UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the quarterly period ended April |
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| or |
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from to |
Commission File Number: 1-4365
OXFORD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
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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, Georgia 30309
(Address of principal executive offices) (Zip Code)
(404) 659-2424
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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.
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Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company ☐ | Emerging growth 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 ☒
As of June 3, 2022,2, 2023, there were 15,929,49015,720,580 shares of the registrant’s common stock outstanding.
OXFORD INDUSTRIES, INC.
INDEX TO FORM 10-Q
For the First Quarter of Fiscal 20222023
2
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 typicallygenerally 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, the impact of the coronavirus (COVID-19) pandemic on our business, operations and financial results, including due to uncertainties about scope and duration, supply chain disruptions, future store closures or other operating restrictions or the impact on consumer traffic, any or all of which may also affect many of the following risks; demand for our products, which may be impacted by competitive conditions and/or evolving consumer shopping patterns; macroeconomic factors that may impact consumer discretionary spending and pricing levels for apparel and related products, many of which may be impacted by current inflationary pressures;pressures, rising interest rates, concerns about the stability of the banking industry or general economic uncertainty; acquisition activities (such as the acquisition of Johnny Was), including our ability to integrate key functions, recognize anticipated synergies and minimize related disruptions or distractions to our business as a result of these activities; operations and financial results; supply chain disruptions, including the potential lack of inventory to support demand for our products, which may be impacted by capacity constraints, closed factories, and cost and availability of freight deliveries;disruptions; costs and availability of labor;labor and freight deliveries, including our ability to appropriately staff our retail stores and food and beverage locations; costs of products as well as the raw materials used in those products;products, as well as our ability pass along price increases to consumers; energy costs; our ability to be more hyper-digital and respond to rapidly changing consumer expectations; the ability of business partners, including suppliers, vendors, wholesale customers, licensees, logistics providers and landlords, to meet their obligations to us and/or continue our business relationship to the same degree in light of current or future staffing shortages, liquidity challenges and/or bankruptcy filings;as they have historically; retention of and disciplined execution by key management and other critical personnel; cybersecurity breaches and ransomware attacks, as well as our and our third party vendors’ ability to properly collect, use, manage and secure business, consumer and employee data; the level of our indebtedness, including the risks associated with heightened interest rates on the debt and the potential impact on our ability to operate and expand our business; changes in international, federal or state tax, trade and other laws and regulations, including the potential imposition of additional duties; the timing of shipments requested by our wholesale customers; weather;weather or natural disaster; fluctuations and volatility in global financial and/or real estate markets; the timing and cost of retail store and restaurantfood and beverage location openings and remodels, technology implementations and other capital expenditures; acquisition activities, including our ability to timely recognize expected synergies from acquisitions; expected outcomes of pending or potential litigation and regulatory actions; the increased consumer, employee and regulatory focus on climate change and environmental, social and governance issues; the regulation or prohibition of goods sourced, or containing raw materials or components, from certain regions and our ability to evidence compliance; access to capital and/or credit markets; factors that could affect our consolidated effective tax rate; the risk of impairment to goodwill and other intangible assets; and geopolitical risks, including those related to the ongoing conflict inwar between Russia and Ukraine. 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 Fiscal 20212022 Form 10-K, 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.
3
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; "TBBC" means The Beaufort Bonnet Company; and “Fiscal 20212022 Form 10-K” means our Annual Report on Form 10-K for Fiscal 2021.2022. Additionally, the terms listed below reflect the respective period noted:
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Fiscal 2024 | | 52 weeks ending February 1, 2025 |
Fiscal 2023 | | 53 weeks ending February 3, 2024 |
Fiscal 2022 | | 52 weeks |
Fiscal 2021 | | 52 weeks ended January 29, 2022 |
Fourth Quarter Fiscal | |
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Third Quarter Fiscal 2023 | | 13 weeks ending October 28, 2023 |
Second Quarter Fiscal 2023 | | 13 weeks ending July 29, 2023 |
First Quarter Fiscal 2023 | | 13 weeks ended |
Fourth Quarter Fiscal 2022 | | 13 weeks |
Third Quarter Fiscal 2022 | | 13 weeks |
Second Quarter Fiscal 2022 | | 13 weeks |
First Quarter Fiscal 2022 | | 13 weeks ended April 30, 2022 |
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4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par amounts)
(unaudited)
| | | | | | | | | | | | | | | | | | |
|
| April 30, |
| January 29, |
| May 1, |
| April 29, |
| January 28, |
| April 30, | ||||||
| | 2022 | | 2022 | | 2021 | | 2023 | | 2023 | | 2022 | ||||||
ASSETS | | | | | | | | | | | | | | | | | | |
Current Assets | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 31,799 | | $ | 44,859 | | $ | 92,086 | | $ | 9,712 | | $ | 8,826 | | $ | 31,799 |
Short-term investments | | | 134,327 | | | 164,890 | | | — | | | — | | | — | | | 134,327 |
Receivables, net | |
| 74,374 | |
| 34,550 | |
| 67,658 | |
| 81,483 | |
| 43,986 | |
| 72,271 |
Inventories, net | |
| 122,760 | |
| 117,709 | |
| 108,810 | |
| 179,608 | |
| 220,138 | |
| 122,760 |
Income tax receivable | | | 19,741 | | | 19,728 | | | 17,830 | | | 19,442 | | | 19,440 | | | 19,741 |
Prepaid expenses and other current assets | |
| 24,911 | |
| 18,599 | |
| 22,355 | |
| 37,459 | |
| 38,073 | |
| 27,014 |
Total Current Assets | | $ | 407,912 | | $ | 400,335 | | $ | 308,739 | | $ | 327,704 | | $ | 330,463 | | $ | 407,912 |
Property and equipment, net | |
| 150,393 | |
| 152,447 | |
| 157,553 | |
| 181,601 | |
| 177,584 | |
| 150,393 |
Intangible assets, net | |
| 155,080 | |
| 155,307 | |
| 155,967 | |
| 280,785 | |
| 283,845 | |
| 155,080 |
Goodwill | |
| 23,870 | |
| 23,869 | |
| 23,930 | |
| 122,056 | |
| 120,498 | |
| 23,870 |
Operating lease assets | | | 182,345 | | | 195,100 | | | 221,647 | | | 245,099 | | | 240,690 | | | 182,345 |
Other assets, net | |
| 27,417 | |
| 30,584 | |
| 33,146 | |
| 36,985 | |
| 35,585 | |
| 27,417 |
Total Assets | | $ | 947,017 | | $ | 957,642 | | $ | 900,982 | | $ | 1,194,230 | | $ | 1,188,665 | | $ | 947,017 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
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Current Liabilities | |
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Accounts payable | | $ | 68,641 | | $ | 80,753 | | $ | 72,323 | | $ | 69,609 | | $ | 94,611 | | $ | 68,641 |
Accrued compensation | |
| 26,477 | |
| 30,345 | |
| 31,578 | |
| 24,318 | |
| 35,022 | |
| 26,477 |
Current portion of operating lease liabilities | |
| 54,642 | |
| 61,272 | |
| 60,226 | |
| 67,265 | |
| 73,865 | |
| 54,642 |
Accrued expenses and other liabilities | |
| 76,657 | |
| 53,796 | |
| 60,963 | |
| 80,854 | |
| 66,141 | |
| 76,657 |
Total Current Liabilities | | $ | 226,417 | | $ | 226,166 | | $ | 225,090 | | $ | 242,046 | | $ | 269,639 | | $ | 226,417 |
Long-term debt | |
| — | |
| — | |
| — | |
| 94,306 | |
| 119,011 | |
| — |
Non-current portion of operating lease liabilities | |
| 185,365 | |
| 199,488 | |
| 226,358 | |
| 223,167 | |
| 220,709 | |
| 185,365 |
Other non-current liabilities | |
| 19,600 | |
| 21,413 | |
| 21,270 | |
| 19,561 | |
| 20,055 | |
| 19,600 |
Deferred income taxes | |
| 2,215 | |
| 2,911 | |
| 363 | |
| 7,725 | |
| 2,981 | |
| 2,215 |
Shareholders’ Equity | |
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Common stock, $1.00 par value per share | |
| 16,284 | |
| 16,805 | |
| 16,894 | |
| 15,780 | |
| 15,774 | |
| 16,284 |
Additional paid-in capital | |
| 163,137 | |
| 163,156 | |
| 156,069 | |
| 176,030 | |
| 172,175 | |
| 163,137 |
Retained earnings | |
| 336,994 | |
| 331,175 | |
| 258,211 | |
| 418,043 | |
| 370,145 | |
| 336,994 |
Accumulated other comprehensive loss | |
| (2,995) | |
| (3,472) | |
| (3,273) | |
| (2,428) | |
| (1,824) | |
| (2,995) |
Total Shareholders’ Equity | | $ | 513,420 | | $ | 507,664 | | $ | 427,901 | | $ | 607,425 | | $ | 556,270 | | $ | 513,420 |
Total Liabilities and Shareholders’ Equity | | $ | 947,017 | | $ | 957,642 | | $ | 900,982 | | $ | 1,194,230 | | $ | 1,188,665 | | $ | 947,017 |
See accompanying notes.
5
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
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| First Quarter | | ||||
| | Fiscal 2022 | | Fiscal 2021 | | ||
Net sales | | $ | 352,581 | | $ | 265,762 | |
Cost of goods sold | |
| 126,204 | |
| 99,177 | |
Gross profit | | $ | 226,377 | | $ | 166,585 | |
SG&A | |
| 157,412 | |
| 137,125 | |
Royalties and other operating income | |
| 7,013 | |
| 5,433 | |
Operating income | | $ | 75,978 | | $ | 34,893 | |
Interest expense, net | |
| 242 | |
| 252 | |
Earnings before income taxes | | $ | 75,736 | | $ | 34,641 | |
Income tax expense | |
| 18,328 | |
| 6,173 | |
Net earnings | | $ | 57,408 | | $ | 28,468 | |
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Net earnings per share: | |
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Basic | | $ | 3.52 | | $ | 1.72 | |
Diluted | | $ | 3.45 | | $ | 1.70 | |
Weighted average shares outstanding: | |
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Basic | |
| 16,316 | |
| 16,594 | |
Diluted | |
| 16,622 | |
| 16,792 | |
Dividends declared per share | | $ | 0.55 | | $ | 0.37 | |
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| First Quarter | | ||||
| | Fiscal 2023 | | Fiscal 2022 | | ||
Net sales | | $ | 420,097 | | $ | 352,581 | |
Cost of goods sold | |
| 144,968 | |
| 126,204 | |
Gross profit | | $ | 275,129 | | $ | 226,377 | |
SG&A | |
| 203,149 | |
| 157,412 | |
Royalties and other operating income | |
| 8,321 | |
| 7,013 | |
Operating income | | $ | 80,301 | | $ | 75,978 | |
Interest expense, net | |
| 2,342 | |
| 242 | |
Earnings before income taxes | | $ | 77,959 | | $ | 75,736 | |
Income tax expense | |
| 19,421 | |
| 18,328 | |
Net earnings | | $ | 58,538 | | $ | 57,408 | |
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Net earnings per share: | |
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Basic | | $ | 3.75 | | $ | 3.52 | |
Diluted | | $ | 3.64 | | $ | 3.45 | |
Weighted average shares outstanding: | |
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Basic | |
| 15,629 | |
| 16,316 | |
Diluted | |
| 16,071 | |
| 16,622 | |
Dividends declared per share | | $ | 0.65 | | $ | 0.55 | |
See accompanying notes.
6
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
| | | | | | | | | | | | |
| First Quarter | | First Quarter | | ||||||||
| Fiscal 2022 | | Fiscal 2021 | | Fiscal 2023 | | Fiscal 2022 | | ||||
Net earnings | $ | 57,408 | | $ | 28,468 | | $ | 58,538 | | $ | 57,408 | |
Other comprehensive income (loss), net of taxes: |
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Net foreign currency translation adjustment |
| 477 | |
| 391 | |
| (604) | |
| 477 | |
Comprehensive income | $ | 57,885 | | $ | 28,859 | | $ | 57,934 | | $ | 57,885 | |
See accompanying notes.
7
OXFORD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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| | First Quarter | | ||||
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| Fiscal 2022 |
| Fiscal 2021 | | ||
Cash Flows From Operating Activities: |
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Net earnings | | $ | 57,408 | | $ | 28,468 | |
Adjustments to reconcile net earnings to cash flows from operating activities: | |
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Depreciation | |
| 9,963 | |
| 9,463 | |
Amortization of intangible assets | |
| 227 | |
| 220 | |
Equity compensation expense | |
| 2,725 | |
| 2,227 | |
Amortization of deferred financing costs | |
| 86 | |
| 86 | |
Deferred income taxes | |
| (727) | |
| 1,584 | |
Changes in operating assets and liabilities, net of acquisitions and dispositions: | |
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Receivables, net | |
| (39,834) | |
| (37,219) | |
Inventories, net | |
| (5,054) | |
| 14,902 | |
Income tax receivable | | | (13) | | | 145 | |
Prepaid expenses and other current assets | |
| (6,314) | |
| (1,980) | |
Current liabilities | |
| 3,498 | |
| 27,211 | |
Other balance sheet changes | |
| 515 | |
| (4,102) | |
Cash provided by operating activities | | $ | 22,480 | | $ | 41,005 | |
Cash Flows From Investing Activities: | |
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Purchases of property and equipment | |
| (9,280) | |
| (4,925) | |
Purchases of short-term investments | | | (15,000) | | | — | |
Proceeds from short-term investments | | | 45,000 | | | — | |
Other investing activities | |
| — | |
| (500) | |
Cash provided by (used in) investing activities | | $ | 20,720 | | $ | (5,425) | |
Cash Flows From Financing Activities: | |
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Repurchase of common stock | | | (42,867) | | | — | |
Proceeds from issuance of common stock | |
| 392 | |
| 322 | |
Repurchase of equity awards for employee tax withholding liabilities | |
| (3,166) | |
| (2,983) | |
Cash dividends paid | |
| (9,020) | |
| (6,252) | |
Other financing activities | |
| (2,010) | |
| (749) | |
Cash used in financing activities | | $ | (56,671) | | $ | (9,662) | |
Net change in cash and cash equivalents | | $ | (13,471) | | $ | 25,918 | |
Effect of foreign currency translation on cash and cash equivalents | |
| 411 | |
| 155 | |
Cash and cash equivalents at the beginning of year | |
| 44,859 | |
| 66,013 | |
Cash and cash equivalents at the end of period | | $ | 31,799 | | $ | 92,086 | |
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| | First Quarter | | ||||
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| Fiscal 2023 |
| Fiscal 2022 | | ||
Cash Flows From Operating Activities: |
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Net earnings | | $ | 58,538 | | $ | 57,408 | |
Adjustments to reconcile net earnings to cash flows from operating activities: | |
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Depreciation | |
| 11,512 | |
| 9,963 | |
Amortization of intangible assets | |
| 3,660 | |
| 227 | |
Equity compensation expense | |
| 3,259 | |
| 2,725 | |
Gain on sale of assets | | | (1,756) | | | — | |
Amortization and write-off of deferred financing costs | |
| 272 | |
| 86 | |
Deferred income taxes | |
| 4,657 | |
| (727) | |
Changes in operating assets and liabilities, net of acquisitions and dispositions: | |
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Receivables, net | |
| (37,542) | |
| (38,975) | |
Inventories, net | |
| 39,987 | |
| (5,054) | |
Income tax receivable | | | (2) | | | (13) | |
Prepaid expenses and other current assets | |
| 634 | |
| (7,173) | |
Current liabilities | |
| (27,671) | |
| 3,498 | |
Other balance sheet changes | |
| (2,991) | |
| 515 | |
Cash provided by operating activities | | $ | 52,557 | | $ | 22,480 | |
Cash Flows From Investing Activities: | |
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Acquisitions, net of cash acquired | |
| (997) | |
| — | |
Purchases of property and equipment | |
| (16,662) | |
| (9,280) | |
Purchases of short-term investments | | | — | | | (15,000) | |
Proceeds from short-term investments | | | — | | | 45,000 | |
Proceeds from the sale of property, plant and equipment | | | 2,125 | | | — | |
Cash (used in) provided by investing activities | | $ | (15,534) | | $ | 20,720 | |
Cash Flows From Financing Activities: | |
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Repayment of revolving credit arrangements | |
| (137,755) | |
| — | |
Proceeds from revolving credit arrangements | |
| 113,051 | |
| — | |
Deferred financing costs paid | | | (1,661) | | | — | |
Repurchase of common stock | | | — | | | (42,867) | |
Proceeds from issuance of common stock | |
| 602 | |
| 392 | |
Repurchase of equity awards for employee tax withholding liabilities | |
| — | |
| (3,166) | |
Cash dividends paid | |
| (10,351) | |
| (9,020) | |
Other financing activities | |
| — | |
| (2,010) | |
Cash used in financing activities | | $ | (36,114) | | $ | (56,671) | |
Net change in cash and cash equivalents | | $ | 909 | | $ | (13,471) | |
Effect of foreign currency translation on cash and cash equivalents | |
| (23) | |
| 411 | |
Cash and cash equivalents at the beginning of year | |
| 8,826 | |
| 44,859 | |
Cash and cash equivalents at the end of period | | $ | 9,712 | | $ | 31,799 | |
See accompanying notes.
