Handleman Company
Formerly |
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| Public | |
| Traded as |
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| ISIN | ๐ |
| Industry |
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| Fate | Voluntarily dissolved and liquidated |
| Founded ๐ | January 1, 1934 Detroit, Michigan, U.S. |
| Founders ๐ |
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| Defunct | May 5, 2009 |
| Headquarters ๐๏ธ | 500 Kirts Boulevard, Troy, Michigan , U.S. |
Area served ๐บ๏ธ |
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Key people | |
| Products ๐ | |
| Services |
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| Revenue๐ค | US$1.31 billion (fiscal 2006) |
| Members | |
Number of employees | 4,147 (1995); 2,600 (2006) |
| Subsidiaries |
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| ๐ Website | handleman.com (defunct) |
| ๐ Address | |
| ๐ telephone | |
| Footnotes / references Revenue reflects fiscal year ended 2006.[1][2] | |
Handleman Company was an American wholesale distribution and category management firm headquartered in Troy, Michigan. Founded in 1934 by Philip Handleman and his sons, the company evolved from a family pharmaceutical distributorship into one of the largest prerecorded music wholesalers in North America, serving major mass merchants in the United States, Canada, and the United Kingdom. At its operational peak, Handleman managed music, video games, books, and entertainment software inventory across thousands of retail locations for customers including Kmart, Wal-Mart, and Woolworth.
The company first went public in 1963 on the over-the-counter market and was listed on the New York Stock Exchange in 1967 under the ticker symbol HDL. Facing irreversible structural decline driven by the music industry's shift to digital distribution, Handleman approved a plan of voluntary liquidation in October 2008 and filed a Certificate of Dissolution with the state of Michigan on May 5, 2009, ending 75 years of operation.[3]
History
Founding (1934โ1952)
Handleman Company was established in 1934 as a family partnership by Philip Handleman and his sons Joseph, Paul, and Moe Handleman in Detroit, Michigan.[4][5] The venture began as a distributor of pharmaceutical drug sundries before the partners identified stronger commercial opportunity in health and beauty aids. In 1940, the firm expanded by placing health and beauty aid departments inside the newly emerging supermarket chains โ a move that antagonized existing drugstore clients but ultimately built a $40 million business.[6]
In 1946, a fourth brother, David Handleman, joined the business, completing the family ownership structure that would guide the company through its next major transformation.[6] In 1952, the company established its first Canadian operation.[4]
Entry into music distribution (1953)
In 1953, Joseph Handleman determined that the music industry was underserved by existing distribution infrastructure โ a moment that coincided with the emergence of rock and roll.[4] His contact at Grey Advertising โ the agency handling RCA's advertising โ introduced him to Manny Saks, president of RCA Records. Shortly thereafter an RCA delegation arrived at the Handleman offices with an offer to make Handleman a music distributor, establishing the partnership that would define the company for the following five decades.[5]
David Handleman took personal charge of the music division in 1956. In 1960 the company sold off its drug business entirely to concentrate on music.[5] The company's core practice โ known as rack jobbing โ involved managing record and later tape racks inside large retailers, taking full responsibility for product selection, stocking quantities, promotional displays, and return management of slow-moving titles.[6]
Public offering and NYSE listing (1963โ1967)
In 1963, Handleman went public with an offering of 330,000 shares of stock on the over-the-counter market.[4] Four years later, in 1967, the company was listed on the New York Stock Exchange.[4]
National expansion alongside Kmart (1960โ1974)
The launch of the Kmart discount chain in 1960 proved pivotal. Handleman developed a close working relationship with Kmart founder Harry Cunningham of the S. S. Kresge Company, who shared advance information on planned store openings. Handleman's strategy was to identify the leading local rack-jobbing competitor in each new Kmart market, acquire that company's physical assets before Kmart opened, and thereby secure the new stores' business from day one โ never paying for goodwill. This approach allowed the company to rapidly build a national network of 16 distribution branches across the country. As UPS and other freight carriers matured, Handleman was able to consolidate its branches and centralize inventory, generating substantial cost savings.[5]
David Handleman assumed leadership of the company in 1967 and became chairman and chief executive officer in 1974.[6]
