SECURITIES AND EXCHANGE COMMISSION
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On August 31, 2023, Oxford Industries, Inc. issued a press release announcing, among other things, its financial results for the fiscal 2023 second quarter ended July 29, 2023. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
As provided in General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
|99.1||Press Release of Oxford Industries, Inc., dated August 31, 2023|
|104||Cover Page Interactive Data File (embedded within the Inline XBRL document)|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Oxford Industries, Inc.|
|Date: August 31, 2023||By:||/s/ Suraj A. Palakshappa|
|Suraj A. Palakshappa|
|Senior Vice President|
Oxford: Owner of Tommy Bahama, Lilly Pulitzer and Johnny Was Reports Second-Quarter Results
ATLANTA, Aug. 31, 2023 (GLOBE NEWSWIRE) -- Oxford Industries, Inc. (NYSE:OXM) today announced financial results for its fiscal 2023 second quarter ended July 29, 2023.
Consolidated net sales in the second quarter of fiscal 2023 increased 16% to $420 million compared to $363 million in the second quarter of fiscal 2022. EPS on a GAAP basis was $3.22 compared to $3.49 in the second quarter of fiscal 2022. On an adjusted basis, EPS was $3.45 compared to $3.61 in the second quarter of fiscal 2022.
In the first half of fiscal 2023, net sales grew 17% year-over-year to $840 million. EPS was $6.86 on a GAAP basis compared to $6.94 last year and $7.23 on an adjusted basis compared to $7.11 last year.
Tom Chubb, Chairman and CEO, commented, “We are pleased to have delivered second quarter results that are up significantly on a multi-year basis and within our forecasted range given the choppy operating environment. Our solid top-line performance was achieved through winning execution within our six brands, each of which saw sales growth this quarter driven by strong emotional connections to consumers, inspiring brand voices, and balanced omnichannel distribution delivering exceptional products to our customers. While these factors remain strong across our business, we have recently seen consumers become a bit more cautious with their discretionary spending due to challenging macroeconomic conditions. We are also feeling the impacts of wildfires on Maui due to Oxford’s significant presence on the island. In consideration of these factors, we are moderating our outlook for the second half of the year.
“Despite some near-term pressures, we are confident that our business model will drive profitable growth and long-term shareholder value well into the future.”
Mr. Chubb concluded, “I am proud of, and grateful for, the generosity of our associates across the enterprise who have pitched in in so many ways to help the people of Maui recover from this disaster. This generosity and the resilience of our people in Maui and Hawaii are among the characteristics that make Oxford such a great company.”
Second Quarter of Fiscal 2023 versus Fiscal 2022
|Net Sales by Operating Group||Second Quarter|
|($ in millions)||2023||2022||% Change|
|Johnny Was (acquired 9/19/2022)||52.0||0.0||nm|
Balance Sheet and Liquidity
Inventory increased $26 million on a LIFO basis and $28 million, or 14%, on a FIFO basis compared to the end of the second quarter of fiscal 2022. The inventory increase reflects: (i) $18 million of Johnny Was inventory, (ii) anticipated sales increases in fiscal 2023, (iii) higher levels of core product and (iv) higher product costs.
During the first half of fiscal 2023 cash flow from operations was $153 million compared to $91 million in the first half of fiscal 2022. The cash flow from operations in the first half of fiscal 2023 provided sufficient cash to fund $31 million of capital expenditures, $21 million of dividends, $19 million of share repurchases and $71 million to repay outstanding debt.
As of July 29, 2023, the Company had $48 million of borrowings outstanding under its revolving credit agreement, compared to no borrowings at the end of the second quarter of last year. Also, the Company had $8 million of cash and cash equivalents versus $186 million of cash, cash equivalents and short-term investments at the end of the second quarter of fiscal 2022. Both changes were due to the acquisition of Johnny Was.
Dividend and Share Repurchase
The Board of Directors declared a quarterly cash dividend of $0.65 per share. The dividend is payable on October 27, 2023 to shareholders of record as of the close of business on October 13, 2023. The Company has paid dividends every quarter since it became publicly owned in 1960.
