Oxford Industries, Inc.

Q3 2020 Earnings Conference Call


spk_0: at the time a that or they listen only mode a question and answer session will follow the formal presentation at anyone should require operators listens still in the conference please press start zero out phone keypad as a reminder this conference is being recorded i would now like to turn this conference over to your house it and shoemaker treasurer we just go ahead
spk_1: thank you and good afternoon before we begin or would like to mine for to suppose that certain statements made on today's call and in the human a session they constitute forward looking statements within the meaning of the federal securities laws forward looking statements are not guarantees an actual results may differ materially from those expressed or implied
spk_2: i'd and the forward looking statements
spk_1: important factor sick cause actual results of operations financial position to differ or just and our pressrelease to shoot earlier today and and documents filed by us with the fcc including the risk factors can in our forums and century and first quarter him to we undertake no duty to a state in the forward looking statements during that call he will produce be discussing certain non staff financial measures you can find a reconciliation of non gap to get financial measures that are press release issued earlier today which is posted under the investor relations test of our website at oxford in dot com and now like to introduce today's call participants with me today or tom chubb chairman and ceo and scott quagmire csl thank you for your attention and now i'd like to turn the call over to tom chat good afternoon and thank you for joining us i'm encouraged by
spk_3: third quarter results as each of our brains businesses tommy bahama mamas pulitzer and southern tied it exceeded our internal plans during hours historically smallest quarter of this year i'll have to pricey commerce business group fifty one percent helping poor for yourself their heads wins and other channels do to cope it's nice to our sustained digital success this year underscores the power of our brains and they're strong consumer connections and is a great indication that our business as well as this and for so a post pandemic compartment with the onset of nice to meet and march we focused on three priorities the safety of our people in our customers protecting the integrity of our friends and preserving liquidity we have done a good job executing on all three of these friends at the same time of his business and industry are facing and significant changes that have only accelerated during the last night as we have progressed through years while not taking our eyes off as brainpower outlined we have resumed our focus on the news is that will help us to better capitalised on important market trends in both and near term and no long term in the pandemic world we believe products will continue that trend towards easy to wear an easy chair in most will remain significantly below twenty nine teen levels department stores will be less relevant than they were both for ecommerce will be bigger and more important than ever company own stores and restaurants will be a physical representation of the brand seamlessly integrated into a total direct to consumer ecosystem including the commerce and the heavily digital diverse tides marketing channels will be essential all of the this trend should benefit our businesses we emerge from this crisis we're building upon are already strong foundation and are well prepared for the post pandemic environment we continue to identify ways in which we better build a customer focused digitally driven mobile centered and cross channel personalized him seamless shopping experience that recognizes them serves the customer their brands discovery and purchasing habits as the future we're delivering innovative isn't differentiated products that are brand any insane with consumers desires and the from offering virtual stopping appointments curved first pick up digital pine telling and having our store associates field customer service calls to delight in your desk with are exciting marlon park concepts each of our brains continues to develop to implement new ways in the hands the customer experience we continue to improve customer data and analytics that are helping and will help us to moist and was a use customer data to provide a better more personalized experience that boost retention rate i am spending levels importantly these tools are also help signals have done a fine acquire new customers a critical the news for them for us we continue to expand our enterprise order management capabilities to increase her ability to ship from our company owned stores that that's to man from anywhere with inventory located anywhere we are able to minimize talk helps increase customer satisfaction and improved inventory of says this is helping us navigate through the pandemic and positions as well to grow and thrive in a new post pandemic normal across oxford our talented teams have risen and continue to rise to the occasion by staying focused on our core purpose of making our customers have our brains are all happens brands and our customers look to us to deliver a happiness through our politics communications and brands experience throughout as challenging period or people in every some some from creative designed to said they can fulfill my
spk_4: as and every sense
spk_5: twins
