K Swiss (NASDAQ:KSWS), Inc. engages in the design, development, and marketing of athletic footwear for sports use, fitness activities,
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K Swiss was founded in 1966 by two brothers dissatisfied with the tennis shoes in the market. The two Swiss brothers developed the K Swiss Classic,
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In 1986 Steven Nichols,
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In 1990 K Swiss went public,
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Pre Order Jordan 11 Low Bred Retro. Nichols has grown the company from sales of $20 million in 1986 to $410 million in 2007. The K Swiss Classic still represents two thirds of sales with only slight changes to the shoe from the original in 1966,
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Retro Jordan 11 Low Bred Gs For Sale. The Classic has since developed into a casual shoe,
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In the mid nineties Warren Buffett offered to buy the company but Nichols refused to sell. He said that he greatly admires Buffett but that Buffett offered no premium for the company. Nichols owns 22% of the company and insiders control 25%,
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The shoe sold today is virtually indistinguishable from the original Classic sold in 1966,
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Nichols has a very different strategy then most shoe companies,
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for formal dresses. The product development costs are drastically lower then its competitors who are constantly introducing new models,
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K Swiss is the most profitable vendor for the stores it distributes shoes to. K Swiss is very selective with the venders they will supply to. K Swiss avoids saturating the market with the Classic because that degrades the image of the brand.

For the past 10 years gross margins have averaged 45% compared to 42% at Nike (NYSE:NKE), 41% at Sketchers and 39% at Steven Madden (NASDAQ:SHOO). Operating margins have averaged 17% compared to 11% at Nike, 7% at Sketchers, 8% at Steven Madden. The 10 year average ROIC and ROE is 22% and 25%.

K Swiss is currently getting hit on two fronts. They are out of style and facing a consumer spending slowdown. In addition,
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In 2006,
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For the first half of 08,
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Nichols has done this four or five times in the past with success. Around K Swiss was hit by softening demand. Nichols hired new marketing people who introduced the Classic Limited Edition.

That drove sales up until the next slump which occurred in 2000,
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Pulling back on supply in bad times also serves to prevent large markdown activity. This further hurts sales in the short run,
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Nichols said during the 4th quarter conference call that he thinks the opposite. Instead of trying to save the quarter,
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Cheap Jordan 11 Bred Low, K Swiss thinks long term. "We do almost no short term things. Everything we do has a long term mentality to it." In the first quarter conference call he said "We think our problems are self manufactured. We didn move our product and marketing ahead to a point where our brand was in demand."

Total backlog for the 2nd half of the year is down 32%,
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Retro Jordan 11 Low Bred Pre Order. Management estimates that 3rd quarter EPS will be $0 ( $.15) and full year revenue of $300 $320 million and EPS between $.5 and $,
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In the past year or so new marketing people have been hired. A remastered K Swiss Classic is set to be introduced in mid 2009. K Swiss has also made a foray into running and free running shoes.

K Swiss has been dominant in tennis but tennis shoes represent only 6% of the athletic shoe market, while running shoes represent 30%. So far the reception they getting at running shops has been good. Also, K Swiss has signed on athletes such as Anna Kournikova and others, something that they haven done before. Nichols said they are still working on improving the marketing, which has become stale.

Steven Nichols and George Powlick are two of the most candid and honest managers out there. Insiders own a large amount of stock and have a long history of making shareholder friendly decisions. The shareholder letters and conference calls are some of the best I come across. The honesty, candor and long term focus of the manegment comes out strong.

During the last conference call, Nichols said that he’s 97% of the reason for K Swiss current problems. Since 1996 management has repurchased 25.5 million shares at an average price of $6.55, bringing the shares outstanding from 53.16 million on December 31,
Pre Order Air Jordan Low 11 Bred Retro, 1995 to 34.7 million today. I encourage readers to look at the last three conference calls and the three articles I linked to. The three articles worth reading are here, here and here, and the last three conference calls here, here and here.

During the second quarter this year, K Swiss acquired a 57% interest in Palladium for $8.4 million with the option to acquire the remaining 43% for a pre determined multiple of EBITDA in 2012. Palladium is a French shoe company that looks a lot like K Swiss did when Nichols took it over in ’87.

Palladium started making a military hiking boot for the French government in 1947,
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But, like K Swiss in 1987,
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Retro Jordan 11 Low Bred Gs zz34, too heavy, too expensive and doesn fit well. K Swiss can change all these things and still keep the shoe timeless look. K Swiss will also be able to use Palladium distribution and sales force to increase sales in Europe.

K Swiss product is distributed in 66 countries, but K Swiss has only begun to tap the potential of the brand internationally. International revenues have gone from $67 million in 2003 to $208 million in 2007. Before the slowdown during the past two years, international revenue had been growing at 50% plus a year. Revenue from Europe was $143 million in 2007,
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There are, however, signs of success in some of those countries. The company introduced the Free Running line of shoes across Europe and the most successful launch was in Italy where it was extremely well received.

Palladium should also help boost sales in Europe because K Swiss will also be able to use Palladium distribution and sales force to increase sales in Europe. Sales are also very strong in Asia (South Korea, Japan,
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Sales or this segment have gone from $25 million in 2002 to $65 million in 2007. In South Korea there are 200 K Swiss concept stores managed by a distributor. In China a distributor opened 12 stores in 2007. K Swiss clearly has a vast untapped market in these countries,
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