OXFORD QUARTERLY NET UP 20%
Byline: Thomas J. Ryan
NEW YORK — Riding sterling earnings and sales gains in its private label women’s apparel business, Oxford Industries reported earnings rose 20 percent in the fourth quarter ended June 2.
In a clear demonstration of its growing importance at the company, women’s wear accounted for more than 42 percent of the company’s sales and 63 percent of its operating profits for the period.
Profits improved at its dress shirt and tailored clothing business, though sales gains were only modest. Men’s slacks was the one clear underperformer.
The Atlanta-based firm earned $7.3 million, or 94 cents a share, in the quarter, up from $6.1 million, or 74 cents, a year ago. Sales advanced 9.4 percent to $246.4 million from $225.3 million.
In the fiscal year, earnings dipped 11.2 percent to $23.4 million, or $3.02, from $26.4 million, or $3.11, a year ago. Sales dipped 2.7 percent to $839.5 million from $862.4 million.
J. Hicks Lanier, chairman and chief executive, said in a statement that the sales gains during the fourth quarter were driven by “continuing strength” in its women’s segment, which sells private label goods to the mass channel. “Improved profitability during the quarter was driven by the sales gain and improved gross margins,” Lanier said.
Commenting on the full year, Lanier said the firm was hampered by the loss of its Polo for Boys license, which accounted for more than 10 percent of sales the prior year. Excluding the lost Polo sales, net sales were up 7 percent in fiscal 2000. To make up for the lost license, Oxford during its last twelve months acquired Izod Club Golf, and entered into licensing agreements for Tommy Hilfiger women’s golf, to launch spring 2001; DKNY Kids, to ship this fall; and Slates tailored clothing, to bow in spring 2001.
“We expect these and other new initiatives to enable us to continue to build our branded business and to maintain our leadership position in private label merchandise,” said Lanier.
However, he added, “Uncertainties about the economy and consumer spending moderate our near-term growth expectations. However, we remain optimistic about continued profitability improvement in the coming fiscal year. We will continue our search for acquisitions and licenses with a focus on high valued-added private label and branded opportunities.”
By operating segment, women’s wear operating profits tripled in the quarter to $8.1 million from $2.6 million as sales climbed 19.5 percent to $104.7 million from $87.6 million. In the year, operating income surged 121.2 percent to $20.8 million as sales climbed 19.3 percent to $324.5 million, 38.6 percent of total company revenues.
J. Reese Lanier Jr., investor relations director, said the strength last year was driven by the collections businesses and a more than 20 percent increase at Next Day Apparel, a women’s private label business with an emphasis on bottoms, acquired in August 1998.
“The growth came from Wal-Mart and Kmart and, to a lesser extent, Target,” he said. “They just executed flawlessly this year.”
Lanier Jr. said he suspects the women’s business growth at Wal-Mart is being helped by Oxford’s ability to meet that chain’s inventory management system needs.
“The fact that we’re a large player and we’re technology savvy has helped us grow the business,” he said.
In the Oxford dress shirt group, operating profit during the quarter grew to $4.4 million from $22,000, although sales nudged up just 1.5 percent to $67.4 million. Full-year earnings dipped 34.9 percent to $13.3 million, while sales slumped 23.3 percent to $240.2 million.
Lanier Jr. said the shirt group was hit the hardest by the loss of the Polo license. The Izod Club business “was successful for us this spring,” and Tommy Hilfiger golf “improved their performance fairly dramatically.” Ely & Walker “did well,” and the private label sport shirt business “held its own,” but private label dress shirts were “a little bit weak.”
At Lanier Clothes, operating income during the quarter climbed 35.4 percent to $2.7 million from $2 million while sales rose 3.4 percent to $45.9 million. Full-year earnings rose 27.1 percent to $11.6 million with sales inching ahead 0.5 percent to $174.8 million. Growth was seen last year in its Nautica, Geoffrey Beene and Oscar de la Renta lines, with an “extraordinary” performance by Nautica dress slacks. Overall strength in the slacks and sports coats business improved margins. Private label tailored clothing was weaker.
In the slacks group, operating income tumbled 83.1 percent to $278,000 from $1.64 million in the quarter, though sales gained 10.6 percent to $28.3 million. In the full year, earnings dropped 42.3 percent to $3.9 million, while sales dipped 0.6 percent to $99.9 million. The group, which makes casual bottoms such as khakis and walking shorts, with primary customers including Lands’ End and Eddie Bauer, was hurt by a quota problem in the Far East, Lanier Jr. said. “We think the [quota] situation is behind us, and we don’t expect significant damage going forward,” he said.