K-SWISS NEWS GOOD, BUT SHARES DO DOWN CEO: PROFITS CAN'T ZOOM UP FOREVER.

Byline: Brent Hopkins Staff Writer

WESTLAKE VILLAGE - Despite robust first-quarter earnings, K-Swiss Inc. shares dove more than 20 percent Wednesday after the shoemaker forecast a softer-than-expected year.

In the most recent period, K-Swiss turned in revenue of $152 million, up from $115.8 million the same time a year ago. Earnings climbed to $21.8 million, 57 cents per share, up from $13.6 million, 36 cents per share. Worldwide futures orders, shipping April through September, were up 13.7 percent, accounting for $194.9 million worth of goods.

The company also tempered this good news with some less positive signs, revising its full-year guidance downward due to marketing and product development costs. It now expects full-year revenue in the $460 million to $480 million range, with earnings per share of $1.40 to $1.50, down from its prior guidance of sales of $490 million to $510 million and earnings per share of $1.50 to $1.65. It also forecast second-quarter revenue of $111 million to $117 million and earnings per share of $0.28 to $0.33.

After the morning's news, investors pushed the stock down $5.06 to close at $19.47. Noting that the stock has shot from about $14 to as high as $28 in the last year, K-Swiss president and chairman Steven Nichols was unfazed by the sudden drop.

``Our stock has had an incredible runup, and some people want us to do 135 percent every year,'' he said in an interview. ``No one can do that. We're pretty happy with where we are.''

Analysts figured that the dramatically lowered guidance could be a sign that K-Swiss is playing things conservatively for coming quarters. Given the company's recent hot streak, retail analyst David Campbell of Davenport & Co., a Richmond, Va.-based brokerage, said the rest of the year will be tough to match. He saw no sign for concern.

``Management's got a good record of controlling inventory during these down cycles,'' he said. ``I think that business may be soft for awhile because it's impossible to have something go up as fast as it has forever.''

The news was enough for Mitch Kummetz, who follows the stock for D.A. Davidson & Co., to cut his rating on the stock from ``buy'' to ``neutral.'' He thought the stock sell-off was warranted, given how deeply the company cut its guidance, but saw no far-reaching problems for the tennis experts.

``This company is managed for the long term,'' Kummetz said. ``They won't do anything radical for short term gain and jeopardize the long term as a result. They might deal with some difficulties, but they've proven in the past they have a good strategy.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com