SEC Filing | Oxford Industries Inc.

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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 May 1, 2021

	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 June 4, 2021, there were 16,892,753 shares of the registrant’s common stock outstanding.

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OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the First Quarter of Fiscal 2021


	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	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3. Defaults Upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	35
Item 6. Exhibits	35
SIGNATURES	36

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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 continued impact of the coronavirus (COVID-19) pandemic in the regions in which we operate, including uncertainties about scope and duration (including emergence of COVID-19 variants and/or resurgence of cases), future store closures or other restrictions (including reduced hours and capacity) due to government mandates, and the effectiveness of store re-openings (including consumer willingness to return to shopping centers), any or all of which may also 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; supply chain disruptions, including the potential lack of inventory to support demand for our products; costs of products as well as the raw materials used in those products; expected pricing levels; costs and availability 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 increase in the U.S. corporate federal income tax rate and/or 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; 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 tax and other legislative changes; 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 under the CARES Act. 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 2020, 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 2020 Form 10-K” means our Annual Report on Form 10-K for Fiscal 2020; “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 2022		52 weeks ending January 28, 2023
Fiscal 2021		52 weeks ending January 29, 2022
Fiscal 2020		52 weeks ended January 30, 2021
Fiscal 2019		52 weeks ended February 1, 2020
Fourth Quarter Fiscal 2021		13 weeks ending January 29, 2022
Third Quarter Fiscal 2021		13 weeks ending October 30, 2021
Second Quarter Fiscal 2021		13 weeks ending July 31, 2021
First Quarter Fiscal 2021		13 weeks ended May 1, 2021
Fourth Quarter Fiscal 2020		13 weeks ended 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

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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)


	May 1,		January 30,		May 2,
	2021		2021		2020
ASSETS
Current Assets
Cash and cash equivalents	$	92,086	$	66,013	$	181,775
Receivables, net		67,658		30,418		50,265
Inventories, net		108,810		123,543		169,495
Income tax receivable		17,830		17,975		790
Prepaid expenses and other current assets		22,355		20,367		21,367
Total Current Assets	$	308,739	$	258,316	$	423,692
Property and equipment, net		157,553		159,732		188,568
Intangible assets, net		155,967		156,187		157,015
Goodwill		23,930		23,910		23,802
Operating lease assets		221,647		233,775		274,778
Other assets, net		33,146		33,714		29,615
Total Assets	$	900,982	$	865,634	$	1,097,470
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	72,323	$	71,148	$	40,432
Accrued compensation		31,578		18,897		11,373
Current portion of operating lease liabilities		60,226		60,886		66,128
Accrued expenses and other liabilities		60,963		45,321		35,194
Total Current Liabilities	$	225,090	$	196,252	$	153,127
Long-term debt		—		—		207,618
Non-current portion of operating lease liabilities		226,358		239,963		271,810
Other non-current liabilities		21,270		23,691		17,101
Deferred income taxes		363		—		9,119
Shareholders’ Equity
Common stock, $1.00 par value per share		16,894		16,889		16,718
Additional paid-in capital		156,069		156,508		149,634
Retained earnings		258,211		235,995		277,595
Accumulated other comprehensive loss		(3,273)		(3,664)		(5,252)
Total Shareholders’ Equity	$	427,901	$	405,728	$	438,695
Total Liabilities and Shareholders’ Equity	$	900,982	$	865,634	$	1,097,470

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)


	First Quarter
	Fiscal 2021		Fiscal 2020
Net sales	$	265,762	$	160,343
Cost of goods sold		99,177		66,269
Gross profit	$	166,585	$	94,074
SG&A		137,125		123,001
Impairment of goodwill and intangible assets		—		60,452
Royalties and other operating income		5,433		3,890
Operating income (loss)	$	34,893	$	(85,489)
Interest expense, net		252		658
Earnings (loss) before income taxes	$	34,641	$	(86,147)
Income tax provision (benefit)		6,173		(19,363)
Net earnings (loss)	$	28,468	$	(66,784)

Net earnings (loss) per share:
Basic	$	1.72	$	(4.02)
Diluted	$	1.70	$	(4.02)
Weighted average shares outstanding:
Basic		16,594		16,612
Diluted		16,792		16,612
Dividends declared per share	$	0.37	$	0.25

