Stride Rite Corporation

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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 children’s shoes and casual footwear. Apart from Stride Rite, its children’s 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 children’s 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 children’s shoes or, as Green favored, women’s 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 Slosberg’s 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 children’s 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 nurse’s 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, Filene’s, 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 company’s history, partly as a result of the postwar baby boom. One of the hallmarks of the company came to be multiple widths in children’s 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 company’s 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 Weber’s 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 Star’s 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 gifts—hospitals, universities, and other very visible community organizations—and 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: “We’re 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, ‘You’re willing to do this for the children in the neighborhood. Why don’t 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 children’s 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 children’s 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 women’s 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 company’s 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 we’d need to bring them together very slowly, with a lot of staff direction and with specific projects to do. What we’ve found is that they’re like magnets with each other. .. . Sometimes it can be five minutes at the beginning or the end of the day … Sometimes it’s 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 1991—from $5.4 million to $66 million—and 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 don’t 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 doesn’t seem too far-fetched to have an interest in the well-being of that community. We’re just broadening the definition of our self-interest.”

Principal Subsidiaries

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