NEW YORK — Oakley Inc.’s fourth-quarter income took an 85.1 percent nosedive as restructuring charges and a tepid sunglass business took their toll.
Net income plummeted to $487,000, or 1 cent a share, from $3.3 million, or 5 cents, a year ago. The most recent period included an aftertax restructuring charge of $1.8 million, or 2 cents a diluted share, to pay for adjustments in the firm’s European business. Without the charge, and a year-ago tax rate benefit, profits dipped 4.2 percent to $2.3 million, or 3 cents a diluted share, from $2.4 million, or 3 cents, a year ago.
Sales for the three months ended Dec. 31 advanced 14.1 percent to $102.9 million from $90.2 million a year ago.
Given the uncertainties surrounding coming months, Oakley backed away from its quarterly guidance going forward, but stood by its expectations for the full-year 2003.
Investors took a big bite out of the firm’s shares, which dropped 64 cents, or 7 percent, to close at $8.48 Wednesday on the New York Stock Exchange, after hitting a 52-week low of $8.05 in intraday trading.
Gross sunglass sales inched up 1.4 percent during the quarter to $57.9 million, noted the firm, as soft consumer spending and week retail conditions persisted. On a conference call, chief operating officer Link Newcomb said the firm was "very disappointed with the current results in our business, particularly in our high-margin sunglasses."
Reduced orders from Foot Locker, which has elected to carry Oakley sunglasses in fewer doors, contributed to the decline. Also, Sunglass Hut’s return as a customer seems, said the firm, to have hurt business with other retailers. Net sales to Sunglass Hut rose 9.7 percent to $7.9 million in the quarter.
The firm will produce an exclusive catalog, which will be paid for and mailed by Sunglass Hut in June, to up to 1.25 million homes and supported by in-store promotions.
"After a one-year absence, we intend to go back to the marketing, with Sunglass Hut’s dominant market presence, that proved so successful for us before 2002," said Newcomb.
Sales from the firm’s newer apparel, prescription eyewear, footwear and watch categories grew by 26.1 percent to $30 million and accounted for 27.1 percent of the Oakley’s sales in the fourth quarter. "Spring 2003 apparel bookings are very strong, reinforcing our momentum in the largest of these categories," added Newcomb in a statement.Sales from Oakley’s retail operations were up 90 percent to $9.5 million in the quarter. "With the store growth we expect in 2003, we expect sales through Oakley retail stores to exceed those to our largest wholesale customer," said Newcomb.
U.S. sales in the quarter, excluding the firm’s own doors, slid 7.4 percent to $36.1 million. International sales rose 24 percent to $57.3 million, or 19.3 percent on a constant dollar basis.
For the year, net profits sank 19.3 percent to $40.6 million, or 59 cents a diluted share, from $50.4 million, or 72 cents, a year ago. Sales for the 12 months strengthened 14 percent to $489.6 million, from $429.3 million the preceding year.
This year, the Foothill Ranch, Calif.-based firm is looking for sales to climb about 15 percent to $560 million, producing earnings of 55 to 60 cents a diluted share.
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