1

Developing A $30MM Business From Zero& Turning Around A Consumer Business

2

Garment Care Business Situation

Business and profit erosion: $140MM to $80MM topline sales; operating income from +$15MM to losing cumulatively -$13MM in 1993-5.

Market share drop from 50% to 30% with Hamilton Beach & Rowenta taking the most of the share.

Premium iron product design/performance lapped by competition and over 20 years old.

Failed on four other occasions to develop a successful premium iron product.

Iron consumer purchase behavior not well understood; Previous research results were focused on entire market vs. understand potential segments.

3

Garment Care Actions

Uninvolved/Low End Ironers Working couples on the go Time pressed Hate ironing

Appearance Driven/High End Ironers Family’s appearance is key “One Pass” ironing Likes to iron

ATTITUDINAL CLUSTERS “NEED GAPS” IRON FEATURES

PerformanceMade Simple

ProfessionalPressingResults

Lightweight Sure steam system Auto-clean valve

Maximum steam performance Superior glidability In-use comfort

Instead of focusing on ALL iron users, we learned consumer attitudes/habits about ironing drove usage/purchase behavior

Key learning: appearance driven users were the heavy users – 20% of users, but 40% of ironing activity (Uninvolved ironers were 60% of users, but only accounted for 40% of ironing activity)

This study proved consumer attitudes can drive purchase behavior vs. just what consumers say or do.

Source: 1995 B&D A&U Study

4

This was how we communicated our new product line strategies to the trade/consumers

Team obtained $18MM in capital to re-tool and launch this new product line strategy

Garment Care Actions

5

Maximum Steam Performance:Maximum Steam Performance:No other premium iron steams more

Professional Pressing Results at Home - just like a dry cleaner!!Professional Pressing Results at Home - just like a dry cleaner!!

Superior Non-Stick Glide:Superior Non-Stick Glide:New “space age” soleplate coating

Comfortably Designed:Comfortably Designed:Comfort Grips & Unique Control Design

(New feature for the category)

Garment Care Actions

ProFinish had 21 utility and design patents, the first iron to launch “comfort grips” into the market

Voted a Consumer Digest “best buy” in 1998, achieved 100% distribution in all retail channels

Developed and Launched New Premium Iron in the >$30 price point segment

6

ProFinish premium irons became a $30MM franchise from zero. Exceeded all expectations and paid out original capital investment.

Total Garment Care was “right-sized” in 1998 to $90MM with $7MM of operating income – a $20MM operating income swing.

B&D total iron share moved up from 30% to ~40%

Eliminated/consolidated over 60 sku’s enhancing product cost and working capital efficiencies.

Today, Garment Care is a $100MM business for Spectrum Brands. (the subsequent owner of Garment Care after B&D divestiture/Applica).

The consumer segmentation study is still quoted in trade publications as how consumer really buy irons.

Garment Care Results