Lilly Pulitzer

Oxford Industries saw a sales bump from its e-commerce channels in the first quarter but it wasn’t enough to keep the Atlanta-based company’s bottom line from turning red.

On Wednesday, the owner of the Lilly Pulitzer and Tommy Bahama brands reported a net loss of $66.8 million, compared to a profit of $21.6 million in the same quarter last year. Net sales fell to $160 million from $282 million in the first fiscal quarter of 2019.

Thomas Chubb, chairman and chief executive officer, said after the company closed all of its North American stores and restaurants on March 17, it “quickly pivoted time and resources to staying connected with our customers through our e-commerce and digital platforms.” That resulted in a sales increase of 12 percent over the first quarter of last year “and the positive momentum has continued into the second quarter.” E-commerce accounted for 23 percent of the company’s overall sales last year.

Chubb said the company began reopening its stores and restaurants in early May and about half of the 225 locations are now operational. Customers are “slowly returning,” he said, adding that the company expects the remainder of the fleet to open by the end of June, albeit with restricted hours and customer capacity.

He said stores that are in “warm, sunny, drivable” locations such as those in Florida and South Carolina, are performing best. Retail accounted for 47 percent of Oxford’s business in 2019.

Turning to wholesale, the company is expecting soft demand to continue through the balance of the year. He said the Lilly Pulitzer brand posted a 12 percent uptick in business in the first quarter and is the strongest brand in the portfolio, but he is also expecting Father’s Day to help boost sales at Tommy Bahama over the next couple of weeks.

“Under these market conditions, managing inventory and expenses tightly becomes even more critical,” Chubb added. “Working closely with our vendors, we were able to cancel or defer many of our forward orders and extend payment terms. We have taken advantage of our strength in digital to redevelop our merchandising and marketing plans and added several promotional activities to ensure our inventory levels stay in check as our business begins to ramp up. Preserving our high level of liquidity is critical and we are well-positioned on that front. On the expense side, we have pulled levers and made reductions across most spending categories,” Chubb said.

During March, Oxford drew down $200 million of its $325 million asset-based revolving credit facility. It is also working with landlords on rent reductions wherever possible.

Even so, Chubb said that while Oxford’s objective is always to deliver “sustained profitable growth,” the state of the country “makes it almost impossible for us to achieve this objective. That said, we believe this situation is temporary.” In fact, some of the reopened stores are actually performing at or above levels from last year.

In answer to an analyst question about whether Oxford would consider making any acquisitions during this time, Chubb said that the only possibilities right now appear to be distressed assets. And while there’s nothing imminent, he said Oxford will “keep our eyes open. As things start to rebound, there could be some good opportunities and we will definitely be looking for them.”

Chubb also took the opportunity of the earnings call to say Oxford is committing $1 million over the next four years to help local communities address economic and racial inequality through education. “Every child regardless of race or economic circumstance deserves the chance to learn and be successful,” he said. “The likelihood of the success increases exponentially when a child has access to a quality education. All too frequently, particularly in economically disadvantaged communities and communities of color that access does not exist.”