spk_3: helped us deliver happiness to our customers we are grateful for the and out of the richie we have them in the of helplessness for almost eight years and have a portfolio businesses which is with that it over the years two main relevant to the marketplace and consumer and to deliver shareholder value today we announced or most recent actions the decision that saddam legacy of europe peril business which has been a part of our portfolio for more than fifty years throughout that times when the europe heroes did well run knives exceptional group of people that said was years business model which provides like some tailored close to department stores and big box retailers does not hurt our long term vision for the enterprise and that challenges presented by the pandemic of the apple pie business alignment exiting this business will result in a portfolio that is completely insane with our strategy we are working closely with are licensed fillers customers and suppliers to ensure a smooth process and i want to personally thank the dedicated employers of live near of apparel for their contributions dog was overseas many years of now turn to call ever discussed with more details on our third quarter results and our plans for the rest of you scott
spk_6: a huge home
spk_7: we were quite quite pleased with her performance in the third quarter given the circumstances as a reminder of third quarters historically or smallest quarter of the year with lily thoughts are spring summer clearance event making a meaningful contribution this year we made some changes to of them
spk_3: we did not hold sales and our stores will lose customers shop and force and for the safety around for wasting our customers we decide to women to sell to online does if they change was to hold of him to ports the first in june and our second quarter and second in september and our third quarter
spk_7: the third quarter of them was twelve million or forty one percent lower than last year due to shift the combined online events however were very successful in two million dollars to suffer for sapphire year for years
spk_3: or full price is commerce business we solid growth and each of our bras on a consolidated basis are full price ecommerce cops increase fifty one percent each of our brands is exceeded our internal plans for the third quarter with full price you calm and tommy bahama increasing thirty eight person
spk_4: well lowly culture of ninety three percent and a thirty six percent increase in southern
spk_3: a full price retail sales decreased for proper saw is traffic was down significantly and most of our stores continue to operate under various restrictions are important wine locations were severely impacted by travel and other restrictions tommy bahama operates nineteen locations where their food and beverage components that squirting hawaiian new york where we had extended closures and restrictions we were very pleased with a restaurant comp as negative six percent
spk_7: are no small number in jacksonville florida which opened in the second quarter is sieges even our pre pandemic plans over hour overall restaurants were down thirty percent year over year or gross margin was fifty five percent quarter comparable the last year and me and eighty degrees fifteen percent or twenty one million dollars some of which is permanent
spk_3: impact in both gross margins and sg and they were charges related to the exit of linear para which tom just discussed during the third quarter of fiscal twenty twenty we recorded a ten million dollars pretax charge blade it is linear apparel access about six known as this was inventory markdowns impacting cost of so most of the him and toy markdowns was reversed and included in a life was counting credits incorporates corporate snowden
spk_7: cost me four million were as teenage rodgers the latest offering least impairment severance and retention cost and non cash it in his division between now and completion of our accident my second half of twenty twenty one with respect and curve cost me five million of incremental charges rashmi half of his charges are expected to current the fourth quarter of fiscal twenty twenty respect the exit wound your apparel be cash flow positive moving your balance sheet when is the quarter with him and twenty four percent lower than last year which we believe this properly reserved and suspiciousness well for future sales as comments in preserving a high level liquidity has been a priority for us and we have executed well on that for us
spk_3: the strength of our balance sheet and the pandemic as well as the actions we have taken to mitigate dakota nineteen impact positions as well for the future we did the third quarter with thirty five million a borrowings and fifty three million of cast just left us in a nexus position of a two million compared to twenty two million in the third quarter last year
spk_7: and we had two hundred eighty seven million of unused availability under a rock revolving credit agreement we have reevaluated oliver capital projects or technology projects to support or did you on this staying there harper's we also remain committed to spending for special moslem bar concept
spk_3: yesterday we have converted to locations the mars bars and open a new location in the fourth quarter we expect open to and bars and line know why and fashion valley in san diego and southern times is open to more stores in florida this year bringing their store count to three
spk_7: we have also taken advantage of the current situation to do some pruning you today we're close for tommy and to little stores respect close to more locations this year and have a handful slated for closure and twenty twenty one and the landlord provides us a compelling reason to stay looking ahead with the recent resurgence and cope cases we to see press traffic in our stores that particular concerns around or twenty five stores and three restaurants in california meanwhile ecommerce has remained strong quarter to date based on current trends combined with our view of how we think to remainder of the season plays out we believe our fourth quarter revenue towards klein on a percentage basis similar to what we experienced in the third quarter
