UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
or | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Commission File Number:
(Exact name of registrant as specified in its charter)
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(Address of principal executive offices) (Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of December 4, 2020, there were
OXFORD INDUSTRIES, INC.
INDEX TO FORM 10-Q
For the Third Quarter of Fiscal 2020
2
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
Our SEC filings and public announcements may include forward-looking statements about future events. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which typically are not historical in nature. We intend for all forward-looking statements contained herein, in our press releases 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, the impact of the current coronavirus (COVID-19) pandemic, including uncertainties about its depth and duration (including resurgence), future store closures or other restrictions (including reduced hours and capacity) due to government mandates, and the effectiveness of store re-openings and cost reduction initiatives (including our ability to effectively renegotiate rent obligations), any or all of which may affect many of the following risks; demand for our products, which may be impacted by competitive conditions and/or evolving consumer shopping patterns; macroeconomic factors that may impact consumer discretionary spending for apparel and related products; the impact of any restructuring initiatives we may undertake in one or more of our business lines, including the process, timing, costs, uncertainties and effects of our announced exit of the Lanier Apparel business; costs of products as well as the raw materials used in those products; expected pricing levels; costs of labor; the timing of shipments requested by our wholesale customers; expected outcomes of pending or potential litigation and regulatory actions; changes in international, federal or state tax, trade and other laws and regulations, including the potential imposition of additional duties; the ability of business partners, including suppliers, vendors, licensees and landlords, to meet their obligations to us and/or continue our business relationship to the same degree in light of current or future financial stress, staffing shortages, liquidity challenges and/or bankruptcy filings exacerbated by the pandemic; weather; fluctuations and volatility in global financial markets; retention of and disciplined execution by key management; the timing and cost of store and restaurant openings and remodels, technology implementations and other capital expenditures; acquisition and disposition activities, including our ability to timely recognize expected synergies from acquisitions; access to capital and/or credit markets; the impact of the CARES Act and other legislation; changes in accounting standards and related guidance; and factors that could affect our consolidated effective tax rate, including estimated Fiscal 2020 taxable losses eligible for carry back to pre-U.S. Tax Reform periods. 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. Risk Factors contained in our Annual Report on Form 10-K for Fiscal 2019, as updated in Part II, Item 1A. Risk Factors contained in this report, and those described from time to time in our future reports filed with the SEC. We caution that one 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.
3
DEFINITIONS
As used in this report, unless the context requires otherwise, "our," "us" or "we" means Oxford Industries, Inc. and its consolidated subsidiaries; "SG&A" means selling, general and administrative expenses; "SEC" means the United States Securities and Exchange Commission; "FASB" means the Financial Accounting Standards Board; "ASC" means the FASB Accounting Standards Codification; "GAAP" means generally accepted accounting principles in the United States; "TBBC" means The Beaufort Bonnet Company; “Fiscal 2019 Form 10-K” means our Annual Report on Form 10-K for Fiscal 2019; “CARES Act” means the Coronavirus Aid, Relief and Economic Security Act; and “U.S. Tax Reform” means the United States Tax Cuts and Jobs Act. Additionally, the terms listed below reflect the respective period noted:
Fiscal 2021 |
| 52 weeks ending January 29, 2022 |
Fiscal 2020 |
| 52 weeks ending January 30, 2021 |
Fiscal 2019 | 52 weeks ended February 1, 2020 | |
Fourth Quarter Fiscal 2020 | 13 weeks ending January 30, 2021 | |
Third Quarter Fiscal 2020 | 13 weeks ended October 31, 2020 | |
Second Quarter Fiscal 2020 | 13 weeks ended August 1, 2020 | |
First Quarter Fiscal 2020 | 13 weeks ended May 2, 2020 | |
Fourth Quarter Fiscal 2019 | 13 weeks ended February 1, 2020 | |
Third Quarter Fiscal 2019 | 13 weeks ended November 2, 2019 | |
Second Quarter Fiscal 2019 | 13 weeks ended August 3, 2019 | |
First Quarter Fiscal 2019 | 13 weeks ended May 4, 2019 | |
First Nine Months Fiscal 2020 | 39 weeks ended October 31, 2020 | |
First Nine Months Fiscal 2019 | 39 weeks ended November 2, 2019 |
4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par amounts)
(unaudited)
| October 31, |
| February 1, |
| November 2, | ||||
2020 | 2020 | 2019 | |||||||
ASSETS | |||||||||
Current Assets | |||||||||
Cash and cash equivalents | $ | | $ | | $ | | |||
Receivables, net |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total Current Assets | $ | | $ | | $ | | |||
Property and equipment, net |
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Intangible assets, net |
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Goodwill |
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Operating lease assets | | | | ||||||
Other assets, net |
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Total Assets | $ | | $ | | $ | | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities |
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Accounts payable | $ | | $ | | $ | | |||
Accrued compensation |
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Current portion of operating lease liabilities |
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Accrued expenses and other liabilities |
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Total Current Liabilities | $ | | $ | | $ | | |||
Long-term debt |
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Non-current portion of operating lease liabilities |
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Other liabilities |
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Deferred income taxes |
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Commitments and contingencies |
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Shareholders’ Equity |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
| ( |
| ( |
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Total Shareholders’ Equity | $ | | $ | | $ | | |||
Total Liabilities and Shareholders’ Equity | $ | | $ | | $ | |
See accompanying notes.
