If palm-tree prints are your thing -- and judging from the latest results from Oxford Industries'
Like the fluorescent colors typically found on a Hawaiian shirt, the Tommy Bahama segment was Oxford's one bright spot this past quarter. It was the only one that saw sales increases and growth in operating income as a result of higher sales volume. Sales for the division rose about 10%, and operating profits were up by nearly 13% as Oxford increased the number of stores to 66 from 58 a year ago.
But that wasn't enough to offset the slide in sales in the clothier's other divisions, which fell 3% overall to $267 million on lower sales volume in men's tailored clothing. Menswear, which accounts for 55% of total revenue, was off 12% as the Ben Sherman line of business struggled to recover. And while the average unit price rose for the division, it was offset by decreases in unit volume shipments. This caused operating income to plummet by 59%.
Any progress the company was reporting last year seems to have begun to unravel, considering the lower receivables and higher inventory levels. They both resulted from lower sales, although a certain amount of the inventory increase was due to strong Tommy Bahama sales -- the company stockpiled some of these flamingo pink shirts in advance of expected higher demand.
Despite the stellar results of the Tommy Bahama line, the outlook for the rest of the business looks cloudy. Management has reduced its expectations for the fourth quarter and forecasts earnings in the range of $1.00 to $1.07 per share. That's dialing down expectations 14% from the $1.17- to $1.25-per-share forecast previously issued.
Although the menswear industry found a warmer December a problem for selling its winter wares, Jos. A. Bank
Having shed its women's-apparel business, Oxford needs to now strengthen the Ben Sherman line to complement Tommy Bahama. Ben Sherman hasn't been performing particularly well since its 2004 acquisition and last year contributed to lower operating profits and margins, much like this time around also. Oxford hasn't quite found the right fit for this business, perhaps because of its British roots.
Then again, who would have guessed that pastel palm trees would have been a hit?