Oxford: Owner of Tommy Bahama, Lilly Pulitzer and Johnny Was Reports First-Quarter Results

ATLANTA, June 12, 2024 (GLOBE NEWSWIRE) -- Oxford Industries, Inc. (NYSE:OXM) today announced financial results for its fiscal 2024 first quarter ended May 4, 2024.

Consolidated net sales in the first quarter of fiscal 2024 decreased 5% to $398 million compared to $420 million in the first quarter of fiscal 2023. EPS on a GAAP basis was $2.42 compared to $3.64 in the first quarter of fiscal 2023. On an adjusted basis, EPS was $2.66 compared to $3.78 in the first quarter of fiscal 2023.

Tom Chubb, Chairman and CEO, commented, “Our strong brands and excellent team focused on executing our strategy allowed us to deliver sales and adjusted EPS within our guidance ranges for the first quarter despite continued macroeconomic headwinds and lower levels of consumer sentiment. While most economic indicators remain fairly positive, consumer sentiment has dropped meaningfully from levels at the start of this year and has driven the consumer to become more cautious than originally anticipated in her discretionary spending across our channels of distribution. Encouragingly, our comparable sales trend has improved sequentially and is positive in the second quarter to-date. However, given the continued choppiness in the market and lack of sustained positive momentum, coupled with the drop in consumer sentiment, we believe it is prudent to adopt a more conservative outlook for the balance of the year and therefore are lowering our fiscal 2024 sales and EPS guidance.

Despite these near-term challenges, we still expect topline growth in all our brands, growth in all direct to consumer channels of distribution, and positive comps for the full year. We also expect a strong 2024 from a cash flow perspective and will continue investing in the future of our business. These investments will provide the ability to continue to deliver profitable growth and strong cash flow on a sustained basis.”

Mr. Chubb concluded, “All of this is achieved through the efforts of our remarkable people to whom we are grateful as always.”

First Quarter of Fiscal 2024 versus Fiscal 2023

• Consolidated net sales decreased 5% to $398 million.
  
  
  
  
  • Full-price direct-to-consumer (DTC) sales decreased 3% to $257 million versus the first quarter of fiscal 2023.
    
    
    
    
    • Full-price retail sales of $137 million were 2% lower than the prior-year period.
      
      
      
      
    • E-commerce sales decreased 5% to $120 million versus last year.
      
      
      
      
  • Outlet sales were $18 million, a 6% increase versus prior-year results, primarily driven by a $1 million increase in Tommy Bahama.
    
    
    
    
  • Food and beverage sales grew 8% to $35 million versus last year.
    
    
    
    
  • Wholesale sales of $88 million were 16% lower than the first quarter of fiscal 2023.
    
    
    
    
• Gross margin was 64.9% on a GAAP basis, compared to 65.5% in the first quarter of fiscal 2023. The decrease in gross margin was primarily due to sales during promotional events representing a higher proportion of net sales and a $1 million higher LIFO accounting charge versus last year partially offset by proportionally lower wholesale sales. Adjusted gross margin, which excludes the effect of LIFO accounting, decreased to 65.4% compared to 65.8% on an adjusted basis in the prior-year period.
  
  
  
  
• SG&A was $213 million compared to $203 million last year. This increase was primarily driven by expenses related to 27 new store openings since the first quarter of 2023, pre-opening expenses related to approximately 15 to 20 additional stores planned to open during the remainder of fiscal 2024, including 4 new Tommy Bahama Marlin Bars, and the addition of Jack Rogers. On an adjusted basis, SG&A was $210 million compared to $200 million in the prior-year period.
  
  
  
  
• Royalties and other operating income decreased by $1 million to $7 million versus last year. This decrease was primarily due to the absence of a $2 million gain recorded in the first quarter of 2023 on the sale of a discontinued manufacturing facility in Mexico.
  
  
  
  
• Operating income was $52 million, or 13.2% of net sales, compared to $80 million, or 19.1% of net sales, in the first quarter of fiscal 2023. On an adjusted basis, operating income decreased to $57 million, or 14.4% of net sales, compared to $83 million, or 19.8% of net sales, in last year’s first quarter. The decreased operating income includes the impact of the lower sales, lower gross margin and higher SG&A as the Company continues to invest in the business.
  
