Exhibit 20
[LETTERHEAD OF GREENWAY PARTNERS, L.P.]
January 19, 2001
Mr. Dale W. Hilpert
Chairman of the Board and
Chief Executive Officer
Venator Group, Inc.
112 West 34th Street
New York, NY 10120
Dear Dale:
As long term investors in Venator Group, Inc. with over 18 million
shares, we look back on the year 2000 with some satisfaction. By the beginning
of 2000, with the majority of its peripheral businesses sold or held for sale,
the Company truly focused on its core competence as the leading US seller of
athletic footwear and apparel. And, we believe such focus has paid off
handsomely. Although we are all waiting for final numbers as time winds down to
your January 31 fiscal year end, all available information points to an
extremely strong year for the Athletic Group.
With athletic shoes back in fashion, the Athletic Group posted double
digit comparable store sales numbers for the first three quarters of fiscal year
2000. Foot Locker is clearly the dominant seller of athletic footwear in the
United States, selling we believe over one-third of the marque priced goods and
using its purchasing power to lock-up substantial quantities of high margin
exclusive product. Adding to the excitement has been the tremendous strides made
by Foot Locker in Europe, where the Company has directed a majority of its
capital expenditures and has been rewarded by comparable store sales reports of
over 40% in certain quarters. While Foot Locker may have enough stores in the
United States (and may continue to close marginal performers), it appears that
opportunities for profitable growth abound in barely tapped overseas markets and
through a solid Internet strategy integrated with stores and catalogues.
Similarly, we believe that the Athletic Group's Champs Sports operation with a
revitalized merchandise strategy has enjoyed a turnaround during 2000.
All this has led to improved financial strength for the Company. You
have announced that the Company expects at year end to have no short-term debt
and a $100 million decrease in long-term debt since the prior year end. The
stock price has also responded positively during 2000, more than doubling from
$7 to $15 1/2 per share at year end.
<PAGE>
Mr. Dale W. Hilpert
January 19, 2001
Page 2
As we look to 2001, we have the following suggestions for your
consideration:
1. INSTITUTE A CASH DIVIDEND AND BUY BACK SHARES. The Company's
health has improved markedly since it entered into the March 1999 credit
agreement amendments that restricted the payment of dividends and the buy back
of shares. In light of your statements about the Company's superlative debt
reduction achievements, it seems to us the banks should be amenable to allowing
the payment of a dividend and the buy back of shares by the Company. We believe
that the market will take such initiatives as a vote of confidence by the
Company in itself. The reinstatement of a dividend will return the Company to a
proud dividend paying tradition that lasted for 83 years from 1912 to 1995, and
will no doubt be warmly embraced by your many retirees who devoted their working
lives to the Company and still own the stock. Also, as you know, many
institutions are precluded from owning stocks which do not pay dividends. So the
institution of a small cash dividend-- say five cents per quarter--will increase
the universe of potential buyers of the stock.
2. DEAL DECISIVELY WITH THE NORTHERN GROUP. From an operations
perspective, management is left only with the Northern group--representing less
than 10% of sales--as a disappointing performer. Management has made clear that
its goal, at least over the past year, has been to improve results at this last
major non-athletic group holding in preparation for a sale. Possibly the time
has come to accelerate the timetable for the sale of this women's sportswear
operation or, at the very least, to classify it as an asset held for sale.
3. DARE WE ASK AGAIN: "WHAT'S IN A NAME?" Several years have passed
since the Company discarded one of the best known names in the world for one
still apt to be mispronounced. With the Company now rightly focused on its
Athletic Group, why not rename the entire company after the well known flagship
stores that now power its progress? LET THE FOOT LOCKER NAME IDENTIFY THE
COMPANY ON WALL STREET AS WELL AS ON MAIN STREET.
With best regards and hopes for continued success in 2001,
Very truly yours,
/s/ Alfred D. Kingsley
Alfred D. Kingsley
/s/ Gary K. Duberstein
Gary K. Duberstein
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