Shoemaker’s Shares Take Step in Right Direction

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K-Swiss Inc. took a big leap on the LABJ Stock Index last week, but in fact the company has been having trouble keeping up with its rivals.

Though the Westlake Village shoe company saw its stock climb 11 percent to $3.32 for the week ended June 20 – making it one of the top 10 gainers on the index – it remained down almost 70 percent from a year ago. (See page 56.)

Analyst Sam Poser with Sterne Agee & Leach Inc. in New York attributed last week’s gain to the shares’ general volatility. He said the stock’s long-term downturn shows that the company’s new ideas haven’t worked out.

“The marketing went up and the sales didn’t go with it,” Poser said.

Those ideas include the company’s Tubes shoes, which feature small tubelike structures on the outer sole and are endorsed by celebrity trainer Jillian Michael. It also has come out with Blade-Light running shoes, a very lightweight running shoe designed to improve speed.

However, revenue was down 4.3 percent to $69 million in the first quarter, delivering a $3.1 million net loss.

The results are a disappointment for the company, which is best known for its classic white leather tennis shoes and its focus on stylish footwear. K-Swiss has put a lot of resources in recent years toward developing and marketing top-quality athletic shoes.

“We wanted to move the brand closer to the Nikes and Adidas of the world because we believed that would give us cushion from being so trend vulnerable,” said David Nichols, president of K-Swiss, who believes it could take five to eight years for the company to achieve its goals.

“That was a long-term investment on our part, and we’re about three years into it,” he said. “For us to be successful, we don’t have to beat everybody, we just have to get our share of the market.”

Meanwhile, Nichols said the company is also working to revitalize sales in its traditional lines of lifestyle shoes. Two months ago, the company launched a line of shoes in J.Crew stores. K-Swiss also will start selling a redesign of its classic sneakers in time for back-to-school shopping.

“The trends the last few years haven’t been in our favor,” he said. “That gave us time to focus on running, but now we think the lifestyle trend could be coming back toward us. Our goal is to have both thriving again.”

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