spk_3: as we think about siskel twenty twenty one it's too early to comment on anything specific but with our exit from linear and other macro changes we expect or tough line to be smaller than two thousand and nineteen
spk_7: however we anticipate turning to profitability
spk_0: lastly our commitment to returning you to shareholders is clear for this pays dividends every quarter since we became public and sixty and a border directors has declared a quarterly dividend of twenty five cents per share that for years time today and we will now turn mcauliffe for question mark hope this will be conducting a question and answer session as you would like to ask questions past star one on the telephone past the confirmation some and line as an assassin kill you might start to a suicide terms of your questions been the seals purposes using speaker equipment and may be necessary for you to pick up their handsets the putting the sorry on moments always hoped for question
spk_8: first question comes to mind
spk_9: citigroup you may proceed with your question he thinks i'm curious and begins we talk a little bit more about what you're seeing a court today
spk_3: so in terms of tell trend now that identity what you spend the rest of the quarter so theories about promotional environmental be seen me and now know about progressive march and line task for for for two
spk_9: and in part of the a gross margin improvement these saw this this quarter was this
spk_3: colored from change and really come out of the next meal's about but the other moving pieces of didn't gross margin mine and free to thanks
spk_10: okay i'll talk about this tale some of those the this tons of southern that outlets got comment on anything else he would mention on the sales friends as well as walking through the gross margin is so sales quarter that they actually didn't really pleased with our business
spk_3: is that a strong with the election november as expected sorted out a little bit slow but we have really as bad as a man sense than have picked up momentum and i played absent california situation with probably same to invest sales decline fourth quarter would be
spk_11: you know a bit less than the third quarter but what counts of was happening there with this new restrictions and having two thousand and seven stores and three restaurants there are expectations
spk_3: a little burst for the fourth quarter of but what we've seen as has been good as doesn't
spk_12: the stores quarter to doesn't have actually been better those tend to pick up a little business
spk_3: summer is committed
spk_13: to be strong of will point out the obvious that the commerce with actions yes
spk_3: having those that their have a battle of was start wind down earlier this year than it has in years past but of course with build all that into the plan as well so really happy with what we're seeing so far
spk_7: but you know obviously still a challenge now as for the gross margins and cheese response consolidate basis will be a little bit off the finally up year every year and that did benefit from the shift in the us lily
spk_14: clarence of actors were some of was move back to the second quarter but a tommy was just a little bit lower year every year
spk_9: and ah lilly's was dumb meaningfully higher but again that's influence that and southern part in one year which was meaningful lower arm
spk_7: to do email tory markdown so on but it all blended together to of slightly
spk_9: then how to the thing that gross margin for for forties
spk_0: for the fourth quarter will probably be down slightly year over year but it'll be pretty pretty comparable
spk_15: two for down to dishonorable that isn't the west of them are now can thank you good luck
spk_16: top
spk_7: hi next question comes down the line of other words you're keeping capital markets may proceed with your question guys thanks for taking the question the i guess person just the thought the puck question i know that year i was reached to the season wasn't the and a bounce back i get kind of how we think about it any mauling implications to the lack of a about back and then too no more linear has it's probably didn't really managed for cash flow obviously the world the change that the has to we think about how would the normal i ask what was from the near as we think about a modeling ah your business post linear thank you
spk_17: woodward
spk_18: okay okay
spk_7: oh on the back it tommy we did we'd we did the same event the timing was just a little bit later were last year after year the car to an allen and i'm late october and issues that and go out to just a second week of november so is this really a little bit of time and shift it's tommy but they still have that are you bought the car to the
spk_3: cards and net flip side of that where you spend a certain amount and
spk_7: yeah i'm sure it will affect the a little bit less transactions because of the traffic and stores but we are just don't own it online it's also
spk_3: adam tesco of near for with them he was very volatile over the last couple years i mean the area with i have some ebbs and flows
spk_0: they normally on a normal year when they weren't having a significant him tours he bills or contraction yeah linear word yet
spk_19: a very low cap spend detours very little dna so is really does you know that that affected operating profit was really you know usually translates to their cash flow but they did over the last couple years have a lot more volatility with him into a levels that tom writing often and at times running back down and and
