Here's my take of the whole situation. Other sunglass manufacturers who sell through Sunglass Hut reported weak sales last quarter -- Oakley reported strong sales. It follows that the income statement of the retailer carrying all of sunglasses should reflect, to an extent, the blended average of what was reported by the manufacturers -- i.e., not so good results. (Note that the market lumps these companies together because Sunglass Hut accounts for roughly 1/3 of Oakley sales, and that Oakley accounts for roughly 1/4 of Sunglass Hut sales.)
Whether Sunglass Hut's problems ultimately affect Oakley's bottom line is, at this point, a matter of speculation. On the negative side, Sunglass Hut intends (unless it has a blow out holiday season) to lessen its inventory levels by slowing new orders from manufacturers.
On the positive side, Oakley's 4th quarter sales results are less affected by Sunglass Hut distribution than during the rest of the year. One reason for this is that Sunglass Hut is significantly less responsible for Oakley's international distribution. International sales make up a larger share of Oakley's 4th quarter profits than they do in other quarters (it is summer in two key Oakley markets -- Australia and Brazil). If Oakley's 4th quarter comes in as expected at the .16 to .17 mark, even though Sunglass Hut does not perform well, I believe the market will begin to separate the performance expectations of Sunglass Hut and Oakley. This will, of course, help Oakley1s per share price in the short run.
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