NEW YORK — Strong sales gains from newer merchandise categories and retail operations more than offset waning sunglass sales to propel Oakley Inc. to double-digit profit growth in the third quarter.

For the three months ended Sept. 30, the Foothill Ranch, Calif.-based sunglasses and accessories marketer said net income rose 10.3 percent to $13.5 million, or 20 cents a diluted share. That compares with last year’s earnings of $12.3 million, or 18 cents. Earnings per share missed the Wall Street consensus estimate by a penny.

Net sales for the quarter grew a commensurate 9.9 percent to $145 million from $131.9 million a year ago, as a 60 basis-point expansion in gross margin was negated by a 60 basis-point increase in operating expenses.

Oakley’s shares fell 2.9 percent, or 31 cents, to close at $10.35 in Thursday’s New York Stock Exchange session.

“Sunglass sales declined during the third quarter as many of our sunglass styles struggled to achieve the momentum we anticipated,” said chief operating officer Link Newcomb in a statement.

“Many U.S. retailers, including Sunglass Hut, entered the third quarter with higher inventory levels than planned due to the disruption in the early summer selling season caused by poor spring weather. International sunglass sales were also weaker than expected in southern European markets, where we continued to experience strong competition from fashion brands; In Japan, where the retail environment continued to be soft, and in the South Pacific region, where an acquisition involving our two largest customers caused what we believe to be a temporary disruption.”

Although global sunglass sales declined 9.6 percent to $77.7 million, that was more than offset by better sales of apparel, footwear, watches and other merchandise, which improved 31.9 percent to $50.6 million. Sales of merchandise other than sunglasses accounted for 32.6 percent of total revenues.

The company’s signature stores also contributed to the better top-line results, chipping in a better-than-expected $15 million, a 75.9 percent increase over the prior-year level.

Overall, for the first nine months of the fiscal year, Oakley saw profits fall 12.9 percent to $35 million, or 51 cents a diluted share. Net sales climbed 3.5 percent to $400 million.Addressing its full-year forecast, Oakley said it now anticipates earnings to finish at the low end of its previous guidance of 55 to 60 cents. For fiscal 2004, the firm said earnings are expected to increase 15 to 20 percent on net sales growth of about 10 percent.

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