K-Swiss Shares Jump 23% on Unexpectedly High Earnings

K-Swiss Inc. shares rose 23% on Tuesday after the company said its earnings topped expectations and that it would split its stock 2 for 1 and increase its dividend.

K-Swiss shares gained $7.88 to close at $42.50 on Nasdaq. The stock’s price has more than doubled in the last year. Late Monday, K-Swiss, based in Westlake Village, said its fiscal fourth-quarter earnings more than doubled and announced the stock split and 50% dividend increase. The report was made after the close of trading.

Shares of competing athletic shoe companies such as Nike Inc. and Reebok International Ltd. have fallen because of a shift in fashion from athletic shoes to dressier styles such as those offered by Hush Puppies. That has meant a glut of athletic shoes in stores and hurt sales and earnings. K-Swiss has supplied fewer stores, in order to build up its shoes’ cachet, and that has helped it prosper, the company said.

“There’s been a huge proliferation of brands being funneled into an overexpanded retail chain,” said Steven Nichols, K-Swiss’ chairman and president. “The average consumer has more places to buy Nikes than to buy milk.”

The company also has a new emphasis on design, marketing and advertising, with more new hires in those areas, Nichols said.

K-Swiss said its net income rose to $3.72 million, or 65 cents a share, from $1.3 million, or 22 cents, in the year-earlier quarter. The company had been expected to earn 54 cents, the average estimate of four analysts surveyed by First Call Corp.

Sales rose 68%, to $40 million from $23.8 million.

K-Swiss’ board declared a 2-for-1 stock split of Class A and Class B shares. The split will be on March 26 to shareholders of record on March 15.

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K-Swiss Run-up

The Westlake Village-based athletic shoemaker has seen increasingly steady earnings growth:

4th Q. 1998: $0.65

Source: Bloomberg News