Greetings and welcome to Oxford Industries, Inc. Second Quarter Fiscal 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Brian Smith, Director of Financial Reports and 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.

Good afternoon and thank you for joining us. Before I turn things over to discuss results for the second quarter and our outlook for the balance of the year, I want to start by acknowledging the state of Hawaii and the island of Maui in particular which have been a very important and special part of our business for many years. We have over 200 members who live on Maui and over 450 in the state of Hawaii. These are wonderful people who we value greatly and our hearts are with all of them as they work to recover from the devastation of the recent wildfires. I am also proud and grateful for the generosity of our associates across the enterprise who have pitched in in so many ways to help the people of Maui recover from this disaster. This generosity and the resilience of our people in Maui and Hawaii are among the characteristics that make Oxford such a great company. Moving to our results, we're pleased to be reporting sales and adjusted earnings per share within our forecasted range given the tough operating environment. During the quarter, we achieved 16% total year-over-year revenue growth driven by our acquisition of Johnny Was in the third quarter of last year and a 1% increase on an organic basis, which is on top of 11% organic growth in the year-ago period. In addition to the tough comparison, the more modest organic growth rate this year reflects, as widely reported across the marketplace, a customer that has become somewhat more cautious with regard to discretionary purchases. As you know, our purpose as a company is to evoke happiness in our customers with our brands. Our customer metrics indicate that we are doing exactly that. Excitement and interest in our brands remain very high. Our active customer count and new customer ad rate are both growing, and our average order value has held steady. We have seen higher traffic across our portfolio brands this year. At the same time, conversion rates are lower on a year-over-year basis. In addition, consumers are making more of their purchases during our promotional events. Both of these factors reinforce the notion that the consumer has become more cautious in their discretionary spending than they were a year ago with increased purchasing activity during promotional periods, which is also putting some modest growth pressure on gross margins. As we move down the income statement, we saw some operating deleverage during the quarter as a result of our increased investment in a couple of key expense categories. The first is employment expense. Our team is our most valuable asset and is the key to all our success. To ensure that we can continue to be successful going forward, we need to have a sufficient number of staff and that they are fairly compensated. Last year, the growth in our business had outrun the size of our staff and we had to catch up to be fully staffed. In addition, we are continuing to invest in our team in an inflationary environment by increasing wage rates and salaries to ensure that we stay competitive and continue to attract and retain the best people. The second major area of increased expense is in advertising and promotion. As the post-pandemic rebound moves further into the rear-view mirror and the market and consumer continue to normalize, we want to ensure we are doing what we need to maintain high levels of excitement about our brands. Accordingly, we have increased our advertising spend levels this year, both in absolute dollars and as a percentage of sales, especially in awareness advertising and experimenting with new media channels. Finally, we are feeling the impact of depreciation, software subscription, and other expenses related to technology and other investments we have made to ensure that we have a modern omni-channel selling platform. While these expenses are causing some short-term operating deleverage in a weaker demand environment, we believe that all three of these areas represent prudent investments in our future. In keeping with our purpose and objective to evoke happiness in our customers and deliver long-term value to our shareholders, we have a number of strategic initiatives underway which are all designed to drive excellence across our portfolio of lifestyle brands to help spur sustained profitable growth. The biggest of these initiatives is a multi-year Southeastern United States fulfillment center enhancement project to ensure best-in-class direct-to-consumer throughput capabilities for our brands. When complete, the fulfillment center will help support our very large, highly profitable e-commerce business across all our brands and will help support our retail business in the eastern half of the country, particularly Florida, which is our largest revenue state by a wide margin. Another very exciting initiative is the upcoming re-launch of the Johnny Was website. The new Johnny Was website will have the same beautiful, aspirational look and feel of the current site but will utilize the best-in-class technology platform that powers our Lilly Pulitzer website. The result will be a website that is 100% Johnny Was and much more searchable, more shoppable, easier to check out, and overall provides a better customer experience. When launched later this year, we expect the new site to drive incremental growth in our Johnny Was e-commerce business. In addition to the website and the fulfillment center projects, we are driving excellence across the portfolio by leveraging our talented people across the brands. Specifically, we've been shifting functional expertise across brands to enhance operational excellence. Aligning talent with opportunities to have the maximum impact on the business benefits both the company and the employee. Our healthy business continues to generate strong cash flow, and we remain focused on using that cash wisely by investing in organic growth and acquisition opportunities and returning capital to our shareholders, all while maintaining a very healthy balance sheet. This quarter provides an excellent example of that focus in action. During the quarter, we opened five net new locations, bringing our total for the year to eight net new locations. By the end of the year, we expect to have opened 25 net new locations, bringing our total count close to 320 stores and retail bar restaurant locations. In addition, the beautiful Tommy Bahama Miramonte Resort in Indian Wells, California, is on track to open in the third quarter. Included in the openings during the quarter was a beautiful new Marlin Bar and Tommy Bahama store in Palm Beach Gardens. The Marlin Bar is off to a terrific start and has dramatically enhanced our retail business in that location, particularly our women's business. This Marlin Bar is unique among the eight that we have opened so far in that it is in an indoor-outdoor location situated at the entrance to an enclosed mall. Our hospitality business is a lynchpin of our Tommy Bahama strategy, and with two more Marlin Bars scheduled to open this year, and three planned for fiscal 2024, we are extremely excited about the growth that it will help us fuel for many years to come. Our cash generation during the quarter also benefited from our acquisition of Johnny Was last year, with Johnny Was contributing $7.3 million of adjusted operating profit, or approximately $0.34 a share to our quarterly results. We are delighted to have Johnny Was as part of the portfolio and believe it has significant runway to grow top line and expand operating margin going forward. This strong cash flow allowed us to pay down $46 million of debt, leaving $48 million outstanding while repurchasing $19 million of stock or approximately 196,000 shares, representing 1% of our outstanding stock, paying $10 million in dividends and investing $15 million in capital expenditures during the quarter. Our inventories are very healthy and we're in an outstanding position to continue to deliver robust cash flow for the balance of the year and for many years to come. Scott will provide more details on the quarter and the balance of the year in a moment, but as we look forward, given the impact of the Maui wildfires and the slightly more hesitant consumer purchasing behavior to start the third quarter, we believe it prudent to build in a bit of caution to our guidance for the balance of the year. At the same time, we know that our efforts to evoke happiness, drive excellence across the portfolio, and invest in our business will drive profitable growth and long-term shareholder value for many years to come, as evidenced by our expected 10-year adjusted EPS CAGR of 14% based on our updated guidance range. Now I will turn the call over to Scott for more details on the quarter and the balance of the year.

