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Stride Rite Corporation

Stride Rite Corporation

191 Spring Street
Lexington, Massachusetts 02421
U.S.A.
Telephone: (617) 824-6000
Fax: (617) 824-6549
Web site: http://www.strideritecorp.com

Public Company
Incorporated:
1919 as Green Shoe Manufacturing Company
Employees: 3,100
Sales: $706.8 million (2006)
Stock Exchanges: New York
Ticker Symbol: SRR
NAIC: 316219 Other Footwear Manufacturing; 422340 Footwear Wholesalers; 448210 Shoe Stores

Founded in 1919 as Green Shoe Manufacturing Company, the Stride Rite Corporation has become a major designer and manufacturer of shoes and casual footwear for both children and adults. Stride Rite markets its products under its own brand names: Stride Rite, PRO-Keds, Keds, Sperry Top-Sider, Munchkin, and Grasshoppers. The company also markets footwear under licensed brand names, such as Tommy Hilfiger, and it designs and markets sportswear under such brands as Keds, PRO-Keds, and Sperry Top-Sider. In 2005 Stride Rite acquired Saucony, Inc., maker of high-performance running shoes; the following year Stride Rite acquired Robeez, a manufacturer of soft-soled footwear for babies and toddlers. Besides wholesaling its line, Stride Rite sells its shoes through over 300 retail stores and seven leased departments in Macys department stores. Although headquartered in Lexington, Massachusetts, most of Stride Rites footwear is made through contract arrangements with manufacturers in the Far East. The company markets its products internationally, but most of its annual revenue comes from domestic sales.

191924: PARTNERS SLOSBERG AND GREEN START COMPANY

In 1919, Jacob A. Slosberg founded a small shoe manufacturing company with his partner, Philip Green. Initially set up in converted stables in the Roxbury section of Boston, the Green Shoe Manufacturing Company specialized in making stitchdown shoes (also called welt shoes) for children. The company, employing nearly 100 people, was able to produce between 800 and 1,000 pairs of shoes each day.

Slosberg, who came to the United States from Russia in 1887 at the age of 12, had almost 30 years of experience in the shoe manufacturing industry when he cofounded Green Shoe. Beginning in 1892 he had worked for a series of shoe and shoe machinery manufacturers in Lynn and Beverly, Massachusetts. In those factories he had spent long hours stitching shoes and later dismantling and reassembling shoe machinery. He had then become a foreman at the Thomas Plant Company, a manufacturer of shoe machines, and when Thomas was sold to United Shoe Machinery, he joined the Greenberg-Miller Company, a manufacturer of childrens shoes in New York. He put the money he had been able to save and the experience he had been able to garner into Green Shoe.

In the early 1920s a disagreement emerged between Philip Green and Slosberg. Some sources say that it involved the quality of the product, which Slosberg was determined to maintain, while others say it was about whether to produce childrens shoes or, as Green favored, womens shoes. In any case, in 1924 Green sold his share of the enterprise, which was bought by Charles B. Strecker, a banker, and his son Seymour.

192544: SURVIVING THE DEPRESSION AND WAR YEARS

Green Shoe grew rapidly under Slosbergs direction. The main brand names were Green-flex and Mo-Debs. Because of overcrowding in the converted stables, Slosberg built a new manufacturing facility. Seymour Strecker sold his share of Green Shoe to Slosberg ten days before the stock market crash of 1929. However, even during the Great Depression, Green Shoe continued to grow. By the mid-1930s, the company was manufacturing about 3,000 pairs of shoes per day. During hard times, the company gained a reputation for reliability and value.

In 1933 Green Shoe, already seeking a brand name that could unite its entire line, hired Tom Lalonde, a manufacturer of childrens shoes, to work in sales. Lalonde owned the name Stride Rite, and Green Shoe bought the name for $1,000 from him, using it for a line of extra support shoes. By 1937 the name was extended to all shoes manufactured by the company.

Jacob Slosberg had two sons, Sam and Charles, who began work at Green Shoe in the early 1920s. Sam eventually went into sales, and Charles took over manufacturing. Charles visited shoe factories in the United States and Europe in order to find ways of streamlining production and distribution without sacrificing quality. He was particularly concerned that the company be able to deliver shoes to outlets in a timely fashion with a minimum of mistakes. To this end, he developed a highly efficient in-stock system. Incoming orders were analyzed immediately. If the items requested were out of stock, production lines were switched over to that product as needed. Workers known as expediters hand-carried these orders through the production process. In this way, the company was never out of stock. This enabled Green Shoe, and for some years Stride Rite, to guarantee that 100 percent of an order would be delivered within 24 hours of the placement of the order.

