Person of the Year: Diane Sullivan

She’s the architect behind one of the industry’s most inspiring comebacks.

When she took the helm at Brown Shoe Co. two years ago, Diane Sullivan moved fast to shake things up, dramatically restructuring and re-energizing the St. Louis-based company. Her efforts to sharpen the firm’s focus, double-down on key growth drivers and better connect with consumers have won her wide praise, from both the retail community and Wall Street.

“Elevating Diane [from president] to CEO was the defining moment for this company that has been around for more than 100 years,” said Scott Krasik, analyst and managing partner at BB&T Capital Markets. “I’ve been covering Brown Shoe since the early 2000s, and the company’s performance has been very inconsistent — mediocre at best. Diane has turned things around by motivating the organization and instilling a desire for excellence in the staff that wasn’t there before.”

Her campaign already is yielding impressive results: Brown Shoe logged third-quarter earnings of $27.3 million, up 12.4 percent from the same quarter of 2012. And last Tuesday, the firm’s stock hit a six-year high of $27.20.

For Sullivan, who arrived in 2003 following top posts at Phillips-Van Heusen and Stride Rite, the transformation has been long in the making. “It wasn’t so easy when I first got here. Brown Shoe was this old-line, Midwestern company that was successful but really more about selling shoes than building brands. So a good part of my early years was spent changing that mind-set,” she explained. “Since becoming CEO, I have focused on making sure we have a super-clear vision and mission, as well as a strategic plan that could drive the consistency and performance of the company into the future.”

That meant making some tough decisions early in her new role. She scaled back on excess infrastructure and shuttered underperforming stores to boost productivity. She also shed brands and businesses that lacked long-term potential, including athletic players And 1 and Avia; and lesser-known labels Reba, Zodiac and Hot Kiss. And the kids’ business was licensed to BBC International. “We’ve become a somewhat smaller but leaner and more-profitable company,” Sullivan said. “We’re focusing on our best-performing brands, those that can drive real growth and help us hit our financial targets.”

Those brands include the Famous Footwear retail chain, which is enjoying strong momentum in the market. “Famous is just firing on all cylinders — everything’s working,” Sullivan said of the 1,058-door family retailer, whose savvy marketing moves, more consumer-centric approach and aggressive digital push helped drive second-quarter sales growth of nearly 11 percent. “We’re differentiating Famous as a retail experience for the whole family.”

Another standout is Sam Edelman, a brand Brown Shoe began partnering with in 2007 and acquired outright in 2010. The label, with sales topping $100 million, is poised for even bigger growth with the recent launch of e-commerce and an expansion into new categories including apparel and jewelry. “Sam is hot. It’s growing. We think we can build it into a global lifestyle brand,” Sullivan said.

For his part, Edelman credits Brown’s CEO with creating the kind of environment that has given his brand the structure and discipline — as well as the creative freedom — to flourish. “[My wife and design partner] Libby and I are still with Brown after five years, which is rare for founders who have sold their business. That says a lot about Diane’s ability to mine from a new and different talent pool. Managing an entrepreneur and designer who has worked for himself for the last 30 years requires a unique set of skills,” he said. “Diane has supported our entrepreneurial spirit, [while] at the same time facilitating access to the great resources within Brown. I take my hat off to her.”

Sullivan also is pumping up some of Brown Shoe’s more seasoned lines. This spring, Naturalizer will debut a footwear and accessories collection designed in collaboration with HGTV star David Bromstad, host of “Color Splash.” A higher-end collection was added to the Dr. Scholl’s offering this past spring in a bid to attract a more fashion-driven consumer. “We continue to look at new ways to keep our brands exciting and relevant,” Sullivan said.

Brown Shoe Chairman Ron Fromm, who has worked alongside Sullivan for 10 years, said his colleague’s talent for building brands and intuitive understanding of the consumer are among her biggest strengths. “Diane’s long list of accomplishments starts with the savvy, intelligent way she thinks about branding,” he said. “She understands that brands are an important asset to be protected at all costs.”

Fromm also praised Sullivan’s confident leadership and ability to inspire and motivate her team. Over the past two years, Sullivan, who said she believes success starts from within, has worked to change the culture of the company. “We’ve focused a lot on values: trust and transparency; personal accountability; and a passion for winning,” she explained. The firm’s St. Louis and New York offices were remodeled to create more open spaces and foster collaboration and idea sharing between departments. She also formed the Engagement Counsel, a group of a dozen employees from various levels and areas of the company who meet regularly to discuss ways to improve the morale and culture. “If you’re going to be successful and win long-term, you need to create an engaged and empowered workforce.”

That mind-set has translated to Brown Shoe’s relationships with its retail partners. “[Diane] has built a culture in which people can thrive, and it shows in everything they’re doing,” said Jeffrey Espersen, GM of footwear and accessories for Zappos.com. “She is honest and ethical, and she treats everyone with respect. She has been a true partner and supporter as we continue to grow. She is always there to help build the business in the right way.”

Scott Meden, EVP and GMM of shoes for Nordstrom, said Sullivan already has left her mark on the business. “Diane’s done a great job clearly defining and then executing her strategy,” he said. “She has significantly expanded Brown’s contemporary business with brands including Sam Edelman and Vince, but she also plays a larger role in shaping the industry with her charitable work with the Two Ten Footwear Foundation and its [Women in Footwear Industry] organization. There’s no question Diane is an inspirational figure for young women in the industry.”

Although Sullivan noted Brown’s current portfolio still has room to grow, the company continues to look for additional opportunities. The men’s business is one prime target. “A lot of people are looking at it,” she said. “This new generation of men cares a lot more about fashion and style. Footwear is no longer such a transactional purchase for them. Men’s is definitely a potential growth area for us.”

With the company back on track, Krasik predicted a bright outlook for the firm. “Investors have been looking for Brown to simplify the story, and Diane’s done that by focusing on the businesses and brands that matter,” he said. “That’s going to help [the company] tremendously going forward.”

And according to Sullivan, she’s just getting warmed up. “I have very high aspirations for where we’re going to go with this company,” she said. “It’s that competitive spirit in me — I want to win.”

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