Oxford Industries, Inc.

Greetings. Welcome to the Oxford Industries Inc. Second Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in the listen-only mode. A 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 your host, Anne Shoemaker, Treasurer of Oxford Industries. Thank you. You may begin.

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 our 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. Due to the material impact of COVID-19 on our business in fiscal 2020, we will also include comparisons to our fiscal 2019 results. And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmeyer, CFO. Thank you for your attention, and now I'd like to turn the call over to Tom Chubb.

Good afternoon, and thank you for joining us. I would like to start by thanking our incredible team of people for delivering outstanding second quarter results that include record sales, gross margin, operating margin, and earnings per share. Our performance was strong across all of our brands, particularly in our direct consumer channels of distribution. While we are benefiting from some favorable market conditions, the numbers that we delivered are the direct result of our team's ongoing efforts to navigate through the short-term challenges posed by the pandemic while staying focused on our long-term strategic objective of delivering happiness to our customers. Our excellent results are attributable to the strength of our brand portfolio and how we communicate our aspirational, upbeat brand messages through beautiful imagery, differentiated products, and exceptional customer experiences. To deliver superior customer experience in today's market, we need to stay focused on our long-term North Star objective of continuing to prove our customer-centric, digitally-driven, seamless, cross-channel shopping experience with an emphasis on mobile. We continue to invest heavily in further improving the customer experience with enhancements to our mobile apps, search engine optimization, customer data and insights, customer service, and much more. The boundaries between our retail and e-commerce businesses are becoming increasingly blurry. We recognize that an ever-growing number of customer journeys to purchase include both physical and digital elements. Most consumers no longer distinguish between the relationship with the digital aspect of the brand and their physical relationship with our brands They simply think of their relationship with our brands. They want and expect to be able to mix and match digital and physical elements at will. We are determined to fulfill this desire and continue to invest in the people, processes, and technology that will allow us to do so. We have talked many times about our ability to ship from store as an example of the blending of these two channels. We have also added capabilities such as drive-to-store digital marketing, buy online, pick up in store, reserve online, pick up in store, virtual shopping appointments, and cross-channel customer service to better meet the needs of our customers. The better we are at providing a truly seamless omnichannel experience, the better our customers' overall experience will be, which will ultimately result in increased brand loyalty and a stronger business over the long term. Our team's relentless focus on improving our customer experience is evident in our numbers, which exceeded 2019 levels. During the second quarter, our combined direct-to-consumer, full-price store and e-commerce comp grew by an impressive 22% compared to 2019 with 15% growth in our biggest brand, Tommy Bahama, and a remarkable 31% growth in Lilly Pulitzer. Growth in our direct-to-consumer channel was led by our highly profitable e-commerce business, which grew by 49% over the second quarter of 2019. In addition to the impressive top line growth, we were able to simultaneously expand our e-commerce gross margin. Our e-commerce business has been enhanced by our ship from store capability, which allows us to leverage inventories located in stores to serve e-commerce demand as well as demand from other stores. For the year, we expect our total e-commerce business to be roughly a third of consolidated sales compared to 23% in fiscal 2019. While e-commerce is our fastest growing channel, physical stores remain an incredibly important part of our direct-to-consumer business. In certain instances, there is no substitute for the personal interaction and high level of service that we are able to provide in stores. Our retail stores grew top line during the quarter modestly over 2019 levels despite lower traffic with sequential improvement through the second quarter across all regions of the country. As we did in e-commerce, we were also able to expand retail store gross margins during the quarter, driven by full price selling and higher IMUs. For this year, we expect retail stores to be just under 40% of our total business. We further differentiate our omni-channel approach to delivering happiness to our customers with our food and beverage offerings. Restaurant bar sales grew 26% during the quarter compared to 2019. We have positive growth in all locations as compared to second quarter of 2019 with all but a couple at double digit levels. For this year's second quarter, we have five additional Marlin Bar locations as compared to 2019. Our food and beverage capabilities give us a unique and powerful way to build relationships with new customers, as well as reinforce the love that existing customers have for our Tommy Bahama brand. Based on the strong start to 2021 and our growing footprint, we expect our restaurant and bar business to achieve close to $100 million in revenue this year. Finally, while our wholesale business only comprises about 20% of our total sales, it remains an important channel of distribution. In situations where both we and our wholesale partner can be profitable, wholesale can be an important vehicle for exposing new customers to our brands and and another way in which we can serve our customer when and how she wants to be served. The excellent performance across the enterprise for the quarter was driven by stellar achievements within each of the individual brands. Starting with Tommy Bahama, the brand delivered double-digit top-line growth over 2019. Higher sales combined with improvement in gross margin and excellent expense control drove 1,000 basis points improvement in operating margin to a very strong 22.7%. During the quarter, much of the growth was driven by knit tops and shorts in both men's and women's, including many of our island zone performance styles. The strength in these categories is a terrific example of how Tommy Bahama benefits from and is capitalizing on the long-standing trend towards casual, easy-care, and easy-to-wear product. At the same time, Lilly Pellitzer achieved top-line growth of 16% over 2019, expanded their gross margin, and also controlled expenses well. Combined, these results drove a 230 basis point improvement in the operating margin to an impressive 29.5%. From a product perspective, we have seen a nice rebound in woven dresses, which has been a historical strength for Lilly. But the biggest growth category has been our Lilly Luxletic activewear, which is now about 12% of our business. In our Southern Tide business, excellent growth in e-commerce plus the addition of our new retail stores drove 17% sales growth, which combined with expanded gross margins resulted in a 21% operating margin. While it is early in Southern Tide's retail journey, operating just a handful of company-owned stores in Florida, we are encouraged by the results that we are seeing. Finally, our early-stage businesses, the Beaufort Bonnet Company and Duckhead, while currently small, are an important part of our overall enterprise growth strategy. With our strong e-commerce businesses and growing wholesale businesses, Both the Beaufort Bonnet Company and Duck Head delivered strong growth and expansion in both gross and operating margin. In addition, we are thrilled to have signed our first lease for a company-owned store for the Beaufort Bonnet Company and look forward to opening later this year. As we head into the second half of the year, While being mindful of the ongoing COVID-related challenges in supply chain and store and restaurant operations, we believe that our focus on executing our long-term strategic initiatives will continue to drive strength in our business. We have built a powerful and profitable seamless digital and mobile-first omni-channel platform that is driving growth by providing a superior, modern customer experience. From a product perspective, the trend towards casual, easy care, and easy to wear plays right into the sweet spot of our brands, and we are doing a great job of capitalizing on the market opportunity. In closing, I would once again like to thank our committed and dedicated team members and express my sincere gratitude to our customers for the relationship we have with them, as well as to our shareholders for their ongoing support. And now I will turn the call over to Scott for additional details on the quarter and the outlook for the second half. Scott?