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	First Quarter
	Fiscal 2021		Fiscal 2020
Net earnings (loss)	$	28,468	$	(66,784)
Other comprehensive income (loss), net of taxes:
Net foreign currency translation adjustment		391		(591)
Comprehensive income (loss)	$	28,859	$	(67,375)

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	First Quarter
	Fiscal 2021		Fiscal 2020
Cash Flows From Operating Activities:
Net earnings (loss)	$	28,468	$	(66,784)
Adjustments to reconcile net earnings (loss) to cash flows from operating activities:
Depreciation		9,463		10,410
Amortization of intangible assets		220		283
Impairment of goodwill and intangible assets		—		60,452
Equity compensation expense		2,227		1,682
Amortization of deferred financing costs		86		86
Deferred income taxes		1,584		(7,422)
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Receivables, net		(37,219)		7,672
Inventories, net		14,902		(17,551)
Income tax receivable		145		72
Prepaid expenses and other current assets		(1,980)		4,031
Current liabilities		27,211		(24,752)
Other balance sheet changes		(4,102)		(14,028)
Cash provided by (used in) operating activities	$	41,005	$	(45,849)
Cash Flows From Investing Activities:
Purchases of property and equipment		(4,925)		(8,591)
Other investing activities		(500)		—
Cash used in investing activities	$	(5,425)	$	(8,591)
Cash Flows From Financing Activities:
Repayment of revolving credit arrangements		—		(22,767)
Proceeds from revolving credit arrangements		—		230,386
Repurchase of common stock		—		(18,053)
Proceeds from issuance of common stock		322		406
Repurchase of equity awards for employee tax withholding liabilities		(2,983)		(1,870)
Cash dividends declared and paid		(6,252)		(4,194)
Other financing activities		(749)		—
Cash (used in) provided by financing activities	$	(9,662)	$	183,908
Net change in cash and cash equivalents	$	25,918	$	129,468
Effect of foreign currency translation on cash and cash equivalents		155		(153)
Cash and cash equivalents at the beginning of year		66,013		52,460
Cash and cash equivalents at the end of period	$	92,086	$	181,775

See accompanying notes.

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OXFORD INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

FIRST QUARTER OF FISCAL 2021

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. 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.

The significant accounting policies applied during the interim periods presented are consistent with the significant accounting policies described in our Fiscal 2020 Form 10-K. No recently issued guidance that was adopted in Fiscal 2021 had a material impact on our consolidated financial statements upon adoption or is expected to have a material impact in future periods.

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.

COVID-19 Pandemic

The COVID-19 pandemic has had a significant effect on overall economic conditions and our operations. 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 with all locations being closed for about half of the First Quarter of Fiscal 2020. We began reopening our stores and restaurants in early May 2020 with additional stores and restaurants reopening throughout the Second Quarter of Fiscal 2020. We have reopened substantially all of our direct to consumer locations in a phased approach in accordance with local government guidelines and with additional safety protocols.

There remains significant uncertainty as to the duration and severity of the pandemic as well as the associated business disruption, impact on discretionary spending and restrictions on our ongoing operations. Thus, the ultimate impact of the pandemic and the extent of the recovery from the pandemic cannot be reasonably estimated at this time.

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

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allocation across each brand’s direct to consumer, wholesale and licensing operations, as applicable. Our business has historically been operated through our Tommy Bahama, Lilly Pulitzer, Southern Tide and Lanier Apparel 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. In Fiscal 2020, we decided to exit Lanier Apparel, which is expected to be completed in the second half of Fiscal 2021. 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. For a more extensive description of our operating groups, see Part I, Item 1. Business included in our Fiscal 2020 Form 10-K.

The table below presents certain financial information (in thousands) about our operating groups, as well as Corporate and Other.


