Oxford Industries, Inc. announced Thursdy financial results for its fourth quarter and 2013 fiscal year ended February 1, 2014. For fiscal 2013, a 52-week year, consolidated net sales rose 7% to $917.1 million from$855.5 million in fiscal 2012, a 53-week year. Adjusted earnings per share rose 8% to $2.81 for the 2013 fiscal year compared to $2.61 in the prior year. For the full year, GAAP earnings per share increased to $2.75 from $1.89 in the prior year.

In the fourth quarter of fiscal 2013, consolidated net sales rose 6% to $250.4 million compared to $236.2 million in the fourteen-week fourth quarter of fiscal 2012. Adjusted earnings per share for the quarter rose 37% to $0.89 compared to $0.65 in the same period last year. Fourth quarter GAAP earnings per share were $0.91 compared to $0.32 in the same period of the prior year. For reference, tables reconciling GAAP to adjusted measures are included at the end of this release.

Thomas C. Chubb III, CEO and President commented, "Fiscal 2013 was a very good year for Oxford. Against a backdrop that included a sluggish economy and a still cautious consumer, we were able to achieve net sales growth of 7%, adjusted operating income growth of 8% and adjusted EPS growth of 8%.  This year over year growth was driven primarily by solid performances at Tommy Bahama and Lilly Pulitzer,including strong comparable store sales results fueled by our e-commerce businesses. Lanier Clothes also achieved slight growth in net sales and continued to deliver to the bottom line. Ben Sherman took a step backwards in both sales and operating income during fiscal 2013, although there were signs of improvement in the second half of the year." 

Mr. Chubb continued, "Looking forward to fiscal 2014, we are excited by the remarkable strength we are seeing at Lilly Pulitzer.  This business is off to a fantastic start with an exceptional product offering and outstanding communication with our consumers.   As we mentioned in ourFebruary 13th press release, Tommy Bahama had an unexpected, weather-related slowdown in traffic beginning in January which has continued into March.  Our plans for the first quarter take into account the softness we are seeing, but we remain confident that we have the right product and marketing strategy to take advantage of more normalized traffic patterns."

Mr. Chubb concluded, "We believe that the success of  both the Tommy Bahama and Lilly Pulitzer brands is achieved with our creation of distinctive, market-superior products, our concentrated focus on the guest experience and our creative and persuasive marketing.  In addition, these brands are operationally effective and, as a result, have the power to drive our consolidated revenues and profitability. As we continue to invest in our lifestyle brands, we believe we can leverage these competitive advantages to deliver long-term, sustainable growth for our shareholders in the years to come." 

Operating Group Results

Tommy Bahama In fiscal 2013, net sales at Tommy Bahama increased 11% to $584.9 million from $528.6 million in fiscal 2012 reflecting contributions from additional retail stores and a 9% comparable store sales increase, offset partially by a decrease in wholesale sales. Adjusted operating income for the year increased 7% compared to the prior year, to $74.3 million. The impact of higher sales, a modest expansion in gross margin and lower incentive compensation were partially offset by other increases in SG&A.

In the fourth quarter of fiscal 2013, Tommy Bahama reported a 7% increase in net sales to $167.8 million compared to $156.8 million in the fourth quarter of fiscal 2012. The increase in net sales was driven by the operation of additional retail stores and a 5% comparable store sales increase, partially offset by a decrease in wholesale sales. As of February 1, 2014, Tommy Bahama operated 141 retail stores globally, including 91 full-price stores, 14 restaurant-retail locations and 36 outlet stores, compared to 113 retail stores as of February 2, 2013.

Adjusted operating income for the quarter increased 12% from the same period in the prior year to $26.7 million primarily due to higher sales and lower incentive compensation, partially offset by the costs associated with operating additional retail stores. 

On a GAAP basis, operating income for fiscal 2013 at Tommy Bahama increased to $72.2 million from $69.5 million in fiscal 2012. For the fourth quarter of fiscal 2013 on a GAAP basis Tommy Bahama had operating income of $26.0 million compared to operating income of $23.9 million in the fourth quarter of fiscal 2012.

Lilly Pulitzer In fiscal 2013, net sales at Lilly Pulitzer increased 13% from the prior year to $137.9 million reflecting increases in all channels of distribution including a comparable store sales increase of 11%.  Adjusted operating income was down slightly from last year at $26.2 millioncompared to $26.6 million in fiscal 2012. The decrease was due to increases in SG&A and lower gross margin primarily due to higher clearance sales and a product mix shift towards sportswear and licensed products. 

Lilly Pulitzer's net sales in the fourth quarter of fiscal 2013 increased to $30.0 million compared to $29.1 million during the same period of the prior year. Net sales increased primarily due to the operation of additional stores, a 21% increase in comparable store sales and an increase in sales from its e-commerce flash clearance sale partially offset by a decrease in wholesale sales. As of February 1, 2014, Lilly Pulitzer operated 23 retail stores compared to 19 retail stores as of February 2, 2013.

