Greetings, and welcome to Oxford Industries Third Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please note this conference is being recorded. I will now turn the conference over to Brian Smith from Oxford. Thank you, and 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 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 the 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'll 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 I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO, and Scott Grassmeyer, CFO and COO. Thank you for your attention, and I'd like to turn the call over to Tom Chubb. Good afternoon, and thank you for joining us today. As is typical for our third quarter, I'll keep my comments on Q3 relatively brief, before turning to what we're seeing in the early weeks of the fourth quarter and how we are approaching the holiday season and the rest of the year. We are pleased with what we were able to accomplish during the third quarter with our financial results broadly in line with the expectations we set earlier in the year. The environment remained highly competitive and promotional, and the consumer continued to be selective with their discretionary spending, often requiring new and innovative product to catch your attention. Against that backdrop, our team stayed focused…

Thank you, Tom. As Tom mentioned, our teams have shown great discipline and resilience in executing our plan against the backdrop of a challenging consumer and macro environment. In the third quarter, our teams were able to deliver top and bottom-line results within our previously issued guidance range. In the third quarter of fiscal 2025, consolidated net sales were $307 million compared to sales of $308 million in the third quarter of fiscal 2024 and within our guidance range of $295 million to $310 million. Direct-to-consumer channels were up in total, but they totaled a company comp increase of 2%, which was in line with our guidance for the quarter. The direct consumer increase was led by increased e-commerce sales of 5% and increased sales in our food and beverage and full-price brick-and-mortar locations of 31%, respectively. The increases in full-price brick-and-mortar were driven primarily by the addition of non-comp stores, with comps in our restaurant and full-price brick-and-mortar locations down slightly, at 21%, respectively. Sales in our outlet locations were comparable to the prior year. Our increased direct-to-consumer sales were offset by decreased sales in our wholesale channel of 11%, driven primarily by decreases in our in-and-off price business. By brand, Lilly Pulitzer delivered another strong quarter, with total sales increasing year-over-year, driven by double-digit growth in retail and high single-digit growth in e-commerce, partially offset by a decline in the wholesale channel. The positive comp sales at Lilly Pulitzer, along with positive comp sales and overall sales growth in our Emerging Brands businesses, helped to offset the low single-digit negative comp at Tommy Bahama and high single-digit negative comp at Johnny Was. That led to sales decreases in both businesses. Adjusted gross margin contracted 200 basis points to 61%, driven by approximately $8 million or 260 basis points…

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and the number 2 if you would like to remove your question from the queue. For any participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Ashley Owens with KeyBanc Capital Markets. You may proceed with your question.

Hi. Great. Thanks so much, and good afternoon. So just first and foremost, I'd appreciate all the color on, you know, what was exactly a gap within each of the banners in terms of assortment for the holiday. But just moving forward as we navigate the quarter, you know, how meaningful would you expect this to be for the upcoming season? Is it something that's been corrected, or are you observing some disruption still? Just want to understand how much of the holiday is now fully aligned versus where you originally planned. And then maybe on that, you know, I know China's complex right now, and that it might be ironing out a little bit, but would ask if this gap is shifting your viewpoint on resourcing strategy moving forward? Would you try to diversify further, place orders further in advance? Just any color there. Thanks.

Yeah. I think the big thing, and while we did give a lot of the detail, one thing that we didn't really call out specifically was that it's really what's on the floor right now that most impacted some of our sourcing decisions. And the reason is at the time that we were placing the buys for what's on the floor right now, corresponded with that brief period of time where the duty or the tariff on China was going to be 145%. You know, when it's been 20% or 27% or whatever, that's something that, you know, we could make a conscious decision to just stay in China with a particular product if we needed to and just try to take various routes to mitigate that tariff. When we were looking at 145%, which you know, that's off the table at this point, but that was right when we were placing the buys for what's on the floor now. Lots of stuff we were able to move out of China. Tommy and Lilly are mostly out of China, if not completely. But sweaters are the one category, and there are a couple of other ones. Sweater is the big one. That they're just not a lot of haven't historically been great resources that we could go to outside of China. So what we decided to do, Ashley, well, you know, at the time, I think it was the right call. We knew we couldn't bear that much tariff. So we really cut back the sweater assortment and tried to fill it in with other products. You know, you look at our assortment right now, and you wish you had the sweaters. And that's really what we were talking about. So by the time you get to spring, that had settled down a lot. The tariff stuff is still a little bit up in the air. But it's settled down a lot. And we were able to either move the stuff or, you know, know that it was going to come in at a tariff rate that we could deal with otherwise. So for spring, I don't think we have this same kind of impact. We still have tariff issues that we have to deal with, but they're not going to impact the way that they have for this season. Does that help?

