World News: 21:05 GMT Wednesday 12th June 2019. [Oxford Industries, Inc. via Globe Newswire via SPi World News]
ATLANTA, June 12, 2019 (GLOBE NEWSWIRE) -- Oxford Industries, Inc. (NYSE:OXM) today announced financial results for its fiscal 2019 first quarter ended May 4, 2019. Consolidated net sales increased 3% to $282.0 million compared to $272.6 million in the first quarter of fiscal 2018. Earnings on a GAAP basis were $1.29 per share in the first quarter of fiscal 2019 compared to $1.23 in the same period of the prior year. On an adjusted basis, earnings were $1.30 per share in the first quarter of fiscal 2019 compared to $1.28 in the first quarter of fiscal 2018. Both net sales and earnings per share were above the top end of the Company’s previously issued guidance ranges.
Thomas C. Chubb III, Chairman and CEO, commented, “Fiscal 2019 has started well as we delivered our ninth consecutive quarter of consolidated comparable sales growth and our sales and earnings per share for the quarter were ahead of expectations. Our first quarter performance reflects the strong positioning of Tommy Bahama, Lilly Pulitzer, and Southern Tide in the marketplace coupled with positive consumer response to our current merchandise assortments. Our recent success also underscores the progress we have made driving consumers to our branded stores and digital sites and fueling conversion through authentic and compelling shopping experiences.”
“We are confident that we have sound plans in place to capitalize on our growth opportunities and continue generating value for our shareholders,” continued Mr. Chubb. “This includes dedicating more resources to enhancing our ecommerce capabilities, our fastest growing channel, and selectively expanding our brick and mortar footprint with a focus on high return prospects such as Tommy Bahama Marlin Bar locations and Lilly Pulitzer stores in newer, underpenetrated markets. At the same time, we’ll continue to pursue a wholesale strategy that supports our premium brand positioning and is accretive to our overall operating results.”
Mr. Chubb concluded, “Looking ahead, we continue to expect solid increases in operating income and EPS in fiscal 2019. The proposed China tariffs have created some near-term uncertainty in the marketplace and our efforts are well-underway to mitigate the potential impact. We believe our powerful brand portfolio and disciplined approach to distribution, combined with the experiential nature of our brands, helps set Oxford apart and provides the Company with important competitive advantages, especially in the current retail environment. Our highly talented teams are energized and committed to executing the strategies we’ve put in place to delight our customers today, tomorrow and well into the future.”
First quarter fiscal 2019 net sales were $282.0 million, a 3% increase over the prior year period. This result included a 2% increase in direct to consumer comparable sales as well as a year-over-year increase in Lanier Apparel sales.
Gross profit in the first quarter increased to $165.8 million compared to $164.1 million in the same period of the prior year. Gross margin in the first quarter of fiscal 2019 was 58.8% compared to 60.2% in the first quarter of fiscal 2018. Gross margin was impacted by the increased proportion of sales from the Company’s lower margin Lanier Apparel business compared to the prior year quarter and lower gross margin at Lilly Pulitzer reflecting increased off-price wholesale sales and increased gift with purchase activity in the quarter.
In the first quarter of fiscal 2019, SG&A was $139.8 million or 49.6% of net sales compared to $139.7 million or 51.2% of net sales in the prior year’s first quarter. The leveraging of SG&A reflected lower advertising expense and increased wholesale sales at Lanier Apparel.
For the first quarter of fiscal 2019, royalties and other operating income were $3.8 million compared to $3.9 million in the first quarter of fiscal 2018.
Operating income in the first quarter of fiscal 2019 was $29.7 million compared to $28.4 million in the same period of the prior year. On an adjusted basis, operating income was $30.0 million compared to $29.4 million in the first quarter of fiscal 2018.
Interest expense for the first quarter of fiscal 2019 was $0.7 million compared to $0.8 million in the first quarter of fiscal 2018.
The effective tax rate in both the first quarter of fiscal 2019 and the first quarter of fiscal 2018 was 25.5%.
Inventory was $157.2 million at May 4, 2019 compared to $132.3 million at the end of the first quarter of fiscal 2018, increasing to support planned growth in the second quarter including the operation of additional stores, as well as higher stock levels on replenishment programs and high performing key items.
As of May 4, 2019, the Company had $33 million of borrowings outstanding under its $325 million revolving credit agreement compared to $72 million at the end of the first quarter of fiscal 2018, with the decrease attributable to strong cash flow from operations in the last twelve months. The Company ended the quarter with $274 million of unused availability under its credit agreement.
The Company initiated its guidance for the second quarter of fiscal 2019, ending on August 3, 2019. The Company expects net sales to be between $300 million and $310 million compared to net sales of $302.6 million in the second quarter of fiscal 2018. Earnings per share on a GAAP basis are expected to be in a range of $1.79 to $1.89 in the second quarter. On an adjusted basis, earnings per share for the second quarter of fiscal 2019 are expected to be in a range of $1.80 to $1.90. This compares with second quarter fiscal 2018 GAAP earnings per share of $1.61 and adjusted earnings per share of $1.83. This guidance includes the estimated impact of a higher effective tax rate year-over-year in the second quarter of fiscal 2019.