5
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Third Quarter |
| First Nine Months | ||||||||||
Fiscal 2020 | Fiscal 2019 | Fiscal 2020 | Fiscal 2019 | ||||||||||
Net sales | $ | | $ | | $ | | $ | | |||||
Cost of goods sold |
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Gross profit | $ | | $ | | $ | | $ | | |||||
SG&A |
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Impairment of goodwill and intangible assets | — | — | | — | |||||||||
Royalties and other operating income |
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Operating (loss) income | $ | ( | $ | | $ | ( | $ | | |||||
Interest expense, net |
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(Loss) earnings before income taxes | $ | ( | $ | | $ | ( | $ | | |||||
Income tax (benefit) provision |
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Net (loss) earnings | $ | ( | $ | | $ | ( | $ | | |||||
Net (loss) earnings per share: |
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Basic | $ | ( | $ | | $ | ( | $ | | |||||
Diluted | $ | ( | $ | | $ | ( | $ | | |||||
Weighted average shares outstanding: |
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Basic |
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Diluted |
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Dividends declared per share | $ | | $ | | $ | | $ | |
See accompanying notes.
6
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
| Third Quarter |
| First Nine Months | ||||||||||
Fiscal 2020 | Fiscal 2019 | Fiscal 2020 | Fiscal 2019 | ||||||||||
Net (loss) earnings | $ | ( | $ | | $ | ( | $ | | |||||
Other comprehensive income (loss), net of taxes: |
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Net foreign currency translation adjustment |
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Comprehensive (loss) income | $ | ( | $ | | $ | ( | $ | |
See accompanying notes.
7
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
First Nine Months | |||||||
| Fiscal 2020 |
| Fiscal 2019 | ||||
Cash Flows From Operating Activities: |
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Net (loss) earnings | $ | ( | $ | | |||
Adjustments to reconcile net earnings (loss) to cash flows from operating activities: |
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Depreciation |
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Amortization of intangible assets |
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Impairment of goodwill and intangible assets | | — | |||||
Equity compensation expense |
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Amortization of deferred financing costs |
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Deferred income taxes (benefit) expense |
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Changes in operating assets and liabilities, net of acquisitions and dispositions: |
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Receivables, net |
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Inventories, net |
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Prepaid expenses and other current assets |
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Current liabilities |
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Other balance sheet changes |
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Cash provided by operating activities | $ | | $ | | |||
Cash Flows From Investing Activities: |
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Purchases of property and equipment |
| ( |
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Other investing activities |
| ( |
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Cash used in investing activities | $ | ( | $ | ( | |||
Cash Flows From Financing Activities: |
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Repayment of revolving credit arrangements |
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Proceeds from revolving credit arrangements |
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Deferred financing costs paid | — | ( | |||||
Repurchase of common stock | ( | — | |||||
Proceeds from issuance of common stock |
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Repurchase of equity awards for employee tax withholding liabilities |
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Cash dividends declared and paid |
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Other financing activities |
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Cash provided by (used in) financing activities | $ | | $ | ( | |||
Net change in cash and cash equivalents | $ | | $ | | |||
Effect of foreign currency translation on cash and cash equivalents |
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Cash and cash equivalents at the beginning of year |
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Cash and cash equivalents at the end of the period | $ | | $ | |
See accompanying notes.
