Oxford Industries exceeds expectations in second quarter earnings

Oxford Industries (NYSE:OXM) reported its fiscal second quarter earnings for 2025 on September 10, posting consolidated net sales of $403 million, a 4% year-over-year decline, and an adjusted EPS of $1.26, exceeding forecasts despite ongoing margin pressures due to high U.S. tariffs. Management confirmed its full-year projections, including net sales of $1.475 to $1.515 billion and adjusted EPS of $2.80 to $3.20, reflecting disciplined cost controls, selective price increases, and investments in supply chain and store expansion.

Lilly Pulitzer drives resilience through strength in direct sales

Lilly Pulitzer reported positive comparable sales in its direct-to-consumer channel, offsetting declines in wholesale sales and outperforming the segments of Tommy Bahama and Johnny Was, which showed high single-digit and low double-digit negative comparisons, respectively. Recent product innovations and limited edition collections strengthened customer engagement, with strong anticipated demand for heritage-inspired collections supporting optimism for second half performance.

“Analyzing the recent performance by brand, Lilly Pulitzer maintained its deep connection with its core consumer in the second quarter and recorded positive comparable sales in the direct-to-consumer channel, continuing the strong engagement we saw in the first quarter. A key factor in this momentum was the delivery of exciting innovations in our casual products, including the sea spray linen jacket that sold out in all colors,” commented Tom Chubb, President and CEO.

Tariff mitigation allows for maintaining projections

Oxford Industries faced approximately $80 million in additional exposure to U.S. tariffs, but through proactive changes in the supply chain, accelerated inventory receipts, supplier concessions, and selective price increases, management mitigated about half of this impact, resulting in a net tariff effect of $25 to $35 million. These actions allowed the company to maintain its projection ranges for both net sales and adjusted EPS, despite a 160 basis point contraction in gross margin compared to the prior year.

“Based on current tariff policies and our historical sourcing patterns for 2024, we estimate a potential exposure to additional tariffs of approximately $80 million in fiscal year 2025 before any mitigation actions. By accelerating receipts and changing sources of supply, we were able to mitigate about half of this exposure,” explained Scott Grassmeyer, CFO and COO.

Recalibration of investments and growth of stores

The company continued to invest heavily in infrastructure, with projected capital expenditures of $121 million (mainly for the distribution center in Lyons, Georgia and new store openings), but noted a reduction to a rate of $75 million starting in fiscal year 2026, and a planned annual rate of approximately 15 net new stores, while the growth of Johnny Was stores is paused amid the ongoing repositioning of the brand.

“We expect the Lyons project to be substantially complete. There may be a small part that extends into next year. But once this is overcome, I believe a continuous pace will be around $75 million. It really depends on the number of stores, and the pace of openings has slowed down a bit,” Grassmeyer said.

Future Perspectives

The company reaffirmed its full-year projections of $1.475 to $1.515 billion in net sales and adjusted EPS of $2.80 to $3.20, with expectations for comparable sales to be flat to slightly positive through the fourth quarter. A net decrease in inventory levels is expected for the remainder of the year after pulling forward purchases due to tariffs. Capital expenditures are projected to moderate to $75 million annually starting in fiscal year 2026, with an annual growth of new stores of approximately 15 locations, down from 30 the previous year.