K-Swiss Inc., Q2 2008 Earnings Call Transcript

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2008-08-05 10:33:20.0

Tags: K-Swiss Inc.

Question-and-Answer Session

Operator

Thank you, sir. Ladies and gentlemen, at this time we will conduct a question and answer session. (Operator Instructions) And our first question comes from John Shanley with Susquehanna Financial Advisers. Go ahead, please.

John Shanley - Susquehanna Financial Advisers

Thank you and good morning everybody. Steven, has the brand had any further success in terms of penetrating additional markets in Europe? And is there a likelihood that the acquisition of an interest in the Palladium brand given the company an opportunity to further penetrate the French market with the K-Swiss brand?

Steven Nichols

So, the answer to that is ?no’ and ?yes’. Right at the moment we still are somewhat maintaining a good position in the three major areas we have been in. That's Germany, Benelux and the UK. We have not been particularly successful up until this point in Italy, France and Spain.

With regard to the Palladium purchase, we are starting to cooperate with them. The vast majority of their business has been or is at the moment in France and we have just agreed to have a joint showroom in Paris and we're looking, which of the Palladium sales force can actually carry K-Swiss or if some of the K-Swiss in France can carry Palladium. So, there will be some synergies there.

There's a smaller side. Last fall, we launched Free Running in Europe and the single most successful country -- by the way this was done almost exclusively with Foot Locker. The most successful country was Italy where we had excellent sell-throughs and the push and turn and by every way we could judge was better than any other country in Italy, in Europe. So, if this will be the beginning of a beach head in Italy we still don't know. But as of this moment, we have not made any good progress outside of the three main countries we've been in for a bunch of years.

John Shanley - Susquehanna Financial Advisers

Okay. Turning to the domestic market, Steven, do you feel that you've taken enough of the Classic product out of the market to begin to see some indications that there's a renewed interest either on the part of consumers or retailers because of the limited availability of that product category?

Steven Nichols

Taking it out of the market really hasn't renewed consumer interest. It just kind of cleared the stage. Our plan will be some time late in the second quarter of next year to launch what we call a Remastered Classic. And this will be more like the original Classic than the Classic that we've been selling the last five or six years. So, this shoe will be just a little thinner and sleeker and lighter and that will be accompanied by our major marketing effort for 2009.

 

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