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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 29, 2022

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 2, 2022, there were 15,768,530 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 2022

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

19

Item 3. Quantitative and Qualitative Disclosures About Market Risk

48

Item 4. Controls and Procedures

48

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

48

Item 1A. Risk Factors

49

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

50

Item 3. Defaults Upon Senior Securities

51

Item 4. Mine Safety Disclosures

51

Item 5. Other Information

51

Item 6. Exhibits

51

SIGNATURES

52

2

Table of Contents

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, 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 and pricing levels for apparel and related products, many of which may be impacted by current inflationary pressures, rising interest rates or general economic uncertainty; acquisition activities (such as our recent acquisition of Johnny Was), including our ability to integrate key functions, recognize anticipated synergies and minimize related disruptions or distractions to our business as a result of these activities; the impact of the coronavirus (COVID-19) pandemic on our business, operations and financial results; supply chain disruptions; costs and availability of labor and freight deliveries; costs of products as well as the raw materials used in those products; energy costs; our ability to be more hyper-digital and respond to rapidly changing consumer expectations; 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 staffing shortages, liquidity challenges and/or bankruptcy filings; retention of and disciplined execution by key management and other critical personnel; cybersecurity breaches and ransomware attacks, as well as our and our third party vendors’ ability to properly collect, use, manage and secure business, consumer and employee data; changes in international, federal or state tax, trade and other laws and regulations, including the potential imposition of additional duties; the timing of shipments requested by our wholesale customers; weather; fluctuations and volatility in global financial and/or real estate markets; the timing and cost of retail store and food and beverage location openings and remodels, technology implementations and other capital expenditures; store closures or other operating restrictions due to COVID-19, natural disaster or otherwise; expected outcomes of pending or potential litigation and regulatory actions; the increased consumer, employee and regulatory focus on climate change and environmental, social and governance issues; the regulation or prohibition of goods sourced, or containing raw materials or components, from certain regions and our ability to evidence compliance; access to capital and/or credit markets; factors that could affect our consolidated effective tax rate; the risk of impairment to goodwill and other intangible assets; and geopolitical risks, including those related to the war between Russia and Ukraine. 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 2021 Form 10-K, 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; and “Fiscal 2021 Form 10-K” means our Annual Report on Form 10-K for Fiscal 2021. Additionally, the terms listed below reflect the respective period noted:

Fiscal 2023

53 weeks ending February 3, 2024

Fiscal 2022

52 weeks ending January 28, 2023

Fiscal 2021

52 weeks ended January 29, 2022

Fiscal 2020

52 weeks ended January 30, 2021

Fourth Quarter Fiscal 2022

13 weeks ending January 28, 2023

Third Quarter Fiscal 2022

13 weeks ended October 29, 2022

Second Quarter Fiscal 2022

13 weeks ended July 30, 2022

First Quarter Fiscal 2022

13 weeks ended April 30, 2022

Fourth Quarter Fiscal 2021

13 weeks ended January 29, 2022

Third Quarter Fiscal 2021

13 weeks ended October 30, 2021

Second Quarter Fiscal 2021

13 weeks ended July 31, 2021

First Quarter Fiscal 2021

13 weeks ended May 1, 2021

First Half Fiscal 2022

26 weeks ended July 30, 2022

First Half Fiscal 2021

26 weeks ended July 31, 2021

Second Half Fiscal 2022

26 weeks ending January 28, 2023

Second Half Fiscal 2021

26 weeks ended January 29, 2022

First Nine Months Fiscal 2022

39 weeks ended October 29, 2022

First Nine Months Fiscal 2021

39 weeks ended October 30, 2021

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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 29,

    

January 29,

    

October 30,

2022

2022

2021

ASSETS

Current Assets

Cash and cash equivalents

$

14,976

$

44,859

$

37,976

Short-term investments

164,890

150,036

Receivables, net

 

64,497

 

34,550

 

46,266

Inventories, net

 

171,639

 

117,709

 

90,981

Income tax receivable

19,740

19,728

18,085

Prepaid expenses and other current assets

 

28,643

 

18,599

 

23,609

Total Current Assets

$

299,495

$

400,335

$

366,953

Property and equipment, net

 

