Oxford Industries Q2 2026 Earnings Call Transcript

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Provided by Quartr
September 10, 2025

Key Takeaways

  • Positive Sentiment: Oxford delivered Q2 net sales of $403 million and adjusted EPS of $1.26, coming in within top-line guidance and above bottom-line expectations despite tariff and promotional pressures.
  • Positive Sentiment: Lilly Pulitzer posted positive direct-to-consumer comparable sales, and the early response to the limited-edition Vintage Vault capsule exceeded expectations, underscoring strong brand engagement.
  • Negative Sentiment: Tommy Bahama comps were down high single digits in Q2 as spring assortments missed mark, though revised color assortments and the new Boracay Island Chino have driven high sell-throughs in late-summer deliveries.
  • Negative Sentiment: Johnny Was continued to underperform with low double-digit negative comps, prompting a comprehensive plan to overhaul merchandising, marketing, and pricing to restore momentum.
  • Neutral Sentiment: The company mitigated roughly half of an estimated $80 million tariff headwind through supply-chain shifts and accelerated receipts, helping limit Q2 gross margin contraction to 160 bps at 61.7%.
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Earnings Conference Call
Oxford Industries Q2 2026
00:00 / 00:00

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Operator

Welcome to Oxford Industries, Inc.'s second quarter fiscal 2025 earnings conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Brian Smith. Thank you. You may begin.

Brian Smith
Brian Smith
Head of Corporate Controls and Financial Reporting at Oxford Industries

Thank you and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results of operations or financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our Form 10-K. We undertake no duty to update any forward-looking statements. During this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at OxfordInc.com.

Brian Smith
Brian Smith
Head of Corporate Controls and Financial Reporting at Oxford Industries

I would like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmyer, CFO and COO. Thank you for your attention. I would like to turn the call over to Tom Chubb.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Good afternoon and thank you for joining us today. As we continue through fiscal 2025, the second quarter brought complex but clarifying developments in the story we began sharing with you last quarter. While the macroeconomic environment remains pressured, marked by higher tariffs, elevated promotional activity across the industry, and cautious consumer behavior, our team has navigated these challenges with discipline and focus, delivering net sales and adjusted EPS within and above our guidance ranges, respectively. Though down from the prior year, these results reflect our ability to adapt to dynamic market conditions while staying true to who we are as a company and maintaining the strength of our brands and margin profile.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Looking at our recent performance by brand, Lilly Pulitzer continued its deep connection with its core consumer in the second quarter and posted positive direct-to-consumer total comparable sales, building on the strong engagement we saw in the first quarter. A key contributor to this momentum in the second quarter was delivering exciting innovation in our casual product, including the linen sea spray jacket that sold out in all colors and extending our offering of elevated everyday product, including polished shorts, silk tops, and new stretch twill pants that all performed extremely well. Continuing the theme of engaging the brand's most loyal customers, early in the third quarter, Lilly Pulitzer launched the highly anticipated Lilly’s Vintage Vault, which debuted Lilly Zoo, a reproduction of a beloved archival print from 1974 in its original colorway.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

This limited edition capsule is the first in a series exploring Lilly's hand-painted print legacy as the brand embarks on a new celebration of its treasured heritage, drawing in Lilly loyalists and new customers alike. While still early, the initial response to the Vintage Vault has exceeded expectations and affirms the power of heritage storytelling and brand authenticity, cornerstones of Lilly Pulitzer's enduring success. Turning to Tommy Bahama. While our second quarter results did not meet our goals for the brand, we are energized by the work underway to improve performance. As always, our teams have leaned in, spending time in the field, listening to our customers, and digging into the data to understand what's driving the softness. What we've learned is encouraging because it's actionable.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

We've identified that some spring and early summer deliveries missed the mark in several areas, most notably in color assortment and completeness of the line, which led to gaps in the offering that are especially relevant to our customer in Florida, where performance continues to be below our expectations. By contrast, we saw better results in the West, where the assortment resonated more effectively with the regional aesthetic. These insights galvanized our team, and we quickly implemented improvements for late summer deliveries to ensure the products available to our customers are more thoughtfully curated and locally relevant. Tommy Bahama is a brand with exceptional consumer loyalty and a deeply resonant lifestyle message. With the right adjustments, we are confident we can re-accelerate performance and re-engage our customer in a more meaningful way in the second half and beyond.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

