The Stride Rite Corporation net sales for the fourth quarter and full year of fiscal 2005 were $131.7 million and $588.2 million, increases of 13% and 5%, respectively, compared to the same periods in the prior year. Fiscal 2005 contained 52 weeks compared to the 53 weeks in 2004, which had one extra week in the fourth quarter. The fourth quarter of 2005 also included $23.2 million of Saucony net sales for the 11 weeks subsequent to the September 16, 2005 acquisition date.

The fourth quarter net loss totaled $3.1 million or $.08 per diluted share, a decrease compared to the net income of $51 thousand or $.00 per diluted share in the fourth quarter of 2004. Net income for the 2005 fiscal year totaled $24.6 million, a decrease of 4% from the $25.7 million reported in the comparable period in 2004. The fiscal 2005 diluted earnings per share of $.66 were flat versus last year.

The fourth quarter includes a pre-tax expense of $5.4 million related to the write-up of inventory purchased in the Saucony acquisition as required by GAAP accounting rules. In addition, the current quarter includes pre-tax acquisition related integration expenses of $800 thousand.

Excluding acquisition related integration costs and the inventory write-up, net income would have been $0.5 million and $28.6 million for the fourth quarter and the year, respectively, while diluted earnings per share would have been $.01 and $.77 for the fourth quarter and the year, respectively. See the section entitled “Non-GAAP Pro Forma Financial Measures” and the “Reconciliation of Non-GAAP Measures” provided in this release for additional description of these Non-GAAP Measures.

David Chamberlain, Chairman and CEO of Stride Rite, commented that 2005 was a significant year for Stride Rite. “With the purchase of Saucony, we added a highly-respected $150 million brand in performance running. We see growth opportunities for Saucony in running, international and children's. We expect that 2006 will be a year of transition for Saucony as we set the platform for 2007.”

“Children's Group had a third year of record performance driven by strong retail performance and store growth. We expect to add 33 new doors in 2006 for a total of 316 doors, including 14 existing Saucony doors.”

“Sperry Top-Sider enjoyed a fourth year of increased sales and significant profit growth. Our products are strong, and we expect continued growth in all retail channels as well as in the women's area.”

“International had strong sales and record profit, helped in part by Tommy Hilfiger. With Saucony, we double our international business presence and add significantly to sales in Europe – an area of focus for us.”

“Keds had a challenging year as we repositioned the brand back to its 1916 heritage as 'America's sneaker' with Mischa Barton as spokesperson. We believe we have effectively accomplished our marketing strategy, as Footwear News recently named Keds 'The Marketing Brand of the Year'. Success in 2006 will depend upon the retail performance of our products.”

“Our Tommy Hilfiger business was impacted predominantly by softness in men's sales. The pending sale of Tommy Hilfiger Corp. to Apax Partners, with their objective of focusing on the higher-end business, is a positive announcement.”

“We enter 2006 with sound strategies in place and strong management teams. We anticipate a solid year of progress and growth.”

Mr. Chamberlain continued, “Assuming reasonable retail and economic conditions in 2006, we are projecting sales growth of 23% to 27% and earnings per share of $.82 – $.88, including a full year of Saucony financial results. Included in the projected earnings is the annual impact related to the expensing of stock options, which is projected at approximately $.05 per diluted share. In addition, these projections include the cost of sales impact related to the write-up of inventory purchased in the Saucony acquisition, which is estimated to reduce earnings per diluted share by $.05. Acquisition related integration costs of approximately $2 million or $.03 per share are also included in the earnings projections.”

Net sales for the fourth quarter and year ended December 2, 2005 and December 3, 2004 are summarized in the tables as follows:

                      The Stride Rite Corporation
                       Net Sales (in thousands)
     For the Quarters Ended December 2, 2005 and December 3, 2004

                                            Fourth Quarter
                                         --------------------
                                                              Percent
                                             2005      2004    Change
                                         ---------- --------- --------
                                              (Unaudited)
 Stride Rite Children's Group - Wholesale  $16,678   $19,996   (17)%
 Stride Rite Children's Group - Retail      45,720    44,715      2%
                                         ---------- --------- --------
 Stride Rite Children's Group - Combined    62,398    64,711    (4)%
 Keds                                       13,659    17,615   (22)%
 Sperry Top-Sider                           13,221    12,610      5%
 Tommy Hilfiger Adult                       14,303    18,402   (22)%
 International                               7,032     5,680     24%
 Saucony                                    23,181         -    100%
 Intercompany Eliminations                  (2,099)   (2,219)   (5)%
                                         ---------- --------- --------
 Total                                    $131,695  $116,799     13%
                                         ========== ========= ========

                      The Stride Rite Corporation
                       Net Sales (in thousands)
       For the Years Ended December 2, 2005 and December 3, 2004

