Shoemaker Kani Seeks to Sell 1.4 Million Shares in IPO

Kani Inc., a designer shoemaker created by the founder of L.A. Gear, plans to sell 1.4 million common shares in an initial public offering, according to papers filed Monday with the Securities and Exchange Commission.

The Manhattan Beach-based company filed to register the stock for sale, saying it expects to price the shares in the $10- to $12-a-share range.

Kani is headed by Robert Greenberg, who founded Santa Monica-based L.A. Gear in 1979 and led that footwear and apparel company until 1992 when he resigned in the midst of financial losses and sold the last of his company stock.

The same year he left L.A. Gear, Greenberg co-founded another company, Skechers USA Inc., which is the parent company of Kani. Skechers is offering the public a 35% stake in Kani through the first-time stock sale; Skechers and Greenberg will continue to control 65% of the company.

Greenberg’s son, Michael, 33, is Kani’s president. The younger Greenberg, who was a national sales manager at L.A. Gear, played a major role in Skechers’ decision to begin U.S. distribution of the popular British boots and shoes called Doc Martens.

Kani makes a variety of brand-name shoes designed by Carl Williams, also known as Karl Kani, and plans to sub-license its Kani brand name to companies that will sell clothing and other products under the Kani label, the company said.

Though Kani sells everything from athletic shoes to utility boots to sandals, the company recently “refocused its footwear efforts toward the production of athletic footwear, primarily high-performance basketball shoes aimed at a younger urban audience,” the SEC filing says.

To that end, the company signed a promotional contract with John Wallace, a rookie basketball player for the New York Knicks.

The company reported net earnings of $106,000 for the first half of the year, down from $217,000 a year ago, according to the SEC filing. Net sales slipped to $6.77 million in the first six months of this year, down from $8.57 million for the period a year earlier.

Kani expects to raise $13 million, after expenses, from the offering if the initial shares sell at $11 each, it said in the filing. The new funds will be used for domestic and international advertising, to get athletic endorsements for the company’s products, and to establish concept shops in department stores and specialty shops.

The company sells its shoes at such stores as Famous Footwear, J.C. Penney and Nordstrom.

Skechers will be a Kani competitor. One of Skechers’ greatest successes, mainly among teenagers, has been its trademark combat boots with tractor soles, steel toes and large heels.

Though Skechers markets its boots and other shoes under its own label, it also signed a licensing agreement in August 1993 to market and distribute the Karl Kani and Cross Colours brands.

The parent company said sales rose to $100 million last year.

Skechers and Kani executives declined to comment on the offering or to elaborate on the companies’ different businesses.

Joseph Charles & Associates Inc. will underwrite the offering and shares will trade on Nasdaq under the symbol KANI. The company will have 4 million shares outstanding after the securities sale, according to the S-1 registration statement filing.