	First Quarter
	Fiscal 2021		Fiscal 2020
Net sales
Tommy Bahama	$	156,698	$	86,984
Lilly Pulitzer		73,576		49,149
Southern Tide		15,466		8,301
Lanier Apparel		12,019		10,725
Corporate and Other		8,003		5,184
Consolidated net sales	$	265,762	$	160,343

Depreciation and amortization
Tommy Bahama	$	7,040	$	7,800
Lilly Pulitzer		2,099		2,316
Southern Tide		187		144
Lanier Apparel		36		102
Corporate and Other		321		331
Consolidated depreciation and amortization	$	9,683	$	10,693

Operating income (loss)
Tommy Bahama	$	20,660	$	(23,362)
Lilly Pulitzer		19,945		4,146
Southern Tide		3,253		(63,366)
Lanier Apparel		855		(2,637)
Corporate and Other		(9,820)		(270)
Consolidated operating income (loss)	$	34,893	$	(85,489)
Interest expense, net		252		658
Earnings (loss) before income taxes	$	34,641	$	(86,147)

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	May 1, 2021		January 30, 2021		May 2, 2020
Assets
Tommy Bahama ⁽¹⁾	$	569,391	$	569,854	$	650,057
Lilly Pulitzer ⁽²⁾		188,886		176,467		202,983
Southern Tide ⁽³⁾		32,285		31,641		37,513
Lanier Apparel⁽⁴⁾		9,620		10,967		39,283
Corporate and Other⁽⁵⁾		100,800		76,705		167,634
Consolidated Total Assets	$	900,982	$	865,634	$	1,097,470

(1)

Decrease in Tommy Bahama total assets from May 2, 2020 includes reductions in operating lease assets, fixed assets and inventories partially offset by higher receivables.

(2)

Decrease in Lilly Pulitzer total assets from May 2, 2020 includes reductions in operating lease assets and inventories partially offset by higher receivables.

(3)

Decrease in Southern Tide total assets from May 2, 2020 includes reductions in inventories partially offset by higher receivables and fixed assets.

(4)

Decrease in Lanier Apparel total assets from May 2, 2020 includes reductions in inventories, operating lease assets, receivables, fixed assets and other current assets as we continue with the exit of Lanier Apparel.

(5)

Decrease in Corporate and Other total assets from May 2, 2020 includes reductions in cash partially offset by higher income tax receivables.

The tables below quantify net sales, for each operating group and in total (in thousands), and the percentage of net sales by distribution channel for each operating group and in total, for each period presented.


	First Quarter Fiscal 2021
	Net Sales		Retail		E-commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	156,698	42	%	23	%	16	%	19	%	—	%
Lilly Pulitzer		73,576	35	%	42	%	—	%	23	%	—	%
Southern Tide		15,466	5	%	19	%	—	%	76	%	—	%
Lanier Apparel		12,019	—	%	—	%	—	%	100	%	—	%
Corporate and Other		8,003	—	%	57	%	—	%	37	%	6	%
Total	$	265,762	34	%	28	%	10	%	28	%	—	%


	First Quarter Fiscal 2020
	Net Sales		Retail		E-commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	86,984	39	%	28	%	13	%	20	%	—	%
Lilly Pulitzer		49,149	24	%	50	%	—	%	26	%	—	%
Southern Tide		8,301	1	%	21	%	—	%	78	%	—	%
Lanier Apparel		10,725	—	%	—	%	—	%	100	%	—	%
Corporate and Other		5,184	—	%	63	%	—	%	32	%	5	%
Total	$	160,343	28	%	34	%	7	%	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, credit losses and other information, is described in the significant accounting policies described in our Fiscal 2020 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.


	First Quarter
	Fiscal 2021		Fiscal 2020
Retail	$	91,280	$	45,503
E-commerce		74,238		53,694
Restaurant		25,208		11,763
Wholesale		74,453		49,058
Other		583		325
Net sales	$	265,762	$	160,343

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. As of May 1, 2021, January 30, 2021 and May 2, 2020, reserve balances recorded as a reduction to receivables related to these items were $6 million, $6 million and $9 million, respectively.

As of May 1, 2021, January 30, 2021 and May 2, 2020, our provision for credit losses related to receivables included in our consolidated balance sheets was $2 million, $3 million and $3 million, respectively. In the First Quarter of Fiscal 2021, provisions for credit losses expense included in our consolidated statement of operations was $0 million and write-offs of credit losses was $0 million. In the First Quarter of Fiscal 2020, provisions for credit losses expense included in our consolidated statement of operations was $2 million and write-offs of credit losses was $0 million.

