Oakley and Luxottica Group, which owns the Sunglass Hut retail chain, last week inked a new contract that will go into effect immediately and run through December 31, 2005. Luxottica said the deal includes “slightly more favorable pricing” on sunglasses and accessories.

According to Oakley’s most recent quarterly results for Q3 2004, their global sales to Luxottica Retail declined 39.1% to $5.3 million from $8.7 million in Q3 last year. Oakley’s U.S. net sales to Sunglass Hut decreased 44.4% to $3.5 million in the third quarter, while net sales through other U.S. channels increased 6.9%.

Tom George, Oakley’s CFO, said that the sales decline to LUX was partially because they are seeing a shift in business away from Luxottica’s retail stores into the 110 Oakley retail stores. He also said that Luxottica may be seeing a shift in their customers away from the sport-orientation and more towards the fashion minded consumer.