OXFORD NET DROPS ON START-UPS
Byline: Arnold J. Karr
NEW YORK — Women’s operations registered the strongest increase in operating profit, but start-up costs for four new men’s wear operations lowered Oxford Industries’ first-quarter earnings 26.7 percent, despite a double-digit sales increase.
As the company continued to scramble to compensate for the loss of its Polo Boys license in mid-1999, net income for the quarter ended Sept. 1 dropped to $3.5 million, or 45 cents a diluted share, from $4.7 million, or 60 cents in the year-ago quarter. Sales were up 10 percent to $204.4 million from $185.7 million in last year’s quarter.
Women’s wear operating profit rose 48.1 percent to $4 million as sales increased 11.5 percent to $72.6 million. The women’s division of the Atlanta-based company was responsible for 35.5 percent of sales and 59.8 percent of operating earnings in the most recent quarter.
Overall, gross margins improved nominally over 1999 levels — to 18.3 percent from 18.1 — but operating expenses moved to 15 percent of sales from 13.6 percent in the year-ago quarter.
All four operating groups experienced sales increases in the quarter. The smallest of the gains was a 0.5 percent increase at the Shirt Group which had previously housed the Polo Boys operation, the only one of the four to experience a decrease in operating income. The shirt unit’s profits were off 81.3 percent to $900,000 while sales hit $61.6 million.
The Shirt Group is launching Izod Club Golf, Tommy Hilfiger Women’s Golf and DKNY Kids, while Oxford’s tailored clothing unit is rolling out Slates Tailored Clothing.
At the Shirt Group, “additional sales from the new marketing divisions offset declines in existing divisions, primarily private label dress shirts and sport shirts,” the company reported, adding that increased expenses from the new units not only pulled divisional profits down but were responsible for the company’s overall earnings decline.
“In light of the difficult retail environment, we are pleased with the first quarter results of three of our operating groups,” said J. Hicks Lanier, chairman, president and chief executive of Oxford. “We are obviously disappointed with the results in the Shirt Group, but we remain confident that the situation is temporary. The expenditures in the Shirt Group are an important part of our strategic plan to increase the branded component of our business.”
Lanier Clothes, Oxford’s tailored clothing unit, registered the greatest gains in sales. Revenues were up 20.9 percent, to $43.4 million, and income ahead 20 percent to $3 million. Strong growth was noted in the Nautica and Geoffrey Beene areas, and “diligent attention to expense control” was credited with helping to offset pricing pressures.
At Oxford Slacks, first-quarter sales rose 14.6 percent, to $26.7 million, while operating earnings were up 30.8 percent to $1.7 million.
Lanier said he expects the current fiscal year to be similar to last year. “As was the case last year, second-half results are expected to improve greatly over the first half, resulting in relatively flat sales and earnings for the full year,” he commented.
Reese Lanier, treasurer, told WWD that, although overall revenues were up in the shirt group and the three other divisions, startups were yielding mixed results. “Not all are performing according to plan,” he said, declining more specific comment.