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Category: Stock Market and Oxford Industries
Date: 12 September 2019 Stock Price: $74.22 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of Oxford Industries, the apparel company that owns brands such as Tommy Bahama and Ben Sherman.
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About Oxford Industries
Oxford Industries, Inc., a leader in the apparel industry, owns and markets the distinctive Tommy Bahama®, Lilly Pulitzer® and Southern Tide® lifestyle brands, as well as other owned brands. Oxford also produces certain licensed and private label apparel products. Oxford's stock has traded on the New York Stock Exchange since 1964 under the symbol OXM.
The image below shows the group's strategy and acquisitions in recent years, which included buying Ben Sherman and Duck Head.
The image below shows the group's strategy and acquisitions in recent years, which included buying Ben Sherman and Duck Head.
Financial overview of Oxford's latest earnings report
The numbers we are interested in (for the quarter):
- Sales: $302 million (down from $302.641 million from the same quarter of the previous year)
- Cost of goods sold: $122.175 million (down from $123.344 for the same quarter of the previous year)
- Net earnings: $29.836 million (up from $27.184 million for the same quarter of the previous year)
- Diluted earnings per share: $1.76 (up from $1.61 for the same quarter of the previous year)
- PE ratio: 10.5 (assuming the earnings per share this quarter is repeated for all quarters of the fiscal year)
- Diluted weighted-average shares outstanding: 16.907 million (unchanged from 16.840 million for the same quarter of the previous year)
- Cash and cash equivalents: $30.756 million
- Cash and cash equivalents per share: $1.81
- Cash and cash equivalents makes up 2.45% of Oxford Industries market capital
- Cash and cash equivalents makes up 3.04 % of Oxford Industries total assets
- Accounts receivable: $59.176 million
- Accounts receivable makes up 5.86% of the Oxford Industries total assets.
- Inventories: $152.672 million (up from $123.924 million for the same quarter of the previous year)
- Inventories makes up 15.11% of Oxford Industries total assets
- Inventories grew by 23.19% over the last 12 months. This is a concern as one has to question why inventories grew by so much. Is Oxford struggling to move stock and hence the inventories are building up? If this is the case the group will eventually start marking down products to move stock quicker which will impact the margins of Oxford and this will feed through to a weaker bottom line.
- Stockholders equity: $518.949 million
- Stockholders equity per share: $30.69
- Oxford Industries is trading at 2.41 times its stockholders equity per share
- Cash generated from operations (for 6 months) : $51.493 million
- Cash generated from operations per share: $3.04
Oxford's management commentary on the results and earnings guidance
ATLANTA, Sept. 11, 2019 (GLOBE NEWSWIRE) -- Oxford Industries, Inc. (NYSE:OXM) today announced financial results for its fiscal 2019 second quarter ended August 3, 2019. Consolidated net sales were $302.0 million compared to $302.6 million in the second quarter of fiscal 2018, which ended August 4, 2018. Earnings on a GAAP basis were $1.76 per share in the second quarter of fiscal 2019 compared to $1.61 in the same period of the prior year. On an adjusted basis, earnings were $1.84 per share in the second quarter of fiscal 2019 compared to $1.83 in the second quarter of fiscal 2018.
Thomas C. Chubb III, Chairman and CEO, commented, “Our second quarter results continued to demonstrate the strength of our full-price direct to consumer businesses. For the tenth consecutive quarter, we posted consolidated comparable sales growth with comparable sales increasing 3% on top of a 7% increase in the prior year. The top-line performance of our full-price direct to consumer channels was offset by lower wholesale sales and some softness in our outlet store business.
“Our Tommy Bahama, Lilly Pulitzer and Southern Tide businesses are built on a strong foundation. It starts with the incredible connections each brand has established with its core consumer. Our success is also rooted in our highly disciplined distribution strategy, which features exciting retail stores, bars and restaurants, a highly profitable and rapidly growing e-commerce business, and careful placement in appropriate department stores and specialty retailers. Equally important is the work our product teams are doing to engage our consumers and drive demand across our brands by offering differentiated and innovative products using performance features, proprietary fabrics and prints, and fresh silhouettes.
