K-Swiss is ready to take on China.
Following initial reports in May of an acquisition deal, Chinese sportswear firm Xtep International Holdings Ltd. completed its purchase on Aug. 2 of K-Swiss Global Brands, which comprises the K-Swiss, Supra and Palladium labels. And execs at the footwear firm are optimistic about the overseas opportunities under the new parent.
Barney Waters, president of K-Swiss, told FN this week that he is confident Xtep will give the heritage athletic brand the boost it needs to have its strongest presence in China yet. With the sale finalized, the primary initiative is to make K-Swiss a mainstay in China, a country where the brand has historically struggled to find its footing.
“We had a rollout [in China] a couple of years ago and it didn’t take off — a test of about 30 to 50 stores — and the investment in testing and tweaking and improving wasn’t sustained, so our business fizzled out,” Waters said. “[Xtep] gives us the opportunity to roll the brand out as it should be in China.”
The first steps in its plan include building a brand platform and positioning specifically for China, as well as creating an expanded product line and establishing an effective retail strategy. The strategy, according to Waters — who has led K-Swiss since 2016 — is a patient one: Start small, make adjustments and then rapidly expand.
Although the athletic brand has experienced difficulty in China, K-Swiss sales have improved overall. Under the ownership of its previous parent company, E-Land Footwear USA Holdings Inc., the label experienced back-to-back years of growth, including a 12% bump in revenue year over year in 2018.
During that time, K-Swiss worked to modernize the brand without abandoning its DNA. To accomplish this, it introduced a marketing platform focused on the entrepreneur market, made shoes specifically for the burgeoning e-sports industry and collaborated with internet personality Gary Vaynerchuk, among several other initiatives.
However, Waters noted that as part of Xtep’s plan for China, the brand will likely focus foremost on its heritage collections before attempting to deliver contemporary messaging.
“I think Xtep bought K-Swiss because of the heritage and that it has meaning and a real history, so they will obviously lean into that when they introduce the brand back into China through brand positioning, through the store environment, through the product mix,” Waters said. “The China approach will be to go back to square one and start building the story again around the history, or at least build the platform based on that.”
Waters admitted his job won’t change much with the acquisition, but he will work often with the Xtep team in China to educate them on the company’s history and ensure the brand identity is consistent overseas. He also said the work he’s done stateside to elevate the label will pay dividends in Asia.
“Chinese consumers like strong U.S. brands, so the better job we do here, the better it will help the China team leverage it in their region,” Waters said.
The KSGB acquisition comes just five months after Xtep entered into a joint venture agreement with Wolverine World Wide Inc. to grow the Saucony and Merrell businesses abroad.
Although the Chinese firm is broadening its portfolio, Waters believes K-Swiss will be a priority and that Xtep’s brands operate in diverse channels and categories, so there would be little competition.
“The key for portfolio brands is to not cross over,” he said. “The Xtep brand is running-based and mid-tier. Saucony is also running, but I would imagine they’re going to position that as high-end, top-tier and in primary markets. And Merrell is another category altogether. They’re all complementary brands, so we’re not stepping on each other’s toes.”
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