8
OXFORD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
THIRD QUARTER OF FISCAL 2020
1. Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We believe the accompanying unaudited condensed consolidated financial statements reflect all normal, recurring adjustments that are necessary for a fair presentation of our financial position and results of operations as of the dates and for the periods presented. Results of operations for the interim periods presented are not necessarily indicative of results to be expected for our full fiscal year.
The preparation of our unaudited condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported as assets, liabilities, revenues and expenses in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. We assessed certain accounting matters, including the carrying value of goodwill, intangible assets and long-lived assets, provisions for credit losses, inventory markdowns and the estimated effective tax rate, that require consideration of forecasted financial information based on information reasonably available to us as well as the uncertain future impacts of the novel coronavirus (COVID-19) pandemic and the Lanier Apparel exit. These assessments resulted in the recognition of certain charges in the First Nine Months of Fiscal 2020, as discussed below and in Note 9. Future changes in the business environment, our expectations and assumptions as compared to the information at the time of this filing regarding the actual magnitude and duration of the COVID-19 pandemic, the actual impact of the Lanier Apparel exit and other factors could have a material impact on our consolidated financial statements in future periods.
COVID-19 Pandemic
In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a pandemic. COVID-19 had a significant effect on overall economic conditions and our operations, resulting in a significant net sales reduction and a significant net loss in the First Nine Months of Fiscal 2020. While our mission remains the enhancement of long-term shareholder value, our focus during this crisis has been, and will continue to be, (1) the health and well-being of our employees, customers and communities, (2) protecting the reputation, value and image of our brands and (3) preserving liquidity.
Due to the COVID-19 pandemic, we saw reduced consumer traffic starting in early March 2020 and temporarily closed all our retail and restaurant locations in March 2020. We began reopening our stores and restaurants in a phased approach on May 3, 2020 with additional stores and restaurants reopening throughout the Second Quarter of Fiscal 2020. Certain retail stores and restaurants, including several in Hawaii and California, were required to close again for certain periods in the Third Quarter of Fiscal 2020 after local jurisdictions reinstated some previous closure requirements, and there can be no assurance that additional closures will not occur as a result of any resurgence of COVID-19 cases and/or additional government mandates or recommendations.
The COVID-19 pandemic is expected to continue to have a material adverse impact on our business, financial condition, results of operations and cash flows for the foreseeable future, due to decreased consumer traffic in stores and restaurants; uncertainty as to the continued strength of our brands’ e-commerce websites during the pendency of the pandemic; overall changes in consumer confidence and consumer spending habits; reduced demand from our wholesale customers, several of which have filed for bankruptcy or are undergoing restructurings and closures; any potential disruptions to our supply chain; and a slowdown in the U.S. and global economies.
For many reasons, including those identified above, the full magnitude of the COVID-19 pandemic continues to be difficult to predict at this time, and its ultimate duration and severity will depend on future developments. We could experience other potential adverse impacts in the future as a result of the COVID-19 pandemic including additional charges resulting from adjustments to the carrying amount of goodwill, intangible assets and long-lived assets, provisions for credit losses and inventory markdowns as well as potential changes to our estimated effective tax rate.
9
As a result of the COVID-19 impact on our First Quarter of Fiscal 2020 net sales and operating results, as well as lower operating results projected for future periods, we concluded that a goodwill impairment test triggering event had occurred during the First Quarter of Fiscal 2020 for the goodwill associated with our Lilly Pulitzer, Southern Tide and TBBC reporting units. Further, we determined that an intangible asset impairment test triggering event had occurred in the First Quarter of Fiscal 2020 for our indefinite-lived Tommy Bahama, Lilly Pulitzer and Southern Tide trademarks. These goodwill and indefinite-lived intangible asset triggering events required the need for a quantitative interim impairment assessment in accordance with our accounting policies as described in Note 1 to our consolidated financial statements included in our Fiscal 2019 Form 10-K. These assessments in the First Quarter of Fiscal 2020 concluded that the fair values of the Southern Tide goodwill and indefinite-lived intangible assets as of May 2, 2020 did not exceed their respective carrying values, resulting in impairment charges as discussed in Note 4. These impairment charges, which totaled $
In the First Quarter of Fiscal 2020, due to the lower operating results and lower projected operating results, we performed recoverability tests for certain other non-current assets, including property and equipment, finite-lived intangible assets and operating lease assets, and we determined that the amounts included in the asset group were recoverable, except for a small charge related to a finite-lived intangible asset in Lanier Apparel included in Note 4. In the Second Quarter of Fiscal 2020, Third Quarter of Fiscal 2020 and the First Nine Months of Fiscal 2020 due to changes in the planned use of certain leased real estate assets, including providing notice of termination of certain retail store leases or plans to discontinue use of certain office space, we recognized impairment charges of $
The significant accounting policies applied during the interim periods presented are consistent with the significant accounting policies described in our Fiscal 2019 Form 10-K, except for the adoption of the credit losses and income tax guidance discussed below.
