Oakley shares were off 4.2% for the week after the company reaffirmed its guidance for fourth quarter and issued its initial expectations for 2003. The company sees Q4 earnings per diluted share of approximately $0.03 before a previously announced European restructuring charge, or breakeven to $0.01 after the charge. Net sales are expected to be up 11% to approximately $100 million.

The company believes that the current weakness in the sunglass business will continue well into 2003, tempering sales growth for the year to approximately 15%, or $560 million. Earnings per diluted share are expected in the range of $0.55 to $0.60. Analysts had been expecting earnings of 61 cents to 71 cents a share, with an average estimate at 69 cents, according to Thomson First Call.

Oakley officials said they are committed to more aggressive cost-cutting efforts in hopes of improving results relative to the guidance as the year unfolds.

Net sales growth for 2003 is expected to be driven by a 30 to 35% increase in sales of the company’s newer footwear, apparel, watches and prescription eyewear product categories and an 85 to 90% increase in sales from the company’s retail store operations. Operating expenses are expected to increase between 17% and 19%.

>>> Expect to see continued tighter profits as high-margin sunglass becomes a smaller percentage of sales. Margins from a rapidly expanding retail group should help, but its still a small piece of the business…

>>> Targeted cuts in 2003 will be focused in advertising and sports marketing, new personnel and travel expenses.