`The Martha Stewart For Real People'

How did Mary Engelbreit turn her homey drawings into an empire? One word: Licensing

It was 1969, and aspiring illustrator Mary Engelbreit was kicking around the idea of applying to design school. "Too bohemian," shuddered the guidance counselor at her upper-crust Catholic high school in St. Louis. Instead, the well-meaning nun urged her to get a nice, safe teaching degree from a nearby Catholic college.

Good thing Engelbreit didn't listen. Today her nostalgic, cozy drawings adorn 14 million greeting cards a year as well as a panoply of licensed products ranging from teapots to wallpaper to bed linens. While most illustrators scrape by selling their art piecemeal as freelancers, Engelbreit, 44, has built a business empire that takes in an estimated $3.5 million in licensing fees a year. Retail sales of various Engelbreit-adorned accessories last year reached $88 million. Now she's getting ready to extend her reach with a home-decorating magazine set to launch in September. "She's the Martha Stewart for real people," says Jean Lowe, editorial director of the new magazine and an executive editor at Kansas City-based publisher Andrews & McMeel, Engelbreit's partner in the magazine venture. She believes the success of Martha Stewart points to a huge opportunity for a personality-driven magazine with a slightly lower-brow sensibility.

Not bad for a self-taught artist who in the end decided to skip both college and design school. But Engelbreit's success is no surprise to the thousands of devoted fans who trade tidbits about new Mary Engelbreit products on a popular America Online message board. "I have her stuff all over my office at work," gushes Sherry Wallis, a 46-year-old high school teacher in Manchester, Mo., who has been collecting Engelbreit cards, tote bags, and calendars for more than 10 years. "For women, I think it's a reminder of childhood."

By licensing her homey scenes for use on dozens of products, Engelbreit has transformed herself from an anonymous card illustrator to a brand name. That's no accident. She never conceived of herself as just a supplier of illustrations. When her first printer asked what she wanted on the back of the card, she made a simple design block of her initials that's become her trademark, followed by a note she still uses: "This illustration is by Mary Engelbreit, who thanks you from the bottom of her heart for buying this card." Corny, perhaps, but effective in tying a card's design to a real person.

"SKYROCKETED." That image is her greatest asset. Indeed, Mary Engelbreit Studios Inc. doesn't make any of the myriad knickknacks that carry her designs. Aided by a stable of artists, she produces the designs while licensees slap them on everything from date books to bed sheets. The cards are produced and distributed by Sunrise Publications in Bloomington, Ind. Engelbreit desk and birthday calendars as well as an Engelbreit-illustrated version of Hans Christian Andersen's The Snow Queen are published by Workman Publishing Co. in New York.

"Mary is our best-selling artist today and has been since we contracted with her. She's skyrocketed," says Lorraine Farrell, vice-president of artistic resources for Sunrise, the country's fifth-largest greeting- card company. Adds competitor Mike Keiser, co-founder of Chicago's Recycled Paper Greetings Inc.: "It's a rare artist who has staying power. Ten years is a very long time. Mary has been succeeding for 20."

Drawing inspiration from the detailed illustrations in the 1920s children's books she copied as a child, Engelbreit uses lots of repeating patterns and bright colors. Her art sometimes includes quotations from figures such as Abraham Lincoln or Ralph Waldo Emerson, but Engelbreit is not afraid to play around with her own words. One of her all-time best-selling cards proclaims, "Life is just a chair of bowlies," while one of her newest urges, "Let's put the fun back in dysfunctional." Says Mary: "I draw things that happen to me, my family, and my friends. It looks cozy and old-fashioned, but when you really look, there's a little zing to it."

Lots of artists license their work, of course, but Engelbreit retains far more control than most. She insists on approving every product before it hits the marketplace. Instead of just delivering the art to the licensee, she employs five full-time artists and a few freelancers to transpose her original work onto the licensed products. Engelbreit who does all of the illustrations, also retains all copyrights to her artwork, a practice she adopted early on that has become widespread. Previously, many illustrators sold their work outright, leaving the new owner free to sublicense its use. Engelbreit even has a say in where the products are sold, and she's not afraid to drop licensees if she finds them dumping her stuff in the mass market.

Engelbreit can get away with those terms because of her popularity. She can also command a hefty 8% of the wholesale price. Most artists get only 5% to 6%, says Seth M. Siegel, co-chairman of Beanstalk Group Inc., a New York consulting and licensing firm that represents Harley-Davidson Inc. and Hummel figurines.

MOONLIGHTING. Her launch into greeting cards stemmed from the suggestion of a New York editor who rejected her work for children's books. She was insulted at first, but when Engelbreit sent off several illustrations to Portal Publications Ltd., a card company in Corte Madera, Calif., she got back a contract with a royalty clause. Over the next several years she kept her day job while turning out cards for Portal by night.

Frustrated by life as a contract artist, Engelbreit decided to launch her own company in 1982, while she was seven months pregnant with her second child. She and a partner borrowed $50,000, and, armed with a laughably tiny line of 12 cards, they set up a booth at the 1983 stationery trade show in New York. Buyers responded, and Engelbreit soon found sales doubling every six months. But by 1986, the company had hit a wall. Either it had to bring in more artists and become a full-fledged card maker or license its art to a bigger company.

Meanwhile, as her suburban St. Louis company grew, Engelbreit found herself spending more time running the business and less time in her studio. So she asked her husband, Phil Delano, then a social worker at juvenile court in St. Louis County, to join the company as president. Delano focused on licensing deals, although a 10-year license with Sunrise that gave her enough cash to buy out her partner had already been inked. Delano has negotiated more than 70 deals, but the couple decided in 1993 to rein in the number because some products weren't meeting Engelbreit's artistic standards. Currently, Mary Engelbreit Studios has 42 active licenses covering everything from stone garden planters to pen and pencil sets.

The company has stumbled a few times. A catalog failed because Engelbreit and Delano didn't understand the fulfillment side of the business. And with the benefit of hindsight, the company never should have signed the 10-year license with Sunrise, which includes an option to extend the agreement for another five years. Most licenses last two or three years, allowing artists to negotiate more lucrative contracts if the products sell well. The company is still unsure whether to expand a chain of five Mary Engelbreit retail stores it operates in Atlanta, Chicago, Denver, Dallas, and St. Louis.

REORGANIZATION. But overall, the past five years have been a chair of bowlies. Mary Engelbreit's company is now housed in a former Greek Orthodox Church outside St. Louis filled with offices decorated with her designs. The company has grown to 30 employees from five in 1991. A recent reorganization designed to increase efficiency gave the CEO title to Greg Hoffmann, the company's former outside attorney. Although she is still the majority shareholder, Mary is now president. Delano, named chairman, remains head of licensing.

Coming off its best year ever, the company is ready to take on its biggest risk: launching a national magazine that will initially appear five times a year. One hundred thousand copies of Mary Engelbreit's Home Companion will hit bookstores in September featuring photo spreads of ordinary people's houses as well as columns on family life, gardening, and crafts. Engelbreit, the editor in chief, will approve all stories and artwork, while publisher Andrews & McMeel will produce and distribute the magazine. Each cover will bear an original Engelbreit illustration, with others scattered throughout inside. "She's not a household name, but she's going to become one," brags Tom Thornton, president of Andrews & McMeel. So much for career advice from guidance counselors.