8
OXFORD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
FIRST QUARTER OF FISCAL 20222023
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. Results of operations for interim periods are not necessarily indicative of results to be expected for a full fiscal year due to the seasonality of our business.
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.
The significant accounting policies applied during the interim periods presented are consistent with the significant accounting policies described in our Fiscal 20212022 Form 10-K. No recently issued guidance adopted in Fiscal 20222023 had a material impact on our consolidated financial statements upon adoption or is expected to have a material impact in future periods.
In Fiscal 2021, we exited our Lanier Apparel business, a business which had been focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. The operating results of the Lanier Apparel business These financial statements should be read in Fiscal 2021 largely reflect activities associatedconjunction with the ongoing wind down of operations following the 2020 announcement that we would be exiting the business.consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for Fiscal 2022.
Recently Issued Accounting Standards Applicable to Future Periods
Recent accounting pronouncements pending adoption are either not applicable or not expected to have a material impact on our consolidated financial statements.
COVID-19 Pandemic
The COVID-19 pandemic has had a significant effect on overall economic conditions and our operations in recent years. In Fiscal 2021, the economic environment improved significantly with a significant rebound in retail traffic starting in March 2021 and other improvements as the year progressed, although certain stores were closed for portions of the First Quarter of Fiscal 2021. This improved environment and exceptionally strong consumer demand drove record earnings during Fiscal 2021 and have continued in the First Quarter of Fiscal 2022. There can be no assurance that these trends will continue for our business or the broader retail apparel market. There remains significant uncertainty as to the duration and severity of the pandemic as well as the associated impact of changes in consumer discretionary spending habits, supply chain and other business disruptions, operating cost increases and inflationary pressures, general economic conditions and restrictions on our ongoing operations that result from the COVID-19 pandemic. Thus, the ultimate impact of the pandemic on our business remains uncertain at this time.
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 direct to consumer, wholesale and licensing operations, as applicable. OurWith our acquisition of Johnny Was on September 19, 2022, our business is organized as our Tommy Bahama, Lilly Pulitzer, Emerging BrandsJohnny Was and Lanier Apparel operating groups.
Tommy Bahama and Lilly Pulitzer each design, source, market and distribute apparel and related products bearing their respective trademarks and license their trademarks for other product categories. The Emerging Brands
9
operating group consists of the operations of our smaller, earlier stage Southern Tide, TBBC and Duck Head brands. In prior years, Southern Tide was reported as a separate operating group, while both TBBC and Duck Head were included in Corporate and Other. All prior year amounts have been restated to conform to the current year presentation.
In the First Quarter of Fiscal 2022, we organized our smaller brands into the Emerging Brands operating group. Each of these smaller brands are supported by Oxford’s emerging brands team that provides certain support functions to our 3 smaller brands, including marketing and advertising execution, customer relationship management and analysis and other functions. The shared resources provide for operating efficiencies and enhanced knowledge sharing across the 3 brands.groups.
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, any other items that are not allocated to the operating groups, including LIFO inventory accounting adjustments, and the operations of our Lyons, Georgia distribution center and our Oxford America business, which we are in process of exitingexited in Fiscal 2022. For a more extensive descriptionThe accounting policies of our Tommy Bahama and Lilly Pulitzerthe reportable operating groups, see Part I, Item 1. Business includedsegments are the same as those described in our Annual Report on Form 10-K for Fiscal 2021 Form 10-K.2022.
9
The table below presents certain financial information (in thousands) about our operating groups, as well as Corporate and Other.
| | | | | | | | | | | | | | |
| | First Quarter | | | First Quarter | | ||||||||
|
| Fiscal 2022 |
| Fiscal 2021 | |
| Fiscal 2023 |
| Fiscal 2022 | | ||||
Net sales |
| |
|
| |
|
|
| |
|
| |
|
|
Tommy Bahama | | $ | 228,067 | | $ | 156,698 | | | $ | 239,435 | | $ | 228,067 | |
Lilly Pulitzer | |
| 92,045 | |
| 73,576 | | |
| 97,450 | |
| 92,045 | |
Johnny Was (1) | | | 49,491 | | | — | | |||||||
Emerging Brands | |
| 31,763 | |
| 22,432 | | |
| 33,991 | |
| 31,763 | |
Lanier Apparel | |
| — | |
| 12,019 | | |||||||
Corporate and Other | |
| 706 | |
| 1,037 | | |
| (270) | |
| 706 | |
Consolidated net sales | | $ | 352,581 | | $ | 265,762 | | | $ | 420,097 | | $ | 352,581 | |
| | | | | | | | | | | | | | |
Depreciation and amortization | |
|
| |
|
| | |
|
| |
|
| |
Tommy Bahama | | $ | 6,618 | | $ | 7,040 | | | $ | 5,984 | | $ | 6,618 | |
Lilly Pulitzer | |
| 2,975 | |
| 2,099 | | |
| 3,392 | |
| 2,975 | |
Johnny Was (1) | | | 5,192 | | | — | | |||||||
Emerging Brands | |
| 359 | |
| 310 | | |
| 425 | |
| 359 | |
Lanier Apparel | |
| — | |
| 36 | | |||||||
Corporate and Other | |
| 238 | |
| 198 | | |
| 179 | |
| 238 | |
Consolidated depreciation and amortization | | $ | 10,190 | | $ | 9,683 | | | $ | 15,172 | | $ | 10,190 | |
| | | | | | | | | | | | | | |
Operating income (loss) | |
|
| |
|
| | |
|
| |
|
| |
Tommy Bahama | | $ | 52,606 | | $ | 20,660 | | | $ | 55,521 | | $ | 52,606 | |
Lilly Pulitzer | |
| 26,178 | |
| 19,945 | | |
| 24,516 | |
| 26,178 | |
Johnny Was (1) | | | 2,484 | | | — | | |||||||
Emerging Brands | |
| 7,736 | |
| 4,961 | | |
| 3,913 | |
| 7,736 | |
Lanier Apparel | |
| — | |
| 855 | | |||||||
Corporate and Other | |
| (10,542) | |
| (11,528) | | |
| (6,133) | |
| (10,542) | |
Consolidated operating income | | $ | 75,978 | | $ | 34,893 | | | $ | 80,301 | | $ | 75,978 | |
Interest expense, net | |
| 242 | |
| 252 | | |
| 2,342 | |
| 242 | |
Earnings before income taxes | | $ | 75,736 | | $ | 34,641 | | | $ | 77,959 | | $ | 75,736 | |
| | | | | | | | | |
|
| April 29, 2023 |
| January 28, 2023 |
| April 30, 2022 | |||
Assets |
| |
| | |
|
| |
|
Tommy Bahama (2) | | $ | 576,867 | | $ | 569,833 | | $ | 542,734 |
Lilly Pulitzer (3) | |
| 215,842 | |
| 211,119 | |
| 194,091 |
Johnny Was (1) | | | 330,321 | | | 334,603 | | | — |
Emerging Brands (4) | |
| 92,959 | |
| 91,306 | |
| 72,728 |
Corporate and Other (5) | |
| (21,759) | |
| (18,196) | |
| 137,464 |
Consolidated Total Assets | | $ | 1,194,230 | | $ | 1,188,665 | | $ | 947,017 |
(1) | The Johnny Was business was acquired on September 19, 2022. |
(2) | Increase in Tommy Bahama total assets from April 30, 2022, includes increases in inventories and operating lease assets partially offset by reductions in property and equipment. |
(3) | Increase in Lilly Pulitzer total assets from April 30, 2022, includes increases in inventories and property and equipment partially offset by reductions in operating lease assets. |
(4) | Increase in Emerging Brands total assets from April 30, 2022, includes increases in inventories, operating lease assets, property and equipment and other non-current assets. |
(5) | Decrease in Corporate and Other total assets from April 30, 2022, includes reductions in short-term investments and cash and cash equivalents, which were used to fund a portion of the acquisition purchase price for Johnny Was. |
10
| | | | | | | | | |
|
| April 30, 2022 |
| January 29, 2022 |
| May 1, 2021 | |||
Assets |
| |
| | |
|
| |
|
Tommy Bahama (1) | | $ | 542,734 | | $ | 531,678 | | $ | 569,391 |
Lilly Pulitzer (2) | |
| 194,091 | |
| 176,757 | |
| 188,886 |
Emerging Brands (3) | |
| 72,728 | |
| 66,825 | |
| 49,802 |
Lanier Apparel (4) | |
| — | |
| 207 | |
| 9,620 |
Corporate and Other (5) | |
| 137,464 | |
| 182,175 | |
| 83,283 |
Consolidated Total Assets | | $ | 947,017 | | $ | 957,642 | | $ | 900,982 |
The tables below quantify net sales, for each operating group and in total (in thousands), and the percentage of net sales by distribution channel for each operating group and in total, for each period presented. We have calculated all percentages below based on actual data, and percentages may not add to 100 due to rounding.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | First Quarter Fiscal 2022 |
| | First Quarter Fiscal 2023 |
| ||||||||||||||||||||||
|
| Net Sales |
| Retail |
| E-commerce |
| Restaurant |
| Wholesale |
| Other |
|
| Net Sales |
| Retail |
| E-commerce |
| Food & Beverage |
| Wholesale |
| Other |
| ||
Tommy Bahama | | $ | 228,067 |
| 45 | % | 20 | % | 14 | % | 21 | % | — | % | | $ | 239,435 |
| 44 | % | 21 | % | 13 | % | 22 | % | — | % |
Lilly Pulitzer | |
| 92,045 |
| 34 | % | 44 | % | — | % | 22 | % | — | % | |
| 97,450 |
| 34 | % | 47 | % | — | % | 19 | % | — | % |
Johnny Was | | | 49,491 | | 36 | % | 38 | % | — | % | 26 | % | — | % | ||||||||||||||
Emerging Brands | |
| 31,763 |
| 5 | % | 30 | % | — | % | 65 | % | — | % | |
| 33,991 |
| 7 | % | 36 | % | — | % | 57 | % | — | % |
Lanier Apparel | |
| — |
| — | % | — | % | — | % | — | % | — | % | ||||||||||||||
Corporate and Other | |
| 706 |
| — | % | — | % | — | % | 43 | % | 57 | % | |
| (270) |
| — | % | — | % | — | % | — | % | NM | % |
Total | | $ | 352,581 |
| 39 | % | 27 | % | 9 | % | 25 | % | — | % | | $ | 420,097 |
| 37 | % | 30 | % | 8 | % | 25 | % | — | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | First Quarter Fiscal 2021 |
| | First Quarter Fiscal 2022 |
| ||||||||||||||||||||||
|
| Net Sales |
| Retail |
| E-commerce |
| Restaurant |
| Wholesale |
| Other |
|
| Net Sales |
| Retail |
| E-commerce |
| Food & Beverage |
| Wholesale |
| Other |
| ||
Tommy Bahama | | $ | 156,698 |
| 42 | % | 23 | % | 16 | % | 19 | % | — | % | | $ | 228,067 |
| 45 | % | 20 | % | 14 | % | 21 | % | — | % |
Lilly Pulitzer | |
| 73,576 |
| 35 | % | 42 | % | — | % | 23 | % | — | % | |
| 92,045 |
| 34 | % | 44 | % | — | % | 22 | % | — | % |
Johnny Was (1) | | | — | | — | % | — | % | — | | — | % | — | % | ||||||||||||||
Emerging Brands | |
| 22,432 |
| 3 | % | 34 | % | — | % | 63 | % | — | % | |
| 31,763 |
| 5 | % | 30 | % | — | % | 65 | % | — | % |
Lanier Apparel | |
| 12,019 |
| — | % | — | % | — | % | 100 | % | — | % | ||||||||||||||
Corporate and Other | |
| 1,037 |
| — | % | — | % | — | % | 53 | % | 47 | % | |
| 706 |
| — | % | — | % | — | % | 43 | % | 57 | % |
Total | | $ | 265,762 |
| 34 | % | 28 | % | 9 | % | 28 | % | — | % | | $ | 352,581 |
| 39 | % | 27 | % | 9 | % | 25 | % | — | % |
(1) | The Johnny Was business was acquired on September 19, 2022. |
3. Revenue Recognition and Receivables: Our revenue consists of direct to consumer sales, including our retail store, e-commerce and restaurantfood and beverage operations, and wholesale sales, as well as royalty income, which is included in royalties and other operating income in our consolidated statements of operations. 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 is described in the significant accounting policies described in our Fiscal 20212022 Form 10-K.
11
The table below quantifies net sales by distribution channel (in thousands) for each period presented.
| | | | | | | | | | | | |
| First Quarter |
| First Quarter |
| ||||||||
| Fiscal 2022 |
| Fiscal 2021 | | Fiscal 2023 |
| Fiscal 2022 | | ||||
Retail | $ | 136,080 | | $ | 91,280 | | $ | 157,605 | | $ | 136,080 | |
E-commerce |
| 96,473 | |
| 74,238 | |
| 125,764 | |
| 96,473 | |
Restaurant |
| 30,885 | |
| 25,208 | | ||||||
Food & Beverage |
| 32,032 | |
| 30,885 | | ||||||
Wholesale |
| 88,616 | |
| 74,453 | |
| 104,829 | |
| 88,616 | |
Other |
| 527 | |
| 583 | |
| (133) | |
| 527 | |
Net sales | $ | 352,581 | | $ | 265,762 | | $ | 420,097 | | $ | 352,581 | |
As of April 30, 2022, January 29, 2022 and May 1, 2021, prepaid expenses and other current assets included $5 million, $4 million and $4 million, respectively, representing the estimated value of inventory for expected direct to consumer and wholesale sales returns. An estimated sales return liability of $14$16 million, $11$12 million and $12$14 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of April 29, 2023, January 28, 2023, and April 30, 2022, respectively. As of April 29, 2023, January 29,28, 2023, and April 30, 2022, prepaid expenses and May 1, 2021, respectively.other current assets included $5 million, $4 million and $5 million, respectively, relating to the estimated value of inventory for expected direct to consumer and wholesale sales returns.
Substantially all amounts recognized in receivables, net represent trade receivables related to contracts with customers. In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to and accept returns from certain of our wholesale customers for certain products. As of April 29, 2023, January 28, 2023 and April 30, 2022, January 29, 2022 and May 1, 2021, reserve balances recorded as a reduction to receivables related to these items were $5$4 million, $3$4 million and $6$5 million, respectively. As of April 29, 2023, January 28, 2023 and April 30, 2022, January 29, 2022 and May 1, 2021, our provision for credit losses related to receivables included in our consolidated balance sheets was $1 million, $1 million and $2$1 million, respectively. In both the First Quarter
11
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 accrued expenses and other liabilities in our consolidated balance sheet and totaled $15$18 million, $16$19 million and $13$15 million as of April 29, 2023, January 28, 2023, and April 30, 2022, January 29, 2022, and May 1, 2021, respectively.
4. Leases: In the ordinary course of business, we enter into real estate lease agreements for our direct to consumer locations, which include retail and food and beverage locations, and office and warehouse/distribution space, as well as leases for certain equipment. Our real estate leases have varying terms and expirations and may have provisions to extend, renew or terminate the lease agreement at our discretion, among other provisions. Our real estate lease terms are typically for a period of ten years or less and typically require monthly rent payments with specified rent escalations during the lease term. Our real estate leases usually provide for payments of our pro rata share 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. Also, our direct to consumer location leases often provide for contingent rent payments based on sales if certain sales thresholds are achieved.
For the First Quarter of Fiscal 20222023, operating lease expense, which includes amounts used in determining the operating lease liability and operating lease asset, was $14$18 million and variable lease expense was $10 million, resulting in total lease expense of $24$28 million compared to $26$24 million of total lease expense in the First Quarter of Fiscal 2021.2022. Cash paid for lease amounts included in the measurement of operating lease liabilities in the First Quarter of Fiscal 2023 was $21 million, while cash paid for lease amounts included in the measurement of operating lease liabilities in the First Quarter of Fiscal 2022 was $18 million, whilemillion. The increase in lease expense and cash paid for lease amounts included inwas primarily driven by the measurementacquisition of operating lease liabilities in the First Quarter of Fiscal 2021 was $18 million.Johnny Was.
12
As of April 30, 2022,29, 2023, the stated lease liability payments for the fiscal years specified below were as follows (in thousands):
| | | | | | |
|
| Operating lease |
| Operating lease | ||
Remainder of 2022 | | $ | 46,126 | |||
2023 | | | 61,905 | |||
Remainder of 2023 | | $ | 58,136 | |||
2024 | | | 49,287 | | | 69,672 |
2025 | |
| 35,891 | | | 53,410 |
2026 | |
| 27,944 | |
| 46,471 |
2027 | | | 16,072 | |
| 33,299 |
After 2027 | |
| 29,212 | |||
2028 | | | 26,794 | |||
After 2028 | |
| 46,612 | |||
Total lease payments | | $ | 266,437 | | $ | 334,394 |
Less: Difference between discounted and undiscounted lease payments | |
| 26,430 | |
| 43,962 |
Present value of lease liabilities | | $ | 240,007 | | $ | 290,432 |
5. Income Taxes: Our effective income tax rate for the First Quarter of Fiscal 20222023 was an expense of 24.2%24.9% while our effective income tax rate for the First Quarter of Fiscal 20212022 was an expense24.2%.
