Zak sets international table – Airway Heights, WA Dinnerware maker here boosts global business, eyes $250 million in annual sales by 2007

If Zak Designs Inc., of Airway Heights, reaches its goal of close to $250 million in annual sales by 2007, President and CEO Irv Zakheim will be grinning as widely as the cartoon characters emblazoned on some of his company’s products.

By Jennifer Hesse

http://spokanejournal.com/spokane_id=article&sub=1969

Zakheim already has much to smile about, considering Zak Designs’ performance over the last couple of years. The company, which designs, manufactures, and distributes licensed children’s and adult dinnerware, as well as other kitchenware items, notched $125 million in sales last year, up more than 60 percent from $75 million in 2001, he says.

Zak Designs expects to continue its strong growth over the next three years, doubling its overall sales and boosting its international sales, which currently make up 40 percent of total sales and likely will reach 50 percent or more by 2007, Zakheim says.

Zakheim says he’s confident that Zak Designs will reach its goal of $225 million to $250 million in sales by 2007 based on current revenue growth, and he expects the company will hit between $140 million and $150 million in total sales this year.

Though Zak Designs expects healthy sales in the U.S., it’s anticipating faster growth in foreign countries where it has expanded its operations, he says.

“We see global sales as a good way to grow our business,” he says.

Zak Designs sells its products to mass-merchant retailers, including Wal-Mart Stores Inc., Fred Meyer Inc., and Target Corp.; department stores such as J.C. Penney Co. and Sears, Roebuck & Co.; and high-end houseware vendors such as Crate & Barrel Inc. It manufactures products at its China-based manufacturing subsidiary, Sara Rose International Inc., and ships them to those retailers from its warehouse here, from its United Kingdom-based subsidiary called Zak Designs Ltd., and from three other sales-and-distribution offices in Tokyo; Melbourne, Australia; and Mexico City.

The Airway Heights company employs roughly 260 people companywide, about 175 of whom work at its headquarters here, at 1604 S. Garfield. It employs 15 to 20 people at its offices in Australia and Mexico, 35 people at Sara Rose, and one person at its office in Japan.

Its offices in Japan, Australia, and Mexico, which opened in 2002 and 2003, have enjoyed strong sales thus far, Zakheim says. He says he expects sales at its Australia and Japan offices will double or triple this year.

Sales at its U.K. office, which Zak Designs opened in 1998, increased by about 50 percent last year and likely will double this year, he says.

Zak Designs uses the four offices abroad to distribute its products throughout the regions they’re located in, Zakheim says. For example, the U.K. office ships products to Zak Designs’ European customers, and the Mexico office ships products to customers throughout Latin America.

In 2002, Zak Designs decided to establish offices with joint-venture partners in Japan, Australia, and Mexico to boost its marketing and sales efforts there, though it already had sold products in those countries through independent distributors, Zakheim says.

“A joint venture was more profitable for both joint-venture partners in the long run,” he says. “There was very little control over growing the business through distributors over the long term.”

The company plans to open a one-person sales and distribution office in Toronto this month, he says.

To reach its sales goals, Zak Designs will beef up its sales and marketing departments, adding five to 10 employees in the U.S. and 15 to 20 at its global offices within the next 12 months, Zakheim says.

“We already have a good product-development team, so we want to make sure we’re maximizing our sales and going after accounts we don’t have,” he says.

Zak Designs won’t necessarily pursue new customers, since it already sells to many of the major retailers in the world, Zakheim asserts. Instead, the company will promote new items within the product lines that its customers already carry, and encourage them to add other product lines that Zak Designs sells, he says.

Zakheim anticipates that Zak Designs’ adult dinnerware product line, called Just Life, will become one of the company’s fastest-growing merchandise divisions this year. That product line, which Zak Designs added in the mid 1990s primarily through private labels with Target and Wal-Mart, has great growth potential because it’s not as established as the company’s children’s dinnerware line.

The Airway Heights company also plans to expand its other lines of products, including children’s lunch kits and travel coffee mugs, he says.

Though Zak Designs might consider adding new product lines in the future, it now is concentrating on growing the lines it has, Zakheim says.

“We have enough to focus our attention on for now,” he says.

To make Zak Designs products more attractive, the company will try aggressively to obtain high-quality licenses from well-known designers and entertainment and toy companies, Zakheim says. The company currently has licenses from companies such as Walt Disney Co., Warner Bros., and Mattel Inc., and designers such as Barbara Eigen and Spokane-based Debbie Mumm.

Licensed characters emblazoned on many of Zak Designs’ children’s dinnerware products include Barbie, Harry Potter, Mickey Mouse, and other popular cartoon figures.

Zak Designs serves as a trend leader in the dinnerware industry, and has won a number of awards for its designs, Zakheim says. Last year, the company received the Wal-Mart supplier of the year award in its houseware division, and the Disney home licensee of the year award, he says.

Leading the industry in design trends can be challenging, since Zak Designs and other dinnerware-supply companies introduce their products at trade shows about two years before they hit the market, Zakheim says. The company sometimes re-launches products if consumers don’t respond quickly.

When Zakheim founded Zak Designs in 1976, it only sold textile products, such as baby quilts, and Christmas tree skirts, he says. In a move to diversify its products, the company began selling children’s dinnerware items in 1980.

In 1987, the company acquired a license to use the image of Pee Wee Herman on its products, which helped open the door for it to gain more licenses from large companies such as Disney, he says.

After that, the company began selling more of the dinnerware products, which are made of melamine, a type of heat-compressed plastic, Zakheim says. It then grew by leaps and bounds during the 1990s, posting sales of $2.5 million in 1990, $11 million in 1992 when it moved here from Los Angeles and acquired Sara Rose, and $54 million in 1999, he says.

To keep up with increasing global demand, along with opening the other overseas offices, Zak Designs considered opening an office in Brazil, but decided to delay that move, he says.

Zak Designs likely won’t add any more international offices very soon, unless it finds an opportunity that fits into the company’s growth strategy, Zakheim says. For now, the company plans to focus on growing sales at its current network of offices and to expand its 200,000-square-foot building here, he says.

The company likely will add about 5,000 to 10,000 square feet of space there soon, Zakheim says. Since moving here, Zak Designs has added about 140,000 square feet of space to that building.