Seven years after marching into the fiercely competitive athletic footwear business, Oakley Inc. -- best known for its sunglasses and ski goggles -- has decided to walk away from it.
The company also said Thursday that its fourth-quarter earnings fell 8%. The results were well short of Wall Street's expectations, and Oakley's stock dropped 6%.
The Foothill Ranch-based company earned $9.2 million, or 13 cents a share, in the quarter, compared with $10 million, or 15 cents, a year earlier.
Analysts surveyed by Thomson Financial had expected earnings of 16 cents a share.
Sales rose 6% to a record $162.4 million from $153 million.
Scott Olivet, who became chief executive in October, said Oakley was refocusing its business lines to boost revenue. In recent years Oakley has diversified into backpacks, clothes and watches, but it never fared well in the sneaker business, which is dominated by Nike Inc.
Oakley's top-end sneakers retail for about $100. The company said it planned to keep selling sandals, golf shoes and boots.
It will cost Oakley as much as $5.3 million to stop selling athletic shoes, a charge it will record in the first half of the year, Olivet said
Oakley, whose precision optics and performance-oriented sunglasses are worn by several of the world's top athletes, also said it would renew its focus on eyewear this year.
Analysts seemed to welcome the company's pledge to return more to its roots.
"Historically Oakley has tried to be all things to all people. I think that is very difficult to do," D.A. Davidson & Co. analyst Mitch J. Kummetz said. "We have seen a couple of signs that maybe they are changing, and that is a good strategy."
Oakley announced Wednesday that it had purchased privately held Oliver Peoples Inc. of Beverly Hills, whose classic spectacles have been seen on many Hollywood celebrities, in a $46.7-million deal.
Olivet also said Thursday that the company would introduce its first line of sunglasses for women next month. "We will add brands in a very selective way," he said.
Oakley expects first-quarter earnings to drop a penny to 3 cents a share, excluding expenses for leaving the athletic shoe business. The company earned 11 cents a year earlier.
But Oakley forecast that earnings this year would be unchanged at 75 cents a share, excluding 2 cents a share to expense stock options.
For all of 2005, Oakley's profit rose 25% to $51.9 million, or 75 cents a share, from $41.6 million, or 60 cents, a year earlier. Sales rose 11% to $648.1 million.
Shares of Oakley fell $1.04 on Thursday to $15.20.