NEW YORK — Less than a week after posting second-quarter earnings that fell short of expectations, Oakley Inc. announced plans to open a flagship in London.

The Foothill Ranch, Calif.-based eyewear manufacturer also announced that Jim Jannard, who founded the company in 1975 and currently serves as chairman and chief executive officer, intends to purchase up to 2 million shares of common stock. According to the company, Jannard already owns approximately 42.7 million shares, representing more than 62 percent of outstanding shares.

The new O Store will be located on King Street in London’s Covent Garden district and will offer a selection of sunglasses, prescription frames, footwear, apparel, accessories and watches. Ribbon-cutting ceremonies for the new store, the company’s 31st, are slated for the first quarter of 2005.

Management’s focus on expanding the company’s retail presence is a strategy some analysts believe could create problems because it brings the company into direct competition with Luxottica, its largest customer.

According to second-quarter results, released on July 21, sales at the company’s retail stores increased 37.3 percent to $18.8 million. Despite this, earnings for the three months ended June 30 fell 12.4 percent to $16 million, or 23 cents a diluted share, compared with earnings of $18.2 million, or 27 cents, in the year-ago period.

In a report following earnings results S.G. Cowen analyst Lauren Levitan said the company’s other expansion efforts also could cause problems. “Oakley announced the recent opening of a new Sunglass Club outlet concept in Florida, which we believe could [over the longer-term] further complicate the relationship between Oakley and Luxottica, which remains the dominant sunglass retailer in U.S. outlet malls and Oakley’s largest retail customer,” said Levitan. Luxottica owns the Sunglass Hut chain.

— Ross Tucker

This story first appeared in the July 27, 2004 issue of WWD. Subscribe Today.