Oakley Profit Falls but Beats Forecast

Sunglass maker Oakley Inc. said Wednesday that third-quarter earnings fell almost 15% but beat Wall Street’s lowered expectations.

The Orange County company, which also makes shoes, clothes, watches and prescription eyewear, said profit for the quarter ended Sept. 30 was $12.3 million, or 18 cents a share, compared with $14.4 million, or 21 cents a share, a year earlier. Last year’s third quarter included a benefit of 2 cents a share from a reduced tax rate.

A consensus of analysts from Thomson First Call expected earnings of 16 cents a share. Oakley warned last month that it would not meet its initial third-quarter earnings expectation of 27 cents.

Sales for the quarter rose 16% to $131.9 million from $114 million last year, when Oakley was embroiled in a dispute with Sunglass Hut, its largest customer.

Oakley’s stock rose 14% to close at $11.28, up $1.38, in New York Stock Exchange trading.

Analyst Kristine Koerber, with WR Hambrecht & Co., said the stock price may have jumped partly because Oakley beat analysts’ expectations, even though the expectations were lowered.

For the fourth quarter, Oakley said it still expects earnings of about 10 cents a share on sales of $108 million to $110 million. If it meets those expectations, the Foothill Ranch-based company said earnings for the year would be 68 cents a share, compared with 72 cents a share in 2001, which included a tax-rate benefit of 6 cents a share. Sales for the full year would rise about 16%.

In 2003, Oakley said it expects first-quarter earnings of 8 cents a share, equal to this year’s first quarter, and sales growth of 10%. For the remainder of that year, the company said it expects sales and earnings to both grow at a rate of about 17%. For all of 2003, the company anticipates earnings growth of 13% on a 15% increase in sales.