173,391

 

152,447

 

156,672

Intangible assets, net

 

287,626

 

155,307

 

155,527

Goodwill

 

116,268

 

23,869

 

23,909

Operating lease assets

237,078

195,100

200,508

Other assets, net

 

26,459

 

30,584

 

29,234

Total Assets

$

1,140,317

$

957,642

$

932,803

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

  

 

  

 

  

Current Liabilities

 

  

 

  

 

  

Accounts payable

$

72,932

$

80,753

$

64,709

Accrued compensation

 

36,150

 

30,345

 

32,744

Current portion of operating lease liabilities

 

62,349

 

61,272

 

58,287

Accrued expenses and other liabilities

 

58,964

 

53,796

 

51,432

Total Current Liabilities

$

230,395

$

226,166

$

207,172

Long-term debt

 

130,449

 

 

Non-current portion of operating lease liabilities

 

225,921

 

199,488

 

206,484

Other non-current liabilities

 

18,058

 

21,413

 

21,779

Deferred income taxes

 

2,455

 

2,911

 

1,899

Shareholders’ Equity

 

 

 

Common stock, $1.00 par value per share

 

15,815

 

16,805

 

16,891

Additional paid-in capital

 

169,063

 

163,156

 

160,421

Retained earnings

 

351,731

 

331,175

 

321,238

Accumulated other comprehensive loss

 

(3,570)

 

(3,472)

 

(3,081)

Total Shareholders’ Equity

$

533,039

$

507,664

$

495,469

Total Liabilities and Shareholders’ Equity

$

1,140,317

$

957,642

$

932,803

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 2022

Fiscal 2021

Fiscal 2022

Fiscal 2021

Net sales

$

313,033

$

247,729

$

1,029,044

$

842,163

Cost of goods sold

 

115,339

 

95,191

 

372,824

 

313,414

Gross profit

$

197,694

$

152,538

$

656,220

$

528,749

SG&A

 

175,027

 

137,505

 

495,574

 

420,997

Royalties and other operating income

 

4,648

 

15,574

 

18,018

 

25,744

Operating income

$

27,315

$

30,607

$

178,664

$

133,496

Interest expense, net

 

698

 

222

 

1,214

 

685

Earnings before income taxes

$

26,617

$

30,385

$

177,450

$

132,811

Income tax expense

 

6,951

 

4,400

 

43,764

 

26,898

Net earnings

$

19,666

$

25,985

$

133,686

$

105,913

Net earnings per share:

 

  

 

  

 

  

 

  

Basic

$

1.25

$

1.56

$

8.36

$

6.37

Diluted

$

1.22

$

1.54

$

8.19

$

6.29

Weighted average shares outstanding:

 

  

 

  

 

  

 

Basic

 

15,740

 

16,649

 

15,992

 

16,627

Diluted

 

16,139

 

16,872

 

16,333

 

16,841

Dividends declared per share

$

0.55

$

0.42

$

1.65

$

1.21

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 2022

Fiscal 2021

Fiscal 2022

Fiscal 2021

Net earnings

$

19,666

$

25,985

$

133,686

$

105,913

Other comprehensive income (loss), net of taxes:

 

  

 

  

 

  

 

  

Net foreign currency translation adjustment

 

(450)

 

654

 

(98)

 

583

Comprehensive income

$

19,216

$

26,639

$

133,588

$

106,496

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

First Nine Months

    

Fiscal 2022

    

Fiscal 2021

Cash Flows From Operating Activities:

 

  

 

  

 

Net earnings

$

133,686

$

105,913

Adjustments to reconcile net earnings to cash flows from operating activities:

 

  

 

  

Depreciation

 

31,126

 

28,592

Amortization of intangible assets

 

2,322

 

660

Equity compensation expense

 

7,796

 

5,854

Gain on sale of investment in unconsolidated entity

(11,586)

Amortization of deferred financing costs

 

258

 

258

Change in fair value of contingent consideration

 

 

786

Deferred income taxes

 

(456)

 

3,115

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

 

  

 

Receivables, net

 

(21,230)

 

(14,341)

Inventories, net

 

(31,332)

 

