Oxford Industries(OXM) - 2026 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Q1 Fiscal 2025 unaudited condensed consolidated financial statements reveal decreased net sales and earnings, increased long-term debt, and negative operating cash flow Condensed Consolidated Statements of Operations Highlights (Q1) | Metric | Fiscal 2025 (in thousands) | Fiscal 2024 (in thousands) | | :--- | :--- | :--- | | Net sales | $392,861 | $398,184 | | Gross profit | $252,286 | $258,361 | | Operating income | $36,206 | $52,451 | | Net earnings | $26,181 | $38,373 | | Diluted EPS | $1.70 | $2.42 | Condensed Consolidated Balance Sheets Highlights | Metric (in thousands) | May 3, 2025 | May 4, 2024 | | :--- | :--- | :--- | | Total Current Assets | $317,534 | $298,363 | | Total Assets | $1,339,706 | $1,156,976 | | Total Current Liabilities | $240,755 | $225,585 | | Long-term debt | $117,714 | $18,630 | | Total Shareholders' Equity | $592,423 | $592,875 | Condensed Consolidated Statements of Cash Flows Highlights (Q1) | Metric (in thousands) | Fiscal 2025 | Fiscal 2024 | | :--- | :--- | :--- | | Cash (used in) provided by operating activities | $(3,942) | $32,923 | | Cash used in investing activities | $(23,455) | $(12,134) | | Cash provided by (used in) financing activities | $25,959 | $(20,710) | - During Q1 2025, the company repurchased approximately 842,000 shares of its common stock for $50 million under a December 2024 authorization, with a new $100 million repurchase plan authorized on March 24, 2025[49][50] - Outstanding borrowings under the U.S. Revolving Credit Agreement increased to $118 million as of May 3, 2025, from $19 million as of May 4, 2024, primarily to fund share repurchases, capital expenditures for a new distribution center, and dividends[59] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 Fiscal 2025 performance, highlighting decreased consolidated net sales and operating income, increased leverage, and the impact of new U.S. tariffs Overview The company operates a portfolio of lifestyle brands, with 81% of sales from direct-to-consumer channels, navigating macroeconomic challenges by realigning operating expenses - In Fiscal 2024, 81% of consolidated net sales were through direct-to-consumer channels (full-price retail, e-commerce, outlets, and Tommy Bahama food & beverage)[64] - The company is facing a challenging retail environment due to macroeconomic factors, heightened promotional activity, and geopolitical issues, including broad-based U.S. tariffs implemented in Q1 2025[67][68] - In response to new tariffs, the company is accelerating its ongoing efforts to decentralize product sourcing and is considering other mitigation strategies like vendor negotiations and potential price increases[69] Results of Operations Q1 2025 consolidated net sales fell 1.3% to $392.9 million, with gross margin decreasing and operating income dropping 31.0% to $36.2 million Net Sales by Reportable Segment (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 Net Sales (in thousands) | Q1 2024 Net Sales (in thousands) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Tommy Bahama | $216,175 | $225,617 | $(9,442) | (4.2)% | | Lilly Pulitzer | $99,042 | $88,421 | $10,621 | 12.0% | | Johnny Was | $43,473 | $51,212 | $(7,739) | (15.1)% | | Emerging Brands | $34,248 | $33,001 | $1,247 | 3.8% | | Consolidated | $392,861 | $398,184 | $(5,323) | (1.3)% | Operating Income (Loss) by Reportable Segment (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 Operating Income (in thousands) | Q1 2024 Operating Income (in thousands) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Tommy Bahama | $30,747 | $42,639 | $(11,892) | (27.9)% | | Lilly Pulitzer | $18,137 | $15,544 | $2,593 | 16.7% | | Johnny Was | $(3,410) | $333 | $(3,743) | (1124.0)% | | Emerging Brands | $1,907 | $3,798 | $(1,891) | (49.8)% | | Consolidated | $36,206 | $52,451 | $(16,245) | (31.0)% | - Consolidated gross margin decreased to 64.2% from 64.9% YoY, primarily due to increased freight expenses, higher markdowns, a shift in sales mix towards wholesale, and a $1 million impact from new U.S. tariffs[97] - SG&A increased by $9.6 million (4.5%) YoY, with about 59% of the increase attributed to higher employment, occupancy, and depreciation costs from the expansion of brick-and-mortar retail locations[103] Financial Condition, Liquidity and Capital Resources Working capital increased to $76.8 million, while long-term debt significantly rose