issues to continue at least six months and possibly longer if increased virus cases have an impact. “We can only fight so much, but it’s certainly something that causes daily issues with how quickly we move,” he says.

Overall, however, Guariglia is feeling very positive about 2021 and the future. “We’ve been able to continue bringing back additional staff from our older teams, as well as fresh new faces,” he adds. “There’s a bigger sense of pride from everyone internally that we made it through together.” – TH

Starline USA: Working Ahead for Q4

Brian Porter, senior vice president of sales and marketing

Starline USA (asi/89320; Canada, 89213), with locations in Grand Island, NY, and Concord, ON, started seeing business recovery back in July 2020, says Brian Porter, senior vice president of sales and marketing. It’s now up about 95% in year-over-year sales.

“End-buyers are now conscious of the supply chain challenges facing manufacturers, so they’re well ahead of their traditional buying timeline for the fourth quarter,” Porter says. “Orders are being placed now for delivery in November and December, simply so they can secure stock.”

Porter says Starline’s high-end lifestyle brands, particularly in drinkware and coolers, remain at the front of the pack in terms of demand, while uniball writing instruments are a close third. Though events aren’t a major market for Starline, Porter says industry peers are seeing promo momentum grow in events like athletics and trade shows, and related markets like business travel. Meanwhile, Starline’s Canada business is having “a banner year,” he says, as demand for the supplier’s products picks up speed while the provinces steadily open back up.

Looking to Q4, Porter says it’ll be important for companies to work ahead early to lock in inventory and strongly encourage end-buyers to do the same.

“We’ve ramped up production capacity,” says Porter, “and we’re ready for another strong finish to the year.” – SL

Compass: Overcoming Challenges

Josh Levy, CEO

Compass (asi/46170) continues to build momentum. The New York-based supplier of brand-name tools and outdoor items finished Q2 up 160% year over year compared to 2020. Even more encouraging, it beat its 2021 Q1 sales by 15%. CEO Josh Levy is seeing continued demand for “higher-end, quality items that have long-term value” that the company specializes in as opposed to cheaper giveaways.

But there are significant concerns to tend to. Compass is dealing with the same supply chain woes as everyone else. Levy ticks off the list: “Long lead times, insane freight rates, shortage of materials, margin compression, etc.”

“We’re trying to buy very large amounts of our best sellers and have been stocking up on those in anticipation of Q4, which is always our strongest due to our higher-end product line,” Levy says. “I believe that this supply chain issue is not going away any time soon, at least not until 2022, and I think a lot of customers will be scrambling to find suppliers who can supply goods.”

Also troubling Levy: the resurgence of COVID and preserving the well-being of his workers. “Employee burnout is also something I’m concerned about,” he says. “Everyone here has been working so hard over the past 18 months, dealing with many changes, working from home, COVID and now the supply chain issues. It can really be exhausting with one crisis after another.” He’s urging employees to find down time and take vacation to recharge their batteries, because these crises are not subsiding anytime soon. – C.J. Mittica

Fairytale Brownies: In-Person and Loving It

Eileen Joy Spitalny, co-founder

Morale is high at Phoenix-based Fairytale Brownies (asi/53518), as all employees are back at the office.

At the end of June, the company held its first in-person, all-staff meeting since the pandemic began. “We had food trucks in the parking lot,” says Eileen Joy Spitalny, co-founder of Fairytale Brownies. “Some people had never met in person before, so it was a good time for everybody to connect.

As expected, Fairytale’s sales were down from the same period last year. But, compared to that time frame in 2019, the company is experiencing double-digit growth. Business is expected to pick back up in the fall thanks to the rush of holiday gifting. – JC