There are ways in which a charitable organization is no different than a business. There is a bottom line to consider; stakeholders to satisfy; a mission to accomplish; and strategic decisions to make. In Los Angeles, one major decision that larger, national charities must grapple with is how to adequately service a metropolis that sprawls across 469.3 square miles. Is one office enough? Is the Valley so different from the rest of the city that it needs its own unit? How a group addresses these questions depends in part on its mission and its potential client base. For example, the Cystic Fibrosis Foundation, with a relatively small target population, has only one office in each Southern California county. Orange County is headquarters, and Los Angeles handles fund raising for the region, explains Helen Johnson, director of field operations for California. In contrast, the American Cancer Society (ACS) and the Muscular Dystrophy Association (MDA) both offer more services and have multiple offices in Los Angeles, including locations in the San Fernando Valley. According to regional coordinator Derry Schroer, MDA has offices in metro Los Angeles to serve communities from Malibu to the South Bay, including downtown plus another location in Burbank that covers the San Fernando and Antelope valleys. “In each area with an office, we have support groups and do fund raising. Through the money we raise, clients visit clinics, support groups and the camp for kids at no cost to the family,” explains Schroer, adding that MDA works with people suffering from one of 40 neuromuscular diseases. Having multiple offices make it easier to fundraise, asserts Schroer. “Because we have the Burbank location, we’re better able to access the community and be more available for committee meetings.” She says most funds raised are kept locally, but a portion is forwarded to the national office to help underwrite scientific research. ACS has nine offices with units in the San Fernando and Santa Clarita valleys. “We are trying to be accessible to the needs of the community so that people don’t have to bridge wide distances to go to a particular unit of the American Cancer Society,” says John E. Lazar, director of community services. Money flows both ways ACS conducts cancer awareness educational campaigns in schools and communities and does most of its fund raising on a regional basis. However, Lazar says there are some units that have unique events such as San Gabriel’s Cattle Baron Ball. This season the San Fernando Valley unit is slated to join forces with its neighbor to help with the event. “Fund-raising dollars go back to the region, which funds the unit,” says Lazar, adding that a percentage of the money is also sent to the national office for dispersal to research hospitals around the country. “But because Los Angeles has so many research facilities and hospitals, a lot of the money comes back into the region.” While having offices in the San Fernando Valley and Los Angeles maximizes fund-raising efforts and localizes services, the strategy can sometimes be a challenge, says Lee M. Cassidy, executive director of the Direct Marketing Association’s Non-Profit Federation. He says much depends on the structure of the organization. “The reasons to open other offices [in some cases] is to have a local program while the national does all the fund raising,” Cassidy says. “National says, ‘We will parcel these funds out according to some formula.'” “What might happen,” continues Cassidy, “is some people will say, ‘We’re the richest state in the country and we’ve raised the most money; or we’re running more programs than any other chapter, and we should get more money.’ So you have a continual tug between national and chapters.” Conversely, Cassidy says that when most of the money is raised locally, some people question why so much has to be sent to national headquarters. “Having multiple offices almost creates this struggle,” says Cassidy, adding that there is one exception. “If the local offices are service delivery units only, that tends to mitigate it.” While Cassidy recognizes that these turf battles definitely do occur, he doesn’t see them as big problems for the non-profit community as a whole. “It can be a major problem for some individual non-profits to the extent that it’s not resolved and re-resolved.”