to $117.7 million to fund share repurchases and capital expenditures, leading to negative operating cash flow - Long-term debt increased to $117.7 million as of May 3, 2025, from $18.6 million a year prior, driven by share repurchases, increased capital expenditures, dividend payments, and working capital needs exceeding cash flow from operations[134] - Capital expenditures in Q1 2025 were $23 million, up from $12 million in Q1 2024, primarily for the construction of a new distribution center in Lyons, Georgia[157][158] - In Q1 2025, the company repurchased $51 million of its stock and paid $10 million in dividends, with a new $100 million share repurchase authorization approved in March 2025[141][155] - As of May 3, 2025, the company had $118 million of borrowings outstanding and $203 million in unused availability under its U.S. Revolving Credit Agreement[146] Critical Accounting Policies and Estimates No significant changes occurred in the company's critical accounting policies and estimates during Q1 Fiscal 2025 - There have been no significant changes to the company's critical accounting policies and estimates during the First Quarter of Fiscal 2025[163] Seasonal Aspects of Our Business The company's business is seasonal, with the third fiscal quarter typically having the lowest net sales and earnings, meaning Q1 results are not indicative of full-year performance - The business is seasonal, with the third fiscal quarter historically being the weakest in terms of net sales and net earnings[165] Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in market risk exposure since Fiscal 2024, except for increased interest rate risk due to higher borrowings - There have been no material changes in exposure to foreign currency, commodity, and inflation risks, however, exposure to interest rate risk has increased due to higher borrowings[166] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of May 3, 2025, with no material changes in internal control over financial reporting during Q1 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[167] - No changes in internal control over financial reporting occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, internal controls[168] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal actions but is not party to any proceedings expected to have a material adverse financial effect - The company is not currently a party to any litigation or regulatory action that is reasonably expected to have a material impact on its financial position, results of operations, or cash flows[169] Risk Factors Updated risk factors highlight new U.S. tariffs (February-April 2025) significantly impacting imports from key sourcing countries like China and Vietnam, particularly for the Johnny Was brand - A new key risk is the imposition of a broad range of new and increased U.S. tariffs between February and April 2025, impacting substantially all countries from which the company imports products[174] - Tariffs have significantly increased on imports from China (approx. 39% of products in FY2024) and Vietnam (approx. 24% of imports in FY2024)[174] - The Johnny Was brand is particularly at risk, having sourced more than 90% of its products from China in recent years[174] - Mitigation efforts, including accelerating the decentralization of product sourcing, may result in increased costs and operational disruptions[175] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased 842,007 shares for approximately $50 million, and a new $100 million share repurchase program was authorized Share Repurchases in Q1 Fiscal 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (in millions) | | :--- | :--- | :--- | :--- | | February (2/2/25 - 3/1/25) | 28,195 | $64.89 | $98.17 | | March (3/2/25 - 4/5/25) | 813,812 | $59.19 | $100.00 (new authorization) | | April (4/6/25 - 5/3/25) | — | $— | $100.00 | | Total | 842,007 | $59.38 | $100.00 | - On March 24, 2025, the Board of Directors authorized a new $100 million share repurchase program, which superseded and replaced all previous authorizations[179] Other Information During Q1 Fiscal 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement - During Q1 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement[181] Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and XBRL interactive data files - The report includes a list of filed exhibits, such as officer certifications (31.1, 31.2, 32) and XBRL interactive data files (101 series)[182]