Oxford Industries Reports Third Quarter Results

--Reports Earnings of $0.33 per Share--

--Expects Strong Fourth Quarter from Continuing Operations--

Dec 08, 2010, 16:00 ET from Oxford Industries, Inc.

ATLANTA, Dec. 8, 2010 /PRNewswire-FirstCall/ -- Oxford Industries, Inc. (NYSE: OXM) today announced financial results for its fiscal 2010 third quarter, which ended October 30, 2010. Consolidated net sales and earnings were consistent with estimates reported on November 22, 2010. Diluted net earnings per share were $0.33 compared to $0.26 in the third quarter of fiscal 2009.

J. Hicks Lanier, Chairman and Chief Executive Officer of Oxford Industries, Inc., commented, "We are pleased with our third quarter results, particularly the strong top and bottom line performance from our Tommy Bahama Group and another very solid quarter from Lanier Clothes, as well as the year to date improvement at Ben Sherman. Based on the momentum we carried from the third quarter into November, as well as holiday selling results to date in both our stores and e-commerce, we are expecting a significant increase in earnings for the fourth quarter and the year."

On November 22, 2010, the Company announced that it has signed a definitive agreement to sell substantially all of Oxford Apparel, one of its operating groups, to LF USA, a subsidiary of Hong Kong-based Li & Fung Limited, for $121.7 million.  The transaction, which is structured as an asset sale, is expected to close by the end of the calendar year and is subject to customary closing conditions. The Company expects to report a gain of approximately $2.80 per diluted share on the sale and expects the net cash proceeds to approximate $90 million. The Company's Oxford Golf business and a distribution center in Lyons, GA, which are a part of Oxford Apparel, are not included in the transaction and will continue to be operated by the Company.

As a result of the planned disposal of the assets and operations of the Oxford Apparel Group, the results of operations for Oxford Apparel other than the operations relating to the Oxford Golf business and the Lyons, Georgia distribution center, have been classified as discontinued operations for all periods presented. The Company noted that the third quarter results for the discontinued operations reflect $64.9 million of sales and $0.26 of diluted earnings per share.  For the third quarter, sales from continuing operations were $139.6 million and diluted earnings from continuing operations were $0.08 per share.

Operating Results for Continuing Operations

Tommy Bahama reported net sales of $81.1 million for the third quarter of fiscal 2010 compared to $75.4 million in the third quarter of fiscal 2009. The increase in net sales for Tommy Bahama was primarily due to improved comparable retail store sales and higher e-commerce sales. Tommy Bahama's operating income for the third quarter of fiscal 2010 was $3.4 million compared to $2.1 million in the third quarter of fiscal 2009. The increase in operating income for Tommy Bahama was primarily due to the increased net sales, improved gross margins due to a greater proportion of direct to consumer sales as a percentage of total Tommy Bahama sales and higher royalty income. These items were partially offset by increased SG&A. The third quarter is Tommy Bahama's smallest quarter of the fiscal year. As of October 30, 2010 and October 31, 2009, Tommy Bahama operated 86 and 85 retail stores, respectively.

Ben Sherman reported net sales of $25.5 million for the third quarter of fiscal 2010 compared to $29.8 million in the third quarter of fiscal 2009. The decrease in net sales for Ben Sherman was primarily due to the exit from, and subsequent licensing of, the footwear and kids' businesses and the exit from the women's operations during fiscal 2009. Net sales in the third quarter of fiscal 2009 related to these exited businesses totaled approximately $4.3 million. Net sales were also impacted by a 3.4% decrease in the average exchange rate of the British pound sterling versus the United States dollar during the third quarter of fiscal 2010 compared to the average exchange rate during the third quarter of fiscal 2009. Ben Sherman's operating income for the third quarter of fiscal 2010 was $1.7 million compared to operating income of $2.3 million in the third quarter of fiscal 2009. The decrease in operating income for Ben Sherman was primarily due to decreased net sales partially offset by improved gross margins.