During World War II, Green Shoe helped develop and manufactured the nurses field boot and the Womens Army Corps boot. Slosberg, who was a member of the War Production Board, used the opportunity to encourage retailers to buy Stride Rite, with the result that the business boomed. It was also during the war that the company began selling shoes to department stores such as Jordan Marsh, Filenes, and the J.L. Hudson Company in Detroit, all under private store labels.

194570: RAPID EXPANSION, GOING PUBLIC, AND BECOMING STRIDE RITE

The years between 1945 and the late 1950s saw the most rapid expansion in the companys history, partly as a result of the postwar baby boom. One of the hallmarks of the company came to be multiple widths in childrens shoes. Daily production rose to about 25,000 pairs in 1959. The workforce quadrupled, and factory floor space increased sevenfold. In fact, the Stride Rite factory was at the time the largest factory in the United States manufacturing all of a companys products under one roof.

When Jacob Slosberg died in 1953, his sons and son-in-law, Martin Landay, assumed the management of the company. Samuel became president and Charles treasurer, with the additional duties of managing production, maintenance, and in-stock operation. Landay was named vice-president. Charles Slosberg died unexpectedly in 1960.

COMPANY PERSPECTIVES

The Stride Rite Corporation is the leading marketer of high quality childrens footwear in the United States and is a major marketer of athletic and casual footwear for children and adults. Our business was founded on the strength of the Stride Rite childrens brand, but today includes a portfolio of great American brands addressing different market segments within the footwear industry.

The 1960s and 1970s saw great changes in the way Green Shoe did business. The company went public in 1960. Then, in 1962, the first of several acquisitions greatly expanded the company. That year, Green Shoe acquired the Weber Shoe Company in Tipton, Missouri. Weber became a Green Shoe manufacturing facility. A second factory was built in 1969 in Hamilton, Missouri, to augment Webers capacity. The Weber acquisition was followed in 1964 by that of the R.J. Potvin Company, in Brockton, Massachusetts. A new warehouse was built there in 1965.

In 1966, with increased capacity and public recognition of its name, Green Shoe became the Stride Rite Corporation. In that year, the company acquired the H. Scheft Company and Stone Shoe Company in Boston and in 1967, Blue Star Shoes, Inc., in Lawrence, Massachusetts. Arnold Hiatt, Blue Stars president, became the first nonfamily member to become president of Stride Rite in 1968. The same year, Orange Shoe Company, in Orange, Massachusetts, was added to Stride Rite. The shoe company that began in 1919 with a capacity of 1,000 pairs per day was producing 30,000 per day in 1969.

This period also saw great changes in the workforce at Stride Rite. During the 1960s, African-American women in particular joined the Stride Rite workforce in great numbers, reflecting the changing population of Roxbury, the neighborhood in which the Boston factory was located. Many of the new employees could work only if they had day-care services for their children. Thus, in response to its employees needs, Stride Rite opened the first company-run day-care center in the United States in 1971. The idea for the center, conceived by Arnold Hiatt, was initially seen as a charitable gift that would serve the surrounding community only. As Hiatt explained, The company had had a charitable foundation for some time, but it had limited itself to the traditional kinds of giftshospitals, universities, and other very visible community organizationsand had played a relatively passive check-writing role. I felt it was time for us to do something in a more targeted way in our community. At the time our offices and our plant were located in Roxbury, and I thought we ought to do something right there.

Shortly after the center opened in the spring of 1971, it began enrolling employees children. Hiatt commented: Were given credit for being a pioneer in employer-supported day care, but our aim was to provide child care for the community, for children of welfare mothers and single-parent households. Shortly after we started, one of our workers approached me and said, Youre willing to do this for the children in the neighborhood. Why dont you do the same for our children? And I said fine. And from that day forward we tried to maintain a balance at the center between children from the community and the children of our employees.

KEY DATES

1919:
Company founded in Boston by partners Slosberg and Green as the Green Shoe Manufacturing Company.
1924:
Green sells his share of the company to Charles B. Strecker and his son, Seymour.
1929:
Seymour Strecker sells his share to Slosberg.
1933:
Green Shoe buys the name Stride Rite from Tom Lalonde, manufacturer of childrens shoes hired by the company as a salesperson.
1960:
The company goes public.
1962:
The company acquires the Weber Shoe Company.
1966:
Green Shoe Manufacturing Company becomes Stride Rite and acquires the H. Scheft Company and Stone Shoe Company.
1968:
Arnold Hiatt, Blue Stars president, becomes the first nonfamily member president of Stride Rite; company buys the Orange Shoe Co.
1971:
Stride Rite opens the first company-run day-care center in the United States.
1979:
The firm opens its first Overland Trading Company and purchases Keds and Sperry Top-Sider from Uniroyal.
1983:
Company headquarters moves to Cambridge, Massachusetts.
1993:
Bob Siegel is named company president and CEO.
1997:
Siegel retires and Jim Eskridge succeeds him as president.
1999:
Eskridge resigns and is succeeded by David M. Chamberlain.
2005:
Company acquires Saucony.