The effective tax rate for the First Quarter of 17.8%. Both periodsFiscal 2023 and Fiscal 2022 benefitted from certain favorable items that resulted in a lower tax rate than a more typical annual effective tax rate of approximately 25% to 26%. The First Quarter of Fiscal 2023 benefited from changes in uncertain tax positions.
The income tax expense in bothfor the First Quarter of Fiscal 2022 and the First Quarter of Fiscal 2021 included the benefit of the utilization of certain net operating loss carryforward amounts in certain state and foreign jurisdictions, the recognition of certain tax credit amounts and the vesting of restricted stock awards at a price higher than the grant date fair value. These favorable items were partially offset by certain unfavorable permanent items which are not deductible for income tax purposes. Additionally, and more significantly, the income tax expense in
6. Shareholders’ Equity: From time to time, we repurchase our common stock mainly through open market repurchase plans. For the First Quarter of Fiscal 2021 included the benefit of a $2 million net reduction in uncertain tax positions resulting from the settlement of those uncertain tax position amounts in the First Quarter of Fiscal 2021.
6. Shareholders’ Equity: In2023, there were no repurchases. For the First Quarter of Fiscal 2022, we repurchased 491,000 shares of our common stock for $43 million under our $100 million open market stock repurchase program after repurchasing 91,000 shares for $8 million in the Fourth Quartermillion. As of Fiscal 2021. These repurchases resulted in $49 million remaining under the existing open market repurchase program and $99April 29, 2023, we have $50 million remaining under our existing Board of Directors’ authorization asauthorization.
We also repurchase shares from our employees to cover employee tax liabilities related to the vesting of April 30, 2022.shares of our common stock. During both the First Quarter of Fiscal 2022 and2023, there were no shares repurchased. For the First Quarter of Fiscal 2021,2022, we repurchased $3 million of shares from our employees to cover employee tax liabilities related to the vesting of shares of our common stock.
Additionally, subsequent to April 30, 2022 through June 8, 2022, we repurchased an additional 220,000 shares of our common stock for $19 million under the open market repurchase program resulting in $30 million remaining under the open market repurchase program as of June 8, 2022.
1312
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal 2021 | | Fiscal 2022 | ||||||||||||||||||||||||||
|
| Common Stock |
| APIC |
| Retained Earnings |
| AOCI |
| Total |
| Common Stock |
| APIC |
| Retained Earnings |
| AOCI |
| Total | ||||||||||
January 30, 2021 |
| $ | 16,889 |
| $ | 156,508 |
| $ | 235,995 |
| $ | (3,664) |
| $ | 405,728 | |||||||||||||||
January 29, 2022 |
| $ | 16,805 | | $ | 163,156 | | $ | 331,175 | | $ | (3,472) | | $ | 507,664 | |||||||||||||||
Comprehensive income | |
| — | |
| — | |
| 28,468 | |
| 391 | |
| 28,859 | |
| — | |
| — | |
| 57,408 | |
| 477 | |
| 57,885 |
Shares issued under equity plans | |
| 39 | |
| 283 | |
| — | |
| — | |
| 322 | |
| 5 | |
| 387 | |
| — | |
| — | |
| 392 |
Compensation expense for equity awards | |
| — | |
| 2,227 | |
| — | |
| — | |
| 2,227 | |
| — | |
| 2,725 | |
| — | |
| — | |
| 2,725 |
Repurchase of shares | |
| (34) | |
| (2,949) | |
| — | |
| — | |
| (2,983) | |
| (526) | |
| (3,131) | |
| (42,375) | |
| — | |
| (46,032) |
Dividends declared | |
| — | |
| — | |
| (6,252) | |
| — | |
| (6,252) | |
| — | |
| — | |
| (9,214) | |
| — | |
| (9,214) |
May 1, 2021 | | $ | 16,894 | | $ | 156,069 | | $ | 258,211 | | $ | (3,273) | | $ | 427,901 | |||||||||||||||
April 30, 2022 | | $ | 16,284 | | $ | 163,137 | | $ | 336,994 | | $ | (2,995) | | $ | 513,420 | |||||||||||||||
Comprehensive income | |
| — | |
| — | |
| 51,460 | | | (462) | |
| 50,998 | |
| — | |
| — | |
| 56,612 | | | (125) | |
| 56,487 |
Shares issued under equity plans | |
| 1 | |
| 341 | |
| — | |
| — | |
| 342 | |
| 15 | |
| 475 | |
| — | |
| — | |
| 490 |
Compensation expense for equity awards | |
| — | |
| 1,673 | |
| — | |
| — | |
| 1,673 | |
| — | |
| 2,527 | |
| — | |
| — | |
| 2,527 |
Repurchase of shares | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (339) | |
| — | |
| (29,475) | |
| — | |
| (29,814) |
Dividends declared | |
| — | |
| — | |
| (7,215) | |
| — | |
| (7,215) | |
| — | |
| — | |
| (9,094) | |
| — | |
| (9,094) |
July 31, 2021 | | $ | 16,895 | | $ | 158,083 | | $ | 302,456 | | $ | (3,735) | | $ | 473,699 | |||||||||||||||
July 30, 2022 | | $ | 15,960 | | $ | 166,139 | | $ | 355,037 | | $ | (3,120) | | $ | 534,016 | |||||||||||||||
Comprehensive income | |
| — | |
| — | |
| 25,985 | |
| 654 | |
| 26,639 | |
| — | |
| — | |
| 19,666 | | | (450) | |
| 19,216 |
Shares issued under equity plans | |
| (4) | |
| 386 | |
| — | |
| — | |
| 382 | |
| 1 | |
| 379 | |
| — | |
| — | |
| 380 |
Compensation expense for equity awards | |
| — | |
| 1,952 | |
| — | |
| — | |
| 1,952 | |
| — | |
| 2,545 | |
| — | |
| — | |
| 2,545 |
Repurchase of shares | |
| — | |
| — | |
| — | |
| — | |
| — | |
| (146) | |
| — | |
| (13,977) | |
| — | |
| (14,123) |
Dividends declared | |
| — | |
| — | |
| (7,203) | |
| — | |
| (7,203) | |
| — | |
| — | |
| (8,995) | |
| — | |
| (8,995) |
October 30, 2021 | | $ | 16,891 | | $ | 160,421 | | $ | 321,238 | | $ | (3,081) | | $ | 495,469 | |||||||||||||||
October 29, 2022 | | $ | 15,815 | | $ | 169,063 | | $ | 351,731 | | $ | (3,570) | | $ | 533,039 | |||||||||||||||
Comprehensive income | |
| — | |
| — | |
| 25,408 | |
| (391) | |
| 25,017 | |
| — | |
| — | |
| 32,049 | |
| 1,746 | |
| 33,795 |
Shares issued under equity plans | |
| 5 | |
| 401 | |
| — | |
| — | |
| 406 | |
| 5 | |
| 332 | |
| — | |
| — | |
| 337 |
Compensation expense for equity awards | |
| — | |
| 2,334 | |
| — | |
| — | |
| 2,334 | |
| — | |
| 2,780 | |
| — | |
| — | |
| 2,780 |
Repurchase of shares | |
| (91) | |
| — | |
| (8,268) | |
| — | |
| (8,359) | |
| (46) | |
| — | |
| (4,824) | |
| — | |
| (4,870) |
Dividends declared | |
| — | |
| — | |
| (7,203) | |
| — | |
| (7,203) | |
| — | |
| — | |
| (8,811) | |
| — | |
| (8,811) |
January 29, 2022 | | $ | 16,805 | | $ | 163,156 | | $ | 331,175 | | $ | (3,472) | | $ | 507,664 | |||||||||||||||
January 28, 2023 | | $ | 15,774 | | $ | 172,175 | | $ | 370,145 | | $ | (1,824) | | $ | 556,270 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | First Quarter Fiscal 2022 | | First Quarter Fiscal 2023 | ||||||||||||||||||||||||||
|
| Common Stock |
| APIC |
| Retained Earnings |
| AOCI |
| Total |
| Common Stock |
| APIC |
| Retained Earnings |
| AOCI |
| Total | ||||||||||
January 29, 2022 |
| $ | 16,805 | | $ | 163,156 | | $ | 331,175 | | $ | (3,472) | | $ | 507,664 | |||||||||||||||
January 28, 2023 |
| $ | 15,774 | | $ | 172,175 | | $ | 370,145 | | $ | (1,824) | | $ | 556,270 | |||||||||||||||
Comprehensive income | |
| — | |
| — | |
| 57,408 | |
| 477 | |
| 57,885 | |
| — | |
| — | |
| 58,538 | |
| (604) | |
| 57,934 |
Shares issued under equity plans | |
| 5 | |
| 387 | |
| — | |
| — | |
| 392 | |
| 6 | |
| 596 | |
| — | |
| — | |
| 602 |
Compensation expense for equity awards | |
| — | |
| 2,725 | |
| — | |
| — | |
| 2,725 | |
| — | |
| 3,259 | |
| — | |
| — | |
| 3,259 |
Repurchase of shares | |
| (526) | |
| (3,131) | |
| (42,375) | |
| — | |
| (46,032) | |
| — | |
| — | |
| — | |
| — | |
| — |
Dividends declared | |
| — | |
| — | |
| (9,214) | |
| — | |
| (9,214) | |
| — | |
| — | |
| (10,640) | |
| — | |
| (10,640) |
April 30, 2022 | | $ | 16,284 | | $ | 163,137 | | $ | 336,994 | | $ | (2,995) | | $ | 513,420 | |||||||||||||||
April 29, 2023 | | $ | 15,780 | | $ | 176,030 | | $ | 418,043 | | $ | (2,428) | | $ | 607,425 |
13
Long-Term Stock Incentive Plan and Equity Compensation Expense
DuringIn recent years, we have granted a combination of service-based restricted share awards and awards based on relative total shareholder return ("TSR") to certain select employees.
Service-Based Restricted Share Awards
The table below summarizes the service-based restricted share awards, including both restricted shares and restricted share units, activity for the First Quarter of Fiscal 2022, we granted 0.1 million service-based2023:
| | | | | | |
|
| Fiscal 2023 |
| |||
|
| |
| Weighted- |
| |
| | Number of | | average | | |
| | Shares or | | grant date | | |
| | Units | | fair value | | |
Awards outstanding at beginning of year | | 212,945 | | $ | 64 | |
Awards granted | | 58,055 | | $ | 115 | |
Awards vested, including awards repurchased from employees for employees’ tax liability | | — | | $ | — | |
Awards forfeited | | (1,070) | | $ | 62 | |
Awards outstanding on April 29, 2023 | | 269,930 | | $ | 75 | |
TSR-based Restricted Share Units
The table below summarizes the TSR-based restricted share units, subject to the recipient remaining an employee through the May 2025 vesting date. Additionally, duringunit activity for the First Quarter of Fiscal 2023:
| | | | | | |
|
| Fiscal 2023 |
| |||
|
| |
| Weighted- |
| |
| | | | average | | |
| | Number of | | grant date | | |
| | Share Units | | fair value | | |
TSR-based awards outstanding at beginning of year | | 196,040 | | $ | 89 | |
TSR-based awards granted | | 74,605 | | $ | 153 | |
TSR-based restricted shares earned and vested, including restricted share units repurchased from employees for employees’ tax liability | | — | | $ | — | |
TSR-based awards forfeited | | — | | $ | — | |
TSR-based awards outstanding on April 29, 2023 | | 270,645 | | $ | 106 | |
7. Business Combinations: On September 19, 2022, we granted 0.1 million total shareholder return-based (“TSR-based”acquired JW Holdings, LLC and its subsidiaries (collectively “Johnny Was”) restricted share units(the “Acquisition”). We accounted for this transaction as a business combination, which generally requires that we record the assets acquired and liabilities assumed at target subject to (1) our achievement of a specified TSR-based ranking by Oxford relative to a comparator group during a period of approximately three years from the date of grant and (2) the recipient remaining an employee through the May 2025 vesting date. The number of shares ultimately earned for the TSR-based restricted share units will be between 0% and 200%fair value as of the restricted share units at target. Neither the service-based or TSR-based restricted share units are included in the table above as the awards are not outstanding shares.
Both the service-based and TSR-based restricted share units are entitled to dividend equivalents for dividends declared on our common stock during the vesting period, with the dividend equivalents for the service-basedacquisition date.
14
restricted share units payable atThe provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, including a reconciliation to the timetotal purchase consideration, are as follows:
| | | | | | | | | |
|
| Provisional Amounts at | | Measurement Period Adjustments | | Provisional Amounts at | |||
Cash and cash equivalents | | $ | 7,296 | | $ | — | | $ | 7,296 |
Receivables | |
| 8,777 | |
| — | |
| 8,777 |
Inventories | |
| 23,434 | |
| — | |
| 23,434 |
Prepaid expenses and other assets | |
| 6,353 | |
| — | |
| 6,353 |
Property and equipment | |
| 21,108 | |
| — | |
| 21,108 |
Intangible assets | |
| 134,640 | |
| — | |
| 134,640 |
Goodwill | |
| 96,637 | |
| 359 | |
| 96,996 |
Operating lease assets | | | 54,859 | | | — | | | 54,859 |
Accounts payable, accrued expenses and other liabilities | |
| (34,777) | |
| (359) | |
| (35,136) |
Non-current portion of operating lease liabilities | | | (47,009) | | | — | | | (47,009) |
Purchase price | | $ | 271,318 | | $ | — | | $ | 271,318 |
As of April 29, 2023, we considered these amounts to be provisional because we were still in the process of reviewing information to support the valuations of the paymentassets acquired and liabilities assumed. We made measurement-period adjustments, as shown in the table above, that increased the amount of provisional goodwill. We expect that goodwill will be deductible for income tax purposes.
Intangible assets allocated in connection with our preliminary purchase price allocation consisted of the respective dividend andfollowing (in thousands):
| | | | | |
|
| |
| Johnny Was | |
| | Useful life | | acquisition | |
Finite lived intangible assets acquired, primarily consisting of customer relationships |
| 8 - 13 years | | $ | 56,740 |
Trade names and trademarks |
| Indefinite | |
| 77,900 |
| | | | $ | 134,640 |
The following unaudited pro forma information presented below (in thousands, except per share data) shows the dividend equivalentsresults of our operations for the TSR-based restricted share units payable after vesting of the restricted shares, for the number of shares ultimately earned. Neither the service-based or TSR-based restricted share units have any voting rights during the vesting period. Both the service-based and TSR-based restricted share units granted during the First Quarter of Fiscal 2022 include certain clauses relatedas if the acquisition of Johnny Was had occurred at the beginning of Fiscal 2021. The information presented below is for illustrative purposes only, is not indicative of results that would have been achieved if the acquisition had occurred as of that date and is not intended to accelerated vesting upon the occurrencebe a projection of qualifying retirement, death or disabilityfuture results of the employee prior to the vesting date. Our stock incentive plans are described in Note 8 to our consolidatedoperations. The following unaudited pro forma information has been prepared from historical financial statements includedfor Johnny Was and us for the periods presented, including without limitation, purchase accounting adjustments, but excluding any seller specific management/advisory or similar expenses and any synergies or operating cost reductions that may be achieved from the combined operations in our Fiscal 2021 Form 10-K.the future.
| | | | | | | |
| | | Actual | | Pro Forma | ||
Net sales |
|
| $ | 352,581 |
| $ | 406,174 |
Earnings before income taxes | | | $ | 75,736 | | $ | 81,744 |
Net earnings | | | $ | 57,408 | | $ | 61,914 |
Earnings per share: | | | | | | | |
Basic | | | $ | 3.52 | | $ | 3.79 |
Diluted | | | $ | 3.45 | | $ | 3.72 |
8. Debt: On March 6, 2023, we entered into a Second Amendment to the Fourth Amended and Restated Credit Agreement (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for a revolving credit facility of up to $325 million, which may be used to fund working capital, to fund future acquisitions and for general corporate purposes. The Revolving Credit Agreement amended and restated our Fourth Amended and Restated Credit Agreement (the “Prior Credit Agreement”). The Revolving Credit Agreement (1) extended the maturity of the facility
15
from July 2024 to March 2028 and (2) modified certain provisions of the agreement. In other non-current assets, we capitalized debt issuance costs of $2 million in connection with commitments upon entering into the Revolving Credit Agreement.
Pursuant to the Revolving Credit Agreement, the interest rate applicable to our borrowings under the Revolving Credit Agreement are based on either the Term Secured Overnight Financing Rate plus an applicable margin of 135 to 185 basis points or prime plus an applicable margin of 25 to 75 basis points.