New trend in teenage fashion calls for different marketing approach Christmas lights hang from the thatched roof that covers the small porch. Two teenage girls curl up on oversized armchairs with magazines. A surfboard, the words “peace” and “love” scribbled across its surface, leans against the wall behind them. It is a beach scene you might see in any seaside community. Except this scene is in Westfield’s Shoppingtown Topanga, and there is no surf for miles. The porch is the entrance to Hollister Co., a new retail concept opened by Abercrombie & Fitch Inc. in early December. The Topanga mall store, the only Hollister Co. unit to open in California, is one of four outlets in the pilot program. Others are in Ohio, Atlanta and New Jersey. If successful, Abercrombie & Fitch could roll out 500 such stores. “Hollister Co. is the bridge between the abercrombie (chain) and the Abercrombie & Fitch stores,” said Hampton Carney, spokesman for the company. “The lifestyle of the high school student is different from the college student.” Hollister Co. is designed to fit between the company’s two other chains, Abercrombie & Fitch for college students and abercrombie for kids aged 7 to 14. The stores’ selection of sportswear is better suited to skateboarding than cruising coffee houses, and its prices are significantly lower than the Abercrombie & Fitch line. The company chose the beach-house ambiance hoping to entice kids to hang out. Others see a deeper meaning in the surfer metaphor. The name is a reference to the Hollister Ranch, a well-known surfing area near Santa Barbara.”Young people look back at those days as the golden age of youth,” said Gerald Celente, publisher of The Trends Journal, a publication of The Trends Research Institute, a consulting group in Rhinebeck, N.Y. The in-between generation The in-between generation Since transforming its image from the 100-year-old Victorian shop that outfitted Teddy Roosevelt for his trips to Africa and sold guns to Ernest Hemingway, the company has grown to a $1-billion-plus business with 325 Abercrombie & Fitch stores and another 71 abercrombie units for kids. Abercrombie & Fitch caters to college-aged shoppers with hip sportswear that draws on the store’s rugged, outdoors roots. Hollister Co. is designed to offer a similar fashion appeal with pricing and other details better suited to younger shoppers. And early indications, at least, suggest the store has hit the right note with teens. “It’s sooo Abercrombie,” said Harmony Costa, a teenage shopper perusing the racks who was unaware of the store’s link to Abercrombie & Fitch. “(But) Abercrombie is more preppy and it’s a little more expensive.” On a recent evening, Abercrombie & Fitch was selling lamb’s wool sweaters for $39 and cotton pants for $44.50. Meanwhile, Hollister Co., just across the way in the Topanga mall, was retailing a different lamb’s wool sweater style for $29 and jeans for $34.50. Along with the lower prices, the mood of the stores is also geared to younger consumers who often don’t want the assistance of sales help and would rather meander through the displays unnoticed. Rather than walking the aisles and offering assistance, salespeople who are not stocking or tidying displays can be found seated on the oversized armchairs placed around the store or on the porch. Some read magazines, but they’re often interrupted by friends who have been hanging out at the mall and stop in to say hello. “We wanted to create an environment where the customer feels at home in the store, and it almost becomes difficult to discern who is the customer and who is the salesperson,” said Carney. “That’s the whole idea behind (the chairs).” Alana Fields wasn’t even certain the porch was a store entrance when she approached on a recent visit to the mall and saw the salespeople seated on the chairs outside. “It was kind of interesting,” she said. “It’s like, chill.” In what would likely be music to the company’s ears, the 22-year-old thought the store was “cute,” and similar to Abercrombie & Fitch, but too young for her tastes. “All of it looks too small for me,” she said. Pundits point out that the hip hop fashion that has prevailed among younger consumers is on the wane, and the next wave appears to take its lead from skateboarding, snowboarding and surfing. While the surfer lifestyle popularized by the Beach Boys a couple of decades ago belongs to the baby boom generation, Generation Y has latched on to the newer versions popularized by extreme sports. “Today, it’s more surfboarding and snowboarding,” said Bob Walberg, chief equity analyst for Briefing.com, a financial analysis company. “You see more and more the popularity of these sports increasing, and the fashion is a tremendous growth market in fashion right now.”

The party dresses in the window of Hepburns, a women’s apparel store in Sherman Oaks Fashion Square, attract plenty of shoppers, but few buyers. “No one’s received any invitations,” said Mary Ann Hunt, the shop’s owner. “People are coming in and saying, ‘We’re really just looking.'” Last year, when the world was perched at the dawn of a new millennium and social calendars were filled with New Year’s Eve plans, shoppers piled into the stores in the week after Dec. 25 to snatch up everything from evening wear to party decorations. But as the year 2001 approaches, and the question, What are you doing New Year’s? remains unanswered, retailers face their own dilemma over invitations: how to get shoppers back into stores during that last week in December. Most retailers agree that last year’s millennium fever effectively added a week to the holiday season and helped many exceed their sales plans. Now they’ll have to find a way to make December 2000 stack up against those numbers. “We had a tremendous holiday season last year, and the fifth week was a part of that,” said Tony Spring, executive vice president of marketing for Bloomingdale’s. While Bloomingdale’s is still hoping for a bump in sales during the last week of December this year, Spring concedes, “We have planned for less aggressive growth in the business (than last year’s).” Not that retailers have given up on the week-after business. Post-Christmas Day discounts have in recent years brought an increasing number of shoppers into stores after Dec. 25. And this year, because Christmas falls on a Monday, many executives expect more people to stay home from work the last week of December, upping the chances that they will choose to visit the mall. Whether they do, and how much they spend once they get there, however, will mostly depend on merchants’ marketing savvy. A number of different plans are afoot. At Bloomingdale’s, where party-related goods like evening wear, handbags and crystal flutes were among the items most heavily promoted last year, this year’s assortment leans more toward stay-at-homes massage, aromatherapy, wellness-related products and cashmere