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O.C. BUSINESS PLUS | HEARD ON THE BEAT / RETAIL

Deal With Foot Locker Could Up Pace of Oakley's Shoe Sales

August 01, 2000|Leslie Earnest | Leslie Earnest covers retail businesses for The Times. She can be reached at (714) 966-7832 and at leslie.earnest@latimes.com

Sunglasses maker Oakley Inc. may not have hit its stride yet as an athletic-shoe maker, but it has taken a promising leap.

The company said Monday that Foot Locker has agreed to sell Oakley shoes in nearly 150 stores by November, the result of a successful two-month test run of the shoes in 10 Foot Locker stores. The shoes are also being tested for wider distribution in other major chains, including the Athlete's Foot and REI.

Because the distribution of Oakley shoes previously has been limited--they sold mostly in surf and specialty shops--agreements with these large chains could eventually significantly increase the company's shoe sales.

"It's a strong affirmation that Oakley has a potential hit on its hands with these sneakers," said Eric Beder, an analyst with Ladenburg Thalmann. "I think we're going to see this become a major part of their business down the road."

Thus far, the road's been bumpy. The Foothill Ranch company has struggled with its shoe line, which it introduced in 1998 and which moved into the black for the first time in June. Hereafter, Oakley says, it expects its shoe business to be profitable.

Currently, shoes represent only about 2% to 3% of sales for Oakley, which still makes most of its money from eyewear, said Marcia Aaron, an analyst with Deutsche Bank. But that percentage could expand to 5% next year, she said.

The deal with Foot Locker "gives us a lot of confidence as we look out into the future," Aaron said. Foot Locker, which has 2,700 stores, is owned by New York-based Venator Group Inc., the nation's largest operator of athletic-shoe store chains.

Two Oakley shoe styles that customers seem to like are the laceless leather slip-on called Flesh and a hiking shoe dubbed Nail, analysts say. They sell for $65 to $115.

Oakley's stock closed unchanged Monday at $14.50 in New York Stock Exchange trading. The stock hit a 52-week high of $15 on July 21 and is up 161% for the year.

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