Greetings and welcome to the Oxford Industries Second Quarter Fiscal 2024 Earnings Conference Call. As a reminder, this call is being recorded. I would now like to turn the call over to Brian Smith. Thank you, Brian. 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 our 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 will find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under our Investor Relations tab on 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 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. I'm going to start with an update on the execution of our plan for the second quarter of fiscal 2024 and our current expectations for the balance of the year. During the second quarter, we continued to make excellent progress on long-term strategic goals, but fell short of delivering on our near-term financial targets. Sales of $420 million and adjusted EPS of $2.70 for the quarter were below our guidance range, primarily due to a continued pullback from the consumer. The pullback worsened sequentially during the quarter, coinciding with consumer sentiment hitting an eight-month low in July, with the trend continuing into August and the start of our third quarter. While most underlying economic indicators remain reasonably strong, the cumulative effect of several years of inflation may be catching up with the consumer. Simultaneously, the second quarter was also marked by several national and global noteworthy events that led to a more distracted consumer at several points over the summer. Certain factors that we believe may have amplified these headwinds with respect to our particular business include, first, our focus on affluent customers aged 45 and up, who tend to be more headline and market sensitive; second, our significant exposure to Florida, which accounts for over a third of our bricks-and-mortar business and grew at an exceptional pace coming out of the pandemic, but has slowed down as the new post-pandemic world settles in. And finally, some commercial and merchandising missteps on our part, including assortment misses and timing of promotional events. The slowdown we experienced in our business has been driven by reduced conversion while traffic has remained strong, which indicates that consumers are very interested in our leading brands but have become cautious when making purchase decisions. Looking across the marketplace, the two areas where the consumer continues to respond positively are newness and value. During the quarter, we saw a strong full-price response to fashion and new and differentiated products, while interest in core sales was more muted. The consumer also responded to value in the quarter, with a higher proportion of sales occurring during promotional events and at our outlet stores than in last year's second quarter. The greater proportion of off-price selling put pressure on gross margin versus our expectation, which along with lower than anticipated sales, resulted in operating margin, operating profit, and ultimately EPS that were below our plan. Importantly, our balance sheet remains strong. Inventories were down on a year-over-year basis to end the quarter, while strong cash flows allowed us to continue investing in the future of our business, including investing in our store pipeline and Lyons, Georgia distribution center project, which Scott will detail shortly, paying off our debt and returning cash directly to shareholders through our quarterly dividend. For the balance of the year, we expect to continue to see a more cautious consumer and accordingly, we have reduced our forecast for the year. Our playbook for achieving forecasted results will be, as always, to protect the strength and integrity of our brands for the long term by avoiding brand-damaging, shortsighted reactions to current market conditions. At the same time, we will create excitement and enthusiasm for our brands via some specific initiatives in the second half. These include new collections such as our Tommy Bahama Indigo Palms collection of denim and denim-friendly products, which launched early in the third quarter. Initial reception to the collection's launch has been strong. The Indigo Palms collection encompasses a range of styles for both men and women, and the early success is fueling our optimism for how it can help us continue to build and grow our business going forward in both our direct channels as well as wholesale. By offering our guests a completely on-brand assortment of Tommy Bahama products that is appropriate for cooler weather, we enhance our ability to be relevant in the cooler months, particularly in the western part of the country, the Midwest, the Mid-Atlantic, and the Northeast. Also in the denim universe, Johnny Was is collaborating with Sasson Denim, playing to nostalgia for the original premium denim brand and featuring a beautiful marketing campaign with Lily Aldridge as the face of the brand. A campaign like this is new territory for us and we are excited to see what we learn from it. From a value perspective, we will again protect the integrity of our brands, but within that constraint, offer plenty of opportunities for our customers to get great value for their money in brand-friendly ways. Some examples include the seasonal Lilly Pulitzer flash sale, which is happening right now, and our holiday marketing plans which feature special value products, gifts with purchase, gift cards, bounce-back deals, and many others. In addition to our focus on top-line initiatives, our second half will include a focus on our operating margin with a keen interest in opportunities for SG&A reductions. For example, we invested in the relocation of Johnny Was distribution center operations from high-cost distribution centers in Los Angeles to Lyons, Georgia that will result in significant operating cost reductions that Scott will discuss more in a minute. We will also continue to look across all areas of business for opportunities to reduce SG&A spending without impairing our future growth prospects. While we are disappointed in our recent performance and revised outlook for this year, our teams have successfully navigated challenging economic cycles before, and I am confident that we have the right people and strategies in place to emerge on the other side of this difficult market with the health of our brands and our consumer connections stronger than ever. Thanks for your attention and I will now turn the call over to Scott for additional detail.

