KSwiss Inc. (KSWS, Financial) filed Quarterly Report for the period ended 2012-03-31.
K-swiss Cl A has a market cap of $134.2 million; its shares were traded at around $3.42 with and P/S ratio of 0.5.
KSwiss brand revenues decreased to $54,196,000 for the three months ended March 31, 2012 from $60,777,000 for the three months ended March 31, 2011, a decrease of $6,581,000 or 10.8%. The decrease in KSwiss brand domestic sales of 36.5% and the increase in KSwiss brand international sales of 14.3% is directionally consistent with the trends in futures orders at December 31, 2011. The overall decrease for the three months ended March 31, 2012 was the result of a decrease in the volume of footwear sold, offset by an increase in average wholesale prices per pair. The volume of footwear sold decreased 12.7% to 1,566,000 pair for the three months ended March 31, 2012 from 1,793,000 pair for the three months ended March 31, 2011. The decrease in the volume of footwear sold for the three months ended March 31, 2012 was primarily the result of a decrease in sales of the performance category of 27.7%, offset by an increase in sales of the lifestyle category of 3.1%. The average wholesale price per pair increased to $30.73 for the three months ended March 31, 2012 from $29.31 for the three months ended March 31, 2011, an increase of 4.8%. The increase in the average wholesale price per pair is attributable primarily to increases in average wholesale prices per pair in both performance and lifestyle categories and product mix of sales, offset by a higher level of sales of closeout product during the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
Gross profit margin, as a percentage of revenues, decreased to 37.8% for the three months ended March 31, 2012, from 39.4% for the three months ended March 31, 2011. KSwiss brand gross profit margin, as a percentage of revenues, was 32.7% for the three months ended March 31, 2012, a decrease from 34.1% for the three months ended March 31, 2011. The decrease in KSwiss brand gross profit margin was the result of an increase in the level of closeout product as a percentage of revenues and decrease in royalty income as a result of timing and loss of an international distributor for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Palladium brand gross profit margin, as a percentage of revenues, was 44.9% for the three months ended March 31, 2012, a decrease from 46.6% for the three months ended March 31, 2011. The decrease in Palladium brand gross profit margin was a result of higher inventory reserves. Our gross profit margin may not be comparable to our competitors as we recognize warehousing costs within selling, general and administrative expenses. These warehousing costs were $3,966,000 and $4,150,000 for the three months ended March 31, 2012 and 2011, respectively.
Overall selling, general and administrative expenses decreased to $31,408,000 (45.3% of revenues) for the three months ended March 31, 2012, from $39,553,000 (54.6% of revenues) for the three months ended March 31, 2011, a decrease of $8,145,000 or 20.6%. The decrease in selling, general and administrative expenses for the three months ended March 31, 2012 was a result of decreases in advertising expenses and compensation expenses. Advertising expenses decreased 37.2% for the three months ended March 31, 2012, due to an effort to reduce advertising spending to industry averages of approximately 10% of revenues. Compensation expenses, which includes commissions, bonus/incentive related expenses and employee recruiting and relocation expenses, decreased 16.9% for the three months ended March 31, 2012, as a result of a 20% reduction in headcount from the prior year in the US and Europe, a decrease in stock option compensation expenses and a decrease in interest expense related to the deferred compensation plan which was terminated in October 2011. Corporate expenses of $3,341,000 and $3,981,000 for the three months ended March 31, 2012 and 2011, respectively, are included in selling, general and administrative expenses and include expenses such as salaries and related expenses for executive management and support departments such as accounting and treasury, information technology and legal which benefit the entire Company. Corporate expenses for the three months ended March 31, 2012 decreased from the three months ended March 31, 2011, as a result of a decrease in compensation expenses, as discussed above, and a decrease in data processing expenses as a result of decreases in on-going maintenance expenses for the Companys SAP computer software system.