Substantially all amounts recognized in receivables, net represent trade receivables related to contracts with customers. In addition to trade and other receivables, tenant allowances due from landlord of $3 million, $2 million and $2 million are included in receivables, net in our consolidated balance sheet as of May 1, 2021, January 30, 2021 and May 2, 2020, respectively. As of May 1, 2021, January 30, 2021 and May 2, 2020, prepaid expenses and other current assets included $4 million, $4 million and $4 million, respectively, representing the estimated value of inventory for expected direct to consumer and wholesale sales returns.

An estimated sales return liability of $12 million, $7 million and $5 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of May 1, 2021, January 30, 2021 and May 2, 2020, 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 sheet and totaled $13 million, $13 million and $12 million as of May 1, 2021, January 30, 2021, and May 2, 2020, respectively.

4. Leases: In the ordinary course of business, we enter into real estate lease agreements for our direct to consumer locations, which include retail and food and beverage locations, and office and warehouse/distribution space, as well as leases for certain equipment. Our real estate leases have varying terms and expirations and may have provisions to extend, renew or terminate the lease agreement at our discretion, among other provisions. Our real estate lease terms are typically for a period of ten years or less and typically require monthly rent payments with specified rent escalations during the lease term. Our real estate leases usually provide for payments of our pro rata share of real estate taxes, insurance and other operating expenses applicable to the property, and certain of our leases require payment of sales taxes on rental payments. Also, our direct to consumer location leases often provide for contingent rent payments based on sales if certain sales thresholds are achieved. For many of our real estate lease agreements, we obtain lease incentives from the landlord for tenant improvement or other allowances.

For the First Quarter of Fiscal 2021 operating lease expense, which includes amounts used in determining the operating lease liability and operating lease asset, was $15 million and variable lease expense was $11 million, resulting in total lease expense of $26 million compared to $25 million of total lease expense in the First Quarter of Fiscal 2020. Cash paid for lease amounts included in the measurement of operating lease liabilities in the First Quarter of Fiscal 2021 was $18 million, while cash paid for lease amounts included in the measurement of operating

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lease liabilities in the First Quarter of Fiscal 2020 was $8 million, as certain April and May 2020 rents were pending resolution of appropriate concessions.

As of May 1, 2021, the stated lease liability payments for the fiscal years specified below were as follows (in thousands):


	Operating lease
Remainder of 2021	$	53,437
2022		64,840
2023		57,701
2024		45,817
2025		32,578
2026		26,478
After 2026		41,521
Total lease payments	$	322,372
Less: Difference between discounted and undiscounted lease payments		35,788
Present value of lease liabilities	$	286,584

5. Income Taxes: Our effective income tax rate for the First Quarter of Fiscal 2021 was an expense of 17.8% while our effective tax rate for the First Quarter of Fiscal 2020 was a benefit of 22.5%.

The income tax expense in the First Quarter of Fiscal 2021 includes the benefit of a $2 million net reduction in uncertain tax positions resulting from the settlement of those uncertain tax position amounts as well as other favorable items including the recognition of certain tax credit amounts, the impact of restricted stock awards vesting at a price higher than the grant date value, and the utilization of certain net operating loss carryforward amounts in certain state and foreign jurisdictions. These favorable items were partially offset by certain unfavorable permanent items which are not deductible for income tax purposes. The net impact of these items results in a lower effective tax rate than the more typical 25% to 26% annual effective tax rate of Fiscal 2019 and Fiscal 2018.

The income tax benefit in the First Quarter of Fiscal 2020 includes the benefit of the operating losses that will be realized at a rate of 35% pursuant to the CARES Act provision allowing the carryback of Fiscal 2020 loss amounts to pre-U.S. Tax Reform years, offset by (1) the non-deductibility of certain impairment charges which resulted in an estimated effective tax rate of 17% on the impairment charges, and (2) the impact of restricted stock awards vesting at a price lower than the grant date value.

After recognizing a $2 million net reduction in uncertain tax positions during the First Quarter of Fiscal 2021, the unrecognized tax benefits of uncertain tax positions as of May 1, 2021 was $3 million. The total amount of uncertain tax benefits relating to our tax positions is subject to change based on future events including, but not limited to, settlements of ongoing audits and assessments and the expiration of applicable statutes of limitation. We expect that the balance of unrecognized tax benefits may decrease by an additional $1 million during the remainder of Fiscal 2021. However, changes in the expected occurrence, outcomes and timing of such events could cause our current estimate to change in the future.