sweaters. “All are businesses that didn’t get as much attention or energy last year, and offer us an opportunity to do additional business,” Spring said. Other retailers like Robinsons-May hope that emphasizing some of the season’s new-fangled gizmos products like Polaroid i-Zone pocket cameras, robotic pet toys and walkie talkies will help pick up the slack. But while some stores focus on New Age wares, still others are turning to more ancient traditions to keep traffic bustling after Dec. 25. Janine Baker, marketing director at Westfield’s Shoppingtown at Topanga, said “Because of our market, quite a bit of our sales are generated because of Hanukkah.” The Jewish holiday, which this year begins on Dec. 21, is an occasion for eight days of gift giving. When Hanukkah falls early in December, sales are recorded in November tallies, but this year’s later timing promises to extend the December shopping season. “Here in Sherman Oaks, I’ve been building up the Hanukkah merchandise,” said Denise Williams, owner of Lavenders’ Hallmark in Fashion Square. “We find that when the two holidays (Christmas and Hanukkah) are close together, sales increase in the Judaica products.” Williams typically devotes about 12 feet of her store’s floor space to Hanukkah merchandise, but this year she has increased the allotment to nearly 20 feet. “We’ll have balloons, chocolate, dreidels, games and party wear,” said Williams. The Glendale Galleria is hosting a special event around the Hanukkah theme. The shopping center will have a menorah display from Dec. 20 to 30 and, on Dec. 28, the mall will host a party with live entertainment, music and refreshments. To boost traffic further, Glendale Galleria is running an event with Jackpot.com Dec. 28 and 29. The winner of the Website’s million-dollar giveaway will be chosen at the mall. “We have done a few things to keep the energy high during that week,” said Annette Bethers, the mall’s marketing director. David Small, the store manager at J.C. Penney’s Glendale Galleria store, isn’t certain how much the millenium contributed to last year’s sales figures, mostly because the store caters to so large a population of Armenian shoppers who live in the surrounding area. With the Armenian Christmas falling on Jan. 6, Small said that his store usually gets a sales boost after Dec. 25. “Our store does the number-one volume in the Penney company the day after Christmas because most of the Armenians in the area celebrate two Christmases,” Small said. Even those retailers who rely on the Dec. 25 celebration point out that after-Christmas sales have played an increasing role in the season’s sales totals. “Realistically, every year we’ve seen after-Christmas sales do better and better,” said Milinda Martin, director of special events and public relations for Robinsons-May.

Officials at Camarillo-based Vitesse Semiconductor Corp. have to wonder what they need to do to get it right. They have spent the last three years broadening their business through acquisitions and development of a host of new products. Over the past quarter, those new services have begun to hit the market and will eventually allow companies that form the backbone of the Internet to buy all of their integrated circuit and communication system needs from one vendor Vitesse. Despite all this, the company’s stock has been downgraded by several analysts and has steadily dropped since hitting a 52-week high of $115.69 in March. The stock as of early December was trading around $59. Putting the best light on the subject, Vitesse Chief Operating Officer Chris Gardner chalks the stock performance up to market fluctuations. “All our peers are down more than Vitesse,” Gardner said. He further said that the company has not changed any projections about its future financial performance, or any other information given to analysts and investors. He declined to comment specifically on the analyst downgrades. Vitesse stock got a small boost after the Standard & Poor’s 500 added the company to its index on Dec. 5. Analysts polled by Zacks Investment Research split on their ratings of the company: Eight rate the company a “strong buy,” nine a “moderate buy.” Kaufman Bros. analyst Alvin Kressler downgraded Vitesse in November, just as he did other companies he covers in the semiconductor industry. “Long term, I still do like Vitesse and a couple of other players,” Kressler said. But in the short term, Kressler said, he has concerns about a slowdown in demand for Vitesse products because companies it sells to are seeing a slowdown themselves, and many upstarts are going out of business or are on tightened budgets. Kressler said he is also concerned by reports that inventory for semiconductor companies is above historic levels. That view, however, is not shared by everyone. Jeremy Bunting, an analyst with Thomas Wiesel Partners, rates the company a “buy” because he anticipates strong growth potential with its newest line of products. “From a fundamental business standpoint, they are in an accelerated growth curve,” Bunting said. Vitesse’s quarterly growth has ranged from 10 to 11 percent a couple of years ago to 19 to 20 percent in the latest quarter. Unlike many of its peers who are watching their growth rates dwindle, Vitesse is on the upswing because of those new products that cater to new markets, such as network processors. “Even though they’re strongly positioned in the higher-speed transmission market, at some point they need a higher growth driver,” Bunting said. For the year ended Sept. 30, Vitesse reported net income of $126.3 million (67 cents per share) compared with net income of $61.4 million for the like period a year ago. Revenues were $441.7 million vs. $281.3 million. Vitesse makes high-bandwidth communication integrated circuits for networking. The company’s products are sold to systems manufacturers of communications equipment and automated test equipment that build the framework of the Internet and high-speed transmission lines. Vitesse’s expanded product line has moved from the layer of physical devices to a higher one that includes network processors, switches, routers and other communications tools for network transmissions. In the next five years, for example, Internet service providers using Vitesse’s newer communications tools can sell premium bandwidth services to customers for certain periods of time, Bunting said. So, for instance, if a company has a video conference call scheduled for one morning, they could pay for increased bandwidth for just that morning. Vitesse is also expanding into making switchers, routers and everything else in between. It has allowed the company to move into the network processor market, which is also growing. “We’re talking to guys who come in from multi-platform switching to networking process to traffic managers,” Gardner said. “Effectively, they can build their entire box with Vitesse products.”