Although company headquarters were moved to Cambridge, Massachusetts, in 1983, and the original site was turned into a warehouse, the day-care center continued to service the same number of children as before. (In 1993, the company announced that the Roxbury warehouse would close. However, grants were made available to community groups to continue providing day-care services.) In addition, a day-care center was opened in Cambridge. The Stride Rite day-care centers, which were modeled in part on the Head Start program, have been studied and adapted by hundreds of companies all over the United States. Stride Rite looked into providing day-care services to employees at its production and distribution facilities outside of Massachusetts, but its plans were hindered by complications resulting from state regulations regarding child care. Abroad, the company had fewer problems, and by 1993 had opened a day-care center at a Stride Rite factory in Bangkok, Thailand.

CONTINUED EXPANSION THROUGH ACQUISITIONS IN THE 1970S1980S

During the 1970s, faced with stalled profits due to skyrocketing leather prices and competition from low-priced imports, the company decided to explore new territory, entering the market for the outdoorsy, sporty shoes gaining popularity among young people and children. The company opened its first Stride Rite Bootery in 1972 and its first Overland Trading Company in 1979. In addition, the company purchased Keds and Sperry Top-Sider from Uniroyal in 1979 for $18 million and $5.7 million respectively. Keds, which had been losing money for Uniroyal, achieved a full turnaround by 1982, and Sperry also became very popular as a result of the preppie look fad of the 1980s. In fact, in the early 1980s, Sperry grew at a rate of 80 percent, a rate described as unmatched at the moment in the shoe industry by Footwear News in 1982. The ultimate decline in the popularity of Top-Siders emphasized what at the time was a basic Stride Rite marketing approach: in general the company did not try to hitch onto every fad and did not try to associate its name with highprofile athletes as did some of its competitors. The success of Top-Siders was unplanned and unexpected; thus the downturn was also unexpected.

During this time, Stride Rite benefited most perhaps from its reputation as a maker of high-quality childrens shoes. Parents looked for reliable quality and value for their children, and the company appeared not to stray too far from their expectations. Moreover, studies began to appear in the 1980s indicating that toddlers learned to walk better in shoes than in sneakers, and these findings fueled a 31 percent increase in sales of baby shoes in 1986 over 1985. Several of Stride Rites baby shoes were granted the Seal of Acceptance by the American Podiatric Medical Association in 1989, the only baby shoes to hold that seal.

As childrens apparel became trendier in the 1980s, Stride Rite responded by changing its marketing, while retaining the basic look and quality of the line itself. By early 1989, Stride Rite had 715 retail units, 70 percent of which were owned by independent dealers, and the 25 Overland Trading Companies were spun off as an independent entity in 1988. Also in 1989, Keds brought out a line of natural-fiber sportswear for children, under the name Keds Kids Clothes. Two years later, in 1991, Stride Rite founded Stride Rite International as a vehicle for marketing its products in foreign countries. The division marketed Stride Rite shoe lines in Europe, Asia, and Latin America. In 1992, the company also began to market a domestic line of womens clothes, Keds Apparel.

During this flurry of marketing activity, Stride Rite also started a new social program. Hiatt, who was then chairman of the company, had read an article in 1986 in the Wall Street Journal that detailed problems encountered by families with both child-care and elder-care responsibilities. After several years of research and with funding from the Stride Rite Charitable Foundation and input from several social agencies and Wheelock College, the company opened its Intergenerational Day-Care Center in 1990. The center, which was housed at the companys headquarters, had separate areas and activities for seniors and children as well as common areas. According to Karen Leibold, the director of the center, The relationship between the children and the elders has really exceeded our expectations. We thought wed need to bring them together very slowly, with a lot of staff direction and with specific projects to do. What weve found is that theyre like magnets with each other. Sometimes it can be five minutes at the beginning or the end of the day. Sometimes its waving across the lunchroom at each other. Sometimes it can be an extended period of time, reading books together, or cooking, or making things with blocks or Play-Doh.

Stride Rite demonstrated that socially conscious policies and profitability could go hand in hand. Net income rose by $5 million to $10 million each year between 1984 and 1991from $5.4 million to $66 millionand its return on equity exceeded 30 percent between 1989 and 1991. Both of these figures were down slightly in 1992; net income dropped to $61.5 million and equity return to 23.6 percent even though net sales increased. Still, the company appeared to understand the employees and customers who make such growth possible. At the time, Arnold Hiatt summarized the Stride Rite philosophy: We dont live in a vacuum. We live in a community. And that community has needs. It is people from the community who buy our products and support our business. It doesnt seem too far-fetched to have an interest in the well-being of that community. Were just broadening the definition of our self-interest.

