World News: 21:05 GMT Wednesday 11th September 2019. [Oxford Industries, Inc. via Globe Newswire via SPi World News]
ATLANTA, Sept. 11, 2019 (GLOBE NEWSWIRE) -- Oxford Industries, Inc. (NYSE:OXM) today announced financial results for its fiscal 2019 second quarter ended August 3, 2019. Consolidated net sales were $302.0 million compared to $302.6 million in the second quarter of fiscal 2018, which ended August 4, 2018. Earnings on a GAAP basis were $1.76 per share in the second quarter of fiscal 2019 compared to $1.61 in the same period of the prior year. On an adjusted basis, earnings were $1.84 per share in the second quarter of fiscal 2019 compared to $1.83 in the second quarter of fiscal 2018.
Thomas C. Chubb III, Chairman and CEO, commented, “Our second quarter results continued to demonstrate the strength of our full-price direct to consumer businesses. For the tenth consecutive quarter, we posted consolidated comparable sales growth with comparable sales increasing 3% on top of a 7% increase in the prior year. The top-line performance of our full-price direct to consumer channels was offset by lower wholesale sales and some softness in our outlet store business.
“Our Tommy Bahama, Lilly Pulitzer and Southern Tide businesses are built on a strong foundation. It starts with the incredible connections each brand has established with its core consumer. Our success is also rooted in our highly disciplined distribution strategy, which features exciting retail stores, bars and restaurants, a highly profitable and rapidly growing e-commerce business, and careful placement in appropriate department stores and specialty retailers. Equally important is the work our product teams are doing to engage our consumers and drive demand across our brands by offering differentiated and innovative products using performance features, proprietary fabrics and prints, and fresh silhouettes.
Mr. Chubb concluded, “As we move into the second half of 2019, the fundamentals of our business remain strong. We continue to focus on executing our growth strategies while working to minimize the impact of additional tariffs on both our consumers and our financial results. While we have revised our outlook for the year to reflect the estimated increase in cost of goods associated with these tariffs on the back half of the year, we are still on track to deliver solid results in 2019 with confidence in the strength of our brands and our talented and dedicated people.”
Second quarter fiscal 2019 net sales were $302.0 million, flat with the prior year. This result included a 3% increase in comparable sales with increases at both Tommy Bahama and Lilly Pulitzer. The increase in direct to consumer sales was offset by lower wholesale sales.
Gross profit in the second quarter increased to $179.8 million compared to $179.3 million in the same period of the prior year. Gross margin in the second quarter of fiscal 2019 grew to 59.5% compared to 59.2% in the second quarter of fiscal 2018. Adjusted gross margin in the second quarter of fiscal 2019 expanded 40 basis points to 59.8% from 59.4% in the same period of the prior year.
SG&A as a percentage of net sales in the second quarter of fiscal 2019 was 47.5% or $143.4 million compared to 48.4% or $146.3 million in the prior year’s second quarter. On an adjusted basis, SG&A as a percentage of net sales was 47.2% or $142.7 million compared to 47.1% or $142.6 million in the prior year’s second quarter.
Royalties and other operating income in the second quarter of fiscal 2019 were $3.8 million compared to $3.6 million in the second quarter of fiscal 2018.
Operating income in the second quarter of fiscal 2019 was $40.3 million compared to $36.5 million in the same period of the prior year. Operating margin increased to 13.3% compared to 12.1% in the second quarter of fiscal 2018. On an adjusted basis, operating income increased 3% to $41.7 million compared to $40.6 million in the second quarter of fiscal 2018. On an adjusted basis, operating margin expanded to 13.8% in the second quarter compared to 13.4% in the same period last year.
Interest expense for the second quarter of fiscal 2019 was $0.4 million compared to $0.6 million in the second quarter of fiscal 2018.
The effective tax rate in the second quarter of fiscal 2019 was 25.1%. This compares to 24.3% in the same period of the prior year, which included the benefit of certain favorable discrete items.
On July 31, 2019, the Company amended its $325 million credit agreement, which extended its maturity to July 31, 2024. As of August 3, 2019, the Company had no borrowings outstanding under its credit agreement compared to $25 million at the end of the second quarter of fiscal 2018 and had $31 million in cash compared to $7 million in the prior year. These changes were attributable to strong cash flow from operations.
Inventory increased to $153 million at August 3, 2019 from $124 million at the end of the second quarter of fiscal 2018. This increase was due to increased stock levels on high volume key items and replenishment programs, the acceleration of receipts ahead of new tariffs, and inventory to support additional stores and planned increased sales in the second half of fiscal 2019.
The Company revised its guidance for fiscal 2019 to incorporate an estimated $0.20 per share impact resulting from additional tariffs in the second half of the year.
For the full fiscal year 2019, GAAP earnings per share are expected to be between $4.15 and $4.35. Adjusted earnings per share are expected to be between $4.25 and $4.45. This compares to earnings on a GAAP basis of $3.94 per share and, on an adjusted basis, $4.32 per share in fiscal 2018. 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.
The Company’s third quarter remains its smallest sales and earnings quarter due to the seasonality of its direct to consumer operations. For the third quarter of fiscal 2019, ending on November 2, 2019, net sales are expected to be in a range from $235 million to $245 million compared to net sales of $233.7 million in the third quarter of fiscal 2018. Earnings per share on a GAAP basis are expected to be in a range of breakeven to $0.10 in the third quarter. On an adjusted basis, earnings per share for the third quarter of fiscal 2019 are expected to be in a range of $0.01 to $0.11. This compares with third quarter fiscal 2018 earnings per share of $0.11 and adjusted earnings per share of $0.14.
The Company’s interest expense for fiscal 2019 is expected to be approximately $1.5 million and its effective tax rate for fiscal 2019 is expected to be approximately 26% compared to 25% in fiscal 2018.
Capital expenditures in fiscal 2019, including $16 million in the first half 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 also announced that its Board of Directors has approved a cash dividend of $0.37 per share payable on November 1, 2019 to shareholders of record as of the close of business on October 18, 2019. The Company has paid dividends every quarter since it became publicly owned in 1960.
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 September 25, 2019 by dialing (412) 317-6671 access code 13693836.
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, and the impact on our business operations of such changes, in international, federal or state tax, trade and other laws and regulations, including the potential imposition of additional duties, tariffs, taxes or other charges or barriers to trade resulting from ongoing trade developments with China and its impact on global markets; 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.
Globe Newswire: 21:05 GMT Wednesday 11th September 2019
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