Sunglass Hut Watches Its Catalog Business

Peanut butter and jelly, Laurel and Hardy… sunglasses and watches? Coral Gables, FL-based retailer Sunglass Hut International wants consumers to associate the products with one another — and with its company, of course. To that end, Sunglass Hut is rapidly expanding its catalog business.

This past fall, Sunglass Hut mailed 2 million copies of a holiday catalog carrying the names of its two watch retail chains, Watch World and Watch Station. The catalogs went primarily to a significant portion of the 8 million-10 million Sunglass Hut and Watch Station buyers. Sunglass Hut plans 10-12 mailings this year, averaging 1 million catalogs a drop, says vice president of marketing Tom Carey.

While customers can order directly from the catalogs, “their role going forward is to drive our best customers to the stores,” Carey says. Worldwide, the company has 118 Watch World stores, more than 100 Watch Station stores, nearly 2,000 Sunglass Hut stores, and 388 “combo” stores selling both watches and sunglasses.

It is these combo stores to which the company is most anxious to drive traffic. “We want to build awareness that we sell both sunglasses and watches,” Carey says.

Watching and waiting

As the corporate name indicates, Sunglass Hut didn’t always sell watches. It acquired retail chain Watch Station in 1996 and two years later launched a Watch Station catalog. In 2000 it acquired Watch World, which had its own catalog. Neither catalog mailed more than twice a year, and to a far smaller audience than the new, cobranded title.

Sunglass Hut’s foray into watches has not been smooth, however. For the 39 weeks ended Oct. 28 — the most recent numbers available — Sunglass Hut’s net sales rose 4%, to $502.8 million, due mostly to the opening of new stores. But net income fell 19%, to $20.2 million, which the company blamed in part on higher operating expenses from integrating Watch World.

“It seems that the assimilation of the two [watch] businesses has taken longer than initially planned, which negatively affected sales and operating performance at the stores,” says Carole Cramer, an analyst at New York investment bank Josephthal and Co.

This past January, chairman James Hauslein had to step in to run the company after CEO John Watson resigned. But Marcia Aaron, an equity analyst with Deutsche Bank Alex. Brown, says, “Hauslein has turned around Sunglass Hut problems before. He’ll either fix the problems or explore other options for the company,” possibly a sale.

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