Oxford Industries, Inc.

Greetings. Welcome to Oxford Industries Inc. first quarter fiscal 2024 earnings conference call. At this time, all participants are in a 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. I'll now turn the conference over to your host, Brian Smith of Oxford Industries Inc. You may begin.

Thank you and good afternoon. 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 a 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 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. Now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmeyer, CFO and COO. Thank you for your attention, and now I'd like to turn the call over to Tom Chubb.

Thank you, Brian. Good afternoon, and thank you for joining us. I'm going to start with an update on the execution of our plan for the first quarter of fiscal 2024 and our current expectations for the balance of the year. Our strong brands and our excellent team focused on executing our strategy allowed us to deliver sales and adjusted EPS within our guidance ranges for the first quarter despite continued macroeconomic headwinds and lower levels of consumer sentiment. While most economic indicators remain fairly positive Consumer sentiment has dropped meaningfully from levels at the start of this year and has driven the consumer to become more cautious than originally anticipated in our spending on discretionary items such as the fashion resort apparel, which is the core of our business. Net sales were down $22 million or 5% as compared to the first quarter of fiscal 2023. The majority of the decline in net sales is attributable to a $17 million year-over-year decline in wholesale sales for the first quarter, which we anticipated as we lapped a very robust first quarter of fiscal 2023. Our position with our key retail partners remains very strong, and our sell-through performance remains excellent. However, most of them, in response to muted consumer sentiment and the attendant lackluster demand, were very cautious in their inventory purchases for spring and summer of this year, and that shows up in our first quarter sales numbers. Looking forward, thanks to our continued strong performance with our key partners, our forward order book is solid and we expect to make up about half of the first quarter shortfall in the wholesale over the remaining three quarters of the year. The second factor in our sales decline was the change in promotional cadence and events in our Lilly Pulitzer brand that we outlined in March. The net effect of these changes is that while first quarter sales for Lilly were down on a year-over-year basis, we expect second quarter sales to be significantly higher than last year for Lily Pellitzer. The third factor contributing to our year-over-year sales decline was a 7% negative count in our direct-to-consumer businesses as we continue to see a consumer that is more cautious in their spending than she was 18 to 24 months ago. Recall that in last year's first quarter, we posted a double-digit positive comp. Interest in our brands remains high, with double-digit growth in traffic offset by a decline in conversion, resulting in negative comps reflective of consumer caution. As we look forward to the balance of the year, encouragingly, Our second quarter to date comps have rebounded compared to the first quarter, are positive to last year, and have sequentially improved. While this gives us reason to be optimistic, based on the dip in consumer sentiment and continued choppy market, we are moderating our comp assumption for the balance of the year. Despite these challenges, we still expect top line growth in all our brands growth in all direct consumer channels of distribution, and positive comps for the full year. We also expect a strong 2024 from a cash flow perspective and will continue to execute on the fundamentals of our long-term strategy, including investing in the future of our business. These investments will provide the ability to continue to deliver profitable growth and strong cash flow on a sustained basis. Compelling, differentiated product is always at the forefront of our strategy. We continue to evoke happiness in our customers with beautiful and unique products like our artist series items in Tommy, Bahama. Each year, we celebrate a new group of artists with a limited collection that honors all the island life has to offer. For our 2024 Artist Series, we selected seven artists from across the globe and asked them to create custom artwork that shows what Tommy Bahama is all about. The resulting shirts, dresses, and other pieces delight tried and true Tommy Bahama aficionados by giving them truly special pieces and also bring new customers into the brand by captivating them with the artistry of the pieces and the amazing stories of the artists behind them. Another great example is the very elevated 65th anniversary Lily Pelletier capsule collection that we offered earlier in the year. This capsule was a massive hit with our customers, and the commercial success that we had has opened the door to additional opportunity for us to grow the business by expanding our line in the future to include a range of more elevated product that commands higher prices. Investing in future growth is also critical to our long-term strategy, and we are continuing with our plans to open stores and marlin bars this year. During the quarter, we opened seven new stores, including two at Tommy Bahama, one of which is a new Barland bar, three at Johnny Was, and one each at Southern Tide and the Beaufort Bonnet Company. These new locations extend our reach and allow us to serve more customers with our beautiful stores and our exceptional in-store experience. For the balance of the year, we expect to open four more Tommy Bahama Marlin bars and 15 to 20 more stores spread across the brands. These openings set us up well for top-line growth in 2025 and beyond. In addition, we are making excellent progress on rebalancing our distribution capacity between the eastern seaboard and the west coast. Going into the year, we have excess west coast capacity and insufficient east coast capacity to serve all the current and future needs that we have on the eastern seaboard. We have exited some west coast capacity, which will save us money, and are hard at work on building our new distribution facility in Georgia, which will allow us to better serve and grow a very robust base of business that we serve in the eastern and southeastern part of the country. Upon completion, we will be in much better position to serve current needs and support future growth, all at a highly competitive distribution cost. While we navigate a less robust consumer market, we remain focused on the long term and ensuring that we are in a position to drive sustained, profitable growth. As always, we are incredibly grateful to our amazing people for all that they do to help us succeed. Thanks for your attention. Now I will turn the call over to Scott for additional details. Scott? Thank you, Tom.