  
  
  
• Interest expense was $1 million compared to $2 million in the prior year period. The decreased interest expense was primarily due to a lower average outstanding debt balance during the first quarter of fiscal 2024 than the first quarter of 2023, driven by strong cash flows allowing for $76 million of debt reduction since the first quarter of fiscal 2023.
  
  
  
  
• The effective tax rate increased to 25.6% in the first quarter of fiscal 2024 compared to 24.9% in the prior-year period due to certain unfavorable discrete items.
  
  

Balance Sheet and Liquidity

Inventory decreased $35 million on a LIFO basis and $26 million, or 10%, on a FIFO basis compared to the end of the first quarter of fiscal 2023. Inventory decreased in all operating groups except Johnny Was primarily due to the continued initiatives to closely manage inventory purchases and reduce on-hand inventory levels.

During the first quarter of fiscal 2024 cash flow from operations was $33 million compared to $53 million in the first quarter of fiscal 2023. The cash flow from operations in the first quarter of fiscal 2024 provided sufficient cash to fund $12 million of capital expenditures, $11 million of dividends and $11 million of debt repayment.

As of May 4, 2024, the Company had $19 million of borrowings outstanding, compared to $94 million at the end of the first quarter of last year. Also, the Company had $8 million of cash and cash equivalents versus $10 million of cash and cash equivalents at the end of the first quarter of fiscal 2023. The cash and cash equivalents balance as of May 4, 2024 represents typical cash amounts maintained on an ongoing basis in our operations, which typically is approximately $10 million at any given time.

Dividend

The Board of Directors declared a quarterly cash dividend of $0.67 per share. The dividend is payable on August 2, 2024 to shareholders of record as of the close of business on July 19, 2024. The Company has paid dividends every quarter since it became publicly owned in 1960.

Outlook

For fiscal 2024 ending on February 1, 2025, the Company revised its sales and EPS guidance. The Company now expects net sales in a range of $1.59 billion to $1.63 billion as compared to net sales of $1.57 billion in fiscal 2023. In fiscal 2024, GAAP EPS is expected to be between $7.99 and $8.39 compared to fiscal 2023 GAAP EPS of $3.82. Adjusted EPS is expected to be between $8.60 and $9.00, compared to fiscal 2023 adjusted EPS of $10.15.

For the second quarter of fiscal 2024, the Company expects net sales to be between $430 million and $450 million compared to net sales of $420 million in the second quarter of fiscal 2023. GAAP EPS is expected to be in a range of $2.82 to $3.02 in the second quarter compared to GAAP EPS of $3.22 in the second quarter of fiscal 2023. Adjusted EPS is expected to be between $2.95 and $3.15 compared to adjusted EPS of $3.45 in the second quarter of fiscal 2023.

The Company anticipates interest expense of $2 million in fiscal 2024, including the $1 million in the first quarter of fiscal 2024, with interest expense expected to be less than $1 million each of the second, third and fourth quarters of fiscal 2024. The Company’s effective tax rate is expected to be approximately 24% for the second quarter of fiscal 2024 and approximately 25% for the full year of fiscal 2024.

Capital expenditures in fiscal 2024, including the $12 million in the first quarter of fiscal 2024, are expected to be approximately $170 million compared to $74 million in fiscal 2023. This is a reduction from the Company’s prior estimate due to the timing of cash flows related to investments for future growth, including the timing of spend associated with a multi-year project to build a new distribution center in Lyons, Georgia to ensure best-in-class direct to consumer throughput capabilities for our brands. The planned year-over-year increase in capital expenditures includes approximately $90 million now budgeted in fiscal 2024 for the distribution center project. Additionally, we will invest in new brick and mortar locations, relocations and remodels of existing locations resulting in a year-over-year net increase of full price stores of approximately 25 by the end of fiscal 2024. We will also continue with our investments in our various technology systems initiatives, including e-commerce and omnichannel capabilities, data management and analytics, customer data and insights, cybersecurity, automation including artificial intelligence and infrastructure.

Conference Call

The Company will hold a conference call with senior management to discuss its financial results at 4:30 p.m. ET today. A live web cast of the conference call will be available on the Company’s website at . A replay of the call will be available through June 26, 2024 by dialing (412) 317-6671 access code 13746788.