Net sales for Lanier Clothes were $30.8 million in the third quarter of fiscal 2010 compared to $35.6 million in the third quarter of fiscal 2009. The decrease in net sales for Lanier Clothes was primarily due to lower sales in the private label businesses. Operating income in the third quarter of fiscal 2010 was $5.3 million compared to operating income of $5.2 million in the third quarter of fiscal 2009.  The increase in operating income for Lanier Clothes, despite a decrease in net sales, was primarily due to improved gross margins resulting from sales mix, with branded sales representing a greater proportion of Lanier Clothes' sales in the third quarter of fiscal 2010. The improved gross margins were partially offset by higher SG&A primarily resulting from the increased branded sales.

The results of the continuing operations of Oxford Apparel, which is comprised of Oxford Golf and the Lyons, Georgia distribution center operations, included net sales of $2.1 million for the third quarter of fiscal 2010 compared to $1.9 million in the third quarter of fiscal 2009. The operating loss for Oxford Apparel was $0.3 million in the third quarter of fiscal 2010, consistent with the third quarter of fiscal 2009.

The Corporate and Other operating loss decreased to $3.7 million for the third quarter of fiscal 2010 from $5.2 million in the third quarter of fiscal 2009.  The decrease in the operating loss was primarily due to a LIFO accounting credit of $0.3 million in the third quarter of fiscal 2010 and a LIFO accounting charge of $1.2 million in the third quarter of fiscal 2009.

Consolidated gross margins for the third quarter of fiscal 2010 increased to 52.8% compared to 47.9% in the third quarter of fiscal 2009. The increase in gross margins was primarily due to changes in the sales mix for the third quarter of fiscal 2010 compared to the third quarter of fiscal 2009. The changes in sales mix included (1) higher direct to consumer sales in Tommy Bahama, both in total and as a proportion of total Tommy Bahama sales, (2) Tommy Bahama sales representing a larger proportion of the total net sales, (3) fewer close out sales in Ben Sherman and (4) a sales mix change in Lanier Clothes towards branded products. Additionally, gross profit reflects a LIFO accounting adjustment credit of $0.3 million in the third quarter of fiscal 2010 and a LIFO accounting charge of $1.2 million in the third quarter of fiscal 2009. The Company anticipates that consolidated gross margins in fiscal 2010 will continue to increase compared to the prior year as its consolidated sales mix is more heavily weighted towards Tommy Bahama.

SG&A for the third quarter of fiscal 2010 increased to $71.0 million, or 50.8% of net sales, compared to $66.9 million, or 47.0% of net sales in the third quarter of fiscal 2009. The increase in SG&A was primarily due to costs associated with the resumption of the Company's incentive compensation program, which was suspended in fiscal 2009 and is tied to financial performance. The resumption of the incentive compensation program impacted SG&A for each operating group. SG&A was also impacted by costs associated with operating retail stores opened during or subsequent to the third quarter of fiscal 2009.

Royalties and other operating income for the third quarter of fiscal 2010 were $4.0 million compared to $3.3 million in the third quarter of fiscal 2009.  The increase in royalties and other operating income was primarily due to increased royalty income in Tommy Bahama, as sales reported by certain licensees increased and new licensees were added.

Interest expense for the third quarter of fiscal 2010 was $5.1 million, flat with the same period of the prior year. Interest expense in the fourth quarter of fiscal 2010 is expected to be comparable to that of the third quarter.

For the first nine months of fiscal 2010, consolidated net sales from continuing operations were $446.2 million compared to $441.9 million in the first nine months of fiscal 2009 and diluted net earnings per share from continuing operations were $0.88 compared to $0.02 in the same period of the prior year.  Both periods include LIFO accounting adjustments and fiscal 2009 also includes restructuring charges and the write-off of unamortized deferred financing costs.

