Oakley saw a respectable 6.2% sales gain and even a 20 basis point margin improvement get lost along the way down the income statement as the company posted a net income decline for Q4.

Fourth quarter net sales were $162.4 million, up 6.2% from $153.0 million in the same period last year. U.S. net sales increased 6.5% to $88.6 million, compared with $83.2 million last year. Domestic wholesale sales totaled $59.1 million in Q4, down 4.8% from $62.1 million in the comparable 2004 period, reflecting the strength of last year’s THUMP launch and lower watch sales. Sales through Oakley's U.S. retail stores increased 40.2% to $29.6 million.

Combined Q4 gross sales of the newer categories — apparel, electronics, prescription eyewear, footwear, and watches — decreased 3.8%, to $57.9 million, reflecting lower sales of electronics and watches.

International net sales increased 5.7% to $73.8 million in the quarter, from $69.8 million last year. International growth was adversely affecter by a stronger U.S. dollar reducing growth by 2.7 percentage points. Net sales to Luxottica’s retail group decreased 1.7% to $9.6 million during the quarter and represented 5.9% of total Q4 net sales.

Fourth quarter margins improved 20 basis points to 53.0%, compared with 52.8% in 2004's comparable period, but were not enough to prevent net income from being down 8.0% to $9.2 million, or 13 cents per diluted share, from $10.0 million, or 15 cents per diluted share, in the fourth quarter of 2004.

Oakley, Inc. 
Full Year Results
(in $ millions) 2005 2004 Change
Total Sales $648.1  $585.5  +10.7%
U.S. Wholesale $343.4  $305.0  +12.6%
Int’l Sales $304.7  $280.5  +8.6%
Owned Retail $101.0  $72.4  +39.5%
Sunglass Sales $336.8  $314.5  +7.1%
New Categories $239.2  $206.5  +15.8%
Gross Margin 55.2% 54.7% +50 bps
SG&A % 38.0% 38.4% -40 bps
Net Income $51.9  $41.6  +24.8%
Diluted EPS 75¢ 60¢ +25.0%
Inventories* $119.0  $115.1  +3.5%
Backlog* $51.7  $55.3  -6.5%
*at year end