Compass: Thriving Even Without Early Holiday Rush

Josh Levy, CEO

It was a successful summer for Compass (asi/46170), as the supplier is slated to be up about 40% for Q3. “I’m pleased with where we are as a company overall,” says CEO Josh Levy, whose company sells high-end, brand-name tools and outdoor products. “We’re busier than normal, our sales are strong and our employees are working extremely hard under still difficult circumstances.”

The abysmal state of the supply chain had many predicting an early rush of holiday purchases. However, according to Levy, that hasn’t materialized yet. “I think a lot of companies have started gathering information and virtuals,” he says, “but in terms of purchases, I’m not sure the end-user is thinking about the holidays yet, since there’s so much going on right now.” He does believe that distributors have already done more legwork and research than typical to try and get ahead of holiday shortages.

The New York City-based supplier is facing the same challenges that everyone is regarding inventory, but Levy says, “We’ve done our best to get deep inventory on our 20 to 25 best sellers.”

“We placed orders in May that are just coming,” Levy adds. “So, hopefully, we’ll have enough to fulfill all the orders. We also have a lot of natural substitutes, and our sales and customer service department are very good at suggesting alternatives if we don’t have an item.” – C.J. Mittica

 

Starline USA: Forging Ahead to Q4

Brian Porter, senior vice president of sales and marketing

Optimism at Starline USA (asi/89320) remains strong as the industry moves into the all-important fourth quarter.

Year-to-year sales in September were up 100%; September 2020 was also a record month for the company. “From about June on, we’ve hit record sales each month without any PPE,” says Brian Porter, senior vice president of sales and marketing. “We’re doing all we can to mitigate disruptions. We’ve been ahead of the inventory curve in most of our product categories, which has helped.”

Drinkware maintains its top spot in terms of client demand, while coolers and the company’s line of writing instruments from uni-ball vie for a close second place. “Drinkware is universal and high-quality with an ROI in years,” says Porter. “Next quarter, we’ll see a rise in demand for home goods and lifestyle brands, so customers will need high-quality, high-ROI options.”

Meanwhile, a resurgence of health restrictions, mask mandates and cancellations has once again put the promo industry back on its heels, just as it expected to turn a corner during an optimistic summer. Porter predicts most returns to the office and larger events will take place in the second quarter of 2022, which means another kitting-heavy Q4.

“Trade shows and large meetings have yet to make the full-scale return we anticipated,” says Porter. “So, kitting and drop-shipping will continue to be used to bring products with high perceived value to employees’ and clients’ doorsteps. And personalization continues to be huge for us. Putting a person’s name on a product takes it to the next level.”

And companies are doing just that when placing orders for Q4 gifts. In fact, says Porter, corporations are responsible for record order counts and volume at Starline, since it’s crucial that they recognize and show appreciation to their hard-working employees and loyal clients during a long-term pandemic.

“We’re focusing on deep inventory in key categories, lead time consistency, new high-quality products and maybe an additional brand partner or two,” says Porter. “We’re also committed to our amazing distributor partners.” – Sara Lavenduski

 

Fairytale Brownies: Biting Into the Busy Season

Eileen Joy Spitalny, co-founder

Entering its busiest season of the year, Phoenix-based Fairytale Brownies (asi/53518) has seen sales up 16% over the same period last year.

The sweet treat supplier recently expanded its offerings, bringing back pumpkin spice morsels and candy cane crunch sprites and introducing snickerdoodle cookies and festive gift packaging. Plus, the company just wrapped up its giveaway contest, partnering with Netflix’s Marriage or Mortgage co-host Sarah Miller. Entrants simply went on Miller’s Instagram and tagged a bride or groom with a sweet tooth. The winner will receive $500 in goodies from Fairytale Brownies.

