Oxford Industries, Inc.

Good day and welcome to the Oxford Industries Inc. Fourth Quarter Fiscal 2023 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Smith. Please go ahead.

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. And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmeyer, CFO and 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. We are pleased with our results for fiscal 2023, which represent the second strongest annual earnings in our 82-year history. The conclusion of FY23 also caps the end of a five-year period during which we delivered compound annual adjusted EPS growth exceeding 18%. In addition, we generated strong cash flow from operations of $244 million in fiscal 2023, allowing us to invest in both organic growth and acquisitions, return capital to our shareholders via our quarterly dividend and opportunistic share repurchases, and pay down almost all our outstanding debt. On today's call, we'll walk through our recent performance and provide an update on the initiatives we have planned for fiscal 2024 that we believe will position us to continue to deliver sustained profitable growth and drive long-term shareholder value for many years to come. In terms of how we wrapped up the fiscal year, January was a bit softer than expected, And as a result, both our fourth quarter and full year came in at the low end of our forecast with sales for fiscal 2023 totaling $1.571 billion and adjusted earnings per share coming in at $10.15. The January softness continued into the new fiscal year and February was also down, as we cycled strong double-digit comps in February of last year. In March, as comparisons eased, business has picked up, and month to date, we are comping modestly positive. We believe the toppiness we have experienced is reflective of a somewhat unusual situation where most economic indicators are actually fairly positive, and yet consumer sentiment remains materially below where it was for the four or five years prior to the pandemic. The muted consumer sentiment is manifesting itself in consumers who have the ability to spend but are being much more cautious in their spending on discretionary items such as the fashion apparel, which is the core of our business. Experience has shown us that during times like this, when near-term demand is choppy, it is best to stay focused on the long-term opportunity and strengthening the fundamentals of the business that have created our strong foundation and that is exactly what we plan to do during fiscal 2024. First, we will double down on our efforts to make sure that we have fresh new differentiated product that gives the consumer a good reason to open her wallet. Second, we will make sure we maintain the elevated happy and optimistic messaging that is representative of each of our brands. Third, we will make sure that we are being diversified and creative in the media channels that we use to try to communicate our brand messages to the customer. And finally, we will make sure that we are making our product available to our customer when and where she wants it, including our own stores, e-commerce websites, restaurants and bars, and wholesale accounts. Across all our brands, there are initiatives planned for fiscal 2024 that touch on each of these four fundamentals. In Tommy Bahama, our biggest brand, we are focused on continuing to develop and grow our hospitality business. Our hospitality business, including our new Tommy Bahama Miramonte Resort, our full-service restaurants and bars, and our unique upscale fast casual marlin bars is a key part of the success of our brand. Hospitality helps complete the dream that is Tommy Bahama in the customer's mind and in that way helps evolve the brand, acquire new customers, retain existing customers, and increases the annual spend of the brand's guests. As we have mentioned in the past, our stores that are connected to one of our restaurant and bars almost uniformly do a higher percentage of business in women's than the fleet average and have higher sales per square foot by a significant margin than the fleet average. Hospitality has been a big part of our success in growing our women's business over the last several years, so that women's has now grown to 36% of our total Tommy Bahama direct-to-consumer business. Our efforts during the 2024 calendar year include opening six new Marlin bars, including one in Winter Park Village in Florida, which opened in January, and one in La Cantera outside of San Antonio, Texas, which opened in February. Both of these new additions to the fleet are off to a terrific start. Four additional Marlin bars are planned for the second half of fiscal 2024, including one in South Park Mall in Charlotte, King of Prussia Mall, which is one of the nation's premier malls, the Oaks in Oklahoma City, and the Sarasota, Florida area's upscale Lakewood Ranch community. 