KeyBanc Remains Bullish On Oxford Industries Despite Comp Slowdown

Oxford Industries Inc OXM, parent company of multiple brand including Tommy Bahama, reported third-quarter results which fell short of management's own guidