Oxford Industries(OXM) - 2024 Q4 - Annual Report

PART I Item 1. Business Oxford Industries is a leading branded apparel company with a portfolio of lifestyle brands focused on direct-to-consumer channels - Oxford Industries operates a portfolio of lifestyle brands: Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head, and Jack Rogers[29] - The business strategy focuses on developing compelling lifestyle brands that create emotional connections with consumers, commanding greater loyalty and higher price points[30] - The company plans significant capital expenditures in Fiscal 2024, primarily for a new distribution center in the Southeastern U.S, direct-to-consumer location build-outs, and technology enhancements[48] Fiscal 2023 Consolidated Net Sales by Distribution Channel | Channel | Net Sales (Millions) | Percentage of Total | | :--- | :--- | :--- | | E-commerce | $538 | 34% | | Full-price Retail | $533 | 34% | | Food and Beverage | $116 | 7% | | Outlet Operations | $73 | 5% | | Total Direct-to-Consumer | $1,260 | 80% | | Wholesale | $311 | 20% | | Consolidated Net Sales | $1,571 | 100% | BUSINESS AND PRODUCTS The company's strategy emphasizes direct-to-consumer channels, which comprised 80% of Fiscal 2023 sales Overview The company's strategy emphasizes direct-to-consumer channels, which comprised 80% of Fiscal 2023 sales - The company's lifestyle brands include Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head, and Jack Rogers[29] - 80% of Fiscal 2023 consolidated net sales were through direct-to-consumer channels (full-price retail stores, e-commerce, food and beverage, outlets), with 20% from wholesale[33] - E-commerce sales accounted for 34% ($538 million) and full-price retail for 34% ($533 million) of consolidated net sales in Fiscal 2023[33] - Significant capital investments are planned for Fiscal 2024, primarily for a new distribution center in the Southeastern U.S, direct-to-consumer location build-outs, and technology enhancements[48] Competitive Environment The company operates in a highly competitive and cyclical apparel market influenced by technology and macroeconomic factors - The apparel market is highly competitive, characterized by low barriers to entry and rapid evolution due to technology, leading to increased consumer access and pricing pressures[41][172] - Macroeconomic factors such as inflation, global economic recession, geopolitical issues, and elevated interest rates are creating a complex and challenging retail environment[45][288] - Consumers are shifting discretionary spending away from apparel towards services and other product categories[43][286] Investments and Opportunities The company is pursuing growth through technology investments and expansion, despite potential short-term margin impacts - The company believes its lifestyle brands have competitive advantages and continues to invest in technology to serve consumers across channels[47] - Opportunities for expansion include new direct-to-consumer locations, e-commerce growth, and wholesale operations expansion[48] - Fiscal 2024 is projected to be a heavy year for capital expenditures, primarily for a new distribution center, direct-to-consumer location build-outs, and technology enhancements[48] - Investments are expected to have a short-term negative impact on operating margin but generate long-term benefits[48] Operating Groups The business is organized into four brand-focused operating groups, with Lanier Apparel exited in Fiscal 2021 - Operating groups are Tommy Bahama, Lilly Pulitzer, Johnny Was, and Emerging Brands, reflecting a brand-focused management approach[51][294] - The Lanier Apparel operating group was exited in Fiscal 2021[51][102][294] Net Sales by Operating Group (in thousands) | Operating Group | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | :--- | | Tommy Bahama | $898,807 | $880,233 | $724,305 | | Lilly Pulitzer | $343,499 | $339,266 | $298,995 | | Johnny Was | $202,859 | $72,591 | — | | Emerging Brands | $126,825 | $116,484 | $90,053 | | Lanier Apparel | — | — | $24,858 | | Corporate and Other | $(515) | $2,954 | $3,868 | | Consolidated Net Sales | $1,571,475 | $1,411,528 | $1,142,079 | Operating Income (Loss) by Operating Group (in thousands) | Operating Group | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | :--- | | Tommy Bahama | $160,543 | $172,761 | $111,733 | | Lilly Pulitzer | $56,110 | $67,098 | $63,601 | | Johnny Was | $(104,776) | $(1,544) | — | | Emerging Brands | $6,714 | $15,602 | $16,649 | | Lanier Apparel | — | — | $4,888 | | Corporate and Other | $(37,609) | $(35,143) | $(31,368) | | Consolidated Operating Income | $80,982 | $218,774 | $165,503 | Tommy Bahama The brand's sales grew 2% in Fiscal 2023, but operating income declined due to investments in SG&A - Tommy Bahama's target consumer is over 45 years old with an annual household income exceeding $100,000, embracing a relaxed, casual lifestyle[53] - 83% of Tommy Bahama's net sales in Fiscal 2023 were from direct-to-consumer channels (full-price retail, e-commerce, food & beverage, outlet stores)[57] - Tommy Bahama operates 22 food and beverage locations (13 restaurants, 9 Marlin Bars), which generated over 25% of its net sales in Fiscal 2023[60] - The brand plans to open five new Marlin Bar locations in Fiscal 2024, including conversions of existing full-price retail stores[67] Tommy Bahama Financial Performance | Metric | Fiscal 2023 | Fiscal 2022 | | :--- | :--- | :--- | | Net Sales | $899 million | $880 million | | Sales Growth (YoY) | 2% | - | | Operating Income | $161 million | $173 million | | Operating Margin | 17.9% | 19.6% | Lilly Pulitzer The brand achieved a 1% sales increase in Fiscal 2023, driven by its strong direct-to-consumer presence - Lilly Pulitzer's net sales increased by 1% in Fiscal 2023[309] - Direct-to-consumer channels (e-commerce and full-price retail stores) represented 84% of Lilly Pulitzer's net sales in Fiscal 2023[76] - The lillypulitzer.com website generated $175 million, or 51%, of Lilly Pulitzer's net sales in Fiscal 2023, with 35% of e-commerce sales from flash clearance events[76][77] - Lilly Pulitzer plans to open at least five new full-price retail stores in Fiscal 2024[82] - As of February 3, 2024, there were 46 Lilly Pulitzer Signature Stores, which are independently operated stores selling Lilly Pulitzer products on a wholesale basis[84] Johnny Was Acquired in Fiscal 2022, Johnny Was incurred a significant operating loss in Fiscal 2023 due to a major impairment charge - Johnny Was was acquired in Q3 Fiscal 2022 and generated $203 million in