Balance Sheet and Liquidity

Total inventories related to continuing operations at October 30, 2010 were $63.5 million, compared to $54.5 million at October 31, 2009.  Inventories increased by 16.5% primarily due to an increase in both Tommy Bahama and Lanier Clothes to support anticipated sales, which was partially offset by the decline at Ben Sherman resulting from the exit from and subsequent licensing of the footwear and kids' businesses and the exit from the Ben Sherman women's operations. Receivables related to continuing operations increased 2.5% primarily due to the higher wholesale sales in the last two months of the third quarter of fiscal 2010 compared to the last two months of the third quarter of fiscal 2009.  

At the end of the third quarter, the Company had total debt of $167.8 million compared to $178.7 million last year. At October 30, 2010, the Company had approximately $124.7 million in unused availability under its U.S. revolving credit facility and $13.4 million in unused availability under its U.K. revolving credit facility.

The Company's capital expenditures for fiscal 2010 for continuing operations, including $9.4 million incurred during the first nine months of fiscal 2010, are expected to be approximately $12 million. The fiscal 2010 capital expenditures primarily consist of costs associated with new retail stores and investment in certain technology initiatives.

Fiscal 2010 Guidance for Continuing Operations

For the fourth quarter the Company expects net sales from continuing operations in the range of $146 million to $156 million and diluted net earnings per share from continuing operations of $0.28 to $0.33.  This compares to net sales and earnings per share from continuing operations in the fourth quarter of fiscal 2009 of $143 million and $0.07, respectively.

For the full fiscal year 2010, the Company expects net sales from continuing operations in the range of $593 million to $603 million. Diluted net earnings per share from continuing operations for fiscal 2010 are expected to be between $1.16 and $1.21. This compares to net sales and earnings per share from continuing operations in fiscal 2009 of $585 million and $0.09, respectively.

Dividend

The Company also announced that its Board of Directors has approved a cash dividend of $0.11 per share payable on January 28, 2011 to shareholders of record as of the close of business on January 15, 2011.  The Company has paid dividends every quarter since it became publicly owned in 1960.

Conference Call

The Company will hold a conference call with senior management to discuss its financial results at 4:30 p.m. ET today.  A live web cast of the conference call will be available on the Company's website at www.oxfordinc.com.  Please visit the website at least 15 minutes before the call to register for the teleconference web cast and download any necessary software.  A replay of the call will be available through December 22, 2010.  To access the telephone replay, participants should dial (858) 384-5517.  The access code for the replay is 4445874.  A replay of the web cast will also be available following the teleconference on the Company's website at www.oxfordinc.com.  

About Oxford:

Oxford Industries, Inc. is an international apparel design, sourcing and marketing company featuring a diverse portfolio of owned and licensed brands and a collection of private label apparel businesses.  Oxford's brands include Tommy Bahama®, Ben Sherman®, Oxford Golf®, Arnold Brant® and Billy London®.  The Company also holds exclusive licenses to produce and sell certain product categories under the Kenneth Cole®, Geoffrey Beene® and Dockers® labels.  Oxford's wholesale customers are found in every major channel of distribution, including national chains, specialty catalogs, mass merchants, department stores, specialty stores and Internet retailers.  The Company operates retail stores, restaurants and Internet websites for some of its brands.  The Company also has license arrangements with select third parties to produce and sell certain product categories under its Tommy Bahama and/or Ben Sherman brands.  Oxford's stock has traded on the New York Stock Exchange since 1964 under the symbol OXM.  For more information, please visit Oxford's website at www.oxfordinc.com.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This press release may include statements that are forward-looking statements within the meaning of the federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. We intend for all forward-looking statements contained herein or on our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Important assumptions relating to these forward-looking statements include, among others, assumptions regarding the consummation and impact of potential acquisition or disposition activities, including the announced sale of substantially all of our Oxford Apparel Group, the impact of economic conditions on consumer demand and spending, demand for our products, timing of shipments requested by our wholesale customers, expected pricing levels, competitive conditions, the timing and cost of planned capital expenditures, costs of products and raw materials we purchase, access to capital and/or credit markets, expected outcomes of pending or potential litigation and regulatory actions and disciplined execution by key management. Forward-looking statements reflect our current expectations, based on currently available information, and are not guarantees of performance. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. contained in our Annual Report on Form 10-K for the period ended January 30, 2010 under the heading "Risk Factors" and those described from time to time in our future reports filed with the SEC.

