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A sharp drop in sales, including a 34 percent drop in domestic sales, caused second-quarter 2007 profits to fall for K-Swiss Inc., the Westlake Village, California company founded in 1966 by two brothers from Switzerland, Art and Ernie Brunner, avid skiers who penetrated the sports footwear market with the first all-leather tennis shoes priced three times that of others in the market.


From first half sales of $274 million and profits of $45 million in 2006, the company's sales and profits dropped to $225 million and $26 million in the same period in 2007. This case reviews the company's performance, analyzes the potential reasons for the large drop in sales and profits after forty years, and suggests changes in corporate strategies. K-Swiss primarily designs, develops, and markets athletic footwear for sports use, fitness activities, and casual wear under the brand names K-Swiss and Royal Elastics. It also markets apparel and accessories under the K-Swiss brand: tennis apparel such as skirts, shorts, tops, polos, dresses, and warm-ups for men and women, as well as tee shirts, caps, socks, and bags for casual athletic consumers. Products are sold through sales executives, independent sales representatives, and its website to specialty athletic footwear stores, pro shops, sporting good stores, and department stores here and overseas.
Arthur and Ernest Brunner were avid skiers and tennis players who moved from Switzerland to California in 1966 to start a business venture selling shoes. ...
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