NEW YORK — Oakley Inc.’s growing apparel business got some of the credit for a first-quarter profit performance that, while 42.3 percent below year-ago levels, managed to exceed expectations.
Net income during the quarter fell to $3.2 million, or 5 cents a share. This compared with $5.6 million, or 8 cents, a year ago. Despite the drop, results beat the firm’s internal estimates of 3 cents by 2 cents and Wall Street’s best guess of 2 cents by 3 cents a share.
Sales for first quarter ended March 31 inched up 1.5 percent to $111.2 million from $109.6 million a year ago.
Excluding turnover at Oakley’s own doors, U.S. sales fell 10.7 percent to $46.8 million. The firm’s 15 O Stores and 66 Iacon stores managed a 53.4 percent surge in revenues to $8.9 million.
"Although our first-quarter results were clearly affected by the sluggish retail environment made worse by the…war in Iraq, late in the quarter we witnessed strong sales of our new 2003 sunglass styles," said chief operating officer Link Newcomb in a statement.
Gross sunglass sales slid 11.5 percent in the quarter to $63.9 million. Unit shipments declined 16.3 percent, though the fall was partially offset by a 5.7 percent rise in average sunglass selling price, primarily due to the weaker U.S. dollar.
Global net sales to Sunglass Hut dropped 24.1 percent to $9.1 million, reflecting the replenishment of severely depleted inventory levels after the firms suspended their relationship between August and late December 2001.
Gross sales of apparel, prescription eyewear, footwear, watches and other newer categories grew 18.6 percent in the quarter to $39 million and made up 33.1 percent of the gross take.
International net sales increased 8 percent to $55.5 million, a 2.2 percent drop on a constant dollar basis.
Oakley will add 43 new concept shops in department stores through June, making a total of 87 locations featuring a full range of products. Each of the concepts is expected to pull in $50,000 to $60,000 wholesale.
"Apparel sell-through this spring has been strong and the category enjoys great momentum in the trade," noted Newcomb on a conference call. This fall, the firm plans to sell apparel through 7,000 doors worldwide, a 12 percent increase. Newcomb said about 70 percent of Oakley’s apparel sales are in men’s with the balance in women’s."The women’s business is growing rapidly, but we still have more room to improve our effort there and get better turns at retail," said Newcomb.
The Foothill Ranch, Calif.-based firm also reaffirmed its sales projection of about 15 percent growth to $560 million this year. This assumes growth from newer product categories near the bottom end of the anticipated range of 30 to 35 percent, due to slower growth in fall footwear. Offsetting this are better than expected sales in goggles and increased sales to the U.S. military.