Mr. Chubb concluded, “As we move into the second half of 2019, the fundamentals of our business remain strong. We continue to focus on executing our growth strategies while working to minimize the impact of additional tariffs on both our consumers and our financial results. While we have revised our outlook for the year to reflect the estimated increase in cost of goods associated with these tariffs on the back half of the year, we are still on track to deliver solid results in 2019 with confidence in the strength of our brands and our talented and dedicated people.
Outlook for Fiscal Year 2019 and Third Quarter
The Company revised its guidance for fiscal 2019 to incorporate an estimated $0.20 per share impact resulting from additional tariffs in the second half of the year.
For the full fiscal year 2019, GAAP earnings per share are expected to be between $4.15 and $4.35. Adjusted earnings per share are expected to be between $4.25 and $4.45. This compares to earnings on a GAAP basis of $3.94 per share and, on an adjusted basis, $4.32 per share in fiscal 2018. The Company expects net sales to grow to between $1.135 billion and $1.155 billion as compared to fiscal 2018 net sales of $1.107 billion.
The Company’s third quarter remains its smallest sales and earnings quarter due to the seasonality of its direct to consumer operations. For the third quarter of fiscal 2019, ending on November 2, 2019, net sales are expected to be in a range from $235 million to $245 million compared to net sales of $233.7 million in the third quarter of fiscal 2018. Earnings per share on a GAAP basis are expected to be in a range of breakeven to $0.10 in the third quarter. On an adjusted basis, earnings per share for the third quarter of fiscal 2019 are expected to be in a range of $0.01 to $0.11. This compares with third quarter fiscal 2018 earnings per share of $0.11 and adjusted earnings per share of $0.14.
The Company’s interest expense for fiscal 2019 is expected to be approximately $1.5 million and its effective tax rate for fiscal 2019 is expected to be approximately 26% compared to 25% in fiscal 2018.Capital expenditures in fiscal 2019, including $16 million in the first half of fiscal 2019, are expected to be between $45 million and $50 million, primarily reflecting investments in information technology initiatives, new retail stores and Marlin Bars, and investments to remodel existing retail stores and restaurants.
Dividend
The Company also announced that its Board of Directors has approved a cash dividend of $0.37 per share payable on November 1, 2019 to shareholders of record as of the close of business on October 18, 2019. The Company has paid dividends every quarter since it became publicly owned in 1960.
The image below shows the revenue by operating group as well as by distribution channel as at the end of their fiscal 2018.
Thomas C. Chubb III, Chairman and CEO, commented, “Our second quarter results continued to demonstrate the strength of our full-price direct to consumer businesses. For the tenth consecutive quarter, we posted consolidated comparable sales growth with comparable sales increasing 3% on top of a 7% increase in the prior year. The top-line performance of our full-price direct to consumer channels was offset by lower wholesale sales and some softness in our outlet store business.
“Our Tommy Bahama, Lilly Pulitzer and Southern Tide businesses are built on a strong foundation. It starts with the incredible connections each brand has established with its core consumer. Our success is also rooted in our highly disciplined distribution strategy, which features exciting retail stores, bars and restaurants, a highly profitable and rapidly growing e-commerce business, and careful placement in appropriate department stores and specialty retailers. Equally important is the work our product teams are doing to engage our consumers and drive demand across our brands by offering differentiated and innovative products using performance features, proprietary fabrics and prints, and fresh silhouettes.
Mr. Chubb concluded, “As we move into the second half of 2019, the fundamentals of our business remain strong. We continue to focus on executing our growth strategies while working to minimize the impact of additional tariffs on both our consumers and our financial results. While we have revised our outlook for the year to reflect the estimated increase in cost of goods associated with these tariffs on the back half of the year, we are still on track to deliver solid results in 2019 with confidence in the strength of our brands and our talented and dedicated people.
Outlook for Fiscal Year 2019 and Third Quarter
The Company revised its guidance for fiscal 2019 to incorporate an estimated $0.20 per share impact resulting from additional tariffs in the second half of the year.
For the full fiscal year 2019, GAAP earnings per share are expected to be between $4.15 and $4.35. Adjusted earnings per share are expected to be between $4.25 and $4.45. This compares to earnings on a GAAP basis of $3.94 per share and, on an adjusted basis, $4.32 per share in fiscal 2018. The Company expects net sales to grow to between $1.135 billion and $1.155 billion as compared to fiscal 2018 net sales of $1.107 billion.
