OAKLEY SALES, NET SHOW DOUBLE-DIGIT HIKE
NEW YORK — New products and classifications generated high double-digit increases in third-quarter sales and earnings at Oakley Inc.
In the quarter ended Sept. 30, the Foothill Ranch, Calif.-based sunglass and apparel manufacturer’s profit beat analysts’ expectations of 21 cents, swaggering upward 69 percent to $17.4 million, or 25 cents a share, from $10.3 million or 15 cents in the year-ago quarter.
The results come from a 51 percent jump in net sales, which reached $107 million from $70.8 million. All categories of merchandise experienced sales increases, the company said.
The news helped the performance of Oakley’s shares on the New York Stock Exchange. Shares jumped 10.6 percent to $19, close to its 52-week high of $20.63 it reached in September.
“These outstanding third-quarter financial results highlight the strength of our market-leading sunglass line and the increasing contribution of the new product categories introduced during the past few years,” Oakley chairman and chief executive Jim Jannard said in a statement.
Domestic net sales totaled $55 million and international net sales were $52 million, increases of 47 percent and 55 percent, respectively. Both increases were helped by a 79 percent sales increase on a global basis from Sunglass Hut, Oakley’s biggest customer.
International sales were driven by continued strength in all key markets. Sales in the South Pacific tripled, boosted by the 2000 Sydney Olympic games.
Link Newcomb, Oakley’s chief operating officer, said the company was able to capitalize on competitive market opportunities and strong consumer demand with its “product diversification strategy, outstanding new product introductions with improved fulfillment, our gains from taking control of our distribution base in all key markets and powerful financial leverage.”
The biggest driver of Oakley’s gains came from the strong performance of several new sunglass products — including the updated Wire styles, the Twenty and the Eye Jacket 2.0 — which were launched this year.
In addition, the company said standout performances came from Juliet and the entire X Metal family, the Minute, the New Straight Jacket and an expanding line of polarized styles. X Metal models’ same-store sales results more than tripled last year’s.
Third-quarter results also reflect better-than-expected sales from Oakley’s newer product categories, including fall introductions in footwear, apparel and performance watches.
Jannard said he was particularly satisfied with achieving profitability in Oakley’s footwear business, which produced sales of $4.3 million. “It is a beginning, and a base from which we intend to grow gradually and thoughtfully to firmly establish the Oakley brand in this large, global category,” he said.
The company’s backlog order was $35.7 million compared with $14.2 million at the same time last year. The increase reflects substantial outstanding orders for X Metal products as well as with strong future orders from retailers for apparel, ski goggles and footwear, the company said. Oakley plans to increase manufacturing capacity to support the new X Metal styles, with a 2001 introduction expected.
Gross margins fell from 62.3 percent to 60.8 percent due to the strength of the U.S. dollar in Europe and Australia, the company’s two largest international markets.
For the first nine months of the year, Oakley earned $41.3 million, or 60 cents a diluted share, from $22.3 million, or 32 cents, an 85.2 percent leap. Sales jumped 41 percent to $270.1 million from $191.6 million.