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6. Shareholders’ Equity: The following tables detail the changes (in thousands) in our common stock, additional paid-in capital ("APIC"), retained earnings and accumulated other comprehensive (loss) income ("AOCI"), for each period presented.


	Fiscal 2020
	Common Stock		APIC		Retained Earnings		AOCI		Total
February 1, 2020	$	17,040	$	149,426	$	366,793	$	(4,661)	$	528,598
Comprehensive loss		—		—		(66,784)		(591)		(67,375)
Shares issued under equity plans		56		350		—		—		406
Compensation expense for equity awards		—		1,682		—		—		1,682
Repurchase of shares		(378)		(1,824)		(17,721)		—		(19,923)
Cash dividends declared and paid		—		—		(4,194)		—		(4,194)
Cumulative effect of change in accounting standards		—		—		(499)		—		(499)
May 2, 2020	$	16,718	$	149,634	$	277,595	$	(5,252)	$	438,695
Comprehensive loss		—		—		(6,087)		933		(5,154)
Shares issued under equity plans		158		202		—		—		360
Compensation expense for equity awards		—		1,884		—		—		1,884
Repurchase of shares		—		—		—		—		—
Cash dividends declared and paid		—		—		(4,235)		—		(4,235)
Cumulative effect of change in accounting standards		—		—		—		—		—
August 1, 2020	$	16,876	$	151,720	$	267,273	$	(4,319)	$	431,550
Comprehensive loss		—		—		(10,604)		(114)		(10,718)
Shares issued under equity plans		8		323		—		—		331
Compensation expense for equity awards		—		2,060		—		—		2,060
Repurchase of shares				—		—		—		—
Cash dividends declared and paid		—		—		(4,277)		—		(4,277)
Cumulative effect of change in accounting standards		—		—		—		—		—
October 31, 2020	$	16,884	$	154,103	$	252,392	$	(4,433)	$	418,946
Comprehensive loss		—		—		(12,217)		769		(11,448)
Shares issued under equity plans		5		276		—		—		281
Compensation expense for equity awards		—		2,129		—		—		2,129
Repurchase of shares		—		—		—		—		—
Cash dividends declared and paid		—		—		(4,180)		—		(4,180)
Cumulative effect of change in accounting standards		—		—		—		—		—
January 30, 2021	$	16,889	$	156,508	$	235,995	$	(3,664)	$	405,728


	First Quarter Fiscal 2021
	Common Stock		APIC		Retained Earnings		AOCI		Total
January 30, 2021	$	16,889	$	156,508	$	235,995	$	(3,664)	$	405,728
Comprehensive income		—		—		28,468		391		28,859
Shares issued under equity plans		39		283		—		—		322
Compensation expense for equity awards		—		2,227		—		—		2,227
Repurchase of shares		(34)		(2,949)		—		—		(2,983)
Cash dividends declared and paid		—		—		(6,252)		—		(6,252)
Cumulative effect of change in accounting standards		—		—		—		—		—
May 1, 2021	$	16,894	$	156,069	$	258,211	$	(3,273)	$	427,901

During the First Quarter of Fiscal 2021, we granted certain service-based restricted shares of our common stock, subject to the recipient remaining an employee through the May 2024 vesting date, which are reported as shares

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issued under equity plans in the table above. Additionally, during the First Quarter of Fiscal 2021, we granted 0.1 million restricted share units at target subject to (1) our achievement of specified total shareholder return (“TSR”) ranking by Oxford relative to a comparator group for the three year period ending in May 2024 and (2) the recipient remaining an employee through May 2024. The ultimate number of shares earned will be between 0% and 200% of the restricted share units at target. These TSR-based restricted share units are entitled to dividend equivalents for dividends declared on our common stock during the performance period, which are payable after vesting of the restricted shares, for the number of shares ultimately earned. These TSR-based restricted share units do not have any voting rights during the performance period. These TSR-based restricted performance units are not included in the table above. Our stock incentive plans are described in Note 8 to our consolidated financial statements included in our Fiscal 2020 Form 10-K.

