Oxford Industries (NYSE: $OXM) released its second quarter results on Wednesday, after market closed, sending the stock plunging. It missed both revenue and earnings estimates in the second quarter. We will explore the Q2 results, and whether the stock is a buy.
Oxford Industries Q2 Results
The apparel giant, behind renowned brands like Lilly Pulitzer, and Tommy Bahama, reported an adjusted EPS of $2.77, below expectations of $3.04. its revenue for the quarter was $420 million, missing estimates of $440 million, and flat compared to the previous year.
Other Financial Highlights
The second quarter gross margin declined slightly to 63.1% compared to 63.9% the previous year, while the operating income margin was 12.5% compared to 16.1% the previous year.
Oxford Industries recorded a 14% decrease in inventory on a LIFO basis and by 6% on a FIFO basis. Meanwhile, operating cash flow declined to $122 million in the first half of fiscal 2024 compared to $153 million the previous year. It ended the quarter with $18 million in cash and cash equivalents compared to $8 million the previous year.
The board also announced a dividend payout of $0.67 per share for a total of $22 million.
Oxford Industries Lowers Full-Year Outlook
For the third quarter, the apparel company expects revenue of $310 million to $325 million, below the $327 million recorded last year. It forecasts an adjusted EPS of $0.00 to $0.20, a steep decline from the $1.01 recorded last year.
For the full year, the company now expects revenue of $1.51 billion to $1.54 billion, below analystsā expectations of $1.61 billion. Oxford Industries now expects an adjusted EPS of $7 to $7.30, significantly missing analystsā expectations of $8.66.
Commenting on the results, CEO Tom Chubb stated, “Consumer sentiment in the second quarter continued to decline from levels earlier in the year, reaching an eight-month low in July.” He added, āThe decline led to market conditions that were weaker than expected, with more consumers looking for deals and promotions.”
Oxford Industries (OXM) Market Performance
Following the disappointing Q2 results, OXM shares were down over 10% during pre-market trading. Year to date, the stock is down 16.36%, while in the past 12 months, it has lost 9.45% of its value. The stock has fallen below the two key metrics of the 50 and 200 DMAs of $93.55 and $99.90, respectively.
Analysts give OXM a hold rating, forecasting a wide range of price targets, with a high of $110, and a low of $91. Their average forecast for the stock is $97.67, which is a 16.75% upside based on Wednesdayās closing price of $83.66.
Short sellers hold 24.82% of the float and 16.92% of the shares outstanding, quite a significant amount. It signals that they expect the stock to keep trending downward.
Is Oxford Industries A Buy?
Oxford Industries has underperformed the broader market year to date. As such, the question is whether or not you should add it to your portfolio. While there is no easy answer to the choice, there are very few strong points for the stock.
The company downgraded its own full-year guidance, and missed earnings and revenue estimates in the second quarter. Thus far, the stock is down over 10% in pre-market trading. Short sellers also share this sentiment. For now, a wait and see approach would be best for OXM.
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