DigDeep Footwear Investor Presentation

Investor Presentation – May 2015

Performance for All

Select Financials

Ticker: DDFW – NYSE

Price: $73.27

Market Cap: $600 mil

1Yr Tgt Est: $130.25

Beta:1.57

Price-Earnings(ttm): 20.03

Yield: %1.36

Profile

Sector: Consumer Goods

Industry: Textile-Apparel

Footwear

Headquarters: Mahwah, NJ, USA

Founded: 1997

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F O OT WEAR IN U D S T RY S TO CK P ER F O R AN CE

DigDeep Industry Composite Index

Robert Schaefer

Chief Market Strategist

Asa Whittaker

Chief Operations Officer

Brianne Bernardo

Chief Marketing Officer

Ryan Konrad

Chief Financial Officer

Anna DePalma

Chief Information Officer

Firm

Vision and

Goals

1st

Half

Operations

and

Strategy

2nd

Half

Analysis

and

Summary

Post

Game

1st Half

Stock Price - At least 15% average annual growth rate

Growth in earnings available for shareholders

Share repurchase program by year 14

Cash Dividend – Small but consistent and increasing

Dividends by year 14

Market Share – Overall Leader

International average of at least 20% wholesale; 25% internet

Particular focus on N.A. and Asian markets

Image Rating – No specific goal delineated

Aim to reach expectation of “70” consistently

Initial Strategy

“Cost” Strategy

Low Cost, low/moderate quality,

moderate breadth

Use aggressive pricing, to assert

a dominant cost strategy

Revised Strategy

“Best Value” Strategy

Relatively low cost, moderate/high

quality, moderate breadth

Leverage existing cost saving

practices

Price & Quality

Product Breadth

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Score By Year

- Price War

- High Capacity Requirements

- Razor Thin Margins

- Sacrifice Ethical Necessities

- Less Congested Market

- Better Pricing Power

- Leverage Scale/Higher Margin of Safety

- Increase CSR Spending

To become the

international leader in

athletic footwear by

offering high performance

shoes at a fair price;

and embrace our motto

“Performance for All” by

performing at the highest

level for our customers,

stakeholders, and the

environment.

2nd Half

Strategy

Efficient and low cost per unit

production without sacrificing

quality, worker welfare.

Tactic

Employ proactive demand forecasting

Leverage economies of scale; high

capacity utilization

Invest in plant upgrades; highest ROI

Over $15 million

Labor & Compensation

$750 annual best practice training

Consistent 1%-2%yoy wage increases

Incentive pay 15% of total comp

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Total Plant Capacity

NA Asia

Efficient Wholesale

Logistics

Prioritize key distribution

channels keeping in mind

shipping costs, tariffs,

and exchange rates

Maintain high inventory

turnover

Accurately forecasting in

the first place

Clearing leftover inventory

at discount

Consumer Friendly Internet

Purchasing

Shipping is always free

Shipped in “green” packing

Up to 30% annual sales

Private Label Bidding Inherently

Risky

Generally did not engage in private

label except to use up excess

capacity; avoid uncertainty

Beginning in year 16, began to sell

roughly 10% in Private Label

Image Rating

Sometimes Higher Margins

Consistently Higher than Average:

Advertising Spending

Particularly in emerging markets

Retailer Support

Celebrity Endorsements

Celebrity Monopoly

Some celebrities with no bids

No explicit spending cap, submit low

bids for all available contracts

Increases celebrity appeal

Diminishes competitor advertising efforts

Increases competitor contract costs

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Celebrity Endorsement Contracts

DigDeep Competitors

Wide Range of Initiatives

Recycled Materials

Energy Efficiency Investments

Charitable Contributions

Ethics Training for all employees

Workforce Diversity Program

Commitment to Our Vision

Consistently ranked in top half of industry

As much as $1.05 per pair went towards CSR

expenditures

Capital Expenditures

Investments in plant and capital

were judged based on NPV or IRR

analysis

Financed using mix of cash and

debt

As operating profits grew and

stabilized, shift towards higher

proportion of debt in financing

mix, no stock

Higher degree of financial

leverage – optimal capital

structure

Stock Price:

Outperformed Index

Substantially

Returning Shareholder

Profits

Beginning in year 14,

small but steadily

increasing cash

dividends

Beginning in year 14,

annual stock

repurchases

Preferred Method, Tax

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F O OT W EAR IN U D S T RY S TO CK P ER F O R AN CE

DigDeep Industry Composite Index

Post Game

Stock Price - At least 15% average annual growth rate

Growth in earnings available for shareholders

Share repurchase program by year 14

Cash Dividend – Small but consistent and increasing

Dividends by year 14

Market Share – Overall Leader

International average of at least 20% wholesale; 25% internet

Particular focus on N.A. and Asian markets

Image Rating – No specific goal delineated

Aim to reach expectation of “70” consistently

Stock Price 15% Yoy:

Successful; exception year 18

FY guidance; $130.25

Cash Dividend & Share Repurchase:

Successful; current yield of 1.36%

Successful; over 1.4 million shares

Market Share:

Wholesale 20%: Generally met

Internet 25%: Consistently met

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Stock Price (Expected) Stock Price (Actual)

Image Rating:

Specific targets; specific

initiatives

Better utilization of

Private Label Sales

CSR Spending

Generally higher quality

Private Label Sales

Repurpose PLS segment

Not merely capacity filler

High margin opportunities

Affects image rating

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GTD Performance

Arches Atheletics Beyond Footwear Conquer Atheletics

DigDeep Footwear Empire Footwear Fancy Feet

Closest Competitors:

Performance: Empire

Footwear/Beyond Footwear

Market Position: Beyond

Footwear