In 1974, Handleman developed the Retail Inventory Management System (RIMS), a proprietary inventory tracking platform. After learning of a California company with early work in this area, David Handleman acquired the firm, relocated its team to Detroit, and substantially expanded the underlying technology.[4][5] The resulting system โ combining optical scanning at retail locations with centralized data analysis โ allowed Handleman to monitor inventory levels in real time across thousands of store locations and make purchasing and allocation decisions with precision that retail customers could not independently match. This capability was a primary reason retailers including Kmart and Wal-Mart relied on Handleman to manage their music departments rather than handling the function in-house.[6]
Diversification into books, software, and video (1975โ1989)
Under David Handleman's leadership the company significantly broadened its product scope:
- 1975: Transitioned into book distribution with the acquisition of Sieberts, a record and book marketer.[4]
- 1980: Surpassed the Pickwick division of American Can to become the largest record and tape wholesaler in the United States.[7] The firm stocked records at over 8,000 retail locations and operated 21 distribution sites. Revenues stood at $199 million, down from $224 million in 1979, as a result of the U.S. recession and a weak year for major releases.[6] The firm also picked up the Zayre chain's 250 stores in the Northeastern United States, bringing its total to about 5,000 record and tape departments, and ran book departments in 2,000 retail stores across the U.S.[6]
- 1983: Transitioned into software distribution, moving entertainment and education software into about 250 retail shops. Entertainment software made up over 50% of U.S. software sales at the time. In 1984, the firm won a contract to rack all software sold at Kmart.[6]
- c. 1985: Purchased the inventory and fixtures of Pickwick, Inc., a major rack-jobbing competitor.[4]
- 1985: Pioneered the video sell-through business. The firm began selling copies of public domain films for approximately $15 each โ against $70 for a copyright-controlled Hollywood title โ with no royalty obligations. Video revenues reached $43 million in 1985, roughly twice the revenue per square foot of other merchandise.[6]
- 1988: Acquired Viking Entertainment, a southern California-based rack jobber of prerecorded video and audio, which brought Handleman master recordings for 500 public domain movies. Handleman also acquired a group of four companies holding film distribution licenses, with combined sales of $10 million, via a stock exchange.[6]
- Early 1989: Acquired Video Treasures, which held licenses and sub-licenses to duplicate and sell more than 400 films, for $10 million. By 1989, Handleman was the largest U.S. tape distributor, controlling about 15% of the market.[6]
At its operational peak, Handleman serviced over 6,500 music retail departments, 7,400 video departments, 2,600 book departments, and 4,700 software retail departments.[7]
Leadership transition to Strome and $1 billion revenues (1991โ1992)
Around the age of 77, David Handleman transferred operational leadership to Stephen Strome, then chief operating officer, who assumed the CEO role around 1991. David subsequently stepped down from the board of directors, retaining a non-executive office at company headquarters.[5]
In 1991, Handleman made a transformative set of acquisitions: Lieberman Company and Sight & Sound, at the time the second- and third-largest rack jobbers in America, along with the entertainment software rack-jobbing business of Live Entertainment Company. These acquisitions, coming six years after Handleman had also purchased the inventory and fixtures of Pickwick, Inc., solidified the company's position as North America's premier distributor and merchandiser of music product.[4] Handleman's revenues stood at $702.7 million in 1991.[6]
In 1992, Handleman began stocking products by Lotus Software, completed a 42,000-square-foot addition to its headquarters building, added 239 Woolworth stores to its customer list, and saw sales exceed $1 billion for the first time.[4][6]
North Coast Entertainment and international expansion (1994โ1996)
In 1994, Handleman established North Coast Entertainment as a dedicated unit to own and license proprietary music, video, and computer software products. That same year, the company formally established its international business, beginning with Mexico, and folded its Canadian operations into the new International division.[4]
In 1995, Handleman opened its first automated distribution center in Sparks, Nevada โ a 324,000-square-foot facility that used automation to cut West Coast distribution costs and freed the firm's 1,300 field representatives to focus on customer service.[6] The international division expanded into Brazil and Argentina.[4]
Also in 1995, Handleman completed a major restructuring, forming three business groups:
- Core Business Group: traditional rack jobbing in the U.S. and Canada for music, video, books, and software; headed by Peter J. Cline.
