K-Swiss reports first quarter results

07 May '10

4 min read

Steven Nichols, Chairman of the Board and President, stated, “We are confident in the direction of the K•Swiss and Palladium brands. While the unexpected short-term loss of capacity in Thailand is disappointing and has cost us some important business, we are continuing to make inroads in Running and Tennis with product innovations and marketing efforts. This is a pivotal year for us as we continue to invest for success in 2011 and beyond, and I'm pleased with how we have begun the year in positioning K•Swiss as the California Sports Company.”

Guidance
For 2010, the Company expects full year consolidated revenues to be 5% to 10% less than 2009. On a year-over-year basis, the Company expects to report decreased revenue in the second and third quarters and an increase in the fourth quarter.

Consolidated gross margin is expected to increase to approximately 43% compared with 35.8% in 2009 due to expected lower closeout sales during 2010 compared to 2009.

Selling, general & administrative expenses are expected to rise to $143 million to $148 million due to increased marketing expenditures. These expenditures will be continually evaluated and could change over time, including the possibility of even greater marketing expenditures depending on available branding opportunities.

Other expense will be charged approximately $3,700,000 in the second quarter due to the Amendment to the Palladium Purchase Agreement.

The tax benefit rate is projected to be approximately 25%. Should the Company be unable to substantiate evidence for realizing the benefit of its deferred tax assets in the second half of the year, the Company might be required to establish a reserve of $10.9 million, plus any deferred tax assets established during the remainder of 2010, if any.

K-Swiss Inc

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