                                            Twelve Months
                                         --------------------
                                                              Percent
                                             2005      2004    Change
                                         ---------- --------- --------
                                         (Unaudited)
 Stride Rite Children's Group - Wholesale  $90,926   $96,468    (6)%
 Stride Rite Children's Group - Retail     175,335   157,208     12%
                                         ---------- --------- --------
 Stride Rite Children's Group - Combined   266,261   253,676      5%
 Keds                                      126,030   136,322    (8)%
 Sperry Top-Sider                           73,817    58,882     25%
 Tommy Hilfiger Adult                       75,560    92,307   (18)%
 International                              33,919    27,125     25%
 Saucony                                    23,181         -    100%
 Intercompany Eliminations                 (10,604)   (9,988)     6%
                                         ---------- --------- --------
 Total                                    $588,164  $558,324      5%
                                         ========== ========= ========

Stride Net sales of the Stride Rite Children's Group-Retail division increased 2% and 12% in the fourth quarter and for the year, respectively, versus the prior year. Sales at comparable Children's Group retail stores (open 52 weeks in each fiscal year) increased 4.4% for the fourth quarter of 2005 and 5.2% for the full year. At the end of fiscal 2005, the Stride Rite Children's Group-Retail operated 271 stores. This is a net increase of 20 stores, or 8% from the end of last year.

Stride Rite Children's Group-Wholesale net sales decreased 17% for the quarter and 6% for the year, respectively, as compared to the prior year. This decrease was primarily attributable to decreased sales of first quality product, mainly in the Tommy Hilfiger and Munchkin children's product lines as well as overall decreases in the department store business and promotional product sales.
Net sales of Tommy Hilfiger men's and women's products for the fourth quarter and the year decreased 22% and 18%, respectively, primarily due to a reduction in the men's business across various channels of distribution. Saucony net sales were $23.2 million for the 11 week period subsequent to the September 16, 2005 acquisition date.

Sperry Top-Sider net sales increased 5% and 25% for the fourth quarter and full year, respectively, on strong sales of men's boat shoes and the overall women's product line. Net sales in the Keds division decreased 22% and 8% for the fourth quarter and the full year, respectively, as the sales growth in premium channels could not offset decreases in the moderate and value retail sales channels.

International net sales increased 24% in the quarter and 25% for the fiscal year, respectively, on higher sales of Tommy Hilfiger in Latin America, Keds footwear in Europe and Asia, and Sperry Top-Sider in Europe and South Africa.
Excluding the inventory write-up, the gross profit percentage increased 1.7 percentage points to 39.8% for the year. Keds, Stride Rite Children's Group-Retail and Sperry Top-Sider all had strong gross profit percentage improvements versus last year.

Operating expenses increased 12% and 11% for the fourth quarter and the year, respectively. As planned, the major operating cost increases related to higher advertising costs and the Stride Rite Children's Group-Retail store expansion. Also contributing to the increase were 11 weeks of Saucony expenses, as well as integration costs and certain other acquisition related costs.

Accounts receivable increased 33% compared to last year on a 13% quarterly sales increase. DSO was 39 days, an increase of 2 days versus the same period last year. The increase was due to the addition of Saucony which generally has offered somewhat longer credit terms to retailers.

Inventories of $116.1 million were up 32% compared to the end of 2004. The increase was due primarily to the addition of Saucony and included the inventory write-up as required by GAAP purchase accounting rules. Excluding Saucony, the 2005 year-end inventory balance increased 3% compared to last year.

Cash and cash equivalents were $33 million at the end of the fiscal year with $60 million in outstanding debt. The Company borrowed $85 million in mid-September 2005 to fund the closing of the acquisition of Saucony.

                      The Stride Rite Corporation
                   Summarized Financial Information
      for the periods ended December 2, 2005 and December 3, 2004

                         Statements of Income

(in thousands)                Fourth Quarter        Twelve Months
                              --------------        -------------
                              2005       2004        2005       2004
                            ---------  --------- ---------- ----------
                                (Unaudited)      (Unaudited)
 Net sales                  $131,695   $116,799   $588,164   $558,324
 Cost of sales                86,643     71,903    359,179    345,728
                            ---------  --------- ---------- ----------
 Gross profit                 45,052     44,896    228,985    212,596
 Selling and administrative
  expenses                    49,881     44,430    191,496    172,190
                            ---------  --------- ---------- ----------
 Operating income (loss)      (4,829)       466     37,489     40,406
 Other income (expense), net    (541)      (371)       524        503
                            ---------  --------- ---------- ----------
 Income (loss) before income
  taxes                       (5,370)        95     38,013     40,909
 Provision for (benefit
  from) income taxes          (2,309)        44     13,446     15,255
                            ---------  --------- ---------- ----------
 Net income (loss)           $(3,061)       $51    $24,567    $25,654
                            =========  ========= ========== ==========

Earnings (loss) per share:
    Diluted                   $(0.08)     $0.00      $0.66      $0.66
    Basic                     $(0.08)     $0.00      $0.68      $0.68

Weighted average shares
 outstanding:
    Diluted                   37,325     37,197     37,223     38,753
    Basic                     36,316     36,495     36,197     37,976