Thank you, Tom. As Tom mentioned, we are pleased to report another strong quarter that is within our guidance range. In an uncertain microeconomic environment where the consumer has become more cautious, our operating groups executed very well, going against direct consumer costs of 14% in the second quarter of 2022. Consolidated net sales for the second quarter of fiscal 2023 were $420 million, which included $52 million of sales for Johnny Was and increases in each operating group, growing 16% above last year's second quarter net sales of $363 million. In the aggregate, Tommy Bahama, Lilly Pulitzer, and Emerging Brands saw decreases of 3% in full-price brick and mortar, 4% in full-price e-commerce, and 7% in wholesale sales. These declines were offset by 8% growth in our food and beverage business and $16 million of sales from the Lilly Pulitzer e-commerce flash sale that we did not hold in the second quarter last year. Adjusted gross margin was 64.3% compared to 64.6% last year. This slight decline was driven by increased e-commerce flash sales at Lilly Pulitzer and a greater proportion of sales during Tommy Bahama's loyalty award card flip side and in the seasonal clearance events, partially offset by the higher gross margin of Johnny Was and reduced freight expense. Adjusted SG&A expenses were $202 million compared to $163 million last year. This quarter included $29 million of SG&A associated with the Johnny Was business, which we did not own in the prior year period. There were also additional SG&A increases in our other businesses for employment costs, advertising costs, variable expenses, and other expenses that we continue to invest in our businesses to fuel and support anticipated future growth. The result of all this yielded $73 million of adjusted operating income, or a 17% operating margin compared to $78 million in 2022. The $73 million of operating income included $7 million of operating income for Johnny Was. The decrease in operating income reflects our planned SG&A deleveraging and the $2 million impact of lower royalty income from our licensing partners, notably in the furniture and home categories, which saw a surge during the pandemic and subsequent recovery period. Moving beyond operating income, we incurred more interest expense after having no debt in the second quarter last year and benefited from a lower effective tax rate due to the favorable tax impact of stock awards vesting during the quarter. With all this, we achieved $3.45 of adjusted EPS, towards the top end of our guidance range. I'll now move on to our balance sheet beginning with inventory. Our inventories increased 14% or 28% year-over-year on a FIFO basis, including $18 million of Johnny Was inventory. The 14% increase in inventory is in line with our low double-digit plan for sales growth for 2023. So we believe our inventory levels are appropriate to allow us to deliver on our forecast for the remainder of the year. We used our cash, cash equivalents, and short-term investments on our balance sheet last year, as well as some borrowings under our revolving credit agreement to fund our acquisition of Johnny Was. We finished the quarter with $48 million of borrowings under our revolving credit facility after having $119 million of borrowings at the beginning of the year, generating $153 million of cash flow from operations in the first half of fiscal 2023, compared to $91 million in the first half last year. That allowed us to significantly reduce outstanding debt by $71 million during the first half, while also funding $31 million of capital expenditures, $21 million in dividends, and $19 million of share repurchases. We have strong cash flows for the back half of the year and anticipate repaying additional debt in the fourth quarter. I will now spend some time on our outlook for 2023. As Tom mentioned, we are moderating our full-year view to reflect the impact of the Maui wildfires and a bit more caution being shown by the consumer early in the third quarter. For the full year, we now expect net sales to be between $1.57 billion and $1.6 billion, growth of 11% to 13% compared to sales of $1.41 billion in 2022. The planned increase in sales in the 53-week 2023 includes the benefit of the full-year of Johnny Was, as well as growth in our existing brands in the low-single-digit range driven by direct-to-consumer businesses, while wholesale sales in our existing businesses are expected to be comparable to 2022. We still anticipate modest gross margin expansion for the full year of 2023 with much of that improvement in the first and fourth quarters. The higher sales and modestly higher gross margins are expected to be offset by increased SG&A, which is expected to grow at a rate higher than sales in each quarter of 2023. As we continue to invest in our businesses as Tom outlined earlier. While we don't want to back off on expense investments that help build for the future, we are redeveloping our efforts to scrub the income statement and prudently trim expenses where appropriate. We expect royalty income for the year to be