The 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 interest rate of 7% as of April 29, 2023), unused line fees and letter of credit fees based upon average utilization or unused availability, as applicable, (3) requires periodic interest payments with principal due at maturity 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.
We issued standby letters of credit of $7 million in the aggregate under the Revolving Credit Agreement as of April 29, 2023. Outstanding letters of credit under the Revolving Credit Agreement reduce the amount of borrowings available to us.
As of April 29, 2023, we had $94 million of borrowings outstanding and $224 million in unused availability under the Revolving Credit Agreement. Under the Prior Credit Agreement as of January 28, 2023 and April 30, 2022, we had $119 million and $0 million of borrowings outstanding, and $199 million and $322 million of unused availability, respectively.
Compliance with Covenants
The 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 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 Revolving Credit Agreement contains a financial covenant that applies only if excess availability under the agreement for three consecutive business days is less than the greater of (1) $23.5 million or (2) 10% of availability. In such case, our fixed charge coverage ratio as defined in the 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 Revolving Credit Agreement of more than the greater of (1) $23.5 million or (2) 10% of availability for 30 consecutive days.
We believe that the affirmative covenants, negative covenants, financial covenants and other restrictions under the Revolving Credit Agreement are customary for those included in similar facilities entered into at the time we amended the Revolving Credit Agreement. During Fiscal 2023 and as of April 29, 2023, no financial covenant testing was required pursuant to our Revolving Credit Agreement, or the Prior Credit Agreement, as applicable, as the minimum availability threshold was met at all times. As of April 29, 2023, we were compliant with all applicable covenants related to the Revolving Credit Agreement.
16
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 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 Fiscal 20212022 Form 10-K.
OVERVIEW
Business Overview
We are a leading branded apparel company that designs, sources, markets and distributes products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC and Duck Head lifestyle brands.
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 can command greater loyalty and higher price points and create licensing opportunities. 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. We believe the principal competitive factors in the apparel industry are the reputation, value, and image of brand names; design of differentiated, innovative or otherwise compelling product; consumer preference; price; quality; marketing (including through rapidly shifting digital and social media vehicles); product fulfillment capabilities; and customer service. Our ability to compete successfully in the apparel industry is directly related todependent on 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 fashion products each season.season as well as certain core products that consumers expect from us.
Tommy BahamaOn September 19, 2022, we acquired Johnny Was. Johnny Was products are sold through the Johnny Was website and Lilly Pulitzer,full-price retail stores and outlets as well as select department stores and specialty stores. We continue to execute acquisition and integration activities, such as investing in the aggregate, represented 90% of our consolidated net sales in Fiscal 2021. technology infrastructure, and streamlining corporate and operational support structures.
During Fiscal 2021,2022, 80% of our consolidated net sales were through our direct to consumer channels of distribution, which consist of our brand specific full-price retail stores, and e-commerce websites and outlets, as well as our Tommy Bahama food and beverage operations and Tommy Bahama outlets.operations. The remaining 20% of our net sales was generated through our wholesale distribution channels. Our wholesale operations consist of net sales of products bearing our lifestyle brands,channels, which complement our direct to consumer operations and provide access to a larger base of consumers. Our wholesale operations consist of sales of products bearing the trademarks of our lifestyle brands to various specialty stores, better department stores, Signature Stores, multi-branded e-commerce retailers and other retailers.
For additional information about our business and our operating groups, see Part I, Item 1. Business of our Fiscal 20212022 Form 10-K. Important factors relating to certain risks which could impact our business are described in Part II, Item 1A. Risk Factors of this report and Part I. Item 1A. Risk Factors of our Fiscal 20212022 Form 10-K.
Industry Overview
We operate in a highly competitive apparel market that continues to evolve rapidly with the expanding application of technology to fashion retail. 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. The apparel industry is cyclical and very dependent uponon the overall level and focus of discretionary consumer spending, which changes as consumer preferences and regional, domestic and international economic conditions change. Further, negative economic conditions often have a longer and more severe impact on the apparel industry than on other industries. Also, in recent years prior to the COVID-19 pandemic, consumers have chosen to spend less of their discretionary spending on certain product categories, including apparel, while spending more on services and other product
17
categories. Further, negative economic conditions often have a longer and more severe impact on the apparel industry than on other industries due, in part, to apparel purchases often being more of a discretionary purchase.
This competitive and evolving environment requires that brands and retailers approach their operations, including marketing and advertising, very differently than historical practicesthey have historically and may result in increased operating costs and investments to generate growth or even maintain existing sales levels. While the competition and evolution presentspresent significant
16
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.
Many of the changes in the industry noted above were accelerated or exacerbated by the COVID-19 pandemic. Additionally, in Fiscal 2021 the United States economy, as well as the apparel retail industry and our own business operations, began experiencing very strong growth in consumer demand and also began encountering various challenges including labor shortages, supply chain disruptions and product and operating cost increases. These items, combined with more recent macroeconomic factors, have continued to impact the apparel retail industry and our business in Fiscal 2022. We, as well as others in our industry, have increased prices to attempt to offset these inflationary pressures.
We believe our lifestyle brands have true competitive advantages, and we continue to invest in and leverage 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.
COVID-19 Pandemicindustry in the current environment.
The COVID-19 pandemic has hadcurrent macroenvironment, with heightened concerns about inflation, a significant effect on overallglobal economic conditions and our operations in recent years. In Fiscal 2021,recession, geopolitical issues, the economic environment improved significantly with a significant rebound in retail traffic starting in March 2021 and other improvements as the year progressed, although certain stores were closed for portionsstability of the First QuarterU.S. banking system, the availability and cost of Fiscal 2021. This improvedcredit and continued increases in interest rates, is creating a complex and challenging retail environment, which may impact our businesses and exceptionally strong consumer demand drove record earnings for us through Fiscal 2021 and have continued inexacerbate some of the First Quarter of Fiscal 2022. There can be no assurance that these trends will continue forinherent challenges to our business or the broader retail apparel market or that store closures will not occur in the future as a result of any resurgence of COVID-19 cases and/or additional government mandates or recommendations.operations. There remains significant uncertainty as toin the durationmacroeconomic environment, and severity of the pandemic as well as the associated impact of changes in consumer discretionary spending habits, supply chainthese and other business disruptions, operating cost increases and inflationary pressures, general economic conditions and restrictionsfactors could have a major effect on our ongoing operations that result from the COVID-19 pandemic. Thus, the ultimate impact of the pandemic on our business remains uncertain at this time.
Lanier Apparel Exit
In Fiscal 2021, we exited our Lanier Apparel business, a business which had been focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. It also took into consideration the increased macroeconomic challenges faced by the Lanier Apparel business, many of which were magnified by the COVID-19 pandemic. The operating results of the Lanier Apparel business in Fiscal 2021 largely reflect activities associated with the ongoing wind down of operations following the 2020 announcement that we would be exiting the business. In Fiscal 2021, Lanier Apparel’s net sales were $25 million and represented 2% of our consolidated net sales. We do not expect any future net sales, operations or charges for Lanier Apparel. Refer to our consolidated financial statements and Management Discussion and Analysis in our Fiscal 2021 Form 10-K for additional information about the Lanier Apparel exit.businesses.
Key Operating Results:
The following table sets forth our consolidated operating results (in thousands, except per share amounts) for the First Quarter of Fiscal 20222023 compared to the First Quarter of Fiscal 2021:2022:
| | | | | | | | | | | | |
|
| First Quarter |
| First Quarter | ||||||||
|
| Fiscal 2022 | | Fiscal 2021 |
| Fiscal 2023 | | Fiscal 2022 | ||||
Net sales | | $ | 352,581 | | $ | 265,762 | | $ | 420,097 | | $ | 352,581 |
Operating income | | $ | 75,978 | | $ | 34,893 | | $ | 80,301 | | $ | 75,978 |
Net earnings | | $ | 57,408 | | $ | 28,468 | | $ | 58,538 | | $ | 57,408 |
Net earnings per diluted share | | $ | 3.45 | | $ | 1.70 | | $ | 3.64 | | $ | 3.45 |
Weighted average shares outstanding - diluted | |
| 16,622 | |
| 16,792 | |
| 16,071 | |
| 16,622 |
Net earnings per diluted share were $3.64 in the First Quarter of Fiscal 2023 compared to $3.45 in the First Quarter of Fiscal 2022. The 6% increase in net earnings per diluted share included a 2% increase in net earnings as well as a 3% reduction in weighted average shares outstanding due to open market share repurchases in Fiscal 2022. The increased net earnings included the operating income of Johnny Was in the First Quarter of 2023, as well as higher net sales, gross margin and royalties and other income. These increases were partially offset by increased SG&A, increased interest expense and a higher effective tax rate. Each of these changes are discussed further below.
COMPARABLE SALES
We often disclose comparable sales in order to provide additional information regarding changes in our results of operations between periods. Our disclosures of comparable sales include net sales from our full-price retail stores and e-commerce sites, excluding sales associated with e-commerce flash clearance sales. We believe that the inclusion of both full-price retail stores and e-commerce sites in the comparable sales disclosures is a more meaningful way of reporting our comparable 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 channels. For our comparable sales disclosures, we exclude (1) outlet store 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) food and beverage sales, as we do not currently believe that the inclusion of food and beverage sales in our comparable sales disclosures is meaningful in assessing our branded apparel businesses. Comparable sales information reflects net sales, including shipping and handling revenues, if any, associated with product sales.
1718
Earnings per shareFor purposes of our disclosures, comparable sales consists of sales through e-commerce sites and any physical full-price retail stores that were $3.45owned 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 which would result in 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 First Quartersize of Fiscal 2022 comparedthe retail space due to $1.70expansion, reduction or relocation to a new retail space or (3) a relocation to a new space that is significantly different from the prior retail space. For those stores which are excluded based on the preceding sentence, the stores continue to be excluded from comparable sales until the criteria for a new store is met subsequent to the remodel, relocation, or other event. A full-price retail store that is remodeled will generally continue to be included in our comparable sales metrics as a store is not typically closed for longer than a two-week period during a remodel; however, a full-price retail store that is relocated generally will not be included in our comparable sales metrics until that store has been open in the First Quarterrelocated space for the entirety of Fiscal 2021. The higher earnings per sharethe prior fiscal year because the size or other characteristics of the store typically change significantly from the prior location. Any stores that were primarily a result of (1) increased net sales in our Tommy Bahama, Lilly Pulitzer and Emerging Brands operating groups, (2) improved consolidated gross margin, and (3) higher royalty income. These favorable items were partially offset by (1) increased SG&A, (2) a higher effective tax rate and (3)closed during the absence of operating income in Lanier Apparelprior fiscal year or current fiscal year, or which we expect to close or vacate in the First Quartercurrent fiscal year, as well as any pop-up or temporary store locations, are excluded from our comparable sales metrics.
Definitions and calculations of Fiscal 2022 duecomparable sales differ among companies, and therefore comparable sales metrics disclosed by us may not be comparable to the exit of the business in Fiscal 2021.metrics disclosed by other companies.
STORE COUNTDIRECT TO CONSUMER LOCATIONS
The table below provides store count information about the number of direct to consumer locations for our brands as of the dates specified. For acquired brands, locations are only included subsequent to the date of acquisition. The store count includesamounts below include our permanent locations and excludesexclude any pop-up or temporary store locations which have an initial lease term of 12 months or less.
| | | | | | | | |
| | April 30, | | January 29, | | May 1, | | January 30, |
|
| 2022 |
| 2022 |
| 2021 |
| 2021 |
Tommy Bahama retail stores |
| 102 |
| 102 |
| 104 |
| 105 |
Tommy Bahama retail-restaurant locations |
| 21 |
| 21 |
| 21 |
| 20 |
Tommy Bahama outlets |
| 35 |
| 35 |
| 35 |
| 35 |
Total Tommy Bahama locations |
| 158 |
| 158 |
| 160 |
| 160 |
Lilly Pulitzer retail stores |
| 59 |
| 58 |
| 59 |
| 59 |
Southern Tide retail stores | | 4 | | 4 | | 4 | | 3 |
TBBC retail stores | | 1 | | 1 | | — | | — |
Total Oxford locations |
| 222 |
| 221 |
| 223 |
| 222 |
| | | | | | | | |
| | April 29, | | January 28, | | April 30, | | January 29, |
|
| 2023 |
| 2023 |
| 2022 |
| 2022 |
Tommy Bahama full-price retail stores |
| 103 |
| 103 |
| 102 |
| 102 |
Tommy Bahama retail-food & beverage locations |
| 21 |
| 21 |
| 21 |
| 21 |
Tommy Bahama outlets |
| 33 |
| 33 |
| 35 |
| 35 |
Total Tommy Bahama locations |
| 157 |
| 157 |
| 158 |
| 158 |
Lilly Pulitzer full-price retail stores |
| 59 |
| 59 |
| 59 |
| 58 |
Johnny Was full-price retail stores | | 65 | | 65 | | — | | — |
Johnny Was outlets | | 2 | | 2 | | — | | — |
Total Johnny Was locations | | 67 | | 67 | | — | | — |
Southern Tide full-price retail stores | | 9 | | 6 | | 4 | | 4 |
TBBC full-price retail stores | | 3 | | 3 | | 1 | | 1 |
Total Oxford direct to consumer locations |
| 295 |
| 292 |
| 222 |
| 221 |
RESULTS OF OPERATIONS
FIRST QUARTER OF FISCAL 20222023 COMPARED TO FIRST QUARTER OF FISCAL 20212022
The discussion and tables below compare our statements of operations for the First Quarter of Fiscal 20222023 to the First Quarter of Fiscal 2021.2022. 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, including gross profit, may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.
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 the same period of the prior year:
| | | | | | | | | | | | | | | | | | |
|
| First Quarter |
|
| | | | |
| |||||||||
| | Fiscal 2022 | | | Fiscal 2021 | | | $ Change |
| % Change | | |||||||
| | | | | | | | | | | | | | | | | | |
Net sales |
| $ | 352,581 |
| 100.0 | % | | $ | 265,762 | | 100.0 | % | | $ | 86,819 |
| 32.7 | % |
Cost of goods sold | |
| 126,204 |
| 35.8 | % | |
| 99,177 |
| 37.3 | % | |
| 27,027 |
| 27.3 | % |
Gross profit | | $ | 226,377 |
| 64.2 | % | | $ | 166,585 |
| 62.7 | % | | $ | 59,792 |
| 35.9 | % |
SG&A | |
| 157,412 |
| 44.6 | % | |
| 137,125 |
| 51.6 | % | |
| 20,287 |
| 14.8 | % |
Royalties and other operating income | |
| 7,013 |
| 2.0 | % | |
| 5,433 |
| 2.0 | % | |
| 1,580 |
| 29.1 | % |
Operating income | | $ | 75,978 |
| 21.5 | % | | $ | 34,893 |
| 13.1 | % | | $ | 41,085 |
| 117.7 | % |
Interest expense, net | |
| 242 |
| 0.1 | % | |
| 252 |
| 0.1 | % | |
| (10) |
| (4.0) | % |
Earnings before income taxes | | $ | 75,736 |
| 21.5 | % | | $ | 34,641 |
| 13.0 | % | | $ | 41,095 |
| 118.6 | % |
Income tax expense | |
| 18,328 |
| 5.2 | % | |
| 6,173 |
| 2.3 | % | |
| 12,155 |
| 196.9 | % |
Net earnings | | $ | 57,408 |
| 16.3 | % | | $ | 28,468 |
| 10.7 | % | | $ | 28,940 |
| 101.7 | % |
year. The table also includes net earnings per diluted share and diluted
1819
weighted average shares outstanding (in thousands), as well as the change and the percentage change for each of these items as compared to the same period of the prior year.
