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Sidi Ends Veltec Agreement

Published August 5, 2009

BOULDER, CO (BRAIN)—Veltec Sports will no longer be the exclusive distributor of the Sidi shoe brand in the United States, Veltec Sports’ chief executive officer Manfred Krikke told BRAIN yesterday. Sidi will establish a new entity called Sidi America and is in talks with Veltec about a co-distribution arrangement for 2010. Krikke said Veltec will not distribute Sidi beyond next model year.

Krikke said since Veltec took on distribution of Sidi more than 20 years ago, it has grown U.S. sales of the line from 10,000 pairs of shoes to more than 100,000 pairs last year. But, according to Krikke, the high-end Italian shoe brand took exception to its longtime distributor having a majority ownership stake in the Lake Cycling shoe brand.

“Footwear is an important category to us. We’ve always liked the brand, and we always have had and continue to have a good relationship with the Signori family,” Krikke said, referring to the family that owns Sidi. “We have a longstanding history there. Personally, it’s a great relationship. Our business fit has grown apart in the sense that our strategy to own brands has led us to make an investment in the shoe company Lake.”

Within the past three years Veltec has purchased Shebeest cycling apparel and acquired the Descente cycling license as part of a long-term strategy to own more of its own brands.

Krikke said, for the first time publicly, that Veltec also invested in Lake Cycling a few years ago, and slowly invested in research and development to eventually gain a majority share. He said although the Lake brand was separately managed and distributed and hit lower price points, Sidi management viewed Veltec’s investment in another shoe brand as a conflict of interest.

“They did not want to participate with us. We’d already made an investment and later acquired controlling interest in Lake, and they wanted us to focus on their own product and didn’t want a distributor that has an investment in another brand of shoes. It led to a business fit issue,” Krikke said.

Krikke said the two companies decided jointly that now’s the time to make a change, adding how that change happens and when it happens is still unclear. He said Sidi has offered Veltec the opportunity to continue distributing the brand for a year as it builds up its own direct distribution model. Krikke said the two companies haven’t yet reached an agreement nor has Veltec decided what to do, but he wants to make the transition as seamless as possible for Sidi dealers.

“We want to make sure there is an orderly and calm transition that guarantees stable pricing. 2011 and onward we are not going to be in the Sidi business. Between now and then our goal is to reorganize around these new business realities,” Krikke said. “Our first priority is to figure out how to do this best so something we've built up over the last 20 years doesn't suffer.”

—Megan Tompkins

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