UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended August ~~4, 2018~~3, 2019

	or

¨ ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File Number: 1-4365

OXFORD INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


Georgia		58-0831862
~~Georgia~~		~~58-0831862~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

999 Peachtree Street, N.E., Suite 688, Atlanta, Georgia30309

(Address of principal executive offices) (Zip Code)

~~(404)~~

(404) 659-2424

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1 par value	OXM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ☒ No ¨

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes þ☒ No ¨

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer x ☒	Accelerated filer o ☐	Non-accelerated filer ¨ ☐	Smaller reporting company ¨ ☐	Emerging growth company ¨
		~~(Do not check if a smaller reporting company)~~		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No þ

~~Indicate the number~~☒

As of August 30, 2019, there were 17,034,929 shares ~~outstanding of each~~ of the ~~issuer’s classes of~~registrant’s common stock ~~as of the latest practicable date.~~outstanding.



		~~Number of shares outstanding~~
~~Title of each class~~		~~as of August 31, 2018~~
~~Common Stock, $1 par value~~		~~16,951,448~~

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OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the Second Quarter of Fiscal ~~2018~~

2019


	Page
	~~Page~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)	5
Condensed Consolidated Statements of Operations (Unaudited)	6
Condensed Consolidated Statements of Comprehensive Income (Unaudited)	7
Condensed Consolidated Statements of Cash Flows (Unaudited)	8
Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15 16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	38 40
Item 4. Controls and Procedures	39 41

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	39 42
Item 1A. Risk Factors	39 42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39 42
Item 3. Defaults Upon Senior Securities	39 42
Item 4. Mine Safety Disclosures	40 42
Item 5. Other Information	40 42
Item 6. Exhibits	40 43
Signatures	40 44

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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

Our SEC filings and public announcements may include forward-looking statements about future events. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which typically are not historical in nature. We intend for all forward-looking statements contained herein, in our press releases 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). Such statements are subject to a number of risks, uncertainties and assumptions including, without limitation, ~~competitive conditions,~~demand for our products, which may be impacted by competitive conditions and/or evolving consumer shopping patterns; ~~the~~macroeconomic factors that may impact ~~of economic conditions on~~ consumer ~~demand and~~ spending for apparel and related products; ~~demand for our products;~~the timing of shipments requested by our wholesale customers; weather; expected pricing levels; retention of and disciplined execution by key management; the timing and cost of store openings and of planned capital expenditures; weather; changes in international, federal or state tax, trade and other laws and regulations; costs of products as well as the raw materials used in those products; costs of labor; retention of and disciplined execution by key management; the timing and cost of store and restaurant openings and remodels as well as other capital expenditures; changes, and the impact on our business operations of such changes, in international, federal or state tax, trade and other laws and regulations, including the potential imposition of additional duties, tariffs, taxes or other charges or barriers to trade resulting from ongoing trade developments with China and its impact on global markets, acquisition and disposition activities, including our ability to timely recognize ~~our~~ expected synergies from ~~any acquisitions we pursue;~~acquisitions; expected outcomes of pending or potential litigation and regulatory actions; access to capital and/or credit markets; and factors that could affect our consolidated effective tax ~~rate, including the impact of the recently enacted U.S. Tax Reform.~~rate. Forward-looking statements reflect our expectations at the time such forward looking statements are made, based on information available at such time, 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. Risk Factors contained in our Annual Report on Form 10-K for Fiscal ~~2017~~,2018, and those described from time to time in our future reports filed with the SEC. We caution that one should not place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

DEFINITIONS

As used in this report, unless the context requires otherwise, "our," "us" or "we" means Oxford Industries, Inc. and its consolidated subsidiaries; "SG&A" means selling, general and administrative expenses; "SEC" means the United States Securities and Exchange Commission; "FASB" means the Financial Accounting Standards Board; "ASC" means the FASB Accounting Standards Codification; "GAAP" means generally accepted accounting principles in the United States; ~~"discontinued operations" means the assets~~ and ~~operations of our former Ben Sherman operating group which we sold in 2015;~~ "TBBC" means The Beaufort Bonnet ~~Company, which we acquired in December 2017; and "U.S. Tax Reform" means the United States Tax Cuts and Jobs Act as enacted on December 22, 2017.~~Company. Unless otherwise indicated, all references to assets,

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liabilities, revenues, expenses or other information in this report reflect continuing operations. Additionally, the terms listed below reflect the respective period noted:


Fiscal 2020		52 weeks ending January 30, 2021
Fiscal 2019		52 weeks ending February 1, 2020
Fiscal 2018		52 weeks ~~ending~~ended February 2, 2019
Fiscal 2017		53 weeks ended February 3, 2018
~~Fiscal 2016~~		~~52 weeks ended January 28, 2017~~
Fourth Quarter Fiscal ~~2018~~2019		13 weeks ending February ~~2, 2019~~1, 2020
Third Quarter Fiscal ~~2018~~2019		13 weeks ending November ~~3, 2018~~2, 2019
Second Quarter Fiscal 2019		13 weeks ended August 3, 2019
First Quarter Fiscal 2019		13 weeks ended May 4, 2019
Fourth Quarter Fiscal 2018		13 weeks ended February 2, 2019
Third Quarter Fiscal 2018		13 weeks ended November 3, 2018
Second Quarter Fiscal 2018		13 weeks ended August 4, 2018
First Quarter Fiscal 2018		13 weeks ended May 5, 2018
~~Fourth Quarter Fiscal 2017~~		~~14 weeks ended February 3, 2018~~
~~Third Quarter Fiscal 2017~~		~~13 weeks ended October 28, 2017~~
~~Second Quarter Fiscal 2017~~		~~13 weeks ended July 29, 2017~~
~~First Quarter Fiscal 2017~~		~~13 weeks ended April 29, 2017~~
~~First Half Fiscal 2018~~		~~26 weeks ended August 4, 2018~~
~~First Half Fiscal 2017~~		~~26 weeks ended July 29, 2017~~

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par amounts)

(unaudited)

August 4,
2018 February 3,
2018 July 29,
2017
ASSETS

Current Assets

Cash and cash equivalents $ 7,054
$ 6,343
$ 5,983
Receivables, net 69,724
67,542
59,264
Inventories, net 123,924
126,812
119,620
Prepaid expenses and other current assets 29,393
35,421
19,626
Total Current Assets $ 230,095
$ 236,118
$ 204,493
Property and equipment, net 195,378
193,533
193,668
Intangible assets, net 177,418
178,858
174,262
Goodwill 66,581
66,703
60,059
Other non-current assets, net 23,918
24,729
24,265
Total Assets $ 693,390
$ 699,941
$ 656,747

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities

Accounts payable $ 51,487
$ 66,175
$ 60,332
Accrued compensation 21,606
29,941
25,403
Other accrued expenses and liabilities 37,828
36,802
32,757
Liabilities related to discontinued operations —
2,092
3,425
Total Current Liabilities $ 110,921
$ 135,010
$ 121,917
Long-term debt 24,936
45,809
37,601
Other non-current liabilities 74,649
74,029
70,836
Deferred taxes 15,752
15,269
15,520
Liabilities related to discontinued operations —
—
1,507
Commitments and contingencies

Shareholders’ Equity

Common stock, $1.00 par value per share 16,951
16,839
16,827
Additional paid-in capital 138,613
136,664
132,668
Retained earnings 316,507
280,395
264,282
Accumulated other comprehensive loss (4,939 ) (4,074 ) (4,411 )
Total Shareholders’ Equity $ 467,132
$ 429,824
$ 409,366
Total Liabilities and Shareholders’ Equity $ 693,390
$ 699,941
$ 656,747


	August 3,		February 2,		August 4,
	2019		2019		2018
ASSETS
Current Assets
Cash and cash equivalents	$	30,756	$	8,327	$	7,054
Receivables, net		59,176		69,037		69,724
Inventories, net		152,672		160,656		123,924
Prepaid expenses and other current assets		22,440		31,768		29,393
Total Current Assets	$	265,044	$	269,788	$	230,095
Property and equipment, net		189,410		192,576		195,378
Intangible assets, net		175,591		176,176		177,418
Goodwill		66,585		66,621		66,581
Operating lease assets		288,928		—		—
Other non-current assets, net		24,636		22,093		23,918
Total Assets	$	1,010,194	$	727,254	$	693,390
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	48,998	$	81,612	$	51,487
Accrued compensation		19,195		24,226		21,606
Current operating lease liabilities		54,044		—		—
Other accrued expenses and liabilities		41,882		36,371		37,828
Total Current Liabilities	$	164,119	$	142,209	$	110,921
Long-term debt		—		12,993		24,936
Non-current operating lease liabilities		290,133		—		—
Other non-current liabilities		17,077		75,286		74,649
Deferred taxes		19,916		18,411		15,752
Commitments and contingencies		—		—		—
Shareholders’ Equity
Common stock, $1.00 par value per share		17,035		16,959		16,951
Additional paid-in capital		145,123		142,976		138,613
Retained earnings		362,407		323,515		316,507
Accumulated other comprehensive loss		(5,616)		(5,095)		(4,939)
Total Shareholders’ Equity	$	518,949	$	478,355	$	467,132
Total Liabilities and Shareholders’ Equity	$	1,010,194	$	727,254	$	693,390

See accompanying notes.

Table of Contents

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 First Half Fiscal 2018 First Half Fiscal 2017
Net sales $ 302,641
$ 284,709
$ 575,269
$ 557,072
Cost of goods sold 123,344
118,740
231,826
231,693
Gross profit $ 179,297
$ 165,969
$ 343,443
$ 325,379
SG&A 146,340
132,911
286,060
266,102
Royalties and other operating income 3,556
3,344
7,503
7,084
Operating income $ 36,513
$ 36,402
$ 64,886
$ 66,361
Interest expense, net 602
742
1,383
1,672
Earnings before income taxes $ 35,911
$ 35,660
$ 63,503
$ 64,689
Income taxes 8,727
12,971
15,752
24,803
Net earnings $ 27,184
$ 22,689
$ 47,751
$ 39,886

Net earnings per share:

Basic $ 1.63
$ 1.37
$ 2.87
$ 2.41
Diluted $ 1.61
$ 1.36
$ 2.84
$ 2.39

Weighted average shares outstanding:

Basic 16,683
16,605
16,661
16,577
Diluted 16,840
16,700
16,804
16,698

Dividends declared per share $ 0.34
$ 0.27
$ 0.68
$ 0.54


	Second Quarter				First Half
	Fiscal 2019		Fiscal 2018		Fiscal 2019		Fiscal 2018
Net sales	$	302,000	$	302,641	$	583,973	$	575,269
Cost of goods sold		122,175		123,344		238,379		231,826
Gross profit	$	179,825	$	179,297	$	345,594	$	343,443
SG&A		143,403		146,340		283,217		286,060
Royalties and other operating income		3,837		3,556		7,624		7,503
Operating income	$	40,259	$	36,513	$	70,001	$	64,886
Interest expense, net		419		602		1,090		1,383
Earnings before income taxes	$	39,840	$	35,911	$	68,911	$	63,503
Income taxes		10,004		8,727		17,418		15,752
Net earnings	$	29,836	$	27,184	$	51,493	$	47,751

Net earnings per share:
Basic	$	1.78	$	1.63	$	3.08	$	2.87
Diluted	$	1.76	$	1.61	$	3.05	$	2.84
Weighted average shares outstanding:
Basic		16,760		16,683		16,736		16,661
Diluted		16,907		16,840		16,878		16,804
Dividends declared per share	$	0.37	$	0.34	$	0.74	$	0.68

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 First Half Fiscal 2018 First Half Fiscal 2017
Net earnings $ 27,184
$ 22,689
$ 47,751
$ 39,886
Other comprehensive income (loss), net of taxes:

Net foreign currency translation (loss) income (284 ) 1,151
(865 ) 865
Comprehensive income $ 26,900
$ 23,840
$ 46,886
$ 40,751


	Second Quarter				First Half
	Fiscal 2019		Fiscal 2018		Fiscal 2019		Fiscal 2018
Net earnings	$	29,836	$	27,184	$	51,493	$	47,751
Other comprehensive income (loss), net of taxes:
Net foreign currency translation adjustment		(133)		(284)		(521)		(865)
Comprehensive income	$	29,703	$	26,900	$	50,972	$	46,886

See accompanying notes.

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OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

First Half Fiscal 2018 First Half Fiscal 2017
Cash Flows From Operating Activities:

Net earnings $ 47,751
$ 39,886
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
   Depreciation 20,224
19,486
   Amortization of intangible assets 1,373
1,082
   Equity compensation expense 3,598
3,075
   Amortization of deferred financing costs 212
211
   Deferred income taxes 330
1,942
   Changes in working capital, net of acquisitions and dispositions:
       Receivables, net (2,460 ) (1,336 )
       Inventories, net 19
23,731
       Prepaid expenses and other current assets 8,494
5,298
       Current liabilities (23,366 ) (9,955 )
       Other non-current assets, net 606
22
       Other non-current liabilities 751
(307 )
Cash provided by operating activities $ 57,532
$ 83,135
Cash Flows From Investing Activities:

Acquisitions, net of cash acquired (302 ) (614 )
Purchases of property and equipment (22,349 ) (18,527 )
Cash used in investing activities $ (22,651 ) $ (19,141 )
Cash Flows From Financing Activities:

Repayment of revolving credit arrangements (165,928 ) (163,703 )
Proceeds from revolving credit arrangements 145,055
109,794
Proceeds from issuance of common stock 814
713
Repurchase of equity awards for employee tax withholding liabilities (2,351 ) (2,206 )
Cash dividends declared and paid (11,522 ) (9,096 )
Cash used in financing activities $ (33,932 ) $ (64,498 )
Net change in cash and cash equivalents $ 949
$ (504 )
Effect of foreign currency translation on cash and cash equivalents (238 ) 155
Cash and cash equivalents at the beginning of year 6,343
6,332
Cash and cash equivalents at the end of the period $ 7,054
$ 5,983
Supplemental disclosure of cash flow information:

Cash paid for interest, net $ 1,211
$ 1,543
Cash paid for income taxes $ 11,839
$ 18,128


	First Half
	Fiscal 2019		Fiscal 2018
Cash Flows From Operating Activities:
Net earnings	$	51,493	$	47,751
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		19,402		20,224
Amortization of intangible assets		584		1,373
Equity compensation expense		3,791		3,598
Amortization of deferred financing costs		212		212
Deferred income taxes		1,274		330
Changes in working capital, net of acquisitions and dispositions:
Receivables, net		10,131		(2,460)
Inventories, net		7,680		19
Prepaid expenses and other current assets		3,825		8,494
Current liabilities		(31,983)		(23,366)
Other balance sheet changes		858		1,357
Cash provided by operating activities	$	67,267	$	57,532
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired		—		(302)
Purchases of property and equipment		(15,976)		(22,349)
Cash used in investing activities	$	(15,976)	$	(22,651)
Cash Flows From Financing Activities:
Repayment of revolving credit arrangements		(122,241)		(165,928)
Proceeds from revolving credit arrangements		109,248		145,055
Deferred financing costs paid		(894)		—
Proceeds from issuance of common stock		885		814
Repurchase of equity awards for employee tax withholding liabilities		(2,453)		(2,351)
Cash dividends declared and paid		(12,601)		(11,522)
Other financing activities		(1,033)		—
Cash used in financing activities	$	(29,089)	$	(33,932)
Net change in cash and cash equivalents	$	22,202	$	949
Effect of foreign currency translation on cash and cash equivalents		227		(238)
Cash and cash equivalents at the beginning of year		8,327		6,343
Cash and cash equivalents at the end of the period	$	30,756	$	7,054
Supplemental disclosure of cash flow information:
Cash paid for interest, net	$	971	$	1,211
Cash paid for income taxes	$	8,416	$	11,839

See accompanying notes.

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OXFORD INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

SECOND QUARTER OF FISCAL ~~2018~~

2019

~~Basis of Presentation:~~ The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We believe the accompanying unaudited condensed consolidated financial statements reflect all normal, recurring adjustments that are necessary for a fair presentation of our financial position and results of operations as of the dates and for the periods presented. Results of operations for the interim periods presented are not necessarily indicative of results to be expected for our full fiscal year. The significant accounting policies applied during the interim periods presented are consistent with the significant accounting policies described in our Annual Report on Form 10-K for Fiscal ~~2017~~.

~~Recently Issued~~

1. Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We believe the accompanying unaudited condensed consolidated financial statements reflect all normal, recurring adjustments that are necessary for a fair presentation of our financial position and results of operations as of the dates and for the periods presented. The preparation of our unaudited condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported as assets, liabilities, revenues and expenses in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Results of operations for the interim periods presented are not necessarily indicative of results to be expected for our full fiscal year.

The significant accounting policies applied during the interim periods presented are consistent with the significant accounting policies described in our Annual Report on Form 10-K for Fiscal 2018, except for the adoption of the new lease accounting guidance in Fiscal 2019 as discussed below and in Note 5.

Accounting Standards ~~Applicable to Future Periods~~

Adopted in Fiscal 2019

In February 2016, the FASB issued revised lease accounting guidance. The guidance requires companies to record substantially all leases, including operating leases, as assets and liabilities on the balance sheet. For these leases, we ~~will be~~are required to recognize (1) ~~a right to use~~an operating lease asset which will represent our right to use, or control the use of, a specified asset for a lease term and (2) a lease liability equal to our obligation to make lease payments arising from a lease, measured on a discounted basis. ~~Also, the revised guidance requires additional qualitative and quantitative footnote disclosures in our consolidated financial statements.~~ The guidance ~~will be effective in~~was adopted on the first day of the First Quarter of Fiscal 2019 ~~with early~~using a modified retrospective approach. The modified retrospective approach allows us to apply the standard and related disclosures to the financial statements for the period of adoption ~~permitted.~~and apply the previous guidance in the prior year comparative periods. The ~~guidance requires the use~~adoption of the ~~modified retrospective transition approach, which includes~~new guidance had a number of optional practical expedients that companies may elect to apply. In March 2018, the FASB approved a new, optional transition method that will provide companies the option to use the effective date as the date of initial applicationmaterial impact on ~~transition.~~

~~We are evaluating the potential impact of the revised lease accounting guidance on~~ our condensed consolidated balance sheet statement of operations and statement of cash flows, and are in the process of implementing changes to our systems, processes and controls. Our implementation plan includes assessing lease arrangements, evaluating practical expedient and policy elections, transitioning to new software in order to meet the accounting and reporting requirementsas a result of the guidance and identifying and implementing changes to our business processes and controls to support the adoption of the revised guidance. Considering the magnitude of our existing operating leases to our business operations, the new lease guidance is expected to have a significant impact on our consolidated balance sheet by requiring thenon-cash recognition of ~~a significant amount of lease-related right of use~~operating lease assets and ~~liabilities. While we are continuing to assess the potential impact of the revised guidance, we do~~operating lease liabilities, but did not ~~anticipate the adoption of the guidance will~~ have a material impact on our consolidated ~~statement~~statements of operations ~~and statement of~~or cash flows.

At adoption of the revised lease accounting guidance, we elected to adopt the package of transition practical expedients and, therefore, have not reassessed (1) whether exiting or expired contracts contain a lease, (2) lease classification for existing or expired leases, or (3) the accounting for initial direct costs that were previously capitalized. We did not elect the practical expedient to use hindsight for leases existing at the adoption date. Refer to Note 5 for additional disclosures and information about accounting for leases.

Recently Issued Accounting Standards Applicable to Future Periods

In June 2016, the FASB issued guidance, as amended, on the measurement of credit losses on financial instruments. This guidance amends the impairment model by requiring that companies use a forward-looking approach based on expected losses to estimate credit losses on certain financial instruments, including trade receivables. This guidance will be effective in Fiscal 2020 with early adoption permitted. We are currently assessing the impact that adopting this guidance will have on our consolidated financial statements.

Recent accounting pronouncements pending adoption not discussed above are either not applicable or not expected to have a material impact on our consolidated financial statements.

2. Operating Group Information: We identify our operating groups based on the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Our operating group structure reflects a brand-focused management approach, emphasizing operational coordination and resource allocation across each ~~brand's~~brand’s direct to consumer, wholesale and licensing operations, as applicable. Our business is primarily operated through our Tommy Bahama, Lilly Pulitzer, Lanier Apparel and Southern Tide operating groups.

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Tommy Bahama, Lilly Pulitzer and Southern Tide each design, source, market and distribute apparel and related products bearing their respective trademarks and license their trademarks for other product categories, while Lanier Apparel designs, sources and distributes branded and private label ~~men's~~men’s tailored clothing, sportswear and other products.

Corporate and Other is a reconciling category for reporting purposes and includes our corporate offices, substantially all financing activities, the elimination of inter-segment sales and any other items that are not allocated to the operating groups, including LIFO accounting adjustments. Because our LIFO inventory pool does not correspond to our operating group definitions, LIFO inventory accounting adjustments are not allocated to the operating groups. Corporate and Other also includes the operations of other businesses which are not included in our operating ~~groups. The~~groups, including the operations of TBBC ~~which we acquired in December 2017,~~ and our Lyons, Georgia distribution ~~center are included in Corporate and Other.~~center. For a more extensive description of our operating groups, see Part I, Item 1. Business included in our Annual Report on Form 10-K for Fiscal ~~2017.~~

~~Table of Contents~~

2018.

The table below presents certain financial information (in thousands) about our operating groups, as well as Corporate and Other.


	Second Quarter				First Half
	Fiscal 2019		Fiscal 2018		Fiscal 2019		Fiscal 2018
Net sales
Tommy Bahama	$	188,870	$	192,728	$	353,600	$	359,860
Lilly Pulitzer		75,555		71,623		148,150		140,250
Lanier Apparel		20,905		23,860		47,494		43,769
Southern Tide		12,468		11,777		26,602		25,249
Corporate and Other		4,202		2,653		8,127		6,141
Total net sales	$	302,000	$	302,641	$	583,973	$	575,269

Depreciation and amortization
Tommy Bahama	$	6,907	$	8,260	$	13,747	$	15,326
Lilly Pulitzer		2,381		2,624		5,064		5,103
Lanier Apparel		141		139		281		280
Southern Tide		135		136		269		261
Corporate and Other		285		312		625		627
Total depreciation and amortization	$	9,849	$	11,471	$	19,986	$	21,597

Operating income (loss)
Tommy Bahama	$	23,218	$	20,621	$	38,410	$	34,924
Lilly Pulitzer		20,449		18,421		35,701		34,247
Lanier Apparel		253		825		1,435		1,187
Southern Tide		1,834		1,420		4,351		3,907
Corporate and Other		(5,495)		(4,774)		(9,896)		(9,379)
Total operating income		40,259		36,513	$	70,001	$	64,886
Interest expense, net		419		602		1,090		1,383
Earnings before income taxes	$	39,840	$	35,911	$	68,911	$	63,503

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 First Half Fiscal 2018 First Half Fiscal 2017
Net sales
Tommy Bahama $ 192,728
$ 187,580
$ 359,860
$ 360,076
Lilly Pulitzer 71,623
69,458
140,250
132,801
Lanier Apparel 23,860
17,848
43,769
41,204
Southern Tide 11,777
9,395
25,249
22,037
Corporate and Other 2,653
428
6,141
954
Total net sales $ 302,641
$ 284,709
$ 575,269
$ 557,072
Depreciation and amortization
Tommy Bahama $ 8,260
$ 7,714
$ 15,326
$ 15,288
Lilly Pulitzer 2,624
2,079
5,103
4,074
Lanier Apparel 139
150
280
298
Southern Tide 136
103
261
209
Corporate and Other 312
332
627
699
Total depreciation and amortization $ 11,471
$ 10,378
$ 21,597
$ 20,568
Operating income (loss)
Tommy Bahama $ 20,621
$ 21,916
$ 34,924
$ 37,954
Lilly Pulitzer 18,421
20,982
34,247
38,669
Lanier Apparel 825
195
1,187
1,053
Southern Tide 1,420
645
3,907
2,749
Corporate and Other (4,774 ) (7,336 ) (9,379 ) (14,064 )
Total operating income $ 36,513
$ 36,402
$ 64,886
$ 66,361
Interest expense, net 602
742
1,383
1,672
Earnings before income taxes $ 35,911
$ 35,660
$ 63,503
$ 64,689

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The tables below quantify, for each operating group and in total, the amount of net sales by distribution channel (in thousands) and as a percentage of net sales for each period presented.