Lilly Pulitzer's adjusted operating income in the fourth quarter of fiscal 2013 was $1.5 million compared to $2.8 million in the fourth quarter of fiscal 2012. SG&A increased in the quarter due to additional infrastructure to support the growth of the brand and the operation of new stores. 

On a GAAP basis, operating income for fiscal 2013 at Lilly Pulitzer increased to $26.0 million from $20.3 million in fiscal 2012. For the fourth quarter of fiscal 2013, Lilly Pulitzer reported GAAP operating income of $1.4 million compared to an operating loss of $1.7 million in the fourth quarter of fiscal 2012. 

Lanier Clothes Fiscal 2013 net sales for Lanier Clothes increased to $109.5 million from $107.3 million in fiscal 2012. Operating income was flat with last year at $10.8 million.

Net sales in the fourth quarter of fiscal 2013 increased 34% to $29.8 million from $22.3 million in fiscal 2012, primarily due to initial shipments of a large private label pant program. Lanier Clothes' operating income in the fourth quarter increased to $2.9 million from $2.0 million in the fourth quarter of fiscal 2012 due to the higher net sales.

Ben Sherman In fiscal 2013, net sales for Ben Sherman fell 18% to $67.2 million from $81.9 million in fiscal 2012. The loss from operations increased to $13.1 million in fiscal 2013 from a loss of $10.9 million in fiscal 2012 due to lower sales, partially offset by lower SG&A.

In the fourth quarter of fiscal 2013, net sales were $20.1 million compared to $24.7 million in the fourth quarter of fiscal 2012, primarily due to lower wholesale sales. Despite lower sales, operating results improved, with a $2.6 million operating loss in the fourth quarter of fiscal 2013 compared to an operating loss of $4.5 million in the fourth quarter of fiscal 2012. This improvement was primarily due to reductions in SG&A.  

Corporate and Other For fiscal 2013, Corporate and Other reported an adjusted operating loss of $12.8 million compared to a loss of $16.6 million in fiscal 2012 reflecting lower incentive compensation and improvements at Oxford Golf. On a GAAP basis, Corporate and Otherreported a loss of $11.2 million in fiscal 2013 compared to a loss of $20.7 million in the prior year.

For the fourth quarter of fiscal 2013, Corporate and Other reported an adjusted operating loss of $3.2 million compared to a loss of $5.3 millionin the fourth quarter of fiscal 2012 due to lower SG&A including  a reduction in incentive compensation and a reduction in an insurance reserve. On a GAAP basis, Corporate and Other reported a loss of $1.4 million in the fourth quarter of fiscal 2013 compared to a loss of $9.8 million in the same period of the prior year.

Consolidated Operating Results

Net Sales For fiscal 2013, consolidated net sales rose 7% to $917.1 million from $855.5 million in fiscal 2012, which was a 53-week fiscal year. In the fourth quarter of fiscal 2013, consolidated net sales rose 6% to $250.4 million compared to $236.2 million in the fourteen-week fourth quarter of fiscal 2012.  

Gross Profit and Margin For fiscal 2013, consolidated gross margin increased 110 basis points to 56.0% primarily due to the impact of LIFO accounting and a change in sales mix towards direct to consumer sales. Gross profit for the year rose to $513.6 million from $469.6 million in fiscal 2012. For the fourth quarter of fiscal 2013, consolidated gross margin increased to 55.1% compared to 53.0% for the fourth quarter of fiscal 2012, primarily due to the net impact of LIFO accounting. Gross profit for the fourth quarter of fiscal 2013 increased to $137.9 millionfrom $125.2 million in the fourth quarter of fiscal 2012.

SG&A For fiscal 2013, SG&A was $447.6 million, or 48.8% of net sales, compared to $410.7 million, or 48.0% of net sales, in the prior year. For the fourth quarter of fiscal 2013, SG&A was $117.8 million, or 47.0% of net sales, compared to $115.1 million, or 48.7% of net sales, in the fourth quarter of fiscal 2012. SG&A increased in the fourth quarter primarily due to the costs of operating additional retail stores and other expenses to support the growing Tommy Bahama and Lilly Pulitzer businesses, partially offset by lower SG&A at Ben Sherman and a decrease in incentive compensation. The impact of the additional week in fiscal 2012 on SG&A was approximately $7 million .

Royalties and Other Income Royalties and other income increased to $19.0 million in fiscal 2013 from $16.4 million in fiscal 2012. For the fourth quarter of fiscal 2013, royalties and other income was $6.3 million compared to $4.3 million in the fourth quarter of fiscal 2012, with the increase primarily due to a $1.6 million gain on the sale of property and higher royalty income.

Operating Income For fiscal 2013, consolidated operating income was $84.7 million compared to $69.0 million in fiscal 2012. In the fourth quarter of fiscal 2013, consolidated operating income was $26.3 million compared to $9.9 million in the fourth quarter of fiscal 2012. 

Interest Expense For fiscal 2013, interest expense declined 53% to $4.2 million from $8.9 million in fiscal 2012. The decrease was primarily due to the full redemption in fiscal 2012 of our senior secured notes using borrowings from the Company's revolving credit facility and cash on hand. Interest expense for the fourth quarter of fiscal 2013 was $1.0 million compared to $1.1 million in the fourth quarter of fiscal 2012.

