Bull of the Day: Oxford Industries (OXM)
Lilly Pulitzer and Tommy Bahama are roaring back.
Oxford Industries, Inc. (OXM) is a big winner in the reopen as apparel demand soars. This Zacks Rank #1 (Strong Buy) is expected to grow revenue by 47% this fiscal year.
Oxford Industries is a retailer which operates Tommy Bahama, Lilly Pulitzer, Southern Tide, The Beaufort Bonnet Company and Duck Head brands.
It also has e-commerce sites and operates restaurants.
A Record Second Quarter
On Sep 2, Oxford Industries reported its fiscal 2021 second quarter results and blew by the Zacks Consensus. Earnings were $3.24 versus the Zacks Consensus Estimate of $2.33.
Sales rose to $329 million, up from $192 million in last year's pandemic impacted quarter, but was also higher than $302 million in the 2019 quarter.
Sales and earnings both exceeded the company's guidance issued in June.
All 5 brands had double digit sales growth along with record gross margin and record operating margin.
The full price direct to consumer sales grew 20% to $223 million compared to the second quarter of fiscal 2019, with growth in all branded businesses.
As restaurants reopened indoor dining, the restaurant business grew 26% to $26 million compared to the second quarter of fiscal 2019. Every location that was open in both fiscal quarters posted positive comps, with most at double-digit increases.
The quarter was boosted by the opening of 5 additional Marlin Bar locations.
However, the company's New York restaurant remained closed.
Wholesale sales were the only area where sales decreased compared to the second quarter of fiscal 2019, falling 6% after excluding Lanier Apparel which the company is exiting this year.
Adjusted gross margin rose to 64.3% from 59.8% in the second quarter of fiscal 2019, as it sold more full priced goods and it saw a shift in sales mix towards direct to consumer channels.
Raised Full Year Guidance
Given the strength of its brands, and the ability to sell more full priced product, Oxford has raised its full year guidance.
It now expects fiscal 2021 earnings of $6.45 to $6.70.
This compares to a loss of $1.81 last year and $4.32 in fiscal 2019.
Analysts are just as bullish.
4 estimates have been raised for fiscal 2021 since the earnings report, pushing up the Zacks Consensus to $6.68 from $5.11 just a week ago. That's at the high end of the company's guidance range.
That's earnings growth of 470% compared to last year's pandemic-impacted year.
Shares Pop in 2021 but are Still Cheap
Shares of Oxford Industries have nearly doubled in the last year, tacking on 36% year-to-date.
But the shares have weakened in the last 3 months, falling 7.4% during that time.
Given the rising earnings, but falling share price, the shares are still cheap, with a forward P/E of 13.3.
This puts it among the cheapest of the hot retailers like Deckers (DECK) and Lululemon (LULU) which trade with forward P/Es of 26 and 55, respectively.
It's also shareholder friendly with a dividend currently yielding 1.9%.
Oxford has paid a dividend every quarter since it went public in 1960.
For those investors looking for a retailer with strong brands for 2022, Oxford should be one on the short list.
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