The SGB Interview: Steven Nichols, President & CEO, K-Swiss

WESTLAKE VILLAGE, CAó He sells a good number of tennis shoesóthe slowest-selling category in the footwear industry over the past three yearsóyet heís probably turned away more business than many brands have accepted in that time. But, by carefully limiting where his products are sold, Steven Nichols, president and CEO of K-Swiss, has quietly built one of the most in-demand brands in the footwear business using the strength of his tennis silhouette to sell a timeless classic. Nichols recently took time out to talk with SGB about a variety of topics including the explosive growth of the K-Swiss brand, the launch of the new ìTrainingî category, selling on the Internet (K-Swiss has been somewhat of a cyber pioneer in the footwear business), and his acquisition-minded strategies going forward.
SGB: Over the years, K-Swiss may have done a better job than any other brand in the industry in balancing a fashion, or classic look, with a performance look. Whatís your approach to succeeding in both the classic and performance ends of the business?
Nichols: The main reason weíve been able to succeed at that is because that really is our company. Our classic shoe, as early as 1966, was a breakthrough tennis shoe. When it came out, the first shoe was actually made in Switzerland and brought to the U.S. It was one of the first leather tennis shoes ever. Over the years this breakthrough shoe became obsolete as a performance tennis shoe, just the way that a Sperry Top Sider is not regarded as a boat shoe, only in that it addresses a bigger market. If you go to the movies in Manhattan on a Saturday night, you might wear a Sperry Top Sider. Our original classic tennis shoe now is the kind of thing that a high school or college kid, after they put on khakis or jeans, puts his feet into. Thatís a significantly bigger market than tennis. But, fortunately, we brought with it our original mentality to make excellent tennis shoes. Thatís continued today. About three years ago, we came out with a line of tennis shoes called 7.0. Thatís the ranking that a top player would claimóan Agassi or Sampras. These shoes retail between $90-$100. They are absolutely state of the art. Based on the heritage we have in tennis, we doubled sales after the first year; now in their third year, sales have more than doubled again. Weíve remained very concentrated on tennis, but itís really only a small percentage of our businessóabout 10 percent.
SGB: Basketball had a huge heyday, and is still a very important category. Now that weíre in the midst of a running boomóat least in terms of footwear salesóhow important is it for your business that tennis gets its day in the limelight?
Nichols: Everything old is new again. There are four major [tennis] events and, generally, the world stops and pays attention to them. The attendance at these events, well, you canít even get in. The sport is at a ten-year low. Itís a question of the sport