net sales in Fiscal 2023[85][315] - 79% of Johnny Was's net sales in Fiscal 2023 were from direct-to-consumer channels (e-commerce 41%, retail stores 38%)[87] - The operating loss in Fiscal 2023 was primarily due to a $111 million impairment charge for goodwill and intangible assets, driven by macroeconomic conditions and elevated interest rates[52][330][337] - Johnny Was expects to open approximately 10 new full-price retail stores in Fiscal 2024[92] Johnny Was Operating Performance | Metric | Fiscal 2023 | Fiscal 2022 (19 weeks) | | :--- | :--- | :--- | | Net Sales | $202,859 | $72,591 | | Operating Loss | $(104,776) | $(1,544) | | Operating Loss as % of Net Sales | (51.6)% | (2.1)% | | Impairment Charge | $111,136 | — | | Amortization of Intangible Assets | $13,852 | $5,194 | Emerging Brands This group achieved 9% sales growth in Fiscal 2023 and is expanding its retail footprint - Emerging Brands includes Southern Tide, TBBC, Duck Head, and Jack Rogers (acquired in Q4 Fiscal 2023)[95][97] - Emerging Brands' net sales increased by 9% in Fiscal 2023, with Jack Rogers contributing $1.5 million[309][316] - The majority of Southern Tide and Duck Head sales are wholesale, while TBBC and Jack Rogers are primarily direct-to-consumer[98] - 13 new Southern Tide stores were opened in Fiscal 2023, and approximately 10 more are expected in Fiscal 2024, along with at least one new TBBC store[101] Emerging Brands Net Sales by Brand (Fiscal 2023) | Brand | Net Sales (thousands) | | :--- | :--- | | Southern Tide | $69,017 | | TBBC | $43,524 | | Duck Head | $12,780 | | Jack Rogers | $1,504 | | Total | $126,825 | Lanier Apparel The company exited its Lanier Apparel business in Fiscal 2021 to focus on its core lifestyle brands - The Lanier Apparel business, focused on moderately priced tailored clothing, was exited in Fiscal 2021[102][626] - The exit aligned with the company's strategy to develop and market compelling lifestyle brands and addressed increased macroeconomic challenges[102][626] Corporate and Other This category serves as a reconciling item for shared services and unallocated corporate expenses - Corporate and Other is a reconciling category for reporting, including corporate offices, financing activities, inter-segment eliminations, and unallocated items[103][566] - It includes LIFO inventory accounting adjustments, as the LIFO pool does not correspond to operating group definitions[103][566] - The category also covers the Lyons, Georgia distribution center and the Oxford America business (exited in Fiscal 2022)[103][566] TRADEMARKS The company owns valuable trademarks for its portfolio of lifestyle brands, which are registered globally - Oxford Industries owns important and valuable trademarks for its lifestyle brands: Tommy Bahama®, Lilly Pulitzer®, Johnny Was®, Southern Tide®, The Beaufort Bonnet Company®, Duck Head® and Jack Rogers®[105] - Trademarks are registered globally for apparel, related products, accessories, home furnishings, and retail services[105] - Trademarks remain valid and enforceable as long as they are used in connection with products and services and required registration renewals are filed[105] ADVERTISING AND MARKETING Marketing expenses totaled $105 million in Fiscal 2023, utilizing a mix of digital and traditional channels - Advertising expense in Fiscal 2023 was $105 million, representing 7% of net sales[107] - The company utilizes digital marketing, social media, email, and traditional direct mail to communicate with consumers and strengthen brand connections[108] - Marketing initiatives include special event promotions (loyalty award card, Flip Side, Friends & Family, gift with purchase) and public relations activities[109] - Increased promotional marketing initiatives have led to higher sales but also some downward pressure on direct-to-consumer gross margins[109] PRODUCT DESIGN Product design is a key competitive factor, managed by dedicated brand-specific teams to align with fashion trends - Product design is a key competitive factor, requiring proficiency in foreseeing fashion trends and consumer preferences[112] - Dedicated brand-specific teams design and develop products, incorporating feedback from buyers, consumers, sales agents, and market trend research[114] - Apparel products primarily use fabrics like cotton, silk, linen, polyester, cellulosic fibers, leather, and blends[114] PRODUCT SOURCING The company relies on a diversified network of third-party foreign producers, with a significant concentration in Asia - Substantially all apparel and related products are sourced from non-exclusive, third-party producers in foreign countries[116] - In Fiscal 2023, approximately 41% of products were sourced from China and 23% from Vietnam[118] - The company conducts business on an order-by-order basis, without long-term contracts, to maintain flexibility[117] - Products are purchased as finished goods, reducing working capital requirements for raw materials[119] - Advance commitments for production create risks of excess inventory or insufficient inventory to meet demand[120] CORPORATE RESPONSIBILITY The company is committed to ESG initiatives, overseen by its Board and managed by a dedicated internal team - The Board oversees ESG initiatives, with a Corporate Responsibility team established in Fiscal 2022 to manage environmental sustainability, social responsibility, and traceability[122][124] - A Supplier Code of Conduct requires vendors to comply with applicable laws and international ethical standards, including human rights, health, safety, and environmental requirements[125] - Compliance is monitored through annual third-party social assessments, with non-compliant suppliers discontinued if issues are not remediated[126] - The company is an active member of the American Apparel & Footwear Association (AAFA) and Cascale (formerly Sustainable Apparel Coalition) to support responsible production[127] ENRICHING OUR COMMUNITIES The company engages in community initiatives focused on broad constituent impact and educational access - The company focuses community initiatives on programs impacting a broad set of constituents, partnering with organizations like United Way of Greater Atlanta, Woodruff Arts Center, and Grady Hospital[129] - The Oxford Educational Access Initiative, launched in 2020, committed $1 million over four years (starting 2021) to support educational access in underserved communities[130] IMPORT RESTRICTIONS AND OTHER GOVERNMENT REGULATIONS Foreign sourcing exposes the company to customs and trade regulations, with $58 million paid in duties