Hancock Fabrics is a specialty retailer of fabric and related home sewing and decorating accessories with approximately 450 stores in 43 states; the company also operates a store on its Web site.

In the mid-1970s, sewing education had been dropped from many school curriculums and American women were entering the work force in large numbers, keeping them from having time to sew or teaching their children the sewing arts, explains the American Sewing Guild (ASG).

The interest and traditions of home sewing, however, have not gone away, but are still thriving, thanks to fabric, pattern, notions and sewing machine manufacturers, as well as sewing-related retail stores. The Home Sewing Association has more than 140,000 members in the United States and ASG boasts more than 20,000 members and 130 chapters throughout the country, which are strong indicators that the practices of sewing and do-it-yourself crafts are alive and well.

One such retailer that aims to encourage and support the sewing and craft arts is Hancock Fabrics. Based in Baldwyn, Miss., Hancock Fabrics is a specialty retailer of fabric and related home sewing and decorating accessories with approximately 450 stores in 43 states; the company also operates a store on its Web site. In 2004, the company completed construction of and moved into a 650,000-square-foot warehouse and distribution facility, a 28,000-square-foot fixture facility, and an 80,000-square-foot corporate headquarters facility in Baldwyn; Hancock Fabric's retail stores are served by these facilities.

Founded in 1957, the company explains, it ranks as one of the leading fabric chains serving the home sewing market and carries a wide selection of fashion merchandise at "guaranteed everyday low prices." The company notes it primarily serves the sewing and home decorating markets, which largely consist of women who are hobbyists and make clothing for their families and decorations for their homes.

"Our goal is to be a one-stop shop for our customers in helping them with their decorating and sewing needs," says Marscia Mahoney, vice president of decorative fabrics. "We can do this by offering a variety of home accent pieces - most other fabric stores don't carry those. We want to provide more for our customers."

The Hancock Fabric stores provide basic fabrics and specialty decorator fabrics in a variety of patterns and styles, and featuring the Lauren Hancock, Laurie Smith and Waverly brands.

Its Kwik-Sew patterns include those for women, men, children, babies, swimwear and lingerie. Quilting products include batting, cutting tools, frames, marking tools and stencils, notions, special quilting fabrics and rulers and templates.

The products that fall under its Sewing & Crafts section include appliques, the Bag Boutique, items for clothing construction, fasteners, scrapbooking supplies, no-sew goods, ribbons, stain removers, dyes, thread, Velcro-brand products and zippers.

Additionally, Hancock Fabrics' home decor department offers custom art and prints, hardware accessories, flowers, framed art, home furnishings, pillows, wallpaper cutouts and wall murals.

"We do very well with our home accent pieces," Mahoney explains. "These include lamps, prints, candle holders, metal beds, occasional tables, small accent items for the home - basically anything a customer can load into a SUV. We also offer a custom furniture service. Through this, customers can select a fabric and have it applied to the frame of their choice. Our goal is to be a one-stop shop - customers can use us to furnish and decorate an entire room."

Customer Support
The services offered at many Hancock Fabrics locations also have been useful in drawing in new customers and helping those already familiar with home sewing and crafts, Mahoney notes.

Through Hancock Fabrics' Quilter's Sampler Club Monthly Block Party, interested consumers receive instructions and guidance on two blocks each month for six months. A class at one of the company's local stores helps members complete that month's kits and gives them a chance to meet other local quilters. At the end of the six months, the company says, members will have completed the blocks featured on the given quilt. The 2006 Gathering of Flowers Sampler Club begins in March 2006. Hancock Fabrics is just completing the 2005 Lewis and Clark Block of the Month quilt.

"This story quilt tells a small part of the story of the Corps of Discovery as they searched for a continuous water route across the continent," the company says. "Lewis and Clark's mission was to map the entire route and record as much data as they could about the flora, fauna and native peoples on their journey. They traveled up the Missouri River to its headwater, the Great Falls in Montana. Next, they encountered the Great Rocky Mountains only to discover there was no continuous water route to the Pacific Ocean.

