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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2020

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: 1-4365

OXFORD INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Georgia

   

58-0831862

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

999 Peachtree Street, N.E., Suite 688, Atlanta, Georgia 30309

(Address of principal executive offices)                               (Zip Code)

(404) 659-2424

(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

Common Stock, $1 par value

OXM

New York Stock Exchange

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. Yes No

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). Yes No

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.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 No

As of December 4, 2020, there were 16,883,565 shares of the registrant’s common stock outstanding.

Table of Contents

OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the Third Quarter of Fiscal 2020

Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (Unaudited)

5

Condensed Consolidated Statements of Operations (Unaudited)

6

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

7

Condensed Consolidated Statements of Cash Flows (Unaudited)

8

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk

47

Item 4. Controls and Procedures

47

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

48

Item 1A. Risk Factors

48

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

48

Item 3. Defaults Upon Senior Securities

49

Item 4. Mine Safety Disclosures

49

Item 5. Other Information

49

Item 6. Exhibits

49

SIGNATURES

50

2

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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.

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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

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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

$

53,071

$

52,460

$

21,568

Receivables, net

 

39,513

 

58,724

 

64,593

Inventories, net

 

148,740

 

152,229

 

154,229

Prepaid expenses and other current assets

 

21,139

 

25,413

 

28,438

Total Current Assets

$

262,463

$

288,826

$

268,828

Property and equipment, net

 

178,029

 

191,517

 

190,537

Intangible assets, net

 

156,464

 

175,005

 

175,298

Goodwill

 

23,857

 

66,578

 

66,594

Operating lease assets

238,259

287,181

287,977

Other assets, net

 

42,945

 

24,262

 

23,850

Total Assets

$

902,017

$

1,033,369

$

1,013,084

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

  

 

  

 

  

Current Liabilities

 

  

 

  

 

  

Accounts payable

$

52,177

$

65,491

$

60,708

Accrued compensation

 

17,947

 

19,363

 

21,560

Current portion of operating lease liabilities

 

62,839

 

50,198

 

49,901

Accrued expenses and other liabilities

 

43,426

 

42,727

 

31,949

Total Current Liabilities

$

176,389

$

177,779

$

164,118

Long-term debt

 

34,802

 

 

Non-current portion of operating lease liabilities

 

244,970

 

291,886

 

293,775

Other liabilities

 

18,394

 

18,566

 

17,365

Deferred income taxes

 

8,516

 

16,540

 

21,010

Commitments and contingencies

 

 

 

Shareholders’ Equity

 

 

 

  

Common stock, $1.00 par value per share

 

16,884

 

17,040

 

17,040

Additional paid-in capital

 

154,103

 

149,426

 

147,448

Retained earnings

 

252,392

 

366,793

 

357,768

Accumulated other comprehensive loss

 

(4,433)

 

(4,661)

 

(5,440)

Total Shareholders’ Equity

$

418,946

$

528,598

$

516,816

Total Liabilities and Shareholders’ Equity

$

902,017

$

1,033,369

$

1,013,084

See accompanying notes.

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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

$

175,135

$

241,221

$

527,466

$

825,194

Cost of goods sold

 

78,866

 

108,241

 

232,386

 

346,620

Gross profit

$

96,269

$

132,980

$

295,080

$

478,574

SG&A

 

113,537

 

134,231

 

352,201

 

417,448

Impairment of goodwill and intangible assets

60,452

Royalties and other operating income

 

3,550

 

3,845

 

10,349

 

11,469

Operating (loss) income

$

(13,718)

$

2,594

$

(107,224)

$

72,595

Interest expense, net

 

339

 

81

 

1,673

 

1,171

(Loss) earnings before income taxes

$

(14,057)

$

2,513

$

(108,897)

$

71,424

Income tax (benefit) provision

 

(3,453)

 

845

 

(25,422)

 

18,263

Net (loss) earnings

$

(10,604)

$

1,668

$

(83,475)

$

53,161

Net (loss) earnings per share:

 

  

 

  

 

  

 

  

Basic

$

(0.64)

$

0.10

$

(5.04)

$

3.17

Diluted

$

(0.64)

$

0.10

$

(5.04)

$

3.15

Weighted average shares outstanding:

 

  

 

  

 

  

 

  

Basic

 

16,568

 

16,773

 

16,576

 

16,748

Diluted

 

16,568

 

16,934

 

16,576

 

16,896

Dividends declared per share

$

0.25

$

0.37

$

0.75

$

1.11

See accompanying notes.