in Fiscal 2023 - The company's international operations and foreign sourcing expose it to customs, trade, and other laws and regulations[132] - In Fiscal 2023, total duties paid on imported products were $58 million, with an average duty rate of approximately 19%[133] - Changes in international trade regulations, including potential additional duties, could significantly impact costs and supply chain[134] - The company ensures compliance with stringent product performance, security, and safety standards, laws, and regulations[135] DISTRIBUTION CENTERS The company is building a new e-commerce distribution center in Georgia, with over $130 million in planned investment - Distribution centers are located in Auburn, WA (Tommy Bahama), King of Prussia, PA (Lilly Pulitzer), Los Angeles, CA (Johnny Was), and Lyons, GA (Emerging Brands, some Lilly Pulitzer/Tommy Bahama)[138] - A multi-year project began in Fiscal 2023 to build a new, best-in-class direct-to-consumer distribution center in Lyons, Georgia[139] - Total capital expenditures for the new distribution center are expected to exceed $130 million, with most spending in Fiscal 2024, and completion by H2 Fiscal 2025[139] - 80% of net sales in Fiscal 2023 were direct-to-consumer, filled on a current basis, making order backlog immaterial[142] INFORMATION TECHNOLOGIES Sophisticated IT systems are considered critical for maintaining a competitive position and supporting growth - Sophisticated information systems are crucial for competitive positioning and continued business growth[144] - IT systems support all stages of operations, including retail, e-commerce, food and beverage, wholesale, distribution, design, sourcing, and marketing[144] - Continuous upgrading and enhancements to information systems are critical for operating efficiencies, consumer access, and supporting anticipated growth[144] LICENSING AND OTHER DISTRIBUTION ARRANGEMENTS The company licenses its trademarks as a high-margin opportunity to enhance brand awareness with modest investment - The company licenses trademarks (e.g, Tommy Bahama, Lilly Pulitzer) for product categories beyond core offerings, viewing it as a high-margin opportunity to enhance brand awareness[145] - License agreements typically require minimum royalty payments and percentages of licensee's net sales, with Oxford retaining approval rights[146] - Tommy Bahama is licensed for indoor/outdoor furniture, bedding, bath linens, fragrances, spirits, and resort operations; Lilly Pulitzer licenses stationery, home furnishings, and eyewear[147] - International distributor agreements exist for Tommy Bahama (Middle East, Latin America) and Johnny Was, but are not expected to materially impact near-term operating results[148] SEASONAL ASPECTS OF BUSINESS The business is subject to seasonality, with higher demand in spring, summer, and holiday seasons - All operating groups are impacted by seasonality, with higher demand in spring, summer, and holiday seasons, and lower demand in the fall (third fiscal quarter)[151] - Quarterly operating results and working capital requirements fluctuate significantly due to seasonality[151] - Past quarterly net sales or operating income are not necessarily indicative of future periods due to varying impacts of unusual items, economic conditions, and other factors[151] HUMAN CAPITAL MANAGEMENT The company employs over 6,000 individuals globally, with a focus on diversity and inclusion - As of February 3, 2024, the company employed over 6,000 individuals globally, with more than 96% in the United States[154] - Approximately 77% of employees are in retail store and food and beverage operations[154] - Core values include Integrity, Respect, Inclusion, Accountability, Teamwork, and Curiosity[155][158] - The company is committed to human rights, a Supplier Code of Conduct, and a diverse and inclusive workplace, with initiatives for fair hiring, retention, and advancement[156][163][164] - Domestic workforce (over 96% of employees) is 34% male, 66% female; 59% white, 41% non-white; Management (19% of workforce) is 29% male, 71% female; 71% white, 29% non-white[165] INFORMATION The company is a Georgia corporation founded in 1942, with SEC filings available on its website - Oxford Industries, Inc is a Georgia corporation founded in 1942, headquartered in Atlanta[167] - SEC filings (10-K, 10-Q, 8-K) are available free of charge on the company's website, oxfordinc.com[167] Item 1A. Risk Factors The company faces numerous risks related to macroeconomic conditions, business operations, cybersecurity, and sourcing - Business and financial condition are heavily influenced by general economic and market conditions, including consumer discretionary spending, inflation, and interest rates[170][171] - The company operates in a highly competitive apparel industry with significant pricing pressures and evolving customer expectations, particularly in the digital marketplace[172][173] - Failure to anticipate and adapt to changing fashion trends and consumer preferences could harm brand reputation and financial performance[174][176] - Cybersecurity attacks and breaches of information security or privacy could disrupt operations, incur expenses, and lead to litigation or financial harm[208][209][210] - Reliance on third-party producers in foreign countries exposes the company to supply chain disruptions, increased costs, and geopolitical risks (e.g, U.S-China trade tensions, UFLPA)[217][234][238] - Impairment charges for goodwill or intangible assets, such as the $111 million charge for Johnny Was in Fiscal 2023, could materially impact financial results[192][241] Item 1B. Unresolved Staff Comments There are no unresolved staff comments Item 1C. Cybersecurity The company maintains a comprehensive cybersecurity program led by its Head of Cyber Security - A comprehensive cybersecurity risk management program is in place, led by the Head of Cyber Security[256] - The Head of Cyber Security, with a master's degree and over 20 years of experience, reports quarterly to the Audit Committee on cyber risk trends and security enhancements[256][257] - The program includes internal and external evaluations, tracking security incidents, and third-party risk assessments[257] - Despite efforts, not all cybersecurity risks can be eliminated, and control over third-party security posture remains limited[258] Item 2. Properties The company leases and owns various properties for its direct-to-consumer, distribution, and administrative operations - The company leases and owns space for direct-to-consumer locations, distribution