199398: UPS AND DOWNS AND REVAMPED PRODUCT LINES

After Bob Siegel was named Stride Rites CEO in 1993, the company began updating its product line, partly in response to the great popularity of the variety of athletic shoes being marketed by such competitors as Nike and Reebok. The need to do so had become obvious, mostly because the thicker-soled training and running footwear had by then replaced the old-style tennis shoe as the casual footwear of choice in America. Bottom-line figures for Stride Rite showed that its market share of casual footwear sales was nose-diving. In 1994 its net income dropped to $19.8 million, down from $58.3 million the previous year, and in 1995, with its total revenue falling off to $496 million, the company recorded an $8.4 million net loss. Siegel responded by closing more than 80 company-owned, underperforming retail stores, which by 1996 put the company back in the black, but just barely. Sales in that year continued to fall, dropping to a low of $448.3 million, down from an average total revenue of $556.6 million for the five-year period between 1990 and 1994.

The market realties forced Stride Rite to adopt a more fashion-conscious philosophy. In 1997, the company commissioned Todd Oldham to design a new line of Keds. It also partnered with London Fog to develop a Sperry clothing line, with Nine West for a line of childrens shoes, and with Tommy Hilfiger for a line of adult footwear. Also, in 1998, the year in which Siegel retired, using its poor sales record as the principal reason, Stride Rite severed the licensing ties with Levi Strauss & Co. that had been agreed to in April 1997.

Former Mattel executive Jim Eskridge succeeded Siegel as Stride Rites CEO. During his tenure, which was less than a year, Stride Rite continued to rally, with revenues climbing to $539.4 million in 1998, and $572.7 million in 1999, with net income figures, respectively, of $21.1 million and $26.4 million. The financial gain was achieved at some cost, notably in the cutting down of the companys workforce, which fell from 3,500 in 1996 to 2,300 in 1999, way below the 1990 figure of 5,600.

19992007: A NEW LEADER FOR THE NEW CENTURY

Over disagreements with the board about the companys direction, Eskridge resigned in July 1999. Temporarily, his place was taken by Myles J. Slosberg, board member and grandson of Stride Rites founder. Thereafter, David M. Chamberlain, former Genesco chairman, was named both CEO and chairman. Under his watch, Stride Rites profits initially dived, partly because Keds, Sperry, and Tommy Hilfiger footwear did not perform as hoped. Chamberlain began implementing changes throughout every division of the company; Dana Lenetz of Footwear News described it as a process of sharpening product offerings, streamlining backroom operations, and improving profit margins. Throughout 2001 and into 2002, a number of administrators were laid off and many executives resigned, including Dan Friedman, the president of the Keds Corporation, and Diane Sullivan, who served as president, chief operating officer, and director of Stride Rite Childrens Group.

During the summer of 2001, in an attempt to revive sales of Keds products, the company opened its first Keds stores, selling shoes and apparel. The company described their vision of Keds as extending well beyond shoes; they hoped to sell the Keds name as a so-called lifestyle brand, creating an image that customers would aspire to. As part of the push to increase sales of Keds products, the company revamped its signature shoe, the Champion Oxford, a classic white canvas sneaker with a blue label on the heel. As part of these efforts to give key brands a boost, the company also returned the Sperry Top-Sider brand to its nautical beginnings, launching the Get Wet campaign, which depicted beautiful young people lounging around their boats in Top-Siders. Around the same time, the company added to its core brand, releasing a new line of toddler walking shoes. With these shoes priced between $40 and $50, Stride Rite emphasized the importance of high-tech footwear for growing feet.

Chamberlain instituted another change early in 2002. Stride Rite, after a thirty-year partnership, cut its ties with Federated Department Stores, the company that operated the department stores Macys, Richs, Lazarus, and Goldsmiths. Federated wanted to expand the number of its stores with leased childrens shoe departments, but Stride Rite wanted to move in a different direction, toward owning more stores rather than leasing within department stores. The development meant the closing of 46 leased childrens shoe departments, the revenue from which would be more than offset by the planned opening of 40 new Stride Rite stores and 10 new outlet stores. Within a few years, Stride Rite had gradually begun to once again partner with Federated, opening a handful of childrens shoe departments in Macys department stores.