A great example of what's working is the recent launch of the Boracay Island Chino. This updated pant, which builds on the incredible equity we've established in the original Boracay collection, comes with a higher price point of $158, but that hasn't slowed down demand in the slightest. We have experienced very high sell-throughs across our own direct-to-consumer channels and also with our wholesale partners who have increased recent orders based on early success. We knew going in that the Boracay guest is incredibly loyal once they find a fit they love, and this product has tapped directly into that loyalty. It delivers the comfort, versatility, and polish that defines the Tommy Bahama lifestyle, and it does so in a way that's clearly resonating with existing and new customers.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

We will launch new versions of this pant, including a five-pocket version and shorts in our upcoming seasons to capitalize on this momentum. Turning to Johnny Was, we continue to face headwinds, and the business remains challenged in the second quarter. While the numbers are not where we want them to be, we remain confident in the potential of Johnny Was and are taking further action. Working closely with both internal teams and external partners, we have developed and are in the early stages of implementing a comprehensive plan to improve Johnny Was's performance. We see meaningful opportunity to enhance the merchandising strategy, elevate brand storytelling and marketing, and refine our approach to customer segmentation and pricing. Our goal is to reestablish momentum in this beautiful, differentiated brand and ensure it contributes meaningfully to Oxford's portfolio.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

To that end, we believe that the best days for Johnny Was still lie ahead. I also want to take a moment to acknowledge the performance of our Emerging Brands Group, which delivered solid revenue growth both from new stores and positive comp store sales in what remains a highly challenging environment. These brands, Southern Tide, The Beaufort Bonnet Company, Duck Head, and Jack Rogers, are still in the early stages of their development within our portfolio and yet continue to demonstrate strong customer appeal and brand momentum. The growth we're seeing reinforces our belief that there are significant growth opportunities ahead, and we are excited about the opportunity to build these brands into even more meaningful contributors in the years to come. Switching gears to our tariff mitigation plans and capital projects, we said last quarter that we would continue to control what we can, and we have.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Our teams have made significant progress mitigating tariff exposure through continued supply chain shifts and facilitating the early delivery of products to avoid tariff increases, and our gross margins, though under some pressure versus last year, reflect that discipline. We've also taken steps to safeguard profitability by enhancing inventory management and maintaining pricing integrity, even in a more promotional retail environment. At the same time, we remain committed to completing the long-term investments we have underway that will serve us well beyond this fiscal year. Our Lions, Georgia distribution center is on schedule and continues to receive the necessary capital to bring it fully online sometime late in fiscal 2025 or early fiscal 2026. We also remain on track to deliver three new Marlin Bar openings and a net increase of approximately 15 full-price stores across our portfolio by year-end.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

While the environment remains dynamic, I'm encouraged by what we're seeing early in the third quarter. Scott will provide more details on our financial results and outlook for the remainder of the year. Total company comp sales quarter to date are modestly positive in the low single-digit range, a clear signal that the work our teams are doing to refine the assortments, improve storytelling, and reconnect with our consumers is beginning to pay off. These are the kind of results that come from listening closely, adjusting thoughtfully, and executing with discipline. There is no doubt that this is a challenging period for our industry, but we believe that our portfolio of differentiated lifestyle-driven brands, led by our exceptional teams, is uniquely positioned to weather the volatility.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

As we move into the second half, we are doubling down on the brand equity we've built, keeping our eyes on the long-term horizon while managing short-term headwinds with resolve. We remain confident that our continued focus on execution, brand authenticity, and customer happiness will allow us to emerge from this cycle stronger with even deeper connections to our customers. Now, I'll hand it over to Scott for more details on our second quarter results as well as our expectations for the balance of the year. Scott?