2024 marks the 65th anniversary of the Lilly Pulitzer brand. Exciting plans for the brand are already underway, including a higher price more elevated capsule collection celebrating the anniversary, which has retailed extremely well and makes us believe that we have the opportunity to expand the price continuum of our assortments. We also have a number of exciting collaborations underway, several of which have already launched. On the product side, we have rolled out a Lily Pulitzer print-wrapped Mocha America Resort Cruiser, a special edition Lily Pellitzer Natalie's Juice, a line of Pottery Barn home goods, and a beautiful capsule collection done in collaboration with Badgley Mischka. Lily Pellitzer and Vogue have also partnered to produce an exciting collection of collaborative media content under Vogue's Styled by Vogue banner. On the commercial front, Lilly-Pellitzer remains focused on mixing things up to continue to delight and surprise the customer. We have changed several of the promotional events that we ran last year during the first and second quarters such that we expect Lilly-Pellitzer's first quarter to be materially smaller than last year and the second quarter to be materially larger than a year ago. We believe this decision will make for a successful first half, albeit one that lays out across the two quarters differently than it did last year. In Johnny was, we were delighted during fiscal 2023 to complete most integration activities post the acquisition. During 2024, our focus will be on enhancing the profitability of this business. The two main elements of this improvement plan are increasing store productivity and improving the effectiveness and efficiency of our marketing activities. Last year, Johnny Wise achieved a 10% operating margin, a respectable level that we believe we can expand on in 2024 and even further in the years ahead. we remain extremely enthusiastic about the Johnny Was brand and expect it to be an important part of our ongoing objective to grow long-term shareholder value. In the emerging brands group, starting with Southern Tide, during 2023, we opened a number of stores and acquired a number of our signature stores, bringing our total company-owned Southern Tide stores to 19 by the end of the year. We have plans to open several more during fiscal 2024, along with at least one store for the Buford Bonnet Company. A 2024 priority for both brands is driving performance across their newly established retail store platforms. Jack Rogers Footwear brand to the emerging brands group in late fiscal 2023. Jack Rogers is a well-known brand that is based around an iconic product. The pandemic and post-pandemic years were challenging for the Jack Rogers business. While Jack Rogers will be slightly dilutive to earnings in 2024, we are going to use this year to focus on resetting the brand, cleaning up inventory, and preparing the brand for future success and profitability. Finally, on an enterprise-wide basis, we will be working hard during fiscal 2024 on our new state-of-the-art distribution center in Lyons, Georgia, which will allow us to house and ship more of our product much closer to the markets where we do a very large portion of our business. This should allow us to get product in consumers' hands more quickly, replenish our stores faster, and ultimately allow us to do more business on less inventory. The initiative also allows us to leverage our long history in the Lions community and the excellent workforce that we have there. We believe we will be able to do all of this while maintaining highly competitive shipping costs. We also have exciting plans to explore opportunities to expand our use of artificial intelligence across the enterprise. We already employ AI in a wide variety of specific situations and believe that we will continue to find incremental use cases where we can employ AI to improve our efficiency and effectiveness. As we look to our forecast for fiscal 2024, as outlined above, we have excellent plans for each of our brands this year. That said, we expect the cautiousness of the consumer to persist throughout the course of the year. The current operating environment has led to caution among many retailers And as a result, we expect our wholesale business to be down meaningfully in the first quarter compared to a very strong first quarter for wholesale last year. We expect wholesale to be positive on a year-over-year basis for the balance of the year, which will partially but not fully offset the first quarter decline, meaning that we will be down slightly in wholesale for the full year. Scott will provide more detail in a minute, but as a result of the wholesale decline, the cadence change in Lilly Pulitzer that I mentioned a few minutes ago, and the week February, we expect the first quarter to be materially below last year's first quarter results. For the full year, we expect mid-single digit top line growth with new stores and modestly positive comps offsetting the headwinds that I have outlined. From a profitability standpoint, gross margins will be flat to up slightly, while we will experience some pressure at the SG&A line due to the effects of inflation across expense categories, as well as the new stores, Marlin bars, and other investments we are making in the future. We are very proud of the portfolio of brands that we have built, and the strong connections we've forged with our customers. Most of all, we are incredibly proud of the amazing team of people that bring them to life every day. As always, we are committed to delivering on our near-term targets while staying focused on the initiatives that will strengthen our brands and business fundamentals over the long term. I'll now turn the call over to Scott for additional color on 2023 and our plans for 2024. Scott? Thank you, Tom.