centers, and sales/administration offices[260] - Existing properties are believed to be well-maintained and adequate for current operations[260] - Retail and restaurant leases are generally long-term, with terms typically 10 years or less[108][261] Principal Administrative, Sales, and Distribution Facilities | Location | Primary Use | Operating Group | Footage | Lease Expiration | | :--- | :--- | :--- | :--- | :--- | | Seattle, Washington | Sales/administration | Tommy Bahama | 125,000 | 2026 | | Auburn, Washington | Distribution center | Tommy Bahama | 335,000 | 2035 | | King of Prussia, Pennsylvania | Sales/administration and distribution center | Lilly Pulitzer | 160,000 | Owned | | Los Angeles, California | Sales/administration | Johnny Was | 30,000 | 2032 | | Los Angeles, California | Administration and distribution center | Johnny Was | 70,000 | 2025 | | Atlanta, Georgia | Sales/administration | Corporate/Other | 30,000 | 2026 | | Lyons, Georgia | Distribution center | Various | 420,000 | Owned | Item 3. Legal Proceedings The company is not currently party to any proceedings expected to have a material financial impact - The company is subject to periodic litigation and regulatory actions in the ordinary course of business[264] - These actions may relate to trademarks, intellectual property, employee relations, real estate, licensing, importing/exporting, product safety, or taxation[264] - No current litigation or regulatory action is expected to have a material impact on financial position, results of operations, or cash flows[264] Item 4. Mine Safety Disclosures This item is not applicable to Oxford Industries, Inc PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the NYSE, and it repurchased $20 million of shares in Fiscal 2023 - Common stock is listed and traded on the New York Stock Exchange under the symbol 'OXM'[267] - As of March 24, 2024, there were 255 record holders of common stock[267] - A cash dividend of $0.67 per share was approved on March 25, 2024, payable May 3, 2024[268] - The company repurchased 196,000 shares for $20 million in Fiscal 2023 under a $150 million Board authorization, with $30 million remaining as of February 3, 2024[272][273] - No unregistered equity securities were sold during Fiscal 2023[270] Market and Dividend Information The company's common stock trades on the NYSE, and a cash dividend of $0.67 per share was approved in March 2024 - Common stock is listed on the NYSE (OXM) with 255 record holders as of March 24, 2024[267] - A cash dividend of $0.67 per share was approved on March 25, 2024, payable May 3, 2024[268] - Future dividend payments may be discontinued or modified based on capital uses (debt, acquisitions, capex, share repurchases), cash flow expectations, or credit facility limitations[268] Recent Sales of Unregistered Securities No unregistered equity securities were sold in Fiscal 2023 - No unregistered equity securities were sold in Fiscal 2023[270] Purchases of Equity Securities by the Issuer and Affiliated Purchasers The company repurchased $20 million of shares in Fiscal 2023, with $30 million remaining under its authorization - The Board authorized up to $150 million for share repurchases on December 7, 2021[272] - In Fiscal 2023, 196,000 shares were repurchased for $20 million (average price $102/share) under an open market program[272] - As of February 3, 2024, $30 million remained under the Board's authorization[273] - No shares were repurchased under the authorization in Q4 Fiscal 2023[273] Stock Price Performance Graph The company's stock outperformed its industry index but slightly underperformed the S&P SmallCap 600 over five years Cumulative Total Shareholder Return (Indexed to $100) | Company / Index | 2/2/19 | 2/1/20 | 1/30/21 | 1/29/22 | 1/28/23 | 2/3/24 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Oxford Industries, Inc | 100 | 91.67 | 88.01 | 111.12 | 164.80 | 138.81 | | S&P SmallCap 600 Index | 100 | 106.63 | 131.34 | 142.26 | 141.93 | 147.56 | | S&P 500 Apparel, Accessories & Luxury Goods | 100 | 92.13 | 90.11 | 88.75 | 64.72 | 52.88 | Item 6. Reserved This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Net sales grew 11% in Fiscal 2023, but net earnings per share decreased by 63% due to a major impairment charge - Net sales increased by 11% to $1.6 billion in Fiscal 2023, including a $130 million increase from Johnny Was[309] - Net earnings per diluted share decreased by 63% primarily due to a $111 million impairment charge for Johnny Was, lower operating income in other segments, and increased interest expense[290][346] - Cash flows from operations were $244 million in Fiscal 2023, exceeding cash used for capital expenditures, dividends, and share repurchases[291] OVERVIEW The company's strategy focuses on profitable growth through its portfolio of lifestyle brands in a challenging retail environment - Oxford Industries manages a portfolio of lifestyle brands: Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head, and Jack Rogers[280] - The company's strategy aims for sustained, profitable growth by developing lifestyle brands with strong emotional connections to consumers[281] - In Fiscal 2023, 80% of consolidated net sales were from direct-to-consumer channels (retail stores, e-commerce, food & beverage, outlets), with 20% from wholesale[283] - The current macroeconomic environment, including inflation and elevated interest rates, has created a complex and challenging retail environment, impacting Fiscal 2023 results[288] Consolidated Operating Results (in thousands, except per share amounts) | Metric | Fiscal 2023 | Fiscal 2022 | | :--- | :--- | :--- | | Net sales | $1,571,475 | $1,411,528 | | Operating income | $80,982 | $218,774 | | Net earnings | $60,703 | $165,735 | | Net earnings per diluted share | $3.82 | $10.19 | | Weighted average shares outstanding - diluted | 15,906 | 16,259 | OPERATING GROUPS The business is organized into four brand-focused operating groups to coordinate operations and allocate resources - Operating groups are Tommy Bahama, Lilly Pulitzer, Johnny Was, and Emerging Brands, reflecting a brand-focused management approach[294] - The structure emphasizes operational coordination and resource allocation across each brand's direct-to-consumer, wholesale, and licensing operations[294] - The Lanier Apparel operating group was exited in Fiscal 2021[294] COMPARABLE SALES Comparable sales are defined to include full-price retail and e-commerce, excluding certain clearance and F&B sales - Comparable sales include net sales from full-price retail stores and e-commerce