"They traveled down the Columbia River to the Pacific, where they wintered at Fort Clatsop. It was here that a black man, York, and Indian woman, Sacagawea, were invited to have an equal voice on where to winter. There were many times that the expedition would have failed had it not been for the help of many different Indian peoples they encountered on their journey. Their travel home was made much easier by following the Indian trails. The expedition began May 14, 1804, and ended Sept. 23, 1806. This quilt pays tribute to their historic expedition."

Hancock Fabrics also assists its customers by offering a variety of classes at its stores. Each month, most of the company's locations offer their local community a variety of instructional classes, which cover topics such as creative quilting, learning to knit or crochet, the basics of sewing and design-to-fit patterns. Additionally, the company provides guides to free projects on its Web site.

"We want to continue to support the home sewing enthusiast," Mahoney says. "We will gladly work with our consumers to help them sew better. We also help customers find people who do sewing for the public - customers may need help like this if they are facing a large project or need specialized assistance."

The company's stores also frequently work with local groups to help them complete projects, she notes. Quilt clubs gather at the stores, school groups come in to complete no-sew fleece projects, there are special classes for senior citizens and store representatives will visit nursing homes to hold classes at those sites.

"Our classes in the stores cover so many things - home decoration, crafting, quilting and knitting - we try to focus on topics that are popular or what our customers want to learn," Mahoney says. "If someone in the community expresses interest in a certain topic, the people at our stores will find people to hold a class for it."

Giving Back
Although Hancock Fabrics has a large local presence because of its classes, the company aims to reach out further. In 1996, Hancock Fabrics decided to concentrate all of its charitable resources to one national organization - St. Jude Children's Research Hospital^®.

"St. Jude Children's Research Hospital in Memphis, Tenn., is the world's leading center for the treatment and research of childhood cancer," the company says. "In its 40-year history, St. Jude has led the tremendous success in increasing survival rates from almost zero to as high as 90 percent in many types of cancer.

"The hospital, which is non-sectarian, has approximately 4,000 patients in active status. St. Jude treats children without regard to race, religion, creed, nationality or the ability to pay. ALSAC/St. Jude, the fundraising arm, covers all costs not covered by insurance for medical treatment rendered at St. Jude. Families without insurance are never asked to pay. In addition, St. Jude manages to direct almost 86 percent of its contributions to treatment and research, as opposed to administrative expenses. The average contribution to St. Jude is $20, so the hospital's success, its very mission, depends on the commitment of thousands of individual givers."

Mahoney explains that one of the ways Hancock Fabrics supports St. Jude is through its Quilt of Dreams program.

"These quilts are made with a line of fabric designed by the kids at St. Jude," she says. "The designs of the fabric are based on the kids' wishes. Our quilters buy the fabric and make a quilt, then they either donate the quilt to St. Jude to use at the hospital or auction it off to raise money. Through the Quilt of Dreams contest, judges look at different categories and pick the best in the nation and in different regions. In the past year, more than 4,400 quilts were donated through this program. The 2006 Fabric collection by Springs Industries truly tells the story of hope and healing."

Navigating the Market
Hancock Fabrics explains its sales have been down recently, but the company is doing all it can to reverse this trend. Its December 2005 sales, the company says, totaled $48.3 million, compared with $49.9 million in the same period of the prior year. Additionally, sales in comparable stores decreased 4.9 percent in December.

In the first two months of the fourth quarter of the 2005 fiscal year, the company notes, total sales were $86.4 million vs. $91.1 million a year ago, and comparable store sales were down 6.8 percent. As of the beginning of January, total sales were $371.4 million in 2005, compared to $395.9 million in 2004. Comparable store sales in the eleven months to date decreased 7 percent, the company explains. In fiscal year 2004, there was a 3.8 percent decrease in sales from 2003.

In recent years, the company has looked at ways to enhance its stores to achieve growth. Hancock Fabrics explains it has focused on repositioning almost 300 smaller, overlapping stores into larger, well-spaced locations that have the square footage needed to showcase its complete product lines. In both 2003 and 2004, the company says, it opened more stores than it closed or relocated for the first time since it began upgrading the store base in 1996.

