Footwear company K-Swiss Inc.'s style mainstay it's Classic shoe is getting scuffed up.
Sales of the Classic dipped 14 percent for the quarter ended March 31 from the same period the prior year, even with some offsetting due to a price increase. Overall, domestic revenues from K-Swiss brand products fell to $103 million in the first quarter from $118 million from the like quarter the year before.
"The first quarter results continue to reflect the negative trends we have been experiencing in our domestic business," Steven Nichols, president and chairman of the board of Westlake Village-based K-Swiss, said in a statement. And Nichols didn't sound positive about the immediate future. He predicted a domestic turnaround wouldn't be in full swing until 2007, at the earliest.
Deena Friedman, an analyst with Brean Murray Carret & Co., believes fashions are passing K-Swiss by. "We continue to be concerned that K-Swiss' product is not trend-right in this dressier fashion environment, which is more supportive of non-athletic footwear," she wrote in a research note.
Friedman, who has a sell rating on K-Swiss, cut her earnings per share forecast 3 cents to $1.34, which is ahead of K-Swiss' reduced guidance of $1.55 to $1.74 for the year. After the company reported earnings last week, K-Swiss shares decreased 1.7 percent to land at $28.89 on April 27.
There were a few bright spots during the first quarter. International K-Swiss brand sales were up 30 percent to $44.5 million. Revenues for its Australian-bred subsidiary Royal Elastics increased nearly 40 percent to $2.9 million worldwide. That increase happened with Royal Elastics' new L.A.M.B. product the shoes associated with pop star Gwen Stefani's design outfit on the shelves.
Still, K-Swiss acknowledges that it is going to be concentrating on its ailing core domestic operation. "Reigniting the domestic business is our top priority," said Nichols.
French West Inc. came in at the top of the denim market literally.
Founder Daniel Bohbot started the company based on Hale Bob tops, which are designed to accent pricey jeans for a stylish night on the town. Together, the jeans and shirt can set a woman back about $500.
With that high-rolling customer ensnared, French West is branching out from tops to boost revenue. Already, French West saw its sales leap to $16 million last year, double the prior year's take. This year, the company expects sales to almost double again.
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