The Company’s third quarter remains its smallest sales and earnings quarter due to the seasonality of its direct to consumer operations. For the third quarter of fiscal 2019, ending on November 2, 2019, net sales are expected to be in a range from $235 million to $245 million compared to net sales of $233.7 million in the third quarter of fiscal 2018. Earnings per share on a GAAP basis are expected to be in a range of breakeven to $0.10 in the third quarter. On an adjusted basis, earnings per share for the third quarter of fiscal 2019 are expected to be in a range of $0.01 to $0.11. This compares with third quarter fiscal 2018 earnings per share of $0.11 and adjusted earnings per share of $0.14.
The Company’s interest expense for fiscal 2019 is expected to be approximately $1.5 million and its effective tax rate for fiscal 2019 is expected to be approximately 26% compared to 25% in fiscal 2018.Capital expenditures in fiscal 2019, including $16 million in the first half of fiscal 2019, are expected to be between $45 million and $50 million, primarily reflecting investments in information technology initiatives, new retail stores and Marlin Bars, and investments to remodel existing retail stores and restaurants.
Dividend
The Company also announced that its Board of Directors has approved a cash dividend of $0.37 per share payable on November 1, 2019 to shareholders of record as of the close of business on October 18, 2019. The Company has paid dividends every quarter since it became publicly owned in 1960.
The image below shows the revenue by operating group as well as by distribution channel as at the end of their fiscal 2018.
Oxford Industries (NYSE: OXM) stock price history
The image below, obtained from Google shows the stock price history of Oxford Industries. And its been a very volatile and slightly rewarding time for stockholders over the last 5 years. But the returns offered by Oxford Industries hardly shot the lights out over this period of time. Its increased 13.8% over the last 5 years. Interestingly the stock is also trading at a lot closer to its 52 week low of $63.50 than it is to its 52 week high of $93.52 which is a clear indication that the short term momentum and sentiment towards the group is more tilted to the negative than positive.
Recent coverage of Oxford Industries
The extract below touches on the latest news regarding Oxford Industries as obtained from Zacks.
Oxford Industries (OXM - Free Report) came out with quarterly earnings of $1.84 per share, missing the Zacks Consensus Estimate of $1.86 per share. This compares to earnings of $1.83 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -1.08%. A quarter ago, it was expected that this owner of the Tommy Bahama, Lilly Pulitzer and Southern Tide clothing lines would post earnings of $1.22 per share when it actually produced earnings of $1.30, delivering a surprise of 6.56%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times.
Oxford Industries, which belongs to the Zacks Textile - Apparel industry, posted revenues of $302 million for the quarter ended July 2019, missing the Zacks Consensus Estimate by 1.94%. This compares to year-ago revenues of $302.64 million. The company has topped consensus revenue estimates just once over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Oxford Industries shares have added about 10% since the beginning of the year versus the S&P 500's gain of 18.9%
Read the full article here.
Oxford Industries (OXM - Free Report) came out with quarterly earnings of $1.84 per share, missing the Zacks Consensus Estimate of $1.86 per share. This compares to earnings of $1.83 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -1.08%. A quarter ago, it was expected that this owner of the Tommy Bahama, Lilly Pulitzer and Southern Tide clothing lines would post earnings of $1.22 per share when it actually produced earnings of $1.30, delivering a surprise of 6.56%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times.
Oxford Industries, which belongs to the Zacks Textile - Apparel industry, posted revenues of $302 million for the quarter ended July 2019, missing the Zacks Consensus Estimate by 1.94%. This compares to year-ago revenues of $302.64 million. The company has topped consensus revenue estimates just once over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Oxford Industries shares have added about 10% since the beginning of the year versus the S&P 500's gain of 18.9%
Read the full article here.
Oxford Industries (NYSE: OXM) latest stock valuation
So based on Oxford Industries latest earnings report and their fiscal guidance what is the stock worth. Based on the earnings reported and the outlook provided our valuation models gives a target (full value) price of $79.40. We therefore believe the stock of Oxford Industries is undervalued at its current price of $73.94. We would recommend long term fundamental and value investors look to buy into Oxford Industries at, at least 10% below our target (full value) price of $79.40. So a good price to enter Oxford Industries would be at around $71.50. We see the stock price of Oxford ticking up to levels closer to our target (full value price) in coming weeks and months.