At March 31, 2012 and 2011, total futures orders with start ship dates from April 2012 and 2011 through September 2012 and 2011 were approximately $71,546,000 and $105,147,000, respectively, a decrease of 32.0%. The 32.0% decrease in total futures orders is comprised of a 39.5% decrease in the second quarter 2012 futures orders and a 26.9% decrease in the third quarter 2012 futures orders. At March 31, 2012 and 2011, domestic futures orders with start ship dates from April 2012 and 2011 through September 2012 and 2011 were approximately $21,669,000 and $47,155,000, respectively, a decrease of 54.0%. At March 31, 2012 and 2011, international futures orders with start ship dates from April 2012 and 2011 through September 2012 and 2011 were approximately $49,877,000 and $57,992,000, respectively, a decrease of 14.0%. The decrease in the domestic futures orders is attributable to the general decline in the KSwiss brand and the launch of a new product, the Clean Classic series, whereas the prior periods futures orders included Tubes product, which was a mature product offering. The decrease in the international futures orders is primarily attributable to a decrease in Asia region futures orders as a result of late transmission of orders from our largest Asia distributor and to the inclusion in 2011 futures orders of orders that were rescheduled for April to September 2011 delivery as a result of the factory delivery delays which occurred in 2011. The mix of futures and at-once orders can vary significantly from quarter to quarter and year to year and therefore futures are not necessarily indicative of revenues for subsequent periods. Orders generally may be canceled by customers without financial penalty.
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K-swiss Cl A has a market cap of $134.2 million; its shares were traded at around $3.42 with and P/S ratio of 0.5.
Highlight of Business Operations:
Our total revenues decreased 4.3% in the three months ended March 31, 2012 from the three months ended March 31, 2011. Our overall gross profit margin, as a percentage of revenues, decreased to 37.8% for the three months ended March 31, 2012 compared to 39.4% for the three months ended March 31, 2011 as a result of an increase in the level of closeout product as a percentage of revenues and a decrease in royalty income as a result of timing and loss of an international distributor, as discussed below. Our selling, general and administrative expenses decreased to $31,408,000 for the three months ended March 31, 2012 from $39,553,000 for the three months ended March 31, 2011, as a result of decreases in advertising and compensation expenses. Other income for the three months ended March 31, 2011 consists of the recognition of $3,000,000 resulting from the settlement and termination of one of our agreements with an international distributor. At March 31, 2012, our total futures orders with start ship dates from April 2012 through September 2012 were $71,546,000, a decrease of 32.0% from March 31, 2011. Of this amount, domestic futures orders were $21,669,000, a decrease of 54.0%, and international futures orders were $49,877,000, a decrease of 14.0%. We incurred a net loss for the three months ended March 31, 2012 of $6,706,000, or $0.19 per diluted share, compared to a net loss of $9,842,000, or $0.28 per diluted share for the three months ended March 31, 2011.KSwiss brand revenues decreased to $54,196,000 for the three months ended March 31, 2012 from $60,777,000 for the three months ended March 31, 2011, a decrease of $6,581,000 or 10.8%. The decrease in KSwiss brand domestic sales of 36.5% and the increase in KSwiss brand international sales of 14.3% is directionally consistent with the trends in futures orders at December 31, 2011. The overall decrease for the three months ended March 31, 2012 was the result of a decrease in the volume of footwear sold, offset by an increase in average wholesale prices per pair. The volume of footwear sold decreased 12.7% to 1,566,000 pair for the three months ended March 31, 2012 from 1,793,000 pair for the three months ended March 31, 2011. The decrease in the volume of footwear sold for the three months ended March 31, 2012 was primarily the result of a decrease in sales of the performance category of 27.7%, offset by an increase in sales of the lifestyle category of 3.1%. The average wholesale price per pair increased to $30.73 for the three months ended March 31, 2012 from $29.31 for the three months ended March 31, 2011, an increase of 4.8%. The increase in the average wholesale price per pair is attributable primarily to increases in average wholesale prices per pair in both performance and lifestyle categories and product mix of sales, offset by a higher level of sales of closeout product during the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
Gross profit margin, as a percentage of revenues, decreased to 37.8% for the three months ended March 31, 2012, from 39.4% for the three months ended March 31, 2011. KSwiss brand gross profit margin, as a percentage of revenues, was 32.7% for the three months ended March 31, 2012, a decrease from 34.1% for the three months ended March 31, 2011. The decrease in KSwiss brand gross profit margin was the result of an increase in the level of closeout product as a percentage of revenues and decrease in royalty income as a result of timing and loss of an international distributor for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Palladium brand gross profit margin, as a percentage of revenues, was 44.9% for the three months ended March 31, 2012, a decrease from 46.6% for the three months ended March 31, 2011. The decrease in Palladium brand gross profit margin was a result of higher inventory reserves. Our gross profit margin may not be comparable to our competitors as we recognize warehousing costs within selling, general and administrative expenses. These warehousing costs were $3,966,000 and $4,150,000 for the three months ended March 31, 2012 and 2011, respectively.
