NEW YORK — Aggressive asset management, capacity reductions and cost containment allowed Oxford Industries Inc. to report fourth-quarter earnings gains even as sales declined.
For the three months ended May 31, the Atlanta-based manufacturer posted a 7.1 percent increase in net income to $5.6 million, or 74 cents a diluted share. That compares with last year’s fourth-quarter profits of $5.3 million, or 70 cents.
Sales fell 11.2 percent to $191.7 million from $215.9 million a year ago.
“We began to see some tangible signs of improvement during the fourth quarter,” said president J. Hicks Lanier in a statement. “Although sales trailed last year, fourth-quarter sales and earnings came in well ahead of our expectations. Gross margins increased 300 basis points driven by significant improvements in sourcing and inventory management.”
By the fourth quarter’s end, Oxford established new joint manufacturing ventures in India and China and substantially completed the transition of its manufacturing support functions to outside of the U.S.
Overall, for the full fiscal year, the company reported net income fell by almost a third, dropping 31.1 percent to $10.6 million, or $1.40 a diluted share. That compares with previous year earnings of $15.3 million, or $2.05.
Led by declines in its women’s wear segment, full-year net sales fell 16.6 percent to $677.3 million from $812.5 million a year ago.
By unit, the Womenswear Group’s sales last year decreased 19 percent to $253.7 million from $313 million. The below-plan performance of the group was due mainly to lower-than-expected replenishment buying and fewer shipments to a major mass merchant retailer. Additionally, the Kmart bankruptcy had a “significant impact” on the unit’s performance. Overall, operating earnings in the women’s apparel unit plunged 39 percent to $9.5 million from $15.5 million in the prior fiscal year.
Lanier Clothes’ sales decreased 13 percent to $153.1 million from $175.1 million last year. The Oxford Slacks unit posted a 22 percent sales decline to $80.7 million. At the Oxford Shirt Group, a sales slide of 14 percent, to $189.4 million, was caused by decreased demand from the specialty and department store channels, as well as the discontinuation of the DKNY Kids business. However, the segment’s operating income did swing to a profit of $700,000 compared to last year’s loss of $1.4 million.