Oxford Industries, Inc. (NYSE:OXM) Q4 2019 Earnings Conference Call March 26, 2020 4:30 PM ET Company Participants Anne Shoemaker - Treasurer Tom Chubb - Chairman and CEO Scott Grassmyer - CFO Conference Call Participants Tracy Kogan - Citi Rick Patel - Needham & Company Ed Yruma - KeyBanc Capital Markets Susan Anderson - B. Riley FBR Operator Greetings and welcome to the Oxford Industries Fourth Quarter 2019 Earnings Call. [Operator Instructions] I would now like to turn the conference over to your host, A ...

Financial Data and Key Metrics Changes - The third quarter generated a 6% positive comparable sales increase, building on a 7% gain from the previous year, with earnings at the high end of guidance [8][14] - Operating income was slightly better than planned at $2.7 million, resulting in earnings at the high end of the range for the quarter [15] - Cash flow remained strong, with no borrowings under the $325 million credit facility and $22 million in cash compared to $7 million last year [16] - Inventory increased to $154 million from $138 million last year, reflecting an 8% increase on a FIFO basis [16] Business Line Data and Key Metrics Changes - Lilly Pulitzer and Tommy Bahama each posted a 6% comparable sales gain in the quarter, with positive comps in both stores and e-commerce [14] - Gross margin at Lilly Pulitzer expanded at both direct-to-consumer and wholesale, while Tommy Bahama experienced a decrease due to a higher proportion of off-price wholesale sales [15] Market Data and Key Metrics Changes - Fourth quarter sales are tracking slightly behind previous forecasts, with a mid-single-digit comp increase moderated to a low-single-digit increase [17] - Lilly Pulitzer has shown strength in direct-to-consumer channels, while Tommy Bahama's performance has lagged expectations [17] Company Strategy and Development Direction - The company is focused on operating a powerful portfolio of lifestyle brands and emphasizes full-price, direct-to-consumer channels to drive shareholder value [12] - New store openings are being strategically tested, including a smaller format store for Lilly Pulitzer in Siesta Key, aimed at capturing local market opportunities [10][71] Management's Comments on Operating Environment and Future Outlook - Management noted that the holiday season has been challenging to plan due to a later Thanksgiving and fewer shopping days, but they remain confident in the potential for a solid fourth quarter [12][17] - The company expects to mitigate the impact of tariffs by the second half of fiscal 2020 through various initiatives [21][75] Other Important Information - The Board of Directors approved a quarterly cash dividend of $0.37 per share, continuing a history of quarterly dividends since 1960 [22] - Capital expenditures for fiscal 2019 are expected to be approximately $40 million, reflecting investments in IT, new retail stores, and remodeling existing locations [20] Q&A Session Summary Question: Follow-up on lighter sales for the fourth quarter - Management confirmed that the sales moderation is due to both Tommy Bahama's direct-to-consumer and wholesale channels, with Lilly performing well [28][30] Question: Performance across product categories at Tommy Bahama - Women's products are performing well, while men's sales are lagging, but management expects to make up ground as the holiday season progresses [32] Question: Drivers of comparable sales in DTC businesses - The primary driver of comparable sales is improved conversion rates rather than significant changes in average unit retail or traffic [40] Question: Update on omni-channel initiatives - The company has implemented an Enterprise Order Management System for Tommy Bahama and a curbside pickup option for Lilly Pulitzer, enhancing customer experience [44][45] Question: Efficiency of recent promotions - Promotions were simplified during the busy holiday period, yielding positive results with minimal margin dilution [54][56] Question: Quality of inventory and exit strategy for the quarter - Management feels confident about inventory quality, with key items well-stocked compared to the previous year [58] Question: Guidance for the upcoming holiday season - Management has baked in some improvement in guidance, expecting a bounce back during the Christmas season [65][66] Question: Performance of new Marlin Bars - The two Marlin Bars opened are performing well, with additional locations planned for the next year [77]