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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

$

(10,604)

$

1,668

$

(83,475)

$

53,161

Other comprehensive income (loss), net of taxes:

 

  

 

  

 

  

 

  

Net foreign currency translation adjustment

 

(114)

 

176

 

228

 

(345)

Comprehensive (loss) income

$

(10,718)

$

1,844

$

(83,247)

$

52,816

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

First Nine Months

    

Fiscal 2020

    

Fiscal 2019

Cash Flows From Operating Activities:

 

  

 

  

 

Net (loss) earnings

$

(83,475)

$

53,161

Adjustments to reconcile net earnings (loss) to cash flows from operating activities:

 

  

 

  

Depreciation

 

33,389

 

29,301

Amortization of intangible assets

 

834

 

878

Impairment of goodwill and intangible assets

60,452

Equity compensation expense

 

5,626

 

5,698

Amortization of deferred financing costs

 

258

 

298

Deferred income taxes (benefit) expense

 

(8,024)

 

2,370

Changes in operating assets and liabilities, net of acquisitions and dispositions:

 

  

 

  

Receivables, net

 

19,737

 

4,559

Inventories, net

 

3,716

 

6,203

Prepaid expenses and other current assets

 

4,275

 

(2,348)

Current liabilities

 

(747)

 

(27,479)

Other balance sheet changes

 

(13,364)

 

2,565

Cash provided by operating activities

$

22,677

$

75,206

Cash Flows From Investing Activities:

 

  

 

  

Purchases of property and equipment

 

(21,916)

 

(26,877)

Other investing activities

 

(3,000)

 

Cash used in investing activities

$

(24,916)

$

(26,877)

Cash Flows From Financing Activities:

 

  

 

  

Repayment of revolving credit arrangements

 

(222,896)

 

(122,241)

Proceeds from revolving credit arrangements

 

257,698

 

109,248

Deferred financing costs paid

(952)

Repurchase of common stock

(18,053)

Proceeds from issuance of common stock

 

1,097

 

1,307

Repurchase of equity awards for employee tax withholding liabilities

 

(1,870)

 

(2,453)

Cash dividends declared and paid

 

(12,706)

 

(18,908)

Other financing activities

 

(459)

 

(1,033)

Cash provided by (used in) financing activities

$

2,811

$

(35,032)

Net change in cash and cash equivalents

$

572

$

13,297

Effect of foreign currency translation on cash and cash equivalents

 

39

 

(56)

Cash and cash equivalents at the beginning of year

 

52,460

 

8,327

Cash and cash equivalents at the end of the period

$

53,071

$

21,568

See accompanying notes.

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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.

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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 $60 million, were recorded in impairment of goodwill and intangible assets in our consolidated statements of operations in the First Quarter of Fiscal 2020. We determined there were no additional triggering events that occurred in the Second Quarter of Fiscal 2020 or Third Quarter of Fiscal 2020 that would require an additional interim impairment test for our goodwill and intangible assets during those quarters.

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 $3 million, $3 million and $7 million, respectively. These impairment charges are for fixed assets and operating lease assets, with the substantial majority of the amounts included in SG&A and the remainder included in cost of goods sold in our consolidated statements of operations. The charges in the Second Quarter of Fiscal 2020 were primarily recognized in Tommy Bahama, while the charges in the Third Quarter of Fiscal 2020 were primarily recognized in Lanier Apparel. Refer to Note 9 for additional discussion of the $3 million of impairment charges recognized in the Third Quarter of Fiscal 2020, which are related to the exit of Lanier Apparel. There were no significant operating lease asset or fixed asset impairment charges in the First Nine Months of Fiscal 2019.

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 adopted the guidance on the first day of Fiscal 2020 resulting in a charge to retained earnings, which is included in the shareholders’ equity statement for the First Quarter of Fiscal 2020 included in Note 8, and a reduction to various asset amounts included in our consolidated balance sheet.

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 adopted the provisions related to classification of franchise taxes partially based on income and changes in ownership of foreign equity method investments or foreign subsidiaries on a modified retrospective basis while we adopted the other provisions on a prospective basis. The adoption of the new guidance did not have an impact on our consolidated financial statements as of the first day of Fiscal 2020.