Thank you, Tom. As Tom mentioned, there were several macroeconomic headwinds across the marketplace that negatively affected our financial results during the quarter, most notably lower consumer sentiment and an increase in the promotional environment. Despite these headwinds, our teams are focused on executing against our strategies of delivering newness and compelling products that resonate with consumers to combat these challenges and encourage full-price selling. In the second quarter of fiscal 2024, consolidated net sales of $420 million were comparable to the second quarter of fiscal 2023 and below our initial guidance range of $430 million to $450 million. Notably, sales in our outlets increased 4% as this channel benefited from consumers looking for deals and promotions, while sales in full-price brick-and-mortar locations were up 1%, driven by new stores and increased promotional activity, partially offset by low single-digit negative comparisons. Our wholesale channel, which was particularly challenging in the first quarter of this year, had a difficult second quarter with sales down 5% compared to the second quarter of 2023. As the specialty store business across our brands continues to struggle, partially offset by increased sales to major department stores, e-commerce and food and beverage sales were relatively flat compared to the second quarter of 2023. Adjusted gross margin contracted 100 basis points to 63.3%, driven primarily by a higher proportion of net sales occurring during promotional events in Tommy Bahama, Lilly Pulitzer, and Johnny Was. Across our three brands, we saw a strong response from consumers to our promotions, promotional indices, and clearance events. We were able to partially offset this decrease in our Emerging Brands Group through our continued efforts to improve our inventory position and reduce the need for off-price wholesale and promotional direct-to-consumer sales. Adjusted SG&A expenses increased 5.7% to $213 million compared to $202 million last year. During the second quarter of fiscal 2024, we incurred higher expenses related to recent and ongoing investments in our business, primarily from the addition of 30 new brick-and-mortar locations opened since the second quarter of last year, and the addition of the Jack Rogers brand acquired in the fourth quarter of 2023. We also incurred costs on some of the approximately 15 net new brick-and-mortar locations, including four Marlin Bar locations that we expect to open in the second half of the fiscal year. Additionally, we incurred approximately $1 million of expenses which are omitted from adjusted SG&A associated with the relocation of Johnny Was's distribution center operations from Los Angeles to Georgia. We expect to incur an additional $1 million of charges related to the relocation in the second half of the year, but are projecting this move to save Johnny Was approximately $4 million in operating costs per year with potential for additional savings. The result of this yielded $57 million of adjusted operating income, or a 13.5% operating margin compared to $73 million or 17.3% in the prior year. The decrease in adjusted operating income reflects the SG&A investments amidst a challenging consumer environment for sales and gross margin. Moving beyond operating income, our effective tax rate was flat. All interest expense was $1 million lower compared to the second quarter of 2023, resulting from lower average debt levels. With all this, we achieved $2.77 of adjusted EPS. I'll now move on to our balance sheet beginning with inventory. During the second quarter of fiscal 2024, we were able to decrease inventory by 6%, or $13 million year-over-year on a FIFO basis. The decrease in inventories resulted from our continued inventory discipline across our portfolio. We were also able to repay our remaining outstanding debt and ended the quarter within an $18 million cash position. From a liquidity standpoint, our $122 million of cash flows from operations in the first half of fiscal 2024 allowed us to fund our elevated level of capital expenditures of $54 million and pay $22 million of dividends, all while being able to repay the $29 million of borrowings that were outstanding at the end of fiscal 2023. I'll now spend some time on our outlook for 2024. We finished the second quarter of fiscal '24 with negative comparisons of 1%, which was lower than our previous forecast of mid-single-digit positive comparisons for the quarter. Similar to the results we saw in the second quarter, comparable sales figures in the third quarter to date are negative. We believe the negative comparable trend will continue and result in negative comps in the low to mid-single-digit range for the remainder of the year, on top of similar comps in the prior year. These assumptions compared our previous expectations from June that assumed mid-single-digit positive comps for the remainder of the year, and we revised our sales forecast accordingly. For the full year, we now expect net sales to be between $1.51 billion and $1.54 billion, or a decline of 2% to 4% compared to sales of $1.57 billion in 2023. Our updated sales plan for 2024 now includes low to mid-single-digit sales declines in Tommy Bahama and Lilly Pulitzer, partially offset by sales growth in the low single-digit range for Johnny Was and Emerging Brands Group. By channel, wholesale comprises the majority of the sales decrease, with