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Oxford Pays $270 Million for Johnny Was

With social dressing back in vogue, Oxford Industries is leaning into the space with a $270 million acquisition of Johnny Was.

“Since 1987, Johnny Was has been inspired by a free-spirited signature aesthetic that embraces a quintessential California lifestyle. With its beautifully crafted clothing and one-of-a-kind accessories, Johnny Was continues to transcend fashion trends,” said Tom Chubb, Oxford chairman and CEO. “The addition of the Johnny Was brand to the Oxford portfolio further diversifies our business across fashion points of view, price points, seasons and geographies.”

Johnny Was CEO Rob Trauber and his leadership team will become part of Oxford’s staff.

“We believe Oxford is the perfect home for Johnny Was as our missions are aligned and they have a proven track record of successfully partnering with brand leadership to optimize investment, performance, and long term brand management to fuel growth,” Trauber said.

Chubb had eyed the modern bohemian lifestyle apparel brand years ago, and even had conversations with Johnny Was founder Eli Levite. But the brand instead picked up an investment stake from Endeavor.

In an investor presentation, Oxford said Johnny Was met all of its acquisition criteria. It offered a profitable business model with premium pricing and well-defined positioning driving customer loyalty. In addition to a capable leadership team, Johnny Was also came with a sustainable and profitable growth trajectory while enhancing and complementing Oxford’s existing brands, including Tommy Bahama, Lilly Pulitzer, Southern Tide, The Beaufort Bonnet Company and Duck Head.

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The company in December 2020 said it was winding down its legacy Lanier Apparel Group, which no longer fit its long term vision. 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,” Chubb said at the time.

The Johnny Was business targets a female customer who is 45 years and older, with a median income between $150,000 and $200,000. It got 41 percent of its $202 million annual volume from e-commerce, with wholesale chipping in 25 percent, 34 percent flowing through retail. Wholesale doors include Neiman Marcus, Saks Fifth Avenue, Bloomingdale’s, Dillard’s and Sundance, as well as more than 1,000 specialty boutiques. It also operates 61 retail stores across 24 states in both small and large markets. The average store size is 1,600 square feet, doing $700 in sales per square foot. The new store payback period is under two years.

Gross margins hover around 70 percent. Johnny Was has 240,000-plus unique DTC customers and an average DTC order value of $290-plus.

Now that the deal closed Monday, Oxford increased its guidance for the third quarter and full year Fiscal 2022.

Third quarter sales are now projected at $295 million to $310 million, with adjusted earnings per share (EPS) at between $1.10 and $1.30. Oxford it expects Johnny Was to enhance quarterly sales and also cited “strong quarter-to-date performance in our full-price direct-to-consumer channels and last week’s successful Lilly Pulitzer e-commerce flash sale.” Prior guidance when the company posted second quarter results on Sept. 1 estimated net sales between $270 million to $280 million on adjusted EPS in the range of 90 cents to $1.05.

For the full year, sales were guided to $1.38 billion to $1.41 billion, with adjusted EPS between $10.25 to $10.60. The guidance does not include the impact of certain items, such as transaction costs and one-time integration costs. Prior estimates called for net sales between $1.30 billion to $1.33 billion, with adjusted EPS between $9.85 to $10.10.

Including the newest baby in its portfolio, Oxford said Johnny Was is expected to contribute 14 percent to overall 2022 revenue, with Tommy Bahama at 56 percent and Lilly Pulitzer at 22 percent. The balance at 8 percent are iSouthern Tide, Beaufort and Duck Head in the emerging brands group.

Oxford financed the deal through cash on hand and borrowed $100 million from its revolving credit facility. It said it expects to “pay off” the debt within the first year of ownership.