Oxford Industries Inc. Tuesday reported sharply lower earnings and sales for the third quarter and reduced full-year guidance.
This story first appeared in the December 10, 2008 issue of WWD. Subscribe Today.
In the three months ended Nov. 1, net income slid 65.1 percent to $4.8 million, or 31 cents a diluted share, from $13.7 million, or 76 cents, in the year-ago quarter. Excluding 7 cents a share in special charges, earning per share was 38 cents a share, 7 cents less than analysts’ consensus estimates.
Sales in the quarter backtracked 14.7 percent to $244.2 million from $286.3 million, falling short of the $259.8 million estimate of analysts. Gross margin fell to 38.3 percent of sales from 39.2 percent in the 2007 period. Inventories were cut 30.3 percent to $108.6 million from $155.8 million.
“Obviously, we are disappointed with our absolute results for the third quarter,” said J. Hicks Lanier, chairman and chief executive officer of the Atlanta-based firm. “However, we believe we managed the business well given what are indisputably the worst market conditions in decades. While we’ve been hurt like everyone else, our wounds are not self-inflicted.”
All four operating groups within Oxford posted an operating profit, although all withstood sales declines. Tommy Bahama’s sales dropped 18.7 percent to $83.7 million and operating income sagged 93.9 percent to $689,000. Ben Sherman’s sales were off 18.1 percent to $38.2 million while operating income fell 42.1 percent to $3.2 million. At Lanier Clothes, revenues dropped 16.2 percent to $44.3 million but operating income rose 71.2 percent to $4.5 million. Oxford Apparel Group’s sales dropped 6.3 percent to $78.1 million as income declined 0.4 percent to $7.3 million.
The company said the third quarter, historically the weakest at Tommy Bahama’s retail stores, “was particularly weak as a result of significantly diminished traffic during September and October.” The company doesn’t expect fourth-quarter operating income at Tommy Bahama to reach last year’s level, but it said it anticipates a “low-double-digit operating margin.”
On a conference call with analysts, Lanier said the company remained focused on not only cost containment, but brand protection as well. Speaking of the Tommy Bahama stores, which have resisted promotional temptations, he said, “We are not out there with dramatic sales. That’s our contrast with what’s going on out there. We know that has moderated our top line, [but] we think it’s the right strategy for us at this time. We will come out of this cycle whenever it turns in a very, very strong position with our brand.”
Based on the third-quarter performance and outlook for the current fourth quarter, Oxford lowered its EPS guidance for the full year to $1, including special items, down from the range of $1.50 to $1.65 provided at the conclusion of the second quarter. Net sales are now budgeted at $950 million, down from an earlier projection of $1 billion and the year-ago level of $1.09 billion.
For the nine months to date, net income dropped 60.1 percent to $15.8 million, or $1.00 a diluted share, while sales were off 9.2 percent to $747.6 million.