Futures orders at K-Swiss Inc. are up significantly, but the company does not expect to turn profitable for at least another year, it said Thursday in a call with analysts.
And to do that, explained George Powlick, VP and CFO of K-Swiss, the firm needs to do two things: Make annual revenue of between $350 million and $400 million, and dial down marketing spend.
Analysts said they believe the Westlake Village, Calif.-based firm could pull it off, as its total futures orders for the first half of 2011 increased 15 percent to $92.9 million. That growth was driven by the domestic market, where futures surged 53 percent to $45.2 million as of year’s end.
“Futures trending more than 50 percent in the domestic market sounds pretty good to me,” said Jeff Van Sinderen, analyst at B. Riley & Co. “The part of their business that is sold through the performance channel — like at running stores — has been building and growing off a small base the last couple of years, so if they are looking at $350 million to $400 million for the year, they should be able to hit that in 2012.”
Full-year revenue for 2010 fell 10 percent to $217 million, from $240.7 million in 2009.
The company said it expects full-year revenue for 2011 to grow between 25 percent and 35 percent from $217 million. If it hits targets in 2011, it would need to grow another 25 percent to 35 percent from there to hit $350 million in 2012.
Meanwhile, losses widened more than expected at the company in the fourth quarter.
For the period ended Dec. 31, 2010, the Westlake Village, Calif.-based firm lost $20.6 million, or 58 cents a share, compared with a net loss of $12.5 million, or 46 cents, in the year-ago period.
Total net loss for the year was $68.2 million, or $1.94 a share, up from a net loss of $28 million, or 80 cents, in 2009.
Total revenues inched up more than 1 percent to $42.7 million in the quarter, but the bottom line was impacted by several one-time charges, related variously to income tax expense, a revaluation of the purchase price of Palladium SAS and the impairment of goodwill and intangible assets pertaining to the trademarks of Palladium. K-Swiss ended the year with cash and cash equivalents of $49.2 million, almost a third of the $139.7 million it had at the end of 2009.
Analysts were expecting a loss of 30 cents for the quarter, as polled by Yahoo Finance.