In a Nutshell: Oxford Industries Inc. said its results for the first quarter of fiscal 2020 were “dramatically impacted” by the COVID-19 pandemic.
During the period, the company noted that it took a number of actions to protect the health and well-being of its employees and customers, protect its brands, and preserve its liquidity. In March, as a proactive measure to bolster its cash position and maintain a high level of liquidity in response to the COVID-19 pandemic, the company drew down $200 million of its $325 million asset-based revolving credit facility.
As of May 2, Oxford had $182 million of cash and cash equivalents, $114 million of unused availability and $208 million of borrowings outstanding under its revolving credit agreement.
The company said it is confident it has ample liquidity to satisfy its ongoing cash requirements in fiscal 2020 and for the foreseeable future. These cash requirements generally consist of working capital and other operating activity needs, capital expenditures, which are expected to be approximately $30 million in fiscal 2020, interest payments on debt and dividends.
Inventory in the quarter increased 8 percent to $169 million compared to $157 million in the prior-year period. The company said it has taken meaningful actions to mitigate inventory risks.
Oxford said due to the significant uncertainty created by the COVID-19 pandemic, it is not providing a financial outlook for fiscal 2020.
Sales: Consolidated net sales for the first quarter ended May 2 fell 43.3 percent to $160.34 million compared to $282.97 million in the first quarter of fiscal 2019.
The company noted that on March 17, it temporarily closed all of its retail stores and restaurants in North America. The result was retail, wholesale and restaurant sales being down 58 percent, 52 percent and 50 percent lower, respectively. These reductions were partially offset by 12 percent growth in e-commerce.
Tommy Bahama net sales decreased 47.2 percent to $87 million from $164.7 million in the first quarter of 2019. Net sales at Lilly Pulitzer fell 32.3 percent to $49.1 million from $72.6 million.
Earnings: The company reported a net loss in the quarter of $66.78 million, or $4.02 net loss per share, compared to earnings of $21.66 million, or earnings per share of $1.29, in the year-ago period.
Gross margin was 58.7 percent compared to 58.8 percent in the year-ago period. Expanded gross margin at Lilly Pulitzer and the benefit of LIFO accounting were offset by lower gross margin in the other businesses.
CEO’s Take: Thomas C. Chubb III, chairman and CEO, said: “We temporarily closed all of our North American stores and restaurants on March 17 and quickly pivoted time and resources to staying connected with our customers through our e-commerce and digital platforms. The combination of specific actions, recent investments in digital capabilities and the overall shift toward online spending brought on by COVID-19, helped drive an acceleration in e-commerce trends. First quarter e-commerce sales grew 12 percent over the first quarter last year and the positive momentum has continued into the second quarter.
“As of today, we have a little more than half of our 225 locations opened and expect to have almost all locations open by the end of June,” Chubb added. “Customers are slowly returning to our stores and restaurants, which are operating under restricted hours and limited capacity. Under these market conditions, managing inventory and expenses tightly becomes even more critical. 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.”