Oxford Industries, Inc. :OXM-US: Earnings Analysis: Q3, 2018 By the Numbers : December 7, 2017

Oxford Industries, Inc. reports financial results for the quarter ended October 31, 2017.

We analyze the earnings along side the following peers of Oxford Industries, Inc. – PVH Corp., Perry Ellis International, Inc., Delta Apparel, Inc., V.F. Corporation, Columbia Sportswear Company, Superior Uniform Group, Inc. and Gildan Activewear Inc. (PVH-US, PERY-US, DLA-US, VFC-US, COLM-US, SGC-US and GIL-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 235.96 million, Net Earnings of USD 1.07 million.
  • Gross margins narrowed from 52.92% to 52.82% compared to the same period last year, operating (EBITDA) margins now 4.07% from 3.16%.
  • Year-on-year change in operating cash flow of 8.74% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-10-31 2017-07-31 2017-04-30 2017-01-31 2016-10-31
Relevant Numbers (Quarterly)
Revenues (mil) 235.96 284.71 272.36 261.05 222.31
Revenue Growth (%YOY) 6.14 0.61 6.29 0.57 11.92
Earnings (mil) 1.07 22.69 17.2 12.04 -1.6
Earnings Growth (%YOY) 167.08 -4.97 -14.77 -31.39 -14.96
Net Margin (%) 0.45 7.97 6.31 4.61 -0.72
EPS 0.06 1.36 1.03 0.6 -0.1
Return on Equity (%) 0.26 5.69 4.5 3.23 -0.43
Return on Assets (%) 0.64 13.49 10.01 6.98 -0.93

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Market Share Versus Profits

Revenues History
Earnings History

OXM-US’s change in revenue this period compared to the same period last year of 6.14% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that OXM-US is holding onto its market share. Also, for comparison purposes, revenues changed by -17.12% and earnings by -95.28% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 3.16% to 4.07%. For comparison, gross margins were 58.14% and EBITDA margins were 15.26% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

OXM-US’s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days are now 38.45 days from 52.26 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

OXM-US’s change in operating cash flow of 8.74% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -1.52% to -0.57% and (2) one-time items. The company’s pretax margins are now 0.19% compared to -0.47% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Oxford Industries, Inc.

Company Profile

Oxford Industries, Inc. designs, sources and markets owned lifestyle brands. It also owns and licenses tailored clothing and golf apparel brands. The company operates through the following groups: Tommy Bahama, Lilly Pulitzer, Lanier Apparel and Southern Tide. The Tommy Bahama group designs, sources and markets men’s and women’s sportswear and related products. The Lilly Pulitzer group designs, markets and distributes upscale collections of women’s and girl’s dresses, sportswear and other products. The Lanier Apparel group designs, markets and produces men’s dress and casual apparel across a wide range of price points. This groups licensed brands include Kenneth Cole, Reaction by Kenneth Cole, Geoffrey Beene, Dockers, Nick Graham and Andrew Fezza. The Southern Tide group offers apparel bearing the Skipjack logo tailored for men, women, and youth. Oxford Industries was founded by John Hicks Lanier, Thomas C. Chubb III and Sartain Lanier in 1942 and is headquartered in Atlanta, GA.

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