lower, with the second half being comparable to the prior year. Considering all of these items, we expect operating margin to decrease from 22% to a percentage between 14% and 14.5% of sales. Additionally, we anticipate higher interest expense at $5 million for the year, after incurring almost $4 million of interest expense in the first half. This compares to $3 million of interest expense in the full year of 2022 when we had no debt outstanding until the third quarter. We also expect a higher effective tax rate of approximately 24% compared to 23% in 2022. After considering these items, 2023 adjusted EPS is now expected to be between $10.30 and $10.60, versus adjusted EPS of $10.88 last year, with the inclusion of a full-year profit from Johnny Was being offset by lower operating income in existing businesses, the increased effective tax rate, and higher interest expense. Further, we expect pressure on our second-half performance as we rehabilitate our business in Maui, where our brands generated nearly $30 million in sales in 2022. Of our six locations on the island, only the Tommy Bahamas store and restaurant and the Johnny Was store remained open, but with significantly reduced traffic. Our Lahaina Marlin Bar location was a total loss. While the reopening path to results after reopening for our three stores in the Whaler Village Center remains uncertain, we expect this to have a negative impact of approximately $0.10 per share on both the third and fourth quarters or $0.20 for the second half. In the third quarter of 2023, we expect sales of $320 million to $335 million compared to sales of $313 million in the third quarter of 2022. In the third quarter of 2023, we expect higher sales as this year includes a full quarter of Johnny Was after Q3 last year only included half a quarter of operations after the September 2022 acquisition, partly offset by lower respective sales in our other businesses after we generated 12% comps in the third quarter last year. We anticipate comparable gross margin to last year's third quarter and continued SG&A deleveraging, which we expect to result in third quarter adjusted EPS of between $0.90 and $1.10 compared to $1.46 in the third quarter of 2022. The lower year-over-year EPS expectation in the quarter is driven by increased SG&A investments, which have a larger impact on our operating income in our smaller sales quarter of the year and by the impact of the situation in Maui. In the fourth quarter, we expect increased sales due in part to the additional week in the quarter with otherwise comparable sales year-over-year after generating 9% comps in Q4 of 2022. Modestly higher gross margins as the fourth quarter 2022 included certain inventory markdowns and emerging brand businesses and modest SG&A deleveraging as SG&A increases at a higher rate themselves. Also, we expect interest expenses in the fourth quarter to be lower than interest expense in the fourth quarter last year due to our significant reduction in debt during 2023 and a higher effective tax rate as the fourth quarter 2022 included certain favorable items that are not expected to repeat in the fourth quarter of the current year. Capital expenditures in 2023 are expected to be approximately $90 million compared to $47 million in 2022. As we mentioned last quarter, the planned CapEx increases include spending associated with brick-and-mortar locations including build-out associated with approximately 35 locations across all brands including 3 Marlin Bars and about 10 new Johnny Was locations. A number of these are relocations and remodels, which along with a few store closures should result in a net increase of full-price stores of about 25 by the end of the year, with approximately 9 net new locations in both the third and fourth quarters. This spending associated with these brick-and-mortar locations represents about one-half of the planned capital expenditure amount for 2023. Additionally, we will also continue with our investments in our various technology system initiatives. Finally, we anticipate initial spending associated with a multi-year project across our fulfillment network in the Southeastern U.S. to enhance direct consumer throughput capabilities for our brands. We continue to have a very positive outlook on our cash and liquidity position after generating cash flow from operations of $126 million in 2022, which included a working capital increase of $85 million. We expect to increase our cash flow from operations significantly to a level in excess of $200 million in 2023. This level of positive cash flow from operations provides ample resources to fund our planned capital expenditures, payment of dividends at the current rate, recently completed share repurchases, and the continued reduction of our outstanding debt during the year. Although SG&A investments will put pressure on 2023 margins, these actions set the table well for mid-to-upper single-digit top-line growth and a long-term operating margin target at or above 15%. Thank you for your time today, and now we will return the call over for questions.

