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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 July 31, 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 August 27, 2021, there were 16,895,103 shares of the registrant’s common stock outstanding.

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OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the Second 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

17

Item 3. Quantitative and Qualitative Disclosures About Market Risk

43

Item 4. Controls and Procedures

43

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

43

Item 1A. Risk Factors

44

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

44

Item 3. Defaults Upon Senior Securities

44

Item 4. Mine Safety Disclosures

44

Item 5. Other Information

44

Item 6. Exhibits

45

SIGNATURES

46

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 coronavirus (COVID-19) pandemic on our business, operations and financial results, including due to uncertainties about scope and duration, future store closures or other restrictions (including reduced hours and capacity and/or operating requirements) due to government and health department mandates and/or recommendations, the effectiveness of store and restaurant re-openings (including impacts on consumer traffic) and supply chain disruptions, 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; supply chain disruptions, including the potential lack of inventory to support demand for our products, which may be impacted by capacity constraints, closed factories, and cost and availability of freight deliveries; 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; 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 ongoing exit of the Lanier Apparel business; cybersecurity breaches; 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 Fiscal 2020 Form 10-K, and those described from time to time in our future reports filed with the SEC. We caution that one should not place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

3

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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 ended 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

First Half Fiscal 2021

26 weeks ended July 31, 2021

First Half Fiscal 2020

26 weeks ended August 1, 2020

First Half Fiscal 2019

26 weeks ended August 3, 2019

4

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par amounts)

(unaudited)

    

July 31,

    

January 30,

    

August 1,

2021

2021

2020

ASSETS

Current Assets

Cash and cash equivalents

$

180,389

$

66,013

$

97,089

Receivables, net

 

48,522

 

30,418

 

28,133

Inventories, net

 

77,330

 

123,543

 

148,578

Income tax receivable

18,085

17,975

787

Prepaid expenses and other current assets

 

24,720

 

20,367

 

23,830

Total Current Assets

$

349,046

$

258,316

$

298,417

Property and equipment, net

 

157,380

 

159,732

 

180,284

Intangible assets, net

 

155,747

 

156,187

 

156,739

Goodwill

 

23,897

 

23,910

 

23,866

Operating lease assets

212,217

233,775

254,230

Other assets, net

 

33,462

 

33,714

 

39,013

Total Assets

$

931,749

$

865,634

$

952,549

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

  

 

  

 

  

Current Liabilities

 

  

 

  

 

  

Accounts payable

$

62,116

$

71,148

$

47,904

Accrued compensation

 

34,027

 

18,897

 

14,332

Current portion of operating lease liabilities

 

58,523

 

60,886

 

65,653

Accrued expenses and other liabilities

 

65,518

 

45,321

 

45,812

Total Current Liabilities

$

220,184

$

196,252

$

173,701

Long-term debt

 

 

 

65,000

Non-current portion of operating lease liabilities

 

215,434

 

239,963

 

255,935

Other non-current liabilities

 

21,389

 

23,691

 

18,471

Deferred income taxes

 

1,043

 

 

7,892

Shareholders’ Equity

 

 

 

Common stock, $1.00 par value per share

 

16,895

 

16,889

 

16,876

Additional paid-in capital

 

158,083

 

156,508

 

151,720

Retained earnings

 

302,456

 

235,995

 

267,273

Accumulated other comprehensive loss

 

(3,735)

 

(3,664)

 

(4,319)

Total Shareholders’ Equity

$

473,699

$

405,728

$

431,550

Total Liabilities and Shareholders’ Equity

$

931,749

$

865,634

$

952,549

See accompanying notes.

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Table of Contents

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

    

Second Quarter

    

First Half

Fiscal 2021

Fiscal 2020

Fiscal 2021

Fiscal 2020

Net sales

$

328,672

$

191,988

$

594,434

$

352,331

Cost of goods sold

 

119,046

 

87,251

 

218,223

 

153,520

Gross profit

$

209,626

$

104,737

$

376,211

$

198,811

SG&A

 

146,367

 

115,663

 

283,492

 

238,664

Impairment of goodwill and intangible assets

-

60,452

Royalties and other operating income

 

4,737

 

2,909

 

10,170

 

6,799

Operating income (loss)

$

67,996

$

(8,017)

$

102,889

$

(93,506)

Interest expense, net

 

211

 

676

 

463

 

1,334

Earnings (loss) before income taxes

$

67,785

$

(8,693)

$

102,426

$

(94,840)

Income tax provision (benefit)