No restricted shares or restricted share units were excluded from the diluted earnings per share calculation in the First Quarter of Fiscal 2021. As of the end of the First Quarter of Fiscal 2020, there were 0.2 million of restricted shares and restricted share units outstanding that were excluded from the diluted earnings per share calculation because we incurred a net loss for the period and their inclusion would be anti-dilutive.

7. Lanier Apparel Exit: In the Third Quarter of Fiscal 2020, we made the decision to exit our Lanier Apparel business, a business which has been primarily focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. It also took into consideration the increased challenges faced by the Lanier Apparel business, many of which were magnified by the COVID-19 pandemic.

In connection with the exit of the Lanier Apparel business, which is expected to be completed in the second half of Fiscal 2021, we recorded pre-tax charges of $13 million in the Lanier Apparel operating group during the second half of Fiscal 2020. These charges consist of (1) $6 million of inventory markdowns, the substantial majority of which were reversed in Corporate and Other as part of LIFO accounting as the inventory had not been sold as of January 30, 2021, (2) $3 million of employee charges, including severance and employee retention costs, (3) $3 million of operating lease asset impairment charges for leased office space, (4) $1 million of non-cash fixed asset impairment charges, primarily related to leasehold improvements, and (5) $1 million of charges related to our Merida manufacturing facility, which ceased operations in Fiscal 2020. The inventory markdowns and manufacturing facility charges are included in cost of goods sold in Lanier Apparel, while the charges for operating lease asset impairments, employee charges, and fixed asset impairments are included in SG&A in Lanier Apparel. As of January 30, 2021, $1 million of the accrued charges for employee charges and charges related to the Merida manufacturing facility had been paid. As of January 30, 2021, the remaining $2 million of accrued employee charges were recorded in accrued compensation in our consolidated balance sheet.

During the First Quarter of Fiscal 2021, we recognized an additional $1 million of charges related to the Lanier Apparel exit primarily consisting of severance and employee retention costs. As of May 1, 2021, $3 million of the cumulative accrued employee charges and charges related to the Merida manufacturing facility had been paid. As of May 1, 2021, the remaining $2 million of accrued employee charges were recorded in accrued compensation in our consolidated balance sheet and are expected to be paid during Fiscal 2021.

In addition to the charges incurred through the First Quarter of Fiscal 2021, we currently expect to incur incremental Lanier Apparel exit charges totaling approximately $3 million, which are expected to consist of additional employee charges for employees retained during the exit and the acceleration of certain post-exit contractual commitments.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto contained in this report and the consolidated financial statements, notes to consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Fiscal 2020 Form 10-K.

OVERVIEW

Business Overview

We are a leading branded apparel company that designs, sources, markets and distributes products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer and Southern Tide lifestyle brands and other brands. Tommy Bahama and Lilly Pulitzer, in the aggregate, represent more than 85% of our net sales and 97% of our net sales were in the United States.

Our business strategy is to develop and market compelling lifestyle brands and products that evoke a strong emotional response from our target consumers. We consider lifestyle brands to be those brands that have a clearly defined and targeted point of view inspired by an appealing lifestyle or attitude. Furthermore, we believe lifestyle brands that create an emotional connection, like Tommy Bahama, Lilly Pulitzer and Southern Tide, can command greater loyalty and higher price points at retail and create licensing opportunities. We believe the attraction of a lifestyle brand depends on creating compelling product, effectively communicating the respective lifestyle brand message and distributing products to consumers where and when they want them. We believe the principal competitive factors in the apparel industry are the reputation, value, and image of brand names; design of differentiated, innovative or otherwise compelling product; consumer preference; price; quality; marketing; product fulfillment capabilities; and customer service. Our ability to compete successfully in the apparel industry is directly related to our proficiency in foreseeing changes and trends in fashion and consumer preference and presenting appealing products for consumers. Our design-led, commercially informed lifestyle brand operations strive to provide exciting, differentiated products each season.

We generate our net sales primarily through our direct to consumer channels of distribution, which consists of our brand-specific full-price retail stores, our brand-specific e-commerce websites, our Tommy Bahama food and beverage operations and our Tommy Bahama outlets. Our remaining net sales were generated through our wholesale distribution channels. Our wholesale operations consist of net sales of products bearing our lifestyle brands, which complement our direct to consumer operations and provide access to a larger group of consumers, and the net sales of our Lanier Apparel operating group, which we are in the process of exiting.

