FOOTHILL RANCH, Calif., Feb 13, 2002 (BUSINESS WIRE) — Oakley (NYSE:OO)
2001 net sales grew 18.1 percent to a record $429.3 million; fourth quarter net sales of $90.2 million exceed revised expectations
2001 combined sales of footwear, apparel, prescription eyewear and watch products grew 79.8 percent, exceeding $100 million
2001 international sales grew 26.9 percent, exceeding U.S. sales for the first time
Fourth quarter net income of $0.05 per share in line with revised expectations
Oakley, Inc. (NYSE:OO) today announced results of its fourth quarter and full year ended December 31, 2001.
Full year 2001 net sales reached a record $429.3 million, up 18.1 percent from $363.5 million in 2000. Net income totaled $50.4 million, or 0.72 per diluted share, compared to $51.1 million, or $0.73 per diluted share in 2000.
Fourth quarter net sales totaled $90.2 million compared with $93.3 million in the fourth quarter of 2000. Net income for the fourth quarter totaled $3.3 million, or $0.05 per diluted share, compared with net income of $9.7 million, or $0.14 per diluted share, in the same period last year.”2001 was characterized by two very distinct halves,” said Oakley Chairman and Chief Executive Officer Jim Jannard. “Our first half momentum generated sales and earnings increases of 38 percent and 37 percent, respectively, as new products and new categories fueled worldwide consumer demand. The second half, and the fourth quarter in particular, were affected by the temporary disruption in our relationship with Luxottica’s Sunglass Hut retail chain and the impact of the tragic events of September 11th on consumer travel and spending patterns, resulting in a two percent increase in net sales and a 35 percent decline in net income for the last six months of the year.”
“We enter 2002 with a renewed Sunglass Hut relationship and more new products than ever before to inspire consumers,” Jannard continued. “The Winter Olympics are providing a perfect showcase for our performance eyewear, goggles and apparel, reminding us that our most powerful response to unexpected challenges is to stay committed to the ideals that have always guided us.”
Oakley Chief Operating Officer Link Newcomb commented, “Throughout 2001 we laid important cornerstones for future success. We established and expanded relationships with world-class retail partners, including Foot Locker, Champs, The Finish Line, Sport Chalet, Galyan’s and, as announced today, Macy’s. We launched the Oakley Premium Dealer Program to differentiate our best retail partners who offer consumers the broadest assortments of Oakley products and the highest level of customer service. We expanded our Oakley retail strategy, opening four new O-Stores and Vaults, and acquired the Iacon chain which by the end of 2001 had 43 specialty sunglass stores and kiosks across the U.S. And most importantly, after four years of focused development, combined sales of our footwear, apparel, prescription and watch categories reached a significant milestone, exceeding $100 million for the first time.”Newcomb concluded, “In spite of the year’s challenges, we ended the year with a solid balance sheet, an exciting line up of new products and a renewed commitment to continue building on the strength of the Oakley brand.”
New Product Category Results
The company’s footwear, apparel, prescription eyewear and watch categories accounted for $23.8 million, or 24.9 percent, of total fourth quarter gross sales and $100.8 million, or 22.4 percent, of full year gross sales, compared with 14.6 percent of full year 2000 gross sales.
Full year footwear gross sales nearly tripled to $30.0 million, fueled by the success of the company’s spring sandal line. Prescription eyewear gross sales increased 113.7 percent in 2001, with sales of $6.0 million in the fourth quarter and $24.7 million for the year, compared with $2.6 million and $11.6 million for the same periods in 2000.
Apparel gross sales declined 11.8 percent in the fourth quarter as a greater proportion of the company’s fall apparel products shipped during the third quarter, compared with 2000 when fall apparel shipments were delayed until the fourth quarter. For the full year, apparel gross sales increased 33.4 percent to $37.9 million.
Watch gross sales increased 43.7 percent during 2001 to $8.2 million, led by strong fourth quarter launches of the Crush(TM), Bullet(TM)and Torpedo(TM). Watch manufacturing capacity has been expanded in anticipation of continued strong demand in 2002.
Fourth Quarter Financial Analysis
Fourth quarter 2001 U.S. net sales (excluding sales from Oakley’s retail store operations) totaled $39.0 million compared with $43.1 million in the same quarter of 2000. Sales to the company’s diverse specialty account base and other domestic sales excluding Sunglass Hut increased $3.6 million, or 12.7 percent, to $32.4 million, including a 33 percent increase in sales through the company’s Internet and related telesales operations to $2.0 million. These increases were more than offset by a $7.7 million, or 54.1 percent, decline in sales to Sunglass Hut.