 

16,325

 

(2,606)

 

22,498

 

(21,969)

Net earnings (loss)

$

51,460

$

(6,087)

$

79,928

$

(72,871)

Net earnings (loss) per share:

 

  

 

  

 

  

 

  

Basic

$

3.09

$

(0.37)

$

4.81

$

(4.40)

Diluted

$

3.05

$

(0.37)

$

4.75

$

(4.40)

Weighted average shares outstanding:

 

  

 

  

 

  

 

  

Basic

 

16,637

 

16,547

 

16,615

 

16,580

Diluted

 

16,859

 

16,547

 

16,825

 

16,580

Dividends declared per share

$

0.42

$

0.25

$

0.79

$

0.50

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

    

Second Quarter

    

First Half

Fiscal 2021

Fiscal 2020

Fiscal 2021

Fiscal 2020

Net earnings (loss)

$

51,460

$

(6,087)

$

79,928

$

(72,871)

Other comprehensive income (loss), net of taxes:

 

  

 

  

 

  

 

  

Net foreign currency translation adjustment

 

(462)

 

933

 

(71)

 

342

Comprehensive income (loss)

$

50,998

$

(5,154)

$

79,857

$

(72,529)

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

First Half

    

Fiscal 2021

    

Fiscal 2020

Cash Flows From Operating Activities:

 

  

 

  

 

Net earnings (loss)

$

79,928

$

(72,871)

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

 

  

 

  

Depreciation

 

18,935

 

23,092

Amortization of intangible assets

 

440

 

559

Impairment of goodwill and intangible assets

60,452

Equity compensation expense

 

3,901

 

3,566

Amortization of deferred financing costs

 

172

 

172

Deferred income taxes

 

2,231

 

(8,648)

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

 

  

 

  

Receivables, net

 

(16,617)

 

30,152

Inventories, net

 

46,083

 

3,986

Income tax receivable

(110)

75

Prepaid expenses and other current assets

 

(4,352)

 

1,584

Current liabilities

 

24,373

 

(3,609)

Other balance sheet changes

 

(5,999)

 

(14,186)

Cash provided by operating activities

$

148,985

$

24,324

Cash Flows From Investing Activities:

 

  

 

  

Purchases of property and equipment

 

(16,223)

 

(13,722)

Other investing activities

 

(2,000)

 

(3,000)

Cash used in investing activities

$

(18,223)

$

(16,722)

Cash Flows From Financing Activities:

 

  

 

  

Repayment of revolving credit arrangements

 

 

(170,312)

Proceeds from revolving credit arrangements

 

 

235,312

Repurchase of common stock

(18,053)

Proceeds from issuance of common stock

 

663

 

766

Repurchase of equity awards for employee tax withholding liabilities

 

(2,983)

 

(1,870)

Cash dividends paid

 

(13,353)

 

(8,429)

Other financing activities

 

(749)

 

(459)

Cash (used in) provided by financing activities

$

(16,422)

$

36,955

Net change in cash and cash equivalents

$

114,340

$

44,557

Effect of foreign currency translation on cash and cash equivalents

 

36

 

72

Cash and cash equivalents at the beginning of year

 

66,013

 

52,460

Cash and cash equivalents at the end of period

$

180,389

$

97,089

See accompanying notes.

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Table of Contents

OXFORD INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

SECOND 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 interim periods are not necessarily indicative of results to be expected for a full fiscal year due to the seasonality of our business.

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. Changes in our expectations and assumptions as compared to the information available at the time of this filing regarding the actual magnitude and duration of the COVID-19 pandemic, the 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 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. We began reopening our stores and restaurants in the Second Quarter of Fiscal 2020 in a phased approach in accordance with local government guidelines and with additional safety protocols. Some 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. 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.

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 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.

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Table of Contents

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 and Corporate and Other, 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.