- North Coast Entertainment: proprietary products and expanded retail operations; headed by Louis A. Kircos.
- International: rack jobbing operations in Mexico, with planned expansion into Argentina and Brazil.[6]
The company also made a series of acquisitions: Starmaker Entertainment, Inc. (a budget video company with approximately $15 million in annual sales); a majority interest in Montreal-based Madacy Music Group for $22.7 million (revenues over $40 million; owned Mediaphon GmbH, a German classical music supplier with over 2,000 master recordings); Levy Music and Video; and an increased stake in software developer Sofsource, Inc. from 27% to above 50%. The firm also entered two joint ventures: one with the Canada Publishing Corporation for book distribution in Canada, and another with Grupo Video Visa of Mexico for sell-through video/music and rack-jobbing services.[6]
By fiscal 1995, revenues reached $1.23 billion: music $653.4 million, video $461.6 million (from 7,400 departments), books $57.6 million (from 2,600 departments), and software $53.3 million (from 4,700 departments). Kmart accounted for 40% of total sales and Wal-Mart for 25%.[6]
In 1996, Handleman suffered its first annual loss since going public, accompanied by a significant share price decline, triggering further restructuring. That year, Kmart named Handleman its "Retailer of Choice."[4]
In 1997, Handleman created its first dedicated Customer Team for category management, formalizing the strategic partnership model with its largest retail accounts.[4]
Strategic refocusing and UK entry (1998โ2001)
In 1998, Handleman embarked on a major strategic refocusing: exiting non-core business lines, substantially reducing the number of retail customers served in music distribution, and establishing North Coast Entertainment as a stand-alone holding company. The same year, the company acquired a 75% interest in The Itsy Bitsy Entertainment Company, which held licensing rights for children's entertainment properties including Teletubbies.[8]
In 1999, Handleman launched its new Channel of Choice business model, positioning the company as the indispensable link between music vendors and mass merchant customers, with resources aligned at both local and national levels. The company also acquired Lifetime Entertainment and expanded into the United Kingdom for the first time.[4]
In 2000, Handleman was awarded a contract to service 250 ASDA stores in the United Kingdom โ an Wal-Mart subsidiary โ significantly expanding its UK footprint.[4]
In 2001, Handleman expanded its Channel of Choice model to the United Kingdom and Canada, added Best Buy to its U.S. customer base, renamed Lifetime Entertainment as Handleman UK Limited, and established Anchor Bay Entertainment UK Limited through North Coast Entertainment.[4]
2000s: Contraction and customer losses
In 2002, Handleman was listed in the Fortune 1000, ranked 17th in revenues among 20 companies in the Diversified Wholesaler category, and placed in the top five in the category for profit growth and profits as a percentage of revenues, assets, and shareholders' equity. The company was also named to the Forbes "Platinum 400" and won the Large Wholesaler of the Year Award from the National Association of Recording Merchandisers (NARM).[4]
In 2002 and 2001, Handleman restated financial results after determining that two contracts had been improperly classified. An SEC investigation was opened; it was terminated in February 2005 with no enforcement action recommended.[2]
In 2003, Handleman sold both Madacy Entertainment and Anchor Bay Entertainment in order to focus on the company's core competencies of category management and distribution of audio products.[4]
Kmart's Chapter 11 bankruptcy filing in 2002 created significant uncertainty for Handleman. The two companies later settled a dispute over approximately $49 million in payments related to Kmart's special creditor status during bankruptcy proceedings.[9]
In March 2005, Kmart informed Handleman it would retain the company for category management and distribution at approximately 1,070 stores while reassigning music supply for its remaining ~400 stores to a competing supplier. The change reduced Handleman's annual sales by approximately $50 million, or about 4%.[10]
