Lower sales in all divisions, and lower profits in all but one, combined with hefty restructuring charges to lower Oxford Industries’ second-quarter earnings more than 80 percent from year-ago levels.
Net income for the three months ended Aug. 2 fell to $1.5 million, or 9 cents a diluted share, 83.1 percent below the $8.7 million, or 49 cents, registered during the second quarter of 2007. Eliminating reorganization charges totaling 38 cents a share, as well as a one-time 4-cent gain, adjusted EPS was 43 cents, 9 cents higher than analysts’ estimates and above the 31- to 36-cent range provided by Oxford in earlier guidance.
Sales dropped 5.8 percent during the quarter to $230.5 million, slightly above expectations, from $244.6 million in the year-ago period. Gross margin declined slightly to 41.9 percent of sales from 42.1 percent a year ago.
“We are pleased with our results for the second quarter, which were particularly gratifying given the difficult tenor of the retail environment,” stated J. Hicks Lanier, chairman and chief executive officer of the Atlanta-based marketer of Tommy Bahama, Ben Sherman and other brands. “We believe that the actions we’ve taken will result in leaner and more focused legacy businesses. As we rationalize these businesses, we are extracting significant working capital and improving our return on investment.”
But Oxford’s newer businesses saw profits and sales drop during the quarter. Tommy Bahama’s sales were off 2.1 percent to $112 million and, with revenues down and, due to its larger retail network, expenses up. Operating income was off 13.4 percent to $18.1 million. At Ben Sherman, which Oxford is trying to reposition, sales sank 11 percent to $32.5 million as the operating loss grew to $2 million from $1.5 million a year ago.
Lanier said Oxford remains confident “that the strength of these brands can support an expanded direct-to-consumer business, a broader international reach and an expanded mix of products.”
Tommy Bahama had 78 stores at the end of the quarter, nine more than a year ago.
For the first half, net income was down 57.5 percent to $11 million, or 69 cents a diluted share, from $25.8 million, or $1.44. Sales for the six months were off 6.2 percent to $503.5 million.
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