32,544

Income tax receivable

(12)

(109)

Prepaid expenses and other current assets

 

(5,644)

 

(3,238)

Current liabilities

 

(23,271)

 

10,361

Other balance sheet changes

 

(6,988)

 

(1,724)

Cash provided by operating activities

$

86,255

$

157,085

Cash Flows From Investing Activities:

 

  

 

  

Acquisitions, net of cash acquired

 

(263,656)

 

Purchases of property and equipment

 

(32,331)

 

(25,132)

Purchases of short-term investments

(70,000)

(150,000)

Proceeds from short-term investments

234,837

Proceeds from sale of investment in unconsolidated entity

14,586

Other investing activities

 

1,450

 

(2,000)

Cash used in investing activities

$

(129,700)

$

(162,546)

Cash Flows From Financing Activities:

 

  

 

  

Repayment of revolving credit arrangements

 

(45,262)

 

Proceeds from revolving credit arrangements

 

175,711

 

Repurchase of common stock

(86,804)

Proceeds from issuance of common stock

 

1,263

 

1,044

Repurchase of equity awards for employee tax withholding liabilities

 

(3,166)

 

(2,983)

Cash dividends paid

 

(26,572)

 

(20,447)

Other financing activities

 

(2,010)

 

(749)

Cash provided by (used in) financing activities

$

13,160

$

(23,135)

Net change in cash and cash equivalents

$

(30,285)

$

(28,596)

Effect of foreign currency translation on cash and cash equivalents

 

402

 

559

Cash and cash equivalents at the beginning of year

 

44,859

 

66,013

Cash and cash equivalents at the end of period

$

14,976

$

37,976

See accompanying notes.

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OXFORD INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

THIRD QUARTER OF FISCAL 2022

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, as well as the acquisition of Johnny Was during the Third Quarter of Fiscal 2022.

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.

The significant accounting policies applied during the interim periods presented are consistent with the significant accounting policies described in our Fiscal 2021 Form 10-K. No recently issued guidance adopted in Fiscal 2022 had a material impact on our consolidated financial statements upon adoption or is expected to have a material impact in future periods.

On September 19, 2022, we acquired the Johnny Was® lifestyle apparel brand and its related assets and operations, which is discussed in further detail in Note 7 of these unaudited condensed consolidated financial statements. Also, in Fiscal 2021, we exited our Lanier Apparel business, as discussed in Note 11 of our consolidated financial statements of our Fiscal 2021 Form 10-K. Johnny Was in Fiscal 2022 and Lanier Apparel in Fiscal 2021 are each disclosed as separate operating groups in Note 2 of these unaudited condensed consolidated financial statements.

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.

Recent Macroeconomic Conditions

The COVID-19 pandemic has had a significant effect on overall economic conditions and our operations in recent years. In Fiscal 2021, the economic environment improved significantly with a rebound in retail traffic starting in March 2021 and other improvements as the year progressed, although certain stores were closed for portions of Fiscal 2021, particularly in the First Quarter of Fiscal 2021. This exceptionally strong consumer demand, along with the strength of our brands, resulted in record earnings for us during Fiscal 2021 and the First Nine Months of Fiscal 2022. The strong earnings in recent periods are despite certain challenges in the retail apparel market, including labor shortages, supply chain disruptions and product and operating cost increases in Fiscal 2021 and Fiscal 2022. We, as well as others in our industry, have increased prices to attempt to offset inflationary pressures.

There can be no assurance that the strong consumer demand of Fiscal 2021 and Fiscal 2022 will continue for our business or the broader retail apparel market. There remains significant uncertainty in the macroeconomic environment as to the impact of changing consumer discretionary spending habits, recent supply chain and other business disruptions, ongoing operating cost increases and other inflationary pressures, rising interest rates, the duration and severity of the pandemic and general economic conditions. Thus, the ultimate impact of these items on our business remains uncertain at this time.

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Table of Contents

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. With our acquisition of Johnny Was on September 19, 2022, our business is organized as our Tommy Bahama, Lilly Pulitzer, Johnny Was and Emerging Brands operating groups. Results for periods prior to Fiscal 2022 also include the Lanier Apparel operating group, which we exited in Fiscal 2021.

