K-Swiss Posts Bigger Loss in Q2

Losses widened at K-Swiss Inc. during the second quarter, though company executives said they are investing in a brighter future.

For the period ended June 30, the Westlake Village, Calif.-based firm reported a net loss of $14.5 million, or 41 cents a diluted share, compared with a net loss of $11.5 million, or 33 cents, a year ago. Earnings reflect a one-time charge of $3.3 million for the completion of its acquisition of the Palladium SAS brand.

Sales during the quarter fell 13 percent to $46.8 million, versus $54 million in the year-ago quarter. Domestic revenues fell 21 percent to $22.7 million, while international sales declined 5 percent to $24.1 million during the quarter.

During a conference call with investors and analysts, Chairman, President and CEO Steven Nichols said that, despite the quarterly loss, the company was making significant investments to strengthen the K-Swiss brand.

“We are taking all the right steps to invest for success in 2011 and beyond,” Nichols said.

Domestic futures orders with ship dates from July through December increased 17 percent to $25 million, up from $21.4 million for the same period last year. International futures orders declined 20 percent to $39.6 million, from $49.3 million a year ago.

For his part, Susquehanna Financial Group analyst Christopher Svezia said only time would tell if the company’s investments will pay off.

 “This is going to be one of those stories where they really have to show credible traction in these products,” he said. “They are clearly gaining traction with some of the more technical product, and that’s reflected in their back orders. But it’s a very competitive area. It’s going to take time and additional investments.”

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