It wasn’t that long ago that Josefina Salazar experienced a couple break-ins a year at her Pacoima beauty parlor. But it was never enough to drive the owner of Lirita’s Beauty Salon on Amboy Avenue out of business. “They caused more damage than they stole,” said Salazar, 51, owner of the shop since 1981. “But we don’t have a problem anymore.” Indeed, for many business owners in Pacoima, things have gotten better in recent years, as small shops have become less of a target for robberies and break-ins. Clustered along the Van Nuys Boulevard corridor, and up and down Valencia and Laurel Canyon boulevards, many of those small businesses have been in the same locations in the predominantly Latino neighborhood for decades. Their established reputations are what their owners say keep them in business, and, for the most part, out of harm’s way. “Some people talk bad about Pacoima,” Salazar said. “But I’m very happy here.” Historically, robberies are more prevalent at larger chain operations, said Senior Lead Officer Ted Watson, who oversees the area for the Los Angeles Police Department. For the most part, crime stays away from small businesses in the area. “The people who shop at these businesses know these owners,” Watson said. “It’s a very tight community.” Bob Scott, vice chairman of the Valley Industry and Commerce Association, agrees. “Pacoima epitomizes the idea of community,” he said. “The whole Northeast Valley area has long been an economically modest, but at the same time community-active area where you have a lot of folks who enjoy their community, take care of their community and are happy and proud to be part of the San Fernando Valley community.” Business robberies in the Pacoima area, including those at small and corporate-owned establishments, are down 37 percent this year, with a total of 37 incidents so far, authorities said. Burglaries are down 32 percent, with 41 last year and 28 so far this year. Other crimes, such as burglaries from vehicles, are down 33 percent, with 263 incidents in 1999 and 175 this year. “There’s a lot of respect among people in the community,” Watson said. “These owners are hard-working. The customers know them. Unlike K mart, these stores are run by a man and his wife. A lot of these people don’t even have cars and can walk to work. The people in Pacoima have been there a long time and live by modest means.” Even gang members have been known to show respect to small business owners, as has been the case for Elvia Bravo, owner of Gloria’s Flowers on Van Nuys Boulevard for 22 years. “If you respect them, they respect you,” said Bravo, explaining that gang members often stop by her small shop just to chat. About 10 years ago, Bravo discovered some graffiti on the back of her building. The very next day, a young man approached her about it. “He said, ‘Lady, I need to speak to you I’m sorry’,” Bravo recalled. When she asked him why he was apologizing, the young man pointed to the wall. “He said, ‘It will never happen again.'” The most serious crime at the flower shop occurred about 17 years ago when a masked man entered the store and demanded money from Bravo’s husband, Fernando. Alone in the shop at the time, Fernando Bravo showed no fear and in fact started throwing tools at the perpetrator, scaring him off, Elvia Bravo said. “We never had a problem again,” she said. Problems have also eased at Lirita’s Beauty Salon. Established in the late 1940s, the beauty shop where a haircut still starts at $8 is like a second home to many neighborhood clients, some of whom have had their hair done regularly at the humble parlor since long before Salazar took over. “I stay here because my clients know me,” Salazar said. “They know my beauty shop.” The sense of community is an asset for Pacoima’s small businesses, said police Capt. Kenneth Garner, commanding officer of the LAPD’s Foothill Division, which encompasses Pacoima. “It’s a real strong business community,” Garner said. “A big part of that is the support they get from the community. If you make your community happy, that’s how you stay afloat.” For the most part, small business owners do not appear too concerned about competing corporate businesses, which are relatively few and far between compared to the mom-and-pop establishments. Along the Van Nuys corridor, for instance, chains like Kentucky Fried Chicken, Auto Zone and Pizza Hut are easily outnumbered by the family-owned flower shops, beauty parlors, discount auto shops, pharmacies, television repair shops and Mexican food establishments. Mike Garcia, director and founder of the non-profit San Juan Macias Orientation Immigration Center on Van Nuys Boulevard, said the 22-year-old organization has never had to deal with serious crime, nor have any of its neighbors. “We’ve never had a problem,” Garcia said. “As long as there’s immigrants, there’s work for us.”