spk_20: this year obviously very challenging years and has been in tasks in their normal operations this year so yeah was becoming you know that we didn't have softness of because maintain that and cash
spk_21: think that if you look back at that is sort of normalize that inventory peaks and valleys thirty years the sales were really sort of flat line and for drilling if you average it out over time talking a pretty small amount of cash flow was actually some mobile
spk_22: thanks mr
spk_3: i know has since come from the line all that susan anderson let's be largely beyond you may proceed with caution how could he thinks for take my question i guess i'm just looking for quick you doing anything different with the product or the business i typically he would be willing out here before line with limited people i guess traveling to reports i guess how are you marketing a project to consumers and then open just curious like a little bit about the home tommy and how that killing yeah you have the same as the course as we talked about his product is really easy to wear and tear you see that throughout the industry and that's true for us as well so what that means is a lot of lounge type were across all our brains all that type of product is doing quite well as they always do this time a year and tommy bahama second layer nests for man are doing really really well the gift of allied i'm so comfortable items that was lend themselves really well too work from home zoom environment and then that sort of leisure time performance inspired products that we have in the all the brains have done really well as that's where we you know tried to til the product of sort men like course we were reactor in yonkers short notice of us what we tried to set up for a holiday and that's really cela to that's what's selling well one of the highlights zoos and selling so far tommy bahama has been on the women's side were typically for tom is women sort of takes a step back this year that is time year and it becomes real is all about the man's business will this year it's different in that men's is doing well
spk_23: the women's is really stepping up and we've got quite a few items women's items in our top right now
spk_3: for tommy bahama most are really times that are coming out of our island soft line which i would describe as being cosied lounge were and then our islands zone line which is performance product of we described as sorta effortless function seal so those are real bright spots that were very
spk_24: excited about got a really cool thing and with pellets or right now it's as a couple items that have a
spk_25: still to his face mask for to connect to laugh when you need as when you don't need as you can drop it back down
spk_3: it which is a fun not to the current environment
spk_26: and and that's creating some excitement and some buses will
spk_27: now that's great and then look the home
spk_28: tommy
spk_19: yeah well how kind of stuff if to bow tie fighter pseudo course very very popular
spk_29: part of the line as tommy bahama
spk_3: but it is you know that is it as popular as always system you cookies has always felt well which is interesting expensive bar food as but we do offer packaged countries in our stores but those were doing really well right now awesome wow that's interesting i just clicked he'll get on the weekend all performances you see any change comes second quarter and in the third quarter and then also i guess it sounds like white girl is
spk_30: well as improved at all
spk_31: yeah
spk_3: the same and than that sort of throughout the year
spk_27: and i'm kind of draws generalizations but sort of florida in the southeastern and tended to be the strongest
spk_22: pretty much throughout this whole situation
spk_3: in then the rest of the country has been week or with you know movements and classics religious or a corresponding to the level of coated in sections and hospitalizations some things like that so the midwest to you know weaker lately than some of the other reasons obviously california has its challenges and hawaii with those you know for a long time fundamentally to travel and all their they have created a path for be able to travel now at least about i am too busy
spk_19: why scotland
spk_32: miss america on the regional flavor magic them covers
spk_0: a pass you really click on topic i was it the new toward i get it right the both they're good guys see also you may be to them by online pick up
spk_33: it was powers and then a little bit about holes on price wholesale to animals that have helped
spk_34: that we were away as with what we saw and directed consumers you never easy come
spk_3: as we mentioned was plus thirty six for the quarter which was great to see and then also we were happy to have those those doors open and southern type continues to do some great marketing is a things they punch above their weight in that regard and you know and that's been true this year to outside
spk_25: taylor their marketing very well and
spk_13: it continues to deliver a light hearted up
spk_3: happy mastered of one that was not come down to what's going on in the world three table think so much and tobacco for a holiday thank you susan i max question comes to mind google healthy healthy advisory group the proceeds has passed
spk_7: hi good afternoon everyone as you think about the shift particularly for most little lily pulitzer in the flash fails how you thinking about promotional cadence going forward for all of the brown and then also if you think about this fourth quarter next year he extends structure giving shipping and shipping search cactus his mind how are you planning thank you
