At a time when news about inflation and cost-consciousness seems inescapable, it is notable to hear a retailer speak of consumers’ willingness to pay full price for things that make them happy.
“Each of our happy, upbeat lifestyle brands, Tommy Bahama, Lilly Pulitzer, Southern Tide, The Beaufort Bonnet Company and Duck Head, had its best year ever in 2021,” Oxford Industries CEO Thomas Chubb said Wednesday (March 23) on the company’s Q4 earnings call, noting strong top- and bottom-line growth versus year-ago and pre-pandemic levels.
In fact, the 58-year-old Atlanta-based holding company said the full-price trend was particularly strong in its direct-to-consumer (D2C) businesses, which account for 80% of its sales.
With consumers clearly wanting to be associated with positive things, Chubb credited the ability of the company’s “talented merchandising teams” to execute within a disruptive supply chain environment by creating compelling assortments on its websites and retail stores that effectively showcased products as they arrived — even when they were late.
“Our ability to navigate supply chain challenges, along with our product innovation, are also driving a robust forward order book in our wholesale channel,” Chubb said.
What Was, What Will Be
For the three months ending Jan. 29, Oxford said its sales rose to $300 million, marking a 35% increase from a year ago, and a $2 million advance from where it was in January 2020 before the pandemic changed the world.
As for the present, Chubb said he expects to be in a “somewhat more promotional environment” due to inflationary cost pressures and a challenging labor market, but he said he is still confident in Oxford’s ability to deliver double-digit, top- and bottom-line growth this year and this quarter.
Despite the current headwinds plaguing much of the industry, Oxford’s first-quarter sales are expected to increase by 20 percent to 25 percent, an advance Chubb said is reflective of “very strong” quarter-to-date results in both direct and wholesale channels, the latter of which fell 25% last quarter as spring orders were deferred into Q1.
Dicing Pricing
As much as Oxford was able to sell more full-priced items and fewer marked-down merchandise, Chubb characterized the retailer’s price increase in the prior quarter and year as “very strategic and selective,” noting that some have already rolled out this year and others will be coming in the second half.
“I think those [price increases] will keep us ahead of the product cost inflation that we’re seeing so far,” Chubb said. “If you look at the double-digit growth that we’re projecting, that’s not just price increases. That’s unit growth as well. So, we feel really, really good about where the business is.”
Oxford Chief Financial Officer Scott Grassmyer said the increase in pricing and unit sales was “pretty balanced,” adding that the supply chain dynamics that dominated much of last year were going to have a different impact this year.
“Just having more inventory, I think the whole market will be a little bit more promotional than last year,” Grassmyer said.
Even so, he said he expects Oxford will still be able to expand gross margins in this environment.
To do that, Oxford is counting on Tommy Bahama — its biggest brand — to continue to deliver outsized growth.
“On Tommy, what I’ll tell you is that men’s is incredibly hot, but women’s is even hotter right now,” Chubb said. “It’s really just unbelievable to see what’s happening in our women’s business.”
He also pointed to a milestone last month in which it sold $1 million worth of women’s sportswear online in a single day.
“For much of the month of February, our women’s business online was actually bigger than our men’s business,” he said. “Men’s was growing very robustly, but women’s was growing even faster. This is not a fluke. This is very deliberate.”