While Stride Rite dominated the market for baby shoes, the company also aimed to capture the attention of a greater percentage of elementary-age kids, a market segment that had become extremely competitive. To that end, the company debuted a new retail concept in the spring of 2004, opening its first Shoe Buzz store, in Millbury, Massachusetts. With a greater square footage than the Stride Rite stores, Shoe Buzz offered a baby-shoe department but focused on shoes for older kids, with 60 percent of its inventory coming from non Stride Rite brands. The company hoped to appeal to the wide-ranging brand preferences of older kids, selling labels such as Merrell, Skechers, and New Balance.

In addition to the opening of Shoe Buzz stores, Stride Rite sought to grow by finding new outlets for existing brands and through key acquisitions. In 2004 the company began licensing its PRO-Keds brand to Damon Dash, the hip-hop mogul and CEO of Rocawear and Roc-A-Fella, who sold a line of PRO-Keds shoes for men, women, and children. By early 2007 Dash had expanded the PRO-Keds line to include apparel. In addition, Stride Rite acquired the athletic-shoe company Saucony Inc. for $170 million in the summer of 2005. Saucony had developed a reputation for technical running shoes, and Stride Rite hoped to expand Sauconys athletic shoes for kids. The following year Stride Rite acquired Robeez Footwear, a Canadian manufacturer of soft-soled shoes and booties for babies and toddlers. Robeez, purchased for $27.5 million, sold its products primarily through upscale boutiques and Stride Rite stores.

The many changes instituted at Stride Rite under Chamberlains watch translated to significant recovery after the companys struggles in the mid-1990s. Growth was slow but steady for several years, with a significant jump during 2006, when sales increased by 20 percent. During that fiscal year, Stride Rite opened 22 childrens shoe stores and 11 manufacturers outlet stores. During the same period, the company closed some underper-forming stores, including three Saucony manufacturers outlets and two Keds stores. While the company planned more closures in 2007, primarily Saucony outlets, it also intended to increase the number of its retail stores by 5 percent to 10 percent. Early in 2007, Chamberlain announced his plans to retire as CEO and chairman by the years end, though he would continue to serve on the board. He intended to stay on as CEO until a replacement had been hired, overseeing the installation of the companys next generation of leadership.

Kenneth F. Kronenberg
Updated, Jane W. Fiero; Judy Galens

PRINCIPAL SUBSIDIARIES

Stride Rite Childrens Group, Inc.; Robeez Footwear, Ltd.; The Keds Corporation; Sperry Top-Sider, Inc.; Saucony, Inc.; Tommy Hilfiger Footwear, Inc.

PRINCIPAL COMPETITORS

adidas-Salomon AG; Brown Shoe Company, Inc.; Converse Inc.; Genesco Inc.; Nike, Inc.; Reebok International Ltd.

FURTHER READING

Bowers, Katherine, Thornton: Stride Rite Must Strengthen Retail Ties, Footwear News, August 11, 2003, p. 6.

Bushnell, Davis, Stride Rite Growing Up to Win Foothold in Market, Boston Globe, January 25, 2007.

Carmichael, Celia, A Tech Ahead, Footwear News, June 25, 2001, p. 26.

Chabrow, Eric, Supply Chains Go Global, Information Week, April 3, 2000, p. 50.

From Green Shoe to Stride Rite, Cambridge, Mass.: Stride Rite.

Gonsalves, Antone, Stride Rite Gets E-Com Footing: Outsourcing Design and Upkeep of Apps Brings Shoe-Selling Online, on Time, PC Week, September 27, 1999, p. 31.

Goodison, Donna L., Stride Rite Steps into the Lifestyle Market with Keds, Boston Business Journal, June 29, 2001, p. 15.

Hip-Hop Mogul Damon Dash, Licensing Letter, August 2, 2004, p. 1.

Keegan, Paul, Doing the Rite Thing, Boston Magazine, July 1991, p. 22.

Laabs, Jennifer, Family Issues Are a Priority at Stride Rite, Personnel Journal, July 1993, p. 48.

Lenetz, Dana, Keds Pres. Friedman Resigns, Footwear News, January 21, 2002, p. 2.

Lenetz, Dana, and Kayleen Schaefer, Stride Rite Breaks Ties with Federated After Three Decades, Footwear News, January 7, 2002, p. 2.

Morgan, Hal, and Kerry Tucker, Companies That Care, New York: Simon & Schuster, 1991.

Moukheiber, Zina, They Want Mules, Well Sell Mules: Robert Siegels Management of Stride Rite Corp., Forbes, September 12, 1994, p. 42.

Olivieri, David, Progressive Company Profits from Its Steady Pace, Business Journal, May 25, 1992, p. 4A.

Reidy, Chris, Lexington, Mass.-based Shoe Maker Hopes for Rebound Under New CEO, Knight-Ridder/Tribune Business News, November 4, 1999.

, Shoemakers Try Synergy on for Size, Boston Globe, June 3, 2005.