“We’re ready for the season,” says co-founder Eileen Joy Spitalny. “It’s going to be a big one, so we’re just trying to have a bit of fun when we can and do so safely. We’ve had food trucks and other fun activities for our employees.” – John Corrigan

Jack Nadel International: Bracing for Holiday Orders

Craig Nadel, president

Craig Nadel, the president and CEO of California-based Counselor Top 40 distributor Jack Nadel International (asi/279600; JNI), doesn’t mince words when talking about the current state of his company and the promo market overall: “Business has been strong, but the supply chain issues are even worse than they were a month or two ago,” Nadel says, adding that JNI’s sales are finally recalibrating to 2019 numbers. “I think it was the case for most of the industry, but it was around this time last year when business really picked up.”

Sales are about even with 2019, which is about 40% ahead of where the distributor was in 2020, according to Nadel.

Nadel points out that due to the delta variant being more pervasive and disruptive to business than anyone anticipated, the lack of events returning in full force has also hampered business growth. “Events have been delayed, and, of course, that’s costing us some orders,” he says. He added that JNI held its first live company event since COVID started at the end of September.

When asked about products or markets that are doing particularly well, Nadel reports that a trend he and his team noticed a few months ago continues to be a strong one: “The interesting thing is how well high-end products are selling,” he notes. “Any good brand is doing great, though I should say that we’re having a difficult time getting most of them. This is true with drinkware, wearables, gifts – everything.” Nadel also points out that he and his team, like most others in the promo space, are urging clients to buy early for holiday gift-giving due to the dire nature of supply chains and inventory.

“We’re asking clients to order early and quickly while there’s still some stock,” he says.

Regarding the other problem plaguing companies across North America – finding employees – Nadel notes that in his opinion it hasn’t gotten any easier to find people despite COVID-related unemployment benefits being clawed back. And Nadel, who’s been very public about bringing JNI’s people back to the office two months ago, shares that it’s going well. “Honestly, we did lose a few people,” he says candidly. “But I also think we’re gaining from having a fun, positive and interactive office – I think we work better when we’re all together. If I had perfect hindsight, we would’ve brought people back now after the delta surge, but we don’t get to play life that way.” – Michele Bell

 

Full Line Specialties: Contending With Virus, Supply Chain Challenges

Sam Singh, president and CEO

After a summer of optimism, COVID restrictions are back in Canada due to a gradual rise in cases. They’re putting a damper on confidence that, along with supply chain concerns, is hindering the business and economic recovery that Canadians had hoped for in the second half of the year.

Full Line Specialties (asi/199688) in Surrey, BC, says sales are poised to be 60% above those in September 2020, despite the team contending with and working through a myriad of challenges.

“When we send a PO to a vendor, stock is available,” says President and CEO Sam Singh. “But by the time it’s processed, another PO ahead of ours has secured the goods. Then our account managers have to piecemeal inventory from multiple sources inside and sometimes outside the industry.”

In British Columbia, like much of the rest of North America, plans to reopen have been scaled back significantly by officials, who have again mandated masks indoors, limited gathering sizes and implemented a vaccine passport program for nonessential businesses. Likewise, team members at Full Line are still free to make personal decisions when it comes to returning to the office or not.

Because of the ongoing restrictions, Singh says Full Line is still seeing huge demand for warehousing, kitting and fulfillment, along with retail names for T-shirts, headwear and drinkware, which will continue into Q4. The only PPE that’s been ticking upwards is fabric masks, now that the government has renewed its mandates.

“The holiday rush started early, in June,” says Singh. “But with the recent limitations on indoor gatherings, we’re not sure what’s going to happen with company Christmas parties. Hopefully, the budgets can be transitioned into buying staff gifts at a higher price point.” Singh is also still unsure about what the first-quarter trade show season will look like, since the U.S. has continued to extend its Canadian land border closure to nonessential travel.

Right now, Singh continues to monitor the situation and meet each client where they are, in terms of both business needs and their province. “We’re looking to hire more staff in administration and sales, as well as possible M&A opportunities,” says Singh. “We’ll see what the next phase of government pandemic safety measures looks like.” – SL

 

Moore Promotions: Powering Ahead

Kelly Moore, owner

Kelly Moore is keeping after it.

While supply chain challenges and other issues stemming from COVID-19 have affected her sales and profits, the solo-operating owner of St. Petersburg, FL-based distributorship Moore Promotions (asi/601617) is still cutting a path forward and winning business.

