Orange 21 expects revenues for 2005 in the range of $41.5 million – $42.5 million, the lower end of initial guidance and fully diluted earnings per share in the range of 5 cents to 9 cents. For the third quarter of 2005, Orange 21 forecasts revenue in the range of $10.6 million to $10.8 million and fully diluted earnings per share in the range of 2 cents to 3 cents.
The revised guidance reflects a reduction in second half sales, which were impacted by several factors including the late shipment of orders due to delays in manufacturing, late deployment of point of purchase displays, a change in several international distributors and lower than expected sales in the new E Eyewear product line. Additionally, earnings were further impacted due to reduced margins as a result of the weak US dollar relative to the Euro and a slight increase in close out sales. The revised guidance includes $0.02 of dilution from the acquisition of Orange 21's eyewear manufacturer and $0.01 to $0.02 attributable to the costs of the Oakley and Class Action law suits, which had previously been excluded from guidance.
Barry Buchholtz, Chief Executive Officer, said, “While we are disappointed to announce that our 2005 performance is not meeting our expectations, we are pleased with our revenue growth and believe that our core brand is well positioned for continued growth in 2006. Although we have experienced growing pains during our first year as a public company, we continue to invest in our brands and believe we are taking the right strategic initiatives for the long term. To that end, we also announced today the acquisition of our Italian manufacturer, LEM, which will help us to achieve our revenue growth and margin improvement goals.”
