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CEO Brings Fresh Eyes to New Balance

New Balance is entering its second century with a new chief executive officer.

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New Balance is entering its second century with a new chief executive officer.

The family-owned activewear company has brought in an industry outsider to lead an aggressive growth plan with the goal of nearly doubling volume in the next five years.

Robert T. DeMartini assumed the head post at the 101-year-old firm this week, and in the next 60 days intends to present a detailed growth strategy. Although he describes himself as “a jogger more than a runner” — a New Balance spokeswoman joked, “We take all levels” — he said he was “trying to hit the ground running.”

DeMartini, 45, said he hadn’t been looking for a job when New Balance found him, a new vice president in the consumer products division at Tyson Foods Inc., where he started in September. Before that, he held positions at Procter & Gamble Co. and Gillette Co.

The new ceo comes without any apparel experience, following in the tracks of William Perez, who resigned as Nike Inc.’s ceo in January after just 13 months. But DeMartini thinks New Balance’s business requires less fashion acumen than many apparel companies.

“New Balance is as much about functionality and efficacy as fashion,” he said. “All brands are is a promise.”

De Martini replaces Jim Davis, 62, who bought New Balance 35 years ago, when the company turned out just 30 pairs of shoes a day. Davis said last month that he was ceding the ceo post, but he would stay on as chairman. His wife, Anne Davis, will remain vice chairman, and the couple “will take on a more strategic role at the company,” according to Davis.

Davis bought New Balance in 1972 from descendents of William Riley, an English immigrant who founded the running shoe firm in Boston in 1906. The Davis family is ranked No. 488 on the Forbes list of the world’s richest people, with an estimated wealth of $2 billion. New Balance remains one of the few large privately held companies in a sector dominated by public firms like Nike, Adidas and Puma (which PPR, owner of Gucci Group, is trying to buy).

“The industry is changing, and everybody that is in a management position in this company has been here a long time,” Davis said. “It was important that we found someone from the outside that had different eyes and ears to give us a fresh perspective on how we should run this company.”

DeMartini said he did not plan to make major leadership shake-ups.

“The leadership team has about 300 years of New Balance experience, cumulatively,” DeMartini said. “My role is to further harness and leverage that. It’s critical to keep what has worked very well at New Balance, but what I can do as an outsider is see things that a lot of experience sometimes blinds you to.”

Before DeMartini arrived, the company outlined an ambitious growth plan to double its wholesale volume to $3 billion by 2011 from $1.55 billion last year, largely driven by apparel growth, which currently is less than 10 percent of sales, but which DeMartini thinks can grow to at least 15 percent in that period.

Until two years ago, New Balance licensed its apparel, but it now produces clothes in-house. “[Apparel] is an embarrassingly small part of our business, and we feel we have a lot of potential there,” Davis told WWD last year. “It’s been poor management on my part.”

DeMartini plans to leverage his “over 20 years’ experience in highly consumable consumer products” into improving turnovers and establishing methodology to understand the New Balance consumer.

“I have a commitment to strengthening our business with serious runners, growing the apparel business, expanding internationally and figuring out what opportunities we have with other brands in the portfolio, like Dunham, PF Flyers and Warrior Lacrosse,” he said. “While the hows are not as obvious, the brand’s ability to grow is clear. I’m excited about the brand strength and potential, as well as the opportunity to work in a competitive environment that could benefit from a more traditional consumer product background.”

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