STADIO PRIMATO K ProjectProduct Positioning Strategy & Review

Richard HiltzGM/National Sales ManagerLotto Sport USAJanuary 2010

“During these tough economic times, let’s offer our consumer a product with a higher value at an affordable price-point.”

Statement

Overview• HISTORICAL & MARKET ANALYSIS• NEW PRODUCT CONCEPT• POSITIONING STRATEGY• EARLY RESULTS• PRODUCT EXPANSION• YEAR 1 SALES RESULTS

HISTORICAL & MARKET ANALYSIS

Historical Analysis: PRIMATO • Developed as a mid price-point, calfskin leather CORE/BASIC

product in 2001 for the US market

• Successful expansion into team colors in 2003 (i.e., red, royal) increasing unit sales by 100%

• 10,000 pairs sold annually in 2004 & 2005

• Lotto “Best Seller” from 2003 to 2005

• Lotto’s Primato sales begin trending down in 2006

• Sales began to stagnate in 2006 with an average of 5,000 pairs annually

Historical Analysis: PRIMATO

2001 2002 2003 2004 2005 2006 2007 20080

2000

4000

6000

8000

10000

12000Pairs Sold

Primato

2008 Market AnalysisCOMPETITORS

• Leadership brands significantly improve the perceived value in their opening and mid price-point cleated category

• adidas & Nike offer aggressive “take-down” strategies on their top styles

• Under Armour enters the category, but with a limited assortment

• Diadora realizes strong sell-thru with their $80 K leather boot

• Mid Price-Point leather cleats become saturated and promotionaloffering little change or excitement

2008 Market AnalysisLotto Sport• Lotto’s Primato needs to be updated or replaced due to

stagnating sales results

• Strategic direction to focus on Lotto’s global Zhero line

• Dick’s Sporting Goods targets Lotto to represent upper mid to high price category in soccer cleated footwear. (i.e., $80 to $130 SRP)

Zhero Evolution $130 Vento Diablo $120 Zhero Mito $80

NEW PRODUCT CONCEPT

New Product Objective1. Replace the Primato with a more updated and

relevant version of a classic leather cleat.

2. “Trade-up” Primato Consumer

3. New style must generate both a volume opportunity and a strong ROI

4. Offer high value at an affordable price-point

VALUE ADDED

VOLUME DRIVER

CLASSIC

PREMIUM K LEATHER

PRODUCT INTRODUCTION:Stadio Primato K

Stadio Primato K: Margin Analysis

Lotto Soccer Footwear SOCCER

10.00% Plan PlanDescription Origin WHLS Program First Duty % Duty Ocean Landed P&L Cost Margin $ Margin % UNIT NET GROSS

Price Price Cost Freight FCST SALES MARGINCORE LINE (FW09)STADIO PRIMATO-K FG CHINA 49.50 44.55 24.75 4.3% 1.06 0.60 26.41 26.41 18.14 40.71% 2,400 106,920$ 43,526$

PRIMATO FG CHINA 35.75 32.18 15.35 4.3% 0.66 0.60 16.61 16.61 15.56 48.38% 2,400 77,220$ 37,356$

Stadio Primato K Key Assumptions

(1) Lower margin will allow for a more aggressive SRP @ $90.00

(2) Initial forecasts will equal current Primato sales during first season

(3) Higher wholesale price will yield a higher ROI (i.e., revenue)

POSITIONING STRATEGY

Lotto Positioning Strategy: Mid Price-Point

• Continue: Stadio Classic – $33/$65 – Lotto Sport Italia Global Style– 51% Margin

• Phase Out: Primato – $33/$65 – Lotto Sport USA SMU– 48% Margin

• Phase In: Stadio Primato K – $49.50/$90.00– Lotto Sport USA SMU– 41% Margin

Positioning Strategy: Upper Mid Price-Point Boot in STADIO Collection

ZHERO

STADIO

VENTO

FW’09 SOCCER PERFORMANCE: Assortment Plan

Mid

Entry

Vento Diablo $120

Stadio Fuoriclasse $150

Zhero Gravity $300

Stadio Classic $65

Zhero Evolution $130

Zhero Flash $60

Zhero Leggenda $160

Zhero Mito $70

Vento Spirit $60

Zhero Line Stadio Line Vento Line

Top

Price-Point Void in Global Collection

FW’09 SOCCER PERFORMANCE: Assortment Plan

Mid

Entry

Vento Diablo $120

Stadio Fuoriclasse $150

Zhero Gravity $300

Stadio Classic $65

Zhero Evolution $130

Zhero Flash $60

Zhero Leggenda $160

Zhero Mito $70

Vento Spirit $60

Zhero Line Stadio Line Vento Line

Top

Stadio Primato K $90

Initial Launch: FW’09

Fastest booking Lotto style ever; sold out in 60 days

Stadio Primato K $90

Stadio Primato K: CHANNEL STRATEGY

Season Product LineChannel Distribution

Fall 2009 Black/Black Soccer Specialty

Q4’09 Color Expansion Key Accounts Only

Spring 2010 Color ExpansionOpen Distribution

SMU Color

DSG Exclusive

EARLY RESULTS

Stadio Primato K

Stadio Classic

Vento Diablo

Stadio Classic

Stadio Classic

FW’09 TOP 5 STYLES

48%

16%

9%

8%

7.5%

7.5%

PRODUCT EXPANSION

Stadio Primato K: COLOR EXPANSION

• Offer Value: Kangaroo leather under $100• Offer Service: In-Stock Program (Blk & Wt)• Offer Trend: Seasonal Color-Story

Q4’09 Early Launch: Key Accounts

Eurosport Sp’10 Ad Campaign

YEAR 1 SALES RESULTS

Stadio Primato K vs. Primato

2007 2008 2009 20100

2000

4000

6000

8000

10000

12000

Primato Stadio Primato K

Pairs Sold

Lotto’s New “FRANCHISE” SHOE

Stadio Primato K FG

OVER 10,000 PAIR SOLD IN FIRST FULL YEAR