First-quarter earnings results weren’t what Oxford Industries Inc. had hoped for, but its updated sales plan for 2024 still forecasts growth for its brands.
The good news was that after negative comparable sales figures of 7 percent for the first quarter, comps for the start of the second quarter to date are in positive territory, Scott Grassmyer, executive vice president and chief financial and operating officer, told analysts during an earnings conference call earlier this week.
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“We believe the positive comp trend will continue throughout the remainder of the year and will result in positive comps for the full year including comps in the mid-single-digit range for the second quarter and back half of the year as we enter a period of going against negative comps in the prior year,” Grassmyer said.
He also said Oxford expects wholesale sales, down significantly in the first quarter, to achieve modest growth during the balance of the year versus the comparable 2023 period. “While still open, our fall order books are trending higher than in the prior years, inventory levels at major department stores have improved,” Grassmyer said.
That’s good news regarding the purchase intentions of the higher-income shopper for Oxford, whose brands include Tommy Bahama, Lilly Pulitzer and Johnny Was, which earlier this year launched its first denim collection. Resort brand Tommy Bahama has restaurant concepts at many of its locations, and Grassmyer told analysts that a “bright spot continues to be our food and beverage business that deliver strong growth of 8 percent.” The company plans to open four more Tommy Bahama Marlin Bars—it opened one in the first quarter—for the balance of the fiscal year ending Feb. 1, 2025. Oxford also operates its first Tommy Bahama Miramonte Resort and Spa that opened this past Nov. 1 in Palm Springs, Calif.
UBS analyst Mauricio Serna said the soft first quarter—which saw the company lower Fiscal 2024 guidance—underscored persistent margin pressures, which he described as a near-term headwind. For specialty retail in general, Serna expects the channel to grow at a 1 percent to 2 percent annual pace, possibly losing some share ton online pure-plays and off-price retailers.
However, he said Oxford can still see a sales benefit from its focus on the “resilient high-income customer. “We think Oxford’s lifestyle brands portfolio should be relatively more resilient to macro headwinds than peers given its focus on mid- to high-income consumers,” Serna said.
During the call, chairman and CEO Tom Chubb said that consumer sentiment at the start of the year became more cautious than expected regarding their discretionary purchases, including fashion resort apparel. That led to cautious inventory purchases for Spring and Summer.
“Looking forward, thanks to our continued strong performance with our key partners, our forward order book is solid, and we expect to make up about half of the first quarter shortfall in the wholesale over the remaining three quarters of the year,” Chubb said.
The CEO also said that sales in the first quarter were impacted by the change in promotional cadence and events at its Lilly Pulitzer brands, as well as 7 percent decline in comps in the direct-to-consumer business versus 18 to 24 months ago. He also expects second-quarter sales at the brand to be “significantly higher than last year.”
Chubb also said the company is making progress on rebalancing its distribution capacity between the Eastern Seaboard and the West Coast. The company is building a new distribution facility in Georgia to improve service to the Eastern and Southeastern parts of the U.S.
For the first quarter ended May 4, net income fell 34 percent to $38.4 million from $58.5 million a year ago. Net sales were down 5.2 percent to $398.2 million from $420.1 million.
By brand, Tommy Bahama sales fell 5.8 percent to $225.6 million, while Lilly Pulitzer was down 9.3 percent to $88.4 million. Johnny Was sales rose 3.5 percent to $51.2 million. Sales at the firm’s emerging brands were down 2.9 percent to $33.0 million.
For the second quarter, the company guided GAAP earnings per share (EPS) in the range of $2.82 to $3.02, versus $3.22 in the same year-ago quarter. Net sales were projected at between $430 million to $450 million, versus $420 million a year ago.
For the full year, the company revised guidance to reflect first quarter results. GAAP EPS was forecasted at between $7.99 and $8.39, versus $3.82 in 2023. Net Sales is expected in the range of $1.59 billion to $1.63 billion, versus $1.57 billion a year ago.
In addition to Tommy Bahama, Lilly Pulitzer and Johnny Was, Oxford also owns Southern Tide, The Beaufort Bonnet Co., and the newly-acquired Jack Rogers brand in the fourth quarter of Fiscal 2023.