Schaefer, Kayleen, Stride Rite Names Childrens Pres, Footwear News, July 1, 2002, p. 2.

Solnik, Claude, Recharged Stride Rite Seeks to Give Keds Sales More Voltage, Footwear News, February 4, 2000, p. 7.

Stone, Nan, Building Corporate Character: An Interview with Stride Rite Chairman Arnold Hiatt, Harvard Business Review, MarchApril 1992, p. 94.

Stride Rite Announces CEO Succession Plan, CNW Group, March 6, 2007.

Stride Rite, Lexington, Mass., Has Acquired Privately Held Robeez Footwear, Brandweek, September 11, 2006, p. 18.

Stride Rite, New York, Has Expanded Its Relationship with Hip-Hop Mogul Damon Dash, Brandweek, January 1, 2007, p. 10.

Stride Rite to Stop Selling Shoes at Federated Stores, New York Times, January 4, 2002, p. C3.

Tedeschi, Mark, Stride Rite Corp. Selects David Chamberlain as Chairman/CEO, Sporting Goods Business, December 10, 1999, p. 30.

Van Tuyl, Laura, Day Care Program Bridges Generations, Christian Science Monitor, April 15, 1991.

Wilson, Marianne, Through a Childs Eyes, Chain Store Executive with Shopping Center Age, September 2000, p. 156.

Zmuda, Natalie, New Kid on the Block, Footwear News, July 12, 2004, p. 13.

, Stride Rite Races Ahead with Saucony Plans, Footwear News, December 5, 2005, p. 4.

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Stride Rite Corporation

Stride Rite Corporation

Five Cambridge Center
Cambridge, MA 02142
(617) 491-8800
Fax: (617) 864-1372

Public Company
Incorporated: 1919 as Green Shoe Manufacturing Company
Employees: 3100
Sales: $586 million
Stock Exchange: New York
SICs: 3149 Footwear except rubber, not elsewhere classified; 5139 Footwear; 5661 Shoe Stores

Founded in 1919 as Green Shoe Manufacturing Company, Stride Rite has become a major producer of childrens shoes and casual footwear. Apart from Stride Rite, its childrens line, it also manufactures Keds sneakers and Sperry Top-Sider boat shoes. Beyond its success as a profitable manufacturing company, however, Stride Rite is known for the social innovations that former president and chair Arnold Hiatt has put into place. Stride Rite was the first company to provide on-site day care in 1971, the first to provide a smoke-free work environment, and the first to provide an on-site intergenerational day-care center in 1990. While spending the effort and resources necessary for these innovative workers benefits, Stride Rite nevertheless achieved impressive growth in sales, income, and investment value throughout the late 1980s and early 1990s.

In 1919, Jacob A. Slosberg founded a small shoe manufacturing company with his partner Philip Green. Initially set up in a converted stables in the Roxbury section of Boston, the Green Shoe Manufacturing Company specialized in making stitchdown shoes (also called welt shoes) for children. The company, employing nearly 100 people, was able to produce between 800 and 1,000 pairs of shoes each day.

Slosberg, who came to the United States from Russia in 1887 at the age of 12, had almost 30 years of experience in the shoe manufacturing industry when he cofounded Green Shoe. Beginning in 1892 he had worked for a series of shoe and shoe machinery manufacturers in Lynn and Beverly, Massachusetts. In those factories he had spent long hours stitching shoes and later dismantling and reassembling shoe machinery. He had then become a foreman at the Thomas Plant Company, a manufacturer of shoe machines, and when Thomas was sold to United Shoe Machinery, he had joined the Greenberg-Miller Company, a manufacturer of childrens shoes in New York. He put the money he had been able to save and the experience he had been able to garner into Green Shoe.

In the early 1920s a disagreement emerged between Philip Green and Slosberg. Some sources say that it involved the quality of the product, which Slosberg was determined to maintain, while others say it was about whether to produce childrens shoes or, as Green favored, womens shoes. In any case, in 1924 Green sold his share of the enterprise, which was bought up by Charles B. Strecker, a banker, and his son Seymour.

Green Shoe grew rapidly under Slosbergs direction. The main brand names were Green-flex and Mo-Debs. Because of overcrowding in the converted stables, Slosberg built a new manufacturing facility. Seymour Strecker sold his share of Green Shoe to Slosberg 10 days before the stock market crash of 1929. However, even during the Depression, Green Shoe continued to grow. By the mid-1930s, the company was manufacturing about 3,000 pairs of shoes per day. During hard times, the company gained a reputation for reliability and value.

In 1933 Green Shoe, already seeking a brand name that could unite its entire line, hired Tom Lalonde, a manufacturer of childrens shoes, to work in sales. Lalonde owned the name Stride Rite, and Green Shoe bought the name for $1,000 from him, using it for a line of extra support shoes. By 1937 the name was extended to all shoes manufactured by the company.