About Oxford

Oxford Industries, Inc., a leader in the apparel industry, owns and markets the distinctive Tommy Bahama^®, Lilly Pulitzer^®, Johnny Was®, Southern Tide^®, The Beaufort Bonnet Company^®, Duck Head^® and Jack Rogers^® lifestyle brands. Oxford's stock has traded on the New York Stock Exchange since 1964 under the symbol OXM. For more information, please visit Oxford's website at .

Basis of Presentation

All per share information is presented on a diluted basis.

Non-GAAP Financial Information

The Company reports its consolidated financial statements in accordance with generally accepted accounting principles (GAAP). To supplement these consolidated financial results, management believes that a presentation and discussion of certain financial measures on an adjusted basis, which exclude certain non-operating or discrete gains, charges or other items, may provide a more meaningful basis on which investors may compare the Company’s ongoing results of operations between periods. These measures include adjusted earnings, adjusted earnings per share, adjusted gross profit, adjusted gross margin, adjusted SG&A, and adjusted operating income, among others.

Management uses these non-GAAP financial measures in making financial, operational, and planning decisions to evaluate the Company’s ongoing performance. Management also uses these adjusted financial measures to discuss its business with investment and other financial institutions, its board of directors and others. Reconciliations of these adjusted measures to the most directly comparable financial measures calculated in accordance with GAAP are presented in tables included at the end of this release.

Safe Harbor

This press release includes statements that constitute forward-looking statements within the meaning of the federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. We intend for all forward-looking statements contained herein, in our press releases or on our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Such statements are subject to a number of risks, uncertainties and assumptions including, without limitation, demand for our products, which may be impacted by macroeconomic factors that may impact consumer discretionary spending and pricing levels for apparel and related products, many of which may be impacted by inflationary pressures, elevated interest rates, concerns about the stability of the banking industry or general economic uncertainty, and the effectiveness of measures to mitigate the impact of these factors; competitive conditions and/or evolving consumer shopping patterns; acquisition activities (such as the acquisition of Johnny Was), including our ability to integrate key functions, recognize anticipated synergies and minimize related disruptions or distractions to our business as a result of these activities; supply chain disruptions; costs and availability of labor and freight deliveries, including our ability to appropriately staff our retail stores and food and beverage locations; costs of products as well as the raw materials used in those products, as well as our ability to pass along price increases to consumers; energy costs; our ability to respond to rapidly changing consumer expectations; unseasonal or extreme weather conditions or natural disasters; the ability of business partners, including suppliers, vendors, wholesale customers, licensees, logistics providers and landlords, to meet their obligations to us and/or continue our business relationship to the same degree as they have historically; retention of and disciplined execution by key management and other critical personnel; cybersecurity breaches and ransomware attacks, as well as our and our third party vendors’ ability to properly collect, use, manage and secure business, consumer and employee data and maintain continuity of our information technology systems; the effectiveness of our advertising initiatives in defining, launching and communicating brand-relevant customer experiences; the level of our indebtedness, including the risks associated with heightened interest rates on the debt and the potential impact on our ability to operate and expand our business; changes in international, federal or state tax, trade and other laws and regulations, including the potential for increases or changes in duties, tariffs or quotas; the timing of shipments requested by our wholesale customers; fluctuations and volatility in global financial and/or real estate markets; the timing and cost of retail store and food and beverage location openings and remodels, technology implementations and other capital expenditures; the timing, cost and successful implementation of changes to our distribution network; pandemics or other public health crises; expected outcomes of pending or potential litigation and regulatory actions; the increased consumer, employee and regulatory focus on corporate responsibility issues; the regulation or prohibition of goods sourced, or containing raw materials or components, from certain regions and our ability to evidence compliance; access to capital and/or credit markets; factors that could affect our consolidated effective tax rate; the risk of impairment to goodwill and other intangible assets such as the recent impairment charges incurred in our Johnny Was segment; risks related to a shutdown of the US government; and geopolitical risks, including ongoing challenges between the United States and China and those related to the ongoing war in Ukraine, the Israel-Hamas war and the conflict in the Red Sea region. Forward-looking statements reflect our expectations at the time such forward-looking statements are made, based on information available at such time, and are not guarantees of performance.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to, those described in Part I. Item 1A. Risk Factors contained in our Annual Report on Form 10-K for Fiscal 2023, and those described from time to time in our future reports filed with the SEC. We caution that one should not place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.