	Second Quarter Fiscal 2019
	Net Sales		Retail		E-commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	188,870	50	%	23	%	11	%	16	%	—	%
Lilly Pulitzer		75,555	51	%	29	%	—	%	20	%	—	%
Lanier Apparel		20,905	—	%	2	%	—	%	98	%	—	%
Southern Tide		12,468	—	%	22	%	—	%	78	%	—	%
Corporate and Other		4,202	—	%	62	%	—	%	29	%	9	%
Total	$	302,000	44	%	23	%	7	%	26	%	—	%


	Second Quarter Fiscal 2018
	Net Sales		Retail		E-commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	192,728	50	%	21	%	11	%	18	%	—	%
Lilly Pulitzer		71,623	52	%	27	%	—	%	21	%	—	%
Lanier Apparel		23,860	—	%	—	%	—	%	100	%	—	%
Southern Tide		11,777	—	%	20	%	—	%	80	%	—	%
Corporate and Other		2,653	—	%	51	%	—	%	22	%	27	%
Total	$	302,641	45	%	21	%	7	%	27	%	—	%


	First Half Fiscal 2019
	Net Sales		Retail		E‑commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	353,600	49	%	19	%	13	%	19	%	—	%
Lilly Pulitzer		148,150	46	%	27	%	—	%	27	%	—	%
Lanier Apparel		47,494	—	%	1	%	—	%	99	%	—	%
Southern Tide		26,602	—	%	17	%	—	%	83	%	—	%
Corporate and Other		8,127	—	%	62	%	—	%	29	%	9	%
Total net sales	$	583,973	41	%	20	%	8	%	31	%	—	%


	First Half Fiscal 2018
	Net Sales		Retail		E‑commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	359,860	49	%	18	%	13	%	20	%	—	%
Lilly Pulitzer		140,250	48	%	26	%	—	%	26	%	—	%
Lanier Apparel		43,769	—	%	—	%	—	%	100	%	—	%
Southern Tide		25,249	—	%	16	%	—	%	84	%	—	%
Corporate and Other		6,141	—	%	56	%	—	%	23	%	21	%
Total net sales	$	575,269	42	%	19	%	8	%	31	%	—	%

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3. ~~Accumulated Other Comprehensive Loss:~~Shareholders’ Equity: The following tables detail the changes (in thousands) in our common stock, additional paid-in capital ("APIC"), retained earnings and accumulated other comprehensive (loss) income ("AOCI"), for each period presented.


	First Half Fiscal 2019
	Common Stock		APIC		Retained Earnings		AOCI		Total
February 2, 2019	$	16,959	$	142,976	$	323,515	$	(5,095)	$	478,355
Net earnings and other comprehensive income		—		—		21,657		(388)		21,269
Shares issued under equity plans		91		331		—		—		422
Compensation expense for equity awards		—		1,876		—		—		1,876
Repurchase of shares		(31)		(2,422)		—		—		(2,453)
Cash dividends declared and paid		—		—		(6,297)		—		(6,297)
Cumulative effect of change in accounting standards		—		—		—		—		—
May 4, 2019	$	17,019	$	142,761	$	338,875	$	(5,483)	$	493,172
Net earnings and other comprehensive income		—		—		29,836		(133)		29,703
Shares issued under equity plans		16		447		—		—		463
Compensation expense for equity awards		—		1,915		—		—		1,915
Repurchase of shares		—		—		—		—		—
Cash dividends declared and paid		—		—		(6,304)		—		(6,304)
Cumulative effect of change in accounting standards		—		—		—		—		—
August 3, 2019	$	17,035	$	145,123	$	362,407	$	(5,616)	$	518,949


	First Half Fiscal 2018
	Common Stock		APIC		Retained Earnings		AOCI		Total
February 3, 2018	$	16,839	$	136,664	$	280,395	$	(4,074)	$	429,824
Net earnings and other comprehensive income		—		—		20,567		(581)		19,986
Shares issued under equity plans		128		236		—		—		364
Compensation expense for equity awards		—		1,718		—		—		1,718
Repurchase of shares		(30)		(2,321)		—		—		(2,351)
Cash dividends declared and paid		—		—		(5,759)		—		(5,759)
Cumulative effect of change in accounting standards		—		—		(117)		—		(117)
May 5, 2018	$	16,937	$	136,297	$	295,086	$	(4,655)	$	443,665
Net earnings and other comprehensive income		—		—		27,184		(284)		26,900
Shares issued under equity plans		14		436		—		—		450
Compensation expense for equity awards		—		1,880		—		—		1,880
Repurchase of shares		—		—		—		—		—
Cash dividends declared and paid		—		—		(5,763)		—		(5,763)
Cumulative effect of change in accounting standards		—		—		—		—		—
August 4, 2018	$	16,951	$	138,613	$	316,507	$	(4,939)	$	467,132

Substantially all amounts included in ~~accumulated other comprehensive loss~~AOCI in our consolidated balance sheets, as well as any related changes, for each period presented, reflect the net foreign currency translation adjustment related to our Tommy Bahama investments and operations in Canada, Australia and Japan.

~~4. Income Taxes:~~ ~~U.S. Tax Reform, as enacted on December 22, 2017, made significant changes in the taxation of our domestic and foreign earnings. The federal corporate tax rate was lowered~~ NaN amounts were reclassified from ~~35% to 21% effective January 1, 2018, resulting in a blended federal rate applicable~~AOCI to our ~~fiscal year ended February 3, 2018 to reflect the weighted average~~consolidated statements of ~~the rate applicable to the~~operations for any period prior to the effective date and the period on and after the effective date. The change in the federal corporate tax rate also required revaluation of our deferred tax assets and liabilities to reflect the enacted rate at which we expect those differences to reverse. U.S. Tax Reform moved the U.S. to a territorial taxation system under which the earnings of foreign subsidiaries will generally not be subject to U.S. federal income tax upon distribution and imposed a one-time transition tax on the amount of previously untaxed earnings of those foreign subsidiaries measured as of November 2, 2017 or December 31, 2017, whichever resulted in the greater taxable amount. Additional changes included the increase in bonus depreciation available for certain assets acquired after September 27, 2017 and limitations on the deduction for certain expenses, including executive compensation and interest incurred in taxable years beginning on or after January 1, 2018. New taxes were imposed related to foreign income including, for years beginning after December 31, 2017, a tax on global intangible low-taxed income (“GILTI”), disallowance of deductions for certain payments (the base erosion anti-abuse tax, or “BEAT”) and new deductions enacted for certain foreign-derived intangible income (“FDII”).presented.

The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides us with up to one year to finalize accounting for the impacts of U.S. Tax Reform. Since our initial accounting for U.S Tax Reform impact is incomplete, we may include provisional amounts when reasonable estimates can be made or continue to apply the prior tax law if a reasonable estimate cannot be made. In accordance with SAB 118, as of August 4, 2018 and February 3, 2018, we estimated provisional tax

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amounts related to our deferred income tax assets and liabilities, including the impacts of the change in the federal corporate tax rate, deductions for executive compensation, our indefinite reinvestment assertion, the transition tax, GILTI, BEAT and FDII. Also, as of August 4, 2018 and February 3, 2018, we have not yet elected an accounting policy related to how we will account for GILTI and therefore have not included any deferred tax impacts of GILTI in our consolidated financial statements. Further, as of August 4, 2018 and February 3, 2018, we continue to assert, on a provisional basis, that substantially all of our investments in foreign subsidiaries and related earnings are permanently reinvested outside of the United States, or that there is no tax payable for any subsidiaries in which we are not permanently reinvested. Therefore, we have not recorded any deferred tax liabilities related to these investments and earnings.

As a result of the provisional revaluation impact on our deferred taxes and certain other items related to U.S. Tax Reform, we recognized a reduction in tax expense of $12 million in our Fiscal 2017 statement of operations. During the First Half of Fiscal 2018, we did not recognize any measurement period adjustments to the provisional amounts recognized during Fiscal 2017. We are still finalizing our calculations related to the impact of U.S. Tax Reform.

The effective tax rate for the Second Quarter of Fiscal 2018, Second Quarter of Fiscal 2017, First Half of Fiscal 2018 and First Half of Fiscal 2017 were 24.3%, 36.4%, 24.8% and 38.3%, respectively. The effective tax rate for both the Second Quarter of Fiscal 2018 and the First Half of Fiscal 2018 decreased from the Second Quarter of Fiscal 2017 and the First Half of Fiscal 2017, primarily due to the lower federal corporate tax rate resulting from U.S. Tax Reform. Our effective tax rate for the full year of Fiscal 2018 is expected to be approximately 26%, which includes the U.S. federal statutory rate of 21% and state income taxes, net of the related federal income tax benefit; the rate differential related to foreign operations; valuation allowances against operating losses and other carryforwards; the excess tax benefit related to restricted stock vesting; and various other items impacting the effective tax rate. The effective rate for Fiscal 2018 may vary from 26% as a result of adjustments to the provisional amounts recognized for U.S. Tax Reform as discussed above as well as any discrete items recognized during Fiscal 2018. The final impact of U.S. Tax Reform may differ from our provisional amounts recognized in Fiscal 2017 due to, among other things, additional regulatory guidance that may be issued, us obtaining additional information to refine our estimated tax amounts and changes in current interpretations and assumptions.

~~5. Accounting Standards Adopted in Fiscal 2018:~~

4. Revenue ~~Recognition for Contracts with Customers~~

In May 2014, the FASB issued guidance which provided a single, comprehensive accounting model for revenue arising from contracts with customers. This guidance was revised and clarified through supplemental adoption guidance subsequent to May 2014. This new revenue recognition guidance superseded most of the prior revenue recognition guidance, which specified that revenue should be recognized when risks and rewards transfer to a customer. Under the new guidance, revenue is recognized at an amount that reflects the consideration expected to be received for those goods and services pursuant to a five-step approach: (1) identify the contracts with the customer; (2) identify the separate performance obligations in the contracts; (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenue when, or as, each performance obligation is satisfied. The new guidance also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flow arising from customer contracts, including significant judgments and changes in judgments.

We adopted the revised revenue recognition guidance as of the first day of Fiscal 2018 using the modified retrospective method, applying the guidance only to contracts that were not completed prior to Fiscal 2018. There was no adjustment for the cumulative effect of applying the guidance to retained earnings upon adoption as there was no change in the timing of revenue recognition for any of our revenue streams. We have changed our accounting policies and practices and designed and implemented specific controls over our evaluation of the impact of the new guidance, including disclosure requirements and the collection of relevant data for the reporting process.

Recognition:Our revenue ~~streams consist~~consists of direct to consumer sales, including our retail store, e-commerce and restaurant operations, and wholesale sales, which are included in net sales in our consolidated statements of operations, as well as royalty income, which isrepresents substantially all amounts included in royalties and other income in our consolidated statements of operations. ~~The table below quantifies the amount of net sales by distribution channel (in thousands) and as a percentage of net sales.~~

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Second Quarter of Fiscal 2018 Second Quarter of Fiscal 2017 First Half of Fiscal 2018 First Half of Fiscal 2017
Retail $ 134,581
45 % $ 127,197
45 % $ 242,316
42 % $ 229,860
41 %
E-commerce 63,363
21 % 55,967
20 % 107,885
19 % 91,640
17 %
Restaurant 21,467
7 % 20,029
7 % 46,760
8 % 43,438
8 %
Wholesale 82,402
27 % 80,810
28 % 176,778
31 % 190,660
34 %
Other 828
— % 706
— % 1,530
— % 1,474
— %
Net sales $ 302,641
100 % $ 284,709
100 % $ 575,269
100 % $ 557,072
100 %

~~The tables below provide net sales by operating group (in thousands) and the percentage of net sales by distribution channel for each operating group.~~

Second Quarter of Fiscal 2018
Net Sales Retail E-commerce Restaurant Wholesale Other
Tommy Bahama $ 192,728
50% 21% 11% 18% —%
Lilly Pulitzer $ 71,623
52% 27% —% 21% —%
Lanier Apparel $ 23,860
—% —% —% 100% —%
Southern Tide $ 11,777
—% 20% —% 80% —%
Corporate and Other $ 2,653
—% 51% —% 22% 27%
Second Quarter of Fiscal 2017
Net Sales Retail E-commerce Restaurant Wholesale Other
Tommy Bahama $ 187,580
52% 19% 11% 18% —%
Lilly Pulitzer $ 69,458
42% 26% —% 32% —%
Lanier Apparel $ 17,848
—% —% —% 100% —%
Southern Tide $ 9,395
—% 23% —% 77% —%
Corporate and Other $ 428
—% —% —% —% 100%
First Half of Fiscal 2018
Net Sales Retail E-commerce Restaurant Wholesale Other
Tommy Bahama $ 359,860
49% 18% 13% 20% —%
Lilly Pulitzer $ 140,250
48% 26% —% 26% —%
Lanier Apparel $ 43,769
—% —% —% 100% —%
Southern Tide $ 25,249
—% 16% —% 84% —%
Corporate and Other $ 6,141
—% 56% —% 23% 21%
First Half of Fiscal 2017
Net Sales Retail E-commerce Restaurant Wholesale Other
Tommy Bahama $ 360,076
49% 16% 12% 23% —%
Lilly Pulitzer $ 132,801
40% 23% —% 37% —%
Lanier Apparel $ 41,204
—% —% —% 100% —%
Southern Tide $ 22,037
—% 17% —% 83% —%
Corporate and Other $ 954
—% —% —% —% 100%

~~Revenue is recognized~~We recognize revenue when performance obligations under the terms of the contracts with our customers are satisfied. Our accounting policies related to revenue recognition for each type of contract with customers, including a description of the related performance obligations, ~~generally consist of delivering our products to our direct to consumer~~return rights, allowances, discounts, credit terms and ~~wholesale customers. Control of~~other information, is described in the ~~product is generally transferred upon providing the product to consumers~~significant accounting policies described in our bricks and mortar retail stores and restaurants, upon physical delivery of the products to consumers in our e-commerce operations and upon shipment from the distribution center to customers in our wholesale operations. Once control is transferred to the customer, we have completed our performance obligations related to the contract and have an unconditional right to consideration as outlined in the contract. Our receivables resulting from contracts with customers in our direct to consumer operations are generally collected within a few days, upon settlement of the credit card transaction. Our receivables resulting from contracts with our customers in our wholesale operations are generally collected within one quarter, in accordance with established credit terms. All of our performance obligations under the terms of our contracts with customers in our direct to consumer and wholesale operations

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~~have an expected original duration of one year or less. Our revenue, including any freight income, is recognized net of applicable taxes in our consolidated statements of operations.~~

~~In our direct to consumer operations, consumers have certain rights to return product within a specified period and are eligible~~Annual Report on Form 10-K for ~~certain point of sale discounts, thus retail store, e-commerce and restaurant revenues are recorded net of estimated returns and discounts, as applicable.~~ Fiscal 2018.

The ~~sales return allowance is recognized on a gross basis, with the recognition of a return liability for~~table below quantifies the amount of net sales ~~estimated to be returned and a return asset~~by distribution channel (in thousands) for ~~the right to recover the product estimated to be returned by the customer, measured at the previous carrying~~each period presented.


	Second Quarter				First Half
	Fiscal 2019		Fiscal 2018		Fiscal 2019		Fiscal 2018
Retail	$	133,250	$	134,581	$	241,256	$	242,316
E-commerce		70,437		63,363		118,426		107,885
Restaurant		20,531		21,467		44,132		46,760
Wholesale		77,273		82,402		179,199		176,778
Other		509		828		960		1,530
Net sales	$	302,000	$	302,641	$	583,973	$	575,269

Substantially all amounts of the product. The value of inventory associated with a right to recover the goods returned are included in prepaid expenses and other current assets in our consolidated balance sheet as of August 4, 2018, whereas prior to Fiscal 2018 those amounts were included in inventories. The changes in the return liability are recognized in receivables, net ~~sales in our consolidated statements of operations and the changes in the return asset are recognized in cost of goods sold in our consolidated statements of operations for all periods presented.~~

represent receivables related to contracts with customers. In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to some of our wholesale customers for certain products. Some of these arrangements are written agreements, while others may be implied by customary practices or expectations in the industry. Wholesale sales are recorded net of such discounts, allowances and cooperative advertising support for our customers, operational chargebacks and provisions for estimated wholesale returns. As certain allowances, other deductions and returns are not finalized until the end of a season, program or other event which may not have occurred yet, we estimate such discounts, allowances and returns on an ongoing basis to estimate the consideration from the customer that we expect to ultimately receive. In accordance with the new revenue recognition guidance, we only recognize revenue to the extent that it is probable that we will not recognize a significant reversal of revenue when the uncertainties related to the variability are ultimately resolved. Significant considerations in determining our estimates for discounts, allowances, operational chargebacks and returns for wholesale customers may include historical and current trends, agreements with customers, projected seasonal results, an evaluation of current economic conditions, specific program or product expectations and retailer performance. We record ~~the~~these discounts, returns and allowances as a reduction to net sales in our consolidated statements of operations and as a reduction to receivables, net in our consolidated balance ~~sheets, with the estimated value of inventory expected to be returned in prepaid expenses and other current assets in our consolidated balance sheets as of August 4, 2018.~~sheets. As of August 3, 2019, February 2, 2019 and August 4, 2018, ~~February 3, 2018 and July 29, 2017,~~ reserve balances recorded as a reduction to receivables related to these items were $7 million, $7 million and $8$7 million, respectively.

In addition to trade and other receivables, an income tax ~~receivable~~receivables of $1 million, $1 million and $6 million and $5tenant allowances due from landlord of $2 million, is$0 million and $2 million are included in receivables, net in our consolidated balance sheet as of August 3, 2019, February 2, 2019 and August 4, 2018, ~~and~~respectively. As of August 3, 2019, February 3, 2018, respectively, with no material income tax receivable as of July 29, 2017. Substantially all other amounts recognized in receivables, net as of those dates represent receivables related to contracts with customers. As of2, 2019 and August 4, 2018, prepaid expenses and other current assets ~~includes~~included $2 million, $2 million and $2 million, respectively, representing the ~~estimate of the~~estimated value of inventory for wholesale and direct to consumer sales returns, which would have been recognized in inventories pursuant to the previous guidance, while the estimated sales returns amount of $4 million for expected direct to consumer returns is classified in other accrued expenses and liabilities in our consolidated balance sheet as of August 4, 2018.returns. We dodid not have any significant contract assets related to contracts with customers, other than receivables and the value of inventory associated with reserves for expected sales returns, as of August 3, 2019, February 2, 2019 and August 4, 2018.

An estimated sales return liability of $5 million, $3 million and $4 million for expected direct to consumer returns is classified in other accrued expenses and liabilities in our consolidated balance sheet as of August 3, 2019, February 2, 2019 and August 4, 2018, ~~February 3, 2018 or July 29, 2017.~~

In addition to our estimated return amounts, our contract liabilities related to contracts with customers include gift cards and merchandise credits issued by us, which do not have an expiration date, but are redeemable on demand by the holder of the card. Historically, substantially all gift cards and merchandise credits are redeemed within one year of issuance. Gift cards and merchandise credits are recorded as a liability until our performance obligation is satisfied, which occurs when redeemed by the consumer, at which point revenue is recognized. However, we recognize breakage income for certain gift cards and merchandise credits using the redemption recognition method, subject to applicable laws in certain states.respectively. Contract liabilities for gift cards purchased by consumers and merchandise credits received by customers but not yet redeemed, less any breakage income recognized to date, is included in other accrued expenses and liabilities in our consolidated balance sheets and totaled ~~$10~~$11 million, ~~$10~~$12 million and $9$10 million as of August 3, 2019, February 2, 2019, and August 4, 2018, ~~February 3, 2018,~~respectively.

5. Leases: We enter into real estate lease agreements for retail, food and ~~July 29, 2017, respectively. Gift card breakage, which was~~beverage, office and warehouse/distribution space, as well as leases for certain equipment. Our leases have varying terms and expirations and may have provisions to extend, renew or terminate the lease agreement at our discretion, among other terms and conditions. Our retail and restaurant leases typically provide for contingent rent based on sales if certain sales thresholds are achieved. Most of our leases provide for payments of real estate taxes, insurance and other operating expenses applicable to the property, and certain of our leases require payment of sales taxes on rental payments. Payments for real estate taxes, sales taxes, insurance and other operating expenses are not ~~material in any period presented, is~~ included in ~~net~~lease expense. Our lease agreements do not include any material residual value guarantees or material restrictive financial covenants.

Substantially all of our leases are classified as long-term operating leases, which have not historically been recognized as assets and liabilities in our consolidated balance sheets. When a non-cancelable long-term operating

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lease includes fixed escalation clauses or lease incentives for rent holidays, rent expense is generally recognized on a straight-line basis over the initial term of the lease from the date that we take possession of the space and assumes that any termination options included in the lease will not be exercised. Contingent rents, including those based on a percentage of retail sales over stated levels, and rental payment increases based on a contingent future event have been recognized as the expense is incurred. The difference between the rents payable under the lease and the amount recognized on a straight-line basis has historically been recorded in other non-current liabilities in our consolidated balance sheets, with the exception of the amounts recognized in current lease liabilities. Also, any tenant improvement allowance amounts received from the landlord have historically been deferred as a liability in our consolidated balance sheets and then recognized in our consolidated statements of ~~operations.~~

~~Royalties from~~operations as a reduction to rent expense over the ~~license~~term of the lease agreement on a straight-line basis. Deferred rent in our ~~owned brands, which~~consolidated balance sheets, including tenant improvement allowances and all amounts in non-current and current liabilities, as of February 2, 2019 was $61 million.

Pursuant to the revised lease accounting guidance adopted in Fiscal 2019, we determine if an arrangement is a lease at contract inception. Operating lease liabilities are ~~generally~~recognized at the lease commencement date based on the ~~greater~~present value of lease payments over the lease term. The significant judgments in calculating the present value of lease obligations include determining the lease term and lease payment amounts, which are dependent upon our assessment of the likelihood of exercising any renewal or termination options that are at our discretion, as well as the discount rate applied to the unpaid lease payments. Operating leases are included in operating lease assets, current operating lease liabilities and non-current operating lease liabilities in our consolidated balance sheet. The operating lease asset at commencement reflects the operating lease liability reduced for any lease incentives, including tenant improvement allowances. Lease expense for operating leases is recognized on a straight-line basis over the lease term, which is consistent with the previous guidance. Variable rental payments based on a percentage of retail sales over contractual levels and variable incremental rental payments adjusted periodically for inflation are both recognized as incurred.

