US: Oxford Industries cuts FY outlook despite Q3 profit
- Q3 profit jumped 85.3% to $3m
- Sales up 7% to $181.4m
- Gross margin improved to 53.4% against 52.1%
- Company cuts full-year earnings guidance
Clothing manufacturer Oxford Industries has cut its full-year earnings target, blaming a "disappointing performance" at its Ben Sherman brand, and the impact of Hurricane Sandy.
The lower forecast came despite an 85.3% jump in third-quarter net profit, which rose to US$3m for the three months to 27 October, up from $1.6m the same period last year. Net sales increased 7% to $181.4m, compared to $170.3m the prior year.
Tommy Bahama sales rose 12% to $103.2m, against $92.5m the year before, due to increases in all distribution channels and gains in e-commerce. Lilly Pulitzer saw sales surge 62% to $26.9m, compared to $16.7m last year, driven by rises in all distribution channels.
Meanwhile, Ben Sherman posted a 21.4% fall in third-quarter sales to $19.8m, compared to $25.2m last year. Mis-steps in merchandise mix, coupled with difficult economic conditions in Europe and the brand's exit from certain moderate-tier wholesale accounts in the UK, resulted in the decline.
Sales of Lanier Clothes dropped 17.8% to $27.2m against $33.1m the same period last year. The brand was impacted by a slowdown in the intake rate on replenishment programmes by a key customer. Lanier Clothes benefited from initial shipments related to a new product launch the same period last year.
Gross margin improved to 53.4% against 52.1% the year before. The clothing maker attributed the increase to the sales mix continuing to shift towards the company's higher gross margin Tommy Bahama and Lilly Pulitzer businesses, and a higher percentage of direct to consumer sales.
CEO and chairman J Hicks Lanier said: "Our growth continues to be driven by strong sales increases at Tommy Bahama and Lilly Pulitzer and we are pleased that early holiday results at both of these brands have been strong."
"Despite the good performances of these businesses, our overall results for the third quarter were negatively impacted by Ben Sherman's disappointing performance, which has continued into the fourth quarter.
"We also are experiencing a fourth-quarter impact from Hurricane Sandy, which delayed the opening of our high-profile Tommy Bahama bar and restaurant in New York and affected 24 of our other stores to varying degrees. Additionally, we have experienced delayed openings for our Hong Kong and Chicago stores."
Oxford Industries has lowered its full-year earnings guidance because of the ongoing challenges at Ben Sherman as well as store opening delays at Tommy Bahama and the impact of Hurricane Sandy.
The company now expects adjusted earnings from continuing operations per share to range from $2.60 to $2.70, compared to previous guidance of between $2.85 to $2.95. Net sales are forecast to be $845-$855m, compared to earlier guidance of $850-$865m.
Tommy Bahama, a wholly-owned subsidiary of Oxford Industries, is set to acquire the brand's Canadian operations from licensee the Jaytex Group, as part of ongoing expansion efforts....
Oxford Industries has appointed Mark Maidment as CEO of its Ben Sherman brand. ...
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