Yes, but check out the executive compensation.

Just what are knitting-related trademarks worth, anyway?

While I suspect that most people value the use of terms that involve the words “stitch” and “bitch” on a more… well, emotional basis, often the valuation is determined in dollars.

They could be worth a lot, or maybe not so much.

As an example of what’s probably one extreme, take Spinrite, a major supplier of craft yarns in North America (in Canada, it’s one of the two major suppliers): it distributes or produces brands like Bernat, Lily, Patons — the ones that you see in the big box craft stores like Zellers and Michaels, and the not-so-big, like Lewiscraft, which is seeking bankruptcy protection.

Spinrite doesn’t actually own the Patons brand; it has a licence from Coats & Clark (they own Rowan) to use the Patons mark in North America. According to their prospectus for their 2005 IPO, Spinrite currently pays $200,000 a year to Coats & Clark (see pages 22, 26, and 42 for descriptions of their brands and the licence). At the time of the IPO, the Patons brand provided 19% of Spinrite’s sales. If we apply that number to their 2005 annual revenue as a rough estimate, that could be almost $20M of revenue from Patons.

“Sure they made those sales,” you might say, “but it’s yarn. They’d sell that yarn anyway, even if they called it something else.” Not all of it, necessarily. The trademark has an intangible value; if you see the Patons label and you’ve used the brand before, you’d probably think about its consistency, quality, and reliability, and if your impression was positive, you’d probably be willing to take a chance on buying a new yarn with the Patons label. That kind of value is intangible goodwill built up in the Patons name. Spinrite might be paying what appears to be a considerable sum for the right to market Patons yarn, but that investment probably comes back more than tenfold.

On the other hand, the goodwill in a trademark can be run into the ground by shoddy products or service. Sure, it might be recognizable and distinctive, but only because consumers want to avoid those products (unless they have no other reasonable choice).

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Spinrite, by the way, is one of the creditors owed money by Lewiscraft. Lewiscraft owns a Canadian chain of craft stores (unsurprisingly called Lewiscraft, as you probably guessed) which, knitting-wise, carries about as respectable a range of knitting yarns as Michaels or the other big stores that are probably squeezing this company out. Despite my current yarn snob status, I have a soft spot for that store.

When I taught myself to knit, I had precisely three sources of yarn: Eaton’s, the little yarn shop that used to be in Sears that I think was run by Wool-Mart (which found itself renamed Wool-Tyme when Wal-Mart decided to move into the Ottawa area), and Lewiscraft. The cotton yarn for my very first completed knit item (a self-designed sweater with eyelet detail and a cowl neck) came from Lewiscraft. So did the yarn for my first unfinished object (another cotton sweater). And my second completed item (another cotton sweater with cables and eyelets, I think from a 1994 VK). And possibly my third cotton sweater too, an Adrienne Vittadini design in VK which was the most complex thing I had made at that time, because it involved twisting stitches from the wrong side of the work. Sometime after that third completed cotton sweater and a couple more unfinished cotton sweaters, I lost interest in most cotton yarns.

In the meantime, the shop in Sears disappeared (but if it really was Wool-Mart-Tyme, that business lives on with multiple locations, and it’s very nice). Eatons dropped its craft department (well, I guess they learned their lesson). It was Lewiscraft, with help from elann and Yarn Forward‘s mail order, that tided me over in Toronto until I learned of Romni, Imagiknit (now long gone), Passionknit, the Yarn Boutique (recently closed), and that place that sold lots of acrylics that used to be on Bloor not too far from the university.

I think I’ve purged most, but not all, the Lewiscraft-purchased yarn from my stash by now, except for the odd ball or two that I pick up from time to time, including the machine-washable yarn (Patons brand, natch) to make the mood toque only just last month. Other times I just go in and gawk at the novelty yarns and all the painting and foil-scraping kits designed to take the creativity out of crafting, like those licensed Lego kits that are only good for building one thing. And I hope that in Lewiscraft’s restructuring, the store closest to me makes enough money to avoid closure, because where else can someone who hates big-box chains go for styrofoam balls?

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5 Responses to Yes, but check out the executive compensation.

  1. Kora says:

    By the way, I meant interestED, not interestING, although I suppose it’s also valid, in a different way.

  2. Kora says:

    It’s not going to enter the craft business. Not according to the staff announcement anyway. They’re liquidating the entire company, and Lewiscraft will no longer exist. They will take over some of the leases (as Bentley, or an affiliated name), and other locations will simply end.

    I had the grim task of informing all of my employees yesterday. Anyone who is interesting can apply with Bentley. Frankly, I’d rather not work for them. I don’t know anything about luggage, other than the obvious, nor do I care. Since the other craft/yarn stores here tend to be run by the owners, there is little chance of staying with the craft business, unless I fancy applying at Michael’s.

    If you want anything from Lewiscraft, I suggest you hurry. The entire store is 30% off (except for Christmas items, which are 70% off) as of 6:00 last night.

  3. j. says:

    Yeah, I heard about that on a mailing list. But is the buyer stripping the company for parts or salvaging those leases, or is it going to enter the craft retailing industry (eventually, not saving anybody’s job)? Because our malls do not need *more* luggage stores.

  4. Kora says:

    Too bad Lewiscraft will be gone in 90 days or less.

    I will miss it dearly, and not just because I work there.

  5. Monika says:

    I too hope Lewiscraft manages to keep a few stores. They are my main source of Patons yarns. Long before knitting was this popular/trendy, they always had a decent yarn selection and good prices. There was always someone in the store with knitting experience to help out.

    When did Yarn Boutique close? When I lived in the area I always shopped there.