Greetings, and welcome to the Oxford Industries Third Quarter Fiscal 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference call is being recorded. I will now turn the conference over to our host, Jevon Strasser of Investor Relations. Thank you. 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 actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in 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 can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at oxfordinc.com. And now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO; and Scott Grassmyer, CFO and COO. Thank you for your attention. And now, I'd like to turn the call over to Tom Chubb.

Thank you, Jevon. Good afternoon, and thank you for joining us for the third quarter of fiscal 2022 OXM conference call. As most of you know, our purpose as a company is to evoke happiness in our customers with the products, services and experiences, we offer through our portfolio of brands. When we are successful in evoking that happiness, our businesses deliver profitable growth and, of course, sustained profitable growth is what allows us to accomplish our objective of driving long-term shareholder value. And we certainly did that during the third quarter, delivering our sixth consecutive quarter of record adjusted earnings. Strong top line growth across all our brands, combined with the acquisition of the Johnny Was brand in September fueled a 26% sales gain. Sales in the aggregated group of Tommy Bahama, Lilly Pulitzer and emerging brands grew 19% and with Johnny Was contributing an additional $23 million of sales for the quarter. At the same time, adjusted gross margin improved an impressive 120 basis points. All of these factors, along with our repurchase activity helped drive a 23% or $0.27 increase in adjusted earnings per share from $1.19 last year to $1.46 this year. The biggest contributor to our increased earnings was our largest brand, Tommy Bahama, which delivered 20% top line growth and a $9 million increase in adjusted operating income for the quarter, with excellent results in all channels of distribution. Lilly Pulitzer are also had a successful quarter with sales growing 16% and positive comps in both retail and e-commerce. Finally, our newly constituted Emerging Brands Group had a revenue increase of 22% during the third quarter. We have also recently advanced a number of strategic initiatives. I will highlight just three among many. First, during September, we added the Johnny Was brand to our…

Thank you, Tom. We're thrilled to deliver our sixth consecutive quarter of record sales, gross margin and adjusted earnings in the third quarter of 2022. Excellent performance was driven by revenue expansion in all of our brands and distribution channels versus the third quarter of 2021. Consolidated net sales were $313 million for the third quarter, which included $23 million of sales for Johnny Was, growing 26% above last year's third quarter sales of $248 million, which included $4 million of sales from linear apparel. This growth was strong across all distribution channels with increases of 22% in full price bricks-and-mortar, 26% in full price e-commerce, 32% in wholesale, 17% in restaurants and 15% in outlets. We also had increased sales of $9 million in the Lilly Pulitzer e-commerce flash sale. Meanwhile, adjusted gross margin expanded to 63.4%, which is 120 basis points above last year's third quarter. We benefited from lower freight costs, which included less air freight due to the early receipt of inventory and from lower freight rates. Also, we increased IMUs. This was partially offset by the impact of Lilly Pulitzer's larger flash sale this year due to extremely lean inventories last year. Adjusted SG&A expenses were $171 million in the third quarter of 2022 compared to $131 million last year. This increase was driven by the addition of Johnny Was operating expenses as well as increases in our other businesses for employment costs, advertising costs, favorable expenses and other expenses to support sales growth. The result of all this yielded $33 million of adjusted operating income compared to $27 million in the prior year period with improved operating income driven by the strong results in Tommy Bahama and the inclusion of Johnny Was for half the quarter. This level of operating profit, combined with a…

Thank you. Ladies and gentlemen, at this time, we will conduct our question-and-answer session. [Operator Instructions] Our first question comes from Ed Yruma with Piper Sandler. Please state your question.

Good afternoon, guys. Congrats on the quarter and thanks for taking the question. I guess two questions for me. First, more remodeling question. How should we think about Johnny Was from a seasonality perspective? Are there particular quarters where revenue or profitability has outsized impact? And I guess, just a more short-term question. You guys seem to have been very successful over the Black Friday shopping season with actually a less promotional strategy than years past, which is very different than obviously the rest of what we're seeing in retail. I guess, how do you contemplate kind of the remainder of the holiday season? And does your guidance contemplate maybe potentially having to be more reactive to what looks like an intensifying promotional holiday?

Thanks, Ed. It's always good to hear your voice. And I'll answer the one about BFCM and the remainder of the season, and then Scott and Jevon can chime in with additional thoughts on that as well as the seasonality of Johnny Was, which is a great question. But I think what's happening this holiday season in the aggregate is very much what we thought would happen. We thought that the season would sort of normalize. And you'll recall well that for us and for many others in the market last year, customers started shopping super early and super hard. So they shop during October, which is still third quarter. They shopped hard during the first part of November. And then they shop through the holiday season, but it was much more tilted towards the first part of the season than it would have been in a normal year. The second thing that was very unusual last year is that for the first time in many years, the market was just not very promotional at all, primarily because people were short of inventory. This year, we expected things to normalize, and they have -- we planned accordingly. So the Black Friday, Cyber Monday five day period ended up being really the kickoff of the holiday season, which is the way that it's traditionally worked. And the level of the promotions in the marketplace, much greater than last year. I'm not sure they're really that much greater than they were back pre-pandemic. It's -- there's a lot -- we expected that, and that's really how it's playing out, and we expect it to continue to be like that for the remainder of the holiday selling season, and we built our guidance based on that assumption.