We account for the ~~licensee's actual net sales~~underlying operating lease asset at the individual lease level. Typically, we do not include any renewal or ~~a contractually~~termination options at our discretion in the underlying lease term as the probability of exercise is not reasonably certain. The revised lease guidance requires us to discount unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, ~~minimum royalty amount, are recognized over time~~our incremental borrowing rate. As our leases typically do not provide an implicit rate, we use an estimated incremental borrowing rate based ~~upon the guaranteed minimum royalty obligations and adjusted~~on information available at commencement date, or as ~~sales data, or estimates thereof, is received from licensees. Royalty income represents substantially all~~of February 3, 2019 for any leases in place at adoption of the ~~amounts~~revised guidance. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Finance leases are not material to our consolidated financial statements.

Substantially all lease expense is included in ~~royalties and other operating income~~SG&A in our consolidated statements of operations.

We have made the following accounting policy elections and practical expedients related to the new revenue recognition guidance: (1) we exclude any taxes collected from customers that are remitted to taxing authorities from net sales; (2) we deem charges incurred by us before and after the customer obtains control of goods, as applicable, as fulfillment costs; (3) as

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customer payment terms are less than one year from the transfer of goods, we do not adjust receivable amounts for the effects of time value of money; and (4) we utilize the portfolio approach when multiple contracts or performance obligations are involved in the determination of revenue recognition. We do not believe the use of any practical expedients utilized by us had a material impact on our financial statements upon our adoption of the revised guidance.

~~Deferred income taxes for intra-entity asset transfers~~

In October 2016, the FASB issued guidance on the recognition of current and deferred income taxes for intra-entity asset transfers. The revised guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset (other than inventory) when the transfer occurs. We adopted this guidance in the First Quarter of Fiscal 2018, resulting in a $0.1 million reduction to retained earnings as of February 4, 2018 and no impact on net earnings for any period presented.

~~6. Tommy Bahama Japan Charges:~~ ~~During~~ For the Second Quarter of Fiscal ~~2018, we incurred certain charges related to~~2019, operating lease expense was $16 million and variable lease expense was $8 million, resulting in total lease expense of $24 million. For the ~~restructure~~First Half of Fiscal 2019, operating lease expense was $33 million and ~~downsizing~~variable lease expense was $17 million, resulting in total lease expense of ~~our Tommy Bahama Japan operations, including~~$49 million. As of August 3, 2019, the ~~forthcoming closure~~weighted-average remaining operating lease term was seven years and ~~early~~the weighted-average discount rate for operating leases was 5%. Cash paid for lease ~~termination~~amounts included in the measurement of ~~the Tommy Bahama Ginza flagship retail-restaurant location, for which the~~operating lease ~~was previously scheduled to expire in 2022. These charges, which are an estimate of the charges that will actually be incurred, totaled $4 million~~liabilities in the Second Quarter of Fiscal ~~2018, consisting of $2 million of lease termination~~2019 and premises reinstatement charges, $1 million of non-cash asset impairment charges and $1 million of other charges including inventory markdowns and employee severance. As we anticipate that substantially all of these charges will be paid in the second half of Fiscal 2018 or the First ~~Quarter~~Half of Fiscal 2019 was $17 million and $35 million, respectively.

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As of August 3, 2019, the required lease liability payments for the fiscal years specified below were as follows (in thousands):


	Operating lease
Remainder of 2019	$	34,369
2020		60,608
2021		63,487
2022		59,825
2023		56,639
2024		43,981
After 2024		86,588
Total lease payments	$	405,497
Less: Difference between discounted and undiscounted lease payments		61,320
Present value of lease liabilities	$	344,177

Disclosures related to periods prior to adoption of revised accounting guidance

Total rent expense in Fiscal 2018 was $96 million, which includes minimum rents, sales taxes, real estate taxes, insurance and other operating expenses and contingent rents incurred under all leases. Payments for real estate taxes, sales taxes, insurance, other operating expenses and contingent percentage rent are included in rent expense, but are generally not included in the aggregate minimum rental commitments, as, in many cases, the amounts payable in future periods are not quantified in the lease agreement or may be dependent on future events. The total amount of such charges included in ~~current liabilities~~total rent expense above were $28 million in Fiscal 2018. As of February 2, 2019, the aggregate minimum base rental commitments for all non-cancelable operating leases with original terms in excess of one year were $68 million, $66 million, $62 million, $59 million, and $51 million for each of the next five years and $124 million thereafter.

6. Debt: In July 2019, we amended our ~~consolidated balance sheet~~$325 million Fourth Amended and Restated Credit Agreement (as amended, the “U.S. Revolving Credit Agreement”) by entering into the First Amendment to the Fourth Amended and Restated Credit Agreement to (1) extend the maturity of the facility to July 2024, and (2) modify certain provisions including a reduction of interest rates on certain borrowings and a reduction in unused line fees. We had 0 amounts outstanding as of August 3, 2019 under the U.S. Revolving Credit Agreement, compared to $25 million of borrowings outstanding as of August 4, 2018. ~~These charges were recognized~~The U.S. Revolving Credit Agreement generally (1) is limited to a borrowing base consisting of specified percentages of eligible categories of assets, (2) accrues variable-rate interest, unused line fees and letter of credit fees based upon average unused availability or utilization, (3) requires periodic interest payments with principal due at maturity, and (4) is secured by a first priority security interest in ~~SG&A, except for the inventory markdowns of $0.5 million which were recognized in cost of goods sold.~~

~~We plan to close the Tommy Bahama Ginza restaurant and retail store in the Third Quarter of Fiscal 2018 and Fourth Quarter of Fiscal 2018, respectively. Following the closure~~substantially all of the ~~Ginza retail-restaurant location,~~assets of Oxford Industries, Inc. and its domestic subsidiaries, including accounts receivable, books and records, chattel paper, deposit accounts, equipment, certain general intangibles, inventory, investment property (including the equity interests of certain subsidiaries), negotiable collateral, life insurance policies, supporting obligations, commercial tort claims, cash and cash equivalents, eligible trademarks, proceeds and other personal property.

To the extent cash flow needs exceed cash flow provided by our operations we will ~~retain a very limited presence~~have access, subject to its terms, to our U.S. Revolving Credit Agreement to provide funding for operating activities, capital expenditures and acquisitions, if any. Our U.S. Revolving Credit Agreement is also used to establish collateral for certain insurance programs and leases and to finance trade letters of credit for product purchases, which reduce the amounts available under our line of credit when issued. As of August 3, 2019, $5 million of letters of credit were outstanding under our U.S. Revolving Credit Agreement. After considering these limitations and the amount of eligible assets in ~~Japan, which will allow us~~our borrowing base, as of August 3, 2019, we had $311 million in unused availability under the U.S. Revolving Credit Agreement, subject to ~~continue to review various alternatives for the Tommy Bahama brand in Japan.~~certain limitations on borrowings.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes ~~to the unaudited condensed consolidated financial statements~~thereto contained in this report and the consolidated financial statements, notes to consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for Fiscal ~~2017~~.

2018.

OVERVIEW

We are a global apparel company that designs, sources, markets and distributes products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer and Southern Tide lifestyle brands and other owned and licensed brands as well as private label apparel products. During Fiscal ~~2017, 92%~~2018, 93% of our net sales were from products bearing brands that we own and ~~66%~~69% of our net sales were through our direct to consumer channels of distribution. In Fiscal ~~2017, 97%~~2018, 96% of our consolidated net sales were to customers located in the United States, with the sales outside the United States consisting primarily of our Tommy Bahama product sales in Canada and the Asia-Pacific region.

Our business strategy is to develop and market compelling lifestyle brands and products that evoke a strong emotional response from our target consumers. We consider lifestyle brands to be those brands that have a clearly defined and targeted point of view inspired by an appealing lifestyle or attitude. Furthermore, we believe lifestyle brands that create an emotional connection, like Tommy Bahama, Lilly Pulitzer and Southern Tide, can command greater loyalty and higher price points at retail and create licensing opportunities, which may drive higher earnings. We believe the attraction of a lifestyle brand depends on creating compelling product, effectively communicating the respective lifestyle brand message and distributing products to consumers where and when they want them.

Our ability to compete successfully in styling and marketing is directly related to our proficiency in foreseeing changes and trends in fashion and consumer preference and presenting appealing products for consumers. Our design-led, commercially informed lifestyle brand operations strive to provide exciting, differentiated products each season.

To further strengthen each lifestyle ~~brand's~~brand’s connections with consumers, we directly communicate with consumers through digital and print media on a regular basis. We believe our ability to effectively communicate the images, lifestyle and products of our brands and create an emotional connection with consumers is critical to the success of our brands. ~~Our advertising~~Advertising for our brands often attempts to convey the lifestyle of the brand as well as a specific product.

We distribute our owned lifestyle branded products primarily through our direct to consumer channels, consisting of our Tommy Bahama and Lilly Pulitzer retail stores and our e-commerce sites for Tommy Bahama, Lilly Pulitzer and Southern Tide, and through our wholesale distribution channels. Our direct to consumer operations provide us with the opportunity to interact directly with our customers, present to them a broad assortment of our current season products and immerse them in the theme of the lifestyle brand. We believe that presenting our products in a setting specifically designed to showcase the lifestyle on which the brands are based enhances the image of our brands. Our Tommy Bahama and Lilly Pulitzer full-price retail stores provide high visibility for our brands and products and allow us to stay close to the preferences of our consumers, while also providing a platform for long-term growth for the brands. In Tommy Bahama, we also operate ~~a limited number of~~ restaurants ~~including~~and Marlin Bars, generally adjacent to a Tommy Bahama full-price retail store location, which we believe further enhance the ~~brand's~~brand’s image with consumers. Our e-commerce websites ~~which represented 19% of our consolidated net sales in Fiscal 2017,~~ provide the opportunity to increase revenues by reaching a larger population of consumers and at the same time allow our brands to provide a broader range of products.

The wholesale operations of our lifestyle brands complement our direct to consumer operations and provide access to a larger group of consumers. As we seek to maintain the integrity of our lifestyle brands by limiting promotional activity in our full-price retail stores and e-commerce websites, we generally target wholesale customers that follow this same approach in their stores. Our wholesale customers for our Tommy Bahama, Lilly Pulitzer and Southern Tide brands generally include various specialty stores, ~~including~~ Signature Stores for Lilly Pulitzer and Southern Tide, better

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department stores and multi-branded e-commerce retailers.

Within our Lanier Apparel operating group, we sell tailored clothing and sportswear products under licensed, private label and owned brands. Lanier ~~Apparel's~~Apparel’s customers include department stores, discount and off-price retailers, warehouse clubs, national chains, specialty stores and multi-branded e-commerce retailers.

The disposal of discontinued, end of season or excess inventory is an ongoing part of any apparel business, and our operating groups have historically utilized a variety of methods to sell such inventory, including outlet stores in Tommy

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Bahama, e-commerce flash sales ~~on e-commerce websites,~~in Lilly Pulitzer, and off-price ~~retailers.~~retailers in each operating group. Our focus in disposing of the excess inventory for our lifestyle brands is to do so in a brand appropriate setting and achieve an acceptable margin.

All of our operating groups operate in highly competitive apparel markets in which numerous U.S. and foreign-based apparel firms compete. No single apparel firm or small group of apparel firms dominates the apparel industry, and our direct competitors vary by operating group and distribution channel. We believe the principal competitive factors in the apparel industry are reputation, value, and image of brand names; design; consumer preference; price; quality; marketing; product fulfillment capabilities; and customer service.

The apparel industry is cyclical and very dependent upon the overall level and focus of discretionary consumer spending, which changes as consumer preferences and regional, domestic and international economic conditions change. Increasingly, consumers are choosing to spend less of their discretionary spending on certain product categories, including apparel, while spending more on services and other product categories. Further, negative economic conditions often have a longer and more severe impact on the apparel industry than on other industries. We believe the changes in consumer preferences for discretionary spending, the current global economic conditions and economic uncertainty continue to impact the business of each of our operating groups and the apparel industry as a whole.

Due to the imposition by the United States of higher tariffs on apparel and related products manufactured in China, our net sales, cost of goods sold, operating income and net earnings are expected to be impacted in the second half of Fiscal 2019 as well as in Fiscal 2020, to the extent that we are unable to offset the additional costs by moving product sourcing from China, successfully negotiating price reductions from third party manufacturers or increasing sales prices on select products. During Fiscal 2018, approximately 54% of our apparel and related products were from producers located in China. During Fiscal 2019, we have made progress in shifting production from China, particularly for goods to be received late in the fiscal year, resulting in our expectation that the proportion of products sourced from China in Fiscal 2019 will be slightly lower than in Fiscal 2018. We anticipate more meaningful reductions in the proportion of our apparel and related products sourced from China in Fiscal 2020.

We believe the retail apparel market is evolving very rapidly and in ways that are having a disruptive impact on traditional fashion retailing. The application of technology, including the internet and mobile devices, to fashion retail provides consumers increasing access to multiple, responsive distribution platforms and an unprecedented ability to communicate directly with brands and retailers. As a result, consumers have more information and greater control over information they receive as well as broader, faster and cheaper access to goods than ever before. This, along with the coming of age of the “millennial” generation, is revolutionizing the way that consumers shop for fashion and other ~~goods. The evidence of the evolution is apparent with~~goods, which continues to be evidenced by weakness and store closures for certain department stores and mall-based retailers, decreased consumer retail traffic, a more promotional retail environment, expansion of off-price and discount retailers, and a shift from bricks and mortar to internet purchasing. These changes may require that brands and retailers approach their operations, including marketing and advertising, very differently than historical ~~practices.~~

practices and may result in increased operating costs to generate growth or even maintain their current sales levels.

While this evolution in the fashion retail industry presents significant risks, especially for traditional retailers who fail or are unable to adapt, we believe it also presents a tremendous opportunity for brands and retailers to capitalize on the changing consumer environment. We believe our brands have true competitive advantages in this new retailing paradigm, and we are leveraging technology to serve our consumers when and where they want to be served. We continue to believe that our lifestyle brands, with their strong emotional connections with consumers, are well suited to succeed and thrive in the long term while managing the various challenges facing our industry.

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Specifically, we believe our lifestyle brands have opportunities for long-term growth in our direct to consumer businesses. We anticipate increased sales in our e-commerce operations, which are expected to grow at a faster rate than comparable sales through our bricks and mortar ~~comparable~~ store ~~sales.~~locations. We also believe growth can be achieved through prudent expansion of bricks and mortar full-price retail store and restaurant operations and modest comparable full-price retail store and restaurant sales increases. ~~Despite the changes in the retail environment, we~~We expect there will continue to be desirable locations to add new retail stores to our portfolio, but at a measured and selective pace, and believe that an effective bricks and mortar retail strategy is an important component to the e-commerce operations for ~~additional stores.~~

long-term success in today’s retail apparel environment.

We believe our lifestyle brands have an opportunity for modest sales increases in their wholesale businesses in the long term. However, we must be diligent in our effort to avoid compromising the integrity of our brands by maintaining or growing sales with wholesale customers that may not be aligned with our long-term strategy. This is particularly important with the challenges in the department store channel, which represented approximately ~~14%~~12% of our consolidated net sales in Fiscal ~~2017,~~2018, compared to approximately ~~16%~~14% in Fiscal ~~2016.~~2017. The management of wholesale distribution for our lifestyle brands resulted in a decrease in wholesale sales in ~~the First Half of~~ Fiscal ~~2018 and~~2018. While we anticipate modest growth in our wholesale sales in Fiscal 2019, there could ~~result in~~be additional reductions in wholesale sales in future ~~periods,~~years, as ~~we may decrease~~ the amount of sales to certain wholesale accounts ~~by reducing~~could decrease if the number of doors that carry our product ~~reducing~~decreases, the volume sold for a particular door is reduced or ~~exiting~~ the account is exited altogether. We anticipate that sales increases in our wholesale businesses in the long term will stem primarily from current customers adding within their existing door count and increasing their online business; increased sales to online retailers; and our selective addition of new wholesale customers who generally ~~follow a retail model with limited discounting and who~~ present and merchandise our products in a way that is consistent with our full-price, direct to consumer distribution strategy. We also believe that there are opportunities for modest sales growth for Lanier Apparel in the future through new product programs and licenses.

We believe we must continue to invest in our lifestyle brands to take advantage of their long-term growth opportunities. Investments include capital expenditures primarily related to the direct to consumer operations, such as technology enhancements, e-commerce initiatives and retail store and restaurant build-out for new, relocated or remodeled locations, as well as distribution center and administrative office expansion initiatives. Additionally, we anticipate increased ~~advertising,~~

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employment and other administrative function costs to support ongoing business operations and fuel future sales growth. Advertising expense in the First Half of Fiscal 2018 increased relative to First Half of Fiscal 2017 for each of our brands with an advertising spend focusing on new consumer acquisition as well as consumer retention and engagement.

In the midst of the changes in our industry, an important initiative for us in ~~Fiscal 2017~~recent years was to increase the profitability of the Tommy Bahama business. These initiatives generally focused on increasing gross margin and operating margin through efforts such as: product cost reductions; selective price increases; reducing inventory purchases; redefining our approach to inventory clearance; effectively managing controllable and discretionary operating expenses; taking a more conservative approach to retail store openings and lease renewals; and continuing our efforts to reduce Asia-Pacific operating losses. ~~Good~~While we have made progress ~~was made~~ on these initiatives in ~~Fiscal 2017. In~~recent years, we expect to make further progress on improving the ~~First Half of Fiscal 2018, additional progress was made in reducing Asia-Pacific losses with the restructuring~~profitability of the Tommy Bahama ~~Japan operations, as discussed~~business in ~~Note 6.~~

Fiscal 2019 and future years.

We continue to believe it is important to maintain a strong balance sheet and liquidity. We believe positive cash flow from operations, coupled with the strength of our balance sheet and liquidity, will provide us with sufficient resources to fund future investments in our owned lifestyle brands. While we believe we have significant opportunities to appropriately deploy our capital and resources in our existing lifestyle brands, our strong cash flows from operations and ample borrowing capacity provide us the ability to continue to evaluate opportunities to add additional lifestyle brands to our portfolio in the future if we identify appropriate targets that meet our investment criteria. ~~With~~While we are actively exploring acquisition opportunities, investment opportunities for the ~~evolving fashion retail environment,~~types of large brands with the attributes that we desire are not always available at an acceptable price. Therefore, our interest in acquiring smaller brands and earlier stage companies ~~is evolving,~~has increased in recent years, particularly in businesses where we may have the opportunity to more fully integrate the brand into our existing infrastructure and shared services functions.

Currently, the market for desirable lifestyle brands, both large and small, is very competitive and the expectations of sellers are high relative to the historical operating results and opportunities of the brand.

Important factors relating to certain risks, many of which are beyond our ability to control or predict, which could impact our business are described in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for Fiscal ~~2017.~~2018.

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The following table sets forth our consolidated operating results ~~from continuing operations~~ (in thousands, except per share amounts) for the First Half of Fiscal ~~2018~~2019 compared to the First Half of Fiscal ~~2017:~~

First Half Fiscal 2018 First Half Fiscal 2017
Net sales $ 575,269
$ 557,072
Operating income $ 64,886
$ 66,361
Net earnings $ 47,751
$ 39,886
Net earnings per diluted share $ 2.84
$ 2.39

2018


	First Half
	Fiscal 2019		Fiscal 2018
Net sales	$	583,973	$	575,269
Operating income	$	70,001	$	64,886
Net earnings	$	51,493	$	47,751
Net earnings per diluted share	$	3.05	$	2.84
Weighted average shares outstanding - diluted		16,878		16,804

The higher net earnings per diluted share in the First Half of Fiscal ~~2018~~2019 was primarily due to ~~(1) the~~higher operating income in each operating group and lower ~~effective tax rate resulting from U.S. Tax Reform as discussed in Note 4, (2) improved~~interest expense. These items were partially offset by lower operating results in Corporate and Other ~~primarily due to the favorable impact of LIFO accounting~~ and ~~the operations of TBBC, which we acquired in the Fourth Quarter of Fiscal 2017, and (3) increased operating income in Southern Tide due to~~a higher net sales. These items were partially offset by (1) lower operating income in Lilly Pulitzer, primarily due to lower wholesale sales, which offset the impact of increased direct to consumer sales, and (2) lower operating income in Tommy Bahama, primarily due to increased advertising expense and Tommy Bahama Japan restructuring charges as discussed in Note 6. Changes in operating results by group are discussed below.

effective tax rate.

COMPARABLE ~~STORE~~ SALES

We often disclose comparable ~~store~~ sales in order to provide additional information regarding changes in our results of operations between periods. Our disclosures of comparable ~~store~~ sales include net sales from full-price retail stores and ~~our~~ e-commerce sites, excluding sales associated with e-commerce flash clearance sales. We believe that the inclusion of both ~~our~~ full-price retail stores and e-commerce sites in the comparable ~~store~~ sales disclosures is a more meaningful way of reporting our comparable ~~store~~ sales results, given similar inventory planning, allocation and return policies, as well as our cross-channel marketing and other initiatives for the direct to consumer channel. For our comparable ~~store~~ sales disclosures, we exclude (1) outlet store sales, warehouse sales and e-commerce flash clearance sales, as those clearance sales are used primarily to liquidate end of season inventory, which may vary significantly depending on the level of end of season inventory on hand and generally occur at lower gross margins than our non-clearance direct to consumer sales, and (2) restaurant sales, as we do not currently believe that the inclusion of restaurant sales in our comparable ~~store~~ sales disclosures is meaningful in assessing our consolidated results of operations. Comparable ~~store~~ sales information reflects net sales, including shipping and handling revenues, if any, associated with product sales.

