Apparel maker Oxford Industries profit drops in Q3
Mr Hicks Lanier, Chairman & CEO of Oxford Industries
Oxford Industries Inc announced financial results for its fiscal 2008 third quarter ended November 1, 2008. Consolidated net sales for the third quarter were $244.2 million versus $286.3 million in the same period of the prior year, which was the three months ended November 2, 2007.
Earnings per diluted share for the quarter were $0.31 compared to $0.76 in the same period last year. The Company noted that results for the fiscal 2008 third quarter include $0.07 per diluted share of restructuring and other unusual charges comprised of $0.04 per diluted share for the write off of unamortized deferred financing costs and $0.03 per diluted share of severance-related expenses.
J. Hicks Lanier, Chairman and CEO of Oxford Industries, Inc., commented, "Obviously we are disappointed with our absolute results for the third quarter. However, we believe we managed the business well given what are indisputably the worst market conditions in decades. While we've been hurt like everyone else, our wounds are not self-inflicted."
"We have been and remain focused on these key areas -- protecting the integrity of our brands, controlling and reducing costs, and maintaining and protecting our strong balance sheet and liquidity as evidenced by our 30% year-over-year reduction in inventory levels."
Cost-cutting actions taken across all parts of the Company, primarily during the second half of the current fiscal year, will reduce the Company's prospective annualized employment costs by over $18 million. Additionally, store roll out plans have been moderated pending an improvement in economic conditions. While capital expenditures for fiscal 2008 are expected to total approximately $22 million, the Company currently anticipates less than $10 million in capital spending for fiscal 2009.
Tommy Bahama reported net sales of $83.7 million for the third quarter of fiscal 2008 compared to $103.0 million in the same period of the prior year. The sales decrease was primarily due to particularly difficult market conditions for both the wholesale business and company-owned retail stores. Tommy Bahama's operating income for the third quarter of fiscal 2008 was $0.7 million compared to $11.3 million in the same period of the prior year.
The decrease in operating income was primarily attributable to a decrease in income for our company-owned retail stores. Expenses for a retail store tend to be relatively flat throughout the year, however retail sales are subject to seasonal ebbs and flows. The third quarter historically has been the weakest sales quarter for our Tommy Bahama retail stores. This year, the third quarter was particularly weak as a result of significantly diminished traffic during September and October. This, coupled with the expenses of seven additional retail stores, resulted in significantly lower operating profits in the third quarter of this year compared to the same period last year.
Tommy Bahama's fourth quarter has historically been its largest retail quarter and, accordingly, the retail stores achieve greater operating leverage in those months. While the Company does not expect Tommy Bahama's fourth quarter operating income to reach last year's level, it is expecting to approach a low double digit operating margin.