#1 too much reliance on one shoe, The Classic
#2 balance of K-Swiss brand line, including running, is uninspiring.
#3 non K-Swiss branded footwear, like Palladium and Royal Elastics, have not received the product design and advertising resources to make a contribution to the company's top line.
#4 selling Royal Elastics brand leaves only Palladium as a company growth avenue, and to date management has not shown assertiveness in designing Palladium shoes and, or, advertising the brand.
#5 management appears most enthusiastic about designing/advertising its new version of The Classic, which is essentially a bet on retro styling making a comeback. Actually "retro styling" made its comeback about 10 years ago, so that concept is already cold.
#6 company inventory levels too high for level of sales, and this will likely have a negative impact on margins for the balance of 2009.
#7 Mr. Nichols is a conservative style manager, which is a good thing. However, it's challenging to be competitive in the branded footwear business by using a conservative, defensive style strategy. At some point K-Swiss needs to evolve beyond its dependence on one show, The Classic.
Until that happens I expect it is possible K-Swiss topline revenues will continue their recent sharp Quarter over Quarter declines.