It’s the end of an era at Oxford Industries.
In reporting third-quarter earnings on Wednesday, the Atlanta-based manufacturer said it will exit the Lanier Apparel business by the second half of 2021. Lanier was founded more than 45 years ago and is the second largest supplier of tailored clothing in the U.S. It produces suits under the Kenneth Cole, Cole Haan, Strong Suit, Dockers, Billy London and Nick Graham labels, along with sportswear under the Duck Head, Oxford, Cole Haan and Island Sands names.
But the pandemic, and its enormous negative impact on the tailored clothing market, was the final nail in the coffin for the division which has been losing momentum for several years as its owner diversified and focused attention on its Tommy Bahama, Lilly Pulitzer and Southern Tide labels.
“Through a series of acquisitions and divestitures over many years, Oxford has migrated from being a private label and licensed manufacturer servicing department stores and big-box retailers, to owning a portfolio of compelling, direct-to-consumer lifestyle brands,” said Thomas C. Chubb 3rd, chairman and chief executive officer of Oxford. “Throughout that time, our legacy Lanier Apparel business has been well run by an exceptional group of people. That said, Lanier’s business model does not fit our long-term vision for the enterprise and the challenges presented by the pandemic have amplified the misalignment. Exiting this business will result in a portfolio that is completely in sync with our strategy. I want to personally thank the dedicated employees of Lanier Apparel for their contributions to Oxford over the years.”
The wind-down of Lanier is expected to be cash-positive and the company’s adjusted results exclude a $10 million pretax charge related to the Lanier Apparel exit as well as a LIFO accounting credit of $6 million, among other items.
Overall, Oxford said in the period ended Oct. 31, the company reported an operating loss of $13.7 million against a profit of $2.6 million in the fiscal 2019 third quarter. For the nine months, the loss was $107.2 million, or a loss of 64 cents a share on a GAAP basis, as compared to a profit of $72.6 million, or earnings of 10 cents a share, in the prior-year period.
Consolidated net sales declined 27 percent to $175 million compared to $241 million in the third quarter of fiscal 2019. E-commerce sales rose 51 percent in the period. Full-price retail sales and restaurant sales were 45 percent and 30 percent lower, respectively, and the wholesale channel decreased 37 percent year-over-year.
Specifically, sales of Tommy Bahama dropped 25.3 percent to $94.9 million in the third quarter. Lilly Pulitzer’s sales dropped 25 percent to $53.7 million, while Southern Tide’s sales actually increased 10.1 percent to $10 million. The Lanier Apparel division experienced a 62.4 percent decline in sales to $108 million in the third quarter.
Chubb said he was “encouraged by our third-quarter results as each of our branded businesses exceeded our internal plans. During our historically smallest quarter of the year, our full-price e-commerce business grew 51 percent, helping partially offset the headwinds in other channels due to COVID-19. Our sustained digital success this year underscores the power of our brands and their strong consumer connections and is a great indication that our business is positioned for success in the post-pandemic environment.”
He said since the pandemic, the company “took steps to reinforce and build upon the strengths of Tommy Bahama, Lilly Pulitzer and Southern Tide, as well as our smaller brands like The Beaufort Bonnet Company and Duck Head. As our brands become more digitally focused, mobile-centric and omnichannel, they continue to add capabilities that create personalized and seamlessly integrated digital and brick-and-mortar shopping experiences that serve our customers well. Key technology initiatives across the various businesses such as enhanced CRM tools, sophisticated enterprise order management capabilities, web site redesign and improved SEO, enrich the customer experience and add efficiencies to our operations.”
He said he’s looking forward to “a solid finish to this year and a return to profitability in fiscal 2021.” Even so, the company declined to provide guidance for fiscal 2020.