Oakley Reports Flat Profits Despite Increase in Sales

Sunglass maker Oakley Inc. reported Tuesday that earnings were flat in the fourth quarter, despite a 19% increase in sales.

The Foothill Ranch-based company attributed the lackluster earnings, in part, to its continued investments in new products, including new lines of athletic shoes and wristwatches launched last year.

The new products “represent important growth engines for the years ahead,” Chairman Jim Jannard said in a statement.

Oakley also said Colin Baden, vice president of design at Oakley, has been named president, a position previously held by Jannard. Baden, 36, who had been with Oakley three years, will oversee product design and development, as well as corporate image and advertising.

For the fourth quarter, the company posted earnings of $3.4 million, or 5 cents a share, the same as a year go. Sales totaled $53.6 million, up from $45 million. The boost largely stemmed from a 45% increase in sales to Sunglass Hut, Oakley’s largest customer, the company said.

Sales of the company’s new athletic shoes, which began in July, have not met Oakley’s expectations, generating $1.7 million. Watch sales, which began in December, hit $2.4 million. The shoes sell for $125 a pair, while the watches cost about $1,500.

Oakley also launched a record number of new eye wear products in 1998.

Despite the disappointing footwear sales, the company said it will continue making shoes and will introduce new models this year.

For the year, earnings rose 23% to $24.1 million, or 34 cents a share, from $19.6 million, or 28 cents a share, in 1997. Sales rose 19.5% to $231.9 million from $194 million.

Oakley’s stock closed unchanged Tuesday at $7.63 a share in New York Stock Exchange trading. The financial results were announced after U.S. markets closed.