Collective Brands Sees Long-Term EPS Growth of 12-16%

At its annual investor meeting, Collective Brands' management provided long-term growth targets for the company, including net sales growth of 3-5%, operating profit growth of 9-12%, and earnings per share growth of 12-16%. Management outlined growth initiatives, highlighted by the most rapid growth in global wholesale brands and Payless international.

“We are focused on building dynamic, exciting and relevant brands with innovative products and delivering them to customers where and how they love to shop,” said Matthew E. Rubel, chairman, chief executive officer and president of Collective Brands, in a statement. “Our brands leverage a powerful, diversified global business model and infrastructure to generate strong cash flows, which enable us to grow shareholder value in a steady manner. We anticipate this business model will drive average earnings per share growth of 12-16% over the next three to five years.”

Payless ShoeSource

Management articulated the keys to success at Payless are to drive the execution of its business strategy, including leveraging and expanding the Payless “House of Brands” strategy; delivering fresh, on-trend product; supporting brand and product stories with an integrated, aspirational marketing strategy; and providing an engaging, fun shopping experience.

Several programs were outlined to connect with expressive consumers, grow accessories and expand the children's business. Payless is leveraging the strength of existing brands such as Champion and designer label Christian Siriano for Payless by expanding into new product categories and broadening the brands' distribution. Payless is also expanding the Dexter brand with DexFlex, fusing comfort technologies with style for women, and launched its beauty collection in 1,500 stores in September 2010, which will expand to 3,000 stores late in 2011.

Internationally, Payless outlined expectations for continued growth including expansion in Latin America and entering new, emerging markets through franchising. Payless expects to open at least 80 franchise stores in nine countries in 2011, with opportunities to expand to 700 stores within five years and 1,400 stores long-term.

Collective Brands Performance + Lifestyle Group (PLG)

PLG continues to build momentum and is well-positioned for global growth, driven by each brand's strategy and unique marketplace position. The PLG brands — Sperry Top-Sider, Saucony, Keds, and Stride Rite — have clearly defined, consumer-driven distribution strategies to ensure that the premium products are sold through the right distribution channels and that each brand is focused on strategic execution, targeting investments in the areas of product innovation and technology to continue to drive growth.

Sperry Top-Sider is experiencing accelerating sales growth and market share gains through its evolution to a full performance and lifestyle brand by expanding beyond its core boat shoe business into more fashion and trend-driven product that appeals to the style savvy consumer, which has driven substantial growth in Sperry's women's business and men's casual business. The brand is also focusing on more innovative performance product through its Advanced Water Technology platform. Sperry will continue to expand its retail presence, as the five U.S.-based Sperry Top-Sider stores opened to date are exceeding expectations.

The Keds brand is on track for a successful turnaround built upon the success of the brand's iconic Champion style. Keds is focused on the millennial consumer, and is elevating the brand's position through collaborations with trend influencers, retailers and designers to build distribution with premium retailers that are more consistent with its new brand image.

Saucony has seen strong growth across key distribution channels and is evolving to a performance lifestyle brand dedicated to runners and performance athletes. The brand is leveraging best-in-class product innovation to drive its core lines and to expand into new footwear categories, including trail running and minimalism/natural movement shoes. Additional product categories such as apparel continue to be an opportunity.

Stride Rite Children's Group is focusing on connecting with moms by clearly communicating the brand's points of differentiation: health, style, quality and durability, while also engaging kids through exciting brands like Glitzy Pets and Slingshot, all supported by enhanced, kid-targeted marketing. The brand is also launching its new STEP program (Scientifically Tested, Everyday Proven), which offers the only full footwear solution that meets kids needs from pre-walk to pre-school through utilizing Stride Rite's SRT Soft Motion technology, which has been statistically shown to promote a lifetime of healthier walking patterns.

Long-Term Financial Outlook

Management provided long-term growth targets for the Company including net sales growth of 3-5%, operating profit growth of 9-12%, and earnings per share growth of 12-16%. Management outlined initiatives designed to capitalize on key growth opportunities and leverage the company's business model.

Collective Brands expects capital expenditures to increase to approximately $110 million in 2011 to support growth initiatives including international store openings.