Orange 21, the parent company to Spy Optics and E-Eyewear, capitalized on the snow in the west and strong at-once orders of its goggle and apparel lines to post a 22.3% increase in sales for the 2004 fiscal year to $33.5 million compared to $27.4 million last year. The company also reported that it expects net income to be $800,000, an increase of 60% over 2003.
The preliminary results for the year would seem to indicate a very strong fourth quarter for the nascent public company. Subtracting the nine-month results contained in its amended S-1 filed in December, Orange 21 looks to have increased sales roughly 24% to $9.5 million versus $7.7 million in the year-ago quarter.
The company apparently swung to net income of approximately $715 million for the period compared to a net loss of $110,000 in the 2003 fourth quarter.
Orange 21s management sees strong opportunity for its brands in Europe, where the company currently uses multi-brand distributors.
Last month, Orange 21 announced it would be investing in dealer direct infrastructure in order to give its brands the attention they need to fuel growth. They have already tapped a new sales manager and five direct reps in France. They will add between six to ten reps in Italy this year and hope to have a total of 15 reps in Europe in the first half. Roughly $600,00 to $700,000 will be invested over the course of the first half of 2005 to establish a European sales and marketing management team, a team of independent sales reps for France and Italy, and POP displays.
Orange 21 experienced 42% growth in Europe in 2004, but does not expect to see results out of its planned investment in this market until 2006. Pressed by analysts for a number for the Europe market, CEO Barry Buchholtz said that the International markets as a whole should represent 25% to 30% of sales.
A second initiative of note is Orange 21s E-Eyewear business, which holds the Dale Earnhardt, Jr. eyewear license. The brand will launch trackside at NASCAR races across the country, starting next week in Calif.
On a full-year basis, the company expects net sales for 2005 to increase by approximately 25% to 30%, and earnings per share growth of approximately 70% to 90%. Net income should be $1.3 million to $1.5 million, nearly the preliminary results for 2004, but showing an impact of the heavy investment in Europe for the year. Management did say that the first quarter is historically a quarter that shows a loss due to “front-end loaded sales and marketing expenses”, a reality they do not see changing this year. ORNG posted a $194,000 loss in Q1 2004 on sales of $6.4 million. Wall Street analysts were forecasting 2005 income of $2.0 million to $2.2 million. ORNG shares dropped 30.9% for the week to close at $6.60 on Friday.
>>> Somebody needs to explain why the heavy investment in Europe when the U.S. has seen limited penetration…