Accounting Standards Adopted in Fiscal 2020
In June 2016, the FASB issued guidance, as amended, related to the measurement of credit losses on financial instruments, which requires that companies use a forward-looking current expected loss approach to estimate credit losses on certain financial instruments, including trade and other receivables, as well as other financial assets and instruments. We estimate current expected credit losses based on our historical collection experience, the financial condition of our customers, an evaluation of current economic conditions and anticipated trends. We
In December 2019, the FASB amended its guidance related to accounting for income taxes, which simplified the accounting for income taxes by removing certain exceptions in existing guidance to reduce complexity in certain areas. On the first day of Fiscal 2020, we
Other recently issued guidance that was adopted in Fiscal 2020 did not have a material impact on our consolidated financial statements upon adoption.
10
Recently Issued Accounting Standards Applicable to Future Periods
Recent accounting pronouncements pending adoption are either not applicable or not expected to have a material impact on our consolidated financial statements.
2. Operating Group Information: We identify our operating groups based on the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Our operating group structure reflects a brand-focused management approach, emphasizing operational coordination and resource allocation across each brand’s direct to consumer, wholesale and licensing operations, as applicable. Our business is primarily operated through our Tommy Bahama, Lilly Pulitzer, Lanier Apparel and Southern Tide operating groups.
Tommy Bahama, Lilly Pulitzer and Southern Tide each design, source, market and distribute apparel and related products bearing their respective trademarks and license their trademarks for other product categories, while Lanier Apparel designs, sources and distributes branded and private label men’s tailored clothing, sportswear and other products. Corporate and Other is a reconciling category for reporting purposes and includes our corporate offices, substantially all financing activities, the elimination of inter-segment sales and any other items that are not allocated to the operating groups, including LIFO inventory accounting adjustments. Because our LIFO inventory pool does not correspond to our operating group definitions, LIFO inventory accounting adjustments are not allocated to the operating groups. Corporate and Other also includes the operations of other businesses which are not included in our operating groups, including the operations of TBBC, Duck Head and our Lyons, Georgia distribution center. As a result of certain organizational and management reporting changes in the First Quarter of Fiscal 2020, our Duck Head operations, which were previously included in Lanier Apparel, are considered part of and included in Corporate and Other. All prior period amounts for Lanier Apparel and Corporate and Other have been restated to conform to the presentation in the current period.
The table below presents certain financial information (in thousands) about our operating groups, as well as Corporate and Other. For a more extensive description of our operating groups, see Part I, Item 1. Business included in our Fiscal 2019 Form 10-K.
