Blog: One size fits all?
Leonie Barrie | 24 May 2007
Payless ShoeSource and Stride Rite both stand to gain from yesterday’s announcement that Payless is to buy Stride Rite Corp for about US$800m. The deal will help Payless secure a bigger share of the fast-growing branded and children's footwear sectors, as well as retaining its dominance in the discount retail sector, and will provide Stride Rite with the resources it needs if it is to stand a chance against widespread industry consolidation.
The acquisition is the second in as many months for Payless, which in March revealed plans to buy skate and snowboard licensing company Collective International for approximately $91m. The appeal of that deal – Collective's portfolio includes Airwalk, Lamar, Sims, LTD, Ultra-Wheels and Skate Attack – was that it would take Payless into the brand development, management and licensing business for the first time.
Stride Rite had previously been on the acquisition trail itself, buying firms such as shoe maker Robeez and athletic footwear line Saucony, but now concedes that it needs to join a company with bigger resources if it is to stand a chance against widespread industry consolidation.
Where the new holding company, Collective Brands, is heading remains to be seen. Further acquisitions are more than likely to broaden its exposure in markets like children's and men's non-athletic shoes, but there will also be challenges in trying to become a leader in such a fragmented marketplace.
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