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Having a broad international range,
deep sourcing capabilities and a direct sales force gives RUSS an edge on the competition
Consumer Cyclical
Recreational Products
(RUS-NYSE)
Russ Berrie and Company, Inc.
111 Bauer Drive
Oakland, NJ 07436
Phone: 201-337-9000
Angelica Berrie
Chief Executive Officer
Interview conducted by:
Lynn Fosse
Senior Editor
CEOCFOinterviews.com
July 2003
BIO:
ANGELICA BERRIE
CEO, Russ Berrie and Company, Inc.
In 2003, Angelica Berrie was appointed Chief
Executive Officer of Russ Berrie and Company, Inc. (RUSS), founded in 1963 by her husband,
Russ Berrie. Over four decades, he built it into one of the world’s premier lifestyle
gift companies, with annual sales of $300 million.
The company, listed on the New York Stock Exchange
under the trading symbol RUS, maintains offices and distribution centers in Cranbury, New
Jersey, Petaluma, California, Canada and England, as well as offices in Hong Kong, China,
Korea, Taiwan and Australia. It employs approximately 1,775 people worldwide.
Before assuming duties of CEO, Ms. Berrie was Vice
President of Strategic Planning and a member of its Board of Directors for five years.
Prior to joining RUSS in 1992, Ms. Berrie gained extensive experience in international
product development as one of the Company’s overseas vendors. She also worked in
advertising at Saatchi& Saatchi and has a degree in Communication Arts.
In addition to her corporate responsibilities, Ms.
Berrie actively supports philanthropic endeavors that foster humanism in medicine, advance
the treatment of diabetes and improve inter-religious understanding.
She is a founding member of the Board of Trustees for
Gilda’s Club Northern New Jersey, and Board Chair of Gilda’s Club Worldwide, a
free cancer support community for men, women and children.
At Columbia University, she has served as a member of
the Health Sciences Advisory Council, as a member of the College of Physicians and
Surgeons Diabetes Advisory Committee, and as an advisory member of the University
Trustees’ Committee on Health Sciences.
She also serves as President of the Jewish Home at
Rockleigh and on the boards of Englewood Hospital and Medical Center and the Center for
Inter-Religious Understanding.
In November, 2002, the New York Chapter, Juvenile
Diabetes Research Foundation honored Ms. Berrie and her husband as Humanitarians of the
Year.
Company Profile:
Russ Berrie and Company, Inc. (NYSE: RUS) and its wholly-owned subsidiaries design,
develop and distribute approximately 8,000 gift, home decor, infant and juvenile products
to retailers worldwide. These products include teddy bears and other stuffed animals, baby
gifts, soft baby toys, bibs, mobiles and developmental toys. Also in the Company's product
line are picture frames, candles, figurines, home decor gifts, home fragrance products and
a wide variety of seasonal and everyday gifts.
RUSS products are sold in gift stores, card shops, department stores, florists, hotel and
airport shops, drugstores and other fine stores, on six continents ... in 97 countries ...
and in dozens of languages, RUSS is known for its dedication to quality and personal
commitment to customers, now more than 55,000 strong, and their customers, who number in
the millions.
The Company’s flagship 18,000 square foot showroom at corporate headquarters in
Oakland, New Jersey, provides a marketing and sales advantage no one else in the industry
enjoys. RUSS satellite showrooms are located in Atlanta, Chicago, Dallas, Denver, Los
Angeles, Miami and Seattle. And at the international level, there are showrooms in
Australia, Canada, England and Hong Kong. Distribution centers are situated in key
locations in New Jersey, California, Michigan, West Virginia, Canada, Europe and
Australia.
CEOCFOinterviews: Ms.
Berrie, what has changed since you have become CEO?
Ms. Berrie: “My
first responsibility as CEO was to take stock of the organization. RUSS is a
forty-year-old company that was driven by its founder for forty years. A very strong
cultural shift had to occur after the loss of the founder. First, we had to assess where
the functionality gaps were and build a strong management team to fill the gaps. We rely
on people more than strategy, because with the best people, you will net the best results.
We recruited people with extensive experience in the gift industry, and brought back some
former RUSS talent who would bring in big business. My senior management team
assumed this responsibility while I focused on strategically planning for the company.
We are a global business but we had been
operating individually, not as one cohesive organization. To address this, we
created the North American and the International Divisions. The United States and
Canada are so close, I felt it made sense to do that. International covers the rest of the
world.