For additional information about our business and each of our operating groups, see Part I, Item 1. Business of our Fiscal 2020 Form 10-K. Important factors relating to certain risks which could impact our business are described in Part II, Item 1A. Risk Factors of this report and Part I. Item 1A. Risk Factors of our Fiscal 2020 Form 10-K.

Industry Overview

Our operating groups operate in highly competitive apparel markets that continue to evolve rapidly with the expanding application of technology to fashion retail. No single apparel firm or small group of apparel firms dominates the apparel industry, and our direct competitors vary by operating group and distribution channel. The apparel industry is cyclical and very dependent upon the overall level and focus of discretionary consumer spending, which changes as consumer preferences and regional, domestic and international economic conditions change. Further, negative economic conditions often have a longer and more severe impact on the apparel industry than on other industries.

The competitive and evolving environment may require that brands and retailers approach their operations, including marketing and advertising, very differently than historical practices and may result in increased operating costs and capital investments to generate growth or even maintain current sales levels. Many of these changes in the industry were accelerated or exacerbated by the COVID-19 pandemic. While this competition and evolution presents significant

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risks, especially for traditional retailers who fail or are unable to adapt, we believe it also presents a tremendous opportunity for brands and retailers to capitalize on the changing consumer environment.

We believe our lifestyle brands have true competitive advantages in this new retailing paradigm, and we are leveraging technology to serve our consumers when and where they want to be served. We continue to believe that our lifestyle brands, with their strong emotional connections with consumers, are well suited to succeed and thrive in the long term while managing the various challenges facing our industry.

COVID-19 Pandemic

The COVID-19 pandemic has had a significant effect on overall economic conditions and our operations and was the primary reason for a 33% reduction in net sales and a significant net loss in Fiscal 2020 after years of profitable operating results. While our mission remains the enhancement of long-term shareholder value, our focus during this crisis has been (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. Actions taken in Fiscal 2020 to mitigate the impact of the COVID-19 pandemic on our business, operations and liquidity are discussed in our Fiscal 2020 Form 10-K.

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 with all locations being closed for about half of the First Quarter of Fiscal 2020. We began reopening our stores and restaurants in early May 2020 with additional stores and restaurants reopening throughout the Second Quarter of Fiscal 2020. We have reopened substantially all of our direct to consumer locations in a phased approach in accordance with local government guidelines and with additional safety protocols.

Most of our locations continue to experience reduced traffic, limited operating hours and capacity, seating and other limitations, with such factors impacting individual locations to varying degrees. 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. Generally, locations in outdoor centers or in drivable resort vacation destinations have performed better than locations in indoor malls, and locations in the southern United States have performed better than locations in the northern United States. At the same time, the shift from in-store shopping to online shopping has accelerated during the COVID-19 pandemic resulting in strong growth in our e-commerce businesses during the COVID-19 pandemic.

Lanier Apparel Exit

In the Third Quarter of Fiscal 2020, we decided to exit our Lanier Apparel business, a business which has been primarily focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. It also took into consideration the increased challenges faced by the Lanier Apparel business, many of which were magnified by the COVID-19 pandemic.

In connection with the exit of our Lanier Apparel business, which is expected to be completed in the second half of Fiscal 2021, we recorded pre-tax charges of $13 million in the Lanier Apparel operating group during the second half of Fiscal 2020, with an additional $1 million of such charges in the First Quarter of Fiscal 2021. The Lanier Apparel exit charges are discussed in Note 7 in the unaudited condensed consolidated financial statements included in this report.

