K-Swiss Q4 2008 Earnings Call Transcript

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2009-03-05 11:29:17.0

Tags: Shoe, Retail Company, Call Transcript, Earnings, Retail, Seeking Alpha, K-Swiss Inc.

Question-and-Answer Session

Operator

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions) And our first question comes from Jeff Van Sinderen with B. Riley. Please go ahead.

Jeff Van Sinderen - B. Riley & Company, Inc.

I wonder if you guys can talk a little bit more about your distribution strategy in the U.S. How that might be evolving in terms of shifted concentration this year. And then also like you're seeing in international markets in terms of what you're hearing from customers there and how that distribution concentration evolve there as well?

Steven Nichols

Distribution strategy United States it is pretty much unchanged for the last two decades. We attempt to sell more upscale retailers. We stay away from many of the retailers that only offer price as the only reason for carrying a brand. We've never sold Sears and big five and when Mervyns was around and May Company and people like that, we didn't sell them.

The distribution in the market is getting more complex and that there are just less players, that's the bad news. The good news is that the size of our company is so small in the overall size of the athletic business, that we don't need a lot of lead retailers to have a big impact on us. As the retailers get more competitive in price and just attacking each other, I think our distribution policy probably is more valid today than it was years ago.

One of the other things we don't do and never have done is made highly promotional low-quality shoes and I'm sure right at the moment that's one of the things that's hurting us, because that's all that's selling today. But when there is an upturn, the fact that we didn't train people to get our shoes at $29.99 and $39.99, I hope that will help us when times return somewhat to normal.

Jeff Van Sinderen - B. Riley & Company, Inc.

Okay. And then let me ask you in terms of new product lines, what kind of feedback you're getting from retailers? What kind of orders they're booking or what kind of plans they are relaying to you in terms of how they intend to buy some of the new product lines you guys are introducing?

Steven Nichols

Well we have three initiatives on K-Swiss and it's the Classic that's been re-mastered, its tennis and running. And we will introduce the Classic very, very late spring and back-to-school and we have done this very sparingly. We don't want too many of these shoes to be in the market, we'd like to keep it scarce. And pretty much whoever we've offered it to has bought the shoe but very lightly.

 

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