sites, excluding outlet sales, e-commerce flash clearance sales, and food and beverage sales[296] - Stores are included if open since the beginning of the prior fiscal year and without significant remodels, size changes (>15%), or relocations[297] - Definitions of comparable sales vary among retail companies, so Oxford's metrics may not be directly comparable to others[298] DIRECT TO CONSUMER LOCATIONS The company operated 315 permanent direct-to-consumer locations as of February 3, 2024 Direct to Consumer Locations by Brand | Brand | February 3, 2024 | January 28, 2023 | January 29, 2022 | January 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Tommy Bahama full-price retail stores | 102 | 103 | 102 | 105 | | Tommy Bahama retail-food & beverage locations | 22 | 21 | 21 | 20 | | Tommy Bahama outlets | 34 | 33 | 35 | 35 | | Total Tommy Bahama locations | 158 | 157 | 158 | 160 | | Lilly Pulitzer full-price retail stores | 60 | 59 | 58 | 59 | | Johnny Was full-price retail stores | 72 | 65 | — | — | | Johnny Was outlets | 3 | 2 | — | — | | Total Johnny Was locations | 75 | 67 | — | — | | Southern Tide full-price retail stores | 19 | 6 | 4 | 3 | | TBBC full-price retail stores | 3 | 3 | 1 | — | | Total Oxford direct to consumer locations | 315 | 292 | 221 | 222 | RESULTS OF OPERATIONS Net sales increased 11.3% in Fiscal 2023, but operating income and net earnings fell by 63% due to an impairment charge Consolidated Statements of Operations Summary (in thousands, except percentages) | Metric | Fiscal 2023 | % of Net Sales | Fiscal 2022 | % of Net Sales | Fiscal 2021 | % of Net Sales | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,571,475 | 100.0% | $1,411,528 | 100.0% | $1,142,079 | 100.0% | | Cost of goods sold | $575,890 | 36.6% | $522,673 | 37.0% | $435,861 | 38.2% | | Gross profit | $995,585 | 63.4% | $888,855 | 63.0% | $706,218 | 61.8% | | SG&A | $820,705 | 52.2% | $692,004 | 49.0% | $573,636 | 50.2% | | Impairment of goodwill and intangible assets | $113,611 | 7.2% | — | —% | — | —% | | Royalties and other operating income | $19,713 | 1.3% | $21,923 | 1.6% | $32,921 | 2.9% | | Operating income | $80,982 | 5.2% | $218,774 | 15.5% | $165,503 | 14.5% | | Interest expense, net | $6,036 | 0.4% | $3,049 | 0.2% | $944 | 0.1% | | Earnings before income taxes | $74,946 | 4.8% | $215,725 | 15.3% | $164,559 | 14.4% | | Income taxes | $14,243 | 0.9% | $49,990 | 3.5% | $33,238 | 2.9% | | Net earnings | $60,703 | 3.9% | $165,735 | 11.7% | $131,321 | 11.5% | | Net earnings per share | $3.82 | - | $10.19 | - | $7.78 | - | Consolidated Net Sales by Distribution Channel | Channel | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | :--- | | Retail | 39% | 39% | 39% | | E-commerce | 34% | 33% | 32% | | Food & beverage | 7% | 8% | 8% | | Wholesale | 20% | 20% | 20% | | Total | 100% | 100% | 100% | Net Sales Consolidated net sales increased 11.3% to $1.57 billion, driven primarily by the Johnny Was acquisition - The 11.3% increase in consolidated net sales was primarily due to a $130 million increase from Johnny Was (full year vs 19 weeks in FY22) and single-digit growth in other brands[309] - The 53rd week in Fiscal 2023 contributed an estimated $16 million to consolidated net sales[309] - Full-price e-commerce sales increased by $66 million (16%), full-price retail store sales by $46 million (9%), and wholesale sales by $30 million (11%)[310] Net Sales by Operating Group (in thousands) | Operating Group | Fiscal 2023 | Fiscal 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Tommy Bahama | $898,807 | $880,233 | $18,574 | 2.1% | | Lilly Pulitzer | $343,499 | $339,266 | $4,233 | 1.2% | | Johnny Was | $202,859 | $72,591 | $130,268 | NM% | | Emerging Brands | $126,825 | $116,484 | $10,341 | 8.9% | | Corporate and Other | $(515) | $2,954 | $(3,469) | (117.4)% | | Consolidated net sales | $1,571,475 | $1,411,528 | $159,947 | 11.3% | Gross Profit Gross margin improved to 63.4% in Fiscal 2023, driven by Johnny Was and reduced freight costs - Gross margin improvement was driven by Johnny Was's higher margin (post-purchase accounting impact), fewer inventory markdowns in Emerging Brands, and reduced freight costs[320] - Offsetting factors included increased e-commerce flash clearance sales and loyalty discounts in Lilly Pulitzer, and higher LIFO accounting charges[320] Gross Profit by Operating Group (in thousands) | Operating Group | Fiscal 2023 | Fiscal 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Tommy Bahama | $579,118 | $567,557 | $11,561 | 2.0% | | Lilly Pulitzer | $226,206 | $225,028 | $1,178 | 0.5% | | Johnny Was | $137,567 | $44,765 | $92,802 | NM% | | Emerging Brands | $61,798 | $53,012 | $8,786 | 16.6% | | Corporate and Other | $(9,104) | $(1,507) | $(7,597) | NM% | | Consolidated gross profit | $995,585 | $888,855 | $106,730 | 12.0% | Gross Margin by Operating Group | Operating Group | Fiscal 2023 | Fiscal 2022 | | :--- | :--- | :--- | | Tommy Bahama | 64.4% | 64.5% | | Lilly Pulitzer | 65.9% | 66.3% | | Johnny Was | 67.8% | 61.7% | | Emerging Brands | 48.7% | 45.5% | | Corporate and Other | NM% | NM% | | Consolidated gross margin | 63.4% | 63.0% | SG&A SG&A expenses increased by 18.6% in Fiscal 2023, with two-thirds of the increase attributable to Johnny Was - Approximately $85 million (66%) of the SG&A increase was due to Johnny Was[327] - Major increases included employment costs ($46M), advertising ($22M), occupancy expenses ($15M), and variable expenses ($12M)[328] - The 53rd week in Fiscal 2023 contributed an estimated $11 million to incremental SG&A[329] SG&A Expenses (in thousands) | Metric | Fiscal 2023 | Fiscal 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | SG&A | $820,705 | $692,004 | $128,701 | 18.6% | | SG&A (as a % of net sales) | 52.2% | 49.0% | - | - | Impairment of goodwill, intangible assets and equity method investments The company recognized $113.6 million in noncash impairment charges in Fiscal 2023, primarily for Johnny Was - Noncash impairment charges totaled $113.6 million in Fiscal 2023[330] - A $111 million impairment charge for goodwill and intangible assets was recognized in the Johnny Was reporting unit[330] - The Johnny Was impairment was driven by the challenging macroeconomic environment, cautious consumer, and elevated interest rates[330] - A $2 million impairment charge was recognized for an equity method investment in a smaller lifestyle brand due to forecasted future losses[331] - No impairment charges for goodwill, intangible assets, or equity method investments were recorded in Fiscal 2022[330][331] Royalties and other operating