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Thank you, Tom. As Tom mentioned, our teams have shown great discipline and resilience in responding to unprecedented uncertainty and challenges related to trade and tariff developments in the first half of the year. Despite these challenges, our teams were able to deliver top-line results within our previously issued guidance range and bottom-line results slightly above our previously issued guidance range for the second quarter. In the second quarter of fiscal 2025, consolidated net sales are $403 million compared to sales of $420 million in the second quarter of fiscal 2024 and near the midpoint of our guidance range of $395 to $415 million. Sales in our full-price brick-and-mortar locations were down 6%, driven by a negative comp of 7%, partially offset by the addition of new store locations. Sales in our wholesale channel were down 6%, while e-commerce sales declined 2%, and sales in our outlet locations decreased 4%.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Sales in our food and beverage locations performed better than our other channels with modest sales growth year over year. Overall, we finished the second quarter of fiscal 2025 with a total company comp of negative 5%, which was in line with our guidance for the quarter. Notably, Lilly Pulitzer had another strong quarter. While total sales at Lilly Pulitzer were down modestly compared to the prior year, the decline was driven by lower sales in our wholesale channel, partially offset by a low single-digit positive comp. The positive comp sales at Lilly Pulitzer, along with positive comp sales and overall sales growth in our emerging brands businesses, helped offset the high single-digit negative comp at Tommy Bahama and low double-digit negative comp at Johnny Was that led to sales declines in both businesses.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Adjusted gross margin contracted 160 basis points to 61.7%, driven by approximately $9 million of increased cost of goods sold from additional tariffs implemented in fiscal 2025, net of mitigation efforts, which was partially offset by improved gross margins during promotional events at Tommy Bahama, a change in sales mix with full-price retail and e-commerce sales representing a higher proportion of net sales at Lilly Pulitzer and Johnny Was, and a change in sales mix with wholesale sales representing a lower portion of net sales. Without the impact of the incremental tariffs, our gross margins would have increased.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Adjusted SG&A expenses increased 5% to $224 million compared to $213 million last year, with approximately $4 million or 40% increase due to increases in employment cost, occupancy cost, and depreciation expense due to the opening of 26 net new brick-and-mortar retail locations, including three new Tommy Bahama Marlin Bars since the second quarter of fiscal 2024. This includes the 11 net new stores, including two Tommy Bahama Marlin Bars opened in the first half of fiscal 2025. We also incurred pre-opening expenses related to some planned new stores, including an additional Tommy Bahama Marlin Bar scheduled to open in the fourth quarter. The result of this yielded a $28 million adjusted operating profit or 7% operating margin compared to $57 million operating profit or 13.5% operating margin in the prior year.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

The decrease in adjusted operating income reflects the impact of our investments in a challenging consumer and macroeconomic environment. Moving beyond operating income, our adjusted effective tax rate of 29.6% was higher than we anticipated due to certain discrete items, most notably from the unfavorable impact on tax expense related to the annual vesting of stock-based awards during the quarter, which occurs when the stock vests at a price lower than the price expensed for both purposes. Interest expense was $1 million higher compared to the second quarter of fiscal 2024, resulting from higher average debt levels. With all this, we ended with $1.26 of adjusted net earnings per share. I'll now move on to our balance sheet, beginning with inventory.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

During the second quarter of fiscal 2025, the inventory increased $27 million or 19% on a LIFO basis and $29 million or 13% on a FIFO basis as compared to the second quarter of 2024, with inventory increasing in all of our operating groups except Johnny Was, primarily due to the impacts associated with the U.S. tariffs that were implemented in the first half of 2025, including accelerated purchases of inventory that were implemented to try to minimize the impact of potential pending tariff increases and $5 million of increased costs capitalized into inventory after the implementation of the tariffs. Notably, as the tariff situation has stabilized to a degree, at least compared to the beginning of the fiscal year, we expect our inventory levels to decrease during the remainder of the year, excluding any additional capitalized tariff cost as the need to accelerate inventory purchases subsides.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

We ended the quarter with long-term debt of $81 million compared to $118 million last quarter and $31 million at the end of fiscal 2024. Cash flow from operations provided $80 million in the first half of fiscal 2025 compared to $122 million in the first half of 2024, driven primarily by lower net earnings, changes in working capital needs, including accelerated inventory purchases, and $15 million of expenditures related to implementation costs associated with cloud computing arrangements that are classified as operating cash outflows. We also had $55 million of share repurchases, capital expenditures of $55 million, primarily related to the Lions, Georgia distribution center project and the addition of new brick-and-mortar locations, and $21 million of dividends that led to an increase in our long-term debt balance since the beginning of the year. I'll now spend some time on our updated outlook for 2025.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Comp sales figures in the third quarter to date are positive in the low single-digit range, also consistent with our expectations. With comp sales figures in the second quarter and third quarter to date consistent with our previously provided guidance and several of the third quarter's most important events, including the Tommy Bahama Friends and Family sale behind us, we feel confident in affirming our previously issued guidance for the remainder of the year. Consistent with our previously issued guidance, we expect the trends of flat to modestly positive comp sales to continue for the remainder of the third quarter and for the fourth quarter. For the full year, net sales are expected to be between $1.475 billion and $1.515 billion, reflecting a decline of 3% to just slightly negative compared to sales of $1.52 billion in fiscal 2024.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Our sales plan for the full year of 2025, consistent with our previously issued guidance, includes decreases in our Tommy Bahama and Johnny Was segments, driven primarily by negative comps. That decline is expected to be tempered by growth in our Lilly Pulitzer and emerging brand segments, driven by positive comps and new store locations. By distribution channel, the sales plan consists of a low single-digit decrease in e-commerce and wholesale sales, partially offset by a low to mid-single-digit increase in our food and beverage channel that will benefit from the addition of three new Marlin Bar locations during the year. We expect flat sales in both full-price retail and outlet channels, with modest negative comps offset by the addition of approximately 15 net new locations during the year.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