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For purposes of our disclosures, ~~we consider a~~ comparable ~~store to be, in addition to our~~sales consists of sales through e-commerce sites aand any physical full-price retail store that was owned and open as of the beginning of the prior fiscal year and which did not have during the relevant periods, and is not within the current fiscal year scheduled to have, (1) a remodel or other event ~~resulting~~which would result in ~~the store being closed~~a closure for an extended period of time (which we define as a period of two weeks or longer), (2) a greater than 15% change in the size of the retail space due to expansion, reduction or relocation to a new retail space or (3) a relocation to a new space that ~~was~~is significantly different from the prior retail ~~space, or (4) a closing or opening of a Tommy Bahama restaurant adjacent to the full-price retail store.~~space. For those stores which are excluded ~~from comparable stores~~ based on the preceding sentence, the stores continue to be excluded from comparable ~~store~~ sales until the criteria for a new store is met subsequent to the remodel, relocation, or ~~restaurant closing or opening, or~~ other event. A retail store that is remodeled will generally continue to be included in our comparable ~~store~~ sales metrics as a store is not typically closed for longer than a two-week period during a remodel; however, a retail store that is relocated generally will not be included in our comparable ~~store~~ sales metrics until that store has been open in the relocated space for the entirety of the prior fiscal year because the size or other characteristics of the store typically change significantly from the prior location. Any stores that were closed during the prior fiscal year or current fiscal year, or which we expect to close or vacate in the current fiscal year, are excluded from ~~the definition of comparable store sales.~~

Because Fiscal 2017 had 53 weeks, each fiscal quarter in Fiscal 2018 starts and ends one calendar week later than in Fiscal 2017 (e.g., the Second Quarter of Fiscal 2018 is the period from May 6, 2018 to August 4, 2018, inclusive, while the Second Quarter of Fiscal 2017 is the period from April 30, 2017 to July 29, 2017, inclusive). Due to the significant seasonality of our direct to consumer sales, particularly during the first and second fiscal quarters each year, as well as the timing of our merchandising and marketing initiatives, the one-week shift between Fiscal 2017 and Fiscal 2018 may significantly impact our comparable store sales if presented on a fiscal period basis. To provide a more accurate assessment of our Fiscal 2018 comparable store productivity, we are presenting our Fiscal 2018 comparable store sales on a calendar-adjusted basis by comparing the Fiscal 2018 period to the comparable calendar period in the preceding year, rather than the comparable fiscal period in the preceding year. By way of example, our Second Quarter of Fiscal 2018 comparable store sales presentation compares the Second Quarter of Fiscal 2018 to the 13-week period ended August 5, 2017. Except as otherwise specified, all references to comparable store sales during Fiscal 2018 contained in this report refer to the calendar-adjusted comparable store sales as opposed to the fiscal period comparable store sales.

Definitions and calculations of comparable ~~store~~ sales differ among retail companies, and therefore comparable ~~store~~ sales metrics disclosed by us may not be comparable to the metrics disclosed by other companies.

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STORE COUNT

The table below provides store count information for Tommy Bahama and Lilly Pulitzer as of the dates specified.

August 4, 2018 February 3, 2018 July 29, 2017 January 28, 2017
Tommy Bahama Full-Price Retail Stores 111 110 111 111
Tommy Bahama Retail-Restaurant Locations 18 18 17 17
Tommy Bahama Outlet Stores 38 38 39 40
Total Tommy Bahama Retail Locations 167 166 167 168
Lilly Pulitzer Full-Price Retail Stores 60 57 50 40
Total Oxford Retail Locations 227 223 217 208


	August 3,	February 2,	August 4,	February 3,
	2019	2019	2018	2018
Tommy Bahama retail stores	113	113	111	110
Tommy Bahama retail-restaurant locations	17	17	18	18
Tommy Bahama outlets	37	37	38	38
Total Tommy Bahama locations	167	167	167	166
Lilly Pulitzer retail stores	63	62	60	57
Total Oxford locations	230	229	227	223

RESULTS OF OPERATIONS

SECOND QUARTER OF FISCAL ~~2018~~2019 COMPARED TO SECOND QUARTER OF FISCAL ~~2017~~

The following table sets forth the specified line items in our unaudited condensed consolidated statements of operations both in dollars (in thousands) and as a percentage of net sales. The table also sets forth the dollar change and the percentage change of the data as compared to the same period of the prior year. We have calculated all percentages based on actual data, and percentage columns may not add due to rounding.

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Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Net sales $ 302,641
100.0 % $ 284,709
100.0 % $ 17,932
6.3 %
Cost of goods sold 123,344
40.8 % 118,740
41.7 % 4,604
3.9 %
Gross profit $ 179,297
59.2 % $ 165,969
58.3 % $ 13,328
8.0 %
SG&A 146,340
48.4 % 132,911
46.7 % 13,429
10.1 %
Royalties and other operating income 3,556
1.2 % 3,344
1.2 % 212
6.3 %
Operating income $ 36,513
12.1 % $ 36,402
12.8 % $ 111
0.3 %
Interest expense, net 602
0.2 % 742
0.3 % (140 ) (18.9 )%
Earnings before income taxes $ 35,911
11.9 % $ 35,660
12.5 % $ 251
0.7 %
Income taxes 8,727
2.9 % 12,971
4.6 % (4,244 ) (32.7 )%
Net earnings $ 27,184
9.0 % $ 22,689
8.0 % $ 4,495
19.8 %

2018

The discussion and tables below compare ~~certain line items included in~~ our statements of operations for the Second Quarter of Fiscal ~~2018~~2019 to the Second Quarter of Fiscal ~~2017.~~2018. Each dollar and percentage change provided reflects the change between these fiscal periods unless indicated otherwise. Each dollar and share amount included in the tables is in thousands except for per share amounts. We have calculated all percentages based on actual data, and percentage columns in tables may not add due to rounding. Individual line items of our consolidated statements of operations may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company. ~~Unless otherwise indicated, all references~~

The following table sets forth the specified line items in our unaudited condensed consolidated statements of operations both in dollars (in thousands) and as a percentage of net sales as well as the dollar change and the percentage change as compared to ~~assets, liabilities, revenues, expenses or other information in this report reflect continuing operations.~~

the same period of the prior year.


	Second Quarter
	Fiscal 2019				Fiscal 2018				$ Change		% Change

Net sales	$	302,000	100.0	%	$	302,641	100.0	%	$	(641)	(0.2)	%
Cost of goods sold		122,175	40.5	%		123,344	40.8	%		(1,169)	(0.9)	%
Gross profit	$	179,825	59.5	%	$	179,297	59.2	%	$	528	0.3	%
SG&A		143,403	47.5	%		146,340	48.4	%		(2,937)	(2.0)	%
Royalties and other operating income		3,837	1.3	%		3,556	1.2	%		281	7.9	%
Operating income	$	40,259	13.3	%	$	36,513	12.1	%	$	3,746	10.3	%
Interest expense, net		419	0.1	%		602	0.2	%		(183)	(30.4)	%
Earnings before income taxes	$	39,840	13.2	%	$	35,911	11.9	%	$	3,929	10.9	%
Income taxes		10,004	3.3	%		8,727	2.9	%		1,277	14.6
Net earnings	$	29,836	9.9	%	$	27,184	9.0	%	$	2,652	9.8	%

Net Sales


	Second Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Tommy Bahama	$	188,870	$	192,728	$	(3,858)	(2.0)	%
Lilly Pulitzer		75,555		71,623		3,932	5.5	%
Lanier Apparel		20,905		23,860		(2,955)	(12.4)	%
Southern Tide		12,468		11,777		691	5.9	%
Corporate and Other		4,202		2,653		1,549	58.4	%
Total net sales	$	302,000	$	302,641	$	(641)	(0.2)	%

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Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Tommy Bahama $ 192,728
$ 187,580
$ 5,148
2.7 %
Lilly Pulitzer 71,623
69,458
2,165
3.1 %
Lanier Apparel 23,860
17,848
6,012
33.7 %
Southern Tide 11,777
9,395
2,382
25.4 %
Corporate and Other 2,653
428
2,225
NM
Total net sales $ 302,641
$ 284,709
$ 17,932
6.3 %

Consolidated net sales ~~increased $18~~decreased $1 million in the Second Quarter of Fiscal 2019. The decrease in consolidated net sales was primarily driven by (1) a $5 million net decrease in wholesale sales, primarily driven by reductions in sales at Tommy Bahama and Lanier Apparel, (2) a $2 million decrease in Tommy Bahama outlet store sales, and (3) a $1 million decrease in restaurant sales in Tommy Bahama. These decreases were partially offset by (1) a $5 million, or ~~6.3%~~3%, comparable sales increase to $168 million in the Second Quarter of Fiscal 2019 from $163 million in the Second Quarter of Fiscal 2018 and (2) an incremental net sales increase of $2 million associated with non-comp retail store operations primarily resulting from an increase at Lilly Pulitzer. The changes in net sales by operating group are discussed below.

The following table presents the proportion of our consolidated net sales by distribution channel for each period presented:


	Second Quarter
	Fiscal 2019		Fiscal 2018
Retail	44	%	45	%
E-commerce	23	%	21	%
Restaurant	7	%	7	%
Wholesale	26	%	27	%
Total	100	%	100	%

Tommy Bahama:

Tommy Bahama net sales decreased $4 million, or 2%, in the Second Quarter of Fiscal 2019. The decrease in Tommy Bahama net sales was primarily driven by (1) a $3 million decrease in wholesale sales, reflecting decreases in both full-price and off-price wholesale sales, (2) a $2 million decrease in outlet store sales primarily due to lower sales in existing outlet stores and the net sales impact of fewer outlet store locations, (3) a $1 million decrease in restaurant sales primarily reflecting lower sales in existing restaurants and the Third Quarter of Fiscal 2018 closure of the Ginza, Japan restaurant and (4) a net sales decrease of $1 million associated with the operation of non-comp retail stores. These decreases were partially offset by a $3 million, or 3%, comparable sales increase to $111 million in the Second Quarter of Fiscal 2019 from $109 million in the Second Quarter of Fiscal 2018. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:


	Second Quarter
	Fiscal 2019		Fiscal 2018
Retail	50	%	50	%
E-commerce	23	%	21	%
Restaurant	11	%	11	%
Wholesale	16	%	18	%
Total	100	%	100	%

Lilly Pulitzer:

Lilly Pulitzer net sales increased $4 million, or 6%, in the Second Quarter of Fiscal 2019. The increase in Lilly Pulitzer net sales was primarily driven by (1) an incremental net sales increase of $3 million associated with non-comp retail store operations, including the operation of additional retail stores and increased gift card breakage income, (2) a $1 million increase in wholesale sales reflecting higher full-price wholesale sales partially offset by lower off-price wholesale sales and (3) a 1% comparable sales increase reflecting comparable sales of $51 million in both the Second

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Quarter of Fiscal 2019 and the Second Quarter of Fiscal 2018. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:


	Second Quarter
	Fiscal 2019		Fiscal 2018
Retail	51	%	52	%
E-commerce	29	%	27	%
Wholesale	20	%	21	%
Total	100	%	100	%

Lanier Apparel:

The Lanier Apparel net sales decrease of $3 million, or 12%, in the Second Quarter of Fiscal 2019 was primarily due to decreased volume in various seasonal, in-stock and replenishment programs, including initial shipments for a warehouse club program in the Second Quarter of Fiscal 2018 that did not repeat in the Second Quarter of Fiscal 2019. These decreases were partially offset by increases in other programs.

Southern Tide:

The Southern Tide net sales increase of $1 million, or 6%, in the Second Quarter of Fiscal 2019 was due to increased sales in both the e-commerce and wholesale channels of distribution, with e-commerce growing at a faster pace than wholesale during the quarter. The increased wholesale sales reflect increased sales to department stores and Signature Stores, including those that opened in Fiscal 2018, partially offset by lower off-price wholesale sales. The following table presents the proportion of net sales by distribution channel for Southern Tide for each period presented:


	Second Quarter
	Fiscal 2019		Fiscal 2018
E-commerce	22	%	20	%
Wholesale	78	%	80	%
Total	100	%	100	%

Corporate and Other:

Corporate and Other net sales primarily consist of the net sales of TBBC and our Lyons, Georgia distribution center operations. The increase in net sales was primarily due to sales growth in TBBC.

Gross Profit

The tables below present gross profit by operating group and in total for the Second Quarter of Fiscal 2019 and the Second Quarter of Fiscal 2018, as well as the change between those two periods and gross margin by operating group and in total. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be

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directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.


	Second Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Tommy Bahama	$	114,526	$	115,954	$	(1,428)	(1.2)	%
Lilly Pulitzer		51,817		49,082		2,735	5.6	%
Lanier Apparel		6,025		6,345		(320)	(5.0)	%
Southern Tide		6,141		6,095		46	0.8	%
Corporate and Other		1,316		1,821		(505)	(27.7)	%
Total gross profit	$	179,825	$	179,297	$	528	0.3	%
LIFO adjustments in Corporate and Other	$	705	$	(122)
Tommy Bahama Japan inventory markdown charges	$	—	$	461


	Second Quarter
	Fiscal 2019		Fiscal 2018
Tommy Bahama	60.6	%	60.2	%
Lilly Pulitzer	68.6	%	68.5	%
Lanier Apparel	28.8	%	26.6	%
Southern Tide	49.3	%	51.8	%
Corporate and Other	NM		NM
Consolidated gross margin	59.5	%	59.2	%

The increase in consolidated gross profit in the Second Quarter of Fiscal 2019 was primarily due to an improved gross margin, which offset the impact of lower net sales. The improved consolidated gross margin reflects increased gross margin in Tommy Bahama, Lilly Pulitzer and Lanier Apparel as well as a change in sales mix as wholesale sales, including Lanier Apparel sales which typically have lower gross margins, represented a lower proportion of our net sales. These favorable changes were partially offset by the net unfavorable impact in the Second Quarter of Fiscal 2019 of LIFO accounting and the Tommy Bahama Japan inventory markdown charges incurred in the Second Quarter of Fiscal 2018. Changes in gross margin by operating group are discussed below.

Tommy Bahama:

The increase in gross margin for Tommy Bahama was primarily driven by (1) a change in sales mix as retail store and e-commerce sales represented a greater proportion of net sales while wholesale and outlet store sales represented a lower proportion of net sales and (2) the Second Quarter of Fiscal 2018 including certain Tommy Bahama Japan inventory markdown charges with no such charges in the Second Quarter of Fiscal 2019.

Lilly Pulitzer:

The increase in gross margin for Lilly Pulitzer was primarily due to a change in sales mix as direct to consumer sales represented a larger proportion of net sales and the favorable impact of higher gift card breakage income. These favorable items were partially offset by higher costs associated with gift with purchase and other promotion events.

Lanier Apparel:

The increase in gross margin for Lanier Apparel was primarily due to a change in sales mix as a greater proportion of sales in the Second Quarter of Fiscal 2019 were related to higher gross margin programs, while the Second Quarter of Fiscal 2018 included more sales related to a warehouse club program.

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Southern Tide:

The decrease in gross margin for Southern Tide was primarily due to the prior year including an insurance recovery on certain inventory partially offset by a change in sales mix as e-commerce and full-price wholesale sales represented a greater proportion of net sales and off-price sales represented a lower proportion of net sales.

Corporate and Other:

The gross profit in Corporate and Other primarily reflects (1) the gross profit of TBBC, (2) the gross profit of our Lyons, Georgia distribution center and (3) the impact of LIFO accounting adjustments. The primary driver for the lower gross profit was the unfavorable impact of LIFO accounting in the Second Quarter of Fiscal 2019 compared to the Second Quarter of Fiscal 2018. The LIFO accounting impact in Corporate and Other in each period primarily reflects (1) a charge in Corporate and Other when inventory that had been marked down to the estimated net realizable value in an operating group in a prior period is ultimately sold or (2) a credit in Corporate and Other when inventory has been marked down to the estimated net realizable value in an operating group in the current period, but the inventory has not been sold as of period end.

SG&A


	Second Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change
SG&A	$	143,403		$	146,340		$	(2,937)	(2.0)	%
SG&A (as a % of net sales)		47.5	%		48.4	%
Amortization of Tommy Bahama Canada intangible assets	$	—		$	378
Amortization of Lilly Pulitzer Signature Store intangible assets	$	80		$	93
Amortization of Southern Tide intangible assets	$	73		$	72
Tommy Bahama Japan restructuring SG&A charges	$	590		$	3,206

The lower SG&A in the Second Quarter of Fiscal 2019 was primarily due to (1) a $3 million reduction in incentive compensation amounts, (2) a $3 million reduction in restructuring charges related to the Tommy Bahama Japan operations and (3) a $2 million reduction in advertising expense. These decreases were partially offset by (1) increases in SG&A to support the businesses, including increased salaries and wages, occupancy and other operating expenses in our ongoing direct to consumer and wholesale operations and (2) $1 million of incremental SG&A associated with the operation of additional direct to consumer locations.

Royalties and other operating income


	Second Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Royalties and other operating income	$	3,837	$	3,556	$	281	7.9	%

Royalties and other operating income primarily reflects income received from third parties from the licensing of our brands. The increased royalties and other income in the Second Quarter of Fiscal 2019 reflects increased royalty income in both Tommy Bahama and Lilly Pulitzer.

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Operating income (loss)


	Second Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Tommy Bahama	$	23,218	$	20,621	$	2,597	12.6	%
Lilly Pulitzer		20,449		18,421		2,028	11.0	%
Lanier Apparel		253		825		(572)	(69.3)	%
Southern Tide		1,834		1,420		414	29.2	%
Corporate and Other		(5,495)		(4,774)		(721)	(15.1)	%
Total Operating Income	$	40,259	$	36,513	$	3,746	10.3	%
LIFO adjustments in Corporate and Other	$	705	$	(122)
Tommy Bahama Japan inventory markdown charges	$	—	$	461
Amortization of Tommy Bahama Canada intangible assets	$	—	$	378
Amortization of Lilly Pulitzer Signature Store intangible assets	$	80	$	93
Amortization of Southern Tide intangible assets	$	73	$	72
Tommy Bahama Japan restructuring SG&A charges	$	590	$	3,206

The increase in operating income in the Second Quarter of Fiscal 2019 was primarily due to lower SG&A and an improved gross margin, each as discussed above. On an operating group basis, the increase in operating income reflects increased operating income in Tommy Bahama, Lilly Pulitzer and Southern Tide, partially offset by lower operating income in Lanier Apparel and a larger operating loss in Corporate and Other. Changes in operating income (loss) by operating group are discussed below.

Tommy Bahama:


	Second Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Net sales	$	188,870		$	192,728		$	(3,858)	(2.0)	%
Gross profit	$	114,526		$	115,954		$	(1,428)	(1.2)	%
Gross margin		60.6	%		60.2	%
Operating income	$	23,218		$	20,621		$	2,597	12.6	%
Operating income as % of net sales		12.3	%		10.7	%
Tommy Bahama Japan inventory markdown charges	$	—		$	461
Amortization of Tommy Bahama Canada intangible assets	$	—	��	$	378
Tommy Bahama Japan restructuring SG&A charges	$	590		$	3,206

The increase in operating income for Tommy Bahama was primarily due to lower SG&A and improved gross margin, partially offset by lower net sales. The lower SG&A for the Second Quarter of Fiscal 2019 reflects (1) a $3 million reduction in restructuring charges related to the Tommy Bahama Japan operations, (2) a $2 million reduction in incentive compensation amounts, and (3) $2 million of lower advertising expense. These decreases were partially offset by increased salaries and wages, occupancy and other operating expenses in our ongoing operations.

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Lilly Pulitzer:


	Second Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Net sales	$	75,555		$	71,623		$	3,932	5.5	%
Gross profit	$	51,817		$	49,082		$	2,735	5.6	%
Gross margin		68.6	%		68.5	%
Operating income	$	20,449		$	18,421		$	2,028	11.0	%
Operating income as % of net sales		27.1	%		25.7	%
Amortization of Lilly Pulitzer Signature Store intangible assets	$	80		$	93

The increase in operating income in Lilly Pulitzer was primarily due to higher net sales partially offset by higher SG&A. The higher SG&A for the Second Quarter of Fiscal 2019 included (1) $1 million of incremental SG&A associated with the cost of operating additional retail stores, and (2) SG&A increases to support the planned growth of the business, including additional employment costs. These increases in SG&A were partially offset by a reduction in advertising expense.

Lanier Apparel:


	Second Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Net sales	$	20,905		$	23,860		$	(2,955)	(12.4)	%
Gross profit	$	6,025		$	6,345		$	(320)	(5.0)	%
Gross margin		28.8	%		26.6	%
Operating income	$	253		$	825		$	(572)	(69.3)	%
Operating income as % of net sales		1.2	%		3.5	%

The decrease in operating income for Lanier Apparel was primarily due to lower net sales and higher SG&A, partially offset by the higher gross margin. The higher SG&A for the Second Quarter of Fiscal 2019 was primarily due to increased advertising and sales-related variable expenses.

Southern Tide:


	Second Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Net sales	$	12,468		$	11,777		$	691	5.9	%
Gross profit	$	6,141		$	6,095		$	46	0.8	%
Gross margin		49.3	%		51.8	%
Operating income	$	1,834		$	1,420		$	414	29.2	%
Operating income as % of net sales		14.7	%		12.1	%
Amortization of Southern Tide intangible assets	$	73		$	72

The increase in operating income for Southern Tide was primarily due to higher sales and lower SG&A partially offset by lower gross margin. The lower SG&A in the Second Quarter of Fiscal 2019 was primarily due to decreased incentive compensation amounts and other expense reductions.

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Corporate and Other:


	Second Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Net sales	$	4,202	$	2,653	$	1,549	58.4	%
Gross profit	$	1,316	$	1,821	$	(505)	(27.7)	%
Operating loss	$	(5,495)	$	(4,774)	$	(721)	(15.1)	%
LIFO adjustments in Corporate and Other	$	705	$	(122)

The larger operating loss in Corporate and Other was primarily due to the unfavorable impact of LIFO accounting.

Interest expense, net


	Second Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Interest expense, net	$	419	$	602	$	(183)	(30.4)	%

Interest expense decreased in the Second Quarter of Fiscal 2019 primarily due to lower average debt outstanding during the Second Quarter of Fiscal 2019 partially offset by higher interest rates and higher unused line fees.

Income taxes


	Second Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Income taxes	$	10,004		$	8,727		$	1,277	14.6	%
Effective tax rate		25.1	%		24.3	%

The higher effective tax rate was primarily due to the Second Quarter of Fiscal 2018 including the impact of more significant favorable discrete items.

Net earnings


	Second Quarter
	Fiscal 2019		Fiscal 2018
Net sales	$	302,000	$	302,641
Operating income	$	40,259	$	36,513
Net earnings	$	29,836	$	27,184
Net earnings per diluted share	$	1.76	$	1.61
Weighted average shares outstanding - diluted		16,907		16,840

The higher net earnings per diluted share in the Second Quarter of Fiscal 2019 was primarily due to higher operating income in Tommy Bahama, Lilly Pulitzer and Southern Tide and lower interest expense. These improved operating results were partially offset by lower operating income in Lanier Apparel, a larger operating loss in Corporate and Other and the impact of a higher effective tax rate.

FIRST HALF OF FISCAL 2019 COMPARED TO FIRST HALF OF FISCAL 2018

The discussion and tables below compare our statements of operations for the First Half of Fiscal 2019 to the First Half of Fiscal 2018. Each dollar and percentage change provided reflects the change between these fiscal periods unless indicated otherwise. Each dollar and share amount included in the tables is in thousands except for per share amounts. We have calculated all percentages based on actual data, and percentage columns may not add due to rounding. Individual line items of our consolidated statements of operations may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.