a partial offset from a slight increase in our direct-to-consumer channels. We expect wholesale sales, which were down approximately $20 million in the first half of the year, to be relatively flat in the second half of the year compared to fiscal 2023 as we go against easier comps relative to what we saw in the first half. In our direct-to-consumer channels, we expect growth in our outlets as those locations continue to perform well in the current environment and in our full-price retail, food, and beverage locations that will benefit from the addition of the approximately 30 new locations during the year. We expect sales in our e-commerce channel to be flat to slightly negative for the year. Looking across the marketplace, there are many macroeconomic risks and uncertainties that could affect our outlook, including consumer headwinds and industry trends that we have already discussed. There are also the upcoming elections in November and the related consequences that could disrupt demand. Other challenges, including shipping disruptions to global trade caused in part by the attacks in the Red Sea, also have potential to disrupt the supply of goods across the economy and increase freight costs. We now anticipate gross margin for the year will decline by approximately 50 basis points to 100 basis points compared to the prior year. As expected, increased activity during promotional events across our brands will more than offset the gross margin benefit from proportionally lower wholesale sales. We also anticipate a slightly negative impact in the second half from an increase in freight rates. Our guidance contains our best estimate of the impact that increased freight will have on earnings. In addition to slightly lower sales and negative gross margin, we expect SG&A to grow at a rate higher than sales in 2024, primarily due to the investments in our business, including expanding our store count by a net of approximately 30 locations with five new Tommy Bahama Marlin Bars, continued IT investments and the addition of Jack Rogers. Additionally, as discussed during our last call, we expect the Jack Rogers brand, acquired in the fourth quarter of fiscal 2023, to generate an operating loss of approximately $2.5 million in 2024 as we reset and refocus the business. We also anticipate lower interest expense of $2 million for the year compared to $6 million in 2023 and higher royalty and other income primarily from a full year of the Tommy Bahama Miramonte Resort. Additionally, we expect a higher adjusted effective tax rate of approximately 24% compared to 23% in 2023, which benefited from certain favorable items that are not expected to recur in 2024. Considering all these items, we expect operating margin to decrease from 2023 levels and now expect 2024 adjusted EPS to be between $7 and $7.30 versus adjusted EPS of $10.15 last year, with decreases in all of our businesses and a higher tax rate being partially offset by the lower interest expense, higher adjusted royalties and other income. In the third quarter of 2024, we expect sales of $310 million to $325 million compared to sales of $327 million in the second quarter of 2023. We also expect gross margin to contract by approximately 50 basis points to 100 basis points. With the trend of increased sales during promotional events expected to continue, SG&A deleveraging, $1 million of lower interest expense and a flat royalty in other income, we expect this to result in third-quarter adjusted EPS between zero and $0.20 compared to $1.01 in the third quarter of 2023. Given our fixed cost structure and the seasonality of our business, the third quarter is typically the smallest of the year from a sales and EPS perspective and will be further impacted in 2024 by heavy preopening costs for new stores and Marlin Bars. Expanding on the investments we are making in 2024, I'd like to briefly discuss our updated CapEx outlook for the remainder of the year, due to refined cash flow timing projections for our Lyons, Georgia distribution center project and adjustments to other capital projects. Capital expenditures in fiscal 2024 have been moderated and are now expected to be approximately $150 million, including $54 million incurred during the first half of the year, compared to $74 million in fiscal 2023 with approximately $75 million related to the significant multi-year project to build a new distribution center in Lyons, Georgia that will enhance the direct-to-consumer throughput capabilities of our brands. The remaining capital expenditures relate to the execution of our pipeline of Marlin Bars, increases in store count across Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide and The Beaufort Bonnet Company, and increased investment in our various direct-to-consumer technology systems initiatives. We expect this elevated capital expenditure level to moderate in 2025 and further moderate in 2026 and beyond after the completion of the Lyons, Georgia project. We also have a positive outlook on our cash and liquidity position as well. Cash flow from operations is expected to remain very strong, giving us ample room to fund the previously mentioned investments, our quarterly dividend, and limit the need to borrow under our revolver, although we do expect a modest debt position for much of the second half due to the elevated capital expenditures. Thanks for your time today. We'll now turn the call over for questions.