For fiscal 2025, we continue to expect gross margin to contract by approximately 200 basis points, largely due to the impact of tariffs, with the recent tariff increases announced during the second quarter, including increased tariffs in countries like Vietnam and India that were included as part of our shift away from China, largely offset by the mitigation efforts we have undertaken, including accelerated inventory receipts and quickly shifting our sourcing network. Despite recent legal challenges, our current forecast is based on the assumption that these tariffs will remain in place for the remainder of the year. Based on current tariff policies and our historical 2024 sourcing patterns, we estimated a potential incremental tariff exposure of approximately $80 million in fiscal 2025 prior to any mitigation actions, such as accelerated receipts, sourcing shifts, vendor concessions, or price increases.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

By accelerating receipts and sourcing shifts, we were able to mitigate roughly half of this exposure. Through additional vendor concessions and select second-half price increases, our current annual guidance reflects a net tariff impact of approximately $25 million to $35 million, or approximately $1.25 to $1.75 per share after tax. While tariffs represent the primary driver of margin contraction this year, we also expect continued promotional activity across our brands to weigh on margins as consumers remain highly responsive to value and deal-oriented shopping in the current environment.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

In addition to lower sales and gross margins, we expect SG&A to grow in the mid-single-digit range, primarily due to the impact of our recent and continued investments in our business, including the annualization of incremental SG&A from the 30 net new locations added during fiscal 2024 and incremental SG&A related to the addition of approximately 15 net new locations in fiscal 2025, including three new Tommy Bahama Marlin Bars, including the two opened in the first quarter and a third planned to open on the Big Island of Hawaii late this year. Also, within operating income, we expect lower royalties and other income of approximately $1 million in fiscal 2025. Additionally, our fiscal 2025 guidance includes the unfavorable impact of non-operating items, including $7 million of interest expense compared to $2 million in 2024, or an approximate $0.20 to $0.25 incremental EPS impact.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Increased debt levels in fiscal 2025 are due to our continued capital expenditures on the Lions, Georgia distribution center, technology investments, and return of capital to shareholders exceeding cash flow from operations. We also expect a higher adjusted effective tax rate of approximately 26% to 27% compared to 20.9% in 2024. The higher tax rate is primarily a result of a significant change in the impact that our annual stock vesting had on stock compensation expense in 2025 compared to 2024. We anticipate the higher tax rate will result in approximately $0.20 to $0.25 per share impact. Considering all these items, including the $1.25 to $1.75 impact from tariffs, higher interest expense, and a higher tax rate, we still expect 2025 adjusted EPS to be between $2.80 and $3.20 versus adjusted EPS of $6.68 last year.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

In the third quarter, we expect sales of $295 million to $310 million compared to sales of $308 million in the third quarter of 2024. This primarily reflects a high single-digit decline in wholesale sales, offset by our flat to low single-digit positive comp assumption and the impact from non-comp stores. We also expect gross margin to contract approximately 300 basis points, primarily driven by increased tariffs and a higher proportion of net sales occurring during promotional and clearance events. SG&A to grow in the low to mid-single-digit range, primarily related to the new store locations, increased interest expense of $1 million, flat royalty and other income, and an effective tax rate of approximately 25%. We expect this to result in third-quarter adjusted loss per share of between $1.05 and $0.85 compared to a loss of $0.11 in the third quarter of 2024.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

I will now discuss our CapEx outlook, capital expenditure outlook for the remainder of the year, largely consistent with our prior guidance. We expect capital expenditures for the year to be approximately $121 million compared to a total of $134 million in fiscal 2024. The remaining capital expenditures relate to completing the new distribution center in Lions, Georgia, and the execution of our pipeline of new stores and Tommy Bahama Marlin Bars, including increases in store count across Tommy Bahama, Lilly Pulitzer, Southern Tide, and The Beaufort Bonnet Company. We expect this elevated capital expenditure level to moderate significantly in 2026 and beyond after the completion of the Lions, Georgia project. Consistent with the seasonal nature of our business, we expect an increase in outstanding borrowings as we head into the third quarter, which is typically our smallest quarter of the year.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Due to our lower net earnings during fiscal 2025, elevated levels of capital expenditures, share repurchases completed in the first half of 2025, payment of our dividend, and working capital needs, we expect to remain in a debt position for the remainder of the year. Thank you for your time today, and we will now turn the call over for questions. Julian?

Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions.

Operator

Our first question comes from the line of Ashley Anne Owens with KeyBanc Capital Markets Inc. Please proceed with your question.

Ashley Owens
Ashley Owens
VP & Senior Equity Research Analyst at KeyBanc Capital Markets

Hi, good afternoon, and thanks for taking our questions. Just to start, you mentioned that comparable store sales performance has been positive quarter to date. Could you just elaborate on what you believe is driving that strength or what you're seeing from a traffic or transaction perspective? Additionally, anything on a brand level? Thanks.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Yeah, thank you, Ashley. Comps are positive quarter to date. All the brands have been part of that. Lilly continues to be positive. Tommy Bahama is around flattish at this point, but that's a significant step up from where they were in the first and second quarters. We've been really happy to see that. I would say it's mostly traffic-driven. During the first two months of the second quarter, our issue was really traffic. Conversions for the most part hung in there pretty well. Average order values were actually strong and actually ticked up a little bit during the second quarter. As we got into July, we saw the traffic start to recover a bit, and that really continued into August. I think that's the story sort of across the board. As I said, we're seeing nice comps in Lilly Pulitzer.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Tommy Bahama is in a much better position than they were first and second quarter, and their business started to pick up in July as well and then continued into August, especially. We're encouraged by what we're seeing there, Ashley.

Ashley Owens
Ashley Owens
VP & Senior Equity Research Analyst at KeyBanc Capital Markets

Okay, great. Just a follow-up, maybe on promotions. I know the environment still remains volatile, and you mentioned that margins are expected to face pressure from both tariffs and also the consumer shopping around promotional periods. Is there anything you're doing differently in terms of how you're planning your promotional cadence for the back half of the year, and any nuances between the brands? Thanks?

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

I think they're mostly going to follow historical patterns. We, of course, try to always remain nimble and adjust to the situation as it unfolds. I think we're not planning any major departures from the way we've run promotions in the past. It's just, as you alluded to, Ashley, we expect to do proportionately more of the business during those periods just because we feel like a lot of consumers are really sort of waiting for those opportunities. Second quarter, you look at it, highly promotional environment, definitely add the tariff pressure, but I think you probably heard Scott say this. Absent the tariff pressure, our gross margins would have increased year over year in the second quarter.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

I think we're exercising a lot of discipline and being judicious and trying to maintain price and brand integrity to the maximum extent possible while balancing that with the need to move inventory and generate revenue. Scott, I don't know if you'd add anything to that.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Yeah, I think the only change in promotions, Tommy Bahama's Friends and Family, we shifted from September, early September last year to August this year, and that worked well for us, so we think it was the right move. Other than that, pretty much similar type events.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

That is all within the same quarter.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Yeah, yeah.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

I think we, as Scott pointed out, feel like that probably worked more effectively.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Yeah.

Ashley Owens
Ashley Owens
VP & Senior Equity Research Analyst at KeyBanc Capital Markets

Okay, that's super helpful color. I will pass it along, thank you.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Okay, thank you, Ashley Anne Owens.

Operator

Thank you. Our next question comes from the line of Janine Stichter with BTIG. Please proceed with your question.

Janine Stichter
Janine Stichter
MD, Consumer Retail & Lifestyle Brands Analyst at BTIG

Yeah, hi, thanks for taking my questions. I was impressed you were able to reiterate the gross margin guidance, even with the incremental $80 million in tariff headwinds. It sounds like part of that is more price increases. I'm just curious how you're planning pricing, how that's evolved in response to tariffs, and what you've seen from the initial price increases that you've taken. Thank you.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

