K-Swiss Widens Loss in Q1

Losses widened in the first quarter at K-Swiss Inc. despite double-digit growth in revenue.
The Westlake Village, Calif.-based company lost $9.8 million, or 28 cents a share, compared with a loss of $4.7 million, or 13 cents, in the same quarter a year ago.
Total revenues for the period ended March 31 increased 10 percent to $72.6 million, from $65.9 million. And worldwide futures orders from April through September surged 45 percent to $105.2 million, led by strong domestic demand.
But the bottom line suffered as gross profit fell 430 basis points, while selling, general and administrative expenses also rose as percentage of revenues.
“The continued momentum at K-Swiss and the initial brand positioning success at Palladium are encouraging signs,” Steven Nichols, chairman, president and CEO, said in a statement.
“[But] I don’t want us to get ahead of ourselves. We still have much work to do to sustain this momentum. The real test is when we stop looking at future orders for the second half of this year for 2012. Until then, we’ll keep feeding the marketing machine and extend our leadership and innovation,” he added on a conference call with analysts.
For the full year, K-Swiss expects revenues to grow between 25 percent and 35 percent. Consolidated gross margin is expected to be flat, while expenses could grow further, as the firm said it may increase “marketing expenditures depending on available branding opportunities.”
The firm ended the quarter with cash and cash equivalents of $31.7 million, a third of its balance as at March 31, 2010.

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