Tommy Bahama, Lilly Pulitzer and Johnny Was each design, source, market and distribute apparel and related products bearing their respective trademarks and may license their trademarks for other product categories. The Emerging Brands operating group, which was organized in Fiscal 2022, consists of the operations of our smaller, earlier stage Southern Tide, TBBC and Duck Head brands. In prior years, Southern Tide was reported as a separate operating group, while both TBBC and Duck Head were included in Corporate and Other. All prior year amounts have been restated to conform to the current year presentation.

Each of the smaller brands included in Emerging Brands designs, sources, markets and distributes apparel and related products bearing its respective trademarks and is supported by Oxford’s emerging brands team that provides certain support functions to the smaller brands, including marketing and advertising execution, customer relationship management and analysis and other functions. The shared resources provide for operating efficiencies and enhanced knowledge sharing across our smaller brands.

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, any other items that are not allocated to the operating groups, including LIFO inventory accounting adjustments, and the operations of our Lyons, Georgia distribution center and our Oxford America business, which we exited in Fiscal 2022.

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Table of Contents

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

    

Third Quarter

First Nine Months

    

Fiscal 2022

    

Fiscal 2021

    

Fiscal 2022

    

Fiscal 2021

Net sales

 

 

  

 

  

 

  

 

Tommy Bahama

$

178,645

$

148,454

$

650,677

$

513,985

Lilly Pulitzer

 

84,053

 

72,157

 

264,763

 

233,066

Johnny Was (1)

22,661

22,661

Emerging Brands

 

26,912

 

22,082

 

88,588

 

67,336

Lanier Apparel

 

 

4,232

 

 

24,743

Corporate and Other

 

762

 

804

 

2,355

 

3,033

Consolidated net sales

$

313,033

$

247,729

$

1,029,044

$

842,163

Depreciation and amortization

 

  

 

  

 

  

 

  

Tommy Bahama

$

6,576

$

6,895

$

20,110

$

20,801

Lilly Pulitzer

 

3,288

 

2,445

 

9,384

 

6,833

Johnny Was (1)

2,184

2,184

Emerging Brands

 

391

 

324

 

1,143

 

955

Lanier Apparel

 

 

27

 

 

88

Corporate and Other

 

197

 

186

 

627

 

575

Consolidated depreciation and amortization

$

12,636

$

9,877

$

33,448

$

29,252

Operating income (loss)

 

  

 

  

 

  

 

  

Tommy Bahama

$

18,984

$

5,531

$

130,508

$

73,515

Lilly Pulitzer

12,688

 

15,985

 

60,358

 

61,713

Johnny Was (1)

117

117

Emerging Brands

 

3,729

 

4,103

 

15,456

 

13,565

Lanier Apparel

 

 

348

 

 

2,053

Corporate and Other

 

(8,203)

 

4,640

 

(27,775)

 

(17,350)

Consolidated operating income

 

27,315

 

30,607

$

178,664

$

133,496

Interest expense, net

 

698

 

222

 

1,214

 

685

Earnings before income taxes

$

26,617

$

30,385

$

177,450

$

132,811

    

October 29, 2022

 

January 29, 2022

    

October 30, 2021

Assets

 

  

  

 

  

Tommy Bahama (2)

$

544,947

$

531,678

$

531,534

Lilly Pulitzer (3)

 

192,609

 

176,757

 

173,104

Johnny Was (4)

350,212

Emerging Brands (5)

 

83,280

 

66,825

 

54,532

Lanier Apparel (6)

 

 

207

 

3,261

Corporate and Other (7)

 

(30,731)

 

182,175

 

170,372

Consolidated Total Assets

$

1,140,317

$

957,642

$

932,803

(1)Amount included for Johnny Was represents the post-acquisition period only.
(2)Increase in Tommy Bahama total assets from October 30, 2021 includes increases in inventories and receivables partially offset by reductions in non-current assets, including operating lease assets and property and equipment.
(3)Increase in Lilly Pulitzer total assets from October 30, 2021 includes increases in inventories and property and equipment partially offset by reductions in operating lease assets.
(4)The Johnny Was business was acquired on September 19, 2022.
(5)Increase in Emerging Brands total assets from October 30, 2021 includes increases in inventories and non-current assets, including operating lease assets and property and equipment.
(6)Decrease in Lanier Apparel total assets from October 30, 2021 is due to the exit of the Lanier Apparel business during Fiscal 2021.

