Forget “cautiously optimistic.”
Foothill Ranch-based Oakley Inc. is looking to make good on “fairly robust” plans for 2010, Chief Executive Colin Baden said.
“It’ll be nice to have this conversation a year from now,” said Baden, a longtime Oakley executive who took over the top spot from former chief Scott Olivet nearly a year ago. “If we do what’s in that plan, we’ll be the envy of Orange County.”
Oakley, a maker of glasses and clothes, has been one of the few companies of any type to report epic 2009 growth, posting a double-digit increase in sales to more than $1.1 billion.
It saw 20% sales growth in the first quarter, according to Italian parent company Luxottica Group SPA.
For an apparel company dependent on retail sales, Oakley’s growth is almost unheard of these days. Most apparel companies still are climbing back from the worst industry downturn in recent memory.
Oakley, which was bought by Luxottica for $2.1 billion in 2007, has created a niche for itself with an advanced, technical line of sunglasses, prescription frames, goggles and other products.
It has more than 600 patents on its glasses, which tout clearer, sharper vision and better sun protection and filtering.
The technical aspects of Oakley’s products have made them big among athletes including Tour de France winner Lance Armstrong, Olympic snowboarder Shaun White and countless baseball and hockey players, motocross riders, golfers and others.
Oakley also makes clothes, shoes, watches and other accessories.
The acquisition by Luxottica has brought more Oakley glasses to its parent company’s Sunglass Hut, LensCrafters and Pearle Vision chains.
Oakley plays up the technical aspects of its products to get people to pay top dollar for glasses, Baden said. A pair of Oakleys can go for $110 to $4,000.
That can be a tough sale at a time when most retailers are slashing prices to lure guarded shoppers.
Training shoppers and retailers to think beyond discounts and blowouts starts with store workers, Baden said.
Last year, Oakley started a training program called global sales development.
The program aims to bring the company’s specialized, technical outlook to salespeople. So far, about 350 events have taken place in North America, in which an Oakley team goes out and teaches salespeople about its products and technology.
“It has a dramatic effect on how (our salespeople) feel about the brand,” Baden said.
Another sales boost: Luxottica.
One of the largest glasses makers with nearly $6 billion in yearly sales, Luxottica also owns Ray-Ban and holds licenses for Prada and Versace.
Being part of Luxottica has boosted Oakley’s sales through Sunglass Hut, which were strained when the two were competitors.
“We actually tie our marketing and product calendars together,” Baden said. “We can see the success in having a collaborative relationship whereas before it wasn’t necessarily a positive one.”
The acquisition also opened the door to prescription frames retailer LensCrafters.
The goal is to become the “go-to guy” in prescription sunglasses, Baden said. LensCrafters is part of that strategy, he said.
Oakley’s sales of clothes, shoes and accessories are relatively small. Historically, glasses and related products have made up about three-fourths of Oakley’s revenue.
That’s helped insulate Oakley from the worst of the downturn that hit clothing makers and retailers.
Oakley has 103 Oakley O Stores and 69 Oakley Vault stores, which are factory outlets. The bulk of its stores are in the U.S.
The company’s stores “went into 2009 with a lot of momentum and that carried us through the year,” Baden said. “Toward the back end of 2009, we felt the pressure like anyone else. But we were able to stick to our plan and accomplish what we set out to accomplish.”
Regional Challenges
Business has changed for Oakley. After the Luxottica deal, the company reorganized 11 regions into four. It’s seeing various challenges in each region, according to Baden.
In the European region, which includes Europe, the Middle East and South Africa, Oakley faces a lack of brand recognition.
The company has cleaned house in the region, building a new regional hub in Zurich. Formerly independent subsidiaries now report to the Switzerland office.
To change perception in the region, Oakley is spending big money on marketing, beyond the usual magazine ads.
It’s using its “rolling mad scientist lab”—showroom trucks highlighting the technology behind Oakley products—at key events, including the Tour de France. Oakley also was at the X Games in Europe this year.
And it’s spending money on billboards and other ads.
The company also is looking to build business in big, growing countries, including China and India.
“In India, the preferred sport is cricket,” Baden said. “Just about every key cricket player wears our stuff. We have brand recognition in India. We just don’t have distribution.”
That’s set to change, thanks to Luxottica. In late 2008, Luxottica said it planned to open more than 100 Sunglass Hut stores in India through a franchising agreement with Indian real estate company DLF Group.
As for China, Oakley is focusing on certain regions since the country is so large, Baden said.
Jannard
Founder Jim Jannard, a cult-like figure at the company and the source of Oakley’s mad scientist culture, still has his office in Foothill Ranch.
But most of Jannard’s time is spent on his latest venture: digital movie and TV camera maker Red Digital Cinema Camera Co. of Lake Forest.
“Jim’s the same,” Baden said. “If he sees us doing something that isn’t brand appropriate, he’ll give me a call, and then I’m headed up to Red for a talking to.”
Gomez is a former Business Journal editor and freelancer based in Long Beach.