Key Operating Results:

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The following table sets forth our consolidated operating results (in thousands, except per share amounts) for the First Quarter of Fiscal 2021 compared to the First Quarter of Fiscal 2020


	First Quarter
	Fiscal 2021		Fiscal 2020
Net sales	$	265,762	$	160,343
Operating income (loss)	$	34,893	$	(85,489)
Net earnings (loss)	$	28,468	$	(66,784)
Net earnings (loss) per diluted share	$	1.70	$	(4.02)
Weighted average shares outstanding -- diluted		16,792		16,612

The improved earnings per share in the First Quarter of Fiscal 2021 are primarily a result of (1) the absence of impairment charges related to goodwill and intangible assets in the First Quarter of Fiscal 2021 after recognizing $60 million of impairment charges related to goodwill and intangible assets in the First Quarter of Fiscal 2020, (2) improved operating results in each operating group resulting from higher sales and higher gross margin partially offset by higher SG&A and (3) a favorable effective tax rate in the First Quarter of Fiscal 2021. These favorable items were partially offset by a larger operating loss in Corporate and Other.

The earnings per share of $1.70 is higher than the earnings per share of $1.29 in the First Quarter of Fiscal 2019. The higher earnings per share compared to the First Quarter of Fiscal 2019 are a result of higher gross margin, lower SG&A, increased royalty income and a lower effective tax rate partially offset by the impact of lower net sales.

STORE COUNT

The table below provides store count information for Tommy Bahama, Lilly Pulitzer and Southern Tide as of the dates specified. The table includes our permanent stores and excludes any pop-up or temporary store locations which have an initial lease term of 12 months or less. Due to the impact of the COVID-19 pandemic, all our stores and restaurants were closed beginning in March 2020. We began reopening our stores and restaurants starting on May 3, 2020 in a phased approach in accordance with local government guidelines and with additional safety protocols implemented. Certain retail stores and restaurants in some jurisdictions, including Hawaii, California and Canada, were required to close again for certain periods in Fiscal 2020 and early Fiscal 2021 after local jurisdictions reinstated some closure requirements. Most of our locations continue to experience reduced traffic, limited operating hours and capacity, seating and other limitations, with such factors impacting individual locations to varying degrees.


	May 1,	January 30,	May 2,	February 1,
	2021	2021	2020	2020
Tommy Bahama retail stores	104	105	110	111
Tommy Bahama retail-restaurant locations	21	20	18	16
Tommy Bahama outlets	35	35	35	35
Total Tommy Bahama locations	160	160	163	162
Lilly Pulitzer retail stores	59	59	61	61
Southern Tide retail stores	4	3	1	1
Total Oxford locations	223	222	225	224

RESULTS OF OPERATIONS

FIRST QUARTER OF FISCAL 2021 COMPARED TO FIRST QUARTER OF FISCAL 2020

The discussion and tables below compare our statements of operations for the First Quarter of Fiscal 2021 to the First Quarter of Fiscal 2020. Each dollar and percentage change provided reflects the change between these fiscal periods unless indicated otherwise. Each dollar and share amount included in the tables is in thousands except for per share amounts. We have calculated all percentages based on actual data, and percentage columns in tables may not add due to rounding. Individual line items of our consolidated statements of operations may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.

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The following table sets forth the specified line items in our unaudited condensed consolidated statements of operations both in dollars (in thousands) and as a percentage of net sales as well as the dollar change and the percentage change as compared to the same period of the prior year:


	First Quarter
	Fiscal 2021				Fiscal 2020				$ Change		% Change

Net sales	$	265,762	100.0	%	$	160,343	100.0	%	$	105,419	65.7	%
Cost of goods sold		99,177	37.3	%		66,269	41.3	%		32,908	49.7	%
Gross profit	$	166,585	62.7	%	$	94,074	58.7	%	$	72,511	77.1	%
SG&A		137,125	51.6	%		123,001	76.7	%		14,124	11.5	%
Impairment of goodwill and intangible assets		—	—	%		60,452	37.7	%		(60,452)	100.0	%
Royalties and other operating income		5,433	2.0	%		3,890	2.4	%		1,543	39.7	%
Operating income (loss)	$	34,893	13.1	%	$	(85,489)	(53.3)	%	$	120,382	NM	%
Interest expense, net		252	0.1	%		658	0.4	%		(406)	(61.7)	%
Earnings (loss) before income taxes	$	34,641	13.0	%	$	(86,147)	(53.7)	%	$	120,788	NM	%
Income tax provision (benefit)		6,173	2.3	%		(19,363)	(12.1)	%		25,536	NM	%
Net earnings (loss)	$	28,468	10.7	%	$	(66,784)	(41.7)	%	$	95,252	NM	%

Net Sales