Gregg Ribatt President & Chief Executive Officer The Stride Rite Group

Transcription

1 Gregg Ribatt President & Chief Executive Officer The Stride Rite Group Stride Rite Group Today s Objectives Demonstrate the strength of the Stride Rite Group and its brand portfolio Illustrate the Stride Rite Group s opportunities for growth Show the progress that the Stride Rite Group has made in the past 12 months 2 1

2 Stride Rite Group Overview Mission: To be the leader in building a diversified portfolio of fashionable, premium lifestyle, and performance footwear brands for men, women, and children across the globe 2007 Sales Overview FY 2007 pro-forma* sales of $765 million, 87% domestic Highly diversified distribution with no customer exceeding 3% of sales Building upon existing positions of leadership Stride Rite: premier children s footwear player in the U.S. Sperry: the authentic, original boat shoe growing into a nautical lifestyle brand Saucony: the technical specialist in running Keds: a global fashion, casual brand Platforming existing positions into streams of high growth Categories Geographies Leveraging capabilities at both Stride Rite Group and CBI across all brands and businesses * Collective Brands did not own Stride Rite for all of ** All children s footwear sold at wholesale for any brand is captured in Stride Rite Children s Wholesale. 4% Direct 28% Stride Rite Children s Retail 9% Tommy Hilfiger 7% All Other 19% Saucony 15% SR Children s Wholesale** 13% Keds 16% Sperry Top-Sider 2007 Distribution 7% Sporting Goods 7% Off Price 7% Athletic 10% Footwear 11% Family 30% Stride Rite Group Stores & ecommerce 17% Department Stores 3 Stride Rite Group Positioned in Many of the Fastest Growing Footwear Segments US Footwear Market Growth (CAGR 05-07) = 1.9% By Gender Segment CAGR (05-07) Kids 3.6% Women 2.2% Segment 0-2 yrs 7-12 yrs By Age Group CAGR (05-07) 9.4% 3.5% By Price Point ($/pair) Segment >$30/pair CAGR (05-07) 2.1% By Consumer Income (HH) Segment >$75K / yr CAGR (05-07) 3.4% Segment Direct By Channel Apparel Specialty Sporting Goods Footwear Stores CAGR (05-07) 10.4% 6.5% 5.4% 4.3% Segment Casual By Category CAGR (05-07) Low Performance 8.2% Work 7.5% 3.9% Segments with significant Stride Rite Group business Source: NPD Consumer Panel 4 2

3 Stride Rite Children s Group 5 Stride Rite Children s Group Overview Mission: Build the world s premier group of children s footwear brands Annual sales over $330 million through retail and wholesale with 4% U.S. market share in children s footwear Portfolio of premium children s brands More than 350 company-owned stores Multi-channel distribution in over 4,000 doors Over 11 million pairs sold annually. Largest premium retailer of children's non-athletic shoes Industry recognition for excellence in design, store performance and consumer communication #1 premium brand of children s non-athletic shoes; #1 brand for first walkers #1 rated brand by mother s in quality, fit, and trust $360 $340 $320 $300 $280 $260 $240 SRCG Sales (in mil of $) $336 $ Sources: NPD, iparenting Media; 2007 A&U Study 6 3

4 Stride Rite Children s Group Strategic Direction Ages 0-6 Baby / toddler Historical Single brand focus Stride Rite Wholesale and retail (closer to equal mix) stores (46 leased) 53% of business was retail in 2000 Retail through licensed dealers Domestic focus Limited international business Categories Single category focus Evolving House of brands Own: Stride Rite, Keds, Robeez, Saucony, Sperry Top-Sider, Munchkin License: Jessica Simpson, Tommy Hilfiger Wholesale and retail (mix shift into retail) 2008 Over 350 stores (7 leased) 63% of business is retail in 2008 Owned retail -- multiple formats Specialty 241 doors Outlets 106 doors Leased departments 7 doors ecommerce Ages 0-10 Baby / toddler; boys / girls Global growth Proactively develop international by leveraging Robeez, Stride Rite Group, and Payless infrastructure and relationships Categories Multiple categories & lifestyle focus athletic, dress, play, casual 7 Stride Rite Retail Store Formats Stride Rite Concept Stores Stride Rite Outlets Leased Departments Store Front Store Interior Number of Locations Average Square Feet 1,284 2,237 1,367 Real Estate Type Regional Mall Outlet Center Macy s 8 4