Income Taxes For fiscal 2013, the Company's effective tax rate rose to 43.7% compared to 38.5% in fiscal 2012. The effective tax rate in both years was negatively impacted by the Company's inability to recognize a tax benefit for losses in certain foreign jurisdictions, while fiscal 2012 benefited from certain favorable items. For the fourth quarter of fiscal 2013, the effective tax rate increased to 40.9% from 40.6% in the fourth quarter of fiscal 2012.

Balance Sheet and Liquidity

Total inventories at February 1, 2014 were $143.7 million, compared to $109.6 million at February 2, 2013. The increase in inventory levels was primarily to support anticipated sales growth. Additionally, in-transit inventory increased $13.0 million over the prior year primarily due to the acceleration of shipments by suppliers because of the timing of Chinese New Year. Receivables increased to $75.3 million compared to$62.8 million at such dates primarily due to higher sales late in the fourth quarter.

As of February 1, 2014, the Company had $141.6 million of borrowings outstanding and approximately $96.5 million of unused availability under its U.S. and U.K revolving credit facilities.

The Company's capital expenditures for fiscal 2013 were $43.4 million. These expenditures consisted primarily of investments associated with new retail stores, information technology investments, store remodeling and investments in its facilities.

Outlook for Fiscal 2014 and the First Quarter of Fiscal 2014

Fiscal 2014 Net Sales and EPS For fiscal year 2014, which ends on January 31, 2015, the Company expects continued solid sales growth, a moderate expansion of operating margin and significant growth in earnings per share. The Company currently expects net sales of $980 million to $1.0 billion in fiscal 2014 compared to $917.1 million in fiscal 2013. Adjusted earnings per share are expected to be between $3.00and $3.15 and GAAP earnings per share are expected to be in a range of $2.88 to $3.03 in fiscal 2014. This compares with fiscal 2013 adjusted earnings per share of $2.81 and GAAP earnings per share of $2.75.

Fiscal 2014 Interest and Taxes Interest expense is estimated to be approximately $4.5 million in fiscal 2014. The effective tax rate for fiscal 2014 is anticipated to decrease to approximately 42.5% compared to an effective tax rate of 43.7% in fiscal 2013 due to an expected higher proportion of domestic income to foreign losses. The rate in both years is impacted by the Company's inability to recognize a tax benefit for losses in certain foreign jurisdictions.

Fiscal 2014 Capital Expenditures Capital expenditures for fiscal 2014 are expected to increase to approximately $55 million. These expenditures are expected to consist primarily of costs associated with opening new retail stores and restaurants as well as remodeling existing retail stores and restaurants. The Company will also continue to invest in information technology inititatives, which include e-commerce enhancements and investments in its facilities.

First Quarter of Fiscal 2014 The Company expects net sales in the first quarter of fiscal 2014 to be in the range of $250 to $260 millioncompared to net sales of $234.2 million in the first quarter of fiscal 2013. Adjusted earnings per share for the first quarter of 2014 are expected to be between $0.80 and $0.90 and GAAP earnings per share are expected to be in a range of $0.77 and $0.87 in the first quarter of fiscal 2014. This compares with first quarter fiscal 2013 adjusted and GAAP earnings per share of $0.82. 

Outlook for Fiscal 2014 by Operating Group

Tommy Bahama For fiscal 2014, Tommy Bahama expects percentage net sales increases in the high single digits compared to fiscal 2013.Tommy Bahama's operating margin in fiscal 2014 is expected to be slightly lower than fiscal 2013 due to expected higher incentive compensation of approximately $4 million and approximately $1.5 million of pre-opening expenses associated with new retail-restaurant "island" locations.

Lilly Pulitzer For fiscal 2014, Lilly Pulitzer is expecting percentage net sales increases in the mid-teens compared to fiscal 2013. In fiscal 2014, operating margin is expected to be comparable to fiscal 2013 as Lilly Pulitzer continues to invest in infrastructure including people, systems and stores.

Lanier Clothes For fiscal 2014,  Lanier Clothes expects percentage net sales to increase in the low single digits compared to fiscal 2013. Operating margin is expected to decrease slightly due to the lower margin structure of certain new programs.

Ben Sherman For fiscal 2014, Ben Sherman is expecting a high single digit percentage increase in net sales compared to fiscal 2013 and a reduction in its operating loss in a range of $4 million to $6 million.

Corporate & Other For fiscal 2014, the Corporate and Other operating loss is expected to increase by approximately $4.5 million primarily due to increases in incentive compensation and the Company's expectation that it will not realize certain favorable items that benefitted fiscal 2013.

Dividend

The Company announced that its Board of Directors has declared a cash dividend of $0.21 per share payable on May 2, 2014 to shareholders of record as of the close of business on April 17, 2014. This represents a 17% increase from the dividend paid in the fourth quarter of fiscal 2013. The Company has paid dividends every quarter since it became publicly owned in 1960.