Our first question is from Ashley Owens with KeyBanc Capital Markets. Please proceed with your question.

Hi, thanks for taking my question today. This is Chandana Madaka on for Ashley. So I just wanted to dig a little deeper into how you're thinking about promotional events going into the back half, maybe any color you could provide there by brand, just now that the thinking around promotions is a little bit different. Also wanted to see if you could dig in further on what you're hearing from wholesale partners, maybe an update on the order books. Thank you.

Okay, so on the promotions, I wouldn't say that we're really thinking about it differently. What we're thinking is just we recognize that they're going to be very important this year, especially during the holiday period. We plan to start a bit earlier. The shopping season is about five days shorter this year than last year, so it's important that we jump on it at the beginning of November. We will have an assortment of mailers. We're doing a mailer in Tommy Bahama that we haven't done in a couple of years. We've got a great gift-with-purchase offering for Cyber Weekend, starting with Black Friday and going through the weekend starting on Thursday, I believe. We have our normal gift cards, bounce-back sales, and we'll have the Lilly Pulitzer Flash Sale in January. It's really the same types of things; our focus on those may be a bit more intent than it has been in the past. In terms of wholesale performance, as Scott mentioned in his prepared remarks, the year overall has been tougher in wholesale. We do expect the second half to be roughly flat with last year, whereas the first half was down about 5%. Our performance with our major clients, where we have the most visibility, has been quite good, and I think as we start to see spring bookings, we're encouraged with what we're seeing there.

Awesome. Thanks. Nice to hear.

Thank you. Our next question is from Dana Telsey with Telsey Advisory Group. Please proceed with your question.

Hi. Good afternoon, everyone. As you think about the state of the consumer and what you saw in outlets versus the other channels of distribution, with the brands, with Tommy, with Lilly, what are you seeing that's different? How did the cadence of the quarter go? And are there categories that performed better or worse than others? And with the promotional environment, how deep are the markdowns, and how you're thinking about promotions for Q3 and Q4. Thank you.

Thank you, Dana. So the cadence of the quarter, as we mentioned, worsened sequentially throughout the quarter. May was an okay month. June softened a bit but not terribly, and then July got significantly worse, especially in the latter half of the month. August was weak as well regarding consumer interest. The market is currently very value-driven. We are committed to maintaining our strategy of a full portfolio of full-price premium brands and are not deviating from that. However, we will pay close attention and be very focused on the types of promotional activities that you’ve seen from us in the past. During the second quarter, we did a greater proportion of sales during those events, which may have included a bit more promotional days. Still, the biggest factor was that it was the time when the consumer showed the most interest in shopping and converting. Discounts were also a bit steeper during the second quarter. We expect a similar pattern in Q3 and Q4, which is built into our guidance. Regarding product performance, anything truly new, innovated, and differentiated tends to capture consumer attention. Casual categories, such as athleisure and swim, have been slower, while dresses have been strong overall.

And then just picking apart freight costs, how are you thinking about the puts and takes on margins?

Yes, we built in about 15 to 20 basis points in margin hit due to elevated freight. It’s not a huge amount. We are watching this closely, particularly in relation to the recent situation on the East Coast with union negotiations, potentially diverting some product to the West Coast for transportation across the country.

Just one last thing. With the change in business patterns, are there any adjustments you’re considering in terms of marketing, store openings, or Marlin Bars?

Not really. We're pretty much full steam ahead.

Yes. For the growth initiatives, SG&A is something we always evaluate. We're looking for opportunities when they present themselves. We mentioned the Johnny Was distribution center move, which will save us some money, and we’re looking for other opportunities to reduce SG&A. But as for growth initiatives, we are moving forward.

This includes the stores we're opening, the Marlin Bars, and the distribution center in Lyons. We believe this is not a traditional recession but more of a different cycle. We want to be ready for when business picks up, and we believe in our direct-to-consumer channels just as much as our wholesale channels.

Thank you.

Thank you, Dana.

Thank you. Our next question is from Mauricio Serna with UBS. Please proceed with your questions.