In early August, the Company completed a $20 million share repurchase program that commenced in the second quarter of fiscal 2023. The Company repurchased approximately 196,000 shares, or approximately 1% of total shares outstanding, for an average price of $102 per share.
For fiscal 2023 ending on February 3, 2024, the Company moderated its sales and EPS guidance. The Company now expects net sales in a range of $1.570 billion to $1.600 billion as compared to net sales of $1.41 billion in fiscal 2022. In fiscal 2023, GAAP EPS is expected to be between $9.61 and $9.91 compared to fiscal 2022 GAAP EPS of $10.19. Adjusted EPS is expected to be between $10.30 and $10.60, compared to fiscal 2022 adjusted EPS of $10.88.
For the third quarter of fiscal 2023, the Company expects net sales to be between $320 million and $335 million compared to net sales of $313 million in the third quarter of fiscal 2022. GAAP EPS is expected to be in a range of $0.74 to $0.94 in the third quarter compared to GAAP EPS of $1.22 in the third quarter of fiscal 2022. Adjusted EPS is expected to be between $0.90 and $1.10 compared to adjusted EPS of $1.46 in the third quarter of fiscal 2022.
In addition to a more cautious macroeconomic environment, updated guidance reflects a negative impact from the wildfires in Maui, where Oxford has six brick-and-mortar locations, two of which are food and beverage locations. Updated sales guidance is impacted by approximately $7 million for the second half of fiscal 2023, while EPS is impacted by roughly $0.20. Both of these changes are expected to be evenly split between the third and fourth quarters.
The Company anticipates interest expense of $5 million in fiscal 2023, including the $4 million in the first half of fiscal 2023 as strong cash flows allow for continued reduction of debt during fiscal 2023. The Company’s effective tax rate is expected to be approximately 24% for the full year of fiscal 2023.
Capital expenditures in fiscal 2023, including the $31 million in the first half of fiscal 2023, are expected to be approximately $90 million compared to $47 million in fiscal 2022. The planned increase is primarily due to increased investment in new brick and mortar retail store and food and beverage locations as well as certain relocations and remodels of existing locations, various technology systems initiatives, and the anticipated initial spend associated with a multi-year Southeastern United States fulfillment center enhancement project to ensure best-in-class direct-to-consumer throughput capabilities for the Company’s brands.
The Company will hold a conference call with senior management to discuss its financial results at 4:30 p.m. ET today. A live web cast of the conference call will be available on the Company’s website at www.oxfordinc.com. A replay of the call will be available through September 14, 2023 by dialing (412) 317-6671 access code 13740752.
Oxford Industries, Inc., a leader in the apparel industry, owns and markets the distinctive Tommy Bahama®, Lilly Pulitzer®, Johnny Was®, Southern Tide®, The Beaufort Bonnet Company® and Duck Head® lifestyle brands. Oxford's stock has traded on the New York Stock Exchange since 1964 under the symbol OXM. For more information, please visit Oxford's website at www.oxfordinc.com.
Basis of Presentation
All per share information is presented on a diluted basis.
Non-GAAP Financial Information
The Company reports its consolidated financial statements in accordance with generally accepted accounting principles (GAAP). To supplement these consolidated financial results, management believes that a presentation and discussion of certain financial measures on an adjusted basis, which exclude certain non-operating or discrete gains, charges or other items, may provide a more meaningful basis on which investors may compare the Company’s ongoing results of operations between periods. These measures include adjusted earnings, adjusted earnings per share, adjusted gross profit, adjusted gross margin, adjusted SG&A, and adjusted operating income, among others.
Management uses these non-GAAP financial measures in making financial, operational, and planning decisions to evaluate the Company’s ongoing performance. Management also uses these adjusted financial measures to discuss its business with investment and other financial institutions, its board of directors and others. Reconciliations of these adjusted measures to the most directly comparable financial measures calculated in accordance with GAAP are presented in tables included at the end of this release.