The days of the gilded IPO are long gone, no question. But even after the fall, a number of Valley companies are bravely going public. Among technology companies, those based in the Valley that have gone public in the last six months have treaded through some rough waters. Chatsworth-based Optical Communications Products Inc., a fiber-optics firm, has been one of the lucky ones. The company went public Nov. 3, selling 10.5 million shares at $11 each. The company’s stock jumped to $17.88 a share on the first day, but as of late November, it had fallen back to around $12, still slightly above its initial offering price. “They did fairly well their first day out,” said Dan McCarthy, market analyst with IPO.com. “For recent times, they did very good.” McCarthy said that Optical was initially successful because it is part of the fiber-optics sector, which has had several successful IPOs over the past month. Optical is still in its “quiet period,” as required by the SEC. The company makes fiber-optic subsystems and modules for customers that include heavyweights such as 3Com Corp., Alcatel, CIENA Corp., Cisco Systems, Lucent Technologies, and Nortel Networks. Optical reported net income of $7 million in 1999, a 92 percent increase over the previous year. Revenues were $36 million. Across town from Optical, fiber-optics firm Luminent, a spinoff of MRV Communications, has been seeing its stock sink. The company went public at $12 a share on Nov. 11, but as of late November it had dropped to around $8. Analysts had expected Luminent’s stock to perform better out of the chute. “It kind of took me by surprise that they didn’t do better the first day, since they are an optical company,” McCarthy said. Hard times The fiber-optics industry in general has been having a rough time lately, after several months of success, he said. Optical was the last successful launch in the sector. And industry leader JDS Uniphase has seen its stock buffeted. “The party seems to be over,” McCarthy said. Telecommunications companies are also having a tough go. Moorpark-based Accelerated Networks launched in June at $15 a share. The stock had tripled in value by its second day on the market, and by late July, it had hit a peak of $67.50 a share. But as of late November, it had plummeted to around $7. Accelerated, which makes telecommunications equipment enabling companies to get Internet and voice service over a single phone line, is suffering like much of the telecom industry. Analysts expect spending on voice-over-broadband products to cool in the coming year. For the third quarter ended Sept. 30, the company reported a net loss of $6.7 million (14 cents a share) compared to a net loss of $5 million (13 cents a share) in the like period a year ago. Revenues were $11.9 million vs. $2.9 million. Accelerated CEO Suresh Nihalani told Reuters that the company hasn’t felt a slowdown in its business because it makes such specialized equipment. The company isn’t expected to be operating in the black until 2002. Victor Hwang, chief operating officer of the Los Angeles Regional Technology Association, said Valley companies are running into the same problems as their counterparts nationwide. “These are still tough times for (tech companies to obtain) capital,” said Hwang. “There’s still a lot of trepidation out there.” The technology companies going public now are in the wireless and optical industries, Hwang said. “What you’re not seeing are any Internet companies going public anymore,” Hwang said. “They’re all pure technology players.” The IPO market in general has changed. Fewer companies are going public and those that are differ from those going public prior to this spring’s “tech wreck” market selloff. Analysts don’t expect more than several companies a week to go public through the rest of the year. “There’s not a whole lot,” McCarthy said. “The bad conditions in the market overall have really frightened underwriters.” That means, any speculative business or business not making money, is out. Right now, foreign companies such as Austria Telecom are hot on the IPO market. Pharmaceutical and biotechnology firms are also popular, as are power, oil and gas companies that stand to benefit from a rise in energy prices, McCarthy said.

