Oxford Industries Q1 Profit Tops Forecast, Outlook Weak

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Totes with Lilly Pulitzer's new exclusive 2014 US Open print.

Totes with Lilly Pulitzer’s new exclusive 2014 US Open print.

Atlanta—Oxford Industries Inc. reported Tuesday its beat estimates as its first quarter profit rose 9.5% boosted primarily by increases at its Tommy Bahama and Lilly Pulitzer brands.

For the quarter ended May 3, the apparel and accessories company posted net earnings of $15 million, or 91 cents a share, compared with $13.6 million, or 82 cents a share last year. Excluding items, adjusted earnings were $15.5 million or 94 a share ahead of analysts’ average estimate for 87 cents.

Net sales rose 10% to $257.6 million from $234 in the prior year ahead of analysts expected sales of $254.57 million.

Lilly Pulitzer ‘Remarkable’

Sales at Tommy Bahama brand climbed 5% year-over-year but comp store sales fell 1%. Sales at Lilly Pulitzer gained 28%, and Lanier Clothes and Ben Sherman brands saw some growth too.

“We were quite pleased with our first quarter results. In particular, Lilly Pulitzer’s remarkable performance has continued with product assortments and a marketing campaign that are clearly resonating with consumers,” said Thomas Chubb, president/ceo. “Tommy Bahama, while impacted by lower traffic early in the quarter, saw a nice rebound in April and ultimately delivered a solid quarter in a very challenging market. Investment in the expansion of these great brands, Tommy Bahama and Lilly Pulitzer, remains our key strategic focus.”

While comparable store sales were negative in February and March, April comparable store sales were positive as traffic improved. At the end of the first quarter, Tommy Bahama operated 141 stores including 91 full-price stores, 14 restaurant-retail locations and 36 outlets.

As of May 3, Lilly Pulitzer operated 26 retail stores, including three stores opened during the first quarter of fiscal 2014, compared to 21 retail stores as of May 4, 2013.

Consolidated gross margin of 57.2% was comparable with the prior year period. Selling, general and administrative expenses was $123.2 million, or 47.8% of net sales, compared to $113.0 million, or 48.3% of net sales, in the first quarter of fiscal 2013. The increase in was primarily due to incremental costs associated with operating additional retail stores, investments in infrastructure and systems, and increased compensation expense.

Weak Forecast

Despite the first quarter results, Oxford Industries gave what was considered a weak forecast.

For the second quarter, Oxford expects net earnings in the range of 82 to 92 cents a share, adjusted earnings of 85 to 95 cents a share and sales of $245 million to $255 million. Analysts expect earnings of $1.13 a share on sales of $254 million.

For fiscal year 2014, the company continues to expect net earnings of $2.88 to $3.03 a share, adjusted earnings of $3.00 to $3.15 a share and sales of $980 million to $1 billion. Analysts projected earnings of $3.11 a share on sales of $991.84 million for the full year.

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