On December 6, 2023, Oxford Industries Inc (OXM, Financial) released its 8-K filing, announcing financial results for the fiscal third quarter ended October 28, 2023. The company, which owns prominent brands such as Tommy Bahama, Lilly Pulitzer, and Johnny Was, reported a 4% increase in consolidated net sales to $327 million compared to the same period last year. However, both GAAP and adjusted EPS experienced a decline, with GAAP EPS falling from $1.22 to $0.68 and adjusted EPS decreasing from $1.46 to $1.01 year-over-year.
Financial Performance Overview
Despite a challenging market, Oxford Industries Inc (OXM, Financial) managed to achieve a modest increase in sales, attributed in part to the addition of Johnny Was, which was acquired on September 19, 2022. Full-price direct-to-consumer (DTC) sales grew by 9%, including a significant contribution from Johnny Was. However, the company's other businesses saw a 3% aggregate decrease in full-price DTC sales.
Tommy Bahama and Lilly Pulitzer, two of Oxford's flagship brands, experienced sales declines of 5% and 9%, respectively. Conversely, the Emerging Brands group saw a 16% increase in sales. Gross margin on a GAAP basis slightly decreased to 62.9% from 63.2% in the previous year, primarily due to a higher LIFO accounting charge. Adjusted gross margin, however, expanded to 64.0% from 63.4%, benefiting from the higher-margin Johnny Was sales and a shift in sales mix towards direct-to-consumer transactions.
Operational Highlights and Future Outlook
Oxford Industries Inc (OXM, Financial)'s SG&A expenses rose to $195 million from $175 million, largely due to the inclusion of Johnny Was expenses. Operating income decreased to $14 million, or 4.4% of net sales, from $27 million in the prior year. The company has moderated its full-year guidance, now expecting net sales between $1.570 billion and $1.590 billion, with GAAP EPS between $9.25 and $9.45, and adjusted EPS between $10.10 and $10.30.
The company's balance sheet reflects a decrease in inventory levels and a strong cash flow from operations, which allowed for significant capital expenditures, dividend payments, share repurchases, and debt reduction. Oxford Industries Inc (OXM, Financial) also declared a quarterly cash dividend of $0.65 per share, maintaining its long-standing tradition of dividend payments since 1960.
Management Commentary
Tom Chubb, Chairman and CEO, remarked on the company's ability to deliver solid results amidst a cautious consumer environment.
We are pleased to deliver another quarter of solid results which were squarely in our sales and EPS forecast ranges and come on top of 12% positive comps during the same period last year,"Chubb stated. He also expressed gratitude towards the company's team for their exceptional efforts.
Investor Considerations
Value investors and potential GuruFocus.com members should note that while Oxford Industries Inc (OXM, Financial) has demonstrated resilience in a challenging market, the decline in EPS and moderated guidance may reflect ongoing market uncertainties. The company's strategic acquisitions and focus on direct-to-consumer sales could offer potential growth avenues, but investors should weigh these against broader economic factors and consumer spending trends.
Oxford Industries Inc (OXM, Financial) will hold a conference call to discuss these financial results and provide further insights into the company's performance and strategy.
Explore the complete 8-K earnings release (here) from Oxford Industries Inc for further details.
