MIAMI, January 30: Imagine Burger King unchallenged by McDonald's. Coca-Cola without Pepsi. Sunglass Hut, as the unrivaled icon of pricey eyewear retailing, had such dominance of a growing market. But even that wasn't enough to stop the pain when darker days descended at Sunglass Hut International Inc.Sales slowed, marketing misfired and Wall Street was no longer charmed by the stylish retailer and its once high-flying stock.
But now, with a new chief executive known for marketing prowess and a promising new line of stores, Sunglass Hut's executives see a rebound in 1998 and are talking of bright skies in 1999.
"Basically, we're going to take a clean slate," chairman Jim Hauslein, 39, said.
"We're doing a variety of changes, and they will take time to take hold.
We'll see good news in 1998 and we'll see 1999 as a boom year," said Hauslein, who was acting chief executive officer until marketing whiz John Watson started as CEO a few days ago.
Sunglass Hut's downturn in 1995 and 1996 was a far cryfrom when the company went public in 1993 at around $20 and its stock later jumped to $40. The shares traded near $7 on Tuesday.
Strong sales and profits led Sunglass Hut to export its shops and and their minimalist decor as far afield as Australia.
But with slower sales in 1995 and 1996 and marketing and merchandise missteps, Sunglass Hut lost much of its glow and last year shut 120 underperforming stores in North America and Europe.
Sunglass Hut had a loss of $5.1 million for the latest quarter, compared with a loss $2.9 million a year earlier, even as sales rose 10 per cent to $124 million. Earnings for the first nine months of its fiscal year fell to $9.4 million from $24.2 million as sales rose 12 percent to $450 million.
Early in January when the earnings were released, Hauslein said weak sales in August and October, inventory clearances and continuing store closings took their toll on results.
But Hauslein shrugs off the closings, saying Sunglass Hut is far from fading away.
"People said wewere a shrinking company ... but in 1996 we opened 448 stores and, in 1995, we opened 553 stores," he said.
Sunglass Hut now has 1,098 Sunglass Hut outlets and overall company revenues run about $500 million a year.
The stock started attracting favourable interest on Wall Street in recent months given the company's turnaround plan and new executive slate. The New York investment house Gruntal & Co issued a strong buy recommendation to clients two weeks ago.
According to Hauslein, a promising new line for the company is watch retailing, which Sunglass Hut entered in 1996. It now has about 80 Watch Station outlets in North America.
"The watch business could be as big as the sunglasses," Hauslein said.
Sunglass Hut, with new chief executive Watson in place, is set to double its marketing budget in 1998, possibly to $5 million.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
