Oxford Industries, Inc. OXM posted third-quarter fiscal 2024 results, with the top and bottom lines missing the Zacks Consensus Estimate and declining year over year.
The company faced weaker-than-expected financial performance due to several headwinds such as a highly competitive and promotional environment. Apart from this, high inflation contributed to more cautious and less frequent consumer spending during the fiscal third quarter, which is traditionally the company’s lowest volume period. Other challenges included distractions from U.S. elections and global events, as well as the impacts of two major hurricanes.
OXM’s Quarterly Performance: Key Insights
The owner of Tommy Bahama, Lilly Pulitzer and Johnny posted a quarterly loss of 11 cents per share, lagging the Zacks Consensus Estimate for earnings of 11 cents. The bottom line marks a sharp decline from earnings of $1.01 in the year-ago quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Oxford Industries, Inc. Price, Consensus and EPS Surprise
Oxford Industries, Inc. Price, Consensus and EPS Surprise
Oxford Industries, Inc. price-consensus-eps-surprise-chart | Oxford Industries, Inc. Quote
Oxford Industries reported net sales of $308 million, which missed the consensus estimate of $318 million. Also, the metric decreased 5.7% from $326.6 million in the year-ago quarter.
Gross profit decreased 5.3% to $194.5 million from $205.4 million in the year-ago quarter. The gross margin expanded 20 basis points (bps) to 63.1%, driven by a $4 million reduction in LIFO accounting charges and fewer discounts at Lilly Pulitzer. However, this improvement was partially offset by a shift in sales mix at Tommy Bahama, Lilly Pulitzer and Johnny Was, where full-price retail and e-commerce sales represented a smaller share of net sales, with more sales occurring during promotional and clearance events. The adjusted gross margin contracted 100 bps to 63% compared with 64% in the third quarter of fiscal 2023.
Selling, general and administrative (SG&A) expenses of $205 million increased from $195 million in the prior year quarter. Adjusted SG&A expenses were increased 5% to $201 million from $191 million reported in the year-ago quarter. The changes in SG&A expenses are largely due to higher expenses related to recent and ongoing investments in the business.
These included costs associated with 33 net new brick-and-mortar locations opened since last year, including four new Tommy Bahama Marlin Bar locations, preparations for approximately five additional stores and two more Marlin Bars expected in late fiscal 2024 or early fiscal 2025. Additional expenses stemmed from the acquisition of the Jack Rogers brand in late fiscal 2023 and about $1 million in hurricane-related costs, including employee support and cleanup efforts.
Oxford Industries reported an adjusted operating loss of $3 million against operating income of $21 million reported in the year-ago quarter.
OXM’s Sales by Operating Groups
Sales across key brands experienced declines in this quarter. Tommy Bahama sales fell 5.2% to $161.3 million from $170.1 million in the same quarter last year, missing our estimate of $163.3 million. Lilly Pulitzer sales dropped 8.5% to $69.8 million, down from $76.3 million in the prior year. The figure was below our estimate of $74.8 million. Similarly, Johnny Was saw a 6.1% decline in sales to $46.1 million from $49.1 million in the year-ago quarter, missing our $50.1 million estimate. Emerging Brands sales also slipped 1% to $30.9 million compared with $31.2 million in the year-ago quarter, narrowly missing our estimate of $30.2 million.
OXM’s Sales by Distribution Channel
During the quarter, full-price direct-to-consumer sales declined 8% to $200 million compared with the prior-year period. Within this segment, full-price retail sales fell 6% to $99 million, while e-commerce sales dropped 11% to $101 million in comparison with the previous year period. On the positive side, Outlet sales rose 3% to $17 million, and Food and Beverage sales increased 4% to $24 million. However, Wholesale sales slipped 2% to $67 million.
OXM’s Financial Snapshot
The company ended the quarter with cash, cash equivalents of $7 million, long-term debt of $58 million and shareholders’ equity of $612.2 million.
For the first nine months of fiscal 2024, Oxford Industries’ cash provided by operating activities was $104 million and capital expenditures were $92 million. For fiscal 2024, capital expenditures are envisioned to be approximately $150 million compared with $74 million reported in fiscal 2023.
Management announced a quarterly cash dividend of 67 cents per share, which is payable on Jan. 31, 2025, to its shareholders of record as of Jan. 17.
What to Expect From OXM in the Future?
Due to the fiscal third-quarter results, the impact of the hurricanes and continued weakness in the Wholesale channel, the company has revised its sales and EPS forecast for fiscal 2024.
For fiscal 2024, Oxford Industries expects net sales in the range of $1.50-$1.52 billion, down from the previous band of $1.51-$1.54 billion. This indicates a decline compared with net sales of $1.57 billion in fiscal 2023.
Management forecasts fiscal 2024 adjusted earnings per share (EPS) to be between $6.50 and $6.70, down from the earlier range of $7-$7.30 and $10.15 reported in fiscal 2023. On a GAAP basis, EPS is expected to fall between $5.78 and $5.98, which is a revision from the previous range of $6.28-$6.58 and compares with $3.82 reported in fiscal 2023.
For fourth-quarter fiscal 2024, management expects net sales in the range of $375-$395 million. On an adjusted basis, EPS is forecast to be $1.18-$1.38. On a GAAP basis, EPS is anticipated to be $1.02-$1.22.
Shares of this Zacks Rank #3 (Hold) company have declined 9.1% in the past three months against the industry’s 25.4% growth.
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