| | | | | | | | | | | | | | | | | | |
|
| First Quarter |
|
| | | | |
| |||||||||
| | Fiscal 2023 | | | Fiscal 2022 | | | $ Change |
| % Change | | |||||||
| | | | | | | | | | | | | | | | | | |
Net sales |
| $ | 420,097 |
| 100.0 | % | | $ | 352,581 | | 100.0 | % | | $ | 67,516 |
| 19.1 | % |
Cost of goods sold | |
| 144,968 |
| 34.5 | % | |
| 126,204 |
| 35.8 | % | |
| 18,764 |
| 14.9 | % |
Gross profit | | $ | 275,129 |
| 65.5 | % | | $ | 226,377 |
| 64.2 | % | | $ | 48,752 |
| 21.5 | % |
SG&A | |
| 203,149 |
| 48.4 | % | |
| 157,412 |
| 44.6 | % | |
| 45,737 |
| 29.1 | % |
Royalties and other operating income | |
| 8,321 |
| 2.0 | % | |
| 7,013 |
| 2.0 | % | |
| 1,308 |
| 18.7 | % |
Operating income | | $ | 80,301 |
| 19.1 | % | | $ | 75,978 |
| 21.5 | % | | $ | 4,323 |
| 5.7 | % |
Interest expense, net | |
| 2,342 |
| 0.6 | % | |
| 242 |
| 0.1 | % | |
| 2,100 |
| 867.8 | % |
Earnings before income taxes | | $ | 77,959 |
| 18.6 | % | | $ | 75,736 |
| 21.5 | % | | $ | 2,223 |
| 2.9 | % |
Income tax expense | |
| 19,421 |
| 4.6 | % | |
| 18,328 |
| 5.2 | % | |
| 1,093 |
| 6.0 | % |
Net earnings | | $ | 58,538 |
| 13.9 | % | | $ | 57,408 |
| 16.3 | % | | $ | 1,130 |
| 2.0 | % |
Net earnings per diluted share | | $ | 3.64 | | | | | $ | 3.45 | | | | | $ | 0.19 | | 5.5 | % |
Weighted average shares outstanding - diluted | | | 16,071 |
| | | | | 16,622 |
| | | | | (551) |
| (3.3) | % |
Net Sales
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| First Quarter |
| | | | | ||||||||||
| | Fiscal 2022 | | Fiscal 2021 |
| $ Change |
| % Change | | | Fiscal 2023 | | Fiscal 2022 |
| $ Change |
| % Change | | ||||||
Tommy Bahama | | $ | 228,067 | | $ | 156,698 | | $ | 71,369 |
| 45.5 | % | | $ | 239,435 | | $ | 228,067 | | $ | 11,368 |
| 5.0 | % |
Lilly Pulitzer | |
| 92,045 | |
| 73,576 | |
| 18,469 |
| 25.1 | % | |
| 97,450 | |
| 92,045 | |
| 5,405 |
| 5.9 | % |
Johnny Was | | | 49,491 | |
| — | |
| 49,491 |
| 100.0 | % | ||||||||||||
Emerging Brands | |
| 31,763 | |
| 22,432 | |
| 9,331 |
| 41.6 | % | |
| 33,991 | |
| 31,763 | |
| 2,228 |
| 7.0 | % |
Lanier Apparel | |
| — | |
| 12,019 | |
| (12,019) |
| (100.0) | % | ||||||||||||
Corporate and Other | |
| 706 | |
| 1,037 | |
| (331) |
| (31.9) | % | |
| (270) | |
| 706 | |
| (976) |
| (138.2) | % |
Consolidated net sales | | $ | 352,581 | | $ | 265,762 | | $ | 86,819 |
| 32.7 | % | | $ | 420,097 | | $ | 352,581 | | $ | 67,516 |
| 19.1 | % |
Consolidated net sales were $420 million in the First Quarter of Fiscal 2023 compared to net sales of $353 million in the First Quarter of Fiscal 2022 compared to net sales of $266 million in the First Quarter of Fiscal 2021.2022. The 33%19% increase in net sales included increases in Tommy Bahama, Lilly Pulitzer, and Emerging Brands as well as each distribution channel,(1) $49 million of sales for Johnny Was, which were partially offset by a $12 million decrease in Lanier Apparel, which we exited in Fiscal 2021. Inwas acquired during the FirstThird Quarter of Fiscal 2021, consumer traffic2022 and our operations had only partially rebounded from the impacts of the COVID-19 pandemic as we still had certain store closures and(2) increases in each operating restrictions in certain regions, wholesale customer demand was still soft and most of the consumer traffic improvement occurred later in Fiscal 2021.group. Although we did have some price increases in the First Quarter of Fiscal 2022 in orderlast year to mitigate increased product and other costs, the increase in net sales was primarily impacteddriven by increased volume.
The increase in net sales by distribution channel included increases in (1) full-price retail salesconsisted of $41 million, or 51%, driven primarily by increased consumer traffic,the following:
● | an increase in full-price retail sales of $20 million, or 17%, including (1) $17 million of full-price retail sales in Johnny Was and (2) a $3 million, or 2% aggregate increase, in Lilly Pulitzer, Tommy Bahama, and Emerging Brands; |
● | an increase in full-price e-commerce sales of $37 million, or 41%, including (1) $19 million of full-price e-commerce sales in Johnny Was and (2) an $18 million, or 20%, aggregate increase in full price e-commerce in sales in Lilly Pulitzer, Tommy Bahama, and Emerging Brands; |
● | an increase in wholesale sales of $16 million, or 18%, including (1) $13 million of wholesale sales in Johnny Was and (2) a $6 million, or 12%, increase in Tommy Bahama. These increases were partially offset by decreases in Lilly Pulitzer and Emerging Brands; |
20
● | a decrease in Lilly Pulitzer e-commerce flash clearance sales of $7 million, with no e-commerce flash clearance in the First Quarter of Fiscal 2023; |
● | an increase in food and beverage sales of $1 million, or 4%; and |
● | an increase in outlet sales of $2 million, or 10%. |
The following table presents the proportion of our consolidated net sales by distribution channel for each period presented. We have calculated all percentages below on actual data, and percentages may not add to 100 due to rounding.
| | | | | | | | | | |
|
| First Quarter |
|
| First Quarter |
| ||||
| | Fiscal 2022 |
| Fiscal 2021 | | | Fiscal 2023 |
| Fiscal 2022 | |
Retail |
| 39 | % | 34 | % |
| 37 | % | 39 | % |
E-commerce |
| 27 | % | 28 | % |
| 30 | % | 27 | % |
Restaurant |
| 9 | % | 9 | % | |||||
Food & beverage |
| 8 | % | 9 | % | |||||
Wholesale |
| 25 | % | 28 | % |
| 25 | % | 25 | % |
Total |
| 100 | % | 100 | % |
| 100 | % | 100 | % |
Tommy Bahama:
Tommy Bahama net sales increased $71$11 million, or 46%5%, in the First Quarter of Fiscal 2022,2023, with an increase in each channel of distribution. The increase in net sales in Tommy Bahama included increases in (1) full-price retail sales of $34 million, or 63%, (2) wholesale sales of $17 million, or 56%, (3) e-commerce sales of $11 million, or 30%, (4) restaurant sales of $6 million, or 23%12%, with strong(2) e-commerce sales and fewer operating restrictions in our 21of $3 million, or 6%, (3) full-price retail sales of $1 million, or 1%, (4) food and beverage
19
locations,$1 million, or 4%, and (5) outlet sales of $4$1 million, or 35%5%. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:
| | | | | | | | | | |
| | First Quarter | | | First Quarter | | ||||
|
| Fiscal 2022 |
| Fiscal 2021 |
|
| Fiscal 2023 |
| Fiscal 2022 |
|
Retail |
| 45 | % | 42 | % |
| 44 | % | 45 | % |
E-commerce |
| 20 | % | 23 | % |
| 21 | % | 20 | % |
Restaurant |
| 14 | % | 16 | % | |||||
Food & beverage |
| 13 | % | 14 | % | |||||
Wholesale |
| 21 | % | 19 | % |
| 22 | % | 21 | % |
Total |
| 100 | % | 100 | % |
| 100 | % | 100 | % |
Lilly Pulitzer:
Lilly Pulitzer net sales increased $18$5 million, or 25%6%, in the First Quarter of Fiscal 2022,2023. The First Quarter of Fiscal 2023 benefited from a successful 30% off direct to consumer event in April 2023 with an increaseno similar event in each channelthe First Quarter of distribution.Fiscal 2022. The increase in net sales in Lilly Pulitzerby distribution channel included increasesan increase in (1) full-price e-commerce sales of $12 million, or 37% and (2) retail sales of $1 million, or 4%. These increases were partially offset by (1) a decrease in e-commerce flash clearance sales of $7 million, as Lilly Pulitzer held ano e-commerce flash clearance eventsales were made in the First Quarter of Fiscal 2022 to test the timing of clearance for certain prior season resort product, but did not have a flash clearance event in the First Quarter of Fiscal 2021,current year period and (2) retail sales of $6 million, or 24%, (3)lower wholesale sales of $3$1 million, or 17%, with higher full-price sales and lower off-price sales, and (4) full-price e-commerce sales of $2 million, or 7%5%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:
| | | | | | | | | | |
| | First Quarter | | | First Quarter | | ||||
|
| Fiscal 2022 |
| Fiscal 2021 |
|
| Fiscal 2023 |
| Fiscal 2022 |
|
Retail |
| 34 | % | 35 | % |
| 34 | % | 34 | % |
E-commerce |
| 44 | % | 42 | % |
| 47 | % | 44 | % |
Wholesale |
| 22 | % | 23 | % |
| 19 | % | 22 | % |
Total |
| 100 | % | 100 | % |
| 100 | % | 100 | % |
21
Johnny Was:
Johnny Was net sales were $49 million during the First Quarter of Fiscal 2023. The following table presents the proportion of net sales by distribution channel for Johnny Was for each period presented:
| | | | | |
| | First Quarter | | ||
| Fiscal 2023 | Fiscal 2022 | |||
Retail | 36 | % | — | % | |
E-commerce | 38 | % | — | % | |
Wholesale | 26 | % | — | % | |
Total | 100 | % | — | % |
Emerging Brands:
Emerging Brands net sales increased $9$2 million, or 42%7%, in the First Quarter of Fiscal 2022, with an increase in each of2023. By brand, the Southern Tide, TBBC and Duck Head businesses comprising Emerging Brands. The increase in net sales included increases in (1) Southern TideTBBC of $5$2 million, or 32%,25% and (2) TBBC of $4 million, or 63%, and (3) Duck Head of $1 million, or 63%32%, partially offset by lower sales for Southern Tide of $1 million, or 4%. The $9By distribution channel, the $2 million increase included increases of (1) $6$3 million, or 45%, in wholesale, (2) $2 million, or 28%27%, in e-commerce and (3)(2) $1 million, or 119%53%, in the Southern Tide and TBBC retail businesses,store sales as those brands continue to open new retail locations. These increases were partially offset by a $1 million, or 6%, decrease in wholesale sales that includes the impact of the acquisition and conversion of three former Southern Tide Signature Store operations to company owned retail stores. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:
| | | | | | | | | | |
| | First Quarter | | | First Quarter | | ||||
|
| Fiscal 2022 |
| Fiscal 2021 | |
| Fiscal 2023 |
| Fiscal 2022 | |
Retail | | 5 | % | 3 | % | | 7 | % | 5 | % |
E-commerce |
| 30 | % | 34 | % |
| 36 | % | 30 | % |
Wholesale |
| 65 | % | 63 | % |
| 57 | % | 65 | % |
Total |
| 100 | % | 100 | % |
| 100 | % | 100 | % |
Lanier Apparel:
There were no Lanier Apparel net sales in the First Quarter of Fiscal 2022 after we exited the Lanier Apparel business in Fiscal 2021. We do not expect any future net sales for Lanier Apparel. Refer to our consolidated financial statements and Management Discussion and Analysis in our Fiscal 2021 Form 10-K for additional information about the Lanier Apparel exit.
Corporate and Other:
Corporate and Other net sales primarily consist of net sales of our Lyons, Georgia distribution center business, as well as our Oxford America business, which we are in the process of exitingexited in Fiscal 2022.2022, and the elimination of any sales between operating groups.
2022
Gross Profit
The tables below present gross profit by operating group and in total for the First Quarter of Fiscal 20222023 and the First Quarter of Fiscal 2021,2022, as well as the dollar change and percentage 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 directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| First Quarter |
| | | | | |
| First Quarter |
| | | | | | ||||||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | ||||||
Tommy Bahama | | $ | 147,344 | | $ | 101,533 | | $ | 45,811 |
| 45.1 | % | | $ | 158,242 | | $ | 147,344 | | $ | 10,898 |
| 7.4 | % |
Lilly Pulitzer | |
| 63,528 | |
| 51,185 | |
| 12,343 |
| 24.1 | % | |
| 68,296 | |
| 63,528 | |
| 4,768 |
| 7.5 | % |
Johnny Was | |
| 33,588 | |
| — | |
| 33,588 |
| 100.0 | % | ||||||||||||
Emerging Brands | |
| 16,348 | |
| 12,101 | |
| 4,247 |
| 35.1 | % | |
| 15,632 | |
| 16,348 | |
| (716) |
| (4.4) | % |
Lanier Apparel | |
| — | |
| 4,294 | |
| (4,294) |
| (100.0) | % | ||||||||||||
Corporate and Other | |
| (843) | |
| (2,528) | |
| 1,685 |
| NM | % | |
| (629) | |
| (843) | |
| 214 |
| NM | % |
Consolidated gross profit | | $ | 226,377 | | $ | 166,585 | | $ | 59,792 |
| 35.9 | % | | $ | 275,129 | | $ | 226,377 | | $ | 48,752 |
| 21.5 | % |
Notable items included in amounts above: | | | | | | | | | | | | | | | | | | | | | | | | |
LIFO adjustments in Corporate and Other | | $ | 1,005 | | $ | 3,065 | |
|
|
|
| | | $ | 1,326 | | $ | 1,005 | |
|
|
|
| |
Lanier Apparel exit charges in cost of goods sold | | $ | — | | $ | 458 | | | | | | | ||||||||||||
| | | | | | | |
|
|
|
| |
| | | | | | | | | | |
|
| First Quarter | |
| First Quarter | | ||||
| | Fiscal 2022 | | Fiscal 2021 | | | Fiscal 2023 | | Fiscal 2022 | |
Tommy Bahama |
| 64.6 | % | 64.8 | % |
| 66.1 | % | 64.6 | % |
Lilly Pulitzer |
| 69.0 | % | 69.6 | % |
| 70.1 | % | 69.0 | % |
Johnny Was | | 67.9 | % | — | % | |||||
Emerging Brands |
| 51.5 | % | 53.9 | % |
| 46.0 | % | 51.5 | % |
Lanier Apparel |
| — | % | 35.7 | % | |||||
Corporate and Other |
| NM | % | NM | % |
| NM | % | NM | % |
Consolidated gross margin |
| 64.2 | % | 62.7 | % |
| 65.5 | % | 64.2 | % |
The increased gross profit of 36%22% was primarily due to the 33%19% increase in net sales as well as improvedincreased consolidated gross margin. The higher gross margin improvement was primarily dueincluded (1) lower freight costs as both inbound freight costs have generally returned to (1) a change in sales mix resulting from the exit of Lanier Apparel, which had lower gross margins than our lifestyle brand businesses,pre-pandemic levels in Fiscal 2021,2023 and our utilization of air freight on inbound products has decreased, (2) a $2 million lower LIFO accounting chargethe 67.9% gross margin of Johnny Was, (3) the absence of e-commerce flash sales in the First Quarter of Fiscal 2022 compared to the First Quarter of Fiscal 2021, (3)2023 and (4) improved initial product margins, as certain sales prices were increased more than the increased product costs as well as a change in mix towards higher gross margin products, and (4)during the lack of Lanier Apparel exit charges in cost of goods sold in the First Quarter of Fiscal 2022.last year. These itemsincreases were partially offset by the impact of increased freight costs of $3 million, or 90 basis points, including rate increases impacting inbound products and e-commerce shipping costs as well as the increased utilization of air freight on inbound products. The First Quarter of Fiscal 2021 did not include elevated freight costs as we did not begin to experience significant increased freight costs until the second half of Fiscal 2021. Both the First Quarter of Fiscal 2022 and the First Quarter of Fiscal 2021 included a higher proportion of full-price selling, with lower levels of markdowns, discounts and promotions, than have been typicalgross margin in prior years.Emerging Brands.
Tommy Bahama:
The lowerhigher gross margin for Tommy Bahama was primarily due to increased(1) reduced freight costs, (2) increased wholesale gross margins and (3) increased food costs in our restaurant businessand beverage gross margins. These increases were partially offset by improved initial product margins, due in part to a change in sales mix towardswith wholesale sales representing a higher gross margin products.proportion of net sales.
Lilly Pulitzer:
The lowerhigher gross margin for Lilly Pulitzer was primarily due to increased(1) lower freight costs, partially offset by improved(2) an increase in initial product margins. While Lilly Pulitzer hadmargins, (3) the absence of e-commerce flash sales in the First Quarter of Fiscal 2023 compared to $7 million of e-commerce flash sales in the First Quarter of Fiscal 2022 and (4) a change in sales mix with e-commerce flash clearanceas direct to consumer sales
21
representing represented a largergreater proportion of net sales, this impacttotal Lilly Pulitzer sales.
Johnny Was:
Gross margin for the First Quarter of Fiscal 2023 was generally offset by off-price wholesale sales representing a smaller proportion of net sales resulting in no significant change in gross margins due to a change in sales mix.68%.
Emerging Brands:
The lower gross margin for Emerging Brands was primarily due to increased freight costs,(1) off-price wholesale sales representing a higher proportion of net sales, as the brands were liquidating inventory that was marked down in the prior year and (2) more
23
inventory markdowns, andparticularly in Southern Tide. These decreases were partially offset by a change in sales mix with wholesaledirect to consumer sales representing a greater proportion of net sales. These items were partially offset by improved initial product margins.
Lanier Apparel:
We exited the Lanier Apparel business in Fiscal 2021 and thus there was no gross profit in the First Quarter of Fiscal 2022. We do not expect any gross profit related to the Lanier Apparel business in future periods. The First Quarter of Fiscal 2021 included the gross profit impact of net sales as we were exiting the business, including the impact in cost of goods sold related to Lanier Apparel exit charges, as disclosed in the prior year. Refer to our consolidated financial statements and Management Discussion and Analysis in our Fiscal 2021 Form 10-K for additional information about the Lanier Apparel exit.
