Blake Krueger’s life is about to get a whole lot busier.
The 58-year-old chairman, president and CEO of Wolverine World Wide Inc. last month closed the year’s biggest footwear acquisition to date when his firm bought Collective Brands Inc.’s Performance & Lifestyle Group for $1.23 billion. Once the deal closes this fall, Wolverine will assume ownership of the Saucony, Sperry Top-Sider, Keds and Stride Rite brands. The Payless ShoeSource chain, which was also part of the transaction, will be spun off and run by Blum Capital and Golden Gate Capital.
“We’ve been very familiar with these brands for a lot of years,” Krueger told Footwear News. “Frankly, we were not interested in the Payless side of the business, so when we had the opportunity to partner with a couple of private equity firms that would take the Payless side, we became very interested in Sperry, Saucony, Stride Rite and Keds.
“There are more than 380 years of brand equity combined in those four brands,” the executive added. “All of them have a very strong, authentic heritage.”
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The addition of the PLG labels will bring Wolverine’s brand roster to 16. The company’s current portfolio is sold in 190 countries.
Indeed, Wolverine has come a long way since Krueger signed on in 1993, after serving as its outside legal counsel since 1978.
“When I joined the company on a full-time basis, we only had three brands — Hush Puppies, Wolverine and Bates,” he recalled. “Over the next 15 years, we added nine brands, and shortly we’ll add four more.”
Since taking over as CEO in 2007, Krueger has faced his share of challenges, starting with the recession, which hit full force two years into the job. On top of that, sourcing costs, as well as commodity prices, have skyrocketed, presenting an entirely new set of challenges. Yet Wolverine has continued to thrive.
“One of the things I’m most proud of is that, currency neutral, 2009 was a record profit year for the company,” Krueger said. “Most companies can’t say that about that most severe of recessionary years.”
Still, Krueger isn’t one to bask in the limelight. In fact, he often deflects credit to the entire Wolverine team. “I’ve spent a lot of time coaching basketball, football, baseball,” he explained. “A lot of what I’ve learned is it may not be the team with the greatest superstar but the team [with the best teamwork] that usually wins.”
And Wolverine has received accolades for the strength of its team and the way it develops talent within the company. In fact, earlier this year Chief Executive magazine named Wolverine as one of the top 40 global companies for leaders.
Here, Krueger reveals his plans for the recently-acquired brands, his concerns about the economy and how his mentors within the industry have helped guide his career.
What will the new Collective brands add to Wolverine?
BK: These four brands were almost a perfect dovetail fit for us. In one stroke, we’re able to fill in five key whitespace areas for us, in women’s, athletic, children’s, casual and retail. That’s something that would be hard for any single brand to do, but being able to acquire four brands like this is an excellent fit for our company.
What are your plans for the brands?
BK: Today, 60 percent of our pairs on a global basis are marketed outside the U.S. When you start looking at the Sperry brand, only 4 percent of its sales are done outside the States. Saucony does about 23 percent of its business outside the U.S., and a lot of that is in Germany and Europe. Stride Rite, only 4 percent. Keds is a small percentage as well. Collectively, a little less than 10 percent [of the PLG brands’ sales] are done abroad, and in terms of pairs sold, it’s even less than that. Initially, strategically, international is a huge opportunity.
How are you feeling about the rest of 2012?
BK: It will be different in some respects and, in some respects, more difficult than 2011. There is global economic turbulence and that continues. Right now, the focus is on Greece, but Europe is in a recession as we speak. The recovery in the U.S. and in other parts of the world has been slow but steady. There continues to be on a global basis a lot of volatility in macro economic conditions. That’s leading a lot of industries, retailers and consumers to be a little conservative. Overall though, we remain very optimistic.
How do you manage to stay optimistic in such an uncertain environment?
BK: We have the advantage of our business model. We’re in 190 other countries around the world. Our success is not tied to any single consumer group, country, region, distribution channel or fashion trend. So our business model, although it’s very complicated, it gives us the opportunity to perform well in a number of economic environments and, frankly, it mitigates risk.
Are you worried about Europe’s economy?
BK: It’s a big concern, but it’s going on everywhere. What’s going on is the whole world has overspent and overpromised for about 50 years. We’re finally realizing that we’re going to have to spend within our means and that’s going to be a very difficult process for countries, regions, cities and some companies for a period of time. It’s going to probably take a number of years, and we all need to recognize that as a macro backdrop against the world in which we operate. On the plus side, as you look around the world, there is a rising tide of middle-class shoppers and consumers. A lot of consumers on a global basis are entering the middle class with the ability to shop and buy products from global brands for the first time.
Has the outdoor industry weathered the ups and downs in the economy well?
