SPY CEO: Despite Report, Company is Growing Rapidly

This letter from SPY Optic President and CEO Michael Marckx is a response to Monday’s Patch story “SPY's New Encinitas Billboard: WTF Fun or Offensive?”  

I just wanted to point out the flaws in your negative positioning on the SPY brand performance for the first quarter of 2013. It was, in fact, one of the best first quarters in many, many years, and the first time SPY has generated an operating profit in the first quarter in a very long time.

This was our 8th consecutive quarter of year over year growth, and for those that have been paying attention to our business, not only are we the only eyewear brand in our market that is growing, and growing double digits, our competitors are all going backwards double digits. This past quarter was one of the happiest quarters in the company's history over the past 5 years. Here's how:

A lot of great things happened this quarter that are notable. In fact, looking back on the last two years, this most recent quarter manifested an across the board success that exceeded our expectations on many levels, representing a multidimensional shift in our brand’s viability.

While we are especially happy to have achieved our 8th consecutive quarter of year over year growth of SPY® brand products with increased revenues of 14 percent for the first quarter of this year, there are number of other related performance highlights that make this solid growth even more exciting for us.

First, we are very pleased with the significant improvement in our quarter over quarter gross margin. Obviously, this is a very positive shift for us and reflects our ongoing efforts to be more efficient operationally and more attractive as a premium brand in our market. To this end, we have:

• Improved our product mix through better brand positioning by way of higher quality products, higher priced product introductions and a reinvigorated brand profile that can support the more premium positioning.
• Reduced our cost of goods sold through a variety of operational and manufacturing efficiencies
  

Second, this is the first quarter in a long time that SPY has achieved a break even operating profit, particularly since our 1st calendar quarters tend to have a seasonally lower sales level than the 2nd and 3rd quarters , and we did so a quarter sooner than we had anticipated through a strict adherence to our plan and branded strategy. This is a big milestone for SPY and a significant corner to have turned in our brand’s resurgence as a leading brand in our market.

Third, our operating expenses were much lower this quarter than last year and this was our second sequential quarter of significantly reduced spending levels, which means we have been able to restructure our business effectively, and have done so with demonstrable creativity, efficiency and strategic execution.  As part of the new structure we have now completed the transition to a full distribution model in Europe, which has reduced our overhead and enabled us to align with new distribution partners intended to expand our brand’s European footprint in the future.  Additionally, we continue to put energy back into our International product offerings, working with our distribution and retail partners outside of Europe to offer products and support that are more in line with the diverse cultural retail dynamic abroad.

Obviously, spending less has enabled us to achieve becoming a more viable business, and it has also enabled us to become a much more effective organization, with the ideal of Super Service at the heart of our company culture. This can be summed up with the ideology of being in service to our retail partners, the people who wear our products and to one another, inside and outside of the company. Our Super Service mantra is simple: How can we make people HAPPY? This mindset is not only evident in our customer service, it is apparent in how we market our brand… always looking to surprise and delight people with our messages, products and branded experiences.

Finally, as a result of all of these efforts our cash flow generated by operations was $1.9 million better this quarter than the first quarter of 2012, leaving us in a stronger cash position for the continued roll-out of our product initiatives for the rest of the year.

So, it’s easy to see that the complexion of these highlights makes for a definitive quarter in our brand’s resurgence story.

Perhaps you can see why your comments on the blog are misleading and erroneous.

It would benefit us all if perhaps a more accurate commentary was provided about the SPY business, along with our Happy Lens Billboard story. After such a stellar quarter for our company, it's disheartening to read the comments you've provided on the Patch.com in the community I reside in.  

Michael Marckx is a resident of Leucadia and sits on the board of the Leucadia 101 Main Street Association