Hi. Good afternoon. Thanks for taking our questions. I guess maybe if you could elaborate a little more on the promotional activity across each of the three big brands. I know I recall there was some shift in promotional events in Lilly Pulitzer, but outside of that, anywhere where you saw promotions really surprise you on the negative side? Just a bit more details would be very helpful. Thank you.

I would say we sold through a bit less at full price than we expected, so we had more inventory when we did, like Tommy's end-of-season sale had more inventory than in the prior year, and Lilly and Johnny faced similar situations. It wasn’t that we had major changes in the events or were dramatically different on the degree of discounts; we just had more inventory available that needed clearance. So, we exchanged some full-price sales for off-price sales during typical clearance periods.

Understood. And then just a quick follow-up. I was surprised to see also like the slowdown on the restaurant business. Could you elaborate a little more on what happened there? And lastly, could you remind us of the comp sales, the compares you're up against in the second half of the year?

The restaurant slowdown, as you know, had not slowed down really until the second quarter. They had been extremely strong as they reopened, even during the pandemic with limitation, and then just had been super strong. We saw some slowdown, and Florida, for example, is a significant restaurant market. As we discussed, Florida had been constantly going strong since the pandemic and has now settled down to perform more: in line with the rest of the country during the quarter.

As far as comps last year, Q3 and Q4, we were in that 3% to 5% range negative, so we're projecting similar type comps in our second half this year, where before we were projecting positive comps. So the biggest change in guidance is that comp movement.

Thank you.

We're going to be working very hard, of course, Mauricio, to try to turn that negative comp assumption into a positive result. But given what we've seen over the last six or eight weeks, we just thought it prudent to lower the expectation.

Thank you. Our next question is from Janine Stichter with BTIG. Please proceed with your question.

Hi. Thanks for taking my question. To start out on the consumer, you went through a whole host of factors that might have contributed to the slowdown. Could you help us rank order, in your opinion, which are the most meaningful in terms of the change you’ve seen in the top-line trend? And within that, we'd love some more context around Florida and how much it grew with COVID.

With respect to Florida, it’s important to clarify that it’s not underperforming compared to the rest of the country; it’s just no longer outperforming. Florida had previously outperformed for the past three years. Now it's running more in line with the pack. I believe it will continue this way for several quarters ahead. If the national climate improves, I would expect Florida to improve as well. Regarding rank ordering the factors, it's difficult to do. All were meaningful. Data shows that during July, brands catering to an older demographic were down considerably, which supports our theory of headline distraction being substantial, as well as the merchandising missteps impacting results.

On the merchandising missteps, when can we expect to see some improvement?

On a year-over-year basis, improvement will be noticeable during the second quarter of next year. These missteps are all fixable, and while we will inevitably face other challenges, we are optimistic about our third and fourth quarter lineup.

Thank you. Our next question is from Paul Lejuez with Citigroup. Please proceed with your question.

Hi, guys. Thanks. Can you talk about which regions were performing this quarter? It sounds like Florida was in line with the chain. But where did you see better results by region, and where did you see weaker results? Also, can you talk about where each of the brands are in terms of full-price selling relative to all-time peaks? What percentage of the assortment for each of the brands are selling at full price today compared to last year or pre-pandemic?

On a relative basis, nowhere was particularly strong during the quarter; virtually everywhere was soft. However, regions like the Midwest, Mid-Atlantic, New England, and certain spots in the Northwest performed better compared to Florida and Texas, which were a little weaker. But overall, we saw softness across the board. Regarding discount levels, we were operating at fairly low levels since the pandemic, but this year saw us reverting closer to pre-pandemic levels. Our promotional events have simply been larger, driven by lower full-price sales.

The retail side of our Marlin Bar locations held much better than average, which was encouraging.

How are you thinking about ticket prices? Do they need to be adjusted lower to avoid additional discounts? Or would you prefer to maintain them and use discounts as a call to action?

We aim to maintain our current product pricing without significant adjustments. However, there is room to tweak the average unit retail by investing more in lower price point offerings in upcoming seasons. An example is our opening price point dresses in Tommy Bahama, which we under-invested in during the second quarter, impacting our revenue. We will address this for next spring.

Thank you. Good luck.

Thank you, Paul.

Thank you. There are no further questions at this time. I would like to hand the floor back over to management for any closing comments.

Thank you, Paul, for hosting our call, and thanks to all of you for your interest in our company. We look forward to talking to you again in December. I hope all is well until then.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.