Clothing Takes Cut of Oxford’s Q4

by MR Magazine Staff

NEW YORK – Oxford Industries said late Tuesday that continued weakness in its tailored clothing business had led it to reduce its guidance for fourth quarter results, despite improvements at Ben Sherman and a continued strong performance at Tommy Bahama.

The company cut its fourth quarter profit guidance to $1.00 to $1.05 a diluted share from an earlier range of $1.07 to $1.14.

The estimate doesn’t include an additional $0.03 per share in severance costs as a result of efforts to “rationalize” its underperforming tailored clothing business

Analysts had originally expected EPS of $1.03 for the quarter, which ended last month.

Atlanta-based Oxford also said that sales in the fourth quarter would land in the lower half of its revenue estimate of $285 million to $295 million.

The company said that both the Tommy Bahama and Ben Sherman brands achieved their fourth quarter plans, representing a “dramatic improvement in profitability” at Ben Sherman.

“However,” its statement read, “continued weakness in the tailored clothing sector depressed the results of the Menswear Group for the fourth quarter of fiscal 2007. The company believes that below plan results at many retailers for the combined months of March and April led to shipment deferrals and tight selling windows.”

Sales for the first quarter now are budgeted at $245 million to $255 million, with diluted EPS of $0.46 to $0.51, versus the current analyst estimate of $0.68.

Oxford said that, in 2008, it expects “healthy” sales increases from Tommy Bahama, Ben Sherman and its tailored clothing business, offset by a decline in its “historical men’s sportswear business.” Full year EPS are expected to land between $3.10 and $3.25, versus the analyst estimate of $3.31.

“We believe that we are on the right path to make Ben Sherman a truly international contemporary lifestyle brand,” commented J. Hicks Lanier, chairman and chief executive officer of Oxford. “While results in our legacy businesses have been more challenging, we have taken the necessary steps to improve operations. We have rationalized underperforming businesses and focused our resources on our best opportunities.”

In conclusion, Lanier added, “It remains our mission to transform Oxford into a diversified and lifestyle oriented branded apparel company. Both Tommy Bahama and Ben Sherman continue to have tremendous opportunity for growth and form the cornerstone of our strategy for the future.”

Oxford provided its guidance after the close of the markets Tuesday. During the day’s session of the New York Stock Exchange, its shares fell $1.52, or 3.3%, to end the session at $44.20. In after-hours trading, the slide continued, with shares being quoted at $43.02, down an additional 2.7%, at midnight New York time.