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	First Half
	Fiscal 2019				Fiscal 2018				$ Change		% Change
Net sales	$	583,973	100.0	%	$	575,269	100.0	%	$	8,704	1.5	%
Cost of goods sold		238,379	40.8	%		231,826	40.3	%		6,553	2.8	%
Gross profit	$	345,594	59.2	%	$	343,443	59.7	%	$	2,151	0.6	%
SG&A		283,217	48.5	%		286,060	49.7	%		(2,843)	(1.0)	%
Royalties and other operating income		7,624	1.3	%		7,503	1.3	%		121	1.6	%
Operating income	$	70,001	12.0	%	$	64,886	11.3	%	$	5,115	7.9	%
Interest expense, net		1,090	0.2	%		1,383	0.2	%		(293)	(21.2)	%
Earnings before income taxes	$	68,911	11.8	%	$	63,503	11.0	%	$	5,408	8.5	%
Income taxes		17,418	3.0	%		15,752	2.7	%		1,666	10.6	%
Net earnings	$	51,493	8.8	%	$	47,751	8.3	%	$	3,742	7.8	%

Net Sales


	First Half
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Tommy Bahama	$	353,600	$	359,860	$	(6,260)	(1.7)	%
Lilly Pulitzer		148,150		140,250		7,900	5.6	%
Lanier Apparel		47,494		43,769		3,725	8.5	%
Southern Tide		26,602		25,249		1,353	5.4	%
Corporate and Other		8,127		6,141		1,986	32.3	%
Total net sales	$	583,973	$	575,269	$	8,704	1.5	%

Consolidated net sales increased $9 million, or 2%, in the First Half of Fiscal 2019. The increase in consolidated net sales was primarily driven by (1) a ~~$10~~$7 million, or 7%3%, ~~calendar-adjusted~~ comparable ~~store~~ sales increase ~~from $144~~to $296 million in the ~~13-week period ended August 5, 2017 to $155~~First Half of Fiscal 2019 from $289 million in the ~~Second Quarter~~First Half of Fiscal 2018, ~~driven by strong~~with comparable ~~store~~ sales increases in both Tommy Bahama and Lilly Pulitzer, (2) an incremental net sales increase of $9$4 million associated with ~~the operation of~~ non-comp ~~full-price~~ retail ~~stores in~~store operations, resulting from an increase at Lilly Pulitzer, and ~~Tommy Bahama,~~ (3) a $2 million ~~of e-commerce and wholesale sales for TBBC, which we acquired in the Fourth Quarter of Fiscal 2017, (4) a $1 million net~~ increase in wholesale sales reflecting increases in Lilly Pulitzer, Lanier Apparel and Southern ~~Tide and a decrease in Lilly Pulitzer, and (5) a $1 million increase in restaurant sales in Tommy Bahama.~~Tide. These increases in ~~consolidated~~ net sales were partially offset by (1) a $6$3 million decrease in ~~direct to consumer~~restaurant sales ~~at comparable stores resulting from the calendar shift between Fiscal 2017~~in Tommy Bahama and ~~Fiscal 2018. By way of comparison, on~~(2) a ~~fiscal period basis, consolidated comparable~~$2 million decrease in outlet store sales ~~increased 3%~~ in ~~the Second Quarter of Fiscal 2018 relative to the Second Quarter of Fiscal 2017.~~Tommy Bahama. The changes in net sales by operating group are discussed below. The following table presents the proportion of our consolidated net sales by distribution channel for each period presented:

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017
Full-price retail stores and outlets 45 % 45 %
E-commerce 21 % 20 %
Restaurant 7 % 7 %
Wholesale 27 % 28 %
Total 100 % 100 %

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	First Half
	Fiscal 2019		Fiscal 2018
Retail	41	%	42	%
E-commerce	20	%	19	%
Restaurant	8	%	8	%
Wholesale	31	%	31	%
Total	100	%	100	%

Tommy Bahama:

The Tommy Bahama net sales ~~increase~~decrease of $6 million, or 2%, in the First Half of Fiscal 2019 reflects (1) a $5 million ~~or 2.7%, was~~decrease in wholesale sales reflecting decreases in both full-price and off-price wholesale sales, (2) a $3 million decrease in restaurant sales primarily ~~driven by (1) an $8 million, or 8%, increase in calendar-adjusted comparable store sales from $104 million in~~due to the ~~13-week period ended August 5, 2017 to $112 million in~~net impact of certain restaurant closures, remodels and openings since the ~~Second Quarter~~beginning of Fiscal 2018 ~~reflecting gains in both e-commerce and bricks and mortar locations, (2) a $1 million increase in restaurant sales resulting from sales at two new restaurants opened in the last year~~ as well as ~~increased~~lower sales at existing ~~restaurants, partially offset by the impact of one~~ restaurant ~~closure in the First Quarter of Fiscal 2018,~~locations and (3) a $1$2 million ~~increase~~decrease in ~~non-comp full-price retail stores.~~outlet store sales due to lower sales at existing outlet stores and the net sales impact of outlet store closures. These ~~increases~~decreases were partially offset by a $5$4 million, ~~decrease~~or 2%, increase in ~~direct~~comparable sales to consumer sales at comparable stores resulting from the calendar shift between Fiscal 2017 and Fiscal 2018. By way of comparison, on a fiscal period basis, Tommy Bahama comparable store sales increased 3%$193 million in the ~~Second Quarter~~First Half of Fiscal ~~2018 relative to~~2019

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from $189 million in the ~~Second Quarter~~First Half of Fiscal ~~2017. Both wholesale sales and off-price direct to consumer sales were generally comparable in the Second Quarter of Fiscal 2018 and the Second Quarter of Fiscal 2017.~~2018. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017
Full-price retail stores and outlets 50 % 52 %
E-commerce 21 % 19 %
Restaurant 11 % 11 %
Wholesale 18 % 18 %
Total 100 % 100 %


	First Half
	Fiscal 2019		Fiscal 2018
Retail	49	%	49	%
E-commerce	19	%	18	%
Restaurant	13	%	13	%
Wholesale	19	%	20	%
Total	100	%	100	%

Lilly Pulitzer:

The Lilly Pulitzer net sales increase of $2$8 million, or ~~3.1%~~6%, in the First Half of Fiscal 2019 was primarily athe result of (1) an incremental net sales increase of $8$5 million associated with non-comp retail store operations including the operation of ~~non-comp full-price~~additional retail stores ~~including stores opened by Lilly Pulitzer~~ and ~~the 12 Signature Stores acquired in Fiscal 2017 and~~increased gift card breakage income, (2) a $2$3 million ~~or 6%,~~ increase in calendar-adjusted comparable store sales from $39 million in the 13-week period ended August 5, 2017 to $41 million in the Second Quarter of Fiscal 2018, with increases in both e-commerce and retail store comparable store sales. These increases were partially offset by (1) a $7 million decrease in wholesale sales reflecting ~~Lilly Pulitzer's efforts to manage its exposure to department stores~~increases in both full-price and ~~the Second Quarter of Fiscal 2018 not including any~~off-price wholesale sales ~~to the Signature Stores acquired in Fiscal 2017~~ and ~~(2)~~(3) a $1 million, ~~decrease~~or 1%, increase in ~~direct~~comparable sales to consumer sales at comparable stores resulting from the calendar shift between Fiscal 2017 and Fiscal 2018. By way of comparison, on a fiscal period basis, Lilly Pulitzer comparable store sales increased 3%$93 million in the ~~Second Quarter~~First Half of Fiscal ~~2018 relative to~~2019 from $92 million the ~~Second Quarter~~First Half of Fiscal ~~2017.~~2018. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017
Full-price retail stores 52 % 42 %
E-commerce 27 % 26 %
Wholesale 21 % 32 %
Total 100 % 100 %


	First Half
	Fiscal 2019		Fiscal 2018
Retail	46	%	48	%
E-commerce	27	%	26	%
Wholesale	27	%	26	%
Total	100	%	100	%

Lanier Apparel:

The Lanier Apparel net sales increase of $6$4 million, or ~~33.7%~~9%, in the First Half of Fiscal 2019 was primarily due to increased volume in various seasonal, in-stock and replenishment programs, including initial shipments for certain programs in the First Half of ~~a new program with a warehouse club,~~Fiscal 2019. These increases were partially offset by decreased sales in other programs, including lower volume for programs resulting from ~~lower volume and~~ the exit ~~from~~of certain programs and customers, including ~~the impact of a customer~~programs with customers who filed for bankruptcy in Fiscal 2018 and certain programs that had initial shipments in the First Half of Fiscal 2018. ~~The timing~~While the Cole Haan and Duck Head businesses both had significant sales growth rates in the First Half of ~~certain~~Fiscal 2019, those business still represent a small proportion of Lanier Apparel’s net sales. We expect the net sales at Lanier Apparel ~~sales, particularly warehouse club program sales, can vary significantly from one year to~~for the ~~next, as reflected by the Second Quarter~~remainder of Fiscal ~~2018 including significant warehouse club~~2019 to grow at a more modest rate than the sales ~~with no significant warehouse club sales in~~growth rate achieved for the ~~Second Quarter~~First Half of Fiscal ~~2017, as the substantial majority of Lanier Apparel warehouse club sales in Fiscal 2017 occurred in the Third Quarter of Fiscal 2017.~~

2019.

Southern Tide:

The Southern Tide net sales increase of $2$1 million, or ~~25.4%~~5%, in the First Half of Fiscal 2019 was due to increased sales in both the wholesale and e-commerce channels of ~~distribution.~~distribution, with e-commerce growing at a faster pace than wholesale sales. The increased wholesale sales reflect increased sales to ~~(1) off-price retailers, (2)~~department stores and Signature

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Stores, including those that opened in ~~the last year and (3) specialty stores.~~Fiscal 2018. The following table presents the proportion of net sales by distribution channel for Southern Tide for each period presented:


	First Half
	Fiscal 2019		Fiscal 2018
E-commerce	17	%	16	%
Wholesale	83	%	84	%
Total	100	%	100	%

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Second Quarter Fiscal 2018 Second Quarter Fiscal 2017
E-commerce 20 % 23 %
Wholesale 80 % 77 %
Total 100 % 100 %

Corporate and Other:

Corporate and Other net sales primarily consist of the net sales of TBBC ~~which include e-commerce and wholesale operations,~~ and our Lyons, Georgia distribution center operations. The increase in net sales was primarily due to ~~the December 2017 acquisition of~~sales growth in TBBC.

Gross Profit

The ~~table~~tables below ~~presents~~present gross profit by operating group and in total for the ~~Second Quarter~~First Half of Fiscal ~~2018~~2019 and the ~~Second Quarter~~First Half of Fiscal ~~2017,~~2018, as well as the change between those two periods and gross margin by operating group and in total for those periods. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Tommy Bahama $ 115,954
$ 109,992
$ 5,962
5.4 %
Lilly Pulitzer 49,082
46,629
2,453
5.3 %
Lanier Apparel 6,345
6,150
195
3.2 %
Southern Tide 6,095
4,468
1,627
36.4 %
Corporate and Other 1,821
(1,270 ) 3,091
NM
Total gross profit $ 179,297
$ 165,969
$ 13,328
8.0 %
LIFO (credit) charge included in Corporate and Other $ (122 ) $ 1,565

Tommy Bahama Japan inventory markdown charges in cost of goods sold $ 461
$ —


	First Half
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Tommy Bahama	$	218,033	$	220,244	$	(2,211)	(1.0)	%
Lilly Pulitzer		97,298		94,587		2,711	2.9	%
Lanier Apparel		13,427		12,313		1,114	9.0	%
Southern Tide		13,293		12,832		461	3.6	%
Corporate and Other		3,543		3,467		76	2.2	%
Total gross profit	$	345,594	$	343,443	$	2,151	0.6	%
LIFO adjustments in Corporate and Other	$	845	$	166
Tommy Bahama Japan inventory markdown charges	$	—	$	461
Inventory step-up charges in Corporate and Other	$	—	$	157


	First Half
	Fiscal 2019		Fiscal 2018
Tommy Bahama	61.7	%	61.2	%
Lilly Pulitzer	65.7	%	67.4	%
Lanier Apparel	28.3	%	28.1	%
Southern Tide	50.0	%	50.8	%
Corporate and Other	NM		NM
Consolidated gross margin	59.2	%	59.7	%

The increase in consolidated gross profit in the ~~Second Quarter~~First Half of Fiscal ~~2018~~2019 was primarily due to ~~(1) higher~~increased sales ~~in each operating group, (2) improved gross margins in Tommy Bahama, Lilly Pulitzer and Southern Tide and (3) the net favorable impact of LIFO accounting. These favorable items were~~ partially offset by ~~(1)~~lower gross margin. The lower consolidated gross margin was primarily due to lower gross margins in Lanier Apparel and (2) the impact of the Tommy Bahama Japan inventory markdown charges. The table below presents gross margin by operating group and in total for the Second Quarter of Fiscal 2018 and the Second Quarter of Fiscal 2017.

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017
Tommy Bahama 60.2 % 58.6 %
Lilly Pulitzer 68.5 % 67.1 %
Lanier Apparel 26.6 % 34.5 %
Southern Tide 51.8 % 47.6 %
Corporate and Other NM
NM
Consolidated gross margin 59.2 % 58.3 %

~~On a consolidated basis, the increase in gross margin in the Second Quarter of Fiscal 2018 was primarily due to (1) improved gross margins in Tommy Bahama,~~ Lilly Pulitzer and ~~Southern Tide, (2) the net favorable impact of LIFO accounting and (3)~~ a change in sales mix as ~~direct to consumer~~Lanier Apparel sales, ~~represented a greater proportion of consolidated sales. These favorable items were partially offset by (1)~~which typically have lower gross margins ~~in Lanier Apparel and (2) the impact~~than our other businesses, represented a higher proportion of ~~the Tommy Bahama Japan inventory markdown charges.~~

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our net sales.

Tommy Bahama:

The increase in gross margin for Tommy Bahama was ~~driven by~~primarily due to (1) a change in sales mix ~~as full-price direct to consumer~~with retail store and e-commerce sales ~~represented~~representing a greater proportion of net sales ~~while off-price~~and wholesale and ~~off-price direct to consumer~~outlet store sales ~~represented~~representing a lower proportion of net sales inand (2) the ~~Second Quarter~~First Half of Fiscal 2018 ~~and (2) improved~~including certain Tommy Bahama Japan inventory markdown charges with no such charges in the First Half of Fiscal 2019.

Lilly Pulitzer:

The decrease in gross margin for Lilly Pulitzer reflects (1) a greater proportion of wholesale sales, including increased off-price sales, which had lower gross margins in ~~our off-price wholesale~~the First Half of Fiscal 2019, and ~~direct to consumer business.~~(2) higher costs associated with gift with purchase and other promotion events. These ~~favorable changes~~unfavorable items were partially offset by the impact of ~~the Tommy Bahama Japan inventory markdown charges.~~higher gift card breakage income.

~~Lilly Pulitzer:~~

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Lanier Apparel:

The increase in gross margin for Lilly Pulitzer was driven by a change in sales mix as direct to consumer sales represented a larger proportion of Lilly Pulitzer sales in the Second Quarter of Fiscal 2018. Gross margins in the direct to consumer channel in the Second Quarter of Fiscal 2018 increased slightly while gross margins in the wholesale channel decreased primarily due to a greater proportion of off-price wholesale sales in the Second Quarter of Fiscal 2018.

~~Lanier Apparel:~~

~~The decrease~~ in gross margin for Lanier Apparel was primarily due to ~~(1)~~a change in sales mix as a greater proportion of sales in the ~~Second Quarter~~First Half of Fiscal ~~2017 including the favorable impact of certain customer allowance amounts~~2019 were related to ~~certain replenishment programs and inventory markdowns, resulting in the~~higher gross margin ~~for~~programs, due in part to the ~~Second Quarter of Fiscal 2017 not being representative of the ongoing gross margin of Lanier Apparel and (2) the Second Quarter~~First Half of Fiscal 2018 including more sales ~~for~~related to a ~~large~~ warehouse club program, which has lower gross margins than other Lanier Apparel sales, with no significant warehouse club sales in the Second Quarter of Fiscal 2017. Lanier Apparel continues to face gross margin pressures, including pricing pressure, margin support and other allowance amounts from wholesale customers.

program.

Southern Tide:

The ~~increase~~decrease in gross margin for Southern Tide was primarily due to ~~improved full-price gross margins, improved gross margins on~~ the ~~sale of off-price inventory and~~prior year including an insurance recovery on certain ~~inventory.~~

inventory partially offset by a change in sales mix as e-commerce sales represented a greater proportion of net sales.

Corporate and Other:

The gross profit in Corporate and Other primarily reflects (1) the gross profit of TBBC, (2) the gross profit of our Lyons, Georgia distribution center and (3) the impact of LIFO accounting adjustments. The ~~primary driver for the improved~~increased gross profit ~~was (1)~~primarily reflects the ~~net favorable~~impact of higher sales in TBBC partially offset by the unfavorable impact of LIFO accounting in the ~~Second Quarter~~First Half of Fiscal ~~2018~~2019 compared to the ~~Second Quarter~~First Half of Fiscal ~~2017 and (2) the Second Quarter of Fiscal 2018 including the gross profit of TBBC.~~2018. The LIFO accounting impact in Corporate and Other in each period primarily reflects ~~the sale of~~(1) a charge in Corporate and Other when inventory that had been marked down to the estimated net realizable value in an operating group in a prior ~~periods~~period is ultimately sold or (2) a credit in Corporate and Other when inventory has been marked down to the estimated net realizable value in an operating group in the current period, but ~~generally reversed in Corporate and Other~~the inventory has not been sold as ~~part~~ of ~~LIFO accounting.~~

period end.

SG&A

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
SG&A $ 146,340
$ 132,911
$ 13,429
10.1 %
SG&A as % of net sales 48.4 % 46.7 %

Tommy Bahama Japan restructuring charges in SG&A $ 3,206
$ —

Amortization of Tommy Bahama Canadian intangible assets $ 378
$ 373

Amortization of Lilly Pulitzer Signature Store intangible assets $ 93
$ —

Amortization of Southern Tide intangible assets $ 72
$ 72


	First Half
	Fiscal 2019			Fiscal 2018			$ Change		% Change
SG&A	$	283,217		$	286,060		$	(2,843)	(1.0)	%
SG&A (as a % of net sales)		48.5	%		49.7	%
Amortization of Tommy Bahama Canada intangible assets	$	—		$	763
Amortization of Lilly Pulitzer Signature Store intangible assets	$	160		$	188
Amortization of Southern Tide intangible assets	$	145		$	144
Tommy Bahama Japan restructuring SG&A charges	$	590		$	3,206

The ~~increase~~decrease in SG&A in the ~~Second Quarter~~First Half of Fiscal ~~2018~~2019 was primarily due to (1) a $5 million ~~of increased~~decrease in advertising expense, ~~with much of the increased spending focused on consumer acquisition initiatives,~~ (2) a $3 million ofreduction in restructuring charges related to the Tommy Bahama Japan ~~restructuring charges, including lease termination fees, premises reinstatement costs, non-cash impairment charges~~operations and

~~Table of Contents~~

~~severance amounts, as discussed~~ (3) a $3 million reduction in ~~Note 6, (3) other~~incentive compensation expense. These decreases were partially offset by (1) increases in SG&A ~~increases~~ to support the businesses, including increased salaries and wages, occupancy and other operating expenses in our ~~growing brands, including additional employee headcount, (4) $2 million of incremental costs in the Second Quarter of Fiscal 2018 associated with additional retail stores~~ongoing direct to consumer and ~~restaurants~~wholesale operations and ~~(5)~~(2) $1 million of incremental SG&A associated with ~~TBBC. This increase in SG&A was partially offset by $1 million~~the cost of ~~lower incentive compensation amounts.~~

operating additional retail stores and restaurants.

Royalties and other operating income

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Royalties and other operating income $ 3,556
$ 3,344
$ 212
6.3 %


	First Half
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Royalties and other operating income	$	7,624	$	7,503	$	121	1.6	%

Royalties and other operating income primarily reflects income received from third parties from the licensing of our ~~Tommy Bahama, Lilly Pulitzer and Southern Tide~~ brands. The increase in royalties and other income in the ~~Second Quarter~~First Half of Fiscal ~~2018~~2019 reflects increased royalty income in both Tommy Bahama and Lilly Pulitzer.

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Operating income (loss)


	First Half
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Tommy Bahama	$	38,410	$	34,924	$	3,486	10.0	%
Lilly Pulitzer		35,701		34,247		1,454	4.2	%
Lanier Apparel		1,435		1,187		248	20.9	%
Southern Tide		4,351		3,907		444	11.4	%
Corporate and Other		(9,896)		(9,379)		(517)	(5.5)	%
Total Operating Income	$	70,001	$	64,886	$	5,115	7.9	%
LIFO adjustments in Corporate and Other	$	845	$	166
Tommy Bahama Japan inventory markdown charges	$	—	$	461
Inventory step-up charges in Corporate and Other	$	—	$	157
Amortization of Tommy Bahama Canada intangible assets	$	—	$	763
Amortization of Lilly Pulitzer Signature Store intangible assets	$	160	$	188
Amortization of Southern Tide intangible assets	$	145	$	144
Tommy Bahama Japan restructuring SG&A charges	$	590	$	3,206

The increase in operating income in the First Half of Fiscal 2019 was primarily due to ~~increased royalty~~higher sales and lower SG&A partially offset by lower gross margin. On an operating group basis, the increase in operating income ~~in Lilly Pulitzer.~~

~~Operating income (loss)~~

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Tommy Bahama $ 20,621
$ 21,916
$ (1,295 ) (5.9 )%
Lilly Pulitzer 18,421
20,982
(2,561 ) (12.2 )%
Lanier Apparel 825
195
630
323.1 %
Southern Tide 1,420
645
775
120.2 %
Corporate and Other (4,774 ) (7,336 ) 2,562
34.9 %
Total operating income $ 36,513
$ 36,402
$ 111
0.3 %
LIFO (credit) charge included in Corporate and Other $ (122 ) $ 1,565

Tommy Bahama Japan inventory markdown charges in cost of goods sold $ 461
$ —

Tommy Bahama Japan restructuring charges in SG&A $ 3,206
$ —

Amortization of Tommy Bahama Canadian intangible assets $ 378
$ 373

Amortization of Lilly Pulitzer Signature Store intangible assets $ 93
$ —

Amortization of Southern Tide intangible assets $ 72
$ 72

~~The comparable~~reflects increased operating income in ~~the Second Quarter of Fiscal 2018~~each operating group and ~~the Second Quarter of Fiscal 2017 reflects the favorable impact of higher sales~~a larger operating loss in ~~each of our operating groups~~Corporate and ~~higher gross margins, each as discussed above, partially offset by higher SG&A, including increased advertising expense and the Tommy Bahama Japan restructuring charges as discussed in Note 6.~~Other. Changes in operating income (loss) by operating group are discussed below.

Tommy Bahama:

~~Table of Contents~~

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Net sales $ 192,728
$ 187,580
$ 5,148
2.7 %
Gross margin 60.2 % 58.6 %

Operating income $ 20,621
$ 21,916
$ (1,295 ) (5.9 )%
Operating income as % of net sales 10.7 % 11.7 %

Tommy Bahama Japan inventory markdown charges in cost of goods sold $ 461
$ —

Tommy Bahama Japan restructuring charges in SG&A $ 3,206
$ —

Amortization of Tommy Bahama Canadian intangible assets $ 378
$ 373


	First Half
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Net sales	$	353,600		$	359,860		$	(6,260)	(1.7)	%
Gross profit	$	218,033		$	220,244		$	(2,211)	(1.0)	%
Gross margin		61.7	%		61.2	%
Operating income	$	38,410		$	34,924		$	3,486	10.0	%
Operating income as % of net sales		10.9	%		9.7	%
Tommy Bahama Japan inventory markdown charges	$	—		$	461
Amortization of Tommy Bahama Canada intangible assets	$	—		$	763
Tommy Bahama Japan restructuring SG&A charges	$	590		$	3,206

The ~~decreased~~increase in operating income ~~for~~in Tommy Bahama was primarily due to ~~higher~~lower SG&A ~~which offset the favorable impact of increased net sales~~ and higher gross margin. The increased SG&A included $4 million of increased advertising expense, with much of the increased advertising focused on consumer acquisition initiatives, and the Japan restructuring charges as discussed in Note 6. This increase in SG&A wasmargin, partially offset by lower net sales. The lower SG&A for the First Half of Fiscal 2019 reflects (1) a $4 million decrease in advertising expense, (2) a $3 million reduction in restructuring charges related to the Tommy Bahama Japan operations, and (3) a $2 million reduction in incentive compensation. These decreases were partially offset by increased salaries and wages, occupancy and other operating expenses in our ongoing operations.

