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Newborn Nursery® Adoption Centers

Could this be a possible success that Middleton Doll and their investors have been looking for? With their sales continually trailing off in the last few years and the consumer goods section showing on and off losses lately DOLL has been looking hard for a catalyst. Could this be the innovation that they need to get their sales and profits fired up.

If you read the paragraph at the bottom of the page, it lists 8 of the currently running Adoption Centers. The company says the stores have been very successful and they now plan for Saks to expand it to 100 stores in the next 3 years. I am very curious of just how successful the stores are. Is there anyone who lives near these areas that could check them out?

The quarterly report last November stated the following "...$0.26 million of start-up sales for Newborn Nursery dolls and accessories for Saks Department Stores" I assume this was for eight stores considering that is what they had at the time. If you conservatively assume that this was for a whole quarter then 100 stores would increase sales by $3.35 million. This would represent a 40% increase to sales in 3 years, and using current gross margins and equal operating cost, a 550% increase in operating profits to $1.829 Million. ***Based on last quarterly report. On top of that management lately has been increasing gross margins, and lowering operating costs especially administration costs. If this plan is successful I do not see why it could not be fairly valued at $30 a share with $1.96 a share in earnings up from $2.50 today an outstanding 1200% gain. I would like to state that I consider this a high risk situation with the company easily forced into bankruptcy in the future is the concept is not successful.

Richard Gross

*I have owned a small position in this company since November 16 2004.*

PEWAUKEE, Wis.--(BUSINESS WIRE)--Feb. 1, 2005--Saks Department Store Group ("SDSG") and The Middleton Doll Company (OTCBB:DOLL - News) today announced an agreement giving SDSG the exclusive rights to offer The Middleton Doll Company's Newborn Nursery® Adoption Centers within its market territories.

The Middleton Doll Company's goal is to expand the unique Newborn Nursery Adoption Center concept to 100 boutiques within SDSG stores over a three-year period. Fifteen Newborn Nursery boutiques are in development for spring 2005, with a total of 40 new location openings planned by the end of 2005. SDSG began testing the concept with the opening of three Newborn Nursery boutiques in mid-2004. The success of those locations led to the expansion into five additional SDSG stores by the end of 2004.

George Jones, President and CEO of SDSG, said, "The Middleton Doll Newborn Nursery is truly a unique concept. Adding the boutiques to our stores is consistent with SDSG's strategic direction of offering differentiated merchandise to our customers and making our stores more exciting places to shop. Mothers and daughters alike love the dolls and the interactivity of the entire newborn adoption center experience."

A Newborn Nursery baby doll adoption is a heartwarming experience that is attracting attention nationwide for encouraging girls to enjoy their childhoods. The 400+ sq. ft. Newborn Nursery boutiques offer a variety of baby dolls with different complexions and hair and eye colors. Once a little girl selects a baby doll, a sales associate dressed like a nurse helps the child complete baby doll adoption papers and teaches the little girl how to take care of her baby doll. At the end of the adoption, little girls and their parents can shop the Newborn Nursery boutique for doll clothes, strollers, bottles and everything else a baby doll needs.

"After perfecting the Newborn Nursery concept at our own mall-based, stand-alone store, we are thrilled that the SDSG test boutique exceeded expectations," said George R. Schonath, President and Chief Executive Officer of The Middleton Doll Company. "With this agreement, more little girls will have the opportunity to welcome a lifelike Newborn Nursery baby doll into their homes."

SDSG department stores that will feature Newborn Nursery boutiques include selected Proffitt's, Younkers, Carson Pirie Scott, Boston Store, Parisian, McRae's, Herberger's and Bergner's.

Newborn Nursery boutiques are currently located in Parisian stores in Birmingham, Ala., Rochester Hills, Mich., and Alpharetta, Ga.; a McRae's store in Sanford, Fla.; a Carson Pirie Scott store in Lombard, Ill.; a Proffitt's store in Chattanooga, Tenn.; a Younkers store in Des Moines, Iowa; and a Boston Store in Milwaukee, Wis.

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Earnings release is set to be on March 1st. Keep your eyes open.
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Could this increase awareness and sales of DOLL? At least in the short-term, I'd be suprised if this does not have a strong positive impact on the share price. In the long-term, if they raise buyer awareness and increase sales, it could give DOLL a long-term boost.

I also posted this to HG's tinyGems board.

Hollywood's Heading to the Mid-Ohio Valley

"Steve Soderbergh of Ocean's Eleven and Erin Brokovich has chosen the Lee Middleton Doll Company as the site for his newest movie.

It would be a murder mystery about two women who work in a doll shop.

The doll company says they still need to sign the paperwork, but they're excited about the possibility.

The city mayor says the film is called "Bubbles.”

Filming could start as early as mid-March."

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I do not view that as a catalyst for this company. More important is the new born nurseries that are growing uncontrollably. Lee Middleton Dolls has a hit with this. I have found out that over 45 stores are already open. I have contacted the store managers for some of these nurseries and sales over Christmas season have been outstanding. Boston Store in Milwaukee reported in excess of $30,000 in sales. Common markup is approximently 100%, which leaves $15,000 in sales for Lee Middleton or $675,000 for all currently open stores. With a recent committment to SAKS department stores the store count by the end of the year should double to about 80, and be at least 150 in three years. This should add $2,225,000 in sales over the christmas season. Of even greater importance is recent improvement in gross margins to 38% from 24% as a result of moving production to facilities in China. Costs are coming down as sales head upward for this tiny company. A combination that could easily result in some healthy rewards. Look for earnings release tonight or tomorrow.
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