Jacob Slosberg had two sons, Sam and Charles, who began work at Green Shoe in the early 1920s. Sam eventually went into sales, and Charles took over manufacturing. Charles visited shoe factories in the United States and Europe in order to find ways of streamlining production and distribution without sacrificing quality. He was particularly concerned that the company be able to deliver shoes to outlets in a timely fashion with a minimum of mistakes. To this end, he developed a highly efficient in-stock system. Incoming orders were analyzed immediately. If the items requested were out of stock, production lines were switched over to that product as needed. Workers known as expediters hand-carried these orders through the production process. In this way, the company was never out of stock. This enabled Green Shoe, and for some years Stride Rite, to guarantee that 100 percent of an order would be delivered within 24 hours of the placement of the order.

During World War II, Green Shoe helped develop and manufactured the nurses field boot and the WAC boot for the Army. Slosberg, who was a member of the War Production Board, used the opportunity to encourage retailers to buy Stride Rite, with the result that the business boomed. The company sold shoes to department stores such as Jordan Marsh, Filenes, and Dayton Hudson in Detroit, all under private store labels.

The years between 1945 and the late 1950s saw the most rapid expansion in the companys history, partly as a result of the postwar baby boom. One of the hallmarks of the company came to be multiple widths in childrens shoes. Daily production rose to about 25,000 pairs in 1959. The work force quadrupled, and factory floor space increased seven-fold. In fact, the Stride Rite factory was at the time the largest factory in the United States manufacturing all of a companys products under one roof.

When Jacob Slosberg died in 1953, his sons and son-in-law Martin Landay assumed the management of the company. Samuel became president and Charles treasurer, with the additional duties of managing production, maintenance, and in-stock operation. Landay was named vice president. Charles Slosberg died unexpectedly in 1960.

The 1960s and 1970s saw great changes in the way Green Shoe did business. The company went public in 1960. Then in 1962, the first of several acquisitions greatly expanded the company. That year, Green Shoe acquired the Weber Shoe Company in Tipton, Missouri. Weber became a Green Shoe manufacturing facility. A second factory was built in 1969 in Hamilton, Missouri, to augment Webers capacity. The Weber acquisition was followed in 1964 by that of the R. J. Potvin Company, in Brockton, Massachusetts. A new warehouse was built there in 1965.

In 1966, with increased capacity and public recognition of its name, Green Shoe became the Stride Rite Corporation. In that year, the company acquired the H. Scheft Company and Stone Shoe Company in Boston and in 1967, Blue Star Shoes, Inc., in Lawrence, Massachusetts. Arnold Hiatt, Blue Stars president, became the first nonfamily member to become president of Stride Rite in 1968. The same year, Orange Shoe Co., in Orange, Massachusetts, was added to Stride Rite. The shoe company that began in 1919 with a capacity of 1000 pairs per day was producing 30,000 in 1969.

This period also saw great changes in the work force at Stride Rite. During the 1960s, African American women in particular joined the Stride Rite work force in great numbers, reflecting the changing population of Roxbury, the neighborhood in which the Boston factory is located. Many of the new employees could work only if they had day-care services for their children. In response to their needs, Stride Rite opened the first company-run day-care center in the United States in 1971.

The idea for the center, conceived by Arnold Hiatt, was initially seen as a charitable gift that would serve the surrounding community only. As Hiatt explained, The company had had a charitable foundation for some time, but it had limited itself to the traditional kinds of giftshospitals, universities, and other very visible community organizationsand had played a relatively passive check-writing role. I felt it was time for us to do something in a more targeted way in our community. At the time our offices and our plant were located in Roxbury, and I thought we ought to do something right there.

Shortly after the center opened in the spring of 1971, it began enrolling employees children. Hiatt commented: Were given credit for being a pioneer in employer-supported day care, but our aim was to provide child care for the community, for children of welfare mothers and single-parent households. Shortly after we started, one of our workers approached me and said, Youre willing to do this for the children in the neighborhood. Why dont you do the same for our children? And I said fine. And from that day forward we tried to maintain a balance at the center between children from the community and the children of our employees.

Although company headquarters were moved to Cambridge, Massachusetts, in 1983 and the original site was turned into a warehouse, the day-care center continued to service the same number of children as before. (In 1993, the company announced that the Roxbury warehouse would close. However, grants will be made available to community groups to continue providing day-care services.) In addition, a day-care center was opened in Cambridge. The Stride Rite day-care centers, which are modeled in part on the Head Start program, have been studied and adapted by hundreds of companies all over the United States. Stride Rite has looked into providing day-care services to employees at its production and distribution facilities outside of Massachusetts. This effort, however, has been hindered by complications resulting from state regulations regarding child care, although, as of 1993, the company was pursuing the possibility of starting day-care services at a distribution center in Kentucky. There is a day-care center at a Stride Rite factory in Bangkok, Thailand.

