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K Tel International: Sweet Music For A Frenetic Marketer


Cover Story

K-TEL INTERNATIONAL: SWEET MUSIC FOR A FRENETIC MARKETER

If you watched television in the 1970s, you know K-tel International Inc. Remember those pitches for Miracle Brush lint removers, Fishin' Magician pocket tool kits, and music albums such as 25 Goofy Greats? Now, the frenetic marketer is back. Since emerging from a 1985 bankruptcy, it has turned oddball products and nostalgic music compilations into a booming international business.

Chief Executive Mickey Elfenbein, who took over from his uncle, company founder Philip Kives, last summer, has big plans for expanding in Europe, where the Plymouth (Minn.) company gets two-thirds of its sales. Elfenbein is making deals with U.S. infomercial marketers to move their products into unmined territories overseas. Pump N' Seal airtight storage devices and Firm Flex exercise machines are already being marketed in Europe by K-tel. He's also persuading a network of European retail stores to distribute K-tel's TV-advertised products, such as Lustre-7 car wax and Thigh Toner exercise machines. He still sees potential in the States. While K-tel blankets retailers with song collections, Elfenbein is pushing household products, such as the Masseur electric body massager, much harder these days. K-tel, No.7 on BUSINESS WEEK's Hot Growth list, earned $2.7 million on sales of $56 million in fiscal 1993, ended in June, with 58% coming from music and the rest from household goods.

The 46-year-old Elfenbein is no newcomer to K-tel. He joined in 1969 and helped see the company through the mid-1980s, when its investments in commercial real estate and oil-and-gas development collapsed.

While the company is doing a lot better these days, the weak European economy stung K-tel in the first half of fiscal 1994. Sales dropped 9%, to $25.7 million, despite stronger U.S. results, and the stock has dipped to about 6 from a peak of nearly 11 in the fall. Some analysts say K-tel is headed for trouble in Europe, where media access is limited and costs are high. Elfenbein says he expects "a few more quarters of struggling" in Europe, but he's confident that business will turn around. In the meantime, K-tel is having one of its best years ever in the U.S. As long as the tried-and-true formulas hold up, there's gold in those Fishin' Magicians.Greg Burns in Chicago


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