The Stride Rite Corporation net sales for the fourth quarter of fiscal 2006 were $151.8 million, an increase of 15% compared to the same period in the prior year. Net income for the fourth quarter totaled $0.6 million or 2 cents per diluted share, compared to the net loss of $3.1 million or 8 cents per diluted share in the fourth quarter of 2005. The fourth quarter of 2006 included $9.7 million of Robeez net sales for the thirteen weeks subsequent to the September 5, 2006 acquisition date.

For the full year of fiscal 2006, net sales were $706.8 million, an increase of 20% from the net sales of $588.2 million in fiscal 2005. Net income for the full year of fiscal 2006 totaled $34.3 million, an increase of 40% from the $24.6 million reported in fiscal 2005. On a diluted basis, earnings per share were $.92 compared to $.66 in fiscal 2005. The prior year includes eleven weeks of Saucony results from the date of acquisition, September 16, 2005.

The fourth quarter of 2006 includes a pre-tax expense of $0.9 million related to the write-up of inventory purchased in the Robeez acquisition. In addition, the current year quarter includes pre-tax acquisition related integration expenses of $0.5 million related to Saucony and Robeez.

The fiscal 2006 full year financial results include pre-tax expenses of $3.5 million related to the flow through of the write-up of inventory purchased in the Saucony and Robeez acquisitions as required by GAAP. In addition, the fiscal 2006 results include pre-tax acquisition-related integration expenses of $3.4 million for Saucony and Robeez.

Excluding acquisition-related integration costs and the Robeez inventory write-up, net income would have been $1.5 million for the fourth quarter of fiscal 2006, while diluted earnings per share would have been $.04. Excluding acquisition-related integration costs and the Saucony inventory write-up, net income would have been $ 0.5 million for the fourth quarter of fiscal 2005, while diluted earnings per share would have been $.01. See the section entitled “Non-GAAP Pro Forma Financial Measures” and the “Reconciliation of Non-GAAP Measures” provided in this release for additional information regarding these Non-GAAP Measures.

Excluding acquisition-related integration costs and the flow through of the inventory write-ups, net income would have been $38.4 million for fiscal 2006, while diluted earnings per share would have been $1.03. This compares to net income of $28.6 million and $.77 diluted earnings per share in the prior year, excluding acquisition-related integration costs and the flow through of the inventory write-up. See the section entitled “Non-GAAP Pro Forma Financial Measures” and the “Reconciliation of Non-GAAP Measures” provided in this release for additional information regarding these Non-GAAP Measures.

Beginning with fiscal 2006, the Company adopted SFAS No. 123®, “Share-Based Payment”, the impact of which increased pre-tax expenses by approximately $0.9 million for the fourth quarter and $3.2 million for the 2006 full year.

David Chamberlain, Chairman and CEO of Stride Rite, commented “We made significant progress in a number of key areas in 2006.

The Stride Rite Children's Group's full year sales increased 7%, with retail store comps up 3.4%. Our strategy of developing excellent product for our wholesale partners and company-owned retail stores is working well. This year we added a net 29 new stores, for a total of 318 stores, including 15 Saucony doors. We plan to open 5% – 10% new stores to our base in 2007. We expect continued progress in our total children's business.

We made solid progress on Keds in 2006. While the year was down 11%, the fourth quarter was up 1%. We significantly expanded our retail distribution in desirable accounts not previously available to the brand. The younger product line is enjoying strong sell-through in a number of accounts. The classic white and more mature product continues to be the area of challenge. We expect spring 2007 will reflect this continued transition, with sales for spring being relatively flat and fall above last year.

Sperry Top-Sider was up 20% for the year and has been a consistently strong performer with expanded product offerings and broadened retail distribution. We expect this momentum to continue into fiscal 2007.

Saucony continues to enjoy success and market share growth in the specialty run business. The initial reactions to our technical product for 2007 have been very positive. We anticipate growth in this market. We are updating and broadening our product offerings of the less technical and athletic lifestyle products. This should contribute to growth in the second half in the sporting goods and national chain channels.

The Tommy Hilfiger Division footwear sales declined 9% in the fourth quarter, significantly less than the 28% decline for the year. We are hopeful that this business, which we license, is beginning to stabilize under the new ownership. We expect the improved fourth quarter trend to continue into 2007.

