We seek to differentiate our brands by offering diverse lines that emphasize authenticity, functionality, quality and comfort and products tailored to a variety of activities and demographic groups. Key elements of our business strategies are:
Build Leading Global Brands.
Our mission is to build niche footwear lines into global brands with market leadership positions. Our Teva and UGG brands began as footwear lines appealing to a narrow core enthusiast market. We have since built these lines into substantial global lifestyle brands with significant potential for further growth and line extension. Across our brands, our styles remain true to the brands’ heritage but have been selectively extended over time to broaden their appeal to men, women and children seeking high quality, comfortable styles for everyday use. Furthermore, we actively manage our brands to ensure that we reach brand appropriate retail distribution channels.
Sustain Brand Authenticity.
We believe our ability to grow our brands, sustain strong gross margins and maintain strong market share results is, in part, from consumer loyalty to the heritage of our brands. Teva’s marketing efforts reinforce the river-guide heritage of Teva and its positioning as a highly technical, performance-oriented footwear leader. Our UGG marketing strategy highlights the brand’s positioning as functional footwear, but also as a premium, luxury collection. We promote our Simple brand by emphasizing Simple’s Green Toe line, its heritage sneaker and clog businesses.
Drive Demand Through Innovation and Technical Leadership.
We believe our reputation for innovation and technical leadership distinguishes our products from those of our competitors and provides us with significant competitive advantages. We continue to develop innovative styles, products and product categories for our all three lifestyle brands. New designs have expanded our market share in new categories and have afforded increased sales year ‘round.
Maintain Efficient Development and Production Process.
We believe our product development processes enable us to produce leading edge products on a timely and a cost effective basis. We design our products domestically. Our on-site supervisory office in Pan Yu City, China serves as a local link to our independent manufacturers in the Far East, enabling us to carefully monitor the production process; from receipt of the design brief to production of interim and final samples and shipment of finished product. We believe this local presence provides greater predictability of material availability, product flow and adherence to final design specifications than we could otherwise achieve through an agency arrangement.
Growth Strategies
Our growth will depend upon our broadening of the products offered under each brand, expanding domestic and international distribution, licensing our brand names and developing or acquiring new brands. Specifically, we intend to:
Introduce New Categories and Styles under Existing Brands.
We intend to increase our sales by developing and introducing additional footwear products under our existing brands that meet our high standards of performance, practicality, authenticity, comfort and quality. By expanding our lines we are able to further penetrate the fall, spring and winter seasons.
Expand Domestic Distribution.
We believe that we have significant opportunities to increase our sales by expanding domestic distribution of our products. While our Teva brand has generally been distributed through the outdoor specialty and sporting goods retail channels, we have identified the potential for expansion into additional retail channels through the development of special make-up styles for retailers who have limited store overlap with our core specialty outdoor and sporting goods customers. UGG has historically realized a substantial portion of its sales in California. Over the past five years we have experienced increasing demand for UGG distribution outside California, and we are experiencing significant demand in the Midwest and East Coast markets. For Simple, we are repositioning the brand, re-connecting with our consumer base, and broadening the appeal of Simple to new channels of distribution. We have also introduced the Green Toe product line, which is accessible through traditional and alternative retail channels.
Expand International Distribution.
We believe significant opportunities exist to market our products abroad, and are currently expanding their distribution worldwide.
Pursue Licensing of Brands in Complementary Product Lines.
We are continuing selective licensing of our brand names in product categories beyond footwear. Our current licensing strategy is selective to ensure the licensing of products complements our trademark protected products and that additional licensed goods remain consistent with our brands’ heritage.
Build New Brands.
We intend to continue to focus on identifying, developing or acquiring, and building new brands. We have been successful in identifying entrepreneurial concepts for innovative, fashionable footwear targeted at niche markets and building these concepts into viable brands utilizing our expertise in product development, production and marketing. We will continue to identify and build new brands that demonstrate potential for significant future growth.