What I would say is we've been, as Scott used the word in his comment, select price increases. We've not done sort of an across-the-board approach to pricing. We've really looked at it on an item-by-item basis and balanced the need to, you know, protect our margins and try to recover some of the tariff impact with not wanting to get too far ahead of ourselves because that tariff number, as you know, Janine, is still very much a moving target. We're pretty sure we're going to end up with some incremental tariffs versus what they were in 2024, but we still really don't know what they are. We're trying to be careful about getting too far ahead of ourselves. The general strategy has been to try to cover the gross margin dollars for the balance of this year.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Really, as we get into spring 2026, that's where it really kicks in, where we're trying to recoup the gross margin dollars, but not necessarily the percent. On average, that led to sort of low to mid-single-digit or low mid-single-digit price increases, a little bit higher than that for spring in Lilly Pulitzer, and then I think across the board, there's a mix of both tariff-based price increases and, in some cases, some changes in the mix that are driving that. One example that I'll give you of a way that we can increase prices without it, I think, being too detrimental for us is that new Boracay Island Chino that I mentioned in my comments. That's up to $158. The old version of the Boracay was $138. This is $158, which is about a 14.5% increase. It's a significantly improved product.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

We're getting full margin for it while covering the incremental tariffs on it, and the consumer seems to be fine with it. I think it's because it's a new, innovative, different, and better product, so they're willing to pay the upcharge. In that case, we're getting not only the margin dollars, but we're actually hanging on to the percentage as well. We've got other ongoing products where we're just being very cautious about increasing the price too much before we really know where things are settled out.

Janine Stichter
Janine Stichter
MD, Consumer Retail & Lifestyle Brands Analyst at BTIG

That's helpful. Maybe just one more gross margin question. You talked about improved gross margin from promotional activity at Tommy Bahama. Maybe just elaborate on what that was, if it's something that's repeatable, as you think about squaring that with your expectation for just more promotions or consumer shopping more around those key events.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

I think part of it was we ended up selling more full-priced product during the promotional period.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Yeah, we just had less, and like end-of-season sale, we just had less inventory to sell. The market, the degree of markdowns was not as severe also.

Janine Stichter
Janine Stichter
MD, Consumer Retail & Lifestyle Brands Analyst at BTIG

All right, thanks so much, and best of luck.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Thank you, Janine.

Operator

Thank you. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question.

Dana Telsey
Dana Telsey
CEO & Chief Research Officer at Telsey Advisory Group

Hi, good afternoon, everyone. Tom, I think a couple of calls ago, you had mentioned about the competitive environment with tariffs and how some of the competitors wouldn't even be making some of their collections given the changes with tariff pricing. What are you seeing? Is it helping you gain market share? As you think about this upcoming holiday season, maybe Scott, how are you thinking of marketing spend and new products to drive activation? Lastly, components of the comp, what did you see in the comp on your direct-to-consumer side, both from online and from your own stores? Thank you.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Okay, starting in reverse order, I would say that during the quarter, traffic was, retail stores were relatively stronger than e-commerce, if that makes sense. We saw a bit of softness in both sides during the quarter, but I think relatively speaking, retail was stronger than e-com. That, frankly, is consistent, I think, with what we're hearing from a lot of other reporting companies that retail seems to be having a bit more strength than e-commerce. In terms of the competitors that may not be offering a line for the resort season and maybe doing some more extreme things around pricing for spring, those are privately held competitors for the most part that we're talking about, if not exclusively. We're not seeing a lot of reporting out of them yet.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

What I would say is I do think that we're holding and even gaining share in our wholesale channels, which is where we can see it, with the caveat that overall, that market is being very cautious with their forward buys. The overall market's not really growing, but I think we're performing well and are getting and will get rewarded for that a bit. I'll add one other comment on that, even though you didn't exactly ask it, and that's that one of the earlier reads that we get on how our pricing is going to be received by the consumer is how the wholesale accounts react to it. They've been very, very positive about the way that we're handling pricing. To me, it's still the consumer ultimately that will vote on that, but those merchants at those wholesale accounts are very skilled, capable, experienced people.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

If they're reacting well to the way that we're handling pricing, I think the consumer will probably also react pretty well. Scott, I don't know if you'd add anything to any of that, or if I missed something.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

No, I think you got it. I think you covered it.

Dana Telsey
Dana Telsey
CEO & Chief Research Officer at Telsey Advisory Group

Great. Anything just to follow up on fourth quarter marketing outlook there in terms of how you're planning for Q4?

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

I think we'll be doing a lot of similar things to what we've done in the past. I don't want to let the cat out of the bag on a couple of the things we'll be doing around holiday in particular, because they're going to be a few little twists on it. I really don't want to spill the beans on that if you'll allow me.

Dana Telsey
Dana Telsey
CEO & Chief Research Officer at Telsey Advisory Group

Lastly, just tell us about consumer.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Dana, these are just sort of the tactics. I don't think from a big picture standpoint it's a whole lot different, but some of the specific tactics we'll be doing I think will be slightly different than what we've done in the past.