    

Second Quarter

First Half

    

Fiscal 2021

    

Fiscal 2020

    

Fiscal 2021

    

Fiscal 2020

Net sales

 

  

 

  

 

  

 

  

 

Tommy Bahama

$

208,833

$

95,254

$

365,531

$

182,238

Lilly Pulitzer

 

87,333

 

73,860

 

160,909

 

123,009

Southern Tide

 

14,587

 

8,812

 

30,053

 

17,113

Lanier Apparel

 

8,492

 

8,450

 

20,511

 

19,175

Corporate and Other

 

9,427

 

5,612

 

17,430

 

10,796

Consolidated net sales

$

328,672

$

191,988

$

594,434

$

352,331

Depreciation and amortization

 

  

 

  

 

  

 

  

Tommy Bahama

$

6,866

$

9,194

$

13,906

$

16,994

Lilly Pulitzer

 

2,289

 

3,015

 

4,388

 

5,331

Southern Tide

 

198

 

169

 

385

 

313

Lanier Apparel

 

25

 

247

 

61

 

349

Corporate and Other

 

314

 

333

 

635

 

664

Consolidated depreciation and amortization

$

9,692

$

12,958

$

19,375

$

23,651

Operating income (loss)

 

  

 

  

 

  

 

  

Tommy Bahama

$

47,324

$

(12,712)

$

67,984

$

(36,074)

Lilly Pulitzer

25,783

 

16,264

 

45,728

 

20,410

Southern Tide

 

2,950

 

(979)

 

6,203

 

(64,345)

Lanier Apparel

 

850

 

(6,134)

 

1,705

 

(8,771)

Corporate and Other

 

(8,911)

 

(4,456)

 

(18,731)

 

(4,726)

Consolidated operating income (loss)

 

67,996

 

(8,017)

$

102,889

$

(93,506)

Interest expense, net

 

211

 

676

 

463

 

1,334

Earnings (loss) before income taxes

$

67,785

$

(8,693)

$

102,426

$

(94,840)

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Table of Contents

    

July 31, 2021

 

January 30, 2021

    

August 1, 2020

Assets

 

  

  

 

  

Tommy Bahama (1)

$

528,517

$

569,854

$

605,448

Lilly Pulitzer (2)

 

178,025

 

176,467

 

191,099

Southern Tide (3)

 

29,851

 

31,641

 

32,918

Lanier Apparel (4)

 

7,679

 

10,967

 

31,740

Corporate and Other (5)

 

187,677

 

76,705

 

91,344

Consolidated Total Assets

$

931,749

$

865,634

$

952,549

(1)Decrease in Tommy Bahama total assets from August 1, 2020 includes reductions in inventories, operating lease assets, and property and equipment partially offset by higher receivables.
(2)Decrease in Lilly Pulitzer total assets from August 1, 2020 includes reductions in inventories, operating lease assets and receivables partially offset by increased property and equipment.
(3)Decrease in Southern Tide total assets from August 1, 2020 includes reductions in inventories partially offset by higher receivables.
(4)Decrease in Lanier Apparel total assets from August 1, 2020 includes reductions in inventories, operating lease assets, other current assets and property and equipment partially offset by higher receivables.
(5)Increase in Corporate and Other total assets from August 1, 2020 includes increases in cash and cash equivalents and income tax receivable.

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.

Second Quarter Fiscal 2021

 

    

Net Sales

    

Retail

    

E-commerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

208,833

 

48

%  

27

%  

12

%  

13

%  

%

Lilly Pulitzer

 

87,333

 

38

%  

46

%  

%  

16

%  

%

Southern Tide

 

14,587

 

9

%  

30

%  

%  

61

%  

%

Lanier Apparel

 

8,492

 

%  

%  

%  

100

%  

%

Corporate and Other

 

9,427

 

%  

54

%  

%  

42

%  

4

%

Total

$

328,672

 

41

%  

32

%  

8

%  

19

%  

%

Second Quarter Fiscal 2020

 

    

Net Sales

    

Retail

    

E-commerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

95,254

 

33

%  

48

%  

9

%  

10

%  

%

Lilly Pulitzer

 

73,860

 

14

%  

71

%  

%  

15

%  

%

Southern Tide

 

8,812

 

5

%  

43

%  

%  

52

%  

%

Lanier Apparel

 

8,450

 

%  

1

%  

%  

99

%  

%

Corporate and Other

 

5,612

 

%  

78

%  

%  

16

%  

6

%

Total

$

191,988

 

22

%  

56

%  

4

%  

18

%  

%

First Half 2021

 

    

Net Sales

    

Retail

    

Ecommerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

365,531

 

45

%  

25

%  

14

%  

16

%  

%

Lilly Pulitzer

 

160,909

 

37

%  

44

%  

%  

19

%  

%

Southern Tide

 

30,053

 

6

%  

25

%  

%  

69

%  

%

Lanier Apparel

 

20,511

 

%  

%  

%  

100

%  

%

Corporate and Other

 

17,430

 

%  

55

%  

%  

40

%  

5

%

Consolidated net sales

$

594,434

 

