The European operations of this US-based international chain of sunglass and watch stores became profitable again last year under the management of Richard Leynes, having basically completed their establishment. Aside from 55 stores in the UK, Sunglass Hut now has a further 29 outlets in Ireland, Holland, Belgium, France, Portugal and Spain. Out of the total, 55 are combination stores that sell sunglasses as well as watches, like a growing number of the chain's stores in the USA and other parts of the world.
Earlier this month, Sunglass Hut announced an agreement in principle to acquire Watch World International, a New York-based retailer that operates 118 watch stores in the USA as well as the WatchWorld.com website. It will pay about $30 million for Watch World, which had a turnover of about $42 million in the past year. Besides its 1,514 Sunglass Hut outlets in North America, the Caribbean, Europe, Australia, New Zealand and Singapore, the buyer already operates 110 Watch Station stores and 246 combination sunglass and watch stores.
For Sunglass Hut, excellent results in Pacific and European operations helped offset unsatisfactory sales in North America in the 1st quarter ended Apr. 29. In April, in particular, North American sales were affected by cold and rainy weather conditions and by an inadequate flow of top-selling items from the chain's biggest supplier, Luxottica, and by other vendors, but the chain's in-stock position has improved since then. Instead, its Australian and European stores experienced double-digit comparable store increases.
Overall, Sunglass Hut's comparable store sales increased by 0.3 percent in the 1st quarter, although the turnover was down to $150.5 million from $152.6 million in the year-ago period. During the quarter, the company opened a total of 8 new stores, of which 7 have the combo format, and converted 44 others to the combo format, but it closed 30 other outlets.
The company's net income declined in the quarter to $4,215,000 from $6,046,000 a year ago. Last month, it obtained a new $125 million 3-year revolving credit facility from Fleet National Bank to finance its longterm growth.