spk_3: okay i'll talk about the commercial for gas tank which is what we learned
spk_33: this year is that shifting the promotional came around it's not a bad thing it all i think the customer actually enjoys the variety a little bit take some of the predictability out of the which is good for us from a business
spk_3: basis so i don't know exactly what will do next year it's it's way too early to say that but i do think the idea of mixing things up a bit of is a good idea in it's something that you know sort of was inspired if you will by the that corona virus said two asian this year but i do think it's one of those valuable lessons that will
spk_35: take away from this year because we're really pleased with the way that are promotional activities played out
spk_3: this year and we think it's been good for the gassed presented some excitement variety for heard that's good for business i and that on the shipping charges and surcharges and the how that will impact quarter outlets gotten comment which we are here officer getting some surcharges but we've also implemented the in a press water management our ability to ships come from store tommy and that's gonna help mitigate that some more not shipping orders and store obviously but we are able to take advantage of that so we do have a bit of mitigation because we're shipping a lot of orders a lot closer to the person and only well will be better customer service at also so introduced frank corso your name or be a little bit higher but we do have a little bit of mitigation with these an approach or impetuous system
spk_13: and one less thing of the store to have been reopened are you looking to close them to keep them
spk_3: how do you think about the store basins and in like manhattan how do you think about it
spk_36: well we got up and guy him for stores that of art and close this year a few more little close during this year and then a group next year and altogether up like that
spk_0: pointing to get it the two together as a two years together those are you know
spk_9: change depending on landlord negotiations or whatever but what we're really doing painters working very hard at any opportunity where we are like check out
spk_7: cause him a leash that allows us to get out at a certain points or we got a renewal were just looking adamant about you waiting
spk_3: then very carefully to see whether it makes sense to continue to operate that store or can we satisfied that demand some other way either through
spk_7: target ecommerce more heavily to that area or through an enhanced wholesale relationship or whatever and
spk_3: it may be so we're been smart about it thing being very analytical about taking us three hundred and sixty degree view of those stores him you know if we're if we were to close how continue to serve that just and capture those dollars
spk_13: in i think what'll happen is that will listen to some closures but we're also opening a few stores to
spk_3: as you know so that madoff think the store town or probably dress down maybe just a little bit over the next few years but will end up with a portfolio of stores that are better purposes and and more profitable for us thank you as a reminder if you would like to ask the question please star one eye and tell us path or next question console i have seized monroe that would be outing you ever see what your question good afternoon jumpstart in an ad for give me my phone disconnected briefly if this question was asked my thousand of you talk a little bit about image already been down for percent versus sale found between seven and what gives you confidence that the inventory composition is good yeah or to weigh on aug of tommy of down and tommy's pretty flat and they members we shifted out there somewhere line to serve as canada resort spring much of the resort spring line so we do have that spraying inventory and elsewhere last year some of our would have not left factory just so i didn't have a quarter united we have that different songs that they are image or some good shape for our hold him and toys are dog aged him and toys are actually lower your of we're year and our core inventory some as the basics is a little bit higher year of year but we still get where we scared that will work out and ordinary course though so are we think we're feel good about our up and toy and items that we felt we do need to liquidate we've taken proper reserves or know so like overall where your teacher that's very helpful announcements a huge you said about marlin bar that they are fracking at three had your free clovis planned levels that's pretty amazing considering we're probably has done to rush on traffic in general newborn feel that a little bit more yeah not only are they trying to get pretty terrible play and levels of the new one that we have been in jacksonville was tax always exceeding the plan that we had for it before we even heard of the corona virus it's been really awesome had to see and it's also driven a big increase in our retail deserve their it's not technically yes cobb because we moved the location of that store within the center that whereas are coming stores in general or come down about forty percent that location this year's complex
spk_37: since though playing in the moral and laura think about thirty percent or so
spk_0: the you have a massive difference which is attributable lottery
spk_3: primarily to the existence of the moral are there i am one of the greatest things valve that is a huge amount of that kept increases actually being driven by women's
spk_0: so that's turning into one of our strongest women stores and as you know steve where all always thought we had a bigger opportunities in women's than we've

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