Table of ~~lower incentive compensation amounts.~~Contents

Lilly Pulitzer:

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Net sales $ 71,623
$ 69,458
$ 2,165
3.1 %
Gross margin 68.5 % 67.1 %

Operating income $ 18,421
$ 20,982
$ (2,561 ) (12.2 )%
Operating income as % of net sales 25.7 % 30.2 %

Amortization of Lilly Pulitzer Signature Store intangible assets $ 93
$ —


	First Half
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Net sales	$	148,150		$	140,250		$	7,900	5.6	%
Gross profit	$	97,298		$	94,587		$	2,711	2.9	%
Gross margin		65.7	%		67.4	%
Operating income	$	35,701		$	34,247		$	1,454	4.2	%
Operating income as % of net sales		24.1	%		24.4	%
Amortization of Lilly Pulitzer Signature Store intangible assets	$	160		$	188

The ~~lower~~increase in operating income in Lilly Pulitzer was primarily due to increased sales partially offset by lower gross margin and higher SG~~&A and lower wholesale sales, which offset the favorable impact of the higher direct to consumer sales.~~&A. The higher SG&A ~~for~~in the ~~Second Quarter~~First Half of Fiscal ~~2018 includes~~2019 included (1) $2 million of incremental SG&A associated with the cost of operating additional retail stores ~~including the 12 Signature Stores acquired in Fiscal 2017,~~and (2) ~~$2 million of increased advertising expense and (3)~~ SG&A increases to support the planned growth of the business, including additional ~~employee headcount.~~

employment costs. These increases in SG&A were partially offset by a $1 million reduction in advertising expense.

Lanier Apparel:

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Net sales $ 23,860
$ 17,848
$ 6,012
33.7 %
Gross margin 26.6 % 34.5 %

Operating income $ 825
$ 195
$ 630
323.1 %
Operating income as % of net sales 3.5 % 1.1 %


	First Half
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Net sales	$	47,494		$	43,769		$	3,725	8.5	%
Gross profit	$	13,427		$	12,313		$	1,114	9.0	%
Gross margin		28.3	%		28.1	%
Operating income	$	1,435		$	1,187		$	248	20.9	%
Operating income as % of net sales		3.0	%		2.7	%

The ~~increased~~increase in operating income ~~for~~in Lanier Apparel was primarily due to ~~the~~ higher sales ~~and lower~~partially offset by higher SG&A. The SG&A increase in the First Half of Fiscal 2019 was primarily due to higher sales-related variable expenses as well as increased advertising expense.

Southern Tide:


	First Half
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Net sales	$	26,602		$	25,249		$	1,353	5.4	%
Gross profit	$	13,293		$	12,832		$	461	3.6	%
Gross margin		50.0	%		50.8	%
Operating income	$	4,351		$	3,907		$	444	11.4	%
Operating income as % of net sales		16.4	%		15.5	%
Amortization of Southern Tide intangible assets	$	145		$	144

The increase in operating income in Southern Tide was primarily due to higher sales partially offset by lower gross margin. ~~The~~ SG&A ~~decrease~~ was ~~primarily due to lower sales-related variable expenses, including royalties and advertising.~~

~~Southern Tide:~~

~~Table of Contents~~

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Net sales $ 11,777
$ 9,395
$ 2,382
25.4 %
Gross margin 51.8 % 47.6 %

Operating income $ 1,420
$ 645
$ 775
120.2 %
Operating income as % of net sales 12.1 % 6.9 %
Amortization of Southern Tide intangible assets $ 72
$ 72

~~The~~comparable between periods as increased ~~operating income for Southern Tide was primarily due to the higher sales and gross margin, partially offset by higher SG&A, including increased incentive compensation and~~advertising expense, variable expenses associated with the higher ~~sales.~~sales and other costs to support future growth of the business were offset by lower incentive compensation amounts.

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Corporate and Other:

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Net sales $ 2,653
$ 428
$ 2,225
NM
Operating loss $ (4,774 ) $ (7,336 ) $ 2,562
34.9 %
LIFO (credit) charge included in Corporate and Other $ (122 ) $ 1,565


	First Half
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Net sales	$	8,127	$	6,141	$	1,986	32.3	%
Gross profit	$	3,543	$	3,467	$	76	2.2	%
Operating loss	$	(9,896)	$	(9,379)	$	(517)	(5.5)	%
LIFO adjustments in Corporate and Other	$	845	$	166
Inventory step-up charges in Corporate and Other	$	—	$	157

The ~~improved~~larger operating ~~results~~loss in Corporate and Other were primarily due to (1) the $2 million net favorable impact of LIFO accounting, (2) a lower operating loss in our corporate operations, due in part to certain life insurance proceeds, (3) improved operating results in our Lyons, Georgia distribution center operations and (4) the operating income of TBBC.

~~Interest expense, net~~

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Interest expense, net $ 602
$ 742
$ (140 ) (18.9 )%

Interest expense decreased in the Second Quarter of Fiscal 2018 primarily due to lower average debt outstanding during the Second Quarter of Fiscal 2018 partially offset by higher interest rates in the Second Quarter of Fiscal 2018.

~~Income taxes~~

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017 $ Change % Change
Income taxes $ 8,727
$ 12,971
$ (4,244 ) (32.7 )%
Effective tax rate 24.3 % 36.4 %

Income taxes decreased in the Second Quarter of Fiscal 2018 primarily due to the impact of U.S. Tax Reform. The impact of U.S. Tax Reform results in the income tax amounts and effective tax rates for Fiscal 2018 and Fiscal 2017 not being comparable. Additionally, income tax expense for the Second Quarter of Fiscal 2018 includes the favorable impact of certain discrete items.

~~Net earnings~~

Second Quarter Fiscal 2018 Second Quarter Fiscal 2017
Net sales $ 302,641
$ 284,709
Operating income $ 36,513
$ 36,402
Net earnings $ 27,184
$ 22,689
Net earnings per diluted share $ 1.61
$ 1.36
Weighted average shares outstanding - diluted 16,840
16,700

~~Table of Contents~~

The higher net earnings per diluted share in the Second Quarter of Fiscal 2018 was primarily due to (1) the lower effective tax rate resulting from U.S. Tax Reform as discussed in Note 4, (2) improved operating results in Corporate and Other, primarily due to the favorable impact of LIFO accounting, (3) increased operating income in Southern Tide due to higher net sales, and (4) increased operating income in Lanier Apparel reflecting higher net sales. These items were partially offset by (1) lower operating income in Lilly Pulitzer, primarily due to lower wholesale sales, which offset the impact of increased direct to consumer sales, and (2) lower operating income in Tommy Bahama, primarily due to the Tommy Bahama Japan restructuring charges and increased advertising expense which offset higher net sales.

~~FIRST HALF OF FISCAL 2018 COMPARED TO FIRST HALF OF FISCAL 2017~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Net sales $ 575,269
100.0 % $ 557,072
100.0 % $ 18,197
3.3 %
Cost of goods sold 231,826
40.3 % 231,693
41.6 % 133
0.1 %
Gross profit $ 343,443
59.7 % $ 325,379
58.4 % $ 18,064
5.6 %
SG&A 286,060
49.7 % 266,102
47.8 % 19,958
7.5 %
Royalties and other operating income 7,503
1.3 % 7,084
1.3 % 419
5.9 %
Operating income $ 64,886
11.3 % $ 66,361
11.9 % $ (1,475 ) (2.2 )%
Interest expense, net 1,383
0.2 % 1,672
0.3 % (289 ) (17.3 )%
Earnings before income taxes $ 63,503
11.0 % $ 64,689
11.6 % $ (1,186 ) (1.8 )%
Income taxes 15,752
2.7 % 24,803
4.5 % (9,051 ) (36.5 )%
Net earnings $ 47,751
8.3 % $ 39,886
7.2 % $ 7,865
19.7 %

The discussion and tables below compare certain line items included in our statements of operations for the First Half of Fiscal 2018 to the First Half of Fiscal 2017. Each dollar and percentage change provided reflects the change between these fiscal periods unless indicated otherwise. Each dollar and share amount included in the tables is in thousands except for per share amounts. Individual line items of our consolidated statements of operations may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company. Unless otherwise indicated, all references to assets, liabilities, revenues, expenses or other information in this report reflect continuing operations.

~~Net Sales~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Tommy Bahama $ 359,860
$ 360,076
$ (216 ) (0.1 )%
Lilly Pulitzer 140,250
132,801
7,449
5.6 %
Lanier Apparel 43,769
41,204
2,565
6.2 %
Southern Tide 25,249
22,037
3,212
14.6 %
Corporate and Other 6,141
954
5,187
NM
Total net sales $ 575,269
$ 557,072
$ 18,197
3.3 %

Consolidated net sales increased $18 million, or 3.3%, in the First Half of Fiscal 2018. The increase in consolidated net sales was primarily driven by (1) an incremental net sales increase of $13 million associated with the operation of non-comp full-price retail stores in Lilly Pulitzer and Tommy Bahama, (2) a $12 million, or 4%, calendar-adjusted comparable store sales increase from $264 million in the 26-week period ended August 5, 2017 to $276 million in the First Half of Fiscal 2018, driven by strong comparable store sales in both Tommy Bahama and Lilly Pulitzer, (3) $5 million of e-commerce and wholesale sales for TBBC, which we acquired in the Fourth Quarter of Fiscal 2017, (4) a $3 million increase in restaurant sales in Tommy Bahama, and (5) a $2 million increase in direct to consumer sales at comparable stores resulting from the calendar shift between Fiscal 2017 and Fiscal 2018. These increases in consolidated net sales were partially offset by (1) a $15 million net

~~Table of Contents~~

decrease in wholesale sales, consisting of decreases in Lilly Pulitzer and Tommy Bahama partially offset by increases in Southern Tide and Lanier Apparel, and (2) a $2 million decrease in net sales through our off-price direct to consumer clearance channels in Tommy Bahama. By way of comparison, on a fiscal period basis, consolidated comparable store sales increased 5% in the First Half of Fiscal 2018 relative to the First Half of Fiscal 2017. The changes in net sales by operating group are discussed below. The following table presents the proportion of our consolidated net sales by distribution channel for each period presented:

First Half Fiscal 2018 First Half Fiscal 2017
Full-price retail stores and outlets 42 % 41 %
E-commerce 19 % 17 %
Restaurant 8 % 8 %
Wholesale 31 % 34 %
Total 100 % 100 %

~~Tommy Bahama:~~

The Tommy Bahama 0.1% net sales decrease, reflects (1) an $8 million decrease in wholesale sales, including decreases in full-price wholesale sales, as Tommy Bahama continues to manage its exposure to department stores by reducing department store door count, and decreased off-price wholesale sales, as Tommy Bahama disposed of a more significant amount of aged inventory in the First Half of Fiscal 2017, and (2) a $2 million decrease in outlet store sales. These decreases were partially offset by (1) a $7 million, or 4%, increase in calendar-adjusted comparable store sales from $188 million in the 26 week period ended August 5, 2017 to $195 million in the First Half of Fiscal 2018, with positive comparable store sales in the larger direct to consumer second quarter offsetting a modest decrease in comparable store sales in the smaller direct to consumer first quarter and (2) a $3 million increase in restaurant sales resulting from sales at two new restaurants opened in the last year as well as increased sales at existing restaurants, partially offset by the impact of one restaurant closure in the First Quarter of Fiscal 2018. Non-comp full-price retail store sales and the calendar shift between Fiscal 2017 and Fiscal 2018 did not have a significant impact on net sales in the First Half of Fiscal 2018 relative to the First Half of Fiscal 2017. By way of comparison, on a fiscal period basis, Tommy Bahama comparable store sales increased 4% in the First Half of Fiscal 2018 relative to the First Half of Fiscal 2017. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

First Half Fiscal 2018 First Half Fiscal 2017
Full-price retail stores and outlets 49 % 49 %
E-commerce 18 % 16 %
Restaurant 13 % 12 %
Wholesale 20 % 23 %
Total 100 % 100 %

~~Lilly Pulitzer:~~

The Lilly Pulitzer net sales increase of $7 million, or 5.6%, was primarily the result of (1) an incremental net sales increase of $14 million associated with the operation of non-comp full-price retail stores, including stores opened by Lilly Pulitzer and the 12 Signature Stores acquired in Fiscal 2017, (2) a $5 million, or 6%, increase in calendar-adjusted comparable store sales from $73 million in the 13-week period ended August 5, 2017 to $77 million in the First Half of Fiscal 2018, with increases in both e-commerce and retail store comparable store sales and (3) a $2 million increase in direct to consumer sales at comparable stores resulting from the calendar shift between Fiscal 2017 and Fiscal 2018. These increases were partially offset by a $12 million decrease in wholesale sales, reflecting Lilly Pulitzer's efforts to manage its exposure to department stores and the First Half of Fiscal 2018 not including any wholesale sales to the Signature Stores acquired in Fiscal 2017. By way of comparison, on a fiscal period basis, Lilly Pulitzer comparable store sales increased 9% in the First Half of Fiscal 2018 relative to the First Half of Fiscal 2017. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:

~~Table of Contents~~

First Half Fiscal 2018 First Half Fiscal 2017
Full-price retail stores 48 % 40 %
E-commerce 26 % 23 %
Wholesale 26 % 37 %
Total 100 % 100 %

~~Lanier Apparel:~~

The increase in net sales for Lanier Apparel of $3 million, or 6.2%, was due to increased volume in various seasonal and replenishment programs, including initial shipments for a new program with a warehouse club, partially offset by decreased sales in other programs resulting from lower volume and the exit from certain programs and customers, including the net sales impact of a customer who filed for bankruptcy in the First Half of Fiscal 2018. The timing of certain Lanier Apparel sales, particularly warehouse club program sales, can vary significantly from one year to the next, as reflected by the First Half of Fiscal 2018 including significant warehouse club sales, with no significant warehouse club sales in the First Half of Fiscal 2017, as the substantial majority of Lanier Apparel warehouse club sales in Fiscal 2017 occurred in the Third Quarter of Fiscal 2017.

~~Southern Tide:~~

The increase in net sales for Southern Tide of $3 million, or 14.6%, was due to increased sales in both the wholesale and e-commerce channels of distribution. The increased wholesale sales reflect increased sales to (1) Signature Stores, including those opened in the last year, (2) off-price retailers and (3) specialty stores. The following table presents the proportion of net sales by distribution channel for Southern Tide for each period presented:

First Half Fiscal 2018 First Half Fiscal 2017
E-commerce 16 % 17 %
Wholesale 84 % 83 %
Total 100 % 100 %

~~Corporate and Other:~~

Corporate and Other net sales primarily consist of the net sales of TBBC, which include e-commerce and wholesale operations, and our Lyons, Georgia distribution center operations. The increase in net sales was primarily due to the ~~December 2017 acquisition of TBBC.~~

~~Gross Profit~~

The table below presents gross profit by operating group and in total for the First Half of Fiscal 2018 and the First Half of Fiscal 2017, as well as the change between those two periods. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.

~~Table of Contents~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Tommy Bahama $ 220,244
$ 215,149
$ 5,095
2.4 %
Lilly Pulitzer 94,587
88,766
5,821
6.6 %
Lanier Apparel 12,313
13,163
(850 ) (6.5 )%
Southern Tide 12,832
10,965
1,867
17.0 %
Corporate and Other 3,467
(2,664 ) 6,131
NM
Total gross profit $ 343,443
$ 325,379
$ 18,064
5.6 %
LIFO charge included in Corporate and Other $ 166
$ 3,272

Tommy Bahama Japan inventory markdown charges in cost of goods sold $ 461
$ —

Inventory step-up charges for TBBC included in Corporate and Other $ 157
$ —

The increase in consolidated gross profit in the First Half of Fiscal 2018 was primarily due to (1) higher net sales in Lilly Pulitzer, Corporate and Other, Southern Tide and Lanier Apparel, (2) improved gross margins in Tommy Bahama, Lilly Pulitzer and Southern Tide, (3) the net favorableunfavorable impact of LIFO accounting and (4) a change in sales mix with direct to consumer sales representing a greater proportion of consolidated net sales. These favorable items were partially offset by (1) lower gross margins in Lanier Apparel, (2) the impact of Tommy Bahama Japan inventory markdown charges and (3) the impact of the inventory step-up charges for TBBC. The table below presents gross margin by operating group and in total for the First Half of Fiscal 2018 and the First Half of Fiscal 2017.

First Half Fiscal 2018 First Half Fiscal 2017
Tommy Bahama 61.2 % 59.8 %
Lilly Pulitzer 67.4 % 66.8 %
Lanier Apparel 28.1 % 31.9 %
Southern Tide 50.8 % 49.8 %
Corporate and Other NM
NM
Consolidated gross margin 59.7 % 58.4 %

On a consolidated basis, the increase in gross margin in the First Half of Fiscal 2018 was primarily due to (1) improved gross margins in Tommy Bahama, Lilly Pulitzer and Southern Tide, (2) a change in sales mix as direct to consumer sales represented a greater proportion of consolidated sales, and (3) the net favorable impact of LIFO accounting. These favorable items were partially offset by (1) lower gross margins in Lanier Apparel, (2) the impact of the Tommy Bahama Japan inventory markdown charges and (3) the impact of the inventory step-up of charges for TBBC.

~~Tommy Bahama:~~

The increase in gross margin for Tommy Bahama was driven by (1) a change in sales mix as full-price direct to consumer sales represented a greater proportion of sales, while off-price wholesale and off-price direct to consumer sales represented a lower proportion of sales in the First Half of Fiscal 2018, and (2) improved gross margins in our off-price wholesale and direct to consumer businesses. These favorable changes were partially offset by the impact of the Tommy Bahama Japan inventory markdown charges.

~~Lilly Pulitzer:~~

The increase in gross margin for Lilly Pulitzer was driven by a change in sales mix as direct to consumer sales represented a larger proportion of Lilly Pulitzer sales in the First Half of Fiscal 2018. This change in sales mix was partially offset by lower gross margins in the direct to consumer business as more sales resulted from gift with purchase promotion events as well as increased freight for e-commerce sales and lower gross margins in the wholesale business reflecting a greater proportion of off-price sales in the First Half of Fiscal 2018.

~~Lanier Apparel:~~

~~Table of Contents~~

The decrease in gross margin for Lanier Apparel was primarily due to (1) the First Half of Fiscal 2017 including the favorable impact of certain customer allowance amounts related to certain replenishment programs and inventory markdowns, resulting in the gross margin in the First Half of Fiscal 2017 not being representative of the ongoing gross margin of Lanier Apparel and (2) the First Half of Fiscal 2018 including sales for a large warehouse club program, which has lower gross margins than other Lanier Apparel sales, with no significant warehouse club sales in First Half of Fiscal 2017. Lanier Apparel continues to face gross margin pressures, including pricing pressure, margin support and other allowance amounts from wholesale customers.

~~Southern Tide:~~

The increase in gross margin for Southern Tide was primarily due to improved full-price gross margins, improved gross margins on the sale of off-price inventory and an insurance recovery on certain inventory.

~~Corporate and Other:~~

The gross profit in Corporate and Other primarily reflects (1) the gross profit of TBBC, (2) the gross profit of our Lyons, Georgia distribution center and (3) the impact of LIFO accounting adjustments. The primary driver for the improved gross profit was (1) the net favorable impact of LIFO accounting in the First Half of Fiscal 2018 compared to the First Half of Fiscal 2017 and (2) the First Half of Fiscal 2018 including the gross profit of TBBC, which was unfavorably impacted by the inventory step-up charges for TBBC. The LIFO accounting impact in Corporate and Other in each period primarily reflects the sale of inventory that had been marked down to the estimated net realizable value in prior periods in an operating group, but generally reversed in Corporate and Other as part of LIFO accounting.

~~SG&A~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
SG&A $ 286,060
$ 266,102
$ 19,958
7.5 %
SG&A as % of net sales 49.7 % 47.8 %

Tommy Bahama Japan restructuring charges in SG&A $ 3,206
$ —

Amortization of Tommy Bahama Canadian intangible assets $ 763
$ 743

Amortization of Lilly Pulitzer Signature Store intangible assets $ 188
$ —

Amortization of Southern Tide intangible assets $ 144
$ 144

The increase in SG&A in the First Half of Fiscal 2018 was primarily due to (1) increased advertising expense of $8 million, with much of the increased spending focused on consumer acquisition initiatives, (2) $4 million of incremental costs in the First Half of Fiscal 2018 associated with additional retail stores and restaurants, (3) $3 million of Tommy Bahama Japan restructuring charges, including lease termination fees, premises reinstatement costs, non-cash impairment charges and severance amounts, as discussed in Note 6, (4) other SG&A increases to support our growing brands and (5) $2 million of incremental SG&A associated with TBBC. This increase in SG&A was partially offset by $2 million of lower incentive compensation amounts.

~~Royalties and other operating income~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Royalties and other operating income $ 7,503
$ 7,084
$ 419
5.9 %

Royalties and other operating income primarily reflects income received from third parties from the licensing of our Tommy Bahama, Lilly Pulitzer and Southern Tide brands. The increase in royalties and other income in the First Half of Fiscal 2018 reflects increased royalty income in both Tommy Bahama and Lilly Pulitzer.

~~Operating income (loss)~~

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First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Tommy Bahama $ 34,924
$ 37,954
$ (3,030 ) (8.0 )%
Lilly Pulitzer 34,247
38,669
(4,422 ) (11.4 )%
Lanier Apparel 1,187
1,053
134
12.7 %
Southern Tide 3,907
2,749
1,158
42.1 %
Corporate and Other (9,379 ) (14,064 ) 4,685
33.3 %
Total operating income $ 64,886
$ 66,361
$ (1,475 ) (2.2 )%
LIFO charge included in Corporate and Other $ 166
$ 3,272

Tommy Bahama Japan inventory markdown charges in cost of goods sold $ 461
$ —

Inventory step-up charges for TBBC included in Corporate and Other $ 157
$ —

Tommy Bahama Japan restructuring charges in SG&A $ 3,206
$ —

Amortization of Tommy Bahama Canadian intangible assets $ 763
$ 743

Amortization of Lilly Pulitzer Signature Store intangible assets $ 188
$ —

Amortization of Southern Tide intangible assets $ 144
$ 144

The decrease in operating income in the First Half of Fiscal 2018 was primarily due to higher SG&A, including increased advertising expense and the Tommy Bahama Japan restructuring charges as discussed in Note 6, which offset the favorable impact of higher sales and higher gross margins, each as discussed above. Changes in operating income (loss) by operating group are discussed below.

