Jul 31, 2008
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K-Swiss Q2 profit up, outlook bleak

Jul 31, 2008

July 31 (Reuters) - Athletic-shoes maker K-Swiss Inc reported a more than three-fold rise in quarterly profit, helped by a gain from the settlement of a lawsuit, but said it could post a loss in the third quarter and forecast weak sales for the period.

The company, which has been hurt by sluggish sales in the United States, also cut its revenue outlook for 2008.

K-Swiss posted a profit of $26.4 million, or 75 cents a share for the second quarter, including a gain of 52 cents a share. It earned $7.7 million, or 22 cents a share, a year earlier.

Last month, the company said it received $30 million from Payless Shoesource, a unit of Collective Brands , as part of a lawsuit settlement related to a trademark infringement.

The company, which sells its products under the K-Swiss and Royal Elastics brands in the United States and Europe, reported a 17 percent fall in revenue to $85.2 million.

Sales in the United States fell about 33 percent and international revenue growth was nearly flat.

Analysts on average expected a profit of 2 cents a share, excluding special items, on revenue of $75.9 million, according to Reuters Estimates.

For the third quarter, K-Swiss, which sells athletic, training, and children's shoes; apparel and accessories, forecast a loss of 15 cents to breakeven per share. Analysts were expecting the company to break even.

The company sees third-quarter revenue of $65 million to $80 million, lower than analysts' estimates of $82.1 million.

For 2008, K-Swiss, which competes with larger rivals Nike Inc and Adidas AG , now sees revenue of about $300 million to $320 million, down from its prior view of about $305 million to $330 million.

But, the company raised its 2008 profit outlook to 50 cents to 65 cents a share, from it earlier estimate of 5 cents to 25 cents a share.

Analysts were expecting earnings of 18 cents a share for the year, before special items, on revenue of $323.0 million.

Shares of the Westlake Village, California-based company closed at $15.42 Wednesday on Nasdaq. (Reporting by Lalitha Murali in Bangalore; Editing by Amitha Rajan)

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