Oxford Not Quite a Custom Fit Yet

I doubt I'm the only one out there who finds the process of buying (and then wearing) new clothes to be a little less than fun (at least, I'm not the only one among the men out there). Sure, things fit fine and look snazzy in the store, but there inevitably follows that period of trying to get comfortable and break in the goods so that they fit you more comfortably.

Perhaps that's a good analogy for what's going on at apparel maker Oxford Industries (NYSE: OXM  ) as the company continues to transform itself from a faceless, behind-the-curtain apparel supplier into more of a brand-oriented company with its own retail outlets.

And like most transitions, there are occasional bumps in the road. For the company's fiscal third quarter, sales were up just 2%. Helping counteract that to some extent, margins expanded, and both reported operating income and net income would have been stronger if not for expenses related to the closure of four company manufacturing facilities in the Caribbean basin.

On the good news side of the ledger, Tommy Bahama is still doing well, with total sales up nearly 8% this quarter, branded sales up 10%, and operating income up 46%. Womenswear also did reasonably well, with sales up 2.5% and operating income up 18%. More business from Target (NYSE: TGT  ) certainly helped.

The problem child, once again, was the menswear group -- and more specifically, Ben Sherman. Sales with this line dropped 17% as the company seems to be realizing that turning this brand/business around is going to be a little more involved than previously hoped.

As I mentioned, this is a company still in the midst of a transition. While huge retailers like Target and Wal-Mart (NYSE: WMT  ) will still be major customers for the time being, as well as other retailers like Kohl's (NYSE: KSS  ) and Nordstrom (NYSE: JWN  ) , the company is certainly trying to build up both its own branded business and its own distribution, as it continues to open new retail stores of its own.

There's certainly risk in this approach -- not all retailers like to see their suppliers competing with them, and opening new stores sucks up cash. Then there's the risk to the stock from the possibilities that (1) the new strategy may fail, and (2) analysts and investors may be slow to recognize the "new" Oxford and price the stock accordingly.

While I like the company's direction and think things are a little better than they look, the price still isn't yet at the level I'd like it to be. When it comes to clothes and stocks alike, I demand a bargain before I'm ready to buy.

For more garment-related Foolishness, try these on for size:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).

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