~~Tommy Bahama:~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Net sales $ 359,860
$ 360,076
$ (216 ) (0.1 )%
Gross margin 61.2 % 59.8 %

Operating income $ 34,924
$ 37,954
$ (3,030 ) (8.0 )%
Operating income as % of net sales 9.7 % 10.5 %

Tommy Bahama Japan inventory markdown charges in cost of goods sold $ 461
$ —

Tommy Bahama Japan restructuring charges in SG&A $ 3,206
$ —

Amortization of Tommy Bahama Canadian intangible assets $ 763
$ 743

The lower operating income for Tommy Bahama was primarily due to higher SG&A which offset the favorable impact of higher gross margin. The increased SG&A included (1) $5 million of increased advertising expense, with much of the increased advertising spend focused on consumer acquisition initiatives and (2) $3 million of Tommy Bahama Japan restructuring charges as discussed in Note 6. This increase in SG&A was partially offset by $3 million of lower incentive compensation amounts.

~~Lilly Pulitzer:~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Net sales $ 140,250
$ 132,801
$ 7,449
5.6 %
Gross margin 67.4 % 66.8 %

Operating income $ 34,247
$ 38,669
$ (4,422 ) (11.4 )%
Operating income as % of net sales 24.4 % 29.1 %

Amortization of Lilly Pulitzer Signature Store intangible assets $ 188
$ —

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The lower operating income in Lilly Pulitzer was primarily due to higher SG&A and lower wholesale sales, which offset the favorable impact of the higher direct to consumer sales and higher gross margin. The higher SG&A for the First Half of Fiscal 2018 includes (1) $4 million of incremental SG&A associated with the cost of operating additional retail stores, including the 12 Signature Stores acquired in Fiscal 2017, (2) $3 million of increased advertising expense and (3) SG&A increases to support the planned growth of the business, including additional employee headcount.

~~Lanier Apparel:~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Net sales $ 43,769
$ 41,204
$ 2,565
6.2 %
Gross margin 28.1 % 31.9 %

Operating income $ 1,187
$ 1,053
$ 134
12.7 %
Operating income as % of net sales 2.7 % 2.6 %

The increased operating income for Lanier Apparel was primarily due to the higher sales and lower SG&A partially offset by lower gross margin. The SG&A decrease was primarily due to lower sales-related variable expenses, including royalties and advertising.

~~Southern Tide:~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Net sales $ 25,249
$ 22,037
$ 3,212
14.6 %
Gross margin 50.8 % 49.8 %

Operating income $ 3,907
$ 2,749
$ 1,158
42.1 %
Operating income as % of net sales 15.5 % 12.5 %
Amortization of Southern Tide intangible assets $ 144
$ 144

~~The increased operating income for Southern Tide was primarily due to the higher sales and gross margin,~~ partially offset by higher ~~SG&A, including increased incentive compensation and variable expenses associated with the higher sales.~~

~~Corporate and Other:~~

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Net sales $ 6,141
$ 954
$ 5,187
NM
Operating loss $ (9,379 ) $ (14,064 ) $ 4,685
33.3 %
LIFO charge included in Corporate and Other $ 166
$ 3,272

Inventory step-up charges for TBBC included in Corporate and Other $ 157
$ —

The improved operating results in Corporate and Other were primarily due to (1) the $3 million net favorable impact of LIFO accounting, (2) a lower operating loss in our corporate operations, due in part to certain life insurance proceeds, (3) the operating income of ~~TBBC and (4) improved operating results in our Lyons, Georgia distribution center operations.~~

TBBC.

Interest expense, net

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Interest expense, net $ 1,383
$ 1,672
$ (289 ) (17.3 )%


	First Half
	Fiscal 2019		Fiscal 2018		$ Change		% Change
Interest expense, net	$	1,090	$	1,383	$	(293)	(21.2)	%

Interest expense decreased in the First Half of Fiscal ~~2018~~2019 primarily due to lower average debt outstanding during the First Half of Fiscal ~~2018~~2019 partially offset by higher interest rates ~~in the First Half of Fiscal 2018.~~

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and higher unused line fees.

Income taxes

First Half Fiscal 2018 First Half Fiscal 2017 $ Change % Change
Income taxes $ 15,752
$ 24,803
$ (9,051 ) (36.5 )%
Effective tax rate 24.8 % 38.3 %

Income taxes decreased in the First Half of Fiscal 2018 primarily due to the impact of U.S. Tax Reform. The impact of U.S. Tax Reform results in the income tax amounts and effective tax rates for Fiscal 2018 and Fiscal 2017 not being comparable. Additionally, income tax expense for the First Half of Fiscal 2018 includes


	First Half
	Fiscal 2019			Fiscal 2018			$ Change		% Change
Income taxes	$	17,418		$	15,752		$	1,666	10.6	%
Effective tax rate		25.3	%		24.8	%

Both periods include the favorable ~~impact~~benefit of certain stock awards that vested during the period and ~~other favorable discrete items, while~~ the First Half of Fiscal ~~2017~~2018 also includes ~~the unfavorable impact of~~ certain ~~stock awards that vested during the period.~~

other favorable discrete items. Our effective tax rate for ~~the full year of~~ Fiscal ~~2018~~2019 is expected to be approximately 26%. In addition to the typical items that may result in an effective tax rate that differs from our expectations, the effective rate for Fiscal 2018 may vary from 26% as a result of adjustments to the provisional amounts recognized for U.S. Tax Reform. The final impact of U.S. Tax Reform may differ from our provisional amounts recognized in Fiscal 2017 due to additional regulatory guidance that may be issued, us obtaining additional information to refine our estimated tax amounts and changes in current interpretations and assumptions. Refer to Note 4 for additional information about income taxes and U.S. Tax Reform.

Net earnings

First Half Fiscal 2018 First Half Fiscal 2017
Net sales $ 575,269
$ 557,072
Operating income $ 64,886
$ 66,361
Net earnings $ 47,751
$ 39,886
Net earnings per diluted share $ 2.84
$ 2.39
Weighted average shares outstanding - diluted 16,804
16,698


	First Half
	Fiscal 2019		Fiscal 2018
Net sales	$	583,973	$	575,269
Operating income	$	70,001	$	64,886
Net earnings	$	51,493	$	47,751
Net earnings per diluted share	$	3.05	$	2.84
Weighted average shares outstanding - diluted		16,878		16,804

The higher net earnings per diluted share in the First Half of Fiscal ~~2018~~2019 was primarily due to (1) the lower effective tax rate resulting from U.S. Tax Reform as discussed in Note 4, (2) the improved operating results in Corporate and Other, primarily due to the favorable impact of LIFO accounting and the operations of TBBC, and (3) increasedhigher operating income in ~~Southern Tide due to higher net sales.~~each operating group and lower interest expense. These items were partially offset by ~~(1) lower~~a larger operating ~~income~~loss in ~~Lilly Pulitzer, primarily due to lower wholesale sales, which offset the impact of increased direct to consumer sales,~~Corporate and ~~(2) lower operating income in Tommy Bahama, primarily due to increased advertising expense~~Other and ~~Tommy Bahama Japan restructuring charges as discussed in Note 6.~~

a higher effective tax rate.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Our primary source of revenue and cash flow is through our design, sourcing, marketing and distribution of branded apparel products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer and Southern Tide lifestyle brands, other owned and licensed brands, and private label apparel products. Our primary uses of cash flow include the purchase of products in the operation of our business from third party contract manufacturers outside of the United States, as well as operating expenses, including employee compensation and benefits, occupancy-related costs, marketing and advertising

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costs, distribution costs, other general and administrative expenses and the payment of periodic interest payments related to our financing arrangements.

Additionally, we use cash for the funding of capital expenditures, dividends and repayment of indebtedness. In the ordinary course of business, we maintain certain levels of inventory, extend credit to our wholesale customers and pay our operating expenses. Thus, we require a certain amount of working capital to operate our business. If cash inflows are less than cash outflows, we have access to amounts under our U.S. Revolving Credit Agreement, subject to its terms, which is described below. We may seek to finance our future cash requirements through various methods, including cash flow from operations, borrowings under our current or additional credit facilities, sales of debt or equity securities, and cash on hand.

As of August ~~4, 2018,~~3, 2019, we had $7$31 million of cash and cash equivalents on hand, ~~with $25 million of~~no borrowings outstanding and ~~$228~~$311 million of availability under our U.S. Revolving Credit Agreement. Generally, we anticipate that excess cash, if any, will be used to repay any debt outstanding on our U.S. Revolving Credit Agreement. We believe our balance sheet and anticipated future positive cash flow from operating activities provide sufficient cash flow to satisfy our ongoing cash requirements as well as ample opportunity to continue to invest in our brands, ~~and our~~ direct to consumer initiatives and other strategic initiatives.

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Key Liquidity Measures

($ in thousands) August 4, 2018 February 3, 2018 July 29, 2017 January 28, 2017
Total current assets $ 230,095
$ 236,118
$ 204,493
$ 231,628
Total current liabilities $ 110,921
$ 135,010
$ 121,917
$ 131,396
Working capital $ 119,174
$ 101,108
$ 82,576
$ 100,232
Working capital ratio 2.07
1.75
1.68
1.76
Debt to total capital ratio 5 % 10 % 8 % 20 %


	August 3,			February 2,			August 4,			February 3,
($ in thousands)	2019			2019			2018			2018
Total current assets	$	265,044		$	269,788		$	230,095		$	236,118
Total current liabilities	$	164,119		$	142,209		$	110,921		$	135,010
Working capital	$	100,925		$	127,579		$	119,174		$	101,108
Working capital ratio		1.61			1.90			2.07			1.75
Debt to total capital ratio		—	%		3	%		5	%		10	%

Our working capital ratio is calculated by dividing total current assets by total current ~~liabilities, each including any assets or liabilities related to discontinued operations.~~liabilities. Current assets increased from ~~July 29, 2017 to~~ August 4, 2018 to August 3, 2019 due to increased inventories and increased cash partially offset by lower receivables and lower prepaid expenses. Current liabilities increased primarily due to ~~increases in prepaid expenses, receivables and inventories. Current~~the impact of the revised lease accounting guidance which required the recognition of $54 million of current operating lease liabilities ~~decreased primarily due to lower accounts payable~~ at August ~~4, 2018 compared~~3, 2019, as discussed in Note 5 to ~~July 29, 2017.~~the unaudited condensed consolidated financial statements included in this report. Changes in current assets and current liabilities are discussed below.

For the ratio of debt to total capital, debt is defined as short-term and long-term debt, and total capital is defined as debt plus ~~shareholders'~~shareholders’ equity. Debt was $0 million at August 3, 2019 and $25 million at August 4, 2018, ~~and $38 million at July 29, 2017,~~ while shareholders’ equity was $519 million at August 3, 2019 and $467 million at August 4, ~~2018 and $409 million at July 29, 2017.~~2018. The decrease in debt since ~~July 29, 2017~~August 4, 2018 was primarily due to ~~$93~~$106 million of cash flow from operations which was partially offset by ~~$43~~cash payments of $31 million for capital expenditures and $24 million for dividends, resulting in $31 million of ~~capital expenditures, the payment~~cash and cash equivalents on hand as of ~~$21 million of dividends and payments related to various acquisitions of $15 million. Shareholders'~~August 3, 2019. Shareholders’ equityincreased from ~~July 29, 2017,~~August 4, 2018, primarily as a result of net earnings less dividends paid. Our debt levels and ratio of debt to total capital in future periods may not be comparable to historical amounts as we continue to assess, and possibly make changes to, our capital structure. Changes in our capital structure in the future, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Balance Sheet

The following tables set forth certain information included in our consolidated balance sheets (in thousands). Below each table are explanations for any significant changes in the balances from ~~July 29, 2017~~August 4, 2018 to August ~~4, 2018.~~3, 2019.

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Current Assets:

August 4, 2018 February 3, 2018 July 29, 2017 January 28, 2017
Cash and cash equivalents $ 7,054
$ 6,343
$ 5,983
$ 6,332
Receivables, net 69,724
67,542
59,264
58,279
Inventories, net 123,924
126,812
119,620
142,175
Prepaid expenses and other current assets 29,393
35,421
19,626
24,842
Total current assets $ 230,095
$ 236,118
$ 204,493
$ 231,628


	August 3,		February 2,		August 4,		February 3,
	2019		2019		2018		2018
Cash and cash equivalents	$	30,756	$	8,327	$	7,054	$	6,343
Receivables, net		59,176		69,037		69,724		67,542
Inventories, net		152,672		160,656		123,924		126,812
Prepaid expenses and other current assets		22,440		31,768		29,393		35,421
Total current assets	$	265,044	$	269,788	$	230,095	$	236,118

Cash and cash equivalents were $31 million as of August 3, 2019 compared to $7 million as of August 4, ~~2018 and July 29, 2017 represent typical~~2018. Typical cash amounts maintained on an ongoing basis in our operations ~~which~~ generally ~~ranges~~range from $5 million to $10 million at any given ~~time.~~time if we have debt outstanding. Any excess cash is generally used to repay any amounts outstanding under our U.S. Revolving Credit ~~Agreement.~~ Agreement, and if cash flow from operations exceeds amounts required to pay any outstanding debt amounts, capital expenditures and dividends, cash outstanding may exceed the typical cash amounts.

The ~~increase~~decrease in receivables, net as of August ~~4, 2018~~3, 2019 was primarily due to ~~a $6 million income tax receivable as of August 4, 2018 with no meaningful income tax receivable as of July 29, 2017, as well as increased~~lower wholesale ~~trade receivables primarily resulting from the higher wholesale~~ sales ~~in Lanier Apparel~~ in the Second Quarter of Fiscal ~~2018.~~

2019 resulting in lower trade accounts receivables and a $5 million reduction in income tax receivables reflecting the collection of certain income tax receivable amounts.

Inventories, net, which is net of a $62 million LIFO reserve in both periods, increased as of August ~~4, 2018 increased primarily as a result of~~3, 2019 due to increases in inventories in each operating group to support planned sales growth and to increase base inventory levels in certain programs and product categories. The higher inventory levels ~~in Lilly Pulitzer and Lanier Apparel, partially offset by lower~~reflect (1) increased inventory levels in Tommy Bahama, ~~and Corporate and Other. The higher inventory~~including increases in ~~Lilly Pulitzer reflects planned~~certain core product categories in the direct to consumer ~~sales increases in the second half of Fiscal 2018, as well as higher retail inventories related to the~~operations, and (2) increased ~~number of Lilly Pulitzer retail stores. The higher~~ inventory in Lanier Apparel ~~reflects a more typical~~due to less inventory ~~level for Lanier Apparel as~~than optimal in the prior year ~~inventories were impacted by the transition of~~for certain replenishment and other programs. Inventories in Tommy Bahama decreased primarily due to continuing initiatives to focus on closely managing inventory purchases, reducing on-hand inventory levels and clearing prior season inventory more quickly. The decrease in Corporate and Other was primarily due to the impact of LIFO accounting, partially offset by the inventory of TBBC. We believe that inventory levels in each operating group are appropriate to support anticipated ~~sales for the Third Quarter of Fiscal 2018.~~

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sales.

Prepaid expenses and other current assets decreased as of August ~~4, 2018 increased~~3, 2019 primarily as a result of ~~(1) higher~~lower prepaid rent expense due to the ~~timing~~adoption of ~~payment~~the revised lease accounting guidance, which resulted in the classification of ~~monthly~~prepaid rent ~~amounts~~in operating lease assets in our consolidated balance sheet, as ~~August 2018 rent payments were made prior to August 4, 2018, but certain August 2017 rent payments had not been paid prior to July 29, 2017, (2) increased~~well as lower prepaid advertising ~~associated with our 2018 advertising campaigns and the timing of certain advertising payments, (3) the reclassification of certain amounts from inventory to prepaid expenses~~ and other current assets related to estimated inventory returns, in accordance with the new revenue recognition guidance using the modified retrospective method of transition, and (4) higher information technology related prepaid ~~operating expenses including software as a service, license, subscription and maintenance arrangements.~~

amounts.

Non-current Assets:

August 4, 2018 February 3, 2018 July 29, 2017 January 28, 2017
Property and equipment, net $ 195,378
$ 193,533
$ 193,668
$ 193,931
Intangible assets, net 177,418
178,858
174,262
175,245
Goodwill 66,581
66,703
60,059
60,015
Other non-current assets, net 23,918
24,729
24,265
24,340
Total non-current assets $ 463,295
$ 463,823
$ 452,254
$ 453,531


	August 3,		February 2,		August 4,		February 3,
	2019		2019		2018		2018
Property and equipment, net	$	189,410	$	192,576	$	195,378	$	193,533
Intangible assets, net		175,591		176,176		177,418		178,858
Goodwill		66,585		66,621		66,581		66,703
Operating lease assets		288,928		—		—		—
Other non-current assets, net		24,636		22,093		23,918		24,729
Total non-current assets	$	745,150	$	457,466	$	463,295	$	463,823

Property and equipment, net as of August ~~4, 2018 increased~~3, 2019 decreased primarily as a result of ~~capital expenditures in~~depreciation expense during the twelve months ended August ~~4, 2018,~~3, 2019, partially offset by ~~depreciation expense~~capital expenditures during the same period. The ~~increase~~decrease in intangible assets, net ~~and goodwill at~~as of August ~~4, 2018 were~~3, 2019 was primarily due to the acquisitions of certain Lilly Pulitzer Signature Stores and TBBC during Fiscal 2017, as disclosed in Note 12 to our consolidated financial statements contained in our Annual Report on Form 10-K for Fiscal 2017, partially offset by the amortization of intangible assets in the ~~twelve~~12 months ended August ~~4, 2018.~~

~~Liabilities:~~

August 4, 2018 February 3, 2018 July 29, 2017 January 28, 2017
Total current liabilities $ 110,921
$ 135,010
$ 121,917
$ 131,396
Long-term debt 24,936
45,809
37,601
91,509
Other non-current liabilities 74,649
74,029
70,836
70,002
Deferred taxes 15,752
15,269
15,520
13,578
Non-current liabilities related to discontinued operations —
—
1,507
2,544
Total liabilities $ 226,258
$ 270,117
$ 247,381
$ 309,029

~~Current liabilities~~3, 2019. The operating lease assets amount as of August ~~4, 2018 decreased primarily due to (1) lower accounts payable~~3, 2019 is a result of the adoption of the revised lease accounting guidance during Fiscal 2019.

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Liabilities:


	August 3,		February 2,		August 4,		February 3,
	2019		2019		2018		2018
Total current liabilities	$	164,119	$	142,209	$	110,921	$	135,010
Long-term debt		—		12,993		24,936		45,809
Non-current operating lease liabilities		290,133		—		—		—
Other non-current liabilities		17,077		75,286		74,649		74,029
Deferred taxes		19,916		18,411		15,752		15,269
Total liabilities	$	491,245	$	248,899	$	226,258	$	270,117

Current liabilities increased as of August 3, 2019 primarily due to the ~~timing~~$54 million of ~~payment~~current lease liabilities recognized as of ~~certain payable amounts, (2) lower accrued compensation amounts resulting from~~August 3, 2019, as a result of the ~~timing~~adoption of ~~payment of bi-weekly employee salaries at quarter end due to~~ the ~~53 week~~revised lease accounting guidance during Fiscal 2017 shifting the relationship between pay periods and fiscal periods as well as lower incentive compensation amounts, and (3) the payment of all liabilities related to discontinued operations. These decreases were partially offset by higher other accrued expenses and liabilities resulting from higher (1) deferred rent amounts, (2) duties payable and (3) gift card liabilities.2019. The decrease in long-term debt ~~as of~~since August 4, 2018 was ~~primarily~~ due to ~~cash flows during the twelve months ended August 4, 2018, including $93~~$106 million of cash flow from operations which was partially offset by cash payments of ~~$43~~$31 million for capital expenditures ~~$21~~and $24 million for ~~dividends and $15 million for various acquisitions.~~

dividends.

The non-current operating lease liabilities amount as of August 3, 2019 is a result of the adoption of the revised lease accounting guidance during Fiscal 2019. Other non-current liabilities ~~increased~~decreased as of August 3, 2019 primarily due to the amount as of August 4, 2018 ~~primarily due to increases in~~including $61 million of deferred rent ~~liabilities, including~~and deferred rent tenant improvement ~~allowances from landlords, and deferred compensation liabilities. Deferred taxes~~allowance liabilities which were ~~comparable~~classified as operating lease assets as of August 4, 2018 and July 29, 2017 primarily due to the $12 million impact on depreciation expense timing differences resulting from a cost segregation analysis completed in Fiscal 2017, which was offset by the $12 million impact of the revaluation of deferred tax amounts resulting from U.S. Tax Reform in Fiscal 2017. There were no current or non-current liabilities related to discontinued operations as of August 4, 20183, 2019, as a result of ~~negotiated lease terminations in Fiscal 2017 for~~ the ~~remaining lease agreements, with the final satisfaction~~adoption of the ~~liability~~revised lease accounting guidance during Fiscal 2019. This reduction was partially offset by increases in amounts for deferred compensation liabilities and fair value of contingent consideration.

Deferred taxes increased as of August 3, 2019 primarily due to timing differences associated with the lease obligations completed in February 2018. We do not anticipate cash flows or earnings related to the discontinued operations in future periods as we have satisfied all obligations related to these lease agreements.

depreciation, amortization and prepaid expenses partially offset by timing differences associated with inventories.

Statement of Cash Flows

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The following table sets forth the net cash flows, including continuing and discontinued operations, for the First Half of Fiscal ~~2018~~2019 and the First Half of Fiscal ~~2017~~2018 (in thousands):

First Half Fiscal 2018 First Half Fiscal 2017
Cash provided by operating activities $ 57,532
$ 83,135
Cash used in investing activities (22,651 ) (19,141 )
Cash used in financing activities (33,932 ) (64,498 )
Net change in cash and cash equivalents $ 949
$ (504 )


	First Half
	Fiscal 2019		Fiscal 2018
Cash provided by operating activities	$	67,267	$	57,532
Cash used in investing activities		(15,976)		(22,651)
Cash used in financing activities		(29,089)		(33,932)
Net change in cash and cash equivalents	$	22,202	$	949

Cash and cash equivalents on hand were $7$31 million and $6$7 million at August 3, 2019 and August 4, 2018, ~~and July 29, 2017,~~ respectively. Changes in cash flows in the First Half of Fiscal ~~2018~~2019 and the First Half of Fiscal ~~2017~~2018 related to operating activities, investing activities and financing activities are discussed below.

Operating Activities:

In the First Half of Fiscal ~~2018~~2019 and the First Half of Fiscal ~~2017,~~2018, operating activities provided $67 million and $58 million, ~~and $83 million~~respectively, of ~~cash, respectively.~~cash. The cash flow from operating activities for each period was primarily the result of net earnings for the relevant period adjusted, as applicable, for non-cash activities including depreciation, amortization and equity-based compensation, as well as the net impact of changes in deferred taxes and our working capital accounts. In both the First Half of Fiscal 2019 and the First Half of Fiscal 2018, working capital account changes had an unfavorable impact on cash flow from ~~operations, while in~~operations. In the First Half of Fiscal ~~2017,~~2019, the more significant changes in working capital, ~~account changes had~~after considering the non-cash impact of certain reclassifications that resulted from the adoption of the revised lease accounting guidance, were a ~~favorable impact on~~decrease in current liabilities, which reduced cash flow from operations, partially offset by decreases in inventories, receivables and prepaid expenses, which increased cash flow from operations. In the First Half

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of Fiscal 2018, the more significant changes in working capital were a decrease in current liabilities, which reduced cash flow from operations, partially offset by a reduction in prepaid expenses, which increased cash flow from operations.