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

Third

Quarter

Fiscal 2010

Third

Quarter

Fiscal 2009

First

Nine Months

Fiscal 2010

First

Nine Months

Fiscal 2009

Net sales

$     139,627

$     142,274

$     446,233

$     441,907

Cost of goods sold

65,942

74,163

203,823

227,876

Gross profit

73,685

68,111

242,410

214,031

SG&A

70,995

66,896

220,328

207,827

Amortization of intangible assets

241

307

719

911

71,236

67,203

221,047

208,738

Royalties and other operating income

3,982

3,266

11,218

8,038

Operating income

6,431

4,174

32,581

13,331

Interest expense, net

5,095

5,079

15,115

15,346

Earnings (loss) from continuing operations before income taxes

1,336

(905)

17,466

(2,015)

Income taxes (benefit)

17

(982)

2,944

(2,293)

Earnings from continuing operations

1,319

77

14,522

278

Earnings from discontinued operations, net of taxes

4,231

4,228

10,744

10,458

Net earnings

$       5,550

$       4,305

$      25,266

$      10,736

Earnings from continuing operations per common share:

Basic

$        0.08

$        0.00

$        0.88

$        0.02

Diluted

$        0.08

$        0.00

$        0.88

$        0.02

Earnings from discontinued operations per common share:

Basic

$        0.26

$        0.26

$        0.65

$        0.64

Diluted

$        0.26

$         0.26

$        0.65

$        0.64

Net earnings per common share:

Basic

$        0.34

$        0.26

$        1.53

$        0.66

Diluted

$        0.33

$        0.26

$        1.53

$        0.66

Weighted average common shares outstanding:

Basic

16,564

16,522

16,532

16,229

Dilution

12

11

13

4

Diluted

16,576

16,533

16,545

16,233

Dividends declared per common share

$        0.11

$        0.09

$        0.33

$        0.27

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except par amounts)

October 30,

2010

January 30,

2010

October 31,

2009

ASSETS

Current Assets:

Cash and cash equivalents

$    4,376

$    8,288

$    5,995

Receivables, net

58,900

44,690

57,440

Inventories, net

63,484

58,180

54,483

Prepaid expenses, net

14,663

10,508

13,818

Deferred tax assets

15,624

13,875

9,885

Assets related to discontinued operations, net

84,936

56,365

63,579

Total current assets

241,983

191,906

205,200

Property, plant and equipment, net

74,721

78,425

82,843

Intangible assets, net

136,584

137,462

138,372

Other non-current assets, net

21,181

17,381

17,216

Total Assets

$  474,469

$  425,174

$  443,631

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Trade accounts payable and other accrued expenses

$   63,308

$   68,249

$   64,564

Accrued compensation

19,000

9,259

9,337

Short-term debt and current maturities of long-term debt

20,924

-

17,479

Liabilities related to discontinued operations

21,542

18,942

12,969

Total current liabilities

124,774

96,450

104,349

Long-term debt, less current maturities

146,900

146,408

161,244

Other non-current liabilities

47,351

49,478

46,832

Non-current deferred income taxes

27,753

28,421

29,444

Commitments and contingencies

Shareholders' Equity:

Common stock, $1.00 par value per common share

16,570

16,461

16,528

Additional paid-in capital

95,660

91,840

90,511

Retained earnings

39,165

19,356

16,955

Accumulated other comprehensive loss

(23,704)