Dana Telsey
Dana Telsey
CEO & Chief Research Officer at Telsey Advisory Group

Got it. And then just on the wholesale partnerships, anything you're seeing different in terms of the wholesale partnerships and how you're planning them?

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

I think the value of having really good partnerships, which we do with our very best customers, is significant. We have extremely close relationships with them. We work very hard to build mutually successful and mutually profitable businesses with them. We really like that part of the business, and I think that's more important than ever that you have those kinds of partnerships. I think ours, while it's a challenging time for everybody, are, by and large, stronger than they've ever been.

Dana Telsey
Dana Telsey
CEO & Chief Research Officer at Telsey Advisory Group

Thank you.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

I'm not sure if I answered the question.

Dana Telsey
Dana Telsey
CEO & Chief Research Officer at Telsey Advisory Group

You did. All good. Thank you.

Operator

Thank you. Our next question comes from the line of Mauricio Serna with UBS. Please proceed with your question.

Mauricio Serna
Mauricio Serna
Executive Director at UBS Group

Great, thanks for taking my question. I guess just on the commentary about the positive quarter-to-date trend in the comps, could you maybe talk about how much of a tailwind was that timing of the sale on Tommy Bahama? Just from excluding that, if you're seeing actually the business being positive. I was wondering if you could clarify, given that the net tariff impact section is going to be lower than what you initially expected and the sales outlook is being kept unchanged, what is driving you to maintain your full-year EPS outlook for this year? Thank you.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Yeah, a couple of things. I want to tackle the tariffs first. Yeah, on the tariffs, last quarter we said around $40 million before, that was before price increases and vendor concessions. Now tariffs, with some of the changes in tariffs, the overall exposure went up, but we accelerated, we did more acceleration of receipts and we had some more late in the year shifting out of China to lower tariff countries. We were able to mitigate it. I think the before price increases and vendor concessions were pretty much around the same number as we said before. We tried to lay it out a little different, kind of starting with the total exposure of $80 million and about half of that through shifting and early receipts. Then we've got some additional through the price increases and the vendor concessions.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

I think overall, even though the landscape turned against us a bit, we were able to have further mitigations to kind of stay in a neutral position to where we were last quarter. Your first question on the Tommy, it was all within the quarter, Mauricio. It shifted from August to September, and it was early September last year. That's flushed out now. In our quarter to date, we think we're back to an apples-to-apples view where August itself was apples to oranges and early September was apples to oranges. Now once you got through the Labor Day weekend where the event was last year, we're back now to an apples-to-apples basis on Tommy.

Mauricio Serna
Mauricio Serna
Executive Director at UBS Group

Got it. Okay. That makes a lot of sense. Then just like the one commentary also about inventory, the expectation that it's going to actually decrease or moderate, I'm sorry, I forgot the term. What is driving that? I would assume that the inventories would be higher just given that, you know, you're bringing in inventory with a tariff cost.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

We said before the impact of any capitalized tariff cost into inventory. From the acceleration, we don't think we'll, we think the tariffs have settled down, we won't need. Before, we were trying to be, we knew the August 27, 2023 change was coming. We got as much in, we didn't know what exactly it was going to be, but we got as much in as we could before then. Now we don't think we'll have to have that acceleration that we had. I think part of our, pretty much our increase in the second quarter was capitalized tariffs and acceleration. We believe that accounts for virtually the whole increase. When you get to third quarter, we're only going to be dealing with the tariff impact and not the acceleration. The acceleration was the bigger piece of it. Does that make sense?

Mauricio Serna
Mauricio Serna
Executive Director at UBS Group

Thank you so much.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Yeah, okay.

Mauricio Serna
Mauricio Serna
Executive Director at UBS Group

Yeah, yeah. All right, thank you so much. Gotcha.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Thank you, Mauricio.

Operator

Thank you. Our next question comes from the line of Joseph Vincent Civello with Truist Securities. Please proceed with your question.

