Oakley Sees 4th-Quarter Payoff in New Products
Oakley Inc.’s aggressive effort to branch out beyond its core sunglasses business is paying off, the company said Monday.
Oakley, which is based in Foothill Ranch, said it expects fourth-quarter earnings to beat analysts’ estimates, thanks to a sales boost from shoes, clothes, prescription eyewear and watches in what is normally a slow period. Sales of these products more than doubled to $20.2 million in the three-month period.
“We believe we are just scratching the surface of Oakley’s potential in these four new categories, each of which offers a larger total market than the sunglass business,” Chief Operating Officer Link Newcomb said.
Analysts had estimated earnings of 11 cents a share for the quarter. The company posted operating earnings of 8 cents a share for the fourth quarter a year earlier on sales of $66.3 million.
The stock, which has more than tripled in price in the last year, on Monday rose 87 cents to $19 a share on the New York Stock Exchange.
“This is a very satisfying quarter,” said Eric Beder, an analyst with Ladenburg Thalmann. “It shows the shoes are becoming popular, that the watches are selling well and that apparel and the [prescription eyewear] divisions are both being set up well for next year.”
Indeed, Oakley’s footwear and prescription eyewear figure to be the fastest-growing segments for the company over the next year, said Marcia L. Aaron, an analyst with Deutsch Bank.
Oakley plans to release five new prescription-only eyewear models next month. And last year, the company distributed catalogs to optometrists’ offices for the first time and broadened its magazine advertising, Beder said. The domestic market for prescription eyewear is about eight times larger than the market for sunglasses, he said.
“It’s a huge opportunity for the company,” he added.
In the first 9 months of 2000, sunglass sales grew about 35%, but Beder predicted that growth rate should be more like 12% to 15% this year. Apparel is likely to grow about 20% to 30% this year, while footwear and prescription eyewear should at least double, he said.
A significant economic slowdown could trim sales of the company’s more expensive metal-framed sunglasses, which bear price tags as high as $400.
Barring a major slowdown, however, “I don’t see any major clouds on the horizon for this company,” Beder said.
Oakley said it expects to release its fourth-quarter results Feb. 14. The company issued Monday’s statement in connection with its presentation at a Goldman Sachs conference during the Sporting Goods Manufacturers Assn.’s Super Show in Las Vegas.
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Eyeing Profit
Sunglass maker Oakley Inc. is forecasting bigger fourth-quarter profit as sales of new products take off. The company’s shares have more than tripled in the last year.
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Oakley Inc., weekly closes and latest on the New York Stock Exchange
Monday: $19.00, up 87 cents
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Source: Bloomberg News