One of the biggest hurdles any start-up business has to jump is finding space to house a new company. When he went looking for office space, Gregg Steiner realized that what was available just wasn’t going to work for his young company. So Steiner who, with his cousin Alan Finkel, owns WildMind Public Relations, decided to use technology to create his own solution for their Sherman Oaks enterprise. He created a virtual company with all employees and partners working from their homes and linked technologically. “I was working for Lowermybills.com (for almost a year), then I told the founder of the company I wanted to start my own P.R. firm. That was in July of this year. He was very supportive and said he would sign on and be a client of ours. “We started looking for office space and realized it was extremely expensive, something like $3,000 a month for a very small space. And we thought it was just too much risk, especially since we had to sign a one-year lease. That was a minimum of $36,000 a year plus you had to furnish it, pay for parking, insurance, a cleaning service and a lot of other expenses. It could cost from $50,000 to $100,000 a year for office space for a small company. “So I got DSL and a new and better computer, plus an all-in-one fax/copier/printer and used one of the extra bedrooms in my house [as an office]. I spent about $300 for the printer and $1,400 for the computer. “The company started in August (with Lowermybills.com as the first customer) and right away we got another client: NetCatalyst. We got them the same month we started the company. The next month we got another account. We’re about to sign on our fourth client and have meetings on the horizon for possibly the fifth and sixth clients. “We hired our first employee in October. He does general P.R. work such as pitching stores, doing research on competitors, database management and answering and making calls. “And we’re all virtual. We all have Microsoft’s MSN Message service, which is a free chat service you can download and use to communicate. You send a message and it pops up on the screen [of the recipient] immediately. We can send files, then open them and work on a press release at the same time. “We also all have cameras above our computer screens so we can see each other. The camera enables us to have human interaction, so we’re not stuck in an office all day not seeing anyone. “Probably the biggest challenge is getting things you might need from each other. We have to drive all over to get something like a press kit or folder, the things you can’t send through e-mail. That makes it challenging. But it’s a small (challenge).”

valley toy companies already planning for THE 2001 holiday season At Woodland Hills toy houses Applause Holding Co. and Funrise Corp., December is crunch time. Santa’s little retail elves may be busy churning out Razor scooters and Sony PlayStation 2s for this holiday season, but Santa’s toy makers are already preparing for the next holiday season. In toy time, the holiday season starts a year and a half before the calendar holiday season. At Applause, Funrise and dozens of other toy firms across the San Fernando Valley, Southern California and the nation, the customer service and sales departments are hustling to send out toys and restock the most popular lines to fill retail shelves for this holiday season. But the creative and management teams are busy preparing their sales pitches for toys for the 2001 holiday season. “This time of year, we have one foot in the present and the other in the future,” said Dave Schwartz, vice president of marketing for Funrise, which makes Tonka trucks, among other toys for young kids. Schwartz and other Funrise execs are busy planning next year’s line of G.I. Joes, at the same time they are keeping an eye on sales for toys this season. At nearby Applause, it’s the same thing. Applause, a private company with more than $100 million in annual revenue, makes more than 3,000 different toys ranging from Harry Potter-related gifts to “102 Dalmatians” plush dogs to originals, like Raggedy Ann. “Christmas 2001 started for us in July,” said Daniel Barnhart, senior manager of marketing for Applause. “Our product lines are being finalized now. Applause, like most other toy developers, started planning for the 2001 Christmas season last summer. By early November, next year’s toy line was ready. The next two months will be spent planning how to package and sell the toys to retailers. In January, the companies will begin a round of toy shows in New York and other cities to sell their lines to Toys R Us and dozens of other large and small toy stores. By February, the first orders for the following Christmas start rolling in. Toy manufacturers, mainly in Asia, begin making the toys in March. Until the toys hit store shelves in the fall, their makers won’t really know which one was a hit and which was a miss. Finding the next big hit is a tough job, one that is becoming more difficult, as more toys hit the market and compete for eyeballs. A long head start Applause planned its 2000 Christmas season line in June 1999, before the Razor hit the market and when “Star Wars” was at its height. But a lot can change in 18 months. “You run into problems with the lead time in predicting trends,” said Leeton Lee, president of the Toy Association of Southern California. “One of the biggest problems when the Beanie Baby craze hit, in the Far East there was a shortage of plastic pellets that fill up the Beanie Babies, so companies had to struggle to get enough out.” And there is the occasional flop. “There are always those ones you wish had done better,” Barnhart said. For Applause, the Slamosaurs Dinosaur Wrestling Federation toys got off to a slower start than expected. The company stayed with the product and sales have since picked up. But not all products are as lucky. The process of trying to figure out which toys will be hot the following year involves looking at what has been hot up to that point, fashion and color trends, new technology on the market and some simple intuition of what kids want. “You have to gauge how long the interest is going to last,” Barnhart said. “With the Powerpuff Girls, sales are very strong. They’re very bright (colors). We can translate that into different textures.” Licensed lines are designed with guidelines from the licensor, with one of the largest toy licensors being the Walt