In August 2005, Wal-Mart reduced the number of U.S. locations serviced by Handleman by 25, to approximately 1,050 stores, with around 250 in Canada and 280 in the United Kingdom.[11]
Acquisition of Crave Entertainment Group (2005)
In 2005, Handleman acquired Crave Entertainment, a full-service distributor of video game hardware, software, and accessories, for approximately $72 million.[12] Also in June 2005, the company acquired REPS L.L.C., a Tennessee-based national in-store merchandising services organization.[13]
Leadership transition (2007)
In November 2007, CEO Stephen Strome โ who had served approximately 16 years โ retired. Albert A. Koch was elected President and CEO.[14]
Liquidation and dissolution (2008โ2009)
The rise of digital music distribution โ including peer-to-peer file sharing and legitimate download platforms such as iTunes โ fundamentally disrupted the physical music retail supply chain on which Handleman's entire business model depended. Despite cost-cutting efforts, the company incurred substantial losses in both fiscal years 2007 and 2008.[15]
On June 2, 2008, Handleman announced it was exiting the North American music business and sold its U.S. Wal-Mart music business and Canadian operations to Anderson Merchandisers.[16] On August 15, 2008, Handleman filed a preliminary proxy statement with the SEC for a Plan of Final Liquidation and Dissolution.[17]
On October 1, 2008, shareholders approved the Plan of Liquidation and Dissolution. Prior to the vote, the company had been de-listed by the New York Stock Exchange and had laid off approximately 260 employees at its Troy and Indiana facilities.[15][18]
On May 20, 2009, a Michigan court declared shares non-transferable effective June 20, 2009, with 2,551 shareholders of record at that date.[19] On May 5, 2009, Handleman Company formally filed a Certificate of Dissolution with the Michigan Department of Energy, Labor and Economic Growth, Bureau of Commercial Services, Corporate Division, legally ending the company's existence after 75 years of operation.[3]
The company's former 148,000-square-foot headquarters building at 500 Kirts Boulevard in Troy was subsequently purchased by a Farmington Hills-based investor for $3 million in early 2010.[20]
Business model
Handleman operated primarily as a rack jobber โ a wholesaler responsible not only for supplying goods to retailers but for managing the complete merchandising cycle within a retail store. Services provided included:
- Product selection and title assortment: Determining which titles and SKUs a given retail chain's customer base was likely to purchase, optimized at the store-cluster level.
- Quantity forecasting and inventory replenishment: Applying sales trend analysis and inventory management data to determine appropriate stocking quantities.
- In-store display setup and maintenance: Physical setup and upkeep of music racks and point-of-purchase displays.
- Promotional marketing: Coordinating retail promotions, endcap placement, and advertising tie-ins.
- Return management: Managing the return of slow-moving or excess inventory back through the supply chain.
This model allowed large retailers such as Kmart and Wal-Mart to fully outsource the complexity of entertainment media management to a specialized vendor. Handleman's scale, distribution infrastructure, and point-of-sale data gave it a structural advantage over any single retailer attempting to manage the same function in-house.[6]
Subsidiaries and acquisitions
| Entity | Type | Year | Notes |
|---|---|---|---|
| Sieberts | Book & record distributor | Acquired 1975 | Enabled entry into book distribution |
| Pickwick, Inc. (inventory & fixtures) | Rack-jobbing assets | Acquired c. 1985 | Purchased inventory and fixtures only, not the company |
| Viking Entertainment | Audio/video rack jobber | Acquired 1988 | Southern California-based; brought 500 public domain film master recordings |
| Four film licensing companies | Film license holders | Acquired 1988 | Combined sales of $10 million; acquired via stock exchange |
