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How Can Oxford Earnings Keep Soaring?

By Dan Caplinger - Sep 7, 2013 at 6:15PM

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The apparel company has benefited from its casual focus, but can Oxford earnings keep growing at their fast pace?

Oxford Industries (OXM -1.72%) will release its quarterly report on Tuesday, and investors have stayed optimistic about the apparel company's prospects, bidding the shares to all-time record highs in the past few months. With expectations for growth in Oxford earnings so high, though, investors need to be careful not to let the company's stock price get ahead of its fundamental business prospects.

Oxford Industries offers a wide variety of apparel in both branded and private-label lines, with brands including Tommy Bahama for sportswear, women's clothing line Lilly Pulitzer, and Oxford Golf apparel for golfers. The company has also licensed brands such as Dockers and Kenneth Cole, and it has taken its own company-owned brands to license their names for a variety of other products ranging from accessories to home fashions and personal-care products. Let's take an early look at what's been happening with Oxford Industries over the past quarter and what we're likely to see in its report.

Stats on Oxford Industries

Analyst EPS Estimate

$0.98

Change From Year-Ago EPS

51%

Revenue Estimate

$243.48 million

Change From Year-Ago Revenue

18%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Can Oxford earnings growth keep up the pace this quarter?
Analysts have been guardedly optimistic about Oxford earnings in recent months, adding $0.03 per share to their July quarter estimates and $0.02 per share to their full-year projections. The stock, though, has been stuck in neutral, with flat performance since early June.

Oxford has undergone a long-term shift that has paid big dividends for investors over the past several years. Traditionally, Oxford focused more on tailored clothing, and that segment has been a tough one lately, with upscale-clothing retailers Men's Wearhouse (TLRD) and Jos. A Bank (NASDAQ: JOSB) fighting hard against the trend away from more formal clothing toward casualwear. For Oxford's part, its move toward its lifestyle brands have given it new life outside the formalwear segment, and that has helped drive long-term growth and stock-price appreciation.

Yet Oxford's earnings growth took a hit during its previous quarter, with the company reporting a 24% decline in net income in its April quarter. But the company managed to post modest revenue growth of just over 1%, with its key Tommy Bahama and Lilly Pulitzer lines helping to make up for weaker results in some of its other brand offerings. Oxford said it would continue to invest in those top brands going forward, with plans for international expansion potentially driving future growth.

With the key back-to-school season upon us, Oxford is working to boost its sales opportunities. Last month, the company chose to use tech giant SAP's (SAP -0.60%) Hybris suite of commerce support products to help it boost its already-growing online business. With the ability to add in-store kiosks to its existing Internet presence, Oxford's Tommy Bahama stores hope that giving their customers as many ways to buy as possible will help increase revenue.

In the Oxford earnings report, watch to see whether the company's ancillary brands can start pulling their own weight rather than holding back growth in Tommy Bahama and other key lines. Without solid gains from all of its businesses, it'll be hard for Oxford Industries to produce the earnings growth that investors want to see from the apparel company.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Oxford Industries, Inc. Stock Quote
Oxford Industries, Inc.
OXM
$98.80 (-1.72%) $-1.73
SAP Stock Quote
SAP
SAP
$93.76 (-0.60%) $0.57
Tailored Brands, Inc. Stock Quote
Tailored Brands, Inc.
TLRD

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