Disney Co. Final designs are also subject to approval by the licensor. For Funrise which makes more-basic products, such as Easy Bake ovens for little girls and trucks for boys it is a little easier. “We make a basic product that should be there next year,” Schwartz said. “But, like every company, we’re beholden to the whims of the consumer. The problem is that every toy company is trying to replicate successful past products, and we’re all sort of fighting over the same consumer.” Increased competition in the marketplace is making it tough for companies to exceed their past year’s sales performance, toy officials say. And without a Furbie or “Star Wars” drawing people to stores this year, it’s even more difficult. “We looked ahead and what we really didn’t see was any ‘Star Wars’ or Pokemon-type hit looming,” Barnhart said. “The big hit, that is becoming less and less true each year. It used to depend on Disney, but it’s changed now that there is more (toy product) on the market.” Applause, which started as a key chain and souvenir company in 1966, has built its business around the specialty toy market. The company, which got its first hit with a license for Smurfs in the 1970s, has toy lines based on licensed brands from such heavyweights as Disney and Universal, along with its own original lines. In 1995, Applause acquired Dakin, a well-known maker of plush dolls, which allowed the company to expand its line to counterbalance losses in the licensing business. Dakin toys are mainly collectibles that include Raggedy Ann, sea life artist Wyland, the Dakin Baby collection and the Jasper Bear, created by artist Lou Rankin. Applause secured $3 million in venture funding in the third quarter to continue building its original lines. Funrise, started in 1987 by Arnie Rubin, has a partnership and licensing deal with Hasbro Inc., under which Funrise makes Tonka trucks and other toys. Southern California’s large toy industry is partially driven by its proximity to Asia, where most of the toys are manufactured, said Lee of the Toy Association. Southern California also has many of the top toy licensors, from Disney to Warner Bros., which licenses many of the toys that drive the holiday shopping market. Also based here is Mattel Inc., a major licensee and importer of toys. So what can you expect to see on store shelves for Christmas 2001? Don’t ask. “Oh, oh, that is going to be so much a secret,” Barnhart said. “It will be what’s innovative and new and a little different. Nobody needs any new bears with a Santa Claus hat.”

paul jardin usa, realizing that men shop for suits only on certain days, changed its business accordingly Once upon a time, Three Day Suit Broker was just like all the other men’s clothing stores. Operating under the name Paul Jardin USA, the company had stores in regional malls. It kept its doors open seven days a week and paid salespeople on commission. Then a critical realization sank in. “Most men who wear suits work Monday through Friday, and the last thing they want to do after work is go shopping,” explains Leo Shahinian, who co-owns the Woodland Hills retail chain with his father Sam and brother Shawn. His observations echo a national retail statistic that finds 70 percent of all shopping is done after 5 p.m. and on the weekends. “The other thing was that men typically shop with their wives or significant other, and the only time they really have together is on the weekends,” Shahinian said. Taking that information and running with it, the family-owned firm in 1992 moved out of the malls into stand-alone facilities; cut back its days of operation to Friday, Saturday and Sunday; took its sales force off commission; and changed the name of the company to better reflect the new philosophy. The result was growth almost immediately. From four stores in 1992, the chain has grown to eight stores, with four added in the past two years. Revenues doubled to about $15 million in the short period from 1997 to 1999. Shahinian credits the growth to the company’s reorganization, which reflects the changing shopping habits of its male consumers. “Even though people were making more money, the old ’80s adage of having and spending was not there. Traditionally, men were non-shoppers. But in the ’90s, they started acting like women becoming more bargain hunters regardless of their income. So we started catering to that attitude by carrying suits from $79 all the way up to designer brand names,” says Shahinian. Despite their more economical ways, men also wanted quality in all price ranges, Shahinian adds. That’s one reason the company decided to use the direct-sourcing method to acquire its inventory. Instead of going through middlemen, the Shahinians went directly to the finest fabric mills in Europe and Korea, bought the material and sent it to the manufacturer themselves. “Some of the manufacturers we use make suits for designers like Versace and Georgio Armani. So we’re getting the same quality workmanship, but our suits cost about one-third the price,” points out Shahinian. He says about 70 percent of the suits in the store are direct-sourced. The rest are the designer brands. “I’ve seen that [direct-sourcing], but it’s not typical,” says Jon Schallert, a Sorrento, Fla. management consultant specializing in independent retailers. “That tactic might give them a decided edge over price and selection. The chance to control the selection also makes it more of an exclusive type of clothing and harder to knock off.” Most competitive environment in U.S. Schallert says he isn’t surprised to see such out-of-the-box thinking in California, which he describes as one of the most competitive retail environments in the country. The Shahinian family made one other crucial modification in its retailing strategy. “Male retail customers always have the feeling they’re being suckered in. They buy something now, and then it goes on sale next week. That’s why our company will never have a sale,” asserts Shahinian. “That way they’ll have the peace of mind that what they’re paying today will be the same price as a month from now or the month before. We don’t have gimmicky sales to bring them in.” Instead, they offer quality and economically priced merchandise, a sales experience that is as hands-on as the customer wants, alterations typically completed in days rather than weeks and men’s accessories that includes everything but underwear and pajamas.