This press release includes statements that constitute forward-looking statements within the meaning of the federal securities laws. 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, concerns about the stability of the banking industry or general economic uncertainty; acquisition activities (such as the 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; supply chain disruptions; costs and availability of labor and freight deliveries, including our ability to appropriately staff our retail stores and food and beverage locations; costs of products as well as the raw materials used in those products, as well as our ability to pass along price increases to consumers; energy costs; our ability to respond to rapidly changing consumer expectations; weather or natural disasters, including the ultimate impact of the recent wildfires on the island of Maui; the ability of business partners, including suppliers, vendors, wholesale customers, licensees, logistics providers and landlords, to meet their obligations to us and/or continue our business relationship to the same degree as they have historically; 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; the level of our indebtedness, including the risks associated with heightened interest rates on the debt and the potential impact on our ability to operate and expand our business; 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; 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, including the timing, cost and successful implementation of changes to our fulfillment network; pandemics or other public health crises; expected outcomes of pending or potential litigation and regulatory actions; the increased consumer, employee and regulatory focus on 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 Annual Report on Form 10-K for Fiscal 2022, 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.
|Contact:||Brian J. Smith|
Oxford Industries, Inc.
Consolidated Balance Sheets (in thousands, except par amounts)
|Cash and cash equivalents||$||7,790||$||31,269|
|Income tax receivable||19,401||19,743|
|Prepaid expenses and other current assets||37,740||31,308|
|Total Current Assets||$||282,380||$||421,248|
|Property and equipment, net||188,004||150,887|
|Intangible assets, net||277,114||154,853|
|Operating lease assets||241,452||179,217|
|Other assets, net||37,829||27,136|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Current portion of operating lease liabilities||67,676||53,119|
|Accrued expenses and other liabilities||68,188||63,768|
|Total Current Liabilities||$||232,561||$||222,640|
|Non-current portion of operating lease liabilities||219,207||180,092|
|Other non-current liabilities||20,402||19,200|
|Deferred income taxes||4,587||1,254|
|Common stock, $1.00 par value per share||15,630||15,960|
|Additional paid-in capital||170,789||166,139|
|Accumulated other comprehensive loss||(2,109||)||(3,120||)|
|Total Shareholders’ Equity||$||624,629||$||534,016|
|Total Liabilities and Shareholders’ Equity||$||1,149,858||$||957,202|
Oxford Industries, Inc.
Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited)
|Second Quarter||First Half|
|Fiscal 2023||Fiscal 2022||Fiscal 2023||Fiscal 2022|
|Cost of goods sold||151,590||131,281||296,558||257,485|
|Royalties and other operating income||4,176||6,357||12,497||13,370|
|Interest expense, net||1,297||274||3,639||516|
|Earnings before income taxes||$||66,377||$||75,097||$||144,336||$||150,833|
|Income tax expense||14,924||18,485||34,345||36,813|
|Net earnings per share:|
|Weighted average shares outstanding:|
|Dividends declared per share||$||0.65||$||0.55||$||1.30||$||1.10|
Oxford Industries, Inc.