income Royalties and other operating income decreased by 10.1% due to lower Tommy Bahama royalties and a resort loss - The decrease was primarily due to lower Tommy Bahama royalties ($2M) and a loss from the Tommy Bahama Miramonte Resort & Spa ($2M) during its remodel and rebranding[332] - A $2 million gain on the sale of the Merida manufacturing facility partially offset these decreases[332] Royalties and Other Operating Income (in thousands) | Metric | Fiscal 2023 | Fiscal 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Royalties and other operating income | $19,713 | $21,923 | $(2,210) | (10.1)% | | Gain on sale of Merida manufacturing facility | $(1,756) | — | - | - | Operating income Consolidated operating income decreased by 63%, driven by the Johnny Was impairment and lower income across all groups - The 63% decrease in consolidated operating income was primarily due to lower operating income across all groups and an increased operating loss in Corporate and Other[333] - Johnny Was's operating loss was significantly impacted by a $111 million impairment charge for goodwill and intangible assets[337] - Tommy Bahama's operating income decreased due to increased SG&A, while Lilly Pulitzer's decreased due to increased SG&A and lower gross margin[334][335] - Emerging Brands' operating income decreased due to increased SG&A and an impairment charge on an unconsolidated entity[338] Operating Income (Loss) by Operating Group (in thousands) | Operating Group | Fiscal 2023 | Fiscal 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Tommy Bahama | $160,543 | $172,761 | $(12,218) | (7.1)% | | Lilly Pulitzer | $56,110 | $67,098 | $(10,988) | (16.4)% | | Johnny Was | $(104,776) | $(1,544) | $(103,232) | NM% | | Emerging Brands | $6,714 | $15,602 | $(8,888) | (57.0)% | | Corporate and Other | $(37,609) | $(35,143) | $(2,466) | NM% | | Consolidated operating income | $80,982 | $218,774 | $(137,792) | (63.0)% | Interest expense, net Net interest expense nearly doubled in Fiscal 2023 due to higher debt balances and interest rates - The increase was primarily due to a higher average outstanding debt balance and increased interest rates in Fiscal 2023[341] - Average debt levels are expected to be lower in Fiscal 2024[341] Interest Expense, Net (in thousands) | Metric | Fiscal 2023 | Fiscal 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Interest expense, net | $6,036 | $3,049 | $2,987 | 98.0% | Income taxes The effective tax rate decreased to 19.0% in Fiscal 2023 due to various favorable items - Fiscal 2023 tax expense benefited from restricted stock vesting, R&D tax credits, and foreign earnings adjustments[343] - Fiscal 2022 tax expense benefited from valuation allowance reversals and net operating loss utilization[344] - Both years' effective tax rates were lower than the typical 25% and are not indicative of future rates[342] Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Fiscal 2023 | Fiscal 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $14,243 | $49,990 | $(35,747) | (71.5)% | | Effective tax rate | 19.0% | 23.2% | - | - | Net earnings Net earnings per diluted share decreased by 63% to $3.82, primarily due to the Johnny Was impairment charge - The 63% decrease in net earnings per diluted share was primarily due to the $111 million Johnny Was impairment charge[346] - Other contributing factors included lower operating income at Tommy Bahama, Lilly Pulitzer, and Emerging Brands, increased interest expense, and a higher operating loss at Corporate and Other[346] - A lower effective tax rate partially offset these decreases[346] Net Earnings Summary (in thousands, except per share amounts) | Metric | Fiscal 2023 | Fiscal 2022 | | :--- | :--- | :--- | | Net sales | $1,571,475 | $1,411,528 | | Operating income | $80,982 | $218,774 | | Net earnings | $60,703 | $165,735 | | Net earnings per diluted share | $3.82 | $10.19 | | Weighted average shares outstanding - diluted | 15,906 | 16,259 | FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The company generated strong operating cash flow in Fiscal 2023 and maintains ample liquidity under its credit facility - Primary cash flow sources are branded apparel sales, used for product purchases, operating expenses, capital expenditures, dividends, and debt repayment[347][348] - Cash provided by operating activities was $244 million in Fiscal 2023, exceeding cash used for capital expenditures, dividends, and share repurchases[349][365] - As of February 3, 2024, the company had $29 million in borrowings and $288 million in unused availability under its $325 million U.S Revolving Credit Agreement[376][393] - Capital expenditures are anticipated to increase in Fiscal 2024, driven by the new Lyons, Georgia distribution center project, direct-to-consumer operations, and IT initiatives[386][387] - In Fiscal 2023, the company paid $42 million in dividends and repurchased $20 million in shares[369][390][391] CRITICAL ACCOUNTING POLICIES AND ESTIMATES Financial statements rely on critical estimates for revenue recognition, inventory, goodwill, and income taxes - Critical accounting policies and estimates include revenue recognition, inventory valuation, business combinations, goodwill and intangible asset impairment, and income taxes[394][398] - Estimates for direct-to-consumer return reserves ($13M in FY23) and wholesale discounts/allowances ($3M in FY23) require judgment based on historical and current trends[400][401] - Inventories are valued at the lower of LIFO cost or market for 92% of inventory ($146M in FY24), with a LIFO reserve of $83 million[405][490][492] - Goodwill and indefinite-lived intangible assets are tested annually for impairment, using income and market approaches, with significant assumptions about revenue growth, operating margins, and discount rates[415][496][499] - The $111 million impairment charge for Johnny Was in Fiscal 2023 highlights the sensitivity of these estimates to macroeconomic conditions and interest rates[420][588] - Income tax provision requires significant judgment due to complex tax laws, uncertainties in deferred tax assets, valuation allowances, and uncertain tax positions[424] RECENT ACCOUNTING PRONOUNCEMENTS The company is evaluating the impact of new ASUs related to segment reporting and income tax disclosures - ASU 2023-07 (Segment Reporting) expands annual and interim disclosure requirements for reportable segment expenses, effective January 1, 2024[561] - ASU 2023-09 (Income Taxes) expands income tax disclosures for rate reconciliation and taxes paid, effective January 1, 2025[562] - The