Shares of Oxford Industries (OXM 0.17%) looked stylish on Thursday morning. The company behind popular clothing brands like Tommy Bahama and Duck Head reported mixed second-quarter results on Wednesday evening. That was good enough to lift Oxford's stock as much as 23.3% in the early morning session.
The numbers weren't pretty, but they could have been worse
Oxford's second-quarter sales fell 4.1% year over year to $403 million. On the bottom line, adjusted earnings fell from $2.77 to $1.26 per diluted share.
These sharp drops look out of place next to the resulting surge in Oxford's stock price, but investors were prepared for an even worse report -- the analyst consensus called for earnings of roughly $1.18 per share and sales near $406 million. Oxford breezed past the earnings target and set the midpoint of its full-year guidance range firmly above current Street views. The small revenue miss was forgivable in that context.
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Don't call it a comeback -- Oxford has a long way to go
This price jump wasn't exactly a victory march. It's just a welcome recovery from a deep plunge. Even now, Oxford's stock is down 39% over the last 52 weeks. The stock trades at bargain-bin valuations such as 13.7 times earnings and 0.5 times sales, because the financials don't look great.
And I wouldn't call this report a game changer. Oxford simply reiterated its sales and earnings guidance for fiscal year 2025. Lower analyst projections indicate widespread pessimism around Oxford's business forecasting skills.
The company is taking on debt to finance its dividends and store openings. I appreciate the courage to take ambitious steps while store traffic is fading. But Oxford Industries is a pretty clear turnaround effort at this point, and those don't always work out. I'm content to watch this drama from the sidelines.