Consolidated Statements of Cash Flows (in thousands)
|Fiscal 2023||Fiscal 2022|
|Cash Flows From Operating Activities:|
|Adjustments to reconcile net earnings to cash flows from operating activities:|
|Amortization of intangible assets||7,331||454|
|Equity compensation expense||7,508||5,252|
|Gain on sale of assets||(1,756||)||—|
|Amortization and write-off of deferred financing costs||368||172|
|Deferred income taxes||1,451||(1,657||)|
|Changes in operating assets and liabilities, net of acquisitions and dispositions:|
|Income tax receivable||39||(15||)|
|Prepaid expenses and other current assets||360||(11,541||)|
|Other balance sheet changes||(2,785||)||(2,286||)|
|Cash provided by operating activities||$||152,500||$||90,629|
|Cash Flows From Investing Activities:|
|Acquisitions, net of cash acquired||(3,320||)||—|
|Purchases of property and equipment||(31,410||)||(19,746||)|
|Purchases of short-term investments||—||(70,000||)|
|Proceeds from short-term investments||—||80,000|
|Proceeds from the sale of property, plant and equipment||2,125||—|
|Other investing activities||(33||)||(50||)|
|Cash used in investing activities||$||(32,638||)||$||(9,796||)|
|Cash Flows From Financing Activities:|
|Repayment of revolving credit arrangements||(334,225||)||—|
|Proceeds from revolving credit arrangements||263,686||—|
|Deferred financing costs paid||(1,661||)||—|
|Repurchase of common stock||(18,987||)||(72,680||)|
|Proceeds from issuance of common stock||1,090||882|
|Repurchase of equity awards for employee tax withholding liabilities||(9,941||)||(3,166||)|
|Cash dividends paid||(20,843||)||(17,829||)|
|Other financing activities||—||(2,010||)|
|Cash used in financing activities||$||(120,881||)||$||(94,803||)|
|Net change in cash and cash equivalents||(1,019||)||(13,970||)|
|Effect of foreign currency translation on cash and cash equivalents||(17||)||380|
|Cash and cash equivalents at the beginning of year||8,826||44,859|
|Cash and cash equivalents at the end of period||$||7,790||$||31,269|
Oxford Industries, Inc.
Reconciliations of Certain Non-GAAP Financial Information (in millions, except per share amounts)
|Second Quarter||First Half|
|AS REPORTED||Fiscal 2023||Fiscal 2022||% Change||Fiscal 2023||Fiscal 2022||% Change|
|Corporate and Other|
|SG&A as % of net sales||48.8||%||44.9||%||48.6||%||44.8||%|
|Earnings before income taxes||$||66.4||$||75.1||(11.6||)%||$||144.3||$||150.8||(4.3||)%|
|Net earnings per diluted share||$||3.22||$||3.49||(7.7||)%||$||6.86||$||6.9||(1.2||)%|
|Weighted average shares outstanding - diluted||16.0||16.2||(1.6||)%||16.0||16.4||(2.5||)%|
|Second Quarter||First Half|
|ADJUSTMENTS||Fiscal 2023||Fiscal 2022||% Change||Fiscal 2023||Fiscal 2022||% Change|
|Amortization of Johnny Was intangible assets(3)||$||3.5||$||0.0||$||6.9||$||0.0|
|Gain on sale of Merida manufacturing facility(4)||$||0.0||$||0.0||$||(1.8||)||$||0.0|
|Impact of income taxes(5)||$||(1.3||)||$||(0.7||)||$||(2.1||)||$||(0.9||)|
|Adjustment to net earnings(6)||$||3.6||$||2.1||$||5.9||$||2.8|
|Corporate and Other|
|SG&A as % of net sales||48.0||%||44.9||%||47.8||%||44.8||%|
|Earnings before income taxes||$||71.3||$||77.8||(8.4||)%||$||152.3||$||154.6||(1.5||)%|
|Net earnings per diluted share||$||3.45||$||3.61||(4.4||)%||$||7.23||$||7.11||1.7||%|
|Second Quarter||Second Quarter||Second Quarter||First Half||First Half|
|Fiscal 2023||Fiscal 2023||Fiscal 2022||Fiscal 2023||Fiscal 2022|
|Net earnings per diluted share:|
|GAAP basis||$||3.22||$||3.14 - 3.34||$||3.49||$||6.86||$||6.94|
|Amortization of Johnny Was intangible assets(9)||0.16||0.16||0.00||0.32||0.00|
|Gain on sale of Merida manufacturing facility(10)||0.00||0.00||0.00||(0.08||)||0.00|
|As adjusted(6)||$||3.45||$||3.30 - 3.50||$||3.61||$||7.23||$||7.11|
|Net earnings per diluted share:|
|GAAP basis||$||0.74 - $0.94||$||1.22|
|Inventory step-up charges in Johnny Was(13)||0.00||0.06|
|Amortization of Johnny Was intangible assets(9)||0.16||0.08|
|Transaction expenses and integration costs associated with Johnny Was acquisition(14)||0.00||0.13|
|As adjusted(6)||$||0.90 - $1.10||$||1.46|
|Fiscal 2023 Guidance(12)||Fiscal 2022 Actual|
|Net earnings per diluted share:|
|GAAP basis||$||9.61 - $9.91||$||10.19|
|Inventory step-up charge in Johnny Was(13)||0.00||0.20|
|Amortization of Johnny Was intangible assets(9)||0.64||0.24|
|Transaction expenses and integration costs associated with the Johnny Was acquisition(14)||0.00||0.13|
|Gain on sale of Merida manufacturing facility(10)||(0.08||)||0.00|
|As adjusted(6)||$||10.30 - $10.60||$||10.88|
(1) Johnny Was was acquired on September 19, 2022 and results presented reflect Johnny Was operations subsequent to the acquisition date.
