K•Swiss also issued guidance for the third quarter of 2007 and full-year 2007. The Company expects revenues for the third quarter of 2007 to be approximately $113 to $123 million and earnings per diluted share to be in the range of $0.28 to $0.38. The Company expects full-year revenues to be approximately $410 to $430 million and expects to report full-year earnings per diluted share of approximately $1.10 to $1.25.
The Company's estimates for the third quarter of 2007 and full-year 2007 reflect a significant decline in domestic revenues; substantial investments in product development and marketing for the K•Swiss brand, including a retail strategy; continued expansion of international operations; and continued investment in the Royal Elastics brand.
The estimates are based upon the following assumptions: gross margins will be approximately 46%; SG&A will not rise above $41 million for the third quarter of 2007 and $146 million for the full-year 2007; the annual tax ratewill be approximately 24%; customer order cancellations will be moderate; and the Company's growth initiatives with respect to Royal Elastics will not exceed a net loss of $0.11 per share for the full year.
Steven Nichols, Chairman of the Board and President, stated, "We continued to invest for a brighter long-term future at K•Swiss during the second quarter with new marketing and product development as well as progress in apparel and international operations."
"The premium positioning we have been establishing for the K-Swiss brand in tennis and now free-running have generated excitement for us, but we are still battling the weaker trends in footwear in the United States and a flattening of our largest markets in Europe."
"Significant investments in all four areas of our business will remain the primary emphasis for at least the next 12 months as we seek to build on this premium brand repositioning to reignite the domestic business and develop growth opportunities in new European markets."
marketing@alchempro.com
