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Oxford CEO: ‘Never-ending List’ of Customer Service Enhancements

Oxford Industries Inc.’s CEO Thomas C. Chubb III credited the creation of a seamless shopping experience with driving strong second-quarter results.

In a Nutshell: “While we are benefiting from some favorable market conditions, the numbers that we delivered are the direct result of our team’s ongoing efforts to navigate through the short-term challenges posed by the pandemic, while staying focused on our long-term strategic objective of delivering happiness to our customers,” Chubb said.

Heading into the second half of the year, Chubb said the company has built a “powerful and profitable, seamless, digital and mobile-first omnichannel platform, that is driving growth by providing a superior, modern customer experience. From a product perspective, the trend toward casual, easy care and easy-to-wear, plays right into the sweet spot of our brands, and we are doing a great job of capitalizing on the market opportunity.”

The chairman and CEO spoke about the company’s investments in improving the customer experience, such as enhancements to its mobile apps, search engine optimization, customer data and insights and customer service.

“We have talked many times about our ability to ship-from-store, as an example of the blending of these two channels. We have also routed capabilities—such as drive-to-store digital marketing; buy online, pickup-in-store; reserve online, pickup-in-store; virtual shopping appointments, and cross-channel customer service—to better meet the needs of our customers. The better we are at providing a truly seamless omnichannel experience, the better our customers’ overall experience will be, which will ultimately result in increased brand loyalty, and a stronger business over the long term,” Chubb said.

Some of those enhancements are either completed or still in progress. An easier return process is being worked on to further improve the customer experience.

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Chubb also explained the thinking behind the reserve online and pickup-in-store option: “The idea there is that a customer could go online, pick out five or six styles that she felt she might be interested in, reserve them online and the store staff can actually build a dressing room for her with those styles in the dressing rooms. She can zip in, try them all on. She sort of pre-screened them online. They are all there waiting for her to try on.”

The CEO called the possibilities for enhancement “almost a never-ending list, but the more that we can do, the better experience that will provide for.”

He said wholesale sales are only about 20 percent of total sales, but still remain an important channel of distribution.

Oxford's looking at additional improvements to its customer experience initiatives to provide a seamless online-offline shopping journey.
Tommy Bahama has benefited from the trend toward “casual, easy care and easy-to-wear product.” Courtesy

Knit tops and shorts in both men’s and women’s were key sales’ drivers in the quarter. Chubb said the strength in the two categories represents a “terrific example of how Tommy Bahama benefits from and is capitalizing on the long-standing trend toward casual, easy care and easy-to-wear product.”

The Lily Pulitzer brand saw a rebound in woven dresses, while its Lilly Luxletic activewear, 12 percent of the brand’s business, was the biggest growth category during the quarter.

New retail doors helped to drive sales up 17 percent at the Southern Tide brand, with just a handful of company-owned stores in Florida.

The company didn’t say much about the supply chain challenges, although Chubb said the company did incur some air freight costs to “close the gap on some of the delays.” And the CEO noted that ocean freight rates have spiked up dramatically, in some cases “as much as maybe four times what they would have been a couple of years ago.”

K. Scott Grassmyer, executive vice president and chief financial officer, said that initial spring wholesale shipments are expected to ship in the first quarter of 2022 due to delays. They have historically shipped in the fourth quarter, the CFO said.

Net Sales: For the quarter ended July 31, net sales rose 71 percent to $328.7 million from $192 million. When compared with the same pre-pandemic 2019 quarter, net sales rose 9 percent. Many companies have been including the comparable 2019 quarter as a more suitable basis for comparison than the year-ago three months because of temporary store closures in 2020.

Growth in the company’s direct-to-consumer channel was led by its “highly profitable e-commerce business, which grew by 49 percent over the second quarter of 2019,” the company said.

When compared to the 2019 quarter, full price DTC sales rose 20 percent to $223 million, while restaurant sales rose 26 percent to $26 million Wholesale sales declined by 20 percent to to $62 million.

By brand, when compared with the same 2019 quarter, Tommy Bahama sales rose 11 percent to $208.8 million. Lilly Pulitzer sales rose 15 percent, and the Southern Tide brand sales grew 17 percent to $14.6 million. Sales at Lanier Apparel, the division that Oxford is exiting, fell 59 percent to $8.5 million. The company also has an operating group labeled Other, which saw sales more than doubled to $9.4 million from $9.2 million. Other is the two early-stage businesses under the The Beaufort Bonnet Co. and Duck Head brands. The company plans to open its first company-owned stores for The Beaufort Bonnet Co. later this year.

For the six months, net sales increased 69 percent to $594.4 million from $352.3 million.

Earnings: Net income for the quarter was $51.5 million, or $3.05 cents a diluted share, against a net loss of $6.1 million, or 37 cents, in the year ago period. When compared with the 2019 quarter, net income was up 72 percent.

The company said the strength and profitability of its DTC business, which contributed to “outstanding first-half results,” is expected to continue into the second half of 2021. It guided full fiscal year net sales to a range between $1.08 billion to $1.1 billion. Full fiscal year sale sin 2019 were $1.12 billion.

For the third quarter, Oxford expects net sales to be between $220 million and $230 million.

For the six months, net income was $79.9 million, or $4.75 a diluted share, against a net loss of $72.9 million, or $4.40, a year ago.

CEO’s Take: “As we head into the second half of the year, while being mindful of the ongoing COVID-related challenges in supply chain and store and restaurant operations, we believe that our focus on executing our long-term strategic initiatives will continue to drive strength in our business,” Chubb said.