-- Earnings per Share of $0.59, in line with Quarterly Guidance --
-- Reduces Guidance for Fiscal 2008 to Reflect Increasingly Challenging Environment --
ATLANTA, June 10 /PRNewswire-FirstCall/ -- Oxford Industries, Inc. (NYSE:OXM) today announced financial results for its fiscal 2008 first quarter endedMay 3, 2008. Consolidated net sales were $272.9 million in the first quartercompared to $292.4 million in the same period of the prior year, which was thethree months ended May 4, 2007. Diluted net earnings per common share were$0.59 in the first quarter compared to $0.95 in the same period of the prioryear and were in line with the Company's previously issued guidance range of$0.55 to $0.60.
J. Hicks Lanier, Chairman and Chief Executive Officer of OxfordIndustries, Inc., commented, 'Our first quarter results were consistent withour expectations and, importantly, we were able to exert careful control overour inventory levels during the quarter. In the quarter, we had strong cashflow from operating activities, inventories were down 17% from last year andwe experienced a slight uptick in our overall gross margins. As a result,total debt was reduced by $33 million during the quarter.'
Mr. Lanier continued, 'Unfortunately, as our guidance revision reflects,the external environment has become increasingly challenging. We believe thatit is prudent to assume that we will see continued deterioration in sales inour company-owned retail stores as well as in our wholesale business. We willcontinue to manage our business conservatively with regard to inventory andare reducing expenses across the organization.'
Tommy Bahama reported net sales of $129.3 million for the first quartercompared to $131.8 million in the same period of the prior year. The slightsales decrease was driven by softness in both wholesale sales andcompany-owned retail stores. Tommy Bahama's operating income for the firstquarter was $19.5 million compared to $26.5 million in the same period of theprior year. While gross margins remained strong, the impact of lower salesand increased marketing expenses were the primary factors in the reduction inoperating income. Marketing expenses, largely associated with the spring 2008advertising campaign, were $2.2 million higher in the first quarter comparedto the same period of the prior year. Additionally, the Company noted thatresults were impacted by pre-opening expenses associated with two new cafeemporiums. Pre-opening expenses were $1.0 million higher in the first quartercompared to the same period of the prior year.
Ben Sherman reported net sales of $36.6 million for the first quartercompared to $39.3 million in the same period of the prior year due to theplanned tightening of wholesale distribution in the United Kingdom and ourexit from the Evisu apparel business in the United States. This was partiallyoffset by increased sales outside the United Kingdom and United States, aswell as at company-owned stores. Operating income for Ben Sherman was $0.3million in the first quarter compared to $1.7 million in the same period ofthe prior year. The reduction in operating income was primarily due toexpense de-leveraging on the lower sales.
Net sales for Lanier Clothes were $38.7 million in the first quartercompared to $42.7 million reported in the same period of the prior year. Forthe quarter, Lanier Clothes reported breakeven operating results compared toan operating income of $1.4 million in the same period of the prior year. Thereduction in operating income was due to lower sales and gross margins causedby continued weak demand for branded tailored clothing, particularly in thedepartment store channel of distribution
Oxford Apparel reported net sales of $68.7 million for the first quarter,down 12.4% from $78.4 million in the same period of the prior year. Operatingincome for Oxford Apparel was $5.3 million for the first quarter compared to$7.3 million in the same period of the prior year. Oxford Apparel continuedto focus on key product categories and exiting certain underperforming linesof business resulting in a planned reduction in sales. The Company noted thatlast year's operating income benefited from a one time $2.0 million gain onthe sale of the Company's Monroe, GA facility.
The Corporate and Other expenses decreased to $5.0 million for the firstquarter from $5.9 million in the same period of the prior year. The decreasewas primarily due to the impact of severance expenses recognized in the sameperiod of the prior year.
Consolidated gross margins for the first quarter increased to 42.6% from41.2% in the same period of the prior year. The improvement in gross marginwas driven primarily by a higher proportion of Tommy Bahama and Ben Shermansales, which generally have higher margins than Lanier Clothes and OxfordApparel. Year over year gross margins improved in both Tommy Bahama and BenSherman.
Selling, general and administrative expenses, or SG&A, for the firstquarter increased to $99.6 million, or 36.5% of net sales, from $93.5 million,or 32.0% of net sales, in the same period of the prior year. The increase inSG&A was due primarily to increased investment in the Tommy Bahama brandincluding the operation of additional retail stores, the spring 2008advertising campaign and higher pre-opening expenses associated with two newcafe emporiums, which opened in March and May.
Royalties and other operating income for the first quarter was $4.2million compared to $5.6 million in the same period of the prior year.Royalty income increased moderately at Tommy Bahama and Ben Sherman. Lastyear's royalties and other operating income results were favorably impacted bythe above mentioned $2.0 million gain on the sale of the Company's Monroe, GAfacility.
As previously announced, the Company entered into a $60 millionaccelerated share repurchase agreement on November 8, 2007 to purchase sharesof its common stock. The share repurchase, funded through borrowings underthe Company's revolving credit facility, was completed in May 2008.
