Orange 21 Keeps Q1 Losses in Check…

Orange 21 beat analyst’s expectations for the first quarter and kept the company’s net loss under control in spite of new sales and marketing initiatives in the U.S. and Europe. Historically, the first quarter has been the slowest quarter in sales for Orange 21 with expenses significantly front-loaded for the year. Sales increased 32.8% to $8.5 million compared to $6.4 million last year with a large piece of the volume centered in California, which accounted for 47% of domestic revenues.

Total U.S. sales increased approximately 27% to $6.4 million during the quarter and accounted for 76% of the total. The company’s international efforts seem to be paying off, with sales jumping 51% to roughly $2.0 million. This jump brought international sales in Q1 up to 80% of what the company recorded in all of fiscal year 2004. Sales in the Canadian market make up about 34% of international sales.

The company added 180 doors during the first quarter and reiterated its goal of expanding its door count by 8% to 10% for the entire year. While some sales improvements will come from this expanded distribution, Orange 21 is counting on expanding its presence at its existing dealers for the lion’s share of its growth. In order to do this, the company is offering new POP displays, increasing service, and expanding its selection.

So far this year, Orange 21 has shipped over 300 new POP units and expanded its sunglass SKU’s by 21%, apparel SKU’s by 81%, and goggle SKU’s by 9%. The company has also added one additional sales rep in the U.S. to cover the Carolinas and Virginia.

The company is currently facing two separate legal battles – one involves Oakley and patent infringement and the other is a class action concerning the company’s guidance and share price. Between the two cases, Orange 21 is estimating legal costs could be as much as $250,000 for the year. The company expects that its insurance will cover anything beyond that figure. Barry Buchholtz, Orange 21’s director and CEO, reiterated that legal counsel feels both cases are without merit.