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Venator Group, Inc.
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(Name of Registrant as Specified In Its Charter)
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[VENATOR GROUP LOGO]
June 28, 1999
Dear Fellow Shareholder:
Your Board of Directors and management, as detailed in our earlier letter,
have successfully designed and implemented a strategic business plan that has
turned your Company into a global athletic/lifestyle specialty retailer. This
effort is now paying off, with Venator's stock price up substantially in the
current fiscal year and with you -- as a Venator shareholder -- reaping the
rewards of our corporate transformation.
Despite this, dissident shareholder Greenway Partners is seeking to place
four of its designees on your Company's Board at this year's annual meeting. In
its zeal to obtain your vote, Greenway has attacked Venator and the value of
your shares. What Greenway chooses to ignore is the real story about today's
Venator.
VENATOR'S CURRENT FISCAL YEAR: STOCK PRICE UP MORE THAN 80%!
On January 29, 1999, the last day of Venator's most recently completed
fiscal year, Venator's stock closed at $5.125. In the five month period since
the start of the current fiscal year, Venator's stock price has INCREASED BY
MORE THAN 80%. As shown in the following table, this stock price improvement is
almost double that of our nearest industry peer:
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<CAPTION>
JUNE 25, JANUARY 29,
1999 1999 CHANGE
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1. VENATOR GROUP............. $9.3125 $ 5.125 81.7%
2. Footstar.................. 36.00 25.3125 42.2%
3. The Finish Line........... 11.00 9.1875 19.7%
4. The Sports Authority...... 4.375 4.0625 7.7%
5. Just For Feet............. 6.0313 15.00 -(59.8)%
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During the same five month period, while the market value of Venator's
shares was increasing by more than 80%, the S&P 500 Index was increasing by less
than 3% and the S&P Retail Stores Composite Index was unchanged.
While your Company's market price has improved dramatically, the job is far
from done. Our attention is now focused on where we go from here, and we are
fully committed to continuing to improve your Company's performance.
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WHAT THE ANALYSTS ARE SAYING
This is an exciting time in our industry, with a full season of
professional basketball in the United States starting in the Fall and worldwide
interest in the 2000 Summer Olympics. Your experienced Board of Directors and
management team are confident that Venator is very well positioned to benefit
from improving market conditions -- and we are not the only ones who see it that
way. This is what the analysts are saying:
- "It is our opinion that Venator, with its Foot Locker, International,
Champs and Eastbay concepts is well positioned for a turn in athletic
footwear. This reflects, in part, [Venator's] many distribution
points, making it a valuable partner to manufacturers." Mark Friedman,
Merrill Lynch, May 27, 1999
- "A major goal of [Venator's] management in recent years has been to
modernize the once archaic Foot Locker chain. During the past two
years, 2,300 properties have been either remodeled, relocated, or
newly opened, representing 38% of all Foot Locker units...The results
of remodeling efforts have been impressive." Donald Trott, Brown
Brothers Harriman, March 12, 1999
- "[Venator's] sales should also benefit from industry wide advertising
expenditures and publicity associated with a return of a full NBA
season in 1999 after the lockout of the fall of 1998 in addition to
the 2000 Olympics...The reductions of unprofitable stores and
elimination of several formats should improve [Venator's] overall
productivity level..." Jeffrey Feiner, Lehman Brothers, May 26, 1999
- "...we remain confident in our opinion that [Venator] is well
positioned for an athletic industry turn around. An improving
environment and a focus on better merchandising in the stores could
potentially lead to a significant earnings recovery." Mark Friedman,
Merrill Lynch, June 10, 1999
THE KEY ISSUES: CREDIBILITY AND VALUE
Your vote at the upcoming annual meeting is extremely important to the
future of your Company and the value of your investment. The choice, as we see
it, is clear. Several years ago, Venator's Board of Directors and management
undertook an ambitious and comprehensive restructuring plan which, we believe,
has proven to be successful. As shown above, since the start of our current
fiscal year Venator's stock has significantly outperformed our industry peers,
as well as the S&P 500 Index and the S&P Retail Stores Composite Index.
OUR PLAN HAS CREDIBILITY AND OUR PLAN IS PRODUCING VALUE. It is being
administered by a first class management team under the guidance of an
experienced, dedicated and independent Board of Directors. The current
directors -- including our nominees -- are all proven leaders with demonstrated
management skills and a record of commitment to shareholders.
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We ask you to contrast the experience and qualifications of our nominees
with those of Greenway's nominees -- three of whom currently are either officers
of Greenway or one of its controlled companies and one of whom currently is a
limited partner of Greenway. We see no reason to have Greenway's four
self-proclaimed "watchdogs" on your Board and believe they would only prove
disruptive. Don't let Greenway divert management and the Board from continuing
to generate value for all shareholders by completing the implementation of our
business plan.
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WE NEED YOUR SUPPORT TO CONTINUE IMPLEMENTING OUR BUSINESS PLAN AND
PROVIDING YOU WITH THE VALUE YOU DESERVE. PLEASE SIGN, DATE AND RETURN THE
ENCLOSED WHITE PROXY CARD TODAY. YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR
HOW FEW SHARES YOU OWN. WE ALSO URGE YOU NOT TO VOTE ON ANY PROXY CARD THAT MAY
BE FURNISHED BY GREENWAY.
If you have any questions, or need assistance in voting your shares, please
call our proxy solicitor, Innisfree M&A Incorporated, toll free at
1-888-750-5834.
We thank you for your continued trust and support.
Sincerely,
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/s/ Roger N. Farah /s/ Dale W. Hilpert
ROGER N. FARAH DALE W. HILPERT
Chairman of the Board and President and
Chief Executive Officer Chief Operating Officer
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Note: Permission to quote from the analysts' reports cited in this letter has
been neither sought nor obtained.
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IMPORTANT
If your shares are held in your own name, please sign, date and return
the enclosed WHITE proxy card today. If your shares are held in
"Street-Name," only your broker or your bank can vote your shares.
Please direct the person responsible for your account to execute on
your behalf a WHITE proxy card with a vote FOR Proposals 1 and 2 and
AGAINST Proposals 3 and 4.
We urge you not to sign any proxy card you may receive from Greenway
Partners.
If you have any questions or need assistance in voting your shares,
please call:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
CALL TOLL-FREE: (888) 750-5834
Banks and Brokers call collect (212) 750-5833
