A Shoe Drops at K-Swiss: Fool by Numbers

On Feb. 22, footwear designer and marketer K-Swiss (Nasdaq: KSWS  ) released fourth-quarter and year-end results for the period ended Dec. 31. Here are the quick and dirty details for the quarter.
  • Total sales grew only 1.7%, thanks to a "decline in the domestic business" to the tune of 18.4%. Management sees domestic sales falling 30% for 2007. International sales improved nearly 50%, but account for less than half of total sales.
  • Net income fell 9% as operating margins plummeted on the weak domestic sales trends.
  • Worldwide futures orders decreased 22.5% year over year -- not good at all.
  • Management is projecting first-quarter 2007 diluted EPS of $0.41-$0.51 and full-year earnings of $1.20-$1.50, for a potential year-over-year decline of 45%.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q4 2006

Q4 2005

Change

Sales

$92,300

$93,833

$92,289

1.7%

Net Profit

--

$10,670

$11,557

(7.7%)

EPS

$0.31

$0.30

$0.33

(9.1%)

Diluted Shares

--

35,476

35,430

0.1%

*Three months ended Dec. 31, 2006 and 2005.

Get back to basics with a look at the income statement.

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

45.39%

46.58%

(1.19)

Operating Margin

11.17%

15.41%

(4.24)

Net Margin

11.37%

12.52%

(1.15)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$260,229

$197,464

31.8%

Accounts Rec.

$40,988

$42,411

(3.4%)

Inventory

$59,178

$61,164

(3.2%)


Liabilities

Q4 2006

Q4 2005

Change

Accounts Payable

$12,262

$19,654

(37.6%)



Learn the ways of the balance sheet.

Cash Flow Highlights

2006

2005

Change

Cash From Ops.

$71,998

$94,200

(23.6%)

Capital Expenditures

$9,429

$1,485

534.9%

Free Cash Flow

$62,569

$92,715

(32.5%)



Find out why Fools always follow the money.

Comparable companies:

  • Nike (NYSE: NKE  )
  • Timberland (NYSE: TBL  )
  • Wolverine Worldwide (NYSE: WWW  )
  • Crocs (Nasdaq: CROX  )
  • Deckers Outdoor (Nasdaq: DECK  )

Related Foolishness:

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Fool contributor Ryan Fuhrmann is long shares of Nike but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.


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