BK: The outdoor industry has come out of it surprisingly strong. The outdoors in general has benefited in this post-recessionary period, but it didn’t go through the end of 2008 and 2009 totally unaffected. The Great Recession had an impact on everybody.
What is the biggest lesson learned from all the economic turmoil?
BK: I participated in the Footwear News CEO Summit in May 2009 and I was quoted a lot by analysts at the time for saying, “Never waste a good recession.” If you are going to be involved in a recession — and we got hit with a doozy, probably the toughest in 80 years — view it as an opportunity to take a few steps back. Look at how you’re conducting business. Certainly, that was the attitude we took in 2009. The other decision we made in 2009 was that we wanted to position the company for accelerated growth coming out of the recession. We knew, historically, that the footwear industry goes into a recession later than other product categories, goes in shallower and comes out quicker. In fact, that turned out to be the case in this recession as well. One of the things we did as a company was we doubled-down on investments in product innovation. We knew a lot of people where cutting back and, frankly, we thought a lot of our competition was cutting back on the wrong things. In our industry, it begins and ends with product. If you are there with outstanding product, you’re going to have a very good business, irrespective of the macroeconomic conditions.
How are you managing sourcing costs?
BK: It’s been a very volatile three or four years on the sourcing side. It’s not just factory costs going up in the Far East, it’s commodity prices, too, which have been extremely volatile. I believe that’s going to continue, although I don’t expect it to be as volatile as it has been. Over the long haul there is going to be increasing demand for commodities, oil-based products, cotton, wool, synthetics. You’re going to see pressure on our supply chain continue and you’ll have to have a best-in-class supply chain if you want to have a competitive advantage in the future.
Has your legal background affected how you approach the CEO role?
BK: The rigorous legal training I had [at Wayne State University Law School] and dealing with a variety of large and small companies in Michigan and the Midwest, it exposed me to a number of different companies, industries, company cultures and different types of leaders. The legal background itself teaches you how to express yourself very clearly in writing, very clearly orally. It teaches you how to construct a decision tree and take a series of decisions and arrive quickly at a conclusion.
Who were your mentors in the footwear industry when you were starting out?
BK: The mentors I had in the industry were all within this company. The person who really brought me into the company was Geof Bloom. Geof is someone who continues to talk to me a couple of times each quarter. He’s not shy, even today, about giving me his thoughts, opinions and advice, which I’m smart enough to listen to very closely. Then, my immediate predecessor, Tim O’Donovan, was someone who I tried to learn a lot from.
What’s the best advice they’ve given you?
BK: One of the things I’ve always loved about Geof is [his mantra of] “carpe diem” — “seize the day.” Geof’s personality and mine are a lot alike. I’d rather do 10 things today when I’m 60 percent sure what is the right way to go, rather than do two things after spending nine months studying them. In our industry, you need to make the right decisions, but the faster you can move, and move with confidence, the better off you are.
Do you mentor anyone in the industry?
BK: I currently serve as chairman of the Footwear Distributors & Retailers of America. I’m vice chairman of the Two Ten Footwear Foundation. I get to cross paths with a lot of people in our industry, both at my level and those new to the industry. Internally, at the company, we have a very extensive program to develop the talent we have within our company.
What do you see as your greatest accomplishment since becoming CEO?
BK: It would have to be the team and the people [I’ve put in place]. My goal is to leave the company in better hands when I retire. When you look at how people have developed and are developing in our company, and how they are achieving success, that personally is very satisfying to me.
And the low points along the way?
BK: I would have to say that 2009 was a bit of a challenge. We were a company and a culture that was used to winning for 15 years. To get to 2009, and to have your sales take a 9 percent or 10 percent dip during the recession, was a real challenge. We had to step up and make some hard decisions. We had to really focus on what it was going to take to succeed in the future. It was certainly a challenge I hadn’t anticipated two years into my CEO role.
If you weren’t running a shoe company, what would you be doing?
BK: I’ve always had an interest in history and architecture. So if I hadn’t become a lawyer and a seller of shoes, I very well might have been an archaeologist or an architect. I probably get more than 20 magazines a month — a lot of business magazines but also a variety of other magazines. My favorite magazine is Archaeology.
What would people be surprised to know about you?
BK: I would have loved to have been a punk rocker. That has always been the core of my musical interest. I’ve always felt that music is extremely important because it helps define culture and fashion and how various generations think and approach life. Lately, I’ve been clawing my way back through time. I probably bought the first Green Day CD way back when they first came to Grand Rapids, Mich. I’ve been listening to Green Day’s last two CDs, then I’ve been working my way backward though time through a band called Rancid. Then, I’ve been listening to a lot of The Clash and the Ramones, and going back to the late 1960s and early ’70s to a band called Mott the Hoople. But having no music talent — singing or playing ability — that dream is probably not going to happen.
