Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oxford Industries Inc (OXM, Financial) reported fourth-quarter net sales and adjusted EPS near the top of their guidance ranges.
- The company experienced strong holiday sales, particularly with newer high-price point products like Tommy Bahama's Indigo Palms denim and Lilly Pulitzer Reserve collection.
- Oxford Industries Inc (OXM) has a strong cash flow from operations projected at approximately $170 million for the year.
- The company plans to open approximately 20 new stores, including four new Marlin Bars, indicating expansion and growth.
- A 3% increase in the quarterly dividend was approved, continuing a long history of dividend payments since 1960.
Negative Points
- Oxford Industries Inc (OXM) experienced a moderation in demand in January, with comps down 3%, and a further decline in February with comps of negative 9%.
- The company anticipates ongoing choppiness in demand due to consumer sentiment and market uncertainty.
- Adjusted gross margin contracted by 80 basis points to 63.2%, primarily due to increased promotional and clearance sales.
- SG&A expenses increased by 4%, driven by higher expenses related to new store openings and other investments.
- The company expects a decrease in adjusted EPS for 2025, with guidance between $4.60 and $5, compared to $6.68 in the previous year, due to tariffs, higher interest expenses, and a higher tax rate.
Q & A Highlights
Q: Could you elaborate on the first-quarter guidance and the headwinds affecting different brands?
A: Thomas Chubb, CEO, noted that Lilly Pulitzer is currently the strongest performer, while other major brands are experiencing some decline. The Easter shift has impacted March comps, moving sales into April. Scott Grassmyer, CFO, added that new store openings are helping offset negative comps, with Lilly expected to comp positively, while Tommy Bahama and Johnny Was are anticipated to have slightly negative comps.
Q: Are wholesale partners tightening their order books, and how is Johnny Was performing?
A: Chubb acknowledged concerns about potential pullbacks from major retailers, but noted strong retail floor performance of their brands. For Johnny Was, the focus is on improving retail store performance and wholesale business, with plans to enhance marketing efficiency and product assortment.
Q: How are customers responding to new products amidst macroeconomic uncertainty?
A: Chubb stated that newness is driving business, with significant increases in new products for Tommy Bahama and Lilly Pulitzer. Notable successes include Tommy Bahama's Barbados Pro short and Lilly Pulitzer's Disney Capsule collection. The introduction of Lilly Pulitzer menswear has also generated excitement.
Q: What internal initiatives are being taken to improve conversion rates?
A: Chubb highlighted efforts such as enhancing product knowledge among store associates, optimizing product assortments, and improving website functionality to facilitate easier navigation and checkout processes.
Q: Can you provide insights into March sales comps and the sales cadence for the year?
A: Chubb mentioned that March feels better than February, despite the Easter shift affecting comps. Grassmyer added that negative comps are expected in the first half, with a more favorable outlook in the second half due to easier comparisons and new store openings.
Q: What measures are being taken to control SG&A expenses?
A: Grassmyer explained that the company is focusing on marketing efficiency, negotiating vendor contracts, and reducing personnel in certain areas. The increase in SG&A is largely due to new store openings amidst negative comps in existing stores.
Q: How are wholesale order books performing, and what is the outlook for tariffs?
A: Grassmyer noted that wholesale projections are cautious, with a flat outlook. The company is being cautious with inventory buys. Regarding tariffs, some mitigation is built into the guidance, with further actions expected to fully mitigate impacts by spring 2026.
Q: Is there potential for tariff mitigation to improve financial performance this year?
A: Grassmyer indicated that while some mitigation is included in the guidance, further improvements are possible. The full impact of tariffs is expected to be mitigated by 2026, with ongoing negotiations and pricing adjustments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