The Company’s third quarter is expected to remain its smallest sales and earnings quarter due to the seasonality of its Tommy Bahama and Lilly Pulitzer direct to consumer operations. As a result, the Company expects its third quarter earnings to be comparable to the third quarter of fiscal 2018 and expects to see meaningful earnings growth in the fourth quarter.
The Company has affirmed its outlook for the full year fiscal 2019. For the full 2019 fiscal year, which ends on February 1, 2020, the Company expects net sales to grow to between $1.135 billion and $1.155 billion as compared to fiscal 2018 net sales of $1.107 billion. In fiscal 2019, GAAP earnings per share are expected to be between $4.42 and $4.62. Adjusted earnings per share are expected to be between $4.45 and $4.65. This compares to earnings on a GAAP basis of $3.94 per share and adjusted earnings of $4.32 per share in fiscal 2018.
The guidance provided above reflects the cost of tariffs at currently enacted rates. The Company continues to mitigate the risks associated with potential tariff increases on apparel and related products made in China by shifting production out of China, negotiating price reductions with factories, planning selective price increases on its products and accelerating the delivery of Fall 2019 product. The Company has made good progress on each of these initiatives.
In fiscal 2019, the Company’s interest expense is expected to be approximately $2 million and its effective tax rate is expected to be approximately 26% compared to 24.9% in fiscal 2018.
Capital expenditures in fiscal 2019, including $8 million in the first quarter of fiscal 2019, are expected to be between $45 million and $50 million, primarily reflecting investments in information technology initiatives, new retail stores and Marlin Bars, and investments to remodel existing retail stores and restaurants.
The Company will hold a conference call with senior management to discuss its financial results at 4:30 p.m. ET today. A live web cast of the conference call will be available on the Company’s website at . A replay of the call will be available through June 26, 2019 by dialing (412) 317-6671 access code 1795689.
Oxford Industries, Inc., a leader in the apparel industry, owns and markets the distinctive Tommy Bahama®, Lilly Pulitzer® and Southern Tide® lifestyle brands, as well as other owned brands. Oxford also produces certain licensed and private label apparel products. Oxford's stock has traded on the New York Stock Exchange since 1964 under the symbol OXM. For more information, please visit Oxford's website at .
All financial results and outlook information included in this release, unless otherwise noted, are from continuing operations and all per share amounts are on a diluted basis. Effective February 3, 2019, the Company adopted the new lease accounting guidance, which resulted in a significant increase in its reported assets and liabilities. The adoption of the new lease accounting guidance did not have a material impact on the Company’s consolidated statements of operations or consolidated statements of cash flows.
The Company’s disclosures about comparable sales include sales from its full-price retail stores and e-commerce sites, excluding sales associated with e-commerce flash clearance sales.
The Company reports its consolidated financial statements in accordance with generally accepted accounting principles (GAAP). To supplement these consolidated financial results, management believes that a presentation and discussion of certain financial measures on an adjusted basis, which exclude certain non-operating or discrete gains, charges or other items, may provide a more meaningful basis on which investors may compare the Company’s ongoing results of operations between periods. These measures include adjusted earnings, adjusted earnings per share, adjusted gross profit, adjusted gross margin, adjusted SG&A, and adjusted operating income, among others. Management uses these non-GAAP financial measures in making financial, operational and planning decisions to evaluate the Company’s ongoing performance. Management also uses these adjusted financial measures to discuss its business with investment and other financial institutions, its board of directors and others. Reconciliations of these adjusted measures to the most directly comparable financial measures calculated in accordance with GAAP are presented in tables included at the end of this release. These reconciliations present adjusted operating results information for certain historical and future periods.
This press release includes statements that constitute forward-looking statements within the meaning of the federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which are not historical in nature. We intend for all forward-looking statements contained herein or on our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Such statements are subject to a number of risks, uncertainties and assumptions including, without limitation, demand for our products, which may be impacted by competitive conditions and/or evolving consumer shopping patterns; macroeconomic factors that may impact consumer spending for apparel and related products; the timing of shipments requested by our wholesale customers; weather; expected pricing levels; costs of products as well as the raw materials used in those products; costs of labor; retention of and disciplined execution by key management; the timing and cost of store and restaurant openings and remodels as well as other capital expenditures; changes in international, federal or state tax, trade and other laws and regulations, including the possibility of the United States imposing significantly higher tariffs on apparel and related products manufactured in China; acquisition and disposition activities, including our ability to timely recognize expected synergies from acquisitions; expected outcomes of pending or potential litigation and regulatory actions; access to capital and/or credit markets; and factors that could affect our consolidated effective tax rate. Forward-looking statements reflect our expectations at the time such forward-looking statements are made, based on information available at such time, and are not guarantees of performance. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. contained in our Annual Report on Form 10-K for the period ended February 2, 2019 under the heading "Risk Factors" and those described from time to time in our future reports filed with the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Contact: Anne M. Shoemaker Telephone: (404) 653-1455 E-mail:
Globe Newswire: 21:05 GMT Wednesday 12th June 2019
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