11
| Third Quarter | First Nine Months | |||||||||||
| Fiscal 2020 |
| Fiscal 2019 |
| Fiscal 2020 |
| Fiscal 2019 | ||||||
Net sales |
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Tommy Bahama | $ | | $ | | $ | | $ | | |||||
Lilly Pulitzer |
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Lanier Apparel |
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Southern Tide |
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Corporate and Other |
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Consolidated net sales | $ | | $ | | $ | | $ | | |||||
Depreciation and amortization |
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Tommy Bahama | $ | | $ | | $ | | $ | | |||||
Lilly Pulitzer |
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Lanier Apparel |
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Southern Tide |
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Corporate and Other |
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Consolidated depreciation and amortization | $ | | $ | | $ | | $ | | |||||
Operating income (loss) |
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Tommy Bahama | $ | ( | $ | ( | $ | ( | $ | | |||||
Lilly Pulitzer |
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Lanier Apparel |
| ( |
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| ( |
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Southern Tide |
| ( |
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| ( |
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Corporate and Other |
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| ( |
| ( |
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Consolidated operating (loss) income |
| ( |
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Interest expense, net |
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(Loss) earnings before income taxes | $ | ( | $ | | $ | ( | $ | |
| October 31, 2020 |
| February 1, 2020 |
| November 2, 2019 | ||||
Assets |
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Tommy Bahama (1) | $ | | $ | | $ | | |||
Lilly Pulitzer (2) |
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Lanier Apparel (3) |
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Southern Tide (4) |
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Corporate and Other (5) |
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| ( | |||
Consolidated Total Assets | $ | | $ | | $ | |
(1) | Decrease in Tommy Bahama total assets from February 1, 2020 and November 2, 2019 was primarily due to lower operating lease assets, fixed assets and receivables. |
(2) | Decrease in Lilly Pulitzer total assets from February 1, 2020 and November 2, 2019 was primarily due to lower operating lease assets and fixed assets. |
(3) | Decrease in Lanier Apparel total assets from February 1, 2020 and November 2, 2019 was primarily due to lower receivables and inventories. |
(4) | Decrease in Southern Tide total assets from February 1, 2020 and November 2, 2019 was primarily due to the $ |
(5) | Increase in Corporate and Other total assets from February 1, 2020 was primarily due to increased non-current income tax receivables and inventories. Increase in Corporate and Other total assets from November 2, 2019 was primarily due to increased cash and cash equivalents, non-current income tax receivables and inventories. |
12
The tables below quantify, for each operating group and in total, the amount of net sales (in thousands) and net sales by distribution channel as a percentage of net sales for each period presented.
Third Quarter Fiscal 2020 |
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| Net Sales |
| Retail |
| E-commerce |
| Restaurant |
| Wholesale |
| Other |
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Tommy Bahama | $ | |
| | % | | % | | % | | % | — | % | |
Lilly Pulitzer |
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| | % | | % | — | % | | % | — | % | |
Lanier Apparel |
| |
| — | % | — | % | — | % | | % | — | % | |
Southern Tide |
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| | % | | % | — | % | | % | — | % | |
Corporate and Other |
| |
| — | % | | % | — | % | | % | | % | |
Total | $ | |
| | % | | % | | % | | % | — | % |
Third Quarter Fiscal 2019 |
| |||||||||||||
| Net Sales |
| Retail |
| E-commerce |
| Restaurant |
| Wholesale |
| Other |
| ||
Tommy Bahama | $ | |
| | % | | % | | % | | % | — | % | |
Lilly Pulitzer |
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| | % | | % | — | % | | % | — | % | |
Lanier Apparel |
| |
| — | % | — | % | — | % | | % | — | % | |
Southern Tide |
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| — | % | | % | — | % | | % | — | % | |
Corporate and Other |
| |
| — | % | | % | — | % | | % | | % | |
Total | $ | |
| | % | | % | | % | | % | — | % |
First Nine Months Fiscal 2020 |
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| Net Sales |
| Retail |
| E‑commerce |
| Restaurant |
| Wholesale |
| Other |
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Tommy Bahama | $ | |
| | % | | % | | % | | % | — | % | |
Lilly Pulitzer |
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| | % | | % | — | % | | % | — | % | |
Lanier Apparel |
| |
| — | % | — | % | — | % | | % | — | % | |
Southern Tide |
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| | % | | % | — | % | | % | — | % | |
Corporate and Other |
| |
| — | % | | % | — | % | | % | | % | |
Consolidated net sales | $ | |
| | % | | % | | % | | % | — | % |
| First Nine Months Fiscal 2019 |
| ||||||||||||
| Net Sales |
| Retail |
| E‑commerce |
| Restaurant |
| Wholesale |
| Other |
| ||
Tommy Bahama | $ | |
| | % | | % | | % | | % | — | % | |
Lilly Pulitzer |
| |
| | % | | % | — | % | | % | — | % | |
Lanier Apparel |
| |
| — | % | — | % | — | % | | % | — | % | |
Southern Tide |
| |
| — | % | | % | — | % | | % | — | % | |
Corporate and Other |
| |
| — | % | | % | — | % | | % | | % | |
Consolidated net sales | $ | |
| | % | | % | | % | | % | — | % |
3. Revenue Recognition and Receivables: Our revenue consists of direct to consumer sales, including our retail store, e-commerce and restaurant operations, and wholesale sales, as well as royalty income, which is included in royalties and other income in our consolidated statements of operations. We recognize revenue when performance obligations under the terms of the contracts with our customers are satisfied. Our accounting policies related to revenue recognition for each type of contract with customers, including a description of the related performance obligations, return rights, allowances, discounts, credit terms and other information, is described in the significant accounting policies described in our Fiscal 2019 Form 10-K.
