Oxford Industries, Inc. (NYSE: OXM) Q1 2025 Earnings Call | 06/11/2025 | Inside Ticker

Here's a summary of Oxford Industries' First Quarter Fiscal Year 2025 Earnings Call:

Oxford Industries Q1 FY25 Earnings Call Summary

Oxford Industries reported first-quarter fiscal 2025 results solidly within its forecast range despite a challenging and unpredictable market environment. The company noted a cautious consumer, rapidly evolving U.S. international trade policy (tariffs), and a need to focus on differentiated products and high-value promotions. Lilly Pulitzer was a standout performer, while Johnny Was faced profitability challenges.

Key Financial Highlights (Q1 FY25 vs. Q1 FY24):

Consolidated Net Sales: $393 million (down from $398 million in Q1 FY24), at the high end of their $375-$395 million guidance.
Brick & Mortar Sales: Down 1% (negative 5% comp, partially offset by new stores).
E-commerce Sales: Decreased 5%.
Food & Beverage Sales: Down 3% (comp down 1%).
Outlet Sales: Comparable year-over-year.
Wholesale Channel Sales: Increased 4%.
Segment Performance: Lower sales at Tommy Bahama and Johnny Was were partially offset by low double-digit sales increase at Lilly Pulitzer and growth in emerging brands.
Adjusted Gross Margin: Contracted 110 basis points to 64.3%, due to increased freight expenses (Tommy Bahama), increased markdowns (Lilly Pulitzer, Johnny Was), and a higher mix of wholesale sales.
Tariff Impact (Q1): Incurred $1 million in additional charges (~20 basis point negative impact to consolidated gross margin, or $0.04/share) from U.S. tariffs.
Adjusted SG&A Expenses: Increased 5% to $221 million (driven by employment costs, occupancy, depreciation from 31 new B&M locations since Q1 FY24, including 8 net new in Q1 FY25).
Adjusted Operating Profit: $39 million (9.8% operating margin), down from $57 million (14.4% margin) in Q1 FY24.
Adjusted Net Earnings Per Share: $1.82.
Inventory: Increased $18 million (12% LIFO) or $20 million (9% FIFO), across most operating groups except Johnny Was, due to tariff impacts (accelerated purchases, increased capitalized costs). Includes an additional $3 million in tariff costs.
Long-Term Debt: $118 million.
Cash Flow from Operations: Used $4 million in Q1 (due to lower net earnings, working capital changes from accelerated inventory, and $12 million in cloud computing implementation costs).

Strategic & Operational Highlights:

Consumer Behavior: Consumers are cautious, responding strongly to new, innovative, differentiated products and high-value promotions.
Tariff Impact: Rapidly evolving U.S. trade policy is creating uncertainty, making planning difficult, and requiring supply chain realignment. The company aims to be substantially out of China by H2 FY26.
Pricing Strategy (Tariffs): For Spring 2026, Tommy Bahama's AUR is projected to increase by less than 3%, fully recovering gross profit dollars, with initial gross margin percent decreasing by less than 50 basis points. Expects to recover initial gross margin percentages in subsequent seasons without dramatic price changes.
Lilly Pulitzer: Fantastic results with double-digit growth and positive comps in both e-commerce and retail. Success driven by focus on high-spending core customers, beautiful prints, successful sportswear items, and collaborations. Newness quotient over 50% this spring.
Tommy Bahama: Opened two new Marlin Bars in King of Prussia, PA, and Charlotte, NC (new temperate, large mall locations), expecting meaningful uplift in retail and immersive brand experience.
Johnny Was: Underperforming. Shifting focus from rapid growth to improving profitability through brand creative, merchandising, marketing efficiency, and retail execution. Expects impact in FY26 and beyond.
New Fulfillment Center: On track for completion in South Georgia by end of fiscal year, expected to be a competitive advantage for the Southeastern U.S.
Store Openings: Opened 8 net new stores (including 2 Marlin Bars) in Q1 FY25. Planning approximately 7 net new stores, including an additional Marlin Bar, for the remainder of FY25.

Updated Fiscal Year 2025 Outlook:

Sales: $1.475 billion to $1.515 billion (3% decline to slightly negative compared to FY24 sales of $1.52 billion).
- Total Company Comp Sales: Low to mid-single-digit decline.
- Tommy Bahama & Johnny Was: Expected declines, offset by growth in Lilly Pulitzer and emerging brands.
- Channel Mix: Low single-digit decrease in e-commerce and wholesale; flat to low single-digit increase in full-price retail and outlet (benefiting from 15 net new locations); low to mid-single-digit increase in Food & Beverage (benefiting from 3 new Marlin Bars).
Gross Margin: Expected to contract approximately 200 basis points for the year. This includes $40 million in additional tariff costs ($2/share after tax), up from $9-10 million in the March forecast. Mitigation efforts (sourcing shifts, promotional events) are underway, aiming for full mitigation by Spring 2026.
SG&A: Expected to grow in the mid-single-digit range (higher than sales) due to continued investments and annualization of new store SG&A.
Operating Income: Expected to be impacted by lower royalties and other income (~$1 million).
Non-Operating Items:
- Higher Interest Expense: $5 million higher (~$0.20-$0.25 EPS impact) due to increased debt levels.
- Higher Adjusted Effective Tax Rate: ~26% (compared to 20.9% in FY24), due to non-recurring favorable items in FY24 (~$0.20-$0.25 EPS impact).
Adjusted EPS: Expected to be between $2.80 and $3.20 (down from $6.68 in FY24), reflecting the $2.00 impact from tariffs, higher interest expense, and higher tax rate.
Q2 FY25 Outlook: Sales $395-$415 million (vs. $420 million in Q2 FY24), reflecting low to mid-single-digit negative comp. Gross margin to contract ~250 basis points (including $15 million in additional tariff costs, or $0.75/share after tax). Adjusted EPS $1.05-$1.25 (vs. $2.77 in Q2 FY24).
Capital Expenditures: Approximately $120 million (including $70 million for the Lyons, Georgia distribution center completion). Elevated CapEx is expected to moderate in 2026.
Cash Flow: Expects strong cash flow from operations in H2 to fund investments and dividends, though anticipates being in a net debt position for the remainder of the year.

The company is responding well to current challenges, remaining focused on long-term goals and the happiness of its customers, while acknowledging the near-term turbulence.