Yeah. Yeah. That's super helpful. You know, just a couple of other questions really quickly. So I think you know, you mentioned earlier that competitors were more aggressive with promotions for holiday and also earlier, which created that tougher backdrop. Any insight as to what you're seeing in the marketplace now in terms of that and if the intensity is moderated, but also how that's helping to inform your promo strategy for the balance of the year? And then, additionally, just following your, you know, leadership refresh and then the external assessment on Johnny Was, would be curious as to what emerged as the key priorities you're now focused on, and then also as you look out to 2026, key objectives for the brand and should we be thinking of this as another period of stabilization or any color you could provide us on some of the road map or some of the key building blocks for stabilizing Johnny. Thank you.

Okay. So with respect to the promotional sort of intensity out there, I would say right now, it still feels quite high, but we're a little bit in that in-between time. Between the, you know, Black Friday, Cyber Monday, weekend, and the final stretch, and those are usually the most promotional times. I don't think it's really retracted, but I'm not sure it's taken another step up yet. But wouldn't be surprised to, you know, to see that happen. And, you know, we're going to try to be responsive to that in brand-appropriate ways. I think the catchword in all the brands is to stay nimble. We do, you know, want to make sure that we're not totally selling out our brands, but we're also thinking about things that we can do to, you know, to respond to the marketplace. The one other thing I'll point out, and this is this calendar that we have this year where there are twenty-seven days between Thanksgiving and Christmas, and Christmas falls on a Thursday. The last time we had that calendar was in 2014. And that year, the business sort of came very late if you looked at the sales build through the Thanksgiving to Christmas selling period that really came on late. Last year, if you remember, you had Christmas on Wednesday. So this year, they've got an additional weekday to shop, which could be meaningful. And, also, it allows us to cut off e-commerce shipments probably on Saturday or in some cases, even Sunday and still have people feeling good that they're going to get them by Christmas, while last year, that was mostly on Friday that we were cutting off. So there's some things there that, you know, we kind of built the current trajectory into our, you know,…

Great. Thank you for clarifying. Appreciate all the information, and I'll pass it along. But best of luck.

Okay. Thank you.

Our next question comes from Janine Stichter with BTIG.

Hi. Good afternoon. Wanted to dig into wholesale a little bit. I know it's a relatively smaller piece of the business, but just curious if you can share what's going on there. It sounds like your wholesale partners are being a bit more cautious with orders. But there's maybe a little bit more inventory in the channel. And then I think you mentioned that off-price was going to be down. Is that a strategic plan, or maybe just elaborate on what's going on there? Thank you.

I think I may on the overall on the wholesale, I think it is, you know, a level of concern and caution by the, you know, by the retailers. And I would say most especially the specialty retailers that, you know, are a big part of our wholesale base. And, during uncertain times, they tend to pull back a bit, and I think we're seeing that now. And, Scott, I don't know if you want to elaborate on the off-price situation a bit.

Yeah. But we did have less inventory that needed to be liquidated through those channels. So we are, you know, trying to keep our inventory and hopefully, we'll continue to have less that we have to put through those channels.

Got it. And then just thinking through the tariffs, as you're just now seeing the impact of product that you were planning, I guess, in April or May when the China tariffs were 145%. Is the Q4 what we should think of as the peak headwind from tariffs? Or how much should we think about continuing into the first quarter of next year?

Well, I think in terms of it, you know, the impact it had on our product assortment, I think it is peak. I think as we get into spring, we were able to, you know, make the product that we wanted to make at somewhere that was, you know, a manageable level of tariff. In terms of the impact, the financial impact, of tariffs, remember, we didn't have them during the first quarter of last year. Really, they didn't really kick in until later in the year. So first quarter, you're not going, you know, apples to apples. And then as you get later in the year, you start to lap the tariffs. Yeah. And I don't know if you want to add.

Yeah. Yeah. We had settled, like, accelerate a lot of products. So, you know, early in the year knowing that tariffs were going to be coming or fearful they're going to be coming. So we were able to most of the first quarter had very, very minimal. Now we go into the first quarter next year. Everything will have some tariff on it, but we will have some price increases to at least help mitigate that impact. As we get later in the year, you will be going apples to apples with tariffs and hopefully have a little bit more mitigation price-wise as the year moves on.

Okay. Thank you very much. I can pass it on.

Thank you, Janine.

Our next question comes from Joseph Civello with Truist Securities.

Hey, guys. Thanks so much for taking my questions. Following up on wholesale a bit, understand, you know, the general cautious tone from retail partners. But can you give any incremental color on your sort of competitive positioning within the channel? And maybe, you know, as we get past the tariff pressures on inventory and stuff like that that you're facing right now?