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(7)Decrease in Corporate and Other total assets from October 30, 2021 includes reductions in short-term investments, cash and cash equivalents, which were used to fund a portion of the acquisition purchase price for Johnny Was, and reductions in inventories, which was primarily due to the change in the LIFO reserve, and reductions in other non-current assets.

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 quarter or nine month period presented, except that the amounts included for Johnny Was represent the post-acquisition period only. We have calculated all percentages below based on actual data, and percentages may not add to 100 due to rounding.

Third Quarter Fiscal 2022

 

    

Net Sales

    

Retail

    

E-commerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

178,645

 

44

%  

20

%  

13

%  

23

%  

%

Lilly Pulitzer

 

84,053

 

27

%  

62

%  

%  

11

%  

%

Johnny Was (1)

22,661

38

%

41

%

%

21

%

%

Emerging Brands

 

26,912

 

5

%  

40

%  

%  

55

%  

%

Lanier Apparel

 

 

%  

%  

%  

%  

%

Corporate and Other

 

762

 

%  

%  

%  

47

%  

53

%

Total

$

313,033

 

36

%  

34

%  

7

%  

22

%  

%

Third Quarter Fiscal 2021

 

    

Net Sales

    

Retail

    

E-commerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

148,454

 

47

%  

22

%  

13

%  

18

%  

%

Lilly Pulitzer

 

72,157

 

31

%  

58

%  

%  

11

%  

%

Johnny Was

%

%

%

%

Emerging Brands

 

22,082

 

4

%  

34

%  

%  

62

%  

%

Lanier Apparel

 

4,232

 

%  

%  

%  

100

%  

%

Corporate and Other

 

804

 

%  

%  

%  

67

%  

33

%

Total

$

247,729

 

37

%  

33

%  

8

%  

21

%  

%

First Nine Months 2022

 

    

Net Sales

    

Retail

    

Ecommerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

650,677

 

46

%  

23

%  

12

%  

19

%  

%

Lilly Pulitzer

 

264,763

 

34

%  

49

%  

%  

17

%  

%

Johnny Was (1)

22,661

38

%  

41

%  

%  

21

%  

%  

Emerging Brands

 

88,588

 

5

%  

39

%  

%  

56

%  

%

Lanier Apparel

 

 

%  

%  

%  

%  

%

Corporate and Other

 

2,355

 

%  

%  

%  

50

%  

50

%

Consolidated net sales

$

1,029,044

 

39

%  

31

%  

8

%  

21

%  

%

    

First Nine Months 2021

 

    

Net Sales

    

Retail

    

Ecommerce

    

Restaurant

    

Wholesale

    

Other

 

Tommy Bahama

$

513,985

 

46

%  

24

%  

14

%  

16

%  

%

Lilly Pulitzer

 

233,066

 

35

%  

48

%  

%  

17

%  

%

Johnny Was

%  

%  

%  

%  

%  

Emerging Brands

 

67,336

 

4

%  

37

%  

%  

59

%  

%

Lanier Apparel

 

24,743

 

%  

%  

%  

100

%  

%

Corporate and Other

 

3,033

 

%  

%  

%  

65

%  

35

%

Consolidated net sales

$

842,163

 

38

%  

31

%  

8

%  

22

%  

%

(1)Amount included for Johnny Was represents the period from September 19, 2022 through October 29, 2022 only.

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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 operating 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 is described in the significant accounting policies described in our Fiscal 2021 Form 10-K.

