A Humbled Shades Maker Strikes Back JUST about everybody described the 1997 performance of Oakley Inc.
, the flashy sunglasses maker, with one word: humbling. The company's sizzling growth did not just slow; it reversed. The stock tumbled. The market for its high end shades was hit hard.Indeed, Oakley's undiminished aggressiveness has already made it one of the budding turnaround stories of 1998. Its high technology sunglasses, which received much free publicity at the Winter Olympics from athletes sporting them on camera, are staging a comeback. And the company is introducing an array of technologically innovative models, including the Racing Jacket, Mars and Minute lines.Oakley's glasses can be expensive the Mars models cost $265 in natural metal and $315 with stitched leather detailing but the early signs are good. The company has said there are already indications of strong sales of the Racing Jacket and Mars lines, as well as of the Fives line, which was introduced in 1997.The stock, which was not far from $8 a share in mid January, closed at $12.75 on Friday. That is still a long way from the $23 share price of August 1995, when Oakley went public, but a sign, analysts say, of a potentially sustainable rebound.Perhaps more important, this upstart is going for the big time: within two months it will introduce a tightly guarded secret, a high performance sports shoe that will compete with brands of Nike, which is struggling with its own problems.True, the move will only deepen a tense rivalry with Nike, which went at Oakley two years ago by introducing its own line of sleek sunglasses, touching off a series of lawsuits between the companies. (Phil Knight, Nike's founder, was almost always pictured wearing Oakley sunglasses but has abandoned them for his own brand.)But if Oakley's sports shoe succeeds, analysts say, and takes even a couple of points of market share from Nike in the vast footwear market, it oakley parts will be icing on the cake for a company that was long regarded as better at technological pizazz than at marketing muscle.''Very few people have seen the shoe,'' said Francis Gannon, a portfolio manager at Sun America Asset Management, which owns about 250,000 shares of the stock. ''But given their record, the shoe is the kicker to the story. That's why I like the stock a lot.''Ms. Aaron upgraded the stock in February, from ''market perform'' to ''buy,'' based on what she perceived to be the strength of the new Mars and Minute sunglasses and the fact that the company seemed to have worked out some manufacturing and sales problems that plagued it last year.She said that Oakley had been unable to keep up with demand for some new products but that a new manufacturing plant and better planning had helped.''The jury will be out for some time, I think, on the footwear,'' Ms. Aaron said.But she added: ''They have become a real company. They've upgraded management and they've gone from being a hard core sports company to more, I hate to use the 'F' word, of a fashion company.''Newsletter Sign UpPLENTY of athletes besides Winter Olympians like Picabo Street, the gold medal winning American skier are helping keep Oakley hip by wearing its sunglasses. Wade Boggs, Andre Agassi and Karrie Webb, the Australian golfer, have been wearing them, as has Michael Jordan, who serves on Oakley's board.Ms. Aaron said she expected oakley holbrook sale shares of Oakley to reach $15 within six months. Mr. Gannon said that the stock would hit $20 within the next 12 months and that the company's net income would rise to 35 cents a share in 1998, from 28 cents last year.Oakley has piqued the interest of other analysts, too, such as Michael Conn of Gruntal Company. He still has a hold on the stock, but recently noted that ''Oakley's business has stabilized and we believe new product launches (including apparel and footwear) could prove to be the catalyst oakley sunglasses frames only for the company's next growth spurt.''Oakley was a typical highflier for several years, with sales soaring to $219 million in 1996 from $124 million in 1994. Net income rose to $46 million in 1996 from about $8 million in 1994. The company rode the crest of the interest in high technology sports sunglasses, and was a leader in developing its own designs and technology. It maintained tight quality control by producing the glasses near its headquarters in Orange County, Calif.Everything was going right until last year. Sales slipped, then tumbled. The overall market cooled somewhat, hitting all the manufacturers, and Oakley suffered particularly because it sells many of its sunglasses through one troubled retail chain, Sunglass Hut. The retailer has resolved its problems, analysts say, but back then it saw its inventories soar.Over all, Oakley's revenue in 1997 fell to about $194 million and net income tumbled to $20 million.Moreover, despite some analysts' enthusiasm, others view projects like the new footwear with some skepticism.''There are people who will buy the shoe,'' said Mark Miller, an analyst at Merrill Lynch who visited Oakley several weeks ago. ''The question is if they can get it out there and make money in the first year. The bottom line is this is a wait and see situation. That's a tough market.''While he likes the new crop of sunglasses, Mr. Miller expects them to produce slow and steady, not explosive, growth. He rates Oakley stock a ''buy'' in the long term but is neutral on it in the short term.However, analysts who are more bullish can point to one other example of Oakley brashness to make their case: the fact that oakley half jacket sunglasses Jim Jannard, the company's founder and chairman, and other corporate officers have been heavy buyers of the stock, even after Wall Street became cool to it.According to public filings, Oakley insiders, led by Mr. Jannard, bought 2.4 million shares of the stock last year, ranking the company ninth in the country for insider buying. The company then ranked fifth in January, with an additional 620,000 shares acquired by insiders.Correction: April 19, 1998, Sunday An article on April 5 about the stock market performance of Oakley Inc., the maker of high fashion sunglasses, misidentified the brand worn by Picabo Street, the Olympic gold medalist skier.
Ms. Street is a paid endorser for Bolle Inc., a competitor; she does not wear Oakleys.
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