Other recently issued guidance that was adopted in Fiscal 2020 did not have a material impact on our consolidated financial statements upon adoption.

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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.

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Third Quarter

First Nine Months

    

Fiscal 2020

    

Fiscal 2019

    

Fiscal 2020

    

Fiscal 2019

Net sales

 

  

 

  

 

  

 

  

 

Tommy Bahama

$

94,905

$

127,023

$

277,143

$

480,623

Lilly Pulitzer

 

53,714

 

71,659

 

176,723

 

219,809

Lanier Apparel

 

10,810

 

28,758

 

29,985

 

75,378

Southern Tide

 

10,023

 

9,102

 

27,136

 

35,704

Corporate and Other

 

5,683

 

4,679

 

16,479

 

13,680

Consolidated net sales

$

175,135

$

241,221

$

527,466

$

825,194

Depreciation and amortization

 

  

 

  

 

  

 

  

Tommy Bahama

$

7,179

$

7,073

$

24,173

$

20,820

Lilly Pulitzer

 

2,254

 

2,554

 

7,585

 

7,618

Lanier Apparel

 

629

 

108

 

978

 

313

Southern Tide

 

174

 

135

 

487

 

404

Corporate and Other

 

336

 

323

 

1,000

 

1,024

Consolidated depreciation and amortization

$

10,572

$

10,193

$

34,223

$

30,179

Operating income (loss)

 

  

 

  

 

  

 

  

Tommy Bahama

$

(7,212)

$

(7,739)

$

(43,286)

$

30,671

Lilly Pulitzer

 

5,266

 

10,988

 

25,676

 

46,689

Lanier Apparel

 

(12,500)

 

1,971

 

(21,271)

 

3,738

Southern Tide

 

(464)

 

526

 

(64,809)

 

4,877

Corporate and Other

 

1,192

 

(3,152)

 

(3,534)

 

(13,380)

Consolidated operating (loss) income

 

(13,718)

 

2,594

$

(107,224)

$

72,595

Interest expense, net

 

339

 

81

 

1,673

 

1,171

(Loss) earnings before income taxes

$

(14,057)

$

2,513

$

(108,897)

$

71,424

    

October 31, 2020

 

February 1, 2020

    

November 2, 2019

Assets

 

  

  

 

  

Tommy Bahama (1)

$

616,049

$

668,197

$

673,788

Lilly Pulitzer (2)

 

182,020

 

199,913

 

192,448

Lanier Apparel (3)

 

20,783

 

43,533

 

52,378

Southern Tide (4)

 

30,172

 

99,667

 

94,876

Corporate and Other (5)

 

52,993

 

22,059

 

(406)

Consolidated Total Assets

$

902,017

$

1,033,369

$

1,013,084

(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 $60 million impairment charge for goodwill and intangible assets in the First Quarter of Fiscal 2020, as well as lower inventories.
(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.

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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

 

    

Net Sales

    

Retail

    

E-commerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

94,905

 

37

%  

27

%  

13

%  

23

%  

%

Lilly Pulitzer

 

53,714

 

22

%  

66

%  

%  

12

%  

%

Lanier Apparel

 

10,810

 

%  

%  

%  

100

%  

%

Southern Tide

 

10,023

 

4

%  

24

%  

%  

72

%  

%

Corporate and Other

 

5,683

 

%  

54

%  

%  

44

%  

2

%

Total

$

175,135

 

27

%  

38

%  

7

%  

28

%  

%

Third Quarter Fiscal 2019

 

    

Net Sales

    

Retail

    

E-commerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

127,023

 

46

%  

14

%  

14

%  

26

%  

%

Lilly Pulitzer

 

71,659

 

35

%  

55

%  

%  

10

%  

%

Lanier Apparel

 

28,758

 

%  

%  

%  

100

%  

%

Southern Tide

 

9,102

 

%  

19

%  

%  

81

%  

%

Corporate and Other

 

4,679

 

%  

55

%  

%  

39

%  

6

%

Total

$

241,221

 

35

%  

26

%  

7

%  

32

%  

%

First Nine Months Fiscal 2020

 

    

Net Sales

    

Retail

    

Ecommerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

277,143

 