| Video Treasures | Film licensing | Acquired early 1989 | Purchased for $10 million; held licenses for 400+ films |
| Lieberman Company | Music rack jobber | Acquired 1991 | America's second-largest rack jobber at acquisition |
| Sight & Sound | Music rack jobber | Acquired 1991 | America's third-largest rack jobber at acquisition |
| Live Entertainment software division | Software rack jobber | Acquired 1991 | |
| North Coast Entertainment (NCE) | Internal division | Established 1994 | Proprietary products; later spun off as stand-alone holding company (1998) |
| Starmaker Entertainment, Inc. | Budget video company | Acquired 1995 | Approximately $15 million in annual sales |
| Madacy Music Group (majority interest) | Music production/distribution | Acquired 1995; sold 2003 | Montreal-based; $22.7 million; revenues >$40M; owned Mediaphon GmbH |
| Levy Music and Video | Music/video rack jobber | Acquired 1995 | |
| Sofsource, Inc. | Software development & licensing | Increased to >50% 1995 | Previously held 27% stake |
| Handleman Entertainment Resources (H.E.R.) | Internal division | Formed 1995 | Core category management and distribution segment |
| The Itsy Bitsy Entertainment Company (75%) | Children's entertainment licensing | Acquired 1998 | Held rights to Teletubbies and other properties |
| Lifetime Entertainment / Handleman UK Limited | UK music distribution | Acquired 1999 | Renamed Handleman UK Limited in 2001 |
| Anchor Bay Entertainment | Home video distribution | Internal; sold 2003 | Specialty/horror/cult titles; UK subsidiary established 2001 |
| REPS L.L.C. | National in-store merchandiser | Acquired June 2005 | Tennessee-based; sold during wind-down |
| Crave Entertainment | Video game distributor | Acquired 2005 | Purchased for ~$72 million; sold during wind-down |
Financial performance
| Fiscal Year | Revenue | Notes |
|---|---|---|
| 1979 | $224 million | Pre-recession peak[6] |
| 1980 | $199 million | Industry slump; Handleman becomes largest U.S. record/tape wholesaler[6] |
| 1985 | $43 million (video only) | First year of video sell-through strategy[6] |
| 1989 | $646.7 million | Music = 58% of revenues; largest U.S. tape distributor[6] |
| 1991 | $702.7 million | Year of Lieberman, Sight & Sound acquisitions[6] |
| 1992 | $1.2 billion | First year over $1 billion[4] |
| 1995 | $1.23 billion | Music $653.4M; video $461.6M; books $57.6M; software $53.3M[6] |
| 2006 | $1.31 billion | Final full profitable operating year[1] |
| Q1 FY2009 | Net loss of $46.5 million | Includes $11.2 million loss from discontinued subsidiaries[15] |
Awards and recognition
- 1992โ93: NARM/RIAA "Consistently Outstanding Performance in Creative Music Merchandising"
- 1994: Shopko "Vendor of the Year"
- 1996: Kmart "Retailer of Choice"
- 1999: BMG "Super Tuesday Award"
- 2000: NARM first place design, 42nd Annual Grammy Awards point-of-purchase
- 2000โ2001: United Way "Gold Level โ Contribution Achievement"
- 2001: NARM first place design, 28th American Music Awards point-of-purchase
- 2002: Forbes "Platinum 400"; Fortune 1000 (Diversified Wholesaler, 17th in revenues); NARM Large Wholesaler of the Year; Information Week 500; Anchor Bay Saturn Award (Special Achievement); Anchor Bay Best Packaging, 5th Annual DVD Awards; NARM first place design, 29th American Music Awards point-of-purchase
- 2002โ2003: Michigan Business & Professional Association "101 Best and Brightest Companies to Work For" (consecutive years); Elite Award for Diversity & Multiculturalism
- 2003: Crain's Detroit Business "Top 30 Best Places to Work in Southeast Michigan"; Information Week ranked 104 of 500 for innovative use of technology in the distribution sector[4]
Legacy
Handleman's story is frequently cited as a case study in the disruption of physical media retail supply chains by digital distribution, alongside firms such as Tower Records and Wherehouse Entertainment. Unlike a traditional music retailer, Handleman occupied a unique structural position as an intermediary whose entire value proposition was predicated on the existence of a healthy physical music supply chain.[18]
References
- โ 1.0 1.1 "Handleman Company". Encyclopedia.com. Retrieved April 11, 2026.