company is currently evaluating the potential effect of these ASUs on its financial statement disclosures[561][562] SEASONALITY The business is subject to seasonality, with higher demand in spring, summer, and holiday seasons - All operating groups are impacted by seasonality, with higher demand in spring, summer, and holiday seasons, and lower in the fall (third fiscal quarter)[431] - Quarterly operating results and working capital requirements fluctuate significantly[431] - Past quarterly results are not indicative of future periods due to varying impacts of unusual items, economic conditions, and other factors[431] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from changes in interest rates, commodity prices, and foreign currency rates - The company is exposed to market risk from changes in interest rates, commodity prices, and foreign currency exchange rates[432] - The U.S Revolving Credit Agreement has variable interest rates (weighted average 7% as of Feb 3, 2024), exposing the company to interest rate risk[433][434] - A 100 basis point increase in interest rates would increase interest expense by less than $1 million, based on $29 million variable-rate debt outstanding[434] - Foreign currency risk is primarily from Tommy Bahama's Canadian and Australian operations and product purchases, but is not expected to materially impact near-term consolidated results[438] - Commodity and inflation risks are managed through price negotiations, selective price increases, and cost containment, without significant hedging[439] Interest Rate Risk The company is exposed to interest rate risk through its variable-rate credit agreement but expects to reduce debt - Exposure to interest rate risk arises from variable-rate borrowings under the U.S Revolving Credit Agreement[433] - As of February 3, 2024, $29 million was outstanding at a weighted average interest rate of 7%[434] - A 100 basis point increase in interest rates would increase interest expense by less than $1 million[434] - The company expects to reduce debt levels in Fiscal 2024, particularly in the first quarter[434] Foreign Currency Risk Foreign currency risk is not expected to materially impact near-term results, as 97% of sales are in the U.S - Exposure to foreign currency exchange rate changes from re-measurement of transactions and translation of foreign subsidiary financial statements[436] - Future product costs could increase due to fluctuations in the U.S dollar against local currencies of suppliers, despite most purchases being U.S dollar-denominated[437] - With 97% of consolidated net sales in the U.S, foreign currency changes are not expected to materially impact near-term consolidated results[438] - Primary foreign currency exposure results from Tommy Bahama's operations in Canada and Australia[532] Commodity and Inflation Risk Commodity and inflation risks are managed through price negotiations and cost containment, without significant hedging - The company is affected by inflation and changing prices of raw materials (cotton, silk, linen, polyester, etc) used in its products[439] - Risks are managed through negotiating product prices in advance, selective price increases, and cost containment initiatives[439] - Historically, the company has not entered into significant long-term sales or purchase contracts or engaged in hedging activities for commodity risks[439] Item 8. Financial Statements and Supplementary Data This section presents the company's consolidated financial statements and supplementary data for Fiscal 2023 Consolidated Balance Sheets (in thousands) | ASSETS | Feb 3, 2024 | Jan 28, 2023 | | :--- | :--- | :--- | | Total Current Assets | $293,115 | $330,463 | | Property and equipment, net | $195,137 | $177,584 | | Intangible assets, net | $262,101 | $283,845 | | Goodwill | $27,190 | $120,498 | | Operating lease assets | $263,934 | $240,690 | | Other assets, net | $32,188 | $32,209 | | Deferred income taxes | $24,179 | $3,376 | | Total Assets | $1,097,844 | $1,188,665 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Total Current Liabilities | $240,644 | $269,639 | | Long-term debt | $29,304 | $119,011 | | Non-current portion of operating lease liabilities | $243,703 | $220,709 | | Other non-current liabilities | $23,279 | $20,055 | | Deferred income taxes | — | $2,981 | | Total Shareholders' Equity | $560,914 | $556,270 | | Total Liabilities and Shareholders' Equity | $1,097,844 | $1,188,665 | Consolidated Statements of Operations (in thousands) | Metric | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | :--- | | Net sales | $1,571,475 | $1,411,528 | $1,142,079 | | Gross profit | $995,585 | $888,855 | $706,218 | | SG&A | $820,705 | $692,004 | $573,636 | | Impairment of goodwill, intangible assets and equity method investments | $113,611 | — | — | | Operating income | $80,982 | $218,774 | $165,503 | | Net earnings | $60,703 | $165,735 | $131,321 | | Net earnings per diluted share | $3.82 | $10.19 | $7.78 | Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | :--- | | Cash provided by operating activities | $244,284 | $125,610 | $198,006 | | Cash used in investing activities | $(83,981) | $(151,747) | $(181,572) | | Cash used in financing activities | $(161,172) | $(11,527) | $(38,175) | | Net change in cash and cash equivalents | $(869) | $(37,664) | $(21,741) | | Cash and cash equivalents at end of period | $7,604 | $8,826 | $44,859 | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed notes accompanying the consolidated financial statements Note 1. Business and Summary of Significant Accounting Policies This note details the company's business, the impact of macroeconomic conditions, and critical accounting policies - Oxford Industries designs, sources, markets, and distributes products for Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head, and Jack Rogers[451] - The company's business is organized into direct-to-consumer (retail, e-commerce, outlets, food & beverage) and wholesale distribution channels[451] - Recent macroeconomic conditions, including inflation and elevated interest rates, negatively impacted Fiscal 2023 results, leading to reduced conversion rates and lower net earnings[454] - Revenue recognition involves estimates for direct-to-consumer returns ($13M liability in FY24) and wholesale discounts/allowances ($3M reserve in FY24)[468][470] - 92% of inventories ($146M in FY24) are valued at the lower of LIFO cost or market, with an $83 million LIFO reserve[490][492] - Goodwill and indefinite-lived intangible assets are tested annually for impairment using quantitative