Oakley Files Lawsuit Against Luxottica

Oakley Inc., ratcheting up its feud with rival Luxottica, which makes Ray-Bans and other trendy sunglasses, has filed a lawsuit accusing the company of selling knockoffs of Oakley designs.

The lawsuit, filed this month in federal court in Santa Ana, is the latest salvo in a conflict that escalated after Luxottica acquired Oakley’s biggest customer, the Sunglass Hut chain, and began slashing orders of Oakley shades.

Since then, the stakes have gotten even larger as retailers of pricey sunglasses and other luxury items contend with a sagging economy heading into the critical holiday shopping season. Sales of Oakley sunglasses have slumped at airports and resort retailers as air travel has declined, company spokesman Gar Jackson said.

In its Nov. 6 lawsuit, Oakley said Luxottica also reneged on a promise to keep business as usual after acquiring Sunglass Hut, the 2,000-store chain that had accounted for about 20% of the Foothill Ranch firm’s business before the deal. Instead, Sunglass Hut stopped ordering Oakley sunglasses and began selling knockoffs of its brightly colored glasses, the suit alleges.

The lawsuit seeks a court order forcing Luxottica to withdraw the products in question, as well as unspecified damages.

Luxottica said it intends to defend itself.

In a sign of the growing rancor between the two companies, some Oakley sunglass ads carry a skull and crossbones with a warning: “Not available at Sunglass Hut.”

The loss of sales through Sunglass Hut’s business forced Oakley to lower its financial projections for the second half of the year, sending its stock into a tailspin.

The stock tumbled 37%, or $6.46 a share, to $11.02 on Aug. 2, the day Oakley revised its earnings estimate. On Friday, the stock closed at $13.61, off 24 cents, on the New York Stock Exchange. Luxottica shares fell 11 cents to $17.10, also on the NYSE.

Oakley’s sunglasses, which sell for as much as $400, account for about 75% of Oakley’s business.