Corporate and Other:
The gross profit in Corporate and Other primarily reflects the impact of LIFO accounting adjustments, which was a $1 million charge in both periods, and the gross profit of the Lyons, Georgia distribution center and Oxford America businesses. The primary driver for the improved gross profit was the $2 million lower LIFO accounting charge due to a $1 million LIFO accounting charge in the First Quarter of Fiscal 2022 compared to a $3 million LIFO accounting charge in the First Quarter of Fiscal 2021. The LIFO accounting impact in Corporate and Other in each period includes the net impact of (1) a charge in Corporate and Other when inventory that had been marked down in an operating group in a prior period was ultimately sold, (2) a credit in Corporate and Other when inventory had been marked down in an operating group in the current period, but had not been sold as of period end and (3) the change in the LIFO reserve, if any.
SG&A
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| First Quarter |
| | | | |
|
| First Quarter |
| | | | |
| ||||||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | ||||||
SG&A | | $ | 157,412 | | $ | 137,125 | | $ | 20,287 |
| 14.8 | % | | $ | 203,149 | | $ | 157,412 | | $ | 45,737 |
| 29.1 | % |
SG&A (as a % of net sales) | |
| 44.6 | % |
| 51.6 | % |
|
|
|
| | |
| 48.4 | % |
| 44.6 | % |
|
|
|
| |
Notable items included in amounts above: | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization of Southern Tide intangible assets | | $ | 72 | | $ | 72 | | | | | | | ||||||||||||
Lanier Apparel exit charges in SG&A | | $ | — | | $ | 815 | | | | | | | ||||||||||||
Amortization of Johnny Was intangible assets | | $ | 3,463 | | $ | — | | | | | | |
SG&A was $203 million in the First Quarter of Fiscal 2023 compared to $157 million in the First Quarter of Fiscal 2022, comparedwith approximately $31 million of the increase due to the SG&A of $137 millionJohnny Was. The 29% increase in First Quarter of Fiscal 2021 reflecting significant SG&A leverage as sales grew at a rate higher than SG&A increased. The increase intotal SG&A in the First Quarter of Fiscal 2022 was primarily due to2023 included the impactfollowing, each of which reflects the COVID-19 pandemic on our operations in the First Quarter of Fiscal 2021, including the continuation of cost reduction initiatives that were initiated in Fiscal 2020, store closures in certain regions, and depressed consumer and wholesale customer demand. The higher SG&A includedof Johnny Was: (1) increased employment costs of $10$14 million, primarily due to increased head count, pay rate increases and other employment cost increases, including in our direct to consumer and distribution center operations partially offset by lower incentive compensation amounts, (2) a $5 million increase in variable expenses related to higher sales, including credit card transaction fees, supplies, commissions, and other expenses, (3) a $4$9 million increase in advertising expense, (4)(3) a $2 million increase in administrative expenses including professional fees, travel and other items, and (5) a $1$6 million increase in occupancy expense, primarily due to higherexpenses, including increases in base rent amounts, percentage rent, expense.
Royaltiesoccupancy related operating costs and other operating income
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | |||
Royalties and other operating income | | $ | 7,013 | | $ | 5,433 | | $ | 1,580 |
| 29.1 | % |
22
Royalties and other operating income primarily consists of income received from third parties from the licensing of our brands. The increased royalties and other operating incomeitems, (4) a $6 million increase in the First Quarter of Fiscal 2022 was due to increased royalty income in both Tommy Bahama and Lilly Pulitzer.
Operating income (loss)
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | |||
Tommy Bahama | | $ | 52,606 | | $ | 20,660 | | $ | 31,946 |
| 154.6 | % |
Lilly Pulitzer | |
| 26,178 | |
| 19,945 | |
| 6,233 |
| 31.3 | % |
Emerging Brands | |
| 7,736 | |
| 4,961 | |
| 2,775 |
| 55.9 | % |
Lanier Apparel | |
| — | |
| 855 | |
| (855) |
| (100.0) | % |
Corporate and Other | |
| (10,542) | |
| (11,528) | |
| 986 |
| NM | % |
Consolidated Operating Income | | $ | 75,978 | | $ | 34,893 | | $ | 41,085 |
| 117.7 | % |
Notable items included in amounts above: | | | | | | | | | | | | |
LIFO adjustments in Corporate and Other | | $ | 1,005 | | $ | 3,065 | |
|
|
|
| |
Lanier Apparel exit charges in cost of goods sold | | $ | — | | $ | 458 | | | | | | |
Amortization of Southern Tide intangible assets | | $ | 72 | | $ | 72 | | | | | | |
Lanier Apparel exit charges in SG&A | | $ | — | | $ | 815 | | | | | | |
Operating income was $76 million in the First Quarter of Fiscal 2022 compared to $35 million in the First Quarter of Fiscal 2021. The increased operating income was primarily due to higher net sales, gross margin and royalty income partially offset by increased SG&A. Each operating group, except for Lanier Apparel, increased operating income in the First Quarter of Fiscal 2022 compared to the First Quarter of Fiscal 2021. Changes in operating income (loss) by operating group are discussed below.
Tommy Bahama:
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | |||
Net sales | | $ | 228,067 | | $ | 156,698 | | $ | 71,369 |
| 45.5 | % |
Gross profit | | $ | 147,344 | | $ | 101,533 | | $ | 45,811 | | 45.1 | % |
Gross margin | |
| 64.6 | % |
| 64.8 | % |
|
|
|
| |
Operating income | | $ | 52,606 | | $ | 20,660 | | $ | 31,946 |
| 154.6 | % |
Operating income as % of net sales | |
| 23.1 | % |
| 13.2 | % |
|
|
|
| |
The increased operating income for Tommy Bahama was due to higher sales and royalty income partially offset by increased SG&A and lower gross margin. The increased SG&A was primarily due to (1) $9 million of increased employment costs, (2) $4 million of increased variable expenses related to higher sales, including credit card transaction fees, supplies, commissions, royalties and other expenses, (3)(5) a $2$4 million increase in advertising expense,administrative expenses including professional fees, travel and (4)other items, (6) a $3 million increase in amortization of intangible assets and (7) a $1 million increase in occupancydepreciation expense.
Lilly Pulitzer:Royalties and other operating income
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | |||
Net sales | | $ | 92,045 | | $ | 73,576 | | $ | 18,469 |
| 25.1 | % |
Gross profit | | $ | 63,528 | | $ | 51,185 | | $ | 12,343 | | 24.1 | % |
Gross margin | |
| 69.0 | % |
| 69.6 | % |
|
|
|
| |
Operating income | | $ | 26,178 | | $ | 19,945 | | $ | 6,233 |
| 31.3 | % |
Operating income as % of net sales | |
| 28.4 | % |
| 27.1 | % |
|
|
|
| |
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | |||
Royalties and other operating income | | $ | 8,321 | | $ | 7,013 | | $ | 1,308 |
| 18.7 | % |
Notable items included in amounts above: | | | | | | | | | | | | |
Gain on sale of Merida manufacturing facility | | $ | (1,756) | | $ | — | | | | | | |
Royalties and other operating income typically consists primarily of income received from third parties from the licensing of our brands. Royalties and other operating income in the First Quarter of Fiscal 2023 included a $2 million gain on sale of the Merida manufacturing facility in Mexico previously operated by our Lanier Apparel operating group, which we exited in Fiscal 2021.
2324
Operating income (loss)
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | |||
Tommy Bahama | | $ | 55,521 | | $ | 52,606 | | $ | 2,915 |
| 5.5 | % |
Lilly Pulitzer | |
| 24,516 | |
| 26,178 | |
| (1,662) |
| (6.3) | % |
Johnny Was | | | 2,484 | | | — | | | 2,484 |
| 100.0 | % |
Emerging Brands | |
| 3,913 | |
| 7,736 | |
| (3,823) |
| (49.4) | % |
Corporate and Other | |
| (6,133) | |
| (10,542) | |
| 4,409 |
| NM | % |
Consolidated operating income | | $ | 80,301 | | $ | 75,978 | | $ | 4,323 |
| 5.7 | % |
Notable items included in amounts above: | | | | | | | | | | | | |
LIFO adjustments in Corporate and Other | | $ | 1,326 | | $ | 1,005 | |
|
|
|
| |
Amortization of Johnny Was intangible assets | | $ | 3,463 | | $ | — | | | | | | |
Gain on sale of Merida manufacturing facility | | $ | (1,756) | | $ | — | | | | | | |
Operating income was $80 million in the First Quarter of Fiscal 2023 compared to $76 million in the First Quarter of Fiscal 2022. The increased operating income included (1) a lower operating loss in Corporate and Other, (2) higher operating income in Tommy Bahama and (3) the operating income of Johnny Was. These increases were partially offset by lower operating income for Emerging Brands and Lilly Pulitzer. Changes in operating income (loss) by operating group are discussed below.
Tommy Bahama:
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | |||
Net sales | | $ | 239,435 | | $ | 228,067 | | $ | 11,368 |
| 5.0 | % |
Gross profit | | $ | 158,242 | | $ | 147,344 | | $ | 10,898 | | 7.4 | % |
Gross margin | |
| 66.1 | % |
| 64.6 | % |
|
|
|
| |
Operating income | | $ | 55,521 | | $ | 52,606 | | $ | 2,915 |
| 5.5 | % |
Operating income as % of net sales | |
| 23.2 | % |
| 23.1 | % |
|
|
|
| |
The increased operating income for Tommy Bahama was primarily due to higher sales and gross margin partially offset by increased SG&A. The increased SG&A was primarily due to (1) $4 million of increased employment costs, (2) a $1 million increase in occupancy expenses, (3) a $1 million increase in advertising expense and (4) $1 million of increased variable expenses.
Lilly Pulitzer:
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | |||
Net sales | | $ | 97,450 | | $ | 92,045 | | $ | 5,405 |
| 5.9 | % |
Gross profit | | $ | 68,296 | | $ | 63,528 | | $ | 4,768 | | 7.5 | % |
Gross margin | |
| 70.1 | % |
| 69.0 | % |
|
|
|
| |
Operating income | | $ | 24,516 | | $ | 26,178 | | $ | (1,662) |
| (6.3) | % |
Operating income as % of net sales | |
| 25.2 | % |
| 28.4 | % |
|
|
|
| |
The decreased operating income for Lilly Pulitzer was primarily due to increased SG&A partially offset by higher sales and royalty income partially offset by increased SG&A and lower gross margin. The increased SG&A was primarily due to (1) $3$2 million ofin increased advertising expense, (2) $1 million of increased employment costs and (3) $1 million of increased variable expenses related to higher net sales including credit card transaction fees, suppliesexpenses.
25
Johnny Was:
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | |||
Net sales | | $ | 49,491 | | $ | — | | $ | 49,491 |
| 100.0 | % |
Gross profit | | $ | 33,588 | | $ | — | | $ | 33,588 | | 100.0 | % |
Gross margin | |
| 67.9 | % |
| — | % |
|
|
|
| |
Operating income | | $ | 2,484 | | $ | — | | $ | 2,484 |
| 100.0 | % |
Operating income as % of net sales | |
| 5.0 | % |
| — | % |
|
|
|
| |
Notable items included in amounts above: | | | | | | | | | | | | |
Amortization of Johnny Was intangible assets | | $ | 3,463 | | $ | — | | | | | | |
Operating income for the First Quarter of Fiscal 2023 represents the acquired operations of Johnny Was that were negatively impacted by (1) $3 million of amortization of intangible assets and other expenses, (4)(2) $1 million of professional and other fees, primarily related to various ongoing direct to consumer and brand initiatives, and (5) $1 millioncosts associated with the implementation of higher depreciation expense.a new e-commerce platform.
Emerging Brands:
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | |||
Net sales | | $ | 31,763 | | $ | 22,432 | | $ | 9,331 |
| 41.6 | % |
Gross profit | | $ | 16,348 | | $ | 12,101 | | $ | 4,247 | | 35.1 | % |
Gross margin | |
| 51.5 | % |
| 53.9 | % |
|
|
|
| |
Operating income | | $ | 7,736 | | $ | 4,961 | | $ | 2,775 |
| 55.9 | % |
Operating income as % of net sales | |
| 24.4 | % |
| 22.1 | % |
|
|
|
| |
Notable items included in amounts above: | | | | | | | | | | | | |
Amortization of Southern Tide intangible assets | | $ | 72 | | $ | 72 | |
|
|
|
| |
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | |||
Net sales | | $ | 33,991 | | $ | 31,763 | | $ | 2,228 |
| 7.0 | % |
Gross profit | | $ | 15,632 | | $ | 16,348 | | $ | (716) | | (4.4) | % |
Gross margin | |
| 46.0 | % |
| 51.5 | % |
|
|
|
| |
Operating income | | $ | 3,913 | | $ | 7,736 | | $ | (3,823) |
| (49.4) | % |
Operating income as % of net sales | |
| 11.5 | % |
| 24.4 | % |
|
|
|
| |
| | | | | | | | | | | | |
The increaseddecreased operating income for Emerging Brands was due to higher net sales partially offset by increased SG&A and lower gross margin.margin partially offset by higher net sales. The increased SG&A included (1) higher SG&A associated with the Southern Tide and TBBC retail store operations, including related employment costs, and occupancy costs and administrative expenses, (2) increased variable expenses resulting from increased wholesale sales and (3) higher advertising expense.
Lanier Apparel:
| | | | | | | | | | | | |
|
| First Quarter |
| | | | |
| ||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | |||
Net sales | | $ | — | | $ | 12,019 | | $ | (12,019) |
| (100.0) | % |
Gross profit | | $ | — | | $ | 4,294 | | $ | (4,294) | | (100.0) | % |
Gross margin | |
| — | % |
| 35.7 | % |
|
|
| | |
Operating income | | $ | — | | $ | 855 | | $ | (855) |
| (100.0) | % |
Operating income as % of net sales | |
| — | % |
| 7.1 | % |
|
|
|
| |
Notable items included in amounts above: | | | | | | | | | | | | |
Lanier Apparel exit charges in cost of goods sold | | $ | - | | $ | 458 | | | | | | |
Lanier Apparel exit charges in SG&A | | $ | - | | $ | 815 | | | | | | |
| | | | | | | | | | | | |
We exited the Lanier Apparel business in Fiscal 2021 and thus there was no operating income in the First Quarter of Fiscal 2022. We do not expect any operating income related to the Lanier Apparel business in future periods. The First Quarter of Fiscal 2021 included the operating income resulting from the net sales, cost of goods sold and SG&A as we were exiting the Lanier Apparel business, including the net impact related to Lanier Apparel exit charges, as disclosed in the prior year. Refer to our consolidated financial statements and Management Discussion and Analysis in our Fiscal 2021 Form 10-K for additional information about the Lanier Apparel exit.
Corporate and Other:
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| First Quarter |
| | | | |
|
| First Quarter |
| | | | |
| ||||||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | ||||||
Net sales | | $ | 706 | | $ | 1,037 | | $ | (331) |
| (31.9) | % | | $ | (270) | | $ | 706 | | $ | (976) |
| (138.2) | % |
Gross profit | | $ | (843) | | $ | (2,528) | | $ | 1,685 | | NM | % | | $ | (629) | | $ | (843) | | $ | 214 | | NM | % |
Operating loss | | $ | (10,542) | | $ | (11,528) | | $ | 986 |
| NM | % | | $ | (6,133) | | $ | (10,542) | | $ | 4,409 |
| NM | % |
Notable items included in amounts above: | | | | | | | | | | | | | | | | | | | | | | | | |
LIFO adjustments in Corporate and Other | | $ | 1,005 | | $ | 3,065 | | | | | | | | $ | 1,326 | | $ | 1,005 | | | | | | |
Gain on sale of Merida manufacturing facility | | $ | (1,756) | | $ | — | | | | | | |
24
The improved operating results in Corporate and Other were primarily a result of the(1) a $2 million lower LIFO accounting charge due to a $1 million chargegain on the sale of the Merida manufacturing facility in the First Quarter of Fiscal 2022Mexico and a $3 million credit in the First Quarter of Fiscal 2021. The impact of LIFO accounting was partially offset by increased(2) decreased SG&A, and lower net sales. The increased SG&A was primarily due to increased employment costs and certain general and administration expenses.including decreased incentive compensation amounts.
Interest expense, net
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| First Quarter |
| | | | |
|
| First Quarter |
| | | | |
| ||||||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | ||||||
Interest expense, net | | $ | 242 | | $ | 252 | | $ | (10) |
| (4.0) | % | | $ | 2,342 | | $ | 242 | | $ | 2,100 |
| 867.8 | % |
The comparablehigher interest expense in the First Quarter of Fiscal 2022 and2023 was primarily due to debt utilized to fund a portion of the acquisition of Johnny Was, while there was no debt outstanding in the First Quarter of Fiscal 2021 was primarily due to the absence of debt outstanding in either period.2022. The interest expense in both periodsfor the First Quarter of Fiscal 2022 primarily consisted of unused line fees and amortization of deferred financing fees associated with the U.S. RevolvingPrior Credit Agreement.