As it goes forward, the company believes that there is a long-term opportunity to nearly double its store count in the United States. Hancock Fabrics says its goal is to continue to expand its selling square footage each year. It plans to achieve this through a combination of opening stores in new markets and replacing the remaining small stores with units that are in the 13,000- to 15,000-square-foot range.

The company explains that efforts in 2004 to remerchandise its stores laid the foundation for improving its operations. Hancock Fabric conducted remodels in 354 stores to accommodate a store-within-a-store home decorating concept, added home accents and yarn to all stores, created new relationships with recognized design personalities and made a significant enhancement to its quilting line. The company believes this positioned its stores to attract new customers as well as sell more to existing customers. Additionally, the company says there are opportunities to improve its home decorating and apparel fabric business, particularly in the area of value-priced goods. In 2004, it notes, Hancock Fabrics virtually completed the implementation of point-of-sale systems in its stores. These systems, the company says, provided it with detailed sales and gross margin information at the item level. As a result, the company was able to improve its purchasing decisions and better tailor its merchandise mix across the chain and from store to store. Jane Aggers, CEO, began her time with Hancock Fabrics in early 2005, and further explained the ways in which the company had improved, regardless of its sales.

"Granted, 2004 was a disappointing year from an earnings standpoint," she said in a statement. "However, it was a remarkable year of achievements in which the two most significant infrastructure improvements in the company's history were completed by our valued associates. The transition to the new distribution center and corporate offices, together with the implementation of point-of-sale systems in our stores, represented the culmination of efforts by a lot of people to improve the position of Hancock Fabrics for the future. However, not surprisingly, both initiatives carried costs in terms of disruptions in the flow of merchandise and distractions to the entire company.

"Sales in comparable stores were down 4.7 percent in the fourth quarter and 4.2 percent for the year, with most of the decline being caused by a lower average ticket, as customer traffic did not vary significantly between years. The lower average ticket was attributable to several factors, including a decrease in home decorating sales, some deflation in apparel category price points and out-of-stocks in several key merchandise areas throughout the year. Gross margins were pressured all year by markdowns needed to clear seasonal goods, promotional efforts to stimulate sales and the exit from certain underperforming categories.

"Sales, general and administration (SG&A) expenses were well controlled in 2004, increasing less than 1 percent before the effect of the retirement-related expenses. In fact, in the last three quarters of the year, SG&A expenses were down almost $1 million compared to the same period of 2003, even with the normal inflationary pressures on every type of expense. "The balance sheet continues to be in good condition, with $31 million in debt, or 19 percent of total capitalization. Inventory in comparable stores was down 1 percent and warehouse inventory was down 4 percent in relation to the prior year-end, with the slight overall increase in inventories being due to the net addition of 14 stores in 2004.

"In the few weeks that I have been with the company, I am very impressed with the talent, expertise and commitment of the Hancock Fabrics organization, both in the stores and in the Baldwyn, Miss. facilities. With the two major accomplishments completed in 2004, we can now focus on our customers and stores, giving them what they want and need. The short-term priority will be on operating improvement opportunities within the four walls of existing stores. Our long-term vision is to grow the company to the benefit of all of our stakeholders, including investors, associates and suppliers, through the improvement of our overall performance on both the top and bottom lines."

Extensive Offerings
To encourage growth, Hancock Fabrics plans to continue its current programs and develop new products and services, Mahoney says. The company will continue to push the importance of the home decor category - regardless whether a customer needs to outfit a room in a house or a dorm. She stresses that Hancock Fabrics offers "something for every age and products at all price points," which allows it to offer something for everyone.

"Our cut-to-order programs will continue to be important in our growth," she says. "New products include designer silks and we have a designer upholstery express service to better serve our customers. All of this adds to the breadth of our product.

"We will continue to succeed in the marketplace because of the assortment of fabrics that we offer - we aren't pigeonholed and we are present in every category," she continues. "With many color combinations and prints that range from traditional to contemporary, we try to have something for everyone."