Thank you. Our first question comes from Edward Yruma with Piper Sandler. Please proceed with your question.

Hey, good afternoon, guys. Thanks for taking the question and our thoughts are with all of your colleagues in Maui. I guess a couple quick ones from me. First, you guys have added quite a few new customers to the Tommy Bahama customer file over the past couple of years. As you think about kind of retaining some of those customers, can you talk about trends that you've seen and maybe tie that back to some of the comments around the promotional environment? And then as a follow-up, just any insight on the organic growth of Johnny Was and how the business was performing would be appreciated. Thank you.

Okay. Thank you, Ed, and thanks for your comments regarding Maui. We know what a special place that is, and it is a tough situation for sure. So we appreciate your thoughts on the customers at Tommy Bahama. I would say what we're seeing there is really what we're seeing fundamentally across the brands, and I think this is consistent with what's going on in the market: that traffic remains good, interest in the brand is good, our customer count is growing, and our new customer ad rate is growing. The issue is really on conversion. We would attribute that, as we said during the comments, to a more cautious consumer. I believe part of it is due to worries about where the economy is going, the actions of the Fed, and interest rates. I do think another factor affecting customer spending is the amount of promotional activity in the marketplace. That does seem to be abating a bit through the spring and early part of the summer, but it was at very elevated levels, and that part does seem to be correcting a bit. However, there is some overhang from the economy that I believe is weighing on the consumer. In terms of Johnny Was, I would say they are experiencing some organic growth challenges that are not different from what we're seeing in other brands, and it’s really the same set of drivers at work there. Their business is heavily tied to California, which was particularly difficult both in the first quarter and part of the second quarter. However, we remain very excited about having them as part of our portfolio. They delivered $7.2 million of operating profit, which translates to $0.34 a share for the quarter. I think their operating margin was around 14%, which is lower than where we believe they can be, but it’s still a respectable operating margin. The focus this year at Johnny Was has been on onboarding them onto our platform and ensuring they operate similar to our established brands. Although it may not seem quick from the outside, we are moving swiftly to launch them on a much better website, which we hope will happen soon. We believe this will enhance their business significantly. Overall, we feel confident about Johnny Was and what it can contribute this year and into the future.

Thank you very much.

Our next question comes from the line of Noah Zatzkin with KeyBanc. Please proceed with your question.

Hi, thanks for taking my questions. I guess first just hoping you could provide any color on the monthly cadence itself moving through the quarter and then the exit rate leading into the second quarter. Secondly, just wondering how you're feeling about the inventory position, and any insights on planned adjustments to the promotional calendar through the balance of the year would be really helpful. Thanks.

Okay, thank you, Noah. Thanks for being on the call today. So through the second quarter, June was what I would call a wobbly month. It got a little better later in the month, but it was somewhat erratic. July actually ended up being a good month; it was pretty strong. As we noted in the prepared remarks, early August has been a bit soft. It’s not like the bottom has dropped out, but it has been soft, similar to some months we saw during the first quarter. The sum of these factors has led us to believe the consumer is in a more cautious shopping mindset, and accordingly, we've moderated our guidance a little for the rest of the year. In terms of inventory, I'm going to let Scott comment on that in more detail, but we feel great about where our inventory stands. We believe we're in a good spot.