26
Income tax provision (benefit)
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| First Quarter |
| | | | |
|
| First Quarter |
| | | | |
| ||||||||
| | Fiscal 2022 |
| Fiscal 2021 | | $ Change |
| % Change | | | Fiscal 2023 |
| Fiscal 2022 | | $ Change |
| % Change | | ||||||
Income tax expense | | $ | 18,328 | | $ | 6,173 | | $ | 12,155 |
| 196.9 | % | | $ | 19,421 | | $ | 18,328 | | $ | 1,093 |
| 6.0 | % |
Effective tax rate | |
| 24.2 | % |
| 17.8 | % |
|
|
|
| | |
| 24.9 | % |
| 24.2 | % |
|
|
|
| |
Both the First Quarter of Fiscal 2023 and Fiscal 2022 and the First Quarter of Fiscal 2021 benefittedbenefited from the net favorable impact of certain items that resulted in a lower effective tax rate than the more typical annual effective tax rate of approximatelybetween 25% and 26%. We expect our annual effectiveThe First Quarter of Fiscal 2023 benefited from changes in uncertain tax rate for Fiscal 2022 to be between 24% and 25%.positions.
The income tax expense in bothfor the First Quarter of Fiscal 2022 and the First Quarter of Fiscal 2021 included the benefit of the utilization of certain net operating loss carryforward amounts in certain state and foreign jurisdictions, the recognition of certain tax credit amounts and the vesting of restricted stock awards at a price higher than the grant date fair value. These favorable items were partially offset by certain unfavorable permanent items which are not deductible for income tax purposes. Additionally, and more significantly, the income tax expense
Net earnings
| | | | | | |
|
| First Quarter | ||||
| | Fiscal 2023 |
| Fiscal 2022 | ||
Net sales | | $ | 420,097 | | $ | 352,581 |
Operating income | | $ | 80,301 | | $ | 75,978 |
Net earnings | | $ | 58,538 | | $ | 57,408 |
Net earnings per diluted share | | $ | 3.64 | | $ | 3.45 |
Weighted average shares outstanding - diluted | |
| 16,071 | |
| 16,622 |
Net earnings per diluted share were $3.64 in the First Quarter of Fiscal 2021 included the benefit of a $2 million net reduction in uncertain tax positions resulting from the settlement of those uncertain tax position amounts.
Net earnings
| | | | | | |
|
| First Quarter | ||||
| | Fiscal 2022 |
| Fiscal 2021 | ||
Net sales | | $ | 352,581 | | $ | 265,762 |
Operating income | | $ | 75,978 | | $ | 34,893 |
Net earnings | | $ | 57,408 | | $ | 28,468 |
Net earnings per diluted share | | $ | 3.45 | | $ | 1.70 |
Weighted average shares outstanding - diluted | |
| 16,622 | |
| 16,792 |
Earnings per share were2023 compared to $3.45 in the First Quarter of Fiscal 2022 compared to $1.70 inreflecting the First Quarter of Fiscal 2021. The higher earnings per share were primarily a result of (1) increased net sales in our Tommy Bahama, Lilly Pulitzer and Emerging Brands operating groups, (2) improved consolidated gross margin, and (3) higher royalty income. These favorable items were partially offset by (1) increased SG&A, (2) a higher effective tax rate and (3) the absence of operating income in Lanier Apparel in the First Quarter of Fiscal 2022 due to the exit of the business in Fiscal 2021.changes noted above.
25
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, Johnny Was, Southern Tide, TBBC and Duck Head lifestyle brands. We primarily distribute our products to our customers via direct to consumer andchannels of distribution, but we also distribute our products via wholesale channels of distribution.
Our primary uses of cash flow include the purchase of our branded apparel products from third party contract manufacturerssuppliers located outside of the United States, as well as operating expenses, including employee compensation and benefits, operating lease commitments and other occupancy-related costs, marketing and advertising costs, distributioninformation technology costs, information technologyvariable expenses, distribution costs, other general and administrative expenses and the periodic payment of interest, if any.interest. Additionally, we use our cash to fund capital expenditures and other investing activities, dividends, share repurchases and repayment of indebtedness, if any. 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 ongoing working capital to operate our business. Our need for working capital is typically seasonal with the greatest working capital requirements generally in the fallto support our larger spring, summer and spring of each year.holiday direct to consumer seasons. Our capital needs depend on many factors including the results of our operations and cash flows, futureanticipated growth rates, the need to finance inventory levels and the success of our various products.
We have a long history of generating sufficient cash flows from operations to satisfy our cash requirements for our ongoing capital expenditure needs as well as payment of dividends and repayment of our debt. Thus, we believe our anticipated future cash flows from operating activities as well as our $166 million of cash, cash equivalents and short-term investments as of April 30, 2022, will provide (1) sufficient cash over both the short and long term to satisfy our ongoing operating cash requirements, and(2) ample opportunityfunds to continue to invest in our lifestyle brands, direct to
27
consumer initiatives and information technology projects, (3) additional cash flow to repay outstanding debt and (4) sufficient cash for other strategic initiatives. Also, if cash inflows are less than cash outflows, we have access to amounts under our U.S.$325 million Revolving Credit Agreement, subject to its terms, which is described below.
Key Liquidity MeasuresWorking Capital
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| April 30, |
| January 29, |
| May 1, |
| January 30, |
|
| April 29, |
| January 28, |
| April 30, |
| January 29, |
| ||||||||
($ in thousands) | | 2022 | | 2022 | | 2021 | | 2021 | | | 2023 | | 2023 | | 2022 | | 2022 | | ||||||||
Total current assets | | $ | 407,912 | | $ | 400,335 | | $ | 308,739 | | $ | 258,316 | | | $ | 327,704 | | $ | 330,463 | | $ | 407,912 | | $ | 400,335 | |
Total current liabilities | | $ | 226,417 | | $ | 226,166 | | $ | 225,090 | | $ | 196,252 | | | $ | 242,046 | | $ | 269,639 | | $ | 226,417 | | $ | 226,166 | |
Working capital | | $ | 181,495 | | $ | 174,169 | | $ | 83,649 | | $ | 62,064 | | | $ | 85,658 | | $ | 60,824 | | $ | 181,495 | | $ | 174,169 | |
Working capital ratio | |
| 1.80 | |
| 1.77 | |
| 1.37 | |
| 1.32 | | |
| 1.35 | |
| 1.23 | |
| 1.80 | |
| 1.77 | |
Our working capital ratio is calculated by dividing total current assets by total current liabilities. Current assets as of April 29, 2023, decreased from April 30, 2022 increased from May 1, 2021 primarily due to increasedthe decrease in cash and cash equivalents and short-term investments, and cash balances, which increased $74 million inwas used to fund a portion of the aggregate, as well asJohnny Was acquisition purchase price, partially offset by increased inventories, receivables, and receivables.prepaid expenses and other current assets, including the assets related to Johnny Was. Current liabilities as of April 30, 202229, 2023 increased from May 1, 2021April 30, 2022 primarily due to higher accrued expenses and otherthe current liabilities partially offset by decreased accrued compensation, current portion of operating lease liabilities and accounts payable.associated with Johnny Was. Changes in current assets and current liabilities are discussed below.
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 as of April 30, 202229, 2023 as compared to May 1, 2021.April 30, 2022.
26
Current Assets:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| April 30, |
| January 29, |
| May 1, |
| January 30, |
|
| April 29, |
| January 28, |
| April 30, |
| January 29, |
| ||||||||
| | 2022 | | 2022 | | 2021 | | 2021 | | | 2023 | | 2023 | | 2022 | | 2022 | | ||||||||
Cash and cash equivalents | | $ | 31,799 | | $ | 44,859 | | $ | 92,086 | | $ | 66,013 | | | $ | 9,712 | | $ | 8,826 | | $ | 31,799 | | $ | 44,859 | |
Short-term investments | | | 134,327 | | | 164,890 | | | — | | | — | | | | — | | | — | | | 134,327 | | | 164,890 | |
Receivables, net | |
| 74,374 | |
| 34,550 | |
| 67,658 | |
| 30,418 | | |
| 81,483 | |
| 43,986 | |
| 72,271 | |
| 31,588 | |
Inventories, net | |
| 122,760 | |
| 117,709 | |
| 108,810 | |
| 123,543 | | |
| 179,608 | |
| 220,138 | |
| 122,760 | |
| 117,709 | |
Income tax receivable | | | 19,741 | | | 19,728 | | | 17,830 | | | 17,975 | | | | 19,442 | | | 19,440 | | | 19,741 | | | 19,728 | |
Prepaid expenses and other current assets | |
| 24,911 | |
| 18,599 | |
| 22,355 | |
| 20,367 | | |
| 37,459 | |
| 38,073 | |
| 27,014 | |
| 21,561 | |
Total current assets | | $ | 407,912 | | $ | 400,335 | | $ | 308,739 | | $ | 258,316 | | | $ | 327,704 | | $ | 330,463 | | $ | 407,912 | | $ | 400,335 | |
Cash and cash equivalents and short-term investments were $32$10 million as of April 29, 2023, compared to $166 million as of April 30, 2022 compared to $92 million as of May 1, 2021. Short-term2022. The decrease in cash and cash equivalents and short-term investments were $134 million as offrom April 30, 2022 with nowas due to the use of cash and short-term investments asto fund a portion of May 1, 2021. The increase in the aggregate short-term investments and cash from May 1, 2021 of $74 million was primarily dueJohnny Was acquisition purchase price, with the remainder funded via borrowings pursuant to our strong cash flow from operations exceeding our cash requirements for capital expenditures, share repurchases and dividends.Revolving Credit Agreement.
The increase inincreased receivables, net as of April 30, 2022 was primarily due to (1) increased wholesale29, 2023 included $8 million of receivables resulting from increased wholesale sales and lower estimated wholesale customer allowances and (2) increased royalty receivables resulting from increased royalties earned during the quarter. These items were partially offset by reductions in amounts due from landlords for certain tenant allowances. associated with Johnny Was.
Inventories, net, which is net ofincluded a $71$76 million and $62$71 million LIFO reserve as of April 29, 2023, and April 30, 2022, and May 1, 2021, respectively,respectively. The increased inventories, net as of April 30, 202229, 2023 included inventories of $17 million associated with Johnny Was. The increase in inventories of our other brands was primarily due to planned increases in inventories for each brand to support the planned(1) anticipated sales growth in each of our brands for the businesses inremainder of Fiscal 20222023, (2) higher levels of core product and as inventory levels in Fiscal 2021 were generally lower than optimal as a result of higher sales than anticipated in Fiscal 2021. These inventory increases were partially offset by (1) the impact of LIFO accounting, including both the $9 million increase in the LIFO reserve primarily due to the impact of the inflationary environment on the LIFO reserve and the recognition of previously deferred inventory markdowns in Corporate and Other as the inventory was disposed, and (2) the absence of inventory in Lanier Apparel as we sold the remaining Lanier Apparel inventory during Fiscal 2021.(3) increased product costs.
Income tax receivable primarily relates to the income tax receivable associated with tax returns for Fiscal 2020, which included the carry back of operating losses to offset taxable income from previous years, with the increase primarily due to the finalization of the Fiscal 2020 income tax returns during Fiscal 2021. The increase in prepaid expenses and other current assets as of April 30, 202229, 2023 was primarily due to increased prepaid advertisingexpenses and other operating expenses as well as increased estimated inventory returns.
Non-current Assets:
| | | | | | | | | | | | | |
|
| April 30, |
| January 29, |
| May 1, |
| January 30, |
| ||||
| | 2022 | | 2022 | | 2021 | | 2021 | | ||||
Property and equipment, net | | $ | 150,393 | | $ | 152,447 | | $ | 157,553 | | $ | 159,732 | |
Intangible assets, net | |
| 155,080 | |
| 155,307 | |
| 155,967 | |
| 156,187 | |
Goodwill | |
| 23,870 | |
| 23,869 | |
| 23,930 | |
| 23,910 | |
Operating lease assets | | | 182,345 | | | 195,100 | | | 221,647 | | | 233,775 | |
Other assets, net | |
| 27,417 | |
| 30,584 | |
| 33,146 | |
| 33,714 | |
Total non-current assets | | $ | 539,105 | | $ | 557,307 | | $ | 592,243 | | $ | 607,318 | |
Property and equipment, net as of April 30, 2022 decreased primarily due to depreciation expense exceeding capital expenditures during the 12 months ended April 30, 2022. Operating lease assets as of April 30, 2022 decreased primarily due to the recognition of amortization related to existing operating leases, the termination or reduced term of certain operating leases and the impairment of certain operating lease assets which exceeded the increased operating leasecurrent assets associated with any new or extended operating lease. The decrease in other assets, net as of April 30, 2022 was primarily due to (1) a $3 million decrease in investment in unconsolidated entities due to the sale of our ownership interest in an unconsolidated entity in Fiscal 2021, (2) a decrease in assets set aside for potential deferred compensation obligations and (3) a reduction in certain deposit payments.Johnny Was.
2728
Non-current Assets:
| | | | | | | | | | | | | |
|
| April 29, |
| January 28, |
| April 30, |
| January 29, |
| ||||
| | 2023 | | 2023 | | 2022 | | 2022 | | ||||
Property and equipment, net | | $ | 181,601 | | $ | 177,584 | | $ | 150,393 | | $ | 152,447 | |
Intangible assets, net | |
| 280,785 | |
| 283,845 | |
| 155,080 | |
| 155,307 | |
Goodwill | |
| 122,056 | |
| 120,498 | |
| 23,870 | |
| 23,869 | |
Operating lease assets | | | 245,099 | | | 240,690 | | | 182,345 | | | 195,100 | |
Other assets, net | |
| 36,985 | |
| 35,585 | |
| 27,417 | |
| 30,584 | |
Total non-current assets | | $ | 866,526 | | $ | 858,202 | | $ | 539,105 | | $ | 557,307 | |
Property and equipment, net as of April 29, 2023, increased primarily due to the addition of $20 million of property and equipment associated with Johnny Was. The additional increase was due to capital expenditures exceeding depreciation since April 30, 2022.
Intangible assets, net and goodwill as of April 29, 2023, increased primarily due to the $135 million of intangible assets, less accumulated amortization, and $97 million of goodwill associated with the acquisition of Johnny Was. Operating lease assets as of April 29, 2023, increased primarily due to the operating lease assets associated with Johnny Was of $53 million. There was an additional increase in operating lease assets associated with new or extended operating leases in our other businesses that exceeded the net impact of amortization of existing operating leases and the termination or reduced term of certain operating leases. The increase in other assets, net as of April 29, 2023, was primarily due to an increase in equity investments in unconsolidated entities including the 2022 $8 million investment in the entity that owns the Tommy Bahama resort.
Liabilities:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| April 30, |
| January 29, |
| May 1, |
| January 30, |
|
| April 29, |
| January 28, |
| April 30, |
| January 29, |
| ||||||||
| | 2022 | | 2022 | | 2021 | | 2021 | | | 2023 | | 2023 | | 2022 | | 2022 | | ||||||||
Total current liabilities | | $ | 226,417 | | $ | 226,166 | | $ | 225,090 | | $ | 196,252 | | | $ | 242,046 | | $ | 269,639 | | $ | 226,417 | | $ | 226,166 | |
Long-term debt | |
| — | |
| — | |
| — | |
| — | | |
| 94,306 | |
| 119,011 | |
| — | |
| — | |
Non-current portion of operating lease liabilities | |
| 185,365 | |
| 199,488 | |
| 226,358 | |
| 239,963 | | |
| 223,167 | |
| 220,709 | |
| 185,365 | |
| 199,488 | |
Other non-current liabilities | |
| 19,600 | |
| 21,413 | |
| 21,270 | |
| 23,691 | | |
| 19,561 | |
| 20,055 | |
| 19,600 | |
| 21,413 | |
Deferred income taxes | | | 2,215 | | | 2,911 | | | 363 | | | — | | | | 7,725 | | | 2,981 | | | 2,215 | | | 2,911 | |
Total liabilities | | $ | 433,597 | | $ | 449,978 | | $ | 473,081 | | $ | 459,906 | | | $ | 586,805 | | $ | 632,395 | | $ | 433,597 | | $ | 449,978 | |
Current liabilities increased as of April 30, 202229, 2023 primarily due to increases in accrued expenses and other current liabilities including anof $27 million associated with Johnny Was. This increase in accrued income taxes of $11 million, estimated direct to consumer returns, gift card liabilities and other accruals. The increase in accrued expenses and other current liabilities was partially offset by decreases in (1) current portionlower accrued income taxes and incentive compensation amounts.
The long-term debt of operating lease liabilities, which$94 million as of April 29, 2023, was primarily due to substantially allborrowing certain amounts to fund a portion of the COVID-related unpaid rent amounts included in the balance asacquisition of May 1, 2021, being paid or otherwise resolved as of April 30, 2022, (2) accrued compensation, which was primarily due to a $5 million reduction in FICA payable as the amounts allowed to be deferred pursuant to the CARES Act in Fiscal 2020 were paid during Fiscal 2021 and a reduction in accrued compensation amounts associated with the exit from Lanier Apparel, as all amounts were paid during Fiscal 2021, and (3) accounts payable, which was primarily due to the timing of payments for payables.