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The table below quantifies the amount of net sales by distribution channel (in thousands) for each period presented.
| Third Quarter |
| First Nine Months |
| |||||||||
Fiscal 2020 |
| Fiscal 2019 |
| Fiscal 2020 |
| Fiscal 2019 | |||||||
Retail | $ | | $ | | $ | | $ | | |||||
E-commerce |
| |
| |
| |
| | |||||
Restaurant |
| |
| |
| |
| | |||||
Wholesale |
| |
| |
| |
| | |||||
Other |
| |
| |
| |
| | |||||
Net sales | $ | | $ | | $ | | $ | |
In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to some of our wholesale customers for certain products. We record these discounts, returns and allowances as a reduction to net sales in our consolidated statements of operations and as a reduction to receivables, net in our consolidated balance sheets. As of October 31, 2020, February 1, 2020 and November 2, 2019, reserve balances recorded as a reduction to receivables related to these items were $
We extend credit to certain wholesale customers based on an evaluation of the customer’s financial capacity and condition, usually without requiring collateral. In circumstances where we become aware of a specific wholesale customer’s inability to meet its financial obligations, a specific provision for credit losses is taken as a reduction to accounts receivable to reduce the net recognized receivable to the amount reasonably expected to be collected. Such amounts are ultimately written off at the time that the amounts are not considered collectible. For all other wholesale customer receivable amounts, we recognize estimated provisions for credit losses based on our historical collection experience, the financial condition of our customers, an evaluation of current economic conditions, anticipated trends and the risk characteristics of the receivables, each of which is subjective and requires certain assumptions. As discussed in Note 1, during Fiscal 2020, we estimated these losses using the current expected loss approach including consideration of the expected impact of the ongoing COVID-19 pandemic on our receivables, while in Fiscal 2019, we estimated these losses using the incurred loss model under the previous guidance. We include such charges for credit losses and write-offs in SG&A in our consolidated statements of operations and as a reduction to receivables, net in our consolidated balance sheets. As of October 31, 2020, February 1, 2020 and November 2, 2019, our provision for credit losses related to receivables was $
Substantially all amounts recognized in receivables, net represent trade receivables related to contracts with customers. In addition to trade and other receivables, current income tax receivables of $
An estimated sales return liability of $
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4. Intangible Assets and Goodwill: As discussed in Note 1, the COVID-19 pandemic has had, and is expected to continue to have, a significant negative impact on each of our operating groups. Thus, certain goodwill and indefinite-lived intangible asset impairment testing was required in the First Quarter of Fiscal 2020, with no additional tests required in the Second Quarter of Fiscal 2020 and the Third Quarter of Fiscal 2020, and resulted in significant impairment charges in Southern Tide as shown in the tables below.
Intangible assets by category are summarized below (in thousands):
| October 31, |
| February 1, |
| November 2, | ||||
2020 |
| 2020 | 2019 | ||||||
Intangible assets with finite lives | $ | | $ | | $ | | |||
Accumulated amortization and impairment |
| ( |
| ( |
| ( | |||
Total intangible assets with finite lives, net |
| |
| |
| | |||
Intangible assets with indefinite lives: |
|
|
|
|
|
| |||
Tommy Bahama Trademarks | $ | | $ | | $ | | |||
Lilly Pulitzer Trademarks |
| |
| |
| | |||
Southern Tide Trademarks |
| |
| |
| | |||
Total intangible assets, net | $ | | $ | | $ | |
Intangible assets, by operating group and in total, for Fiscal 2019 and the First Nine Months of Fiscal 2020 are as follows (in thousands):
| Tommy |
| Lilly |
| Lanier |
| Southern |
| Corporate |
| ||||||||
Bahama | Pulitzer | Apparel | Tide | and Other | Total | |||||||||||||
Balance February 2, 2019 | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Impairment |
| — |
| — |
| — |
| — |
| — |
| — | ||||||
Amortization |
| — |
| ( |
| ( |
| ( |
| ( |
| ( | ||||||
Balance, February 1, 2020 |
| |
| |
| |
| |