During the 1970s, faced with skyrocketing leather prices and competition from low-priced imports, the company decided to change direction. It opened its first Stride Rite Bootery in 1972 and its first Overland Trading Company in 1979. In addition, the company purchased Keds and Sperry Top-Sider from Uniroyal in 1979 for $18 million and $5.7 million respectively. Keds, which had been losing money for Uniroyal, was turned around by 1982, and Sperry became very popular as a result of the preppie look fad of the 1980s. In fact, in the early 1980s, Sperry grew at a rate of 80 percent, a growth rate that was described as unmatched at the moment in the shoe industry by Footwear News in 1982. However, in 1991, sales plummeted 26 percent.

What happened to sales of Top-Siders illustrates a basic Stride Rite marketing approach: in general the company does not try to hitch onto every fad and does not try to associate its name with high profile athletes as do some of its competitors. The success of Top-Siders was unplanned and unexpected. The company seems to have benefited from its origins as a maker of childrens shoes. Parents look for reliable quality and value for their children, and the company appears not to stray too far from their expectations.

Studies began to appear in the 1980s that showed that toddlers learned to walk better in shoes than in sneakers and these findings fueled a 31 percent increase in sales of baby shoes in 1986 over 1985. Several of its baby shoes were granted the Seal of Acceptance by the American Podiatric Medical Association in 1989, the only baby shoes to hold that seal. As childrens apparel became trendier in the 1980s, Stride Rite responded by changing its marketing, while retaining the basic look and quality of the line itself. By early 1989, Stride Rite had 715 retail units, 70 percent of which were owned by independent dealers. However, the 25 Overland Trading Companies became an independent entity in 1988. Also in 1989, Keds brought out a line of natural fiber sportswear for children, under the name Keds Kids Clothes, and in 1992 it began to market a line of womens clothes, Keds Apparel.

In 1991, Stride Rite founded Stride Rite International as a vehicle for marketing its products in foreign countries. This division markets Stride Rite shoe lines in Europe, Asia, and Latin America.

In 1990, Stride Rite started a new social program. Hiatt, who now was chairman of the company, had read an article in 1986 in the Wall Street Journal which detailed problems encountered by families with both child care and elder care responsibilities. After several years of research and with funding from the Stride Rite Charitable Foundation and input from several social agencies and Wheelock College, the company opened its Intergenerational Day-Care Center in 1990. The Center, which is housed at the companys headquarters, has separate areas and activities for seniors and children as well as common areas. According to Karen Leibold, the director of the center, The relationship between the children and the elders has really exceeded our expectations. We thought wed need to bring them together very slowly, with a lot of staff direction and with specific projects to do. What weve found is that theyre like magnets with each other. .. . Sometimes it can be five minutes at the beginning or the end of the day Sometimes its waving across the lunchroom at each other. Sometimes it can be an extended period of time, reading books together, or cooking, or making things with blocks or Play-Doh.

Stride Rite has demonstrated that socially conscious policies and profitability can go hand in hand. Net income has risen by $5 to $ 10 million each year between 1984 and 1991from $5.4 million to $66 millionand its return on equity exceeded 30 percent between 1989 and 1991. Both of these figures were down slightly in 1992; net income dropped to $61.5 million and equity return to 23.6 percent even though net sales increased. Still, the company appears to understand the employees and customers who make such growth possible. Arnold Hiatt summarized the Stride Rite philosophy: We dont live in a vacuum. We live in a community. And that community has needs. It is people from the community who buy our products and support our business. It doesnt seem too far-fetched to have an interest in the well-being of that community. Were just broadening the definition of our self-interest.

Principal Subsidiaries

The Keds Corp.; Sperry Top-Sider, Inc.; Stride Rite Childrens Group, Inc.; Stride Rite Canada, Ltd.; Stride Rite International Corp.; Stride Rite Sourcing International, Inc.

Further Reading

From Green Shoe to Stride Rite, Cambridge, MA: Stride Rite Corp.

Keegan, Paul, Doing the Rite Thing, Boston, July 1991.

Morgan, Hal, and Kerry Tucker, Companies That Care, New York: Simon and Schuster, 1991.

Olivieri, David, Progressive Company Profits from Its Steady Pace, Business Journal, May 1992.

Van Tuyl, Laura, Day Care Program Bridges Generations, Christian Science Monitor, April 15, 1991.

Kenneth F. Kronenberg

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