Non-currentJohnny Was. The non-current portion of operating lease liabilities as of April 30, 2022, decreased29, 2023, increased primarily due to $45 million of operating lease liability amounts associated with Johnny Was. This was partially offset by the net impact of the payment of operating lease liabilities and reductions in liabilities related to the termination or reduced term of certain operating leases which exceeded the operating lease liabilities associated with any new or extended operating lease agreements. Other non-current liabilities as of April 30, 2022 decreased primarily due to decreases in deferred compensation liabilities. Deferred income taxes increased as of April 30, 2022 primarily due to timing differences associated with depreciation and amortization partially offset by timing differences associated with inventories and operating lease amounts.leases.
Statement of Cash Flows
The following table sets forth the net cash flows for the First Quarter of Fiscal 20222023 and the First Quarter of Fiscal 20212022 (in thousands):
| | | | | | | | | | | | | | |
| | First Quarter | | | First Quarter | | ||||||||
|
| Fiscal 2022 |
| Fiscal 2021 | |
| Fiscal 2023 |
| Fiscal 2022 | | ||||
Cash provided by operating activities | | $ | 22,480 | | $ | 41,005 | | | $ | 52,557 | | $ | 22,480 | |
Cash provided by (used in) investing activities | |
| 20,720 | |
| (5,425) | | |||||||
Cash (used in) provided by investing activities | |
| (15,534) | |
| 20,720 | | |||||||
Cash used in financing activities | |
| (56,671) | |
| (9,662) | | |
| (36,114) | |
| (56,671) | |
Net change in cash and cash equivalents | | $ | (13,471) | | $ | 25,918 | | | $ | 909 | | $ | (13,471) | |
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Cash and cash equivalents and short-term investments, in the aggregate, were $10 million and $166 million as of April 29, 2023, and $92 million at April 30, 2022, and May 1, 2021, respectively. The increasedecrease in cash and cash equivalents and short-term investments from April 30, 2022 was due to the aggregateuse of cash and short-term investments balance was primarily dueto fund the acquisition of Johnny Was, with the remainder of the purchase price funded via borrowings pursuant to our strong cash flows from operations exceeding our cash requirements for capital expenditures and financing activities.Revolving Credit Agreement. Changes in cash flows in the First Quarter of Fiscal 20222023 and the First Quarter of Fiscal 20212022 related to operating activities, investing activities and financing activities are discussed below.
Operating Activities:
In the First Quarter of Fiscal 20222023 and the First Quarter of Fiscal 2021,2022, operating activities provided $22$53 million and $41$22 million of cash, respectively. The cash flow from operating activities for each period primarily consisted of net earnings for the relevant period adjusted, as applicable, for non-cash activities including depreciation, amortization of intangible assets, equity-based compensation, gain on sale of assets, and other non-cash items as well as the net impact of changes in deferred income taxes and operating assets and liabilities. In the First Quarter of Fiscal 2023 and Fiscal 2022, changes in operating assets and liabilities had a net unfavorable impact on cash flow from operations while indue to the seasonality of our business.
In the First Quarter of Fiscal 20212023, the changesnet change in operating assets and liabilities generally offset.
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was primarily due to an increase in receivables and a decrease in current liabilities that decreased cash flow from operations, partially offset by a decrease in inventories that increased cash flow from operations. In the First Quarter of Fiscal 2022, the net change in operating assets and liabilities was primarily due to an increase in receivables, prepaid expensesinventories, and inventories,prepaids, which all decreased cash flow from operations, partially offset by an increaseoperations. The significant favorable impact in current liabilities, which increased cash flow from operations. In the First Quarter of Fiscal 2021, the net change in operating assets and liabilities2023 was primarily due to sales outpacing inventory purchases and cost increases, which resulted in receivables and other changes, which decreased cash flow from operations, offset by increasesa reduction in current liabilities and decreases in inventories, which increased cash flow from operations.inventory levels during the First Quarter of Fiscal 2023.
Investing Activities:
In the First Quarter of Fiscal 2022 and2023 used $16 million of cash, which primarily consisted of capital expenditures. During the First Quarter of Fiscal 2021,2022, investing activities provided $20 million and used $5$21 million of cash, respectively.cash. During the First Quarter of Fiscal 2022, we converted $30 million of short-term investments to cash based on our short-term cash needs. needs which exceeded the $9 million of capital expenditures.
On an ongoing basis, our cash flow used in investing activities primarily consists of our capital expenditures, which totaled $9 million and $5 million in the First Quarter of Fiscal 2022 and the First Quarter of Fiscal 2021, respectively.
Our cash flow used in investing activities is expected to primarily consist of our capital expenditure investments in information technology initiatives, including e-commerce capabilities; direct to consumer operations, including opening, relocating and remodeling locations; and facilities enhancements for distribution centers and offices. Additionally, cash flow from investing activities will include any amounts contributed to or received from our short-term investment accounts, if any.
Financing Activities:
In the First Quarter of Fiscal 20222023 and the First Quarter of Fiscal 2021,2022, financing activities used $57$36 million and $10$57 million of cash, respectively. During the First Quarter of Fiscal 2023, we used cash to pay $10 million of dividends. In the First Quarter of Fiscal 2022, we used cash flow from operations to repurchase $46 million of shares, including repurchased shares of our stock pursuant to an open market stock repurchase program and of equity awards in respect of employee tax withholding liabilities,liabilities; pay $9 million of dividends and pay $2 million of contingent consideration for the final contingent consideration payment related to the TBBC acquisition, which is includedacquisition.
If net cash requirements are less than our net cash flows, we may repay amounts outstanding on our Revolving Credit Agreement, if any, like we did in other financing activities. In the First Quarter of Fiscal 2021,2023. Alternatively, to the extent we usedare in a net debt position, and our net cash flowrequirements exceed our net cash flows, we may borrow amounts from operations to pay $6 million of dividends, repurchase $3 million of shares, consisting of repurchased shares of equity awards in respect of employee tax withholding liabilities, and pay $1 million of contingent consideration, which is included in other financing activities.our Revolving Credit Agreement.
Liquidity and Capital Resources
We have a long history of generating sufficient cash flows from operations to satisfy our cash requirements for our ongoing capital expenditure needs as well as payment of dividends and repayment of our debt. Thus, we believe our
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anticipated future cash flows from operating activities as well as our $166 million of cash and short-term investments as of April 30, 2022, will provide (1) sufficient cash flows over both the short and long term to satisfy our ongoing operating cash requirements, and(2) ample opportunityfunds to continue to invest in our lifestyle brands, direct to consumer initiatives and information technology projects, (3) additional cash flow to repay outstanding debt and (4) sufficient cash for other strategic initiatives.
Our capital needs depend on many factors including the results of our operations and cash flows, future growth rates, the need to finance inventory levels and the success of our various products.
To the extent cash flow needs for acquisitions or otherwise, in the future exceed cash flow provided by our operations, as well as our cash and short-term investment amounts, we will have access, subject to its terms, to our $325 million U.S. Revolving Credit Agreement to provide funding for operating activities, capital expenditures and acquisitions, if any, and any other investing or financing activities. 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 certain product purchases, which reduce the amounts available under our line of credit when issued and, as of April 30, 2022, totaled $3 million.
We did not have any borrowings outstanding under our U.S. Revolving Credit Agreement during the First Quarter of Fiscal 2022 or at any point during Fiscal 2021. As of April 30, 2022, we had $322 million of unused availability under our U.S. Revolving Credit Agreement. Considering both the $322 million of unused availability under our U.S.
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Revolving Credit Agreement and our cash, cash equivalents and short-term investments in excess of the amounts included in the borrowing base assets of $86 million, our total liquidity position totaled $408 million as of April 30, 2022.
Our cash short-term investments and debt, as well as availability, levels in future periods maywill not be comparable to historical amounts, asparticularly after the completion of the acquisition of Johnny Was in September 2022. We anticipate our debt will be reduced significantly during Fiscal 2023. Further, we continue to assess, and may possibly make changes to, our capital structure, including borrowingswhich we may achieve by borrowing from additional credit facilities, sales ofselling debt or equity securities or the repurchase ofrepurchasing additional shares of our stock in the future. Changes in our capital structure, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
$325 Million Revolving Credit Agreement
On March 6, 2023, we amended the Revolving Credit Agreement. The Revolving Credit Agreement matures in March 2028. As of April 29, 2023, we had borrowings of $94 million, issued standby letters of credit of $7 million, and availability of $224 million under the Revolving Credit Agreement.
Pursuant to the Revolving Credit Agreement, the interest rate applicable to our borrowings under the Revolving Credit Agreement are based on either the Term Secured Overnight Financing Rate plus an applicable margin of 135 to 185 basis points or prime plus an applicable margin of 25 to 75 basis points.
The 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 interest rate of 7% as of April 29, 2023), unused line fees and letter of credit fees based upon average utilization or unused availability, as applicable, (3) requires periodic interest payments with principal due at maturity 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.
The 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 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 Revolving Credit Agreement contains a financial covenant that applies only if excess availability under the agreement for three consecutive business days is less than the greater of (1) $23.5 million or (2) 10% of availability. In such case, our fixed charge coverage ratio as defined in the 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 Revolving Credit Agreement of more than the greater of (1) $23.5 million or (2) 10% of availability for 30 consecutive days.
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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 amendedentered into the U.S. Revolving Credit Agreement. During the First Quarter of Fiscal 20222023 and as of April 30, 2022,29, 2023, no financial covenant testing was required pursuant to our U.S. Revolving Credit Agreement or the Prior Credit Agreement, as applicable, as the minimum availability threshold was met at all times. As of April 30, 2022,29, 2023, we were compliant with all applicable covenants related to the U.S. Revolving Credit Agreement. Refer to Note 5 of our consolidated financial statements included in our Fiscal 2021 Form 10-K for additional information regarding our U.S. Revolving Credit Agreement, including details about affirmative and negative covenants.
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.
Operating Lease Commitments:
Refer to Note 4 in our unaudited condensed consolidated financial statements included in this report for additional information about our operating lease commitments as of April 30, 2022.29, 2023.
Dividends:
On June 6, 2022,5, 2023, our Board of Directors approved a cash dividend of $0.55$0.65 per share payable on July 29, 202228, 2023 to shareholders of record as of the close of business on July 15, 2022.14, 2023. 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 or repurchase shares in the short term 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 our U.S. Revolving Credit Agreement above and in Note 5 of our consolidated financial statements contained in our Fiscal 2021 Form 10-K.
Share Repurchases:
Refer to Note 6 in our unaudited condensed consolidated financial statements and Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds included in this report for additional information about share repurchases.dividends.
Capital Expenditures:
Our anticipated capital expenditures for Fiscal 2022,2023, including the $9$17 million incurred in the First Quarter of Fiscal 2022,2023, are expected to be approximately $50 million. Our ongoing$90 million, as compared to $47 million for Fiscal 2022. The planned increase in capital expenditures primarily consist of costsincludes spend associated with new brick and mortar locations and relocations and remodels of existing locations resulting in a net increase of full price stores of approximately 25 by the end of Fiscal 2023. The spend associated with these brick and mortar locations represents about one-half of the planned capital expenditure amount for 2023. Additionally, we will continue with our investments in informationour various technology systems initiatives, including e-commerce capabilities; directand omnichannel capabilities, data management and analytics, customer data and insights, cybersecurity, automation including artificial intelligence and infrastructure. Finally, we anticipate spend associated with a multi-year project at our Lyons, Georgia distribution center to consumer operations, including opening, relocating and remodeling locations; and facilities enhancementsenhance its direct-to-consumer throughput capabilities for distribution centers
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and offices. Our capital expenditure amounts in future years will fluctuate from the amounts incurred in Fiscal 2022 and prior years depending on the investments we believe appropriate for that year to support future expansion of our businesses.brands.
Other Liquidity Items:
Our contractual obligations as of April 30, 202229, 2023 except for the increased operating lease commitments and increased debt outstanding, both as discussed above, have not changed materially from the contractual obligations outstanding at January 29, 2022,28, 2023, as disclosed in our Fiscal 20212022 Form 10-K. 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 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 in a consistent manner. 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. 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.
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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 materially 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 Fiscal 20212022 Form 10-K. There have not been any significant changes to our critical accounting policies and estimates during the First Quarter of Fiscal 2022.2023. A detailed summary of significant accounting policies is included in Note 1 to our consolidated financial statements contained in our Fiscal 20212022 Form 10-K.
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. As a result, our quarterly operating results and working capital requirements fluctuate significantly from quarter to quarter. Typically, the demand for products for our larger brands is higher in the spring, summer and holiday seasons and lower in the fall season (the third quarter of our fiscal year). Thus, our third quarter historically has had the lowest net sales and net earnings compared to other quarters. Further, the impact of the timing of certain unusual or non-recurring items, economic conditions, the timing of our e-commerce flash clearance sales, wholesale product shipments, weather, acquisitions or other factors affecting our operations may vary from one year to the next. Therefore, due to the potential impact of these items, we do not believe that net sales or operating income by quarter in the First Quarter of Fiscal 2021 are necessarily2023 is indicative of the expected distribution in Fiscal 2022 orproportion of amounts by quarter for future periods, in light of, among other things, the COVID-19 pandemic’s more significant negative impact on the first quarter in Fiscal 2021 than the later quarters in Fiscal 2021.periods.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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 Fiscal 20212022 Form 10-K. There have not been any material changes in our exposure to these risks during the First Quarter of Fiscal 2022.2023 other than our decreased exposure to interest rates resulting from our decreased borrowings relative to January 28, 2023.
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.
Changes in Internal Control over Financial Reporting
There have not been anywere no changes in our internal controlcontrols over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act during the First Quarter of Fiscal 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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 trademark and other intellectual property, licensing arrangements,employee relations matters, real estate, employee relations matters,licensing arrangements, importing or exporting regulations, product safety requirements, taxation or other topics. We are not
33
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 Fiscal 20212022 Form 10-K, 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 not presently known to us may also adversely affect our business. The risks described in our Fiscal 20212022 Form 10-K are not the only risks facing our company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) | During the First Quarter of Fiscal |
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(c) | We have certain stock incentive plans as described in Note 8 of our Fiscal 2022 Form 10-K, 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 First Quarter of Fiscal |
| | | | | | | | | |
| | | | | | | Total Number of | | Dollar Value |
| | | | | | | Shares | | (000s) of Shares |
| | | | Average | | Purchased as | | That May Yet be | |
| | Total Number | | Price | | Part of Publicly | | Purchased Under | |
| | of Shares | | Paid per | | Announced Plans | | the Plans or | |
Fiscal Month |
| Purchased |
| Share |
| or Programs |
| Programs | |
February (1/30/22 - 2/26/22) | | 166,252 | | $ | 84.92 | | 166,252 | | $ 127,523 |
March (2/27/22 - 4/2/22) | | 196,835 | | $ | 86.19 | | 196,835 | | $ 110,557 |
April (4/3/22 - 4/30/22) | | 162,879 | | $ | 91.79 | | 128,074 | | $ 98,791 |
Total | | 525,966 | | $ | 87.52 | | 491,161 | | $ 98,791 |
As disclosed in our Quarterly Report on Form 10-Q for the Third Quarter of Fiscal 2021, and in subsequent filings, on December 7, 2021, our Board of Directors authorized us to spend up to $150 million to repurchaseNo shares of our stock. This authorization superseded and replaced all previous authorizations to repurchase shares of our stock and has no automatic expiration. Pursuant to the Board of Directors’ authorization we entered into a $100 millionwere repurchased through open market stock repurchase program (Rule 10b5-1 plan) to acquire shares of our stock, under which 91,000 shares of our stock were repurchased for $8 million in the Fourth Quarter of Fiscal 2021. Additionally, inprograms during the First Quarter of Fiscal 2022, we repurchased an additional 491,000 shares2023. As of our stock for $43April 29, 2023, $50 million under this open market repurchase program, which are included in the table above. After considering these repurchases, there was $49 million remaining under the open market repurchase program and $99 million remainingremained under the Board of Directors’ authorization as of April 30, 2022.
Additionally, subsequent to April 30, 2022, we repurchased an additional 220,000 shares of our common stock for $19 million under the open market repurchase program, resulting in $30 million remaining under the open market repurchase program as of June 8, 2022.
Also, we have certain stock incentive plans as described in Note 8 to our consolidated financial statements included in our Fiscal 2021 Form 10-K, 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 First Quarter of Fiscal 2022, we repurchased $3 million of shares from employees, which are included in the table above.authorization.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
None
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS
| | |
3.1 |
| |
3.2 | | |
10.1 | | |
31.1 | | |
31.2 | | |
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 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.
| | |
June | OXFORD INDUSTRIES, INC. | |
| | |
| (Registrant) | |
| | |
| /s/ K. Scott Grassmyer | |
| K. Scott Grassmyer | |
| Executive Vice President, Chief Financial Officer and Chief Operating Officer | |
| (Authorized Signatory) | |
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