Oakley, Inc. reported double-digit sales gains pretty much anyway you slice the data during the second quarter, following up on a strong start to the year and, no doubt, making new expectant parent Luxottica Group quite happy.  The 29.3% top-line growth for the quarter came from 23% organic growth with the remaining 6% coming through the acquisitions of ESS and Bright Eyes. Currency exchange rates buoyed net sales by two percentage points in the quarter.


Overall domestic sales jumped 32.1% to $158.3 million for the quarter from $119.9 million in the year-ago period.  On a conference call with analysts, OO management indicated that Optics provided “strong growth,” while apparel, footwear and accessories posted “good growth.” A strong domestic wholesale gain was driven by “significant double-digit optics growth and a moderate increase in AFA sales.”


U.S. owned-retail operations provided “positive comp store sales growth across the retail platform,” while Oakley retail saw “double-digit comps.” Sunglass Icon realized increasing comps as the quarter wore on, according to the call, with the month of June seeing a double-digit comp and over half of the chain’s Oakley business coming from Polarized styles. The company has opened 54 company-owned stores during the last year, not including the 34 stores added through the acquisition of Bright Eyes. At quarter end, the company operated 275 doors, while another 133 locations were operated by licensees.


Regionally, EMEA saw double-digit optics growth, but flat sales in AFA. Asia-Pacific proved to be the strongest international region for Oakley with double-digit optics and AFA growth. The company’s “Asian fit” eyewear assortment was given as the driver behind sales in the region with the Japan subsidiary posting sunglass sales growth over 20%.


The Optics category saw sales grow 30.9% driven by “significant double-digit increases in sunglasses, prescription eyewear and goggles.”  The Polarized business as a whole was up 38%, while Sport performance optics sales were up 56% in the quarter over the year-ago. However, management was “not satisfied” with the performance at Dragon during the quarter.  Scott Olivet, CEO, said the disappointment with Dragon did not stem from the brand “not growing or going backwards in any way,” but rather that it was a case of a difficult winter causing weak goggle sales paired with back-end integration causing distractions.


Within the 19.6% growth rate in the AFA business, the company saw “each category of apparel and accessories, footwear and watches up double-digits.” The southern hemisphere was highlighted as a leading growth vehicle in the channel with Brazil and Australia called out as key markets. Management was also pleased with the performance in Japan due to golf product designed specifically for the region.


Second quarter net sales of other products, which consist of non-Oakley owned brands sold through the company's multi-branded Bright Eyes, Sunglass Icon and The Optical Shop of Aspen retail stores, increased 31.3% to $19.1 million from $14.6 million during the same period last year.


Looking ahead, the company increased its full year net sales guidance to a range of $930 million to $960 million, or approximately 22% to 26% over 2006 net sales of $762 million, up from previous guidance of sales growth in the 18% to 22% range. The company did not change its 2007 net income guidance of 95 cents to 98 cents per diluted share, but noted that they now include the expected impact of costs related to the company's merger with Luxottica.