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K-Swiss Inc. (KSWS) Message Board

  • mingsphinx mingsphinx Jan 24, 2013 12:44 AM Flag

    How did sales decline?

    According to the company, K•Swiss actually sells fewer shoes than it did 10 years ago. Sales volume was 10.5 million in 1999 versus 8.0 million for 2011. How did such a decline happen?

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    • You do not need to be an expert in footwear to understand that the Classic will sell regardless of how badly managed the company is. Many of you are probably familiar with the Chaco brand of sandals. If not, you might want to check them out. Chaco sandals are often more expensive than other brands like Teva or Keen. But even though I pay more, I will keep buying Chaco sandals because, for me at least, these sandals just get it right. I will pay another $20-30 extra to make sure that my feet are taken care of because I know that wearing poor footwear will just end up costing me in other ways.

      The same can be said about the K•Swiss Classic. People buy these shoes not because they are tennis fanatics but because they are comfortable, provide good support and lasting. Once people decide that this is the shoe for them, then there is really no reason to change. So long as the Classic is available, there will be a market for it. Sales cannot be expected to grow much, but the cash flow generated would be like an annuity. And this is why you need to take a long hard look at K•Swiss. There was a huge increase in cash flow, which was accompanied by a massive run up in the stock price, and then a massive reversal as the company started to bleed cash like its carotid artery had been severed, which then culminated in this privatization offer. They tried to mess things up with idiotic acquisitions but you should never let go of your how you understand the core businesses to perform. Cash flow for a company like K•Swiss can fluctuate, but not by so much because sales of its main product ought to be steady.

      Be brave and take action or you will be dispossessed. In situations like these, you need to make the government, who are supported by the taxes you pay, earn their keep.

    • nothinglost Mar 23, 2013 11:46 AM Flag

      Remember the days when Reebok was a 1 billion dollar company? For a brief time, Reebok surpassed Nike as #1.

      What happened to Reebok is the same story as K-Swiss.

      Nike built it's brand on performance/athletics. While Reebok outfitted a few basketball teams by buying their support, their main business was always fashion driven product, beginning with the Princess aerobic shoe for women. Reebok has never been considered a pure performance/athletic brand because Reebok's focus was on fashion.

      So although Reebok made inroads into Nike's market, briefly taking market share, they were not able to maintain this position .... because fashion changes.

      Function over fashion won out in the duel between Nike and Reebok. Nike won.

      How does that fit with K-Swiss? At one time K-Swiss was considered a performance tennis shoe and maintained a loyal following of players. However, the brand had zero exposure or relevance in other team sports and of course could not survive on tennis product alone.

      In an effort to grow the business, it largely turned it's back on it's performance tennis product, (that brought them to the dance in the first place) and turned it's focus on building fashion driven product that was commonly referred to as "inner-city" footwear. K-Swiss had tremendous success for several years and rode the wave as long as they could ... when the fickle fashion changed and they had nothing to fall back on.

      Function over fashion. For an athletic brand, chasing fashion is a dangerous game. If you turn your back on what brought you to the dance, you may have to leave alone.

      • 1 Reply to nothinglost
      • Nonsense. The K•Swiss Classic has remained virtually unchanged since it was introduced. There are certain products in the market that have gotten it so right that they do not need to be refreshed and yet will continue to sell. Chaco sandals come to mind and the K•Swiss Classic would also fall into this category.

        For products like these, sales are unlikely to grow much, if at all. But you should expect a very steady cash flow from selling these evergreens. So unless you understand how K•Swiss came to bleed cash like its jugular has been cut, I would urge you to do what you can to initiate an investigation into the company before deal is allowed to close.

    • How did sales decline. I'll tell you:

      #$%$ Poor Customer Service. Period.

      I have been wearing K Swiss shoes for years. I went to purchase some replacements online and the website was malfunctioning. (The drop-down that would allow me to select my size did not drop-down, and I could not continue with the purchase without selecting a size.)

      On December 22 I e-mailed customer service, explaining that I was a cash money customer wanting to make a purchase, but couldn’t due to a malfunctioning website. The response from customer service? Silence. On February 8 I re-sent the same notice, explaining that this was the second time I tried to contact them with the goal of making a purchase. Again, the response? Silence.

      If customer service cannot be bothered to respond when I asked them on two separate occasions “Help me purchase your product” then they have shown me by their actions that they don’t care about their customers, their sales or their reputation.

      Right now, and in the process of typing out a letter to Nichols (both), Powlick, and Sullivan when I found this message board. When I saw the question “How did sales decline?” I immediately knew that I knew the answer.

      I work in healthcare, we are on our feet all the time. The topic of footwear is visited among my peers certainly more often than the general population. Now forward, whenever anybody raises the question of good durable comfortable work shoes, I will tell them “No matter what you do, stay away from K-Swiss. They are awful!” Now, granted, I will be talking about the company but if somebody misunderstands and thinks I’m talking about the shoes, then no one will be happier than I.

      • 1 Reply to nukemedtech2002
      • You are not describing poor service, but a troubling refusal by the company to engage in business. Is it normal for a business not reply to a customer who wants to buy? What does it tell you that the company is not interested in selling its products?

        Placing your faith in class action lawyers is misguided. There are very few instances where investors actually received a payout as a result of securities class action litigation. In almost all instances, the lawyers get paid a token amount by the company to cover their costs and fees after a settlement is reached and investors get nothing. People with more experience in the market would know that these class action lawyers are more likely to work in concert with the criminal syndicates looking to dispossess the investing public than to be the defenders they sometimes pretend to be.

        The only way to get any redress is to motivate the SEC and the DOJ in initiate an investigation. There is a pretty strong case for the regulators to get involved as the numbers reported by the company are inconsistent. But you need to be persistent and find strength in numbers. If need be, get in contact with your local congressional representative or senator. Understand that if you choose to do nothing, then you will be forced to accept the buyout and swallow the capital loss.

    • Excess inventory cannot explain the massive cash drain K•Swiss has experienced in recent years unless you believe that anyone would keep ordering a product they cannot sell only to liquidate it at prices below their costs.

      The numbers reported by the company – a positive gross profit margin and rising average selling prices – prove conclusively that inventory liquidation cannot be the cause for the company’s negative operating cash flow. If surplus inventory is the reason explains the cash drain, then the gross profit margin would be negative and average selling prices would decline.

      I urge you to seek an explanation for how the company can bleed so badly. Until you understand the reasons, you need to band together and try to motivate the SEC and the DOJ to take a closer look at K•Swiss. Relying on class action lawyers is a losing proposition that will gain you nothing. Only the government has the power to truly investigate this mess.

    • Let's see. You can start with poor management, poor product lines, poor direction on ideas, poor marketing when management decided on direction, poor advertising, poor etc. In short, poor ways lead them to this huge fall....

      • 1 Reply to callingbluff
      • They are selling shoes and their main product, the Classic, actually has a stable and loyal customer base. So even if management makes bad decisions, as long as the company keeps to the tried and tested formula, there should be a floor to revenue declines.

        Not only is the decline in revenue hard to explain, the company went from being solidly cash flow positive to hemorrhaging cash like it had to pay distributors to take their product almost at a flip of a switch. Officially, the company is saying that demand for their products was hit by the mortgage crisis of 2007/8, but now that their main markets are out of recession, it is difficult to understand why their numbers continue to decline.


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