Wall Street applauded Oakley's (NYSE:OO) latest performance, as the company benefited from strong sales in its core optics business. However, the first quarter wasn't without challenges. Overall, the company saw a year-over-year earnings decline of 81% on a sales increase of 7%.

Its apparel, footwear, and accessories category saw revenues decline by a sharp 8.8%. Management admitted in the quarterly earnings conference call that some of these declines were anticipated, but the total losses exceeded previous estimates. The company blamed delivery delays in the international market for the weakness.

In response, Oakley intends to double down its efforts in this category, offering a wider selection of apparel to better convey the Oakley "story" to consumers. Additionally, management indicated that it will realign apparel to focus on Oakley-branded retail stores, which are enjoying strong results. Sales at Oakley's U.S. retail stores increased 36.3% year over year.

In the company's most vital category, optics, Oakley is looking sharp. Revenues here increased 12.3%, backed by strength in sunglasses, goggles, and prescription eyewear. Goggles benefited from exposure in the 2006 Winter Olympics, particularly given the success of several high-profile athletes like the "Flying Tomato," Shaun White. Oakley is striving to get its high-definition optics on key athletes before launching the product to the broader market. Its efforts appear to be paying off -- optics now compose 71% of revenues, up from 68% in the year-ago period.

With new growth initiatives in place, optics should continue to do well for the company over the next few quarters. Oakley just launched a new campaign in March, highlighting its first-ever line of sunglasses specifically designed for the "active woman." Oakley is blending form and function with this new line, and it says the consumer response thus far has exceeded expectations. In June, the company will also launch its "Design Your Own Sunglasses" campaign, a new build-to-order effort that Oakley considers a "tremendous growth opportunity." Finally, in the coming quarters, Oakley will also release a new line of optics tailored for the Asian market.

Oakley remains focused on optics, which should bode well for its results. But investors should monitor how well the company manages to present its apparel, footwear, and electronically enabled eyewear to consumers. The success of these products will determine whether Oakley proves to be an average investment opportunity, or a blockbuster one.

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Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.