Investing Activities:

In the First Half of Fiscal ~~2017, the more significant changes in working capital accounts were a decrease in inventories~~2019 and ~~prepaid expenses, which increased cash flow from operations, and a decrease in current liabilities, which decreased cash flow from operations.~~

~~Investing Activities:~~

~~During~~ the First Half of Fiscal 2018, ~~and the First Half of Fiscal 2017,~~ investing activities used ~~$23~~$16 million and ~~$19~~$22 million, respectively, of cash. Our cash flow used in investing activities on an ongoing basis ~~typically~~primarily consists of our capital expenditure investments in our existing brands and acquisitions of new businesses. Our capital expenditures primarily consist of costs associated with information technology initiatives, including e-commerce capabilities; opening, relocating and remodeling ~~full-price~~ retail stores and restaurants; and facilities enhancements for distribution centers and offices.

Financing Activities:

In the First Half of Fiscal ~~2018, we paid $22 million for capital expenditures compared to $19 million in the First Half of Fiscal 2017. During~~2019 and the First Half of Fiscal 2018, ~~and the First Half of Fiscal 2017, we paid amounts for acquisitions, consisting of working capital and other related settlements associated with certain of our acquisitions.~~

~~Financing Activities:~~

~~During the First Half of Fiscal 2018 and the First Half of Fiscal 2017,~~ financing activities used ~~$34~~$29 million and ~~$64~~$34 million, respectively, of cash. During the First Half of Fiscal ~~2018~~2019 and the First Half of Fiscal ~~2017,~~2018, we decreased debt and increased cash as our cash flow from operations ~~exceeded~~was greater than our capital ~~expenditure~~expenditures and ~~dividend payments.~~payment of dividends. During the First Half of Fiscal ~~2018~~2019 and the First Half of Fiscal ~~2017,~~2018 we paid $13 million and $12 million of dividends, respectively. Also, during the First Half of Fiscal 2019 we paid $1 million for the payment of certain amounts related to previous acquisitions including the payment of certain holdback and ~~$9 million, respectively, of dividends.~~

~~We anticipate that cash flow provided by~~contingent consideration amounts.

If we are in a debt position, we may borrow or ~~used in financing activities in the future will be dependent upon~~pay down debt depending on whether our cash flow from operating activities exceeds our capital expenditures, dividend payments, acquisitions and any other investing or financing activities. Generally, we anticipate that excess cash, if any, will be used to repay any debt on our U.S. Revolving Credit Agreement.

Liquidity and Capital Resources

~~We had $25 million outstanding as of August 4, 2018 under our $325 million~~

In July 2019, we amended the U.S. Revolving Credit Agreement by entering into the First Amendment to the Fourth Amended and Restated Credit Agreement ("to (1) extend the maturity of the facility to July 2024, and (2) modify certain provisions including a reduction of interest rates on certain borrowings and a reduction in unused line fees. We had no amounts outstanding as of August 3, 2019 under our U.S. Revolving Credit ~~Agreement")~~Agreement compared to ~~$38~~$25 million of borrowings outstanding as of ~~July 29, 2017.~~August 4, 2018. The U.S. Revolving Credit Agreement generally (1) is limited to a borrowing base consisting of specified percentages of eligible categories of assets, (2) accrues variable-rate interest, ~~(weighted average borrowing rate of 4.4% as of August 4, 2018),~~ unused

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line fees and letter of credit fees based upon average unused availability or utilization, (3) requires periodic interest payments with principal due at maturity ~~(May 2021)~~(July 2024) and (4) is secured by a first priority security interest in substantially all of the assets of Oxford Industries, Inc. and its domestic subsidiaries, including accounts receivable, books and records, chattel paper, deposit accounts, equipment, certain general intangibles, inventory, investment property (including the equity interests of certain subsidiaries), negotiable collateral, life insurance policies, supporting obligations, commercial tort claims, cash and cash equivalents, eligible trademarks, proceeds and other personal property.

To the extent cash flow needs exceed cash flow provided by our operations we will have access, subject to its terms, to our U.S. Revolving Credit Agreement to provide funding for operating activities, capital expenditures and acquisitions, if any. Our U.S. Revolving Credit Agreement is also used to establish collateral for certain insurance programs and leases and to finance trade letters of credit for product purchases, which reduce the amounts available under our line of credit when issued. As of August ~~4, 2018,~~3, 2019, $5 million of letters of credit were outstanding ~~against~~under our U.S. Revolving Credit Agreement. After considering these limitations and the amount of eligible assets in our borrowing base, as ~~applicable, as~~ of August ~~4, 2018,~~3, 2019, we had ~~$228~~$311 million in unused availability under the U.S. Revolving Credit Agreement, subject to certain limitations on borrowings.

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Covenants and Other Restrictions:

The U.S. Revolving Credit Agreement is subject to a number of affirmative covenants regarding the delivery of financial information, compliance with law, maintenance of property, insurance requirements and conduct of business. Also, the U.S. Revolving Credit Agreement is subject to certain negative covenants or other restrictions including, among other things, limitations on our ability to (1) incur debt, (2) guaranty certain obligations, (3) incur liens, (4) pay dividends to shareholders, (5) repurchase shares of our common stock, (6) make investments, (7) sell assets or stock of subsidiaries, (8) acquire assets or businesses, (9) merge or consolidate with other companies or (10) prepay, retire, repurchase or redeem debt.

Additionally, the U.S. Revolving Credit Agreement contains a financial covenant that applies if excess availability under the agreement for three consecutive business days is less than the greater of (i) $23.5 million or (ii) 10% of availability. In such case, our fixed charge coverage ratio as defined in the U.S. Revolving Credit Agreement must not be less than 1.0 to 1.0 for the immediately preceding 12 fiscal months for which financial statements have been delivered. This financial covenant continues to apply until we have maintained excess availability under the U.S. Revolving Credit Agreement of more than the greater of (i) $23.5 million or (ii) 10% of availability for 30 consecutive days.

We believe that the affirmative covenants, negative covenants, financial covenants and other restrictions under the U.S. Revolving Credit Agreement are customary for those included in similar facilities entered into at the time we entered into the U.S. Revolving Credit Agreement. During the ~~First Half~~Second Quarter of Fiscal ~~2018~~2019 and as of August ~~4, 2018,~~3, 2019, no financial covenant testing was required pursuant to our U.S. Revolving Credit Agreement as the minimum availability threshold was met at all times. As of August ~~4, 2018,~~3, 2019, we were compliant with all covenants related to the U.S. Revolving Credit Agreement.

Other Liquidity Items:

We anticipate that we will be able to satisfy our ongoing cash requirements, which generally consist of working capital and other operating activity needs, capital expenditures, interest payments on our debt and dividends, if any, primarily from positive cash flow from operations supplemented by borrowings under our U.S. Revolving Credit Agreement. Our need for working capital is typically seasonal with the greatest requirements generally in the fall and spring of each year. Our capital needs will depend on many factors including our growth rate, the need to finance inventory levels and the success of our various products. We anticipate that at the maturity of the U.S. Revolving Credit Agreement or as otherwise deemed appropriate, we will be able to refinance the facility or obtain other financing on terms available in the market at that time. The terms of any future financing arrangements may not be as favorable as the terms of the current agreement or current market terms.

Although we have paid dividends in each quarter since we became a public company in July 1960, we may discontinue or modify dividend payments at any time if we determine that other uses of our capital, including payment of outstanding debt, funding of acquisitions, funding of capital expenditures or repurchases of outstanding shares, may be in our best interest; if our expectations of future cash flows and future cash needs outweigh the ability to pay a dividend; or if the terms of our credit facility, other debt instruments or applicable law limit our ability to pay dividends. We may borrow to fund dividends in the short term based on our expectation of operating cash flows in future periods subject to the terms and conditions of our credit facility, other debt instruments and applicable law. All cash flow from operations will not be paid out as dividends in all periods. For details about limitations on our ability to pay dividends, see the discussion of the U.S. Revolving Credit Agreement above.

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Our contractual obligations as of August ~~4, 2018~~3, 2019 have not changed materially from the contractual obligations outstanding at February ~~3, 2018,~~2, 2019, as disclosed in our Annual Report on Form 10-K for Fiscal ~~2017~~2018 filed with the SEC, other than changes in amounts outstanding under our U.S. Revolving Credit Agreement, as discussed above.

Our anticipated capital expenditures for Fiscal ~~2018,~~2019, including the ~~$22~~$16 million incurred in the First Half of Fiscal ~~2018,~~2019, are expected to be ~~approximately~~in a range of $45 million to $50 ~~million compared to $39 million in Fiscal 2017.~~million. These expenditures are expected to consist primarily of costs associated with information technology initiatives, including e-commerce capabilities; ~~opening, relocating and remodeling full-price~~new retail stores and ~~restaurants;~~Marlin Bars; and ~~facilities enhancements.~~investments to remodel existing retail stores and restaurants. Our capital expenditure amounts in future years

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may increase or decrease from the amounts incurred in prior years depending on the information technology initiatives, ~~full-price retail store and restaurant~~direct to consumer location openings, relocations and remodels and other infrastructure requirements deemed appropriate for that year to support future expansion of our businesses.

Off Balance Sheet Arrangements

We have not entered into agreements which meet the SEC’s definition of an off balance sheet financing arrangement, other than operating leases, and have made no financial commitments to or guarantees with respect to any unconsolidated subsidiaries or special purpose entities.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the selection and application of accounting policies. Further, the application of GAAP requires us to make estimates and judgments about future events that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. On an ongoing basis, we evaluate our ~~estimates.~~estimates, including those discussed below. We base our estimates on historical experience, current trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions. We believe it is possible that other professionals, applying reasonable judgment to the same set of facts and circumstances, could develop and support a range of alternative estimated amounts. We believe that we have appropriately applied our critical accounting policies. However, in the event that inappropriate assumptions or methods were used relating to the critical accounting policies, our consolidated statements of operations could be misstated.

Our critical accounting policies and estimates are discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for Fiscal ~~2017.~~2018. There have not been any significant changes to the application of our critical accounting policies and estimates during the First Half of Fiscal ~~2018, except for changes in our revenue recognition policy as disclosed in Note 5.~~2019. A detailed summary of significant accounting policies is included in Note 1 to our consolidated financial statements contained in our Annual Report on Form 10-K for Fiscal ~~2017.~~

2018.

SEASONAL ASPECTS OF OUR BUSINESS

Each of our operating groups is impacted by seasonality as the demand by specific product or style, as well as by distribution channel, may vary significantly depending on the time of year. For details of the impact of seasonality on each of our operating groups, see the business discussion for each operating group in Part I, Item 1, Business in our Annual Report on Form 10-K for Fiscal ~~2017.~~

2018.

As the timing of certain unusual or non-recurring items, ~~economic conditions,~~ wholesale product shipments, weather or other factors affecting our operations may vary from one year to the next, we do not believe that net sales or operating income for any particular quarter or the distribution of net sales and operating income for Fiscal ~~2017~~2018 are necessarily indicative of anticipated results for Fiscal ~~2018~~2019 or expected distribution in future years. Our third quarter has historically been our smallest net sales and operating income quarter and that result is expected to continue. ~~The following table presents our percentage of net sales and operating results by quarter for Fiscal 2017:~~

First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Net sales 25 % 26 % 22 % 27 %
Operating income 35 % 42 % 1 % 22 %

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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We are exposed to certain interest rate, foreign currency, commodity and inflation risks as discussed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for Fiscal ~~2017.~~2018. There have not been any significant changes in our exposure to these risks during the First Half of Fiscal ~~2018.~~2019.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our company, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting during the Second Quarter of Fiscal ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to litigation and regulatory actions arising in the ordinary course of business. These actions may relate to ~~trademarks~~trademark and other intellectual property, licensing arrangements, real estate, importing or exporting regulations, taxation, employee ~~relations~~relation matters or other topics. We are not currently a party to any litigation or regulatory action or aware of any proceedings contemplated by governmental authorities that we believe could reasonably be expected to have a material impact on our financial position, results of operations or cash flows. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of additional factors not presently known or determinations by judges, juries, or others which are not consistent with our evaluation of the possible liability or outcome of such litigation or claims.

ITEM 1A. RISK FACTORS

Our business is subject to numerous risks. Investors should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for Fiscal ~~2017,~~2018, which could materially affect our business, financial condition or operating results. We operate in a competitive and rapidly changing business environment, and additional risks and uncertainties that we currently consider immaterial or are not presently known to us ~~or that we currently consider immaterial~~ may also adversely affect our business. The risks described in our Annual Report on Form 10-K for ~~Fiscal 2017~~2018 are not the only risks facing our company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)	During the Second Quarter of Fiscal 2019, we did not sell any unregistered equity securities.

(b)

We have certain stock incentive plans as described in Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for Fiscal 2018, all of which are publicly announced plans. Under the plans, we can repurchase shares from employees to cover employee tax liabilities related to the vesting of shares of our stock. During the Second Quarter of Fiscal 2019, no shares were repurchased pursuant to these plans.

~~(a)During the Second Quarter of Fiscal 2018, we did not make any unregistered sales of our equity securities.~~

~~(c)~~We have certain stock incentive plans as described in Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for Fiscal 2017, all of which are publicly announced plans. Under the plans, we can repurchase shares from employees to cover employee tax liabilities related to the vesting of shares of our stock. During the Second Quarter of Fiscal 2018, no shares were repurchased pursuant to these plans.

In March 2017, our Board of Directors authorized us to spend up to $50 million to repurchase shares of our stock. This authorization superseded and replaced all previous authorizations to repurchase shares of our stock and has no automatic expiration. ~~As of August 4, 2018, no shares of our stock had been repurchased pursuant to this authorization.~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

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None

ITEM 4. MINE SAFETY DISCLOSURES

None

ITEM 5. OTHER INFORMATION

None

~~None~~

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ITEM 6. EXHIBITS


3.1
~~3.1~~		Restated Articles of Incorporation of Oxford Industries, Inc. (filed as Exhibit 3.1 to the ~~Company's~~Company’s Form ~~10-Q~~10Q for the fiscal quarter ended July 29, 2017)
3.2		Bylaws of Oxford Industries, Inc., as ~~amended.~~amended (filed as Exhibit 3.2 to the ~~Company's~~Company’s Form ~~10-K~~10K for Fiscal ~~2017)~~ 2017)
~~31.1~~ 10.1		First Amendment to Fourth Amended and Restated Credit Agreement, dated as of July 31, 2019, by and among Oxford Industries, Inc., Tommy Bahama Group, Inc., the Persons party thereto from time to time as guarantors, the financial institutions party thereto from time to time as lenders, and SunTrust Bank, as administrative agent (filed as Exhibit 10.1 to the Company’s Form 8-K filed on August 1, 2019)
31.1		Section 302 Certification by Principal Executive Officer.*
31.2		Section 302 Certification by Principal Financial Officer.*
32		Section 906 Certification by Principal Executive Officer and Principal Financial Officer.*
101.INS		XRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL Instance Document*tags are embedded within the Inline XBRL Document
101.SCH		XBRL Taxonomy Extension Schema Document*
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*
104		Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
		* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


September 12, 2019
~~September 13, 2018~~	OXFORD INDUSTRIES, INC.
	~~(Registrant)~~
	(Registrant)

	/s/ K. Scott Grassmyer
	K. Scott Grassmyer
	Executive Vice President - Finance, Chief Financial Officer and Controller
	(Authorized Signatory)



	August 4, 2018			February 3, 2018			July 29, 2017
ASSETS
Current Assets
Cash and cash equivalents	$	7,054		$	6,343		$	5,983
Receivables, net	69,724			67,542			59,264
Inventories, net	123,924			126,812			119,620
Prepaid expenses and other current assets	29,393			35,421			19,626
Total Current Assets	$	230,095		$	236,118		$	204,493
Property and equipment, net	195,378			193,533			193,668
Intangible assets, net	177,418			178,858			174,262
Goodwill	66,581			66,703			60,059
Other non-current assets, net	23,918			24,729			24,265
Total Assets	$	693,390		$	699,941		$	656,747

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	51,487		$	66,175		$	60,332
Accrued compensation	21,606			29,941			25,403
Other accrued expenses and liabilities	37,828			36,802			32,757
Liabilities related to discontinued operations	—			2,092			3,425
Total Current Liabilities	$	110,921		$	135,010		$	121,917
Long-term debt	24,936			45,809			37,601
Other non-current liabilities	74,649			74,029			70,836
Deferred taxes	15,752			15,269			15,520
Liabilities related to discontinued operations	—			—			1,507
Commitments and contingencies
Shareholders’ Equity
Common stock, $1.00 par value per share	16,951			16,839			16,827
Additional paid-in capital	138,613			136,664			132,668
Retained earnings	316,507			280,395			264,282
Accumulated other comprehensive loss	(4,939		)	(4,074		)	(4,411		)
Total Shareholders’ Equity	$	467,132		$	429,824		$	409,366
Total Liabilities and Shareholders’ Equity	$	693,390		$	699,941		$	656,747



	Second Quarter Fiscal 2018		Second Quarter Fiscal 2017		First Half Fiscal 2018		First Half Fiscal 2017
Net sales	$	302,641	$	284,709	$	575,269	$	557,072
Cost of goods sold	123,344		118,740		231,826		231,693
Gross profit	$	179,297	$	165,969	$	343,443	$	325,379
SG&A	146,340		132,911		286,060		266,102
Royalties and other operating income	3,556		3,344		7,503		7,084
Operating income	$	36,513	$	36,402	$	64,886	$	66,361
Interest expense, net	602		742		1,383		1,672
Earnings before income taxes	$	35,911	$	35,660	$	63,503	$	64,689
Income taxes	8,727		12,971		15,752		24,803
Net earnings	$	27,184	$	22,689	$	47,751	$	39,886

Net earnings per share:
Basic	$	1.63	$	1.37	$	2.87	$	2.41
Diluted	$	1.61	$	1.36	$	2.84	$	2.39

Weighted average shares outstanding:
Basic	16,683		16,605		16,661		16,577
Diluted	16,840		16,700		16,804		16,698

Dividends declared per share	$	0.34	$	0.27	$	0.68	$	0.54



	First Half Fiscal 2018			First Half Fiscal 2017
Cash Flows From Operating Activities:
Net earnings	$	47,751		$	39,886
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation	20,224			19,486
Amortization of intangible assets	1,373			1,082
Equity compensation expense	3,598			3,075
Amortization of deferred financing costs	212			211
Deferred income taxes	330			1,942
Changes in working capital, net of acquisitions and dispositions:
Receivables, net	(2,460		)	(1,336		)
Inventories, net	19			23,731
Prepaid expenses and other current assets	8,494			5,298
Current liabilities	(23,366		)	(9,955		)
Other non-current assets, net	606			22
Other non-current liabilities	751			(307		)
Cash provided by operating activities	$	57,532		$	83,135
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired	(302		)	(614		)
Purchases of property and equipment	(22,349		)	(18,527		)
Cash used in investing activities	$	(22,651	)	$	(19,141	)
Cash Flows From Financing Activities:
Repayment of revolving credit arrangements	(165,928		)	(163,703		)
Proceeds from revolving credit arrangements	145,055			109,794
Proceeds from issuance of common stock	814			713
Repurchase of equity awards for employee tax withholding liabilities	(2,351		)	(2,206		)
Cash dividends declared and paid	(11,522		)	(9,096		)
Cash used in financing activities	$	(33,932	)	$	(64,498	)
Net change in cash and cash equivalents	$	949		$	(504	)
Effect of foreign currency translation on cash and cash equivalents	(238		)	155
Cash and cash equivalents at the beginning of year	6,343			6,332
Cash and cash equivalents at the end of the period	$	7,054		$	5,983
Supplemental disclosure of cash flow information:
Cash paid for interest, net	$	1,211		$	1,543
Cash paid for income taxes	$	11,839		$	18,128



	Second Quarter of Fiscal 2018				Second Quarter of Fiscal 2017				First Half of Fiscal 2018				First Half of Fiscal 2017
Retail	$	134,581	45	%	$	127,197	45	%	$	242,316	42	%	$	229,860	41	%
E-commerce	63,363		21	%	55,967		20	%	107,885		19	%	91,640		17	%
Restaurant	21,467		7	%	20,029		7	%	46,760		8	%	43,438		8	%
Wholesale	82,402		27	%	80,810		28	%	176,778		31	%	190,660		34	%
Other	828		—	%	706		—	%	1,530		—	%	1,474		—	%
Net sales	$	302,641	100	%	$	284,709	100	%	$	575,269	100	%	$	557,072	100	%



	August 4, 2018	February 3, 2018	July 29, 2017	January 28, 2017
Tommy Bahama Full-Price Retail Stores	111	110	111	111
Tommy Bahama Retail-Restaurant Locations	18	18	17	17
Tommy Bahama Outlet Stores	38	38	39	40
Total Tommy Bahama Retail Locations	167	166	167	168
Lilly Pulitzer Full-Price Retail Stores	60	57	50	40
Total Oxford Retail Locations	227	223	217	208



	Second Quarter Fiscal 2018				Second Quarter Fiscal 2017				$ Change			% Change
Net sales	$	302,641	100.0	%	$	284,709	100.0	%	$	17,932		6.3	%
Cost of goods sold	123,344		40.8	%	118,740		41.7	%	4,604			3.9	%
Gross profit	$	179,297	59.2	%	$	165,969	58.3	%	$	13,328		8.0	%
SG&A	146,340		48.4	%	132,911		46.7	%	13,429			10.1	%
Royalties and other operating income	3,556		1.2	%	3,344		1.2	%	212			6.3	%
Operating income	$	36,513	12.1	%	$	36,402	12.8	%	$	111		0.3	%
Interest expense, net	602		0.2	%	742		0.3	%	(140		)	(18.9	)%
Earnings before income taxes	$	35,911	11.9	%	$	35,660	12.5	%	$	251		0.7	%
Income taxes	8,727		2.9	%	12,971		4.6	%	(4,244		)	(32.7	)%
Net earnings	$	27,184	9.0	%	$	22,689	8.0	%	$	4,495		19.8	%



	Second Quarter Fiscal 2018		Second Quarter Fiscal 2017
Full-price retail stores and outlets	45	%	45	%
E-commerce	21	%	20	%
Restaurant	7	%	7	%
Wholesale	27	%	28	%
Total	100	%	100	%



	Second Quarter Fiscal 2018		Second Quarter Fiscal 2017
Full-price retail stores	52	%	42	%
E-commerce	27	%	26	%
Wholesale	21	%	32	%
Total	100	%	100	%



($ in thousands)	August 4, 2018			February 3, 2018			July 29, 2017			January 28, 2017
Total current assets	$	230,095		$	236,118		$	204,493		$	231,628
Total current liabilities	$	110,921		$	135,010		$	121,917		$	131,396
Working capital	$	119,174		$	101,108		$	82,576		$	100,232
Working capital ratio	2.07			1.75			1.68			1.76
Debt to total capital ratio	5		%	10		%	8		%	20		%



	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Net sales	25	%	26	%	22	%	27	%
Operating income	35	%	42	%	1	%	22	%