Oxford Industries, Inc.

Greetings and welcome to the Oxford industry's second quarter fiscal 2024 earnings conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. A brief question and answer session will follow the formal presentation. As a reminder, this call is being recorded. I would now like to turn the call over to Brian Smith. Thank you, Brian. 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 our actual results of operations or our financial condition to differ are discussed in our press release issued earlier today. and the 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 will find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under our investor relations tab of our website at oxfordinc.com. And I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmeyer, CFO and CLO. Thank you for your attention, and I'd like to turn the call over to Tom Chubb.

Good afternoon, and thank you for joining us. I'm going to start with an update on the execution of our plan for the second quarter of fiscal 2024 and our current expectations for the balance of the year. During the second quarter, we continue to make excellent progress on long-term strategic goals, but fell short of delivering on our near-term financial targets. Sales of $420 million and adjusted EPS of $2.70 for the quarter were below our guidance range, primarily due to a continued pullback from the consumer. The pullback worsened sequentially during the quarter, coinciding with consumer sentiment hitting an eight-month low in July, with the trend continuing into August and the start of our third quarter. While most underlying economic indicators remain reasonably strong, the cumulative effect of several years of inflation may be catching up with the consumer. Simultaneously, the second quarter was also marked by several national and global noteworthy events, that led to a more distracted consumer at several points over the summer. Certain factors that we may believe may have amplified these headwinds with respect to our particular business include, first, our focus on affluent 45 and up customers who tend to be more headline and market sensitive. Second, our significant exposure to Florida which accounts for over a third of our bricks and mortar business and grew at an exceptional pace coming out of the pandemic, but has slowed down as the new post-pandemic world settles in. And finally, some commercial and merchandising missteps on our part, including assortment misses and timing of promotional events. The slowdown we experienced in our business has been driven by reduced conversion, while traffic has remained strong, which indicates that consumers are very interested in our leading brands but have become cautious when making purchase decisions. Looking across the marketplace, the two areas where the consumer continues to respond positively are newness and value. During the quarter, we saw a strong full-price response to fashion and new and differentiated products. while interest in core styles was more muted. The consumer also responded to value in the quarter with a higher proportion of sales during the quarter occurring during promotional events and at our outlet stores than in last year's second quarter. The greater proportion of off-price selling put pressure on gross margin versus our expectation, which along with lower than anticipated sales, resulted in operating margin, operating profit, and ultimately EPS that were below our plan. Importantly, our balance sheet remained strong. Inventories were down on a year-over-year basis to end the quarter, while strong cash flows allowed us to continue investing in the future of our business, including investing in our store pipeline and Lions Georgia Distribution Center project, which Scott will detail shortly, pay off our debt, and return cash directly to shareholders through our quarterly dividend. For the balance of the year, we expect to continue to see a more cautious consumer, and accordingly, we have reduced our forecast for the year. Our playback for achieving forecasted results will be, as always, to protect the strength and integrity of our brands for the long term by avoiding brand-damaging, short-sighted reactions to current market conditions. At the same time, we will create excitement and enthusiasm for our brands via some specific initiatives in the second half. These include new collections, such as our Tommy Bahama Indigo Palms collection of denim and denim-friendly products which launched early in the third quarter. Initial reception to the collection's launch has been strong. The Indigo Palms collection encompasses a range of styles for both men and women, and the early success is fueling our optimism for how it can help us continue to build and grow our business going forward in both our direct channels as well as wholesale. By offering our guests a completely on-brand assortment of Tommy Bahama product that is appropriate for cooler weather, it enhances our ability to be relevant in the cooler months, particularly in the western part of the country, the Midwest, the Mid-Atlantic, and the Northeast. Also in the denim universe, Johnny Woz is collaborating with Sasan Denim, playing to nostalgia for the original premium denim brand and featuring a beautiful marketing campaign with Lily Aldridge as the face of the brand. A campaign like this is new territory for us, and we are excited to see what we learn from it. From a value perspective, we will again protect the integrity of our brands, but within that constraint, offer plenty of opportunities for our customers to get lots of value for their money in brand friendly ways. Some examples of this include the seasonal Lily Pelletzer flash sale, which is happening right now, and our holiday marketing plans, which feature special value products, gift with purchase, gift cards, bounce back deals, and many others. In addition to our focus on top line initiatives, Our second half will include focus on our operating margin with a keen interest in opportunities for SG&A reductions. As an example, we invested in the relocation of Johnny Woz Distribution Center operations from high-cost distribution centers in Los Angeles to Lyons, Georgia that will result in significant operating cost reductions that Scott will discuss more in a minute. We will also continue to look across all areas of business for opportunities to reduce SG&A spend without impairing our future growth prospects. While we are disappointed in our recent performance and revised outlook for this year, our teams have successfully navigated challenging economic cycles before, and I am confident that we have the right people and strategies in place to emerge on the other side of this difficult market with the health of our brands and our consumer connections stronger than ever. Thanks for your attention, and I will now turn the call over to Scott for additional detail. Scott?