De-Lite Shoe Company

Our

mission and values are to help people throughout the world realize the full potential of their body and sole. vision is to put a pair of DeLites on every foot worldwide!
-Groove is in the Heartand on your feet

Our

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Joe Smith, Co-Founder and CEO

A Rich Tradition Of:

q

Rewarding Share Holders Handsomely.

Click to edit Master subtitle style (Returned $378 Millions to shareholders in dividends and stock repurchases in years 11-20.)
(Sold 10.3 Millions of S/Q 7 shoes worldwide in year 20.).

Selling Footwear Customers Demand and Like.

Management:
v

CEO: Joe Smit v CFO: Joe Doe v COO: M. Ditt

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New Management Goals: Year 11 earnings per share at least 10% annually. Grow

Maintain a return on equity investment (ROE) of Click annually. 15% or moreto edit Master subtitle style

Maintain a B+ or higher credit rating.

Achieve stock price gains averaging about 10% annually.

Achieve an image rating of 70 or higher.

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How did we do?

Grew earnings per share at least 10% annually.

1.2 1 0.8 0.6

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EPS (17.7% Annual Growth)

Maintained a return on equity investment (ROE) of 15% 0 or more annually.

0.2

0.4

ROE (Average 19%; 3.86% Annual Growth)

12 10 8 6 4 2 0

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How did we do?

Maintained a B+ or higher credit rating.

Adjusted Credit Rating (Average A-)
15 10

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Achieved stock price gains averaging more than 10% 0 annually.

Stock Price (23% Growth; Average $126.45)

12 10 8 6 4 2 0

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How did we do?

Achieved an image rating of 70 or higher.

15 10 5 0

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Image (Average 79.8)

Why were these Goals Important? Scoring

Criteria: EPS

30%

ROE 20% Credit Rating 15% Stock Price 20% 1/10/13 Image Rating 15%

De-Lite Shoe Company: The Best of Best!

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Our Journey
Start: Year 10
Year

10 revenues of $238 million, net profit of $25 million (equal to $2.50 per share), an ROE of ~17%, a solid B+ credit rating, and market capitalization of $300 Million

In 10 Year End:Years: 10 Revenues up 125% Year up revenues of $539 million, Profit 20 288% Market Capitalization million (equal to 515% net profit of $97 up EPS up 411% $12.78 per share), an ROE of ~22%, 1/10/13 Dividends up 1040%

How Did We Do Compared to Our Esteemed Competitors

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Percentage Changes in Different Catogories Across Shoe Industry

10 9 8 7 6 5 4 3 2 1 0

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How Did We Do Compared to Our Esteemed Competitors

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Break up of Shoe IndustrySales, Profits, Expenses and Dividends
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How Did We Do Compared to Our Esteemed Competitors

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Shoe Industry Cash Allocation (Year 19)

10 9 Percentages % 8 7 6 5 4 3 2 1 0

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How Did We Do Compared to Our Esteemed Competitors

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Shoe Industry Cash Allocation (Year 20)

10 9

Percentages %

8 7 6 5 4 3 2 1 0

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Strategies We Used

Broad Differentiation. Branded Footwear Emphasis.

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Focused on all Geographic Regions. Zero Focus on Private-Label Footwear (Sweet Poison). Same Strategy worldwide. Optimum Marketing.

Clever Use Retailer Support and Celebrity 1/10/13 Endorsements.

Strategies We Used

Economies of Scale. Production in Low Cost Countries.

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Worker Incentives and High Productivity. Demand matching Incremental Capacity Growth. Captured Wholesale first; Internet later. Optimal Warehouse Operations

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Porters 5 Forces
New

Entrants Weak Not allowed in game mode Weak, We all could use a pair of shoes Strong, Brand Loyalty

Substitutes Customers Suppliers Rivals

Weak, not a component of the game mode Strong, rivals would 1/10/13 imitate strategies to gain market

Driving Forces

Exchange Rate Fluctuation Stock Market Fluctuation Trade barriers

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Celebrity Endorsements
Signup as Many Celebrities as We Click can to edit Master subtitle style

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Strategic Group Map

Year Click to edit Master subtitle style 19 Year 12

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Plant Operations
Built new plant in LA region Click to edit Master subtitle style

in

year 11

Sold NA plant in Year 12 Added Capacity every year (9,100 M)

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Plant Operations
Plant Upgrades Click to edit Master subtitle style

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Plant Operations
Employee Wages Click to edit Master subtitle style

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Plant Operations
Six Sigma and Best Practices Click to edit Master subtitle style Training

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Strategy Execution:

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Strategy Execution:

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Strategy Execution:

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Strategy Execution:

Price changes in response to changing market conditions. Internet slowly becoming more important.

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Internet vs Wholesale
15 10 5 0

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Our Profits Make-up In a NutShell

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Revenues & Net Profit Vs Number of Shoes

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The Secret
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In Dollars
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In Dollars: Per Shoe

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In Dollars: Per Shoe

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Our Strength Marketing in all Regions to mitigate foreign currency exchange rate Helped us
12 10 8 6 4 2 0

variance. In Earlier years EA was important. Later years LA region. Click to edit Master subtitle style Net Earnings (EBIT) By Region NA becoming increasingly important.

Regional Profits by Percentages

12 10 8 Percentages % 6 4 2 0

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Our Strength Free Cash Flows

Free Cash Flow
12

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10

Linear Regression for

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Uncontrollable Factor: Foreign Exchange Rates Year 20 Earnings reduced by $47 Millions.
Foreign Exchange Impact
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$$s in Millions

Foreign Exchange Rate Impact by Region

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What Won Our Customers Hearts

Price Number of models/styles Styling/quality (S/Q) rating Click to edit Master subtitle style Advertising Size of retailer network Celebrity endorsements Delivery time Retailer support Mail-in rebates Shipping charges (Internet sales only)

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De-Lite Shoe Company: Highest Accolade

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Bright Future Ahead

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Keys to Our Success

We Understood company operations. We Learned well how to run the game.

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We Developed a specific strategy & stuck with it. We Analyzed competitors and industry trends. We Maintained balance between demand and supply. We were assertive & proactive.

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