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

    

Third Quarter

    

First Nine Months

    

Fiscal 2022

    

Fiscal 2021

    

Fiscal 2022

    

Fiscal 2021

Retail

$

112,344

$

92,579

$

402,400

$

319,493

E-commerce

 

107,756

 

82,402

 

323,045

 

261,393

Restaurant

 

23,157

 

19,748

 

81,333

 

70,784

Wholesale

 

69,292

 

52,658

 

220,707

 

189,133

Other

 

484

 

342

 

1,559

 

1,360

Net sales

$

313,033

$

247,729

$

1,029,044

$

842,163

An estimated sales return liability of $9 million, $11 million and $7 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of October 29, 2022, January 29, 2022 and October 30, 2021, respectively. As of October 29, 2022, January 29, 2022 and October 30, 2021, prepaid expenses and other current assets included $4 million, $4 million and $3 million, respectively, representing the estimated value of inventory for expected direct to consumer and wholesale sales returns.

Substantially all amounts recognized in receivables, net represent trade receivables related to contracts with customers. In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to and accept returns from certain of our wholesale customers for certain products. As of October 29, 2022, January 29, 2022 and October 30, 2021, reserve balances recorded as a reduction to receivables related to these items were $5 million, $3 million and $5 million, respectively. As of October 29, 2022, January 29, 2022 and October 30, 2021, our provision for credit losses related to receivables included in our consolidated balance sheets was $1 million, $1 million and $2 million, respectively. In both the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021, provisions for credit losses expense included in our consolidated statement of operations and the write-offs of credit losses were less than $1 million.

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 $17 million, $16 million and $14 million as of October 29, 2022, January 29, 2022, and October 30, 2021, 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 the First Nine Months of Fiscal 2022 operating lease expense, which includes amounts used in determining the operating lease liability and operating lease asset, was $43 million and variable lease expense was $31 million, resulting in total lease expense of $75 million compared to $70 million of total lease expense in the First Nine Months of Fiscal 2021. Cash paid for lease amounts included in the measurement of operating lease liabilities in the

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First Nine Months of Fiscal 2022 was $53 million, while cash paid for lease amounts included in the measurement of operating lease liabilities in the First Nine Months of Fiscal 2021 was $53 million.

As of October 29, 2022, the stated lease liability payments for the fiscal years specified below were as follows (in thousands):

    

Operating lease

Remainder of 2022

$

15,300

2023

79,865

2024

63,653

2025

 

47,707

2026

 

40,493

2027

27,146

After 2027

 

52,525

Total lease payments

$

326,689

Less: Difference between discounted and undiscounted lease payments

 

38,419

Present value of lease liabilities

$

288,270

5.    Income Taxes: Our effective income tax rate for the Third Quarter of Fiscal 2022 was 26.1% while our effective income tax rate for the Third Quarter of Fiscal 2021 was 14.5%. Our effective income tax rate for the First Nine Months of Fiscal 2022 was 24.7% while our effective income tax rate for the First Nine Months of Fiscal 2021 was 20.3%. The effective tax rate for both the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021 benefitted from certain favorable items that resulted in a lower tax rate than a more typical annual effective tax rate of approximately 25% to 26%.

The income tax expense in both the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021 included the benefit of the utilization of certain net operating loss carryforward amounts in certain state and foreign jurisdictions, the recognition of certain tax credit amounts and the vesting of restricted stock awards at a price higher than the grant date fair value. These favorable items were partially offset by certain unfavorable permanent items which are not deductible for income tax purposes. Additionally, and more significantly, the income tax expense in the First Nine Months of Fiscal 2021 included 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 and the utilization of benefits associated with certain capital losses to substantially offset the gain recognized on the sale of an unconsolidated entity in the Third Quarter of Fiscal 2021.

6.    Shareholders’ Equity: In the First Nine Months of Fiscal 2022, we repurchased 976,000 shares of our common stock for $87 million under our $100 million open market stock repurchase program after repurchasing 91,000 shares for $8 million in the Fourth Quarter of Fiscal 2021. These repurchases resulted in $5 million remaining under the existing open market repurchase program and $55 million remaining under our existing Board of Directors’ authorization as of October 29, 2022. Additionally, subsequent to October 29, 2022, we repurchased an additional 47,000 shares of our common stock for $5 million under the open market repurchase program resulting in no amounts remaining under the open market repurchase program as of December 8, 2022.

During both the First Quarter of Fiscal 2022 and the First Quarter of Fiscal 2021, we repurchased $3 million of shares from our employees to cover employee tax liabilities related to the vesting of shares of our common stock.

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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 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