Overall selling, general and administrative expenses decreased to $31,408,000 (45.3% of revenues) for the three months ended March 31, 2012, from $39,553,000 (54.6% of revenues) for the three months ended March 31, 2011, a decrease of $8,145,000 or 20.6%. The decrease in selling, general and administrative expenses for the three months ended March 31, 2012 was a result of decreases in advertising expenses and compensation expenses. Advertising expenses decreased 37.2% for the three months ended March 31, 2012, due to an effort to reduce advertising spending to industry averages of approximately 10% of revenues. Compensation expenses, which includes commissions, bonus/incentive related expenses and employee recruiting and relocation expenses, decreased 16.9% for the three months ended March 31, 2012, as a result of a 20% reduction in headcount from the prior year in the US and Europe, a decrease in stock option compensation expenses and a decrease in interest expense related to the deferred compensation plan which was terminated in October 2011. Corporate expenses of $3,341,000 and $3,981,000 for the three months ended March 31, 2012 and 2011, respectively, are included in selling, general and administrative expenses and include expenses such as salaries and related expenses for executive management and support departments such as accounting and treasury, information technology and legal which benefit the entire Company. Corporate expenses for the three months ended March 31, 2012 decreased from the three months ended March 31, 2011, as a result of a decrease in compensation expenses, as discussed above, and a decrease in data processing expenses as a result of decreases in on-going maintenance expenses for the Companys SAP computer software system.
At March 31, 2012 and 2011, total futures orders with start ship dates from April 2012 and 2011 through September 2012 and 2011 were approximately $71,546,000 and $105,147,000, respectively, a decrease of 32.0%. The 32.0% decrease in total futures orders is comprised of a 39.5% decrease in the second quarter 2012 futures orders and a 26.9% decrease in the third quarter 2012 futures orders. At March 31, 2012 and 2011, domestic futures orders with start ship dates from April 2012 and 2011 through September 2012 and 2011 were approximately $21,669,000 and $47,155,000, respectively, a decrease of 54.0%. At March 31, 2012 and 2011, international futures orders with start ship dates from April 2012 and 2011 through September 2012 and 2011 were approximately $49,877,000 and $57,992,000, respectively, a decrease of 14.0%. The decrease in the domestic futures orders is attributable to the general decline in the KSwiss brand and the launch of a new product, the Clean Classic series, whereas the prior periods futures orders included Tubes product, which was a mature product offering. The decrease in the international futures orders is primarily attributable to a decrease in Asia region futures orders as a result of late transmission of orders from our largest Asia distributor and to the inclusion in 2011 futures orders of orders that were rescheduled for April to September 2011 delivery as a result of the factory delivery delays which occurred in 2011. The mix of futures and at-once orders can vary significantly from quarter to quarter and year to year and therefore futures are not necessarily indicative of revenues for subsequent periods. Orders generally may be canceled by customers without financial penalty.
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