A.T. Cross Company said growth at its Cross Optical Group (COG), which owns the Costa and Native sunglass brands, continues to boost profits and sales.


Sales at COG reached $12.8 million in the fourth quarter ended Dec. 31, 2011, up 12.0 percent compared to the year earlier quarter. Group sales for all of 2011 grew 19.8 percent to $72.5 million, compared to $60.5 million in 2010. Since acquiring Costa in 2003, COG’s sales have grown at an annual compound growth rate of 24 percent.


Operating margins for the business reached 15 percent of revenues for the year.  It finished 2011 with $9.9 million of inventory, up 14% from 2010 versus its revenue growth of 20%.


“The outstanding management team at the Cross Optical Group delivered this growth utilizing less than $2 million of capital in each of those years and turned the inventory more than three times per year,” said David G. Whalen, president and CEO of A.T. Cross. “We call it a capital light business model and it is working.”


Costa grew its doors from about 4,500 to 5,000 last year, or about half its potential distribution in the United States. Sales at its full-price e-commerce site nearly doubled.


Costa grew sales at existing doors by offering new products for sportswomen and college students outside the brand’s core target of 25- to 35-year-old fishermen. Consumers also upgraded to the higher-margin 580P lens technology Costa introduced in July, 2011 and are buying growing numbers of Costa-brand hats and T-shirts. Finally, ATX continued to invest in Costa’s prescription lens program, which could deliver up to 30 percent of the brand’s sales in coming years. That would put it on the same level as Oakley and Maui Jim.


Distribution of Native, which comes out of the human-powered sporting world of skiing, cycling and climbing, grew from 1,525 doors to 1,700 in 2001. That represents about 35 percent of potential U.S. doors. Sales grew 35 percent in the fourth quarter thanks to the introduction of ski goggles.


Sales of both Costa and Native accelerated significantly in the first seven weeks of 2012, Whalen said.


On a companywide basis, ATX has seen business pick up in Japan in the first quarter, but is planning on flat growth at its Cross Accessory Division (CAD) in Europe. CAD’s sales of Cross pens and other personal and desk accessories declined at a double-digit rate in the fourth quarter after six consecutive quarters of high-single-digit growth as speculation mounted that the euro zone might break up or enter a deep recession, said Whalen. Consumers and corporate gift customers responded by pulling back orders, causing dealers to dramatically cut back inventory. “All of this resulted in the sharp reversal we saw in Q4, and overall, our Europe business was flat for the year,” Whalen said.