Shipments to Sunglass Hut resumed in late December after being discontinued during the third quarter of 2001. In addition, unexpected delays and manufacturing capacity constraints in the company’s eyewear operations caused shortfalls in sales of Switch(TM), Fives(TM) 2.0 and polarized products. The company expects these capacity limitations to be largely resolved in early 2002. Sales through Oakley’s retail store operations, including sales from the Iacon stores acquired October 31, 2001, and the four new Oakley retail stores opened during 2001, reached $5.0 million during the quarter, compared to $0.8 million in the fourth quarter of 2000.
Oakley’s international net sales totaled $46.2 million in the quarter, compared with $49.4 million last year, experiencing their first year-over-year decline in the past twelve quarters. The 6.4 percent decrease (3.2 percent on a constant dollar basis) reflected the weak consumer environment in major markets, especially those highly dependent on leisure travel activity. In addition, sales in Australia and New Zealand, one of the company’s largest international markets, were negatively impacted by the disruption in Sunglass Hut shipments, magnifying the difficult comparisons to last year’s fourth quarter sales fueled by the 2000 Sydney Olympics. The company expects renewed growth in international sales in the first quarter of 2002 and international growth to slightly exceed U.S. sales growth rates for the year, excluding retail store operations. The company also announced today the establishment of a new direct office in Sao Paulo, Brazil to increase its business in that important global market.
Fourth quarter gross margins were 54.9 percent compared with 58.0 percent in last year’s comparable period, reflecting the decline in sunglass volumes from the temporary loss of sales to Sunglass Hut and lower international margins as a result of a stronger U.S. dollar in most of the company’s direct international markets. Operating expenses were 50.2 percent of net sales in the quarter, up from 41.4 percent last year, due primarily to the negative leverage of reduced sales and budgeted increases in investments in marketing, product research, design and development and new category operations.
The company’s order backlog as of December 31, 2001 was $36.7 million, up 36.9 percent from $26.8 million at the same time last year. Future orders from retailers for the company’s spring footwear and apparel lines totaled $28.6 million at December 31, 2001, up 57.1 percent compared with $18.2 million at the same time one year ago, reflecting continued growth in these important new categories.
The company’s consolidated inventory totaled $77.3 million at December 31, 2001, compared with $85.1 million
at September 30, 2001 and $62.0 million at December 31, 2000. This inventory reflects the 18.1 percent growth in trailing-12-month sales and expanded company-owned retail operations and international warehouses. Accounts receivable totaled $74.8 million at December 31, 2001, compared with $81.2 million at September 30, 2001 and $65.0 million at December 31, 2000.
As a result of a one-time, fixed-amount tax benefit associated with the company’s foreign operations and lower than anticipated sales and pre-tax income in the second half of the year, the company’s effective tax rate for 2001 was 29 percent, compared with the company’s earlier 2001 estimates of 30 percent and an effective tax rate of 35 percent in 1999 and 2000. The company’s fourth quarter provision for income taxes required an adjustment to 10.9 percent in order to effect the final full-year rate. The company expects its quarterly and full year tax rate to return to 35 percent in 2002. Full Year 2001 Financial
Total 2001 net sales increased 18.1 percent to a record $429.3 million, fueled by a 26.9 percent increase in international sales to $216.1 million and a 10.3 percent increase in U.S. sales to $213.1 million, including a 172.8 percent increase in Oakley’s retail store sales to $8.9 million. During 2001, international net sales surpassed U.S. sales for the first time in the company’s history. International and U.S. net sales in 2000 were $170.3 million and $193.2 million, respectively.Net income for 2001 totaled $50.4 million, or $0.72 per diluted share, compared with $51.1 million, or $0.73 per diluted share, earned in 2000. The company’s EBITDA for 2001 totaled $97.6 million, compared with $101.6 million in 2000.
The company’s current guidance for 2002 calls for revenue growth of between 20 and 25 percent, operating margins comparable to 2001 and earnings per diluted share of between $0.77 and $0.80 reflecting a return to a 35 percent tax rate.
Stock Repurchase Program
On December 11, 2000, the company’s board of directors authorized a $20 million stock repurchase program to occur from time to time as market conditions warrant. In the fourth quarter 2001, the company repurchased 50,000 shares for $525,195 at an average share price of approximately $10.50. Under this program the company has repurchased a total of 1,128,100 shares for $16.2 million at an average price of $14.32 per share.
About Oakley, Inc.
Oakley: An original, unexpected and innovative world brand. Building on its legacy of market-leading sunglasses, the company offers expanding lines of premium performance footwear, apparel, accessories, watches and prescription eyewear to consumers in more than 70 countries. Trailing-12-month net sales through December 31, 2001 totaled $429.3 million and generated net income of $50.4 million — an 11.7 percent net margin.