The San Fernando Valley may be typecast as an entertainment-industry hub, but the Business Journal’s list of fastest growing private companies helps demonstrate the area’s diversity as a business community. Out of the 25 fastest-growing firms, only one, 3 Point Digital a distributor of digital film editing equipment and other software could be considered entertainment-related. The rest run the gamut from construction companies to employment agencies, apparel makers to travel agencies. “Most people think of the Valley as strictly entertainment-related, but the area is diversifying,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corp. “The Valley has a lot of tech companies and a lot of other companies out there doing some interesting things.” Diversity is important given the wallop the Valley suffered in the early 1990s, when the aerospace industry contracted and the area lost thousands of jobs, said Kyser. “The Valley was hit hard, but I’d say the area has a little insulation from future economic gyrations,” he said. This year’s list of fastest growing private companies features a number of new faces. In fact, 18 of the 25 companies on the list seemingly came from nowhere to make the ranking, including No. 1-ranked EPI Enterprises Inc., a commercial construction company out of Van Nuys, and No. 3-ranked NewMark Merrill Cos., a Tarzana company that buys and repositions shopping centers. EPI, based in Van Nuys, experienced a whopping 564-percent increase in revenues between 1997 and 1999. Founder and chief executive James Amato attributes the company’s growth to a strong economy and dynamic growth in the commercial real estate industry. NewMark saw revenues increase 383 percent over the same period. As the retail real estate market softened in recent months, the company was presented with more buying opportunities. While some fast-growing companies disappear from the list seemingly as quickly as they appear, Market Scan Information Systems Inc., a maker of software that helps auto dealers track automobile lease rates, has maintained its No. 2 ranking for two years running. The Westlake Village-based company saw a 454-percent increase in revenues between 1997 and 1999 and, CEO Rusty West said, the company’s prospects remain solid. “The economy has been really strong and new cars are getting so expensive, a lot of people prefer to lease,” said West. Business for Box Brothers Corp., on the other hand, has slowed a bit as the economy cools, said Robert Goodman, the company’s CEO and president. The company sells boxes and packing supplies to people and companies on the move. It also packages and ships items that weigh less than 1,000 pounds. Cardboard on fire Box Brothers, which made it to No. 7 on the list, saw its revenues increase 124 percent since 1997 and, despite the cooling economy, Goodman expects the company’s revenues to continue to grow. “We’ll continue boosting revenue, but it’s going to be through expansion (of locations),” he said. The Woodland Hills-based company plans to open its 30th store in New Jersey this month, a move that will allow Box Brothers to tap into the East Coast market for the first time and increase cross-country shipping, said Goodman. In a somewhat quirkier category of commerce, Chatsworth-based Pipedream Products Inc. made this year’s list thanks to a healthy 78-percent increase in revenue between 1997 and 1999. The company sells risqu & #233; novelty and gag gifts, games, lotions and adult-themed toys to wholesalers who, in turn, distribute the items to consumers. David Feldman, the company’s CEO, said the biggest market for the company’s novelty and gag gifts are bachelor and bachelorette parties. Business is so good, in fact, the company recently had to buy out a tenant in its 51,000-square-foot Chatsworth warehouse so it could expand. By shifting to more in-house production of many of its items, the company has been able to boost profits by reducing manufacturing costs. In addition, the company puts a lot of effort into its packaging, which Feldman credits as a significant factor contributing to its improving sales. “Our packaging is very dynamic,” he said. “We’re selling the sizzle and not the steak.” Bruce Ackerman, president and CEO of the Economic Alliance of the San Fernando Valley, said it is probably no coincidence that nine of the top 25 fastest growing companies are located in places that don’t have business taxes, including Calabasas, Burbank and Glendale. Taxing issue L.A.’s own gross receipts tax puts the San Fernando Valley at a distinct disadvantage attracting and retaining businesses. “When a company’s scanning the horizon (for a place to locate), they’re asking, ‘Where am I going to get the best deal?'” said Ackerman. And often, the answer is not the city of Los Angeles. Kyser agreed that L.A.’s gross receipts tax makes it tough for the city to compete with the surrounding municipalities. In fact, economic development types in other communities and states use rankings such as the Business Journal’s fastest growing company list to woo companies to their areas. “It makes a great shopping list,” he said. Ackerman noted that, despite repeated objections to the gross receipts tax by the business community, the city of L.A. has so far refused to reduce the burden. Revamping the tax has not been a high priority for Mayor Richard Riordan, Ackerman added. “Somebody’s going to have to take a real lead (in L.A. tax reform),” he said. Kyser said it is incumbent on members of the business community to find out where candidates for City Council stand on the gross receipts tax issue, and then hold them accountable come election time. “The bottom line begins and ends with business,” he concluded. “Being business-friendly is very important.”