(2) LIFO adjustments represents the impact of LIFO accounting adjustments. These adjustments are included in cost of goods sold in Corporate and Other.
(3) Amortization of Johnny Was intangible assets represents the amortization related to intangible assets acquired as part of the Johnny Was acquisition. These charges are included in SG&A in Johnny Was.
(4) Gain on sale of Merida manufacturing facility represents the gain on sale of Oxford's last owned manufacturing facility, which was located in Merida, Mexico and previously operated by the Lanier Apparel operating group. The gain is included in royalties and other operating income in Corporate and Other.
(5) Impact of income taxes represents the estimated tax impact of the above adjustments based on the estimated applicable tax rate on current year earnings.
(6) Amounts in columns may not add due to rounding.
(7) Guidance as issued on June 7, 2023.
(8) LIFO adjustments represents the impact, net of income taxes, on net earnings per share resulting from LIFO accounting adjustments. No estimate for LIFO accounting adjustments is reflected in the guidance for any future periods.
(9) Amortization of Johnny Was intangible assets represents the impact, net of income taxes, on net earnings per share resulting from the amortization of intangible assets acquired as part of the Johnny Was acquisition.
(10) Gain on sale of Merida manufacturing facility represents the impact, net of income taxes, on net earnings per share resulting from the gain on sale of Oxford's last owned manufacturing facility, which was located in Merida, Mexico and previously operated by the Lanier Apparel operating group.
(11) Guidance as issued on August 31, 2023.
(12) Guidance as issued on August 31, 2023. Fiscal 2023 is a 53 week year ending on February 3, 2024, with the additional week included in the fourth quarter of Fiscal 2023.
(13) Inventory step-up charge in Johnny Was represents the impact, net of income taxes, on net earnings per share of purchase accounting adjustments resulting from the step-up of inventory at acquisition of the Johnny Was business. No additional inventory step-up charge is expected in future periods.
(14) Transaction expenses and integration costs associated with the Johnny Was acquisition represents the impact of transaction costs and integration costs, net of income taxes, on net earnings per share.
|Direct to Consumer Location Count|
|End of Q1||End of Q2||End of Q3||End of Q4|
|Full-price retail store||102||102||102||103|
|Retail-food & beverage||21||21||21||21|
|Total Tommy Bahama||158||158||158||157|
|Lilly Pulitzer full-price retail store||59||58||59||59|
|Full-price retail store||—||—||64||65|
|Total Johnny Was||—||—||66||67|
|Southern Tide full-price retail store||4||5||5||6|
|TBBC full-price retail store||1||2||2||3|
|Full-price retail store||103||101||—||—|
|Retail-food & beverage||21||22||—||—|
|Total Tommy Bahama||157||156||—||—|
|Lilly Pulitzer full-price retail store||59||59||—||—|
|Full-price retail store||65||67||—||—|
|Total Johnny Was||67||69||—||—|
|Southern Tide full-price retail store||9||13||—||—|
|TBBC full-price retail store||3||3||—||—|