Joseph Civello
Joseph Civello
Equity Research Analyst at Truist Securities

Hey guys, good afternoon. Thanks for taking my question. Just following up a little bit on the price increases. I think you said select ones so far have been averaging in a low to mid-single-digit range, but that could be picking up through the spring. Can you just talk about what the magnitude could be by then and, you know, how you'd implement those? It'd be on a broader range of products, either brand-specific, region-specific, anything like that would help. Thanks.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Yeah, I would say, Joe, that, you know, I think we're going to be a little bit on the conservative side with the price increases as long as tariffs remain up in the air. So far, as far as we've really gone out is spring, and for spring, I think they're a little bit higher than they are for fall and resort. That's kind of where we are right now.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

In fall, we really, on wholesale, we had already had prices out. There's not the wholesale increases for fall where there will be for spring. We'll have some both direct-to-consumer and wholesale. We'll come close. In spring, we think we make up the gross margin dollars. Fall, we will not quite make up the gross margin dollars.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

The other thing that I would point out, I think you're clear on this, but when we talk about, say, a 5% increase in fall prices, that's fall of this year versus fall of last year. When we talk about, say, another 5% increase for spring, that's spring versus spring. It's not on top of a fall increase, if that makes sense. It's not a cumulative thing. You're not compounding those price increases. Where we are so far, they're really not, you know, they're not that much.

Joseph Civello
Joseph Civello
Equity Research Analyst at Truist Securities

Yeah, it totally makes sense.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Yeah.

Joseph Civello
Joseph Civello
Equity Research Analyst at Truist Securities

Just one more follow-up then on Lilly. Just talk a little bit about the direct-to-consumer business versus what you're seeing in wholesale. Thanks so much.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

I think our specialty accounts in particular, they tend to, during tough times, they tend to be very cautious, and we've got a good amount of that within Lilly Pulitzer. It's not that I don't think it's that we're not performing well. They just tend to get more conservative and cautious in their purchasing. In our major accounts, our performance has been quite good. Again, as I mentioned earlier, the majors are also in a pretty conservative stance right now when it comes to forward purchases, but I have no concerns about our position with any of the key accounts in either Tommy Bahama or Lilly Pulitzer.

Joseph Civello
Joseph Civello
Equity Research Analyst at Truist Securities

Got it. Thanks so much.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Okay, thank you.

Operator

Thank you. Our final question comes from the line of Paul Lujoy with Citigroup Inc. Please proceed with your question.

Tracy Kogan
Tracy Kogan
Vice President at Citigroup

Hi, thanks. It's Tracy Jill Kogan filling in for Paul. I know you guys have outlined CapEx this year at $120 million, and I think a lot of that is from the distribution center. I'm just wondering, as you look out to fiscal 2026 and beyond, what is a good CapEx number to use, and if there'll be any more major investments in distribution centers or things like that in the near future? Thanks.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Yeah, we expect the Lions project to be substantially complete. There could be a tiny bit that trails over to next year. Once that's behind us, I think an ongoing rate is going to kind of be in that $75 million pace. It really depends on the number of stores, and the number of store pace has slowed down a little bit than what it was. I would say somewhere in that $75 million neighborhood.

Tracy Kogan
Tracy Kogan
Vice President at Citigroup

Thanks. What's your early expectation for store growth next year? Do you have any openings identified? Thanks.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

We've got some pipeline. You know, Johnny Was, we are not opening stores right now. I'm not saying we won't open any, but, you know, we've really slowed that down. Southern Tide opened a whole lot very quickly, and we've slowed it down, but there'll be some Southern Tide stores. I think Tommy and Lilly will kind of be on a normal type.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Yeah, subject to real estate availability.

Scott Grassmyer
EVP, CFO & COO at Oxford Industries

Yeah, yeah. There'll probably be a few Marlin Bars and then a few standalone stores at Tommy Bahama and Lilly Pulitzer. We'll probably have five or six standalone stores, and then The Beaufort Bonnet Company will probably have a couple also. Southern Tide will have a few, not at the 10 or so pace they had the last couple of years. Overall, probably more like this year, closer to this year where we're going to be at 15, where we were 30 last year. So probably the 15 is probably a pretty good number. Pretty good number. Again, with a few of them being Marlin Bars, which are more expensive.

Tracy Kogan
Tracy Kogan
Vice President at Citigroup

Got it. Thank you, guys.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Thank you, Tracy.

Operator

Thank you. With that, there are no further questions at this time. I would like to turn the call back to Tom Chubb for closing remarks.

Tom Chubb
Tom Chubb
Chairman, CEO & President at Oxford Industries

Okay, thanks, Julian, and thanks to all of you for your interest. We look forward to talking to you again in December, and I hope all is well until then.

Operator

Thank you, ladies and gentlemen. With that, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time. Have a wonderful day.

Executives
    • Brian Smith
      Brian Smith
      Head of Corporate Controls and Financial Reporting
    • Tom Chubb
      Tom Chubb
      Chairman, CEO & President
Analysts
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