CEOCFOinterviews: Have there been any changes in your field
sales strategy?
Ms. Berrie: “Our core business has been largely two
types of “Mom and Pops”, which are not all necessarily one-store
operations. Several of them are Hallmark chains with anywhere from five to fifteen stores
they own and operate. We would describe them as specialty retailers. That is our
core business, so the strategy remains the same. We are looking for a deeper penetration;
to get more retail space and sell in a program mode. We have been selling the same way to
all kinds of accounts. We need to change the way we segment the business. We want to focus
on dealing with our customers in a way that reflects more of the way they operate. We have
a key accounts group focused on particular accounts where there is an entire chain of
florists, for example, so that we can deepen the penetration into specific channels of
distribution. We must also decide how to do business with the big box operators, without
losing our core base. That is how we have tried to work out the differentiation in
selling.”
CEOCFOinterviews: What are your strongest product categories?
Ms. Berrie: “We have approximately eight thousand
products. Over the years, we have tried to be all things to all people. Our mantra is
‘focus, focus, focus.’ The secret to our continued success is to focus on
regrouping our products from assorted items. We were always in the item business,
people will say ‘you go to RUSS for a hot item.’ However, that is not the
way to keep the business stable; we feel the best way is to program sell, so we’ll
focus on particular product areas. There’s RUSS Baby, RUSS Kids, RUSS Toys, RUSS
Decor and RUSS Holiday; five different product groupings. Within these groups we will
focus the product line a little tighter. This will create a specific discipline in the way
we execute our strategy.”
CEOCFOinterviews: Which areas are doing the best for you and
which areas need attention?
Ms. Berrie: “We’re the ‘king’ of seasonal
business. We cover a wide range of items for gift giving occasions from Secretary’s
Day to St. Patrick’s Day to Hanukkah. We create gifts for just about every holiday
that you can think of – something our competition doesn’t do. This
is where our strength has always been. We are also focusing more on our everyday business
– occasions such as weddings, birthdays, christenings and other celebrations that
take place every day of the year. That way, we’re not as affected if a holiday
such as Easter arrives early in the spring or people don’t want to go out shopping
for Christmas because it is snowing. We want a stable business on both sides
of the fence. We also have the decor division, which is new. Since 9/11 the demographics
show that people are nesting more and staying home and buying items for the home. The
décor division brings a whole different customer base to RUSS.”
CEOCFOinterviews: Do people care about the brand name?
Ms. Berrie: “One of the first things I did when Russ
died was to hire a firm to conduct a brand market research survey. I wanted to know how to
create a brand strategy and then concentrate on brand extensions. Branding is key in the
way we move forward largely because I believe that the RUSS brand could be as big as
Disney in the future. We need to build on that foundation and use the strength of the
brand because of all the gift companies, we are the one company that has global presence.
If we strengthen the brand globally, we are light years ahead of our competitors.”
CEOCFOinterviews: Is there any area in the world where you
would like to be where you aren’t presently?
Ms. Berrie: “China perhaps, but it’s is a
challenging market. We are in Moscow, the United Arab Emirates. It’s very satisfying
to have that kind of reach. We have products in Finland and in other places you
couldn’t imagine. China is the only place where we don’t have a presence. We are
registering there and researching what the rules are.”
CEOCFOinterviews: You are almost through with a change in
technology; will you tell us about that?
Ms. Berrie: “We just went live on J.D. Edwards
(Nasdaq:JDEC), after we had a terrible time several years ago trying to change to SAP (SAP
AG, NYSE:SAP). At that time, we were on a twenty-year-old Vax system, and they are no
longer manufacturing replacement parts. Yet, within the gift industry, we were ahead
in terms of our information systems and the kind of information needed to run the
business. But this is a different world; the J.D. Edwards system is a more flexible
system. We expect that technology will be the platform for our growth and help us to link
globally to our operations in Canada, Australia, the Far East and in Europe. Having the
right information improves the business process, so we have a competitive advantage even
in selling to big accounts. We can provide replenishment and other automated processes to
make it easier to do business with us. Product cost then, doesn’t become an issue; it
is a question of what services and information we can offer that others cannot.”
CEOCFOinterviews: Can you tell us more about what
differentiates you from the competition?
Ms. Berrie: “We are globalized and we are the largest
gift company in the world. We have our own sales force in Canada, Australia and Europe.
