The company's net income jumped by 293 percent to $5,472,000 in the 1st quarter ended March 31. Total sales grew by 30 percent to a record $63,086,000, driven primarily by higher eyewear sales, with overall increases of 18 percent in the USA and 46 percent in the rest of the world.
The order backlog is up 275 percent from a year ago, yet Oakley has warned investors that its sunglass sales, which rose to 959,649 units from 807,979 in the year-ago period, should experience more moderate growth rates in the next quarters.
Oakley's management remains very optimistic about sales of new sunglass styles due to be launched in the summer, yet the recent big jump in orders is partly attributable to efforts to secure fall orders earlier, as well as to positive retailers' reaction to new offerings of ski goggles and winter footwear and apparel. Oakley indicates also that it's about to introduce a redesigned family of Wire frames, suited also for prescription lenses, that will feature new mechanical innovations in the ear stems, nose bridges and hinges. A new C Wire frame will have an integrated spring-hinge mechanism.
New products introduced since March 1999, such as the Straight Jacket line and the MX O Frame goggle, contributed to the company's strong sales increase in the latest quarter. Furthermore, its polarized styles and its Minutes and X Metal models jointly experienced a sales increase of more than 94 percent. Prescription eyewear was up 184 percent.
The acquisition of the distribution in Australia was a factor in the 46 percent sales increase to $29,447,000 outside the USA, but there were also significant increases in Continental Europe, the UK, South Africa, Japan and the rest of Asia. Deliveries of winter goggles in key markets were strong. Effective Apr. 1, Oakley has taken over the distribution of its own products in New Zealand from its longtime local exclusive importer, Shoreline, which had 1999 sales of nearly $3 million in Oakley products. Oakley sales in that important sunglass market will be run from its new Australian sales office. About 85 percent of the company's non-US sales are now direct.
In the USA, still the biggest market with sales of $33,639,000 in the quarter, sales over the internet and telesales contributed only about $1 million in revenues. Higher sales through other channels more than offset a 20 percent decline in sales to Sunglass Hut, which is still the company's largest customer.
The 1st quarter is seasonally the weakest one for Oakley, so the increased sales volumes, which were due in part to the company's diversification into apparel and footwear, had a direct effect on the gross margin, which improved to 61.9 percent from 58.8 percent in the year-ago period. The restructured footwear operation had a loss of only $164,000 in the quarter, down from $1 million one year ago.