D isc M e n

A Troy firm has become one of the world's largest producers
of music and entertainment. items.

ALAN ABRAMS SPECIAL TO THE JEWISH NEWS

"This is the first time our annual re-
port has looked like show business," said
David Handleman, chairman of the com-
pany founded by his father, Philip, in
1934 with David and his three brothers,
Joseph, Paul and Moe.
Over the past 60-plus years, the Han-
dleman Company has evolved from a
drug sundries and pharmaceutical whole-
saler to a full-service music, video, book
and software distributor with a success-
ful line of proprietary products. Recent-
ly, it has made an impressive foray into
the international market.
The company operates principally by
selling products to mass merchants as
well as to specialty chain stores, drug-
stores and supermarkets.
Handleman's consolidated gross prof-
it margin for fiscal 1997 was 23.2 per-

PHOTO BY DAN IEL LI PPITT

of every publicly held corn-
' pany's annual report spot-
lights words of praise by
superstar recording artists
like Celine Dion and Garth
Brooks. But you'll find both
of them in living color in the
just-released 1997 report for
Troy-based Handleman
Company.
The superstars help call
attention to the company's
net sales for fiscal 1997 of $1.18 billion,
which guarantees Handleman's inclu-
sion among the top 20 publicly held com-
panies in the five-county metro Detroit
region — a list top-heavy with automo-
tive related industries.
The sales figure represents a 4 percent
increase over 1996.

cent. The company employs 3,500 people
worldwide.
Traded on the New York Stock Ex-
change under the ticker symbol of HDL,
the company went public in 1963. As Mr.
Handleman put it, "The stock has done
better. We had a bad year in fiscal 1995,
and in fiscal 1996 and 1997 we came back
a little bit."
Last year's low was $4.50, and the high
was $9.56 per share. Handleman stock
earned $.16 a share in fiscal 1997, corn-
pared with the previous year's loss of
$.67.
Widely known in both the Jewish and
Detroit communities for his many phil-
anthropies and affilia-
David Handleman
tions, Mr. Handleman,
and Stephen Strome who will be 82 in No-
want to corner the
vember, turned over
market.
the company presiden-
cy to Stephen Strome in 1990. Strome,
who is now 50, added the title of CEO in
1991, thus becoming the first non-Han-
dleman to run the firm.
The company is divided into three
parts. Handleman Entertainment Re-
sorces, or H.E.R., is by far the largest,
with net sales of $959.3 million.
The second entity, Handleman Inter-
national, had sales grow by 62 percent
over the past year, from $72.2 million
to $117 million.
The third division is North Coast En-
tertainment, which owns Handleman's
proprietary products. Their sales grew

by 32 percent last year from
$101.5 million to $134.4 million.
Handleman Entertainment Re-
sources primarily serves mass merchant
customers like Meijer, Kmart and Wal-
Mart with music, video, books or personal
computer software. Music is by far the
largest, and accounts for close to $600
million in sales.
Compact discs (CDs) accounted for 77
percent of the music lines. In second place
were tape cassettes, which still enjoy good
sales primarily because of their wide use
in car stereos. Video sales were $266.4
million; books represented $55.6 million;
and personal computer software sales
were $41.7 million.
The Handleman Company has built
its reputation on niche or micro-market-
ing. "What we are is a category manag-
er for these product lines for the mass
merchant," said Strome. "We work with
the retailer and they allocate us the space
within the store. We then design and get
their approval on the fixtures and in-store
displays.
"We select and put the product in the
stores to an inventory level which we mu-
tually agree upon. We provide the prod-
uct fulfillment, the reordering, and
putting the price on the product — which
can vary by item by store. So we actual-
ly maintain a retail price file for each item
for each store that we service," said '0
Strome.
"We provide advertising and market- w
ing programs as well as promotions to
the retailers in each store in any one of =
the product lines that they chose to buy <
from us. And we take back any product

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