European operations are based in the U.K., but we have a sales force in Spain, France and
Germany, and we are going to start additional sales teams in different parts of Europe
instead of depending on our distributors. This is how we’ll control the business. If
you can control the business yourself, by selling to the market direct, it is good. In
that sense we are different: we have the broad international range that others don’t
have. We have our own direct sales force around the world and in the United States; in all
there are over 500 sales people around the world, directly selling only our product. We
have the deepest and largest sourcing capabilities in Asia with about 350 overseeing
quality control. Even though Enesco (Enesco Group, Inc., NYSE:ENC) is about the same size
in dollar volume as RUSS, they don’t have the different and varied product categories
that we do. Those areas of differentiation give us a significant advantage over our
competitors.”
CEOCFOinterviews: How do you continually come up with new
ideas?
Ms. Berrie: “We have an excellent team. Our Senior Vice
President of Product Development has good instincts and we have reliable market
intelligence. The one thing that puts us ahead is that we have always
responded intelligently and creatively to market trends. Trend forecasting makes an
important difference in the way we develop products. We have someone on staff whose job it
is to go out in the market and find out what is happening. Not to mention our entire sales
force in the field recommending ideas and making product suggestions based on input from
our customers.”
CEOCFOinterviews: What is the financial condition of Russ
Berrie?
Ms. Berrie: “We are financially sound. We have money in
the bank and strong cash reserves. We have had forty years of stability. The business has
had little growth recently because the economy is so challenging, but I believe that we
are well positioned financially. We have the resources to invest in future growth,
but we have to be careful of the investment. We can make wise investments in acquisitions,
as we did with Sassy, Inc. They contributed significantly to our business. Sassy sells to
three of the biggest national accounts in the country; their specific niche is
developmental baby products. In this economy, it is survival of the fittest. Our
competitors are cutting back their sales people, downsizing and not investing in
technology. We use a scanning wand for scanning bar codes, which reduces the order
processing time considerably. In terms of productivity, these kinds of tools that we have
invested in will make a difference in the success of our sales force in this
economy.”
CEOCFOinterviews: Will you tell us about your efforts to give
back to the community?
Ms. Berrie: “Which ever community we are in, we try to
do specific things. We have a product, a plush Yorkie dog, ‘Sparkle’, based on
comedian Gilda Radner’s dog, and proceeds from the sale of Sparkle benefit
Gilda’s Club Worldwide. One out of every two men and one out of every three women
will have cancer in their lifetime. Many people will be touched by cancer in some way.
Because Russ was diabetic, we created two teddy bears to benefit the Juvenile Diabetes
Research Foundation International. These two bears ‘Ruby’ and ‘Rufus’
have patches on their bodies so that children can learn how to inject their bodies with
insulin. The concept was created by the mother of a juvenile diabetic. These two bears
have been our ambassadors to spread the word out about diabetes; they have been put into a
barrel that went over Niagara Falls and they have gone to space in a space shuttle. It has
been an interesting way to use our product to advance awareness of diabetes.
We also created the Making a Difference Awards Program, which awards cash prizes to unsung
heroes in New Jersey. Just recently, a top prize went to three families of firemen who
lost their lives saving people in a fire. Another prize went to a woman who was blind from
birth and decided to start an organization that would translate reading materials into
Braille for people who are blind in her community, just so they could keep current with
the world. Several years ago, we awarded an organization called “Salt of the
Earth” for their efforts with the homeless. The founder travels throughout
Bergen County to distribute blankets to the homeless when it’s cold and organizes
them so they know where to go for hot food. He makes sure that if there is an emergency
they will have the help they need.
These are the unsung heroes, and they do these things
without any thought of recognition or reward. We believe this type of community
involvement or heroism deserves acknowledgement.”
CEOCFOinterviews: In closing, why should potential investors
be interested in Russ Berrie?
Ms. Berrie: “The most important thing -- Russ
Berrie, the company, has been around for forty years. We have a solid machine that will
propel us into the future. We are pursuing the business in a strategic way. We are
investing in technology that will yield incredible savings long term and place us at the
forefront of our industry and put us ahead of the game. All of this will yield great
rewards next year.
RUSS isn’t just selling products. We are selling love, affection and friendship. I
recently e-mailed our employees, and sent a picture of soldiers in the gulf war clutching
teddy bears. In this changing world, one constant will always be love and affection; and
wherever there is love and affection, there is a place for RUSS’ products.”
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