Oxford tumbles to 3.5 year lows following disappointing earnings and outlook

Oxford Industries (OXM) reported Q2 earnings that missed analyst expectations, with adjusted EPS coming in at $2.77 versus the expected $3.00. Revenues for the quarter totaled $420 million, which was below the estimate of $438.18 million, though comparable to the same quarter last year. The company cited weaker consumer sentiment and increased demand for deals and promotions, particularly through its outlet locations, as contributing factors to the revenue shortfall. Despite the challenging consumer environment, OXM highlighted its strategy of focusing on delivering compelling products and maintaining long-term shareholder value.

The company updated its full-year guidance to reflect these market challenges. OXM now expects FY2024 net sales to range between $1.51 billion and $1.54 billion, down from the previous forecast of $1.59 billion to $1.63 billion. The company also revised its adjusted EPS forecast for FY2024 to $7.00 to $7.30, below both its previous guidance of $8.60 to $9.00 and the analyst consensus of $8.79. For Q3, the company anticipates net sales between $310 million and $325 million and adjusted EPS ranging from $0.00 to $0.20, significantly lower than the expected $1.09, signaling continued near-term headwinds.

Customer trends remained a key point of discussion, with OXM observing a shift towards value-seeking behavior. While full-price direct-to-consumer (DTC) sales rose by 1%, outlet sales increased by 4% year-over-year, reflecting the growing demand for promotions. The company’s e-commerce sales remained flat compared to last year, and wholesale sales declined by 5%. Despite these challenges, CEO Tom Chubb emphasized the company's commitment to long-term strategies and protecting the strength of its brands.

Segment performance was mixed across OXM's portfolio of brands. Full-price retail sales, which include Tommy Bahama, Lilly Pulitzer, and Johnny Was, grew 1% to $305 million, while outlet sales contributed $21 million, a modest 4% increase. Food and beverage sales, including the Tommy Bahama Marlin Bar locations, remained flat at $29 million, while the wholesale segment underperformed, falling 5% year-over-year. Gross margins also declined slightly, with the company citing a higher proportion of promotional sales as a contributing factor.

On the cost side, OXM faced increased SG&A expenses, which rose to $217 million from $205 million in the prior year, largely driven by 30 new store openings and pre-opening expenses for additional planned stores, including four new Tommy Bahama Marlin Bars. Adjusted SG&A expenses were slightly lower at $213 million, up from $202 million a year ago. The company noted that it remains focused on cost management and is actively seeking ways to reduce expenses while continuing to invest in future growth.

Looking ahead, OXM expects continued macroeconomic challenges but remains optimistic about its cash flow and ability to navigate through the difficult market environment. The company repaid its outstanding debt in Q2 and expects to generate strong cash flow for the remainder of the year. Capital expenditures are projected to total $150 million for FY2024, with a significant portion allocated to the construction of a new distribution center in Georgia and ongoing investments in new retail locations and technology systems.

Shares of OXM plunged to their lowest level in over three and a half years after the earnings release. The next key support level lies in the $61-$64 range, making it crucial for the stock to regain ground in tomorrow's session. Failure to do so could result in further downward momentum.