Oxford Industries (NYSE:OXM) reported second-quarter fiscal 2026 results that were within its expectations, as improved gross margin and adjusted earnings per share growth helped offset sales pressure across parts of its portfolio. The company also lowered its full-year sales and adjusted earnings outlook, citing continued weakness at Lilly Pulitzer and a cautious consumer environment.
Chairman and CEO Tom Chubb said Tommy Bahama delivered low-single-digit comparable sales growth during the quarter, including a return to positive comparable sales in Florida, a major market that had posted softer results in recent periods. The company also reported significant profitability improvement at Johnny Was, while Lilly Pulitzer continued to face product assortment and marketing challenges.
Second-Quarter Sales, Margins and Earnings
Food and beverage sales increased 11%, primarily due to non-comparable locations, while wholesale sales fell 14%. Chief Financial Officer and Chief Operating Officer Scott Grassmyer said the wholesale decline was primarily attributable to lower sales of residual inventory through off-price channels.
Sales growth at Tommy Bahama partly offset declines at other businesses. Lilly Pulitzer and Johnny Was each recorded mid-single-digit negative comparable sales, along with lower off-price wholesale sales. Emerging Brands sales declined mainly because of lower wholesale sales.
Adjusted gross margin expanded 140 basis points year over year to 63.1%. Grassmyer attributed the improvement primarily to assortment, sourcing and pricing strategies that increased initial markups, as well as a sales mix shift that reduced off-price wholesale’s share of revenue. A greater share of direct-to-consumer sales occurring during promotional events at Tommy Bahama, Lilly Pulitzer and Emerging Brands partially offset those gains.
Adjusted selling, general and administrative expense increased slightly to $210 million from $209 million a year earlier. The increase reflected new retail and food-and-beverage locations, software and consulting costs, and expenses related to transitioning operations at Oxford’s Lyons, Georgia, distribution center. The company partially offset those costs with lower incentive compensation and reduced discretionary spending, including travel.
Adjusted EBITDA rose to $45 million, or 11.4% of sales, from $43 million, or 10.7% of sales, in the prior-year quarter. Adjusted earnings per share were $1.34.
Tariff Refunds Support Cash Flow and Debt Reduction
Oxford recorded a $42 million reduction to cost of goods sold during the quarter for refunds of previously paid tariffs and received substantially all of that amount during or shortly after the second quarter. The tariff refunds were excluded from adjusted results.
Cash flow from operations totaled $97 million in the first half of fiscal 2026, including $29 million related to tariff refunds, compared with $80 million in the first half of fiscal 2025. Capital expenditures fell to $32 million in the first half from $55 million a year earlier, largely due to fewer new brick-and-mortar locations and lower spending on the Lyons distribution center as that project nears completion.
Long-term debt fell to $73 million at quarter-end, down from $143 million at the end of the first quarter and $116 million at the end of fiscal 2025. Inventory decreased 12% on a LIFO basis, including a $10 million increase in the LIFO reserve. On a FIFO basis, inventory was down 4% year over year, with reductions at Emerging Brands, Lilly Pulitzer and Johnny Was.
Lilly Pulitzer Reset Planned for Spring 2027
Chubb said Lilly Pulitzer’s central issue is its assortment, particularly an inventory shift that moved too much investment away from entry-level price points and toward higher-priced products. The company had also identified product and marketing challenges during the first quarter, but said the effect has been more significant than originally expected.
Because of product development lead times, Oxford expects spring 2027 to be the first season in which it can substantially reshape Lilly Pulitzer’s full assortment. Its work will focus on pricing architecture, the balance of prints, patterns and colors, the mix of social and casual-use products, and the balance between new and continuing styles.
Chubb said the brand expects to be more promotional during the remainder of fiscal 2026, using targeted activity to support customer engagement and inventory sell-through. He said the changes are not expected to produce a positive trend shift during fiscal 2026, though resort product could provide an earlier indication of the planned assortment changes.
In response to an analyst question, Chubb said the company had reduced the share of Lilly Pulitzer dress styles priced below $200 from about half of styles in the prior year to approximately 35% in fiscal 2026. For spring 2027, the company plans to move closer to its fiscal 2025 price architecture, while retaining some of the progress made at higher price points.
Oxford is also converting selected Southern Tide and Johnny Was stores into Lilly Pulitzer locations where it believes Lilly Pulitzer has stronger market awareness and profit potential. Chubb cited a Charleston, South Carolina, Johnny Was store that had been losing money before its conversion to Lilly Pulitzer, which he said became profitable immediately after the change.
Lowered Full-Year Outlook
Oxford now expects total company comparable sales to decline by a low-single-digit percentage for fiscal 2026, versus its prior outlook of slightly negative to slightly positive comparable sales. The company forecast full-year sales of $1.43 billion to $1.47 billion, compared with $1.478 billion in fiscal 2025.
The revised outlook assumes lower sales at Lilly Pulitzer and Johnny Was, partly offset by sales growth at Tommy Bahama and Emerging Brands. Oxford expects low-single-digit declines in direct-to-consumer sales, a high-single-digit wholesale decline, and a low-double-digit increase in food-and-beverage sales supported by new locations.
- Full-year adjusted EPS is forecast at $1.60 to $2.00, compared with $2.11 in fiscal 2025.
- Gross margin, excluding tariff-refund effects, is expected to improve about 50 basis points for the year.
- Oxford expects gross margin expansion of about 100 basis points in both the third and fourth quarters, supported by higher initial markups and a greater direct-to-consumer mix, despite increased Lilly Pulitzer promotions.
- Third-quarter sales are projected at $280 million to $300 million, versus $307 million a year earlier.
- Third-quarter adjusted loss per share is expected to range from $1.40 to $1.20, compared with a loss of $0.92 in the prior-year period.
The company expects Tommy Bahama comparable sales to be slightly positive for the full year. Chubb said women’s sales at Tommy Bahama have increased more than men’s sales this year, which he described as encouraging given the brand’s growth opportunity in women’s apparel.
Oxford also began an enterprise review intended to improve operating margins over the next several years. The effort includes using the Lyons distribution center more fully, reassessing technology infrastructure, advancing data analytics and artificial intelligence capabilities, optimizing the store fleet, and consolidating finance, planning and operations oversight within Emerging Brands.
About Oxford Industries (NYSE:OXM)
Oxford Industries, Inc, incorporated in 1942 and headquartered in Atlanta, Georgia, is a leading designer, marketer and distributor of high-quality men’s and women’s lifestyle apparel and accessories. The company’s product portfolio features a mix of owned brands and licensed partnerships that span casual, resort and performance categories. Key owned brands include Tommy Bahama, renowned for its island-inspired menswear and women’s sportswear, and Southern Tide, which offers coastal-focused clothing and footwear.