36

%  

34

%  

12

%  

18

%  

%

Lilly Pulitzer

 

176,723

 

19

%  

64

%  

%  

17

%  

%

Lanier Apparel

 

29,985

 

%  

%  

%  

100

%  

%

Southern Tide

 

27,136

 

3

%  

29

%  

%  

68

%  

%

Corporate and Other

 

16,479

 

%  

65

%  

%  

31

%  

4

%

Consolidated net sales

$

527,466

 

26

%  

43

%  

6

%  

25

%  

%

    

First Nine Months Fiscal 2019

 

    

Net Sales

    

Retail

    

Ecommerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

480,623

 

48

%  

18

%  

13

%  

21

%  

%

Lilly Pulitzer

 

219,809

 

43

%  

36

%  

%  

21

%  

%

Lanier Apparel

 

75,378

 

%  

%  

%  

100

%  

%

Southern Tide

 

35,704

 

%  

18

%  

%  

82

%  

%

Corporate and Other

 

13,680

 

%  

59

%  

%  

34

%  

7

%

Consolidated net sales

$

825,194

 

39

%  

22

%  

8

%  

31

%  

%

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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Table of Contents

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

$

47,415

$

83,636

$

134,701

$

324,892

E-commerce

 

66,135

 

62,310

 

226,618

 

180,736

Restaurant

 

12,214

 

17,325

 

32,505

 

61,457

Wholesale

 

49,221

 

77,595

 

132,768

 

256,794

Other

 

150

 

355

 

874

 

1,315

Net sales

$

175,135

$

241,221

$

527,466

$

825,194

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 $8 million, $9 million and $9 million, respectively.

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 $3 million, $1 million and $1 million, respectively. Provisions for credit losses expense included in our consolidated statement of operations for the Third Quarter of Fiscal 2020 and the First Nine Months of Fiscal 2020 were $0 million and $4 million, respectively, while write-offs of credit losses for the Third Quarter of Fiscal 2020 and the First Nine Months of Fiscal 2020 were $2 million and $2 million, respectively. Both provisions for credit losses expense included in our consolidated statement of operations and write-offs of credit losses for the Third Quarter of Fiscal 2019 and the First Nine Months of Fiscal 2019 were $0 million.

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 $1 million, $1 million and $1 million and tenant allowances due from landlord of $3 million, $1 million and $2 million are included in receivables, net in our consolidated balance sheet as of October 31, 2020, February 1, 2020 and November 2, 2019, respectively. As of October 31, 2020, February 1, 2020 and November 2, 2019, prepaid expenses and other current assets included $3 million, $3 million and $4 million, respectively, representing the estimated value of inventory for expected wholesale and direct to consumer sales returns. We did not have any significant contract assets related to contracts with customers, other than trade receivables and the value of inventory associated with expected sales returns, as of October 31, 2020, February 1, 2020 and November 2, 2019.

An estimated sales return liability of $6 million, $3 million and $3 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of October 31, 2020, February 1, 2020 and November 2, 2019, respectively. Contract liabilities for gift cards purchased by consumers and merchandise credits received by customers but not yet redeemed, less any breakage income recognized to date, is included in accrued expenses and other liabilities in our consolidated balance sheets and totaled $12 million, $12 million and $11 million as of October 31, 2020, February 1, 2020, and November 2, 2019, respectively.

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Table of Contents

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

$

51,929

$

51,929

$

51,929

Accumulated amortization and impairment

 

(42,965)

 

(41,924)

 

(41,631)

Total intangible assets with finite lives, net

 

8,964

 

10,005

 

10,298

Intangible assets with indefinite lives:

 

  

 

  

 

  

Tommy Bahama Trademarks

$

110,700

$

110,700

$

110,700

Lilly Pulitzer Trademarks

 

27,500

 

27,500

 

27,500

Southern Tide Trademarks

 

9,300

 

26,800

 

26,800

Total intangible assets, net

$

156,464

$

175,005

$

175,298

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

$

110,700

$

29,216

$

246

$

29,401

$

6,613

$

176,176

Impairment

 

 

 

 

 

 

Amortization

 

 

(475)

 

(31)

 

(291)

 

(374)

 

(1,171)

Balance, February 1, 2020

 

110,700

 

28,741

 

215

 

29,110

 

6,239