And Ed, as far as the seasonality, Johnny Was it's really not that season. It's pretty level quarter-to-quarter where other businesses seem to have the spring spike in the lower third quarter. Johnny was as pretty level each quarter throughout the year.

Thank you.

Thank you, Ed.

Thank you. The next question comes from Paul Lejuez with Citigroup. Please state your question.

Thanks. It's Tracy Kogan filling in for Paul. First, I was hoping you guys could give us some color on the regional performance and performance in some of your bigger states. And then what are you guys seeing from your wholesale partners? Are you seeing any cautiousness at all, like we've heard from some others or is it really -- are they continuing to place big orders because sell-throughs are good. Thank you.

Yeah. Thank you, Tracy. So on the regional performance during third quarter, it was really -- it was kind of good everywhere, but very happily for us, some of our biggest markets were actually the strongest of the strong. So Hawaii was really good. The Desert was really good. West Florida, even with the hurricane that happened down there still was just fantastic. So the regional lineup really worked well for us during the quarter. Again, there wasn't really anywhere that was particularly weak. But the strongest of the strong, we're really in the places that we would like to see it at most. So that was really a great outcome for us. And then in terms of retailer cost, and I think going into spring of 2023, they are definitely very cautious. Most of the big retailers and really most of the small ones to had cut back their open-to-buy dollars pretty meaningfully for spring of 2023. We actually think that's a healthy thing for the marketplace. It means they'll be appropriately inventoried, and we'll sell more at full price. In terms of our own bookings, I think we're getting much more than our share in that environment. So bookings, depending on the brand or sort of flattish to down very modestly, which we think in the environment is actually we're really getting more than our share of the open to buy dollars. And we think that's based on the performance and the strength of our brands and just yesterday, I was looking at last week selling from our -- some of our major wholesale partners where we get good reporting out of them on a weekly basis. And it looks really, really good. And over the long term, that's what we need to do to have successful wholesale businesses. And I think we're doing that quite well at the moment.

Great. Thanks very much and happy holidays.

Thank you, Tracy. You too.

Our next question comes from Noah Zatzkin with KeyBanc. Please state your question.

Hi. Congrats on the quarter. Thanks for taking my questions. Just on the strong improvement at Lilly, could you just provide a little bit of color on kind of the change in marketing strategy and how that kind of played out in improving trends through the quarter? And then second, across a lot of your peers, we're seeing kind of stronger performance from brick-and-mortar relative to DTC, but you guys had a pretty even split in terms of growth rates. So just -- have you seen any different behavior among consumers shopping brick-and-mortar versus e-commerce or has the behavior largely been the same? Thank you.

Yeah. Thank you, Noah for the question, and thanks for being on the call. And what I would say is, I think brick-and-mortar is having a great year. We're really happy with what we're seeing there. And while it is true that when you take the Johnny Was impact out of the picture. It was really sort of evenly balanced in terms of year-over-year growth in e-com versus brick-and-mortar. But if you think back to last year and then even the year before, it was much more tilted towards e-com. So the fact that brick-and-mortar is having the growth that it is this year, I think, is a different trend line than what we've seen before. We've been really happy to see it. It's wonderful. We expect to see that really continuing through the holiday. And actually, as we get closer to Christmas, kind of think that bricks and mortar will continue to get stronger. So great to see that. Love to see e-com still growing too, and it's a good picture all the way around. And then in terms of the improvement at Lilly, it was really about changing the partners that we were working with in the digital marketing arena and then sort of using that as the jumping off point to make sure that we were attending to all the fundamentals in the right way. In our digital marketing arena, I think that work is well underway. Obviously, it's well underway, and we've seen some great results to date, but there is also more to come there. There's more work to be done and also, I think, more room for us to improve our performance there. But we were delighted to see the positive comps in Lilly during the quarter in both bricks and mortar and e-commerce.

Thank you.

Thank you. There are no further questions at this time. I'll hand the floor back to Tom Chubb for closing remarks.

Thank you, Diego, and thanks to all of you for your interest in our company. We hope you enjoy the holidays, and we will look forward to talking to you again in the new year.

Thank you. And that concludes today's conference. All parties may disconnect. Have a great evening.