Oakley Profit Dampened by Weather

Oakley Inc. on Wednesday said profit fell 18 percent in the second quarter as unusually rainy and cold weather in much of the country dampened sales of its designer sunglasses. The company also said it expects sales to rise only 10 percent for the full year, down from a previous forecast of 15 percent. But cost-cutting should let the company post earnings near the high end of its previous forecast of 55 cents to 60 cents a share, Oakley said.

Oakley's stock was downgraded to "sell" from "hold" by WR Hambrecht & Co. analyst Kristine Koerber Wednesday. "It's just another disappointing quarter where earnings came in below expectations," said Koerber, who had the downgrade prepared before the earnings report.

"Sunglass sales were weak," she said, and sales of apparel, shoes, watches and other products the company considers new categories were also weaker than expected. Foothill Ranch, California-based Oakley posted second-quarter profit of $18.2 million, or 27 cents a share, compared with $22.3 million, or 32 cents a share, a year ago.

Analysts on average had forecast 29 cents a share, according to Reuters Research, a unit of Reuters Group Plc. The nine analysts polled had estimates ranging from 26 cents to 33 cents. Sales edged lower, to $143.8 million from $145.1 million a year earlier in what is usually the strongest selling season for sunglasses, said the company, which also makes footwear and apparel.

Sales in the United States fell 10 percent to $76.8 million. International sales rose 13 percent to $67 million, though the bulk of the increase was due to the weaker dollar, which boosts the value of sales booked in other currencies. Sales of sunglasses fell 7.6 percent to $105.4 million. Oakley shares closed at $12.11 on Tuesday on the New York Stock Exchange. The stock has risen about 18 percent this year, while the Standard & Poor's 500 Index .SPX has advanced about 14 percent.(Source: Reuters)