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Tommy Bahama, Lilly Pulitzer Owner Scores Record Q3, Raises Guidance

Oxford Industries turned a $26 million profit in the third quarter and sales also rose as it strategized through supply chain woes.

In a Nutshell: Oxford Industries Inc., in reporting financial results for its fiscal 2021 third quarter, said the strength of its direct-to-consumer (DTC) business is expected to continue through the remainder of 2021.

For the fourth quarter, the company expects net sales to be between $285 million and $295 million compared to net sales of $221 million in the fourth quarter of fiscal 2020 and $298 million in the fourth quarter of fiscal 2019.

Oxford projected earnings per share (EPS) in a range of $1.20 to $1.35 in the fourth quarter. This compares with a loss of 74 cents per share in the fourth quarter of fiscal 2020, and earnings of 90 cents per share in 2019 period.

For the full fiscal year, the company now expects net sales in a range of $1.13 billion to $1.14 billion compared to net sales of $749 million in fiscal 2020 and $1.12 billion in fiscal 2019. In fiscal 2021, EPS is expected to be between $7.49 and $7.64. This compares to a loss of $5.77 per share in fiscal 2020 and earnings of $4.05 per share in 2019.

Capital expenditures in fiscal 2021, including $25 million in the first nine months, are forecast to be between $35 million and $40 million, primarily reflecting investments in information technology initiatives, new Marlin Bars and retail stores. Capital expenditures were $29 million in fiscal 2020 and $37 million in fiscal 2019.

Thomas C. Chubb III, chairman and CEO, said on a conference call with analysts that from a product perspective, the company continues to see strength in the casual, easy and cozy styles that are a hallmark of its brands.

“Great examples of this are continued strength in Tommy Bahama Knits and shorts, women’s lounge and sleepwear, and Lilly Pulitzer’s Luxletic athleisure collection,” Chubb said. “At the same time, we saw a nice rebound in some of the occasion-driven categories that were most challenged last year, including men’s pants and woven shirts, and women’s dresses, as people reengaged in more social events. As we head into the final stretch of the year, I am pleased to report that holiday selling to-date has been robust, and I firmly believe that we will deliver a strong finish to a fantastic year.”

Chubb said Oxford is ordering inventory earlier to account for the stretched-out time in the supply chain that everybody in the industry is experiencing.

“And then, we’re continuing to be nimble and agile,” he said. “So, the bottom line…is that I don’t expect us to not be able to deliver the business based on supply chain issues…I think we’ll be in good shape.”

As of Oct. 30, Oxford had a strong liquidity position, with $188 million of cash and short-term investments and no borrowings outstanding under its revolving credit agreement. In the first nine months of fiscal 2021, cash provided by operating activities totaled $157 million compared to $23 million in the first nine months of fiscal 2020.

Sales: Net sales for the third quarter ended Oct. 30 were $248 million compared to $175 million and $241 million in the third quarters of fiscal 2020 and fiscal 2019, respectively, despite significantly lower sales at Lanier Apparel, which the company effectively exited during the period.

Full-price direct to consumer (DTC) sales grew 40 percent to $143 million, with growth in all brands–Tommy Bahama, Lilly Pulitzer, Southern Tide, The Beaufort Bonnet Company and Duck Head–compared to the third quarter of fiscal 2019. Full-price retail sales grew 13 percent and full-price e-commerce sales grew 100 percent compared to the third quarter of fiscal 2019.

Off-price sales in DTC channels, which include the Lilly Pulitzer e-commerce flash clearance sale and Tommy Bahama outlet store sales, decreased $12 million compared to the third quarter of fiscal 2019. Sales from the Lilly Pulitzer e-commerce flash clearance sale were $19 million in the third quarter of fiscal 2021 compared to $31 million in the third quarter of fiscal 2019. More inventory sold at full price in the spring and summer resulting in less inventory for the clearance event.

Wholesale sales were $53 million during the quarter compared to $78 million during 2019 period. The decrease was primarily due to $25 million of lower sales in Lanier Apparel.

Earnings: Net earnings in the quarter were $25.99 million compared to a net loss of $10.6 million a year earlier and earnings of $1.67 million in the 2019 quarter.

EPS increased to $1.54 compared to a loss of 64 cents per share in the third quarter of fiscal 2020 and earnings of 10 cents per share in the third quarter of fiscal 2019. Gross margin increased to 62 percent compared to 55 percent in the 2019 third quarter. The gross margin improvement was fueled by strong full-price sales, a shift in sales mix toward full-price DTC channels and higher initial gross margin, partially offset by higher freight costs.

Operating income increased to $31 million, or 12 percent of net sales, compared to $3 million, or 1 percent of net sales, in the third quarter of fiscal 2019.

CEO’s Take: Chubb said: “We are delighted to be reporting record net sales and earnings for the third quarter of fiscal 2021. These outstanding results are directly attributable to the power of our brand portfolio, the strength of our product offerings and our ability to connect with and serve customers across channels, combined with the great work our teams have done to fortify these foundational cornerstones during the pandemic.”

“While the current operating environment has presented challenges, including supply chain disruptions and additional cost pressures, we are managing them adeptly and I am confident in our ability to continue successfully executing our key strategies as we move through the fourth quarter and into fiscal 2022,” Chubb added. “I am pleased to report that holiday selling to date has been robust and I firmly believe that we will deliver a strong finish to a fantastic year.”

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