- โ 2.0 2.1 "Handleman CO /MI/ โ Form 10-K (Fiscal Year 2005)". U.S. Securities and Exchange Commission. Retrieved April 11, 2026.
- โ 3.0 3.1 "Handleman CO /MI/ โ 10-K, Management's Discussion and Analysis (Post-Dissolution)". Retrieved April 11, 2026.
- โ 4.00 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 "About Handleman โ Company History". Handleman Company. Retrieved April 11, 2026 – via Wayback Machine.
- โ 5.0 5.1 5.2 5.3 5.4 5.5 Handleman, David (July 29, 2004). "Oral History of David Handleman" (PDF). Interviewed by Stanley Meretsky. Jewish Federation of Metropolitan Detroit. Retrieved April 11, 2026.
- โ 6.00 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 Lewis, Scott M. (1996). "Handleman Company". International Directory of Company Histories. 15. St. James Press. pp. 210โ212. Search this book on
- โ 7.0 7.1 "The Handleman Company". LinkedIn. Retrieved April 11, 2026.
- โ "Handleman Co. History: Founding, Timeline, and Milestones". Zippia. July 21, 2023. Retrieved April 11, 2026.
- โ "Handleman Settles with Kmart". Crain's Detroit Business. 21 (11). March 14, 2005. p. 18.
- โ "Handleman Company Announces Changes in Its Business Arrangement with Kmart". U.S. Securities and Exchange Commission. March 30, 2005. Retrieved April 11, 2026.
- โ "Reallocation of Stores Results in a Minor Adjustment to the Number of Stores Serviced by Handleman Company". U.S. Securities and Exchange Commission. August 12, 2005. Retrieved April 11, 2026.
- โ "Handleman โ M&A Summary". Mergr. Retrieved April 11, 2026.
- โ "Handleman Company โ Form 8-K (Acquisition of REPS LLC)". U.S. Securities and Exchange Commission. June 24, 2005. Retrieved April 11, 2026.
- โ "Handleman Company Elects Albert Koch to President and Chief Executive Officer". U.S. Securities and Exchange Commission. November 28, 2007. Retrieved April 11, 2026.
- โ 15.0 15.1 15.2 "Handleman Liquidation Leaves Questions for Shareholders". Crain's Detroit Business. October 5, 2008. Retrieved April 11, 2026.
- โ "Handleman Company โ Shareholder Meeting Remarks by CEO Albert A. Koch". U.S. Securities and Exchange Commission. October 1, 2008. Retrieved April 11, 2026.
- โ "Handleman Company Files Preliminary Proxy Statement โ Plan of Final Liquidation and Dissolution". U.S. Securities and Exchange Commission. August 15, 2008. Retrieved April 11, 2026.
- โ "Handleman CO /MI/ โ Form 10-K (Fiscal Year 2011, Post-Dissolution)". U.S. Securities and Exchange Commission. Retrieved April 11, 2026.
- โ "Investor Buys Former Handleman Co. HQ in Troy for $3 Million". Crain's Detroit Business. February 24, 2010. Retrieved April 11, 2026.
Further reading
- Cochran, Thomas N. "Handleman Co.: Building Tomorrow's Business Today." Barron's, January 23, 1989, pp. 55โ56.
- Gubernick, Lisa. "We Are a Society of Collectors." Forbes, July 24, 1989, p. 80.
- "The Middleman's Dilemma." Financial World, October 15, 1980, pp. 30, 32.
- Taub, Stephen. "The Sweet Music of Computer Software." Financial World, October 15, 1983, pp. 28โ29.
External links
- Handleman Company โ About/History (archived March 2, 2009)
- Oral history of David Handleman โ Jewish Federation of Metropolitan Detroit, July 29, 2004
- Handleman Company SEC EDGAR filings
- Handleman Company โ Encyclopedia.com
- Handleman Company History โ FundingUniverse
Category:Companies established in 1934
Category:Companies disestablished in 2009
Category:Defunct companies based in Michigan
Category:Companies formerly listed on the New York Stock Exchange
Category:Troy, Michigan
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