K-Swiss top line trends in the US continue to improve on the margin, due in part to the launch of its new ‘Tubes’ running product. Key callouts are…
1) Dollar sales and market share both continue to trend higher on a fairly consistent basis.
2) Before the launch of this product, KSWS’ share of the running category was 0.02%. Now it sits at about 0.11%. That might not seem like a big number, but for a category that measures about $4bn at retail, these bps add up pretty quickly.
3) The new launch nearly doubled the average selling price of K Swiss’ existing running offering.
Is this a game changer for KSWS? No… But for a company that has been decimated by fashion trends, over reliance on one category, poor brand management, excess cuts from Foot Locker, supply chain pressure, and a money-losing subsidiary, we need to keep in mind that ANY stabilization has meaningful margin implications. Keith recently removed this one from his virtual book due almost entirely to liquidity (or lack thereof), which is a factor he places increased emphasis on today as we head into a stagflationary environment in 4Q. Over longer durations. I still really like both the trajectory of the P&L, balance sheet, and ultimately risk/reward.