assessments, with significant estimates and assumptions[495][496][498][499] - ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes) are applicable in future years, with the company evaluating their potential impact[561][562] Note 2. Operating Groups This note provides detailed financial information for each of the company's operating groups - Operating groups are Tommy Bahama, Lilly Pulitzer, Johnny Was, and Emerging Brands; Lanier Apparel was exited in Fiscal 2021[563] - Emerging Brands includes Southern Tide, TBBC, Duck Head, and Jack Rogers (acquired in Fiscal 2023)[564] - Corporate and Other is a reconciling category for corporate offices, financing, inter-segment eliminations, and unallocated items like LIFO adjustments[566] Net Sales by Operating Group (in thousands) | Operating Group | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | :--- | | Tommy Bahama | $898,807 | $880,233 | $724,305 | | Lilly Pulitzer | $343,499 | $339,266 | $298,995 | | Johnny Was | $202,859 | $72,591 | — | | Emerging Brands | $126,825 | $116,484 | $90,053 | | Lanier Apparel | — | — | $24,858 | | Corporate and Other | $(515) | $2,954 | $3,868 | | Consolidated net sales | $1,571,475 | $1,411,528 | $1,142,079 | Operating Income (Loss) by Operating Group (in thousands) | Operating Group | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | :--- | | Tommy Bahama | $160,543 | $172,761 | $111,733 | | Lilly Pulitzer | $56,110 | $67,098 | $63,601 | | Johnny Was | $(104,776) | $(1,544) | — | | Emerging Brands | $6,714 | $15,602 | $16,649 | | Lanier Apparel | — | — | $4,888 | | Corporate and Other | $(37,609) | $(35,143) | $(31,368) | | Consolidated operating income | $80,982 | $218,774 | $165,503 | Note 3. Property and Equipment, Net This note summarizes the company's property and equipment, which increased to $195.1 million in Fiscal 2023 Property and Equipment, Net (in thousands) | Category | February 3, 2024 | January 28, 2023 | | :--- | :--- | :--- | | Land | $2,887 | $3,090 | | Buildings and improvements | $32,651 | $32,495 | | Furniture, fixtures, equipment and technology | $315,810 | $278,589 | | Leasehold improvements | $270,861 | $255,955 | | Less accumulated depreciation and amortization | $(427,072) | $(392,545) | | Property and equipment, net | $195,137 | $177,584 | Note 4. Business Combinations This note details the acquisition of Johnny Was in Fiscal 2022 and other minor acquisitions in Fiscal 2023 - In Fiscal 2023, minor acquisitions (Jack Rogers, Southern Tide signature stores) totaled $11 million, adding $5M intangible assets, $3M inventory, and $3M goodwill[577] - The Johnny Was brand was acquired on September 19, 2022, for a preliminary purchase price of $270 million in cash[578][579] - Acquired intangible assets for Johnny Was included $56.7 million in finite-lived assets (customer relationships) and $77.9 million in indefinite-lived assets (tradenames and trademarks)[582] Johnny Was Acquisition-Date Fair Values (in thousands) | Asset/Liability | Final Amounts at Feb 3, 2024 | | :--- | :--- | | Cash and cash equivalents | $7,296 | | Receivables | $8,777 | | Inventories | $23,406 | | Property and equipment | $20,161 | | Intangible assets | $134,640 | | Goodwill | $99,236 | | Operating lease assets | $54,859 | | Accounts payable, accrued expenses and other liabilities | $(34,078) | | Non-current portion of operating lease liabilities | $(47,009) | | Purchase price | $273,641 | Johnny Was Pro Forma Consolidated Information (in thousands, except per share data) | Metric | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | | Net sales | $1,546,371 | $1,327,875 | | Earnings before income taxes | $237,919 | $169,832 | | Net earnings | $182,380 | $135,276 | | Earnings per share: Basic | $11.47 | $8.02 | | Earnings per share: Diluted | $11.22 | $8.13 | Note 5. Intangible Assets and Goodwill Goodwill decreased significantly in Fiscal 2023 due to a $99 million impairment charge for the Johnny Was reporting unit - A $99 million goodwill impairment charge and a $12 million indefinite-lived intangible asset impairment charge were recognized for the Johnny Was reporting unit in Fiscal 2023[588] - These impairments were driven by the challenging macroeconomic environment, cautious consumer behavior, and elevated interest rates[588] - Johnny Was's impaired assets have the least excess of fair value over book value, making them sensitive to future changes[420] Intangible Assets by Category (in thousands) | Category | February 3, 2024 | January 28, 2023 | | :--- | :--- | :--- | | Total intangible assets with finite lives, net | $48,601 | $58,445 | | Total intangible assets with indefinite lives | $213,500 | $225,400 | | Total intangible assets, net | $262,101 | $283,845 | Goodwill by Operating Group (in thousands) | Operating Group | Feb 3, 2024 | Jan 28, 2023 | | :--- | :--- | :--- | | Tommy Bahama | $697 | $739 | | Lilly Pulitzer | $19,522 | $19,522 | | Johnny Was | — | $96,637 | | Emerging Brands | $6,971 | $3,600 | | Corporate and Other | — | — | | Total | $27,190 | $120,498 | Note 6. Debt The company amended its credit agreement in March 2023, providing a $325 million revolving credit facility - The U.S Revolving Credit Agreement was amended on March 6, 2023, providing a $325 million facility maturing in March 2028[589] - As of February 3, 2024, borrowings were $29 million, standby letters of credit were $5 million, and unused availability was $288 million[593] - The interest rate is variable (weighted average 7% as of Feb 3, 2024) and the facility is secured by substantially all domestic assets[591] - The company was compliant with all applicable covenants in Fiscal 2023, with no financial covenant testing required[596] Note 7. Leases and Other Commitments Total lease expense was $119 million in Fiscal 2023, with future lease payments totaling $368.4 million - Weighted-average remaining operating lease term was six years, with a weighted-average discount rate of 5.7% as of February 3, 2024[599] Lease Expenses (in thousands) | Metric | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | :--- | | Operating lease expense | $71,000 | $61,000 | $58,000 | | Variable lease expense | $48,000 | $43,000 | $35,000 | | Total lease expense | $119,000 | $104,000 | $93,000 | Required Lease Liability Payments (in thousands) | Fiscal Year | Operating Lease Payments | | :--- | :--- | | 2024 | $78,886 | | 2025 | $64,045 | | 2026 | $58,746 | | 2027 | $45,053 | | 2028 | $39,334 | | After 2028 | $82,348 | | Total lease payments | $368,412 | [Note 8. Shareholders' Equity](index=174&type=section&id=Note%208.%20Shareholders'%