5 Stride Rite Retail Collections by Stride Rite New Retail Store Format Prototype to Extend the Franchise New, larger store (1,700 sq ft) designed to appeal to boys and girls ages 7-10, in addition to core customer (ages 0-6) Expands addressable market (U.S.) 61% From $2.3B annually (ages 0-6) to $3.7B (ages 0-10) Extends life of existing customer base in the store Ages 7-10 represent 50% of store sales vs. 28% in average Stride Rite store: an 80% increase Offers environment specific to pre-tweens, unlike anything in the market One more test store to open in Stride Rite Children s Group Continued Newness and Ideas to Drive Demand and Retain Customers Longer in Life Stages Jessica Simpson for tween in casual and dress Broader offering of Sperry Top-Sider, Keds, Saucony for older children Robeez expanding franchise beyond booties into hard sole shoes SuperBall and Slimers shoes for excitement among traditional age groups Andy MacDonald and Anastasia Ashley for Airwalk addresses older kids in hot skate market 10 5

6 Stride Rite Children s Group Retail Operational and Efficiency Initiatives Drive Increased Profitability Sharing Best Practices from Payless Retail Operations Operational Excellence Brand Marketing Effectiveness Merchandising Efficiencies Superior In-Store Experience Drive Store Productivity New Customers Increase trips Tenure Productivity AUR Best in Class Service Model Conversion Productivity Align staffing with traffic UPT s, AUR Store Visit Metrics Compliance Scorecards Acquisition Increase frequency and quantity of Direct Mail Create age segmented mailers Retention Elevate customer shopping patterns Retain preferred customers Assortment Planning Size Optimization Cluster Management Store Design and Layout New Technologies and Measures CSAT Training KPIs 11 Stride Rite Children s Group Summary of Opportunities (I) Platforms for Growth Expand retail stores Grow the core wholesale business Increase share in key age groups and expand end uses Strategic Rationale Profitable expansion opportunities replaces loss of independents Build off brand equity and leadership position in wholesale channel 0-2 years: Highest growth segment; Robeez well positioned 6-10 years: Underpenetrated today; Leverage existing customer base and increase lifetime value Initiatives Continue roll out of Stride Rite stores Collections, outlets, other concepts Portfolio management approach to running the business Continued innovation, e.g. SuperBall, Slimers, next generation baby technology Expand Robeez beyond soft sole Re-launch Stride Rite baby Add to brand portfolio (e.g., Airwalk, Jessica Simpson) Test larger store with added brands and agespecific sections 12 6

7 Stride Rite Children s Group Summary of Opportunities (II) Platforms for Growth Strategic Rationale Initiatives International expansion Leverage existing Stride Rite Group and Collective Brands platforms Strategically grow the business across the globe Pursue potential retail opportunities in Canada, Central America, Europe Robeez international expansion Improve operations Enhance profitability and customer service Leverage Payless retail tools, techniques and experience Consolidate Robeez operations with Stride Rite Re-purpose inventory SKU count 13 Sperry Top-Sider 14 7

8 Sperry Top-Sider Overview Mission: To grow into a global nautical lifestyle brand for men, women and children with footwear, apparel and accessories sold worldwide in multiple distribution channels Overview $124 million in 2007 sales 96% of the sales are domestic Annual sales growth over 20% in each of last two years; brand continues to grow at high rate Department store; marine, outdoor and specialty store; family footwear store distribution Multi-generational appeal and loyal customer base $140 $120 $100 $80 $60 $40 $20 $0 Sperry Top-Sider Sales (in mil of $) $124 $41 $93 $25 $83 $ Men's Women's 15 Sperry Top-Sider Business Drivers and Growth Platforms Platforms for Growth Maintain performance authenticity and leadership through continued technical innovation and marine channel distribution Expand beyond boat shoes to become a stronger four season, year-round resource Build on initial success of women's Sperry Top-Sider in image/better department stores, expanding classifications offered Expand internationally to become the global nautical lifestyle brand Expand beyond footwear with apparel and accessories 16 8

9 Sperry Top-Sider Sperry Growth Opportunities Leveraging Existing Strength 2007 Men's Domestic Casual and Dress Casual Footwear Market ($ millions) Sperry Top-Sider 2.2% share Top 5 brand 2007 Women's Domestic Casual and Dress Casual Footwear Market ($ millions) Sperry Top-Sider 1.2% share $5.2B $13.5B Size of market: $5.2B 2005 to 2007 CAGR: 1.6% Solid position off which to grow within men s Establishing premium products and distribution Expanding age reach to younger customers Growing casual and dress casual beyond traditional boat shoes Driving performance category with innovation Sources: NPD consumer panel and Company reports Size of market: $13.5B 2005 to 2007 CAGR: 6.0% Growing in fragmented market that is 2.6X as large as men s and growing approximately 4X faster Building off existing position and premium distribution Expanding designs beyond traditional boat shoes into casual and dress casual 17 Sperry Top-Sider Innovation and Technical Product 18 9