So much so, in fact, that Moore believes her third-quarter sales could finish close to what she reached in Q3 2020.

For Moore, that represents a brightening of the sky, as her year-over-year sales in the first six weeks of the third quarter were down relative to the same stretch the prior year. She wasn’t confident the gap could be closed.

Nonetheless, strong business from customers in the mortgage industry, clients getting a head-start on holiday gifting, and even a return of some PPE business – which had helped elevate her sales in 2020 – has Moore powering ahead.

“While PPE demand is not near as strong as it was in 2020, it’s still currently about 25% of my total business, which is a result of the uptick in interest I’m seeing again lately,” says Moore, noting that hand sanitizer demand has been particularly strong.

Additionally, gift packages have proved a hot seller. “Clients love to choose several inexpensive products and get a custom box with crinkle paper to put them in,” Moore says.

With COVID-related supply chain disruption causing everything from inventory shortfalls to longer production/delivery times and lower service levels in promo, Moore has found it advantageous to partner closely with a select few suppliers who she says are navigating the issues better than others.

How will the important Q4 holiday gifting season go? Moore’s not entirely sure, but she’s holding on to a kind of tempered optimism.

“It should be better than 2020,” Moore says. “I still feel a lot of hesitancy for big buys and/or higher-end gifts. I think I’ll be busy, but not making my usual profit margins.” – Christopher Ruvo

 

Whitestone Branding: Q3 Sales Skyrocket

Joseph Sommer, owner/founder

For Whitestone Branding (asi/359741), a lot of hard work came to fruition in the third quarter of 2021.

With less than two weeks left in Q3, the distributorship, which has a remote workforce located around the country, had already increased sales 140% relative to the same quarter the prior year.

Owner/founder Joseph Sommer and his team drove the impressive gain through strategic and consistent marketing and business development that’s been going on all year.

“We were ferocious with our lead generation and have done a very good job staying in touch with current and past clients,” Sommer says. “We’ve had a lot of large e-commerce projects wrap up in September – projects that have taken the better part of the quarter and even year to materialize and invoice. The solutions include redemption sites for customers and full company stores for brands.”

Sommer expects the strong sales momentum to continue through the fourth quarter holiday gifting season. “I anticipate that we’ll have an exciting end to the year,” he says.

Still, the success hasn’t come without challenges, the biggest of which were internal.

“We’ve been restructuring the organization to help support future growth, and we’ve had some people change jobs internally,” Sommer explains. “Anytime you have reshuffling of your organization chart, it can pose a challenge, but I feel confident in our team and our ability to tackle these challenges head on.”

Other issues included navigating event cancellations that resulted from a surge in COVID-19 cases. Nonetheless, the impact to Whitestone’s business has been relatively minimal.

“It’s not been anything to cause a panic,” Sommer says. “Most of the event cancellations kept the products we produced or were able to incorporate the items for virtual events or future in-person events.”

While some distributors have experienced a return of end-client demand for PPE, that has not been the case for Whitestone. Instead, customers have been clamoring for apparel. “It could be the changing of the season,” Sommer says. CR

 

Custom Logos: Persisting Through Challenges

Jeff Golumbuk, co-founder/owner

The COVID-19 pandemic and its effect on the supply chain has been the biggest challenge that San Diego-based Custom Logos (asi/173183) has faced in its 32-year history, according to co-founder/owner Jeff Golumbuk.

While bookings continue to be very strong, even exceeding pre-pandemic levels, billings remain off with work in progress accounting for almost double monthly billing, due to the company’s inability to produce and get orders through the system. “Shipping continues to be a nightmare,” Golumbuk says.

Internally, the pandemic has caused friction regarding debates over vaccination. Although the company hasn’t required its employees to get the shot, approximately 85% of staff has already been vaccinated. “I’m thrilled with President Biden’s proposed mandatory vaccine and only wish it was practical for us to follow suit,” Golumbuk says. “As a small business with only 68 full-time employees, we can’t risk losing staff and feel it’s an overreach on our part to mandate vaccinations. That’s another issue with COVID – it has forced politics into the workplace, something we were hoping and praying to get past with the advent of a new administration.”

