K-Swiss Shares Jump On Upgrade


Salon Staff
February 6, 2012 11:36PM (UTC)

Shares of K-Swiss Inc., which makes casual and athletic footwear and accessories, jumped Monday after a Sterne Agee analyst upgraded its rating on the shoe company's stock.

THE SPARK: Stern Agee analyst Sam Poser upgraded his rating of K-Swiss to "Neutral" from "Underperform", saying the long-struggling company may have put some cost-control and product improvements in place to help halt its downward spiral.

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THE BIG PICTURE: K-Swiss has been able to revive its poor sales recently, reporting last quarter that its revenue jumped 40 percent for the period. But the company is plagued by climbing debt, lower profit margins, a continued tax audit and a write-down on its purchase of the Form Athletics brand , which led to a loss of $20 million.

Investors have been upset with the company's unstable sales trends and unsettling inventory levels. K-Swiss stock has lost more than half its value in the past year.

THE ANALYSIS: At the company's current low stock price, Poser said he doesn't seem many reasons for it to fall further, but he doesn't see a rapid turnaround either, given the company's declining revenue and weaker presence at retailers over the past 5 years.

K-Swiss has introduced a number of products that are showing some promise with consumers, but he said it has been burning cash for three years and he does not see that changing until later this year or early 2013.

K-Swiss's fourth-quarter results, due out later this month, may shed further light.

SHARE ACTION: Investors were cheered by any sign of good news for the company and sent its shares up 22 cents, or 6 percent, to $3.90 by midday. The shares have traded between $2.47 and $12.48 in the past 52 weeks.

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