Collective Brands, Inc. (“Collective Brands” or the “Company”) is a leader in bringing compelling lifestyle, fashion and performance brands for footwear and related accessories to consumers worldwide. We operate a hybrid business model with a product portfolio of powerful brands and private brand labels at multiple price points and selling channels including retail, wholesale, e-commerce and licensing.
Collective Brands is the holding company for Payless ShoeSource, Inc. (“Payless”), The Stride Rite Corporation (“Stride Rite” or “Stride Rite Group”), and Collective Licensing, LP (“Collective Licensing”). Payless is one of the largest footwear specialty retailers in the Western Hemisphere. It is dedicated to democratizing fashion and design in footwear and accessories and inspiring fun, fashion possibilities for the family at a great value. Stride Rite markets the leading brand of high-quality children’s shoes in the United States as well as products for children and adults under well-known brand names, including Stride Rite®, Sperry Top-Sider®, Saucony®, Keds®, and Robeez®. Collective Licensing is a youth lifestyle marketing and global licensing business.
Payless is one of the largest footwear retailers in the Western Hemisphere, with 4,522 retail stores in 16 countries and territories as of year-end 2008. Our Payless ShoeSource retail stores in the United States, Canada, the Caribbean, Central America, and South America sold over 150 million pairs of footwear and over 40 million units of accessories during 2008. Payless ShoeSource stores sell a broad assortment of quality footwear, including athletic, casual and dress shoes, sandals, work and fashion boots, slippers, and accessories such as handbags, jewelry, and hosiery. Payless ShoeSource stores offer fashionable, quality, private and branded label footwear and accessories for women, men and children at affordable prices in a self-selection shopping format.
Our stores feature several designer and mainstream footwear brands including Airwalk®, American Eagle™, Champion®, Dexter®, and Lela Rose for Payless™. We seek to compete effectively by getting to market with differentiated, trend-right merchandise before mass-market discounters and at the same time as department and specialty retailers but at a more compelling value. As of year-end 2008, each Payless ShoeSource store stocked on average approximately 6,600 pairs of footwear. We focus our marketing efforts on expressive women consumers between the ages of 16 and 49. This consumer wants to express her personality through shoes, but also places importance on low prices. We also focus our marketing efforts on expressive moms who believe that her children’s appearances are a reflection on her. These two expressive groups tend to have household incomes of less than $75,000 and make a disproportionately large share of household footwear purchasing decisions.
We believe that over one-third of these target consumers purchased at least one pair of footwear from our stores last year. We also operate payless.com® where customers buy our products on-line and store associates order products for customers that are not sold in all of our stores. In 2009, we will enter the Middle East through a franchising agreement with M.H. Alshaya. We also intend to drive our business with existing and new initiatives including: new designer footwear lines, direct-to-retail licensed programs, ‘green’ (i.e. environmentally friendly) footwear lines, and increased deployment of new accessory fixtures.
Stride Rite is a leading marketer of high quality children’s footwear and casual and athletic footwear for adults. Stride Rite was founded on the strength of the Stride Rite children’s brand, but today includes a portfolio of great American brands addressing different market segments within the footwear industry including Saucony®, Sperry Top-Sider®, and Keds®. Stride Rite is predominantly a wholesaler of footwear, selling its products mostly in North America in a wide variety of retail formats including premier department stores, independent shoe stores, value retailers and specialty stores. Stride Rite markets products in countries outside North America largely through owned operations, independent distributors and licensees.
Stride Rite also markets its products directly to consumers by selling children’s footwear through its Stride Rite children’s retail stores and a broader selection of its footwear through Stride Rite outlet stores and e-commerce sites. In total, Stride Rite operated 355 retail locations as of the end of 2008. Stride Rite designs and markets children’s footwear through its Stride Rite Children’s Group for consumers 0-10 years old, including dress and casual footwear, boots, sandals and athletic shoes. Those products are also marketed at wholesale under the Stride Rite®, Robeez®, and other brand names at moderate to premium price points. In addition, Stride Rite designs and markets marine performance, outdoor recreational, dress-casual, and casual footwear for men and women under our Sperry Top-Sider® and Sperry® trademarks. Stride Rite also designs and markets technical running, athletic lifestyle, outdoor trail shoes and fashion athletic as well as athletic apparel under the Saucony® brand name. Lastly, Stride Rite markets fashion/athletic and casual footwear for adults and children under the Keds®, Pro-Keds®, and Grasshoppers® labels.
Segments and Geographic Areas
We operate our business in four reporting segments: Payless Domestic, Payless International, Stride Rite Retail and Stride Rite Wholesale. See Note 19 to the Notes to the Consolidated Financial Statements for a discussion on financial results by segment.
1. The Payless Domestic reporting segment is comprised primarily of domestic retail stores under the Payless ShoeSource name, as well as the Company’s sourcing unit, and Collective Licensing.
2. The Payless International reporting segment is comprised of international retail stores under the Payless ShoeSource name in Canada, the South American Region, the Central American Region, Puerto Rico, and the U.S. Virgin Islands.
3. The Stride Rite Retail reporting segment consists of Stride Rite’s specialty stores and outlet stores.
4. The Stride Rite Wholesale reporting segment consists of Stride Rite’s wholesale operations. We sell footwear to approximately 8,000 customers in 80 countries and territories worldwide.