Luxottica's Sunglass Hut Brings Oakley Back

FOOTHILL RANCH, CA (BRAIN)--Luxottica signed an agreement to again sell Oakley sunglasses through its Sunglass Hut chain.

The agreement comes after months of negotiations between the two companies and boosted earnings expectations for both. Oakley officials said they now predict earnings to come in at the high end of its previous forecast, an estimate that Wall Street analysts are calling conservative.

Oakley shares jumped $2.40, or 17 percent, to $16.45 on news of the deal. The stock fell 19 percent since early August, when Oakley cut earnings forecasts because orders from Sunglass Hut, its largest retailer, were being slashed.

Oakley and the Sunglass Hut ended their relationship when the two couldn't come to terms over quantity price breaks. Luxottica purchased Sunglass Hut in the spring and initially announced it would cut back on its Oakley orders, preferring to stock its own brands, among them Persol and Ray Ban.

Under the new three-year deal, Sunglass Hut will again be Oakley's largest customer.

The company expects the slow retail climate to hinder fourth-quarter sales, which they estimate could hit $85 million, or $5 million less than earlier forecasts.