This is a summary of the fourth quarter fiscal 2008 earnings call as presented by K-Swiss, Inc. (KSWS) on March 05, 2009
Management
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Chairman, President and Chief Executive Officer: Steven Nichols
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Vice President of Finance, Chief Operating Officer, Chief Financial Officer, Principal Accounting Officer and Secretary: George Powlick
Key Investors Issues:
- K-Swiss has suspended the common stock dividend.
- Domestic revenues decreased 29.9% to $141.8 million in 2008.
- International revenues decreased 4.7% to $198.4 million.
Full Year Highlights
- Net earnings were $20.9 million, or 59 cents per diluted share.
- Total worldwide revenues for 2008 decreased 17.1% to $340 million compared with $410.4 million in 2007.
- The Company acquired Palladium SAS and launched K-Space.
Fourth Quarter Highlights
The breakdown of sales by product category was as follows:
- Performance 14%, Sports Style 76%, other 10%.
- Performance revenues were up 8% when compared with the prior year period. This category includes all genders of tennis, running and training.
- Sport Style revenues were down 36% when compared with the prior year period. This category includes all genders of non-performance footwear.
The biggest sellers in Sport Style were the Classic, which sold a 172,000 pair, and was down 33.8% from the prior year period.
- The Lozan II with 97,000 pair and the ST329 with 76,000 pair, the Gowbury II with 69,000 pair.
- Other revenues were at 10% when compared with the prior year period. This category includes a apparel, Royal Elastics and Palladium.
- Excluding Palladium the other revenue category was down 20%, on a 28% decline in Royal Elastics and a 7% increase in apparel.
K-Swiss, Inc placed significant focus on developing three key goal global marketing initiatives for 2009 classic, tennis and running.
- Most important is for the firm to reintroduce and reignite the iconic K-Swiss Classic tennis show.
- In 2000, the firm made a deliberate decision to essentially replace the original Classic by introducing more atheletic-looking, contemporary Classic Luxury Edition sneaker.
- The initiative was very successful and grew the Classic business again.
This process created the original Classic 1966 look, with a comfortable feel insight consumers expect today and a iconic sneaker that defines a brand and the firm''s heritage.
- K-Swiss, Inc returned this new Classic to the market with an online initiative called K-Space, as well as pure product placement, online marketing, in-store VIP events, sponsorship and target printed advertising in select lifestyle magazine.
- K-Space is a new kswiss.com micro site that shows people who love the Classic.
- The second priority is to continue being a leading tennis brand with world-class athletes and product innovation. Last month the firm''s interchangeable midsole insert system was introduced in the new Defier miSOUL Technology tennis shoe.
K-Swiss, Inc has 12 sponsors pro triathletes wearing and winning in K-Swiss in competition every where.
- The firm is also moving into its third year of sponsorship of the Iron Man World Championship in Kona, Malibu Triathlon and South Beach Triathlon.
- A full line of running shoes is coming together very well and will slow it in 2009 with a new K-Swiss Run One miSOUL Technology running shoe and its interchangeable midsole insert system.
- There is nothing like it currently in the market.
In the Running Network Spring 2009 Review of running footwear, the K-Swiss miSOUL running shoe won best new shoe based on ware testing and review of independent testers.
- Running network represents 24 of the finest regional and national specialty running magazines and websites in North America.
- K-Swiss, Inc recently opened the first ever K-Swiss Running retail store in Taiwan.
- To celebrate the grand opening, the firm hosted a high energy 10-K Race in Taipei that attracted more than 300,000 runners on Sunday, February, 22nd.
