Oxford Industries(OXM) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter sales were $266 million, down from $282 million in fiscal 2019, but above the guidance range of $220 million to $240 million [12] - Adjusted earnings per share increased to $1.89 compared to $1.30 in the first quarter of fiscal 2019 [13] - Gross margin expanded 520 basis points over 2019 to 64% [34] - Consolidated adjusted operating margin expanded 410 basis points over 2019 to 15% [36] Business Line Data and Key Metrics Changes - E-commerce sales increased by 55% compared to 2019, significantly contributing to overall sales growth [31] - Tommy Bahama's women's business outperformed the men's business, indicating strong brand loyalty and customer engagement [19] - Lilly Pulitzer's sales exceeded first quarter 2019 levels, with an operating margin of 27% compared to 21% in 2019 [21] Market Data and Key Metrics Changes - Retail sales were 16% lower than in 2019, with significant regional differences in recovery, particularly strong in the Southeast and Southwest [32] - Restaurants experienced a 7% sales increase compared to 2019, benefiting from the addition of new Marlin Bars [33] - Inventory decreased 29% on a FIFO basis compared to the end of the first quarter of 2020, indicating effective inventory management [37] Company Strategy and Development Direction - The company is focused on enhancing digital marketing and omni-channel customer service to drive growth [16] - Plans to open new retail stores and a new Marlin Bar in Las Vegas, indicating a commitment to physical expansion [49] - Continued investment in information technology initiatives and digital marketing to support growth opportunities [48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of regions that were slower to rebound, anticipating continued consumer interest in travel and social events [26] - The company expects strong revenue and earnings in the second quarter, projecting sales between $300 million to $310 million [40] - Management highlighted the importance of brand loyalty and customer engagement as key drivers for future growth [31] Other Important Information - The company is exiting the Lanier Apparel business, which is expected to impact sales negatively in the second quarter [41] - Cash provided by operating activities was $41 million in the first quarter of 2021, compared to cash used in operating activities of $46 million in the first quarter of 2020 [39] - The company has no debt and a strong liquidity position with $92 million in cash at the end of the first quarter [39] Q&A Session Summary Question: Inquiry about gross margin performance and inventory management - Management confirmed that there was no significant cost difference from carried-over inventory, which helped maintain brand health and avoid excess inventory [52][53] Question: Supply chain impact on inventory and clearance sales - Management indicated that higher sell-through rates were the primary cause of reduced inventory, with supply chain issues complicating inventory replenishment [59] Question: Performance of outlet stores versus full-price stores - Outlet sales were down, but gross margins remained healthy, indicating effective inventory management despite lower sales [60] Question: Recovery in Northern states and performance in Hawaii - Management noted improvements in the Mid-Atlantic, Northeast, and Midwest regions, with Hawaii showing mixed recovery based on tourist demographics [63][65] Question: E-commerce growth and margin impact - E-commerce is expected to continue growing as a percentage of total sales, with profitability remaining strong [70][72] Question: Operating margin expectations and efficiency improvements - Management anticipates entering low double-digit operating margins, with ongoing improvements in operational efficiency contributing to margin expansion [81][83]