Despite those challenges, Golumbuk claims that company morale is at an all-time high with staffing exceeding pre-pandemic levels. “We’re continuing to offer staff bonuses … we’ve increased our starting minimum wage to $15/hour and have given a cost-of-living increase to anyone on staff that’s been with us for at least one year.” – JC

Rockland Embroidery: Piecing Together High Order Volume

Andy Shuman, general manager

For Topton, PA-based contract decorator Rockland Embroidery (asi/83089), September has continued to ramp up, with an order volume that’s more consistent with the traditional holiday season. General Manager Andy Shuman hopes it’s a sign that consumers are acknowledging the supply chain challenges that exist and are thinking ahead.

As in previous months, Rockland has been decorating a higher percentage of brand name goods, compared to the past. But as with other types of goods, distributors are finding it challenging to source such items. “We’re seeing a trend in which orders are mixed and matched between similar items as consumers are having to settle for essentially whatever they can find that’s in stock now,” Shuman says. “In some cases, it’s not possible to fill an order with a single brand or style, thus the mixing and matching.”

Though screen printing companies have been running into ink shortages in the last month or two, Shuman says his firm has been OK so far, though he has concerns about the shop’s ability to mix custom colors. “What we have noticed is that sometimes it can take weeks to receive the materials once they are ordered,” he adds.

Due to the litany of challenges faced by the promotional products industry right now, Rockland Embroidery has made a conscious decision to be conservative with the turn times it offers clients. Everything from staffing changes, product shortages, missed shipments and material challenges are creating complications. “We obviously better our estimates whenever possible, but at the end of the day, we’re seeing average turn times that are significantly higher than normal,” Shuman says.

Thanks to “a lot of wildcards,” Shuman doesn’t believe normalization to the industry will comes until late into 2022, and when it does it will be a gradual return over a span of months, or even years. Still, he adds, he’s optimistic for the future: “The industry continues to show its resiliency, and better times are most definitely ahead, but not without a continued battle.” – Theresa Hegel

 

Rowboat Creative: Staying Strong With Live Events

Lucas Guariglia, owner

Sales at Chicago-based Rowboat Creative (asi/313715) were down slightly in September, both compared to the previous month and September 2020, according to Lucas Guariglia, owner. At the time of reporting though, he noted there was still one week left, and “I can guarantee you that is when we go hardest to finish each month strong for sales,” he adds.

Event business continues to be strong for Rowboat. The decorator recently completed a three-week-long activation for Summerfest in Milwaukee, WI. Though attendance was lower than in previous years, customer engagement was stronger than ever, Guariglia says. Rowboat is working with a shoe brand on an activation planned for the Chicago Marathon. The decorator has also been working on jobs for a variety of musical artists. “We turned about 40,000 imprints in a couple of days for two sold-out shows at Soldier Field for Los Bukis,” Guariglia notes.

Rowboat’s biggest challenges mirror the rest of the industry. The shop’s desire to offer its typical quick turn times is butting against inventory challenges and late shipments from suppliers. “We thrive on being able to be nimble, so when our wings are tied, it makes it difficult to do what we do best,” Guariglia says. “It’s all a learning curve, but some factors we just cannot fight, as it’s hitting everyone in the industry.”

Guariglia and his team have set a goal to finish 2021 as one of the strongest Rowboat has ever seen. “We like to set the bar high, and while we’re facing adversity because of world conditions, why not challenge ourselves?” he asks. “Sales have been extremely strong, and we’re turning out more work than we ever have at a very high level.”

The key, he adds, is to have a strong sense of company financials, since high volume doesn’t necessarily equate to success. “Running truckloads of orders might seem like you’re doing big things, but if your margins aren’t there, it will just look good on Instagram,” Guariglia says. “I feel constantly driven to make sure we’re making the best decisions for the health of the business, our staff and all of our sanity, as opposed to just looking to expand to say we’re expanding.” – TH