We do. We’re up 14% on a FIFO basis on inventory year-over-year, but with the addition of Johnny Was and the sales growth we have planned, we believe our inventory levels are appropriate to support our forecast for the remainder of the year. We think we should be much closer to flat and maybe even a little down year-over-year by the end of the year.

Regarding planned changes to the promotional environment, I would say that in Lilly Pulitzer in particular, we've mixed things up a bit this year. We are not really increasing promotions; we are instead changing the cadence and look of promotions compared to last year. In Tommy Bahama, our strategy will be similar to what you've seen previously.

Thank you.

Our next question comes from the line of Mauricio Serna with UBS. Please proceed with your question.

Great. Good afternoon and thanks for taking my question. I wanted to get a little more detail about what caused the company to lower the sales outlook. I know you previously talked about sensing more caution from consumers. Just trying to understand if this was something that really happened post-quarter or if this is just building in more conservatism due to ongoing uncertainty. Also, if you could elaborate on the bigger picture lessons learned from Johnny Was and how you expect the brand's growth moving forward, that would be helpful. Thank you.

Thank you for the question, Mauricio, and thank you for being on. Regarding the guidance, I think we've covered that reasonably thoroughly. The issue is a realization on our part that the consumer is indeed a bit more cautious. Early in the year, I'm not sure we really saw that, but especially as we got into August, we have stronger evidence now indicating that consumers are being more careful with their discretionary spending. Interest in the brand remains very high, traffic is robust, and customers are even spending the same or slightly more than last year. However, conversion rates are lower and spending is increasingly happening during promotional time periods. We feel good about the health of our brands, our market position, and our cash flow. We're extremely pleased with our projected cash flow for the year, which exceeds $200 million. Lessons learned from Johnny Was include moving quickly, and we believe we have implemented this with them effectively. Although the transition may seem slow from the outside, we believe it is progressing well. The brand has already made contributions, adding $0.34 to EPS this quarter, which we appreciate.

One of the same reasons for the top-line reductions is the impact from the Maui situation. That represents $3 million to $4 million in both the third and fourth quarters. We projected to lose around $30 million in sales from our stores in Maui. The two stores that are still open are operating at significantly reduced volumes. Our Lahaina Marlin Bar location was a total loss, and the reopening path for our three stores in the Whaler Village Center is uncertain.

Got it. Very helpful, and congratulations on those results. Thank you.

Thank you, Mauricio.

Our next question comes from the line of Paul Lejuez with Citigroup. Please proceed with your question.

Thanks. It’s Tracy Kogan for Paul. I'm wondering if you could elaborate on current trends. Is there one brand seeing more caution than another, or is it one channel versus another? Just any differences you are observing would be helpful. I also have a follow-up.

The trend is similar across the three larger brands, and there is a mix of channels at play. The main issue holding us back is the conversion rate across the board. The three smaller brands, however, continue to grow nicely, but as they are still small, there is ample room for growth. That sums up our observations.

Got it. Thank you very much.

Yes, the freight for the most part is close to flushing itself through the system. The higher freight costs from last year were primarily a first-half issue, significantly impacting the first quarter and less so in the second quarter. We had some inventory write-downs in Q4 last year in our emerging brands group that we do not expect to reoccur.

Got it. Thanks very much.

Thank you, Tracy.

Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question.

Hi, good afternoon, everyone. As you think about what's happening with the current consumer and your inventory levels, how are you planning full-price versus markdown business? Is there anything regarding category performance by brand that helps indicate consumer focus?

In terms of full-price versus markdown, our plan is to maximize full-price business where possible. As mentioned earlier, we're not going to increase promotions significantly, but we will mix things up, so there will be changes in the cadence and appearance of promotions in Lilly Pulitzer compared to last year. Tommy Bahama will follow a similar strategy to previous years. We've seen a return to more structured styles this year, moving away from the super casual and cozy looks favored during the pandemic. In the first half, we were buying fairly basic and core products much earlier due to supply chain issues. However, we think we're in a much better position now with new styles and assortments for the second half of the year.

Thank you.

Thank you, Dana.

There are no further questions. I'd like to hand it back to Mr. Chubb for closing remarks.

Thank you, Doug, and thanks to all of you for your interest in our company. We look forward to talking to you again in December, and I hope that all of you are well until then.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.