Why Oxford Industries Is A Market Performer With Promise: Analyst's Q2 Forecast And Insights

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on Oxford Industries, Inc. OXM, with a price target of $115.

Oxford is scheduled to report 2Q23 results on Thursday, August 31, after the market close.

Operationally, Oxford Industries has emerged cleaner and leaner from the pandemic, driving a string of quarters that beat expectations even while other peers struggle.

Telsey expects the second quarter EPS of $3.42 vs. $3.61 last year, compared to the consensus estimate of $3.40 and company guidance for EPS between $3.30-$3.50.

Telsey applauds the company's discipline with pricing and promotions as well as the long-term perspective towards preserving brand equity. In addition, OXM's e-commerce business is expected to deliver continued expansion, while its flat wholesale outlook for FY23 is better than many peers, the analyst adds.

On the top line, the analyst forecasts total sales growth of 17.2% Y/Y to $426 million, broadly in line with the market's expectation of $424 million.

Telsey sees 2% growth at Tommy Bahama, 2% growth at Lilly Pulitzer, and 4% growth in the Emerging Brands segment, with Johnny Was revenues of $54.8 million in the quarter (vs. $49.5 million last quarter).

OXM stands out with a higher income consumer and travel and lifestyle brands that resonate with tourists and locals alike, benefiting the company, the analyst adds.

The analyst predicts gross margin contraction of 50 bps to 64.1%,

slightly below the consensus of 64.6% (flat Y/Y), with SG&A (including royalty and other income) to deleverage 300 bps to 47.8% of sales. 

The second quarter operating margin is expected to be 17.2% (down 430 bps), compared to 21.5% last year and in line with the consensus estimate.

For the smaller volume third quarter, year-over-year growth is expected to be weaker than the fourth quarter, as more stores open, compares ease, and the company laps some inventory write-downs taken last year.

Price Action: OXM shares are trading higher by 1.02% to $101.15 on the last check Friday.