38

%  

30

%  

9

%  

23

%  

%

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Table of Contents

    

First Half 2020

 

    

Net Sales

    

Retail

    

Ecommerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

182,238

 

35

%  

39

%  

11

%  

15

%  

%

Lilly Pulitzer

 

123,009

 

18

%  

62

%  

%  

20

%  

%

Southern Tide

 

17,113

 

3

%  

32

%  

%  

65

%  

%

Lanier Apparel

 

19,175

 

%  

%  

%  

100

%  

%

Corporate and Other

 

10,796

 

%  

70

%  

%  

24

%  

6

%

Consolidated net sales

$

352,331

 

25

%  

45

%  

6

%  

24

%  

%

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.

The table below quantifies net sales by distribution channel (in thousands) for each period presented.

    

Second Quarter

    

First Half

    

Fiscal 2021

    

Fiscal 2020

    

Fiscal 2021

    

Fiscal 2020

Retail

$

135,634

$

41,783

$

226,914

$

87,286

E-commerce

 

104,753

 

106,789

 

178,991

 

160,483

Restaurant

 

25,828

 

8,528

 

51,036

 

20,291

Wholesale

 

62,022

 

34,489

 

136,475

 

83,547

Other

 

435

 

399

 

1,018

 

724

Net sales

$

328,672

$

191,988

$

594,434

$

352,331

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 July 31, 2021, January 30, 2021 and August 1, 2020, reserve balances recorded as a reduction to receivables related to these items were $5 million, $6 million and $9 million, respectively.

As of July 31, 2021, January 30, 2021 and August 1, 2020, our provision for credit losses related to receivables included in our consolidated balance sheets was $2 million, $3 million and $4 million, respectively. In the First Half 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 Half of Fiscal 2020, provisions for credit losses expense included in our consolidated statement of operations was $4 million, with approximately half that amount in the Second Quarter of Fiscal 2020, 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 $2 million, $2 million and $2 million are included in receivables, net in our consolidated balance sheet as of July 31, 2021, January 30, 2021 and August 1, 2020, respectively. As of July 31, 2021, January 30, 2021 and August 1, 2020, prepaid expenses and other current assets included $5 million, $4 million and $6 million, respectively, representing the estimated value of inventory for expected direct to consumer and wholesale sales returns.

An estimated sales return liability of $14 million, $7 million and $12 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of July 31, 2021, January 30, 2021 and August 1, 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 July 31, 2021, January 30, 2021, and August 1, 2020, respectively.

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Table of Contents

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 Half of Fiscal 2021 operating lease expense, which includes amounts used in determining the operating lease liability and operating lease asset, was $30 million and variable lease expense was $17 million, resulting in total lease expense of $47 million compared to $48 million of total lease expense in the First Half of Fiscal 2020. Cash paid for lease amounts included in the measurement of operating lease liabilities in the First Half of Fiscal 2021 was $35 million, while cash paid for lease amounts included in the measurement of operating lease liabilities in the First Half of Fiscal 2020 was $21 million, as certain 2020 rent amounts were pending resolution of appropriate concessions.

As of July 31, 2021, the stated lease liability payments for the fiscal years specified below were as follows (in thousands):

    

Operating lease

Remainder of 2021

$

33,660

2022

65,341

2023

58,818

2024

 

46,922

2025

 

33,717

2026

26,879

After 2026

 

41,488

Total lease payments

$

306,825

Less: Difference between discounted and undiscounted lease payments

 

32,868

Present value of lease liabilities

$

273,957

5.    Income Taxes: Our effective income tax rate for the Second Quarter of Fiscal 2021 was an expense of 24.1% while our effective income tax rate for the Second Quarter of Fiscal 2020 was a benefit of 30.0%. Our effective income tax rate for the First Half of Fiscal 2021 was an expense of 22.0% while our effective income tax rate for the First Half of Fiscal 2020 was a benefit of 23.2%.

The income tax expense in the First Half 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 in the First Quarter of Fiscal 2021 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 2018 and Fiscal 2019, respectively.

The income tax benefit in the First Half 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 goodwill 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.

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After recognizing a $2 million net reduction in uncertain tax positions during the First Half of Fiscal 2021, the unrecognized tax benefits of uncertain tax positions as of July 31, 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 next twelve months. However, changes in the expected occurrence, outcomes and timing of such events could cause our current estimate to change in the future.

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)

Dividends declared

 

 

 

(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

 

 

 

 

 

Dividends declared

 

 

 

(4,235)