10 Sperry Top-Sider Expanding Our Men s Line Expanding off authentic boat shoe heritage Developing collections for premium distribution Expand multigenerational collections Four-season, year round product 19 Sperry Top-Sider Expanding Our Women s Line Leveraging initial offering of women s boat shoes Strong marketplace acceptance across broad consumer groups Expanding classifications, moving toward more dress casual, with less explicit nautical design Four season product, year-round product 20 10

11 Sperry Top-Sider Sperry: Creating a Global Nautical Lifestyle Brand Expand internationally leveraging existing Stride Rite Group operations Infrastructure (organization and facilities) in Europe Opportunities also in Central/South America and Asia Drive children s through Stride Rite Children s Group Mid to longer term Expand beyond footwear with apparel and accessories Develop retail boutique concept in key markets as brand flagship 21 Saucony We are a community of runners. We run with each other, our dogs, our thoughts, the guy we pass by every day, the road, our friends, our shoes, the weather, and all of the Saucony employees who obsess about making every run better. We never run alone

12 Saucony Overview Mission: Tirelessly devoted to inspiring every runner on every run, every day. At Saucony, we run. Overview: $145 million in 2007 sales 34% of sales international Positive momentum in the run-specialty retail channel market share increased from 10% to 13% (2005 to 2007) #3 share in run specialty channel now Innovative products. Trade awards: Runner's World International "Best Innovation" Award Runner's World "Best Debut", Grid Sinister "Shoe of the Year", IRRA for the Omni Runner's World - The Editor's Choice - "Best Trail Running Shoe", Xodus Outside Magazine "Gear of the Year" award for the Triumph Runner's World "Best Buy" award for the Jazz $150 $145 $140 $135 $130 Saucony Sales (in mil of $) $137 $ Saucony Growth Opportunities Growth Opportunities in the $4B U.S. Running Market: Run Specialty and Technical Running Strong position (#3) among all brands in the run specialty channel, driven by technical product leadership Higher price points are fastest growing segment in the $4B US market Maintain and build position with Continued technical innovation in products Increased service levels - - shadow reps, clinics, spike nights - - with key accounts Build apparel business with blend of performance and style Extending running leadership into adjacent categories such as trail running Price Band $90 + $40 - $90 Under $40 4,500 4,000 3,500 3,000 2,500 2,000 1,500 Domestic Running Footwear Market (in millions of $) % 587 2,533 2,499 2,476 CAGR % (1.1) 1, , (6.3) Source: NPD

13 Saucony Growth Opportunities Innovative Technical Running Product to Expand Position in Run Specialty Channel Six core franchise models Fundamentals of Fit, Feel, Ride Consistency across subsequent versions Stability Neutral Motion Control Continual innovation $90+ market growing at 18% (2007) Source: NPD Saucony Growth Opportunities Growth Opportunities in the $4B U.S. Running Market: Sporting Goods Channel Sporting Goods channel is large and growing Build off strength in run specialty with technical product Expand business with leading full service sporting goods channel by Visually compelling products and technologies Increased marketing support in health/fitness and men s lifestyle magazines Increased service to key accounts Source: NPD 2007 Dept. Stores Discount/Mass Direct Off-Price Sporting Goods Athletic Specialty Family 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Domestic Running Footwear Market (in millions of $) % ,081 1,104 1, CAGR % (0.2) total (7.7) (5.8) 3.6 (4.3)

14 Saucony Growth Opportunities Visually Compelling Athletic Product Stand Out in Sporting Goods and Athletic Channels Visually compelling styling and technologies Younger market Fundamentals of style, comfort and price/value Win on the wall 27 Saucony Growth Opportunities Apparel Leverages Style, Performance, and Distribution Platforms Integral component of building Saucony from running shoe leader into a global running lifestyle brand As much as 30% of sales volume, based on benchmarks Opportunity to increase share of open to buy with existing retailers and share of wallet with brand-loyal customers Fashion and performance can reach consumers beyond core runners 28 14

15 Saucony Growth Opportunities Re-Establishing Originals to Capture Share of Growing Run Style Market Originals footwear resonates with the independent younger population New technical footwear offering creates a great opportunity develop "run-style models" Low performance (athleisure) footwear market is large ($4B, same size as running market) and growing (9.3% CAGR) Women account for 58% of the market Incremental revenue that does not create conflicts with the run specialty channel Source: NPD Keds Group 30 15

