Telsey Advisory Group has adjusted its outlook on Oxford Industries (NYSE: NYSE:OXM), reducing the price target to $86 from the previous $110 while maintaining a Market Perform rating on the stock.
The apparel company experienced a challenging start to fiscal year 2024, underperforming expectations in sales, gross margin, and earnings per share (EPS) for the second consecutive quarter.
All four of Oxford Industries' operating groups failed to meet sales forecasts, with management citing a downturn in consumer sentiment that reached its lowest point in July.
Despite increased sales at outlet locations and during promotional events, driven by consumers seeking greater value, these gains adversely affected profit margins and, consequently, the company's bottom line.
In light of the second-quarter shortfall and a more cautious stance for the remainder of the year, Oxford Industries has revised its financial forecasts downward for the second time this fiscal year. The company anticipates a decline in comparable sales throughout the rest of the year.
In other recent news, Oxford Industries reported its fiscal 2024 second-quarter earnings, revealing sales of $420 million and adjusted earnings per share of $2.70, both figures below the company's initial guidance.
The shortfall was attributed to a dip in consumer sentiment, leading to a downward revision of Oxford Industries' full-year sales forecast. The company now predicts full-year net sales to decline by 2% to 4% from the $1.57 billion reported in 2023, with adjusted EPS forecasted to range from $7 to $7.30, down from $10.15 in the prior year.
Wholesale sales declined by 5%, while full-price brick-and-mortar sales saw a slight increase of 1%. The company's adjusted gross margin decreased to 63.3%, and SG&A expenses rose to $213 million. Despite these challenges, Oxford Industries plans to open 30 new stores and invest in IT improvements.
Among recent developments, the company expects negative comparable sales in the low to mid-single-digit range for the remainder of the year. Anticipated growth in direct-to-consumer segments and the Johnny Was and Emerging Brands Group is projected to partially offset declines in Tommy Bahama and Lilly Pulitzer.
InvestingPro Insights
As Oxford Industries (NYSE: OXM) navigates through a turbulent fiscal year, it's essential for investors to consider the latest financial metrics and analyst insights. According to InvestingPro, Oxford Industries has a market capitalization of $1.31 billion and is trading at a forward P/E ratio of 10.15, indicating a valuation that is potentially more attractive when compared to the current P/E ratio of 32.36. The company's gross profit margin stands strong at 62.56% for the last twelve months as of Q2 2025, showcasing its ability to maintain profitability amid sales challenges.
InvestingPro Tips highlight that Oxford Industries has raised its dividend for 3 consecutive years and has maintained dividend payments for an impressive 54 consecutive years, reflecting a commitment to shareholder returns. Additionally, the company is expected to be profitable this year, with a predicted net income growth, which could signal a rebound from the recent downturn. Investors can find 9 additional InvestingPro Tips, including insights on stock price volatility and cash flow adequacy, by visiting the dedicated page for Oxford Industries on InvestingPro.
The company's stock is trading near its 52-week low, yet the InvestingPro Fair Value estimate stands at $95.62, suggesting a potential undervaluation at the current price of $83.66. With Oxford Industries' next earnings date on December 4, 2024, investors will be keenly watching for signs of recovery and strategic initiatives that could steer the company back to a growth trajectory.
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