Any bad news around KSWS’ 2Q should mask what I think is a solid 2-year margin/cash flow expansion call. This is one to keep on your screen.

Why the 2Q flag? Check out the chart below. Though KSWS has been losing share – it has been at a less severe rate for much of the past 12 months. What I find ironic, however, is that the share position peaked almost to the day of KSWS’ last quarterly conference call – when management presumably saw a light at the end of the tunnel for its business (even though this team never articulates it as such).

Since then, KSWS market share has regressed slightly. My sense is that this is, in part, as the company clears inventory of its more basic product (recall that low performance trend is rolling over) and prepping to get in the performance footwear game with its running shoe in the spring. Am I thrilled that KSWS will go head to head with Nike, Under Armour, New Balance and Asics? Hardly. But the numbers KSWS needs to crank its P&L are a rounding error to the market.

In the meantime, it is beginning to see its easiest revenue, margin, working capital and capex compares in years – at the same time it should start to harvest recent investments.

I like how this is shaping up.
Market share peaked almost to the day of the last conference call. Opportunity?