16 Keds Group Overview Mission: Keds finds inspiration in the people who share our spirit and energy. We believe there's no need for little steps when you can bound confidently forward. Our deep roots as an American icon allow us the freedom to do fashion with know how and authenticity. $104 million in 2007 sales Keds Group encompasses the Keds, Pro-Keds and Grasshoppers brands. The brands compete collectively in the low performance athletic, casual, and sandal markets U.S. market nearly $17 billion at retail Increases in international business have been offset by declines in domestic Keds Large opportunities to expand internationally and through PRO-Keds and Grasshoppers brands International business up 170% since 2004 driven by Keds Women's in Western Europe, Canada, and Australia. Grasshoppers repositioned successfully with better styling, comfort, and retail performance. Target customer (Women 45+) is one of fastest growing groups in U.S. due to explosion of baby boomers PRO-Keds license negotiated back in house in 2008 and early response to 2009 brand and product is positive Strong brand equity can be leveraged Keds has high brand awareness in U.S., similar to much larger competitors in target segment (Skechers 97%, Converse 93%, Keds 88%, and Vans 79%) $120 $110 $100 $90 $80 Keds Group Sales (in mil of $) $100 $ Source: NPD Consumer Panel YE Keds Group Keds Group Platforms for Growth Champion Green Fun Fashion Pro-Keds Grasshoppers Extend range of product to offer basics to luxury $30-$100 Launch Keds Customization Keds Studio Create leadership position in industry Create premium channel segmentation Strong online / community based marketing Occupy more of her closet Build business in wider (non Champion, Non Hampton) range of product platforms Establish credibility as fashion resource Build upon Heritage platforms Exclusive collaborations for premium boutique distribution Upgraded quality, design, graphics and material application Enable her active lifestyle with footwear that targets her different wearing occasions Improved comfort and style and expand price band from $25 - $40 to $30 - $

17 Stride Rite Group Transition Roadmap Phase I Phase II Phase III (2009+) Integrate and Maintain the Business Enhance Platforms Develop/ Execute Brand Strategies Accelerate Expansion Manage thru merger transition Adopt new policies and procedures Leverage new corporate centers Capture initial synergies Manage Hilfiger transition Deliver 2007/2008 results Integrate and enhance key CBI corporate platforms Product development Sourcing Logistics ecommerce Consolidate and enhance internal SRR platforms Global brands Europe Retail (execution and format development) Continue to add talent and build the organization and capabilities Deliver increased effectiveness and efficiency Transition new leadership Refine brand positioning and target markets Identify growth opportunities and accelerate organic growth Drive international expansion across all brands Build capabilities in apparel/accessories Build bottom-up, long-term corporate and brand strategies Identify and sequence required investments Leverage what we have built Enhanced talent pool Efficient platforms and Infrastructure Base of organic growth and resultant cash flows Map the market and identify streams of growth Develop acquisition criteria and corporate development plans Deliver growth via 3 year plans which meet or exceed corporate objectives 33 Stride Rite Group Substantial Integration Progress Since August 2007 Leadership transition Organization/structural changes Physical consolidation Strategic focus Partnering for growth Corporate leadership Adding depth within divisions Global brands established Sourcing, logistics, store development, treasury, and tax consolidated into CBI centers Matrix structure implemented in key support areas Robeez Vancouver operations consolidation into SRCG European operations consolidation in Amsterdam US DC consolidation Implemented bottom-up strategic planning process ROIC/IRR/NPV investment criteria implemented Increased accountability and compensation for driving results and achieving strategic objectives Premium Airwalk brands added to SRCG stores to address older children Disney direct to retail discussion initiated Testing Champion and American Ballet Theater in outlet stores Implementing retail management best practices Leveraging Store Development platforms and activities 34 17

18 Stride Rite Group Tommy Hilfiger License Update Transition Tommy Hilfiger adult footwear business from Stride Rite to Tommy Hilfiger on December 31, 2008 at end of term of license agreement. Stride Rite is delivering 2008 product collections Collaborating with Tommy Hilfiger to assure smooth transition; receipt of certain fees and reduction of certain expenses Solid 2008 sales trends In 2009, intend to redeploy assets into other higher-growth Stride Rite Group businesses while rationalizing overhead Extended Tommy Hilfiger children s business for another year, consistent with our strategy and business model (i.e., licensing brands) 35 Stride Rite International Evolving Into More Strategic and Efficient Organization Re-aligned organization International focused on market analysis, business development and in-market coordination/support Brands are managed globally: brand positioning, product development, distribution strategy, marketing Consolidating European infrastructure into one Netherlands-based European headquarters Enables Stride Rite Europe management team to more effectively drive growth Leverages infrastructure across all businesses Creates increased scale Integration of Robeez Canada with Stride Rite in U.S

19 Stride Rite Group Summary Building a high growth organization and culture with strategic approach to running the business Develop, attract and invest in talent Significant growth opportunities across all brands Product innovations Channel segmentation Category expansion International initiatives Acquisition over time Developing more efficient business model Best practices across both Stride Rite and Collective Brands Leveraging both Stride Rite and CBI resources Greater focus on inventory management and expense control 37 19