International sales were strong in fiscal 2006, helped significantly by the addition of Saucony. Saucony has a solid technical running business in Canada and Europe. We believe the international markets offer a significant opportunity for growth for The Stride Rite Corporation. In 2007 we will begin to make investments in Europe behind Saucony, Keds, and Sperry Top-Sider. International should have a solid 2007.

We completed the acquisition of Robeez on September 5, 2006. Robeez enjoys a leadership position in the Age 0 – 3 soft soled shoe market. We believe it has upside growth opportunities both domestically and internationally.

For fiscal year 2007, we are projecting sales growth of 5% to 8% and earnings per share of $1.10 – $1.15, excluding any additional costs related to the Robeez acquisition. This assumes reasonable economic and retail conditions continue.”

Total Stride Rite Children's Group net sales increased 10% in the fourth quarter and 7% for the full year compared to the comparable periods in fiscal 2005.

Stride Rite Children's Group-Wholesale net sales increased 8%
for the quarter although down 7% for the full year compared to
fiscal 2005. The sales decrease for the year was principally in
the department store channel and certain licensed partner
accounts.

Net sales of the Stride Rite Children's Group-Retail division
increased 10% in the fourth quarter and 14% for the full year
versus the 2005 results. Sales at comparable Children's Group
retail stores (open 52 weeks in each fiscal year) increased
2.5% for the fourth quarter and 3.4% for the full year of
fiscal 2006.

* Net sales in the Keds division increased 1% for the fourth quarter compared to the same period in the prior year. For the year, Keds sales declined 11% as the increased sales to premier specialty retail accounts did not offset the sales declines of core products in the mid-tier and value retailers.

* Sperry Top-Sider net sales increased 16% for the fourth quarter and 20% for the full year on strong sales of men's and women's products, across most retail channels.

* Saucony domestic wholesale net sales were $17.9 million for the fourth quarter and $89.3 million for the full year. The sales results reflect the continued emphasis on technical run product and success in the specialty run retail channel.

* International net sales increased 86% for the full year compared to fiscal 2005, due primarily to the addition of Saucony. Saucony sales were particularly strong in Canada and Europe. Sales for the fourth quarter declined 4%, due primarily to lower sales of Tommy Hilfiger in Latin America.

* Net sales of Tommy Hilfiger men's and women's products decreased 9% for the fourth quarter and 28% for the full year, with sales declines due to a reduction in the department store customer base combined with fewer closeout sales.

* Robeez net sales for the fourth quarter of 2006 were $9.7 million for the 13 weeks subsequent to the September 5, 2006 acquisition date.

* Excluding the non-cash impacts of the Robeez inventory write-up in 2006 and the Saucony inventory write-up in 2005, the fourth quarter gross profit percentage of 39.6%, increased 1.3 percentage points compared to the same period in the prior year. For the quarter, the improvement primarily related to fewer closeout sales and increased company-owned retail store sales.

* The full year gross profit rate of 41.3%, excluding the Robeez and Saucony inventory write-ups, was 1.4 percentage points higher than fiscal 2005. For the year, the primary improvement related to increased gross profit margins in Sperry Top-Sider and our International business.

* Operating expenses increased 15% for the fourth quarter and 23% for the full year versus the comparable periods in the prior year. As planned, the major operating cost increases were related to Saucony and Robeez expenses, the Stride Rite Children's Group-Retail store expansion and higher advertising costs in Sperry Top-Sider. Also contributing to the increase in operating expenses were integration costs and the impact of adopting SFAS No. 123®, “Share-Based Payment”.

* For the fourth quarter, operating income of $2.1 million increased $7.0 million compared to last year's fourth quarter operating loss. For the full year, operating income of $53.4 million increased 42%.

* Accounts receivable increased 19% versus the comparable period last year due primarily to the addition of Robeez and higher sales in the last month of the quarter. DSO of 41 days was 2 days higher compared to the same period last year.

* Inventories of $120 million were up 3% versus the comparable period of 2005. The increase includes the addition of Robeez.

* The Company repurchased approximately 94 thousand shares of company stock during the fourth quarter at a cost of $1.4 million. For the full year, approximately 908 thousand shares have been repurchased at a cost of $12.2 million.