Well, I think through the third quarter, our, you know, relative performance to the extent we know, and we don't always have perfect information. But I think we performed well. And I don't think we, you know, for the overall, I would say, well, there were small pockets where maybe that was not the case. But I would say, overall, our performance was quite good on the retail floor. For the fourth quarter in the holiday, I think it's, you know, it's too early to know for sure. We don't have enough data, but my hunch is that we're going to continue to perform well relative to the rest of the floor. And it's more about the general caution.

Got it. Makes sense. And then if we could also just get a little bit more color on, you know, thoughts around price increases, as we go through the spring, which I believe was, like, the original trajectory we were looking at.

Yeah. You know, we do have some price increases in for, you know, the fall holiday period, but would there be, you know, more in the spring. But, again, we'll, you know, have the full tariff load coming in that inventory. And then we're, you know, looking at next fall pricing on, you know, are there any adjustments we additional adjustments we need to make. So I think there'll be, you know, once we have an early part of next year, the, you know, pricing should, you know, the goal is to have it mitigate the tariff dollars. Oh, I don't think we'll get the percentage quite mitigated, but the dollars, you know, once we get out of the early part of the year, the goal is to have the pricing mitigate the tariff dollars.

Got it. Makes sense. Thanks so much.

Alright. Thank you, Joe. Our next question comes from Paul Lejuez with Citigroup.

Hi. It's Tracy Kogan filling in for Paul. I had a question about what you're seeing quarter to date. And in outside of the key sweater category, can you talk about the trends there in some of those other categories and also talk about trends by brand quarter to date? Is it pretty broad-based weakness you're seeing across the brands, or is there a big deviation of one brand or the other? Thank you, guys.

Sure. Thank you, Tracy. Well, I would say that, and we talked about this in the prepared remarks, but the big three brands are all relatively weak at the moment. You know, and the smaller brands are still sort of humming along. They were plus 17% in the third quarter, and they're continuing to have a strong fourth quarter, while the big brands are where we're really seeing the softness. And then in terms of product, we also talked about that a little bit. And I think in, you know, in Lilly, we're because of the China tariff situation and the threat of a 145%, China is where we make a lot of our more embellished kind of, you know, novelty type stuff, things with, you know, sparkles and rhinestones and bows and that kind of stuff. And so we just got less of that stuff. And so the consumer's almost being forced into some things that, I mean, Lilly is never basic product, but that within the Lilly spectrum are a little more tame. And then in Tommy Bahama, we've actually seen very good performance in things like the Boracay pant, which is basically a chino. It's a really great one, really nice one, but it's a chino pant, and that is we talked about third quarter and, again, this quarter, we introduced a new one or I say third quarter, second quarter. We introduced it earlier in the year. It's at $158 versus $138. It does have some new features and benefits. But it's sold just incredibly well. And, actually, we're selling a lot more of them than we sold the old one last year. And then also things like long sleeve wovens are performing well. Some of the second layer knits. And I think the kind of theme to a lot of those things is versatility. You know, things that can be worn on a lot of different use occasions. But, you know, we'll see more as the season develops, Tracy.

Great. Thank you, guys. Good luck at the holidays.

Okay. Thank you.

Our next question comes from Mauricio Serna with UBS. You may proceed with your question.

Great. Thank you for taking my question. I guess, you know, I understand now in this fourth quarter, you're experiencing some assortment issues that related to, you know, the sweaters and the move out of China for that for this particular season. But as you think about the spring 2026 season, how are you thinking about assortment, you know, how ready you are in terms of different, you know, the three big brands, I guess, and the potential for maybe, you know, after getting through this bit of a hiccup in Q4, you know, having stronger results in the first half of next year? Thank you.

I think the challenges to the assortment were really mostly for what's on the floor right now. I think as we get into spring, by the time we were placing those buys, the 145% tariff was off the table. And or we had found other places to make things. So I don't think we'll have that challenge so much in the spring. As Scott mentioned a minute ago, the tariff issue for the spring will just be that this year, we will have tariffs, whereas in spring of last year, we didn't really have them yet because they hadn't been implemented and or we were at, you know, pulled in ahead of them.

Got it. And just as a reminder, what kind of price increases are you planning for spring 2026? To offset the tariffs?

Yeah. It it's kind of varying, but, you know, it's ranging from, you know, four to say 8%. But some of it, ones that are more in the 8% or more the, you know, it's more a little more elevated in mix. So I think for the tariff piece of it around four. Which kind of offsets the dollar impact. The dollar? Yeah. Yeah. Not quite the margin impact, but the dollar impact.

Understood. Okay. Thank you very much, and good luck in the rest of the holiday season.

Alright. Thank you, Mauricio.

This now concludes our question and answer session. I would like to turn the call back over to Tom Chubb for closing comments.

Thanks to all of you very much for your interest. We look forward to talking to you again in March. And until then, I hope you have a happy holiday season.

Ladies and gentlemen, thank you for your participation. This concludes today's conference. Please disconnect your lines and have a wonderful day.