Oakley, Inc. finished the year with strong sales results, but felt margin pressures from the company’s initiatives in footwear and apparel, as well as markdowns related to electronics, cause a downward turn in net income. On a conference call with analysts, management said that half of the sales growth was organic, with the remainder coming from the handful of acquisitions completed during the year. Though Oakley did not release fourth quarter results, Sports Executive Weekly was able to glean the following information from technical, back-end mathematics, namely subtraction.

For the fourth quarter, net sales increased approximately 20.9% to $196.4 million from $162.4 million last year. International sales increased 21.3% to $90.2 million, while domestic sales rose 20.5% to $106.2 million. Sales of Optics increased 15.7% to $138.7 million, while sales in the Apparel, Footwear, and Accessories segment increased 30.2% to $43.1 million.

Gross margin for the quarter slid 100 basis points to 53.2% of sales from 54.2% in the same period last year, which lead to a 19.9% decrease in quarterly net income to $7.7 million from $9.6 million last year. Diluted EPS for the quarter were 11 cents, down from 14 cents last year.

The company expects 2007 net sales in the range of $900 million to $930 million, an increase of 18% to 22% over 2006. The company expects 2007 EPS to be in the range of 94 cents to 97 cents per diluted share, an increase of approximately 45% over 2006 EPS.

Oakley, Inc. 
Full Year Results
(in $ millions) 2006 2005 Change
Total Sales $761.9 $648.1 17.5%
U.S. Wholesale $252.6 $223.6 12.9%
Int’l Sales $338.0 $305.3 10.7%
Owned Retail $171.3 $119.2 43.7%
Optics $552.9 $465.1 18.9%
App., FW, Acc. $156.7 $148.5 5.6%
Gross Margin 54.2% 57.2% -300 bps
Net Income $44.8  $59.7  -24.9%
Diluted EPS 65¢ 87¢ -25.3%
Inventories* $155.4  $119.0  +30.5%
*at  year-end