K-Swiss has bought Form Athletics, a California-based company that specializes in lifestyle wear and gear for mixed martial arts, with a surf-and-skate flavor. It will be a division of K-Swiss, and will continue to be led by Mark Miller, the chief executive of the company who started it early this year.
His title will be president of Form Athletics, and he will additionally take on the role of president of K-Swiss Orange County, leading a new unit of the company that is going to focus on young consumers. Miller started up M3 Snowboards in 1993, and later he was a senior vice president and general manager for the Americas at DC Shoes.
Meanwhile, K-Swiss continued its slide in the second quarter, reporting a 13.3 percent sales drop to $46.8 million. Sales in the U.S. fell by 21.0 percent to $22.7 million, and revenues from outside the domestic market dipped by 4.6 percent to $24.1 million. The gross profit margin jumped by 7.3 percentage points to 37.4 percent.
K-Swiss’ quarterly net loss was $14.5 million, compared with a loss of $11.5 million for the same period in 2009. This year’s results include a one-time charge of $3.3 million related to the acquisition of Palladium, whose purchase price was revised last May.
Orders were down as well, falling by 8.6 percent to $64.6 million for ship dates from July to December. In the U.S. there was an increase of 17.1 percent to $25.0 million, but this couldn’t make up for the decline abroad of 19.7 percent to $39.6 million.
K-Swiss has managed to find temporary production plants to partially replace the capacity of a manufacturing facility in Thailand that closed in April. By October, the full capacity should be restored to make up for the loss.
For all of 2010, K-Swiss says its sales will probably be 5 to 10 percent below those of 2009. The gross margin should be 41-42 percent, up from 35.8 percent in 2009 because this year there are fewer closeout sales. Marketing expenditures are expected to grow, but will be re-evaluated as time goes on.
