NEW YORK — Record sales led to unprecedented pretax earnings for Oakley Inc. in the second quarter, but a heavier tax burden caused profits to recede from prior-year levels.
For the three months ended June 30, the Foothill Ranch, Calif.-based sunglass and accessory manufacturer reported net income slipped 5.5 percent to $22.3 million, or 32 cents a diluted share. That compares with last year’s earnings of $23.6 million, or 34 cents. However, Oakley’s earnings per share did beat Wall Street estimates by a penny.
Sales for the quarter grew 10.6 percent to $145.1 million from $131.2 million a year ago. Total U.S. net sales rose 21.5 percent to $85.8 million from $70.7 million last year, as international sales dipped 2.1 percent to $59.3 million from $60.6 million in 2001.
While Oakley posted record revenues, topline growth failed to filter down to the bottom line, due partly to a one-time tax benefit in last year’s second quarter, which reduced the company’s effective tax rate to 30 percent. In this year’s second quarter, Oakley’s tax rate returned to its customary level of 35 percent.
"With our return to growth, I believe this quarter marks the completion of our recovery from the challenges with which we were confronted last year," said chief operating officer Link Newcomb in a conference call with analysts. "Our solid second-quarter results were highlighted by record revenues and a return to growth in pretax income."
Overall, for the first six months of the fiscal year, Oakley reported net income declined 14.8 percent to $27.9 million, or 40 cents a diluted share. That compares with last year’s earnings of $32.7 million, or 47 cents. Net sales for the period increased 13.2 percent to $254.7 million from $225 million a year ago.
Looking forward, Oakley raised its full-year guidance by 2 cents, to 83 cents, and affirmed its retail plans to open 18 to 20 new Iacon stores and eight to 10 new O-Stores and Vaults over the remainder of 2002.
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