(23,240)

(22,232)

Total shareholders' equity

127,691

104,417

101,762

Total Liabilities and Shareholders' Equity

$  474,469

$  425,174

$  443,631

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

First Nine

Months

Fiscal 2010

First Nine

Months

Fiscal 2009

Cash Flows From Operating Activities:

Earnings from continuing operations

$  14,522

$     278

Adjustments to reconcile net earnings from continuing operations to net cash

provided by operating activities:

Depreciation

13,005

13,856

Amortization of intangible assets

719

911

Amortization/write-off of deferred financing costs and bond discount

1,464

2,881

Stock compensation expense

3,563

2,731

Loss on sale of property, plant and equipment

10

339

Deferred income taxes

(2,337)

(3,271)

Changes in working capital:

Receivables

(14,258)

(11,160)

Inventories

(5,549)

39,613

Prepaid expenses

(4,154)

(2,769)

Current liabilities

4,535

(5,548)

  Other non-current assets

(644)

(904)

  Other non-current liabilities

(2,119)

712

Net cash provided by operating activities

8,757

37,669

Cash Flows From Investing Activities:

Purchases of property, plant and equipment

(9,435)

(8,406)

Proceeds from sale of property, plant and equipment

78

-

Net cash used in investing activities

(9,357)

(8,406)

Cash Flows From Financing Activities:

Repayment of revolving credit arrangements

(64,514)

(188,575)

Proceeds from revolving credit arrangements

85,415

187,477

Repayment of company-owned life insurance policy loans

(4,125)

-

Repurchase of 8 7/8% Senior Unsecured Notes

-

(166,805)

Proceeds from the issuance of 11 3/8% Senior Secured Notes

-

146,029

Deferred financing costs paid

-

(5,043)

Proceeds from issuance of common stock

362

316

Dividends on common stock

(5,460)

(4,406)

Net cash provided by (used in) financing activities

11,678

(31,007)

Cash Flows from Discontinued Operations:

Net operating cash flows provided by (used in) discontinued operations

(14,939)

4,319

Net investing cash flows used in discontinued operations

(33)

(13)

Net cash provided by (used in) discontinued operations

(14,972)

4,306

Net change in cash and cash equivalents

(3,894)

2,562

Effect of foreign currency translation on cash and cash equivalents

(18)

143

Cash and cash equivalents at the beginning of year

8,288

3,290

Cash and cash equivalents at the end of period

$   4,376

$   5,995

Supplemental disclosure of cash flow information:

Cash paid for interest, net

$   9,658

$  10,220

Cash paid for income taxes

$  19,071

$   9,493

OXFORD INDUSTRIES, INC.

OPERATING GROUP INFORMATION

(UNAUDITED)

(in thousands)

Third

Quarter

Fiscal

2010

Third

Quarter

Fiscal

2009

First

Nine

Months

Fiscal 2010

First

Nine

Months

Fiscal 2009

Net Sales

Tommy Bahama

$      81,131

$      75,403

$     289,585

$     268,262

Ben Sherman

25,528

29,844

66,028

77,690

Lanier Clothes

30,820

35,555

83,984

92,266

Oxford Apparel

2,097

1,891

6,315

4,574

Corporate and Other

51

(419)

321

(885)

Total

$     139,627

$     142,274

$     446,233

$     441,907

Operating Income (Loss)

Tommy Bahama

$       3,440

$       2,143

$      35,473

$      27,772

Ben Sherman

1,684

2,323

1,608

(5,961)

Lanier Clothes

5,345

5,243

12,513

10,681

Oxford Apparel

(316)

(308)

(983)

(819)

Corporate and Other

(3,722)

(5,227)

(16,030)

(18,342)

Total Operating Income

$       6,431

$       4,174

$      32,581

$      13,331

SOURCE Oxford Industries, Inc.



RELATED LINKS

http://www.oxfordinc.com