After shutting down all of its restaurants and retail stores on March 17 as a result of the coronavirus pandemic, Tommy Bahama and Lilly Pulitzer owner Oxford Industries will furlough a “significant number” of employees starting March 31.
In a Nutshell: Oxford Industries will cover the costs and benefits of these employees in April, simultaneously working to negotiate with landlords concerning the more than $100 million the company paid in occupancy costs last year.
Oxford Industries CEO and chairman Thomas C. Chubb III said the health and safety of the company’s employees remain the leadership’s primary concern during the COVID-19 outbreak.
“We have broadly and successfully implemented work from home capabilities and our stores and restaurants are temporarily closed,” Chubb said in a statement. “We have also taken decisive actions which leverage the strength of our balance sheet and our prowess in e-commerce and digital.”
Most of Oxford Industries’ stores are located in resorts, lifestyle centers and “prestigious” street fronts, according to Chubb, and were subsequently hit hard by the sudden drop in travel and tourism.
“As we began to feel the impact of COVID-19 over the last few weeks, we have had to make significant changes in how we operate our business,” Chubb said. “Our strength in digital has played a critical role in allowing us to continue to deliver our brands’ messages and compelling product collections to our customers.
“To mitigate inventory risks, we are working with our suppliers on forward orders and redeveloping our merchandising and marketing plans for future seasons,” he added.
Sales: Consolidated net sales totaled $297.6 million in the fourth quarter, below the $307.5 million estimated by Wall Street and the $298.5 million it earned in the comparable period last year. The company recorded its 12th consecutive quarter of growth in comparable sales, which increased 4 percent.
Adjusted gross margin rose 90 basis points in Q4 to 56.2 percent due to improvement at Lilly Pulitzer.
For the full year, the company reported consolidated net sales of $1.123 billion compared to the $1.107 billion it earned in the prior fiscal year. Comparable sales were up 4 percent for the year, bolstered by the company’s growing e-commerce channels—which grew by 10 percent during the year, representing 23 percent of total sales.
Wholesale, on the other hand, is becoming “more challenging,” according to Chubb, and made up just 11 percent of the company’s revenue in fiscal 2019, prompting the shift toward digital.
“We are taking steps to mitigate the risk of the inventory increases by working with our suppliers to cancel delay or reduce our forward purchase,” Chubb said. “We are also taking advantage of our strength in digital to remerchandise and remarket our seasonal offerings for this channel.”
The company’s inventory totaled $152.2 million as of Feb. 1, down from $160.7 million at the end of the prior fiscal year.
Earnings: Oxford generated adjusted earnings per share of $1.09 during the fourth quarter, below the $1.11 estimated by Wall Street. For the full fiscal years of both 2018 and 2019, the company reported adjusted earnings of $4.32.
CEO’s Take: “While COVID-19 has created a great deal of near-term uncertainty, we are well-positioned to handle the challenges ahead thanks to our strong balance sheet and liquidity and our advanced digital capabilities that keep us closely connected to the consumer,” Chubb said. “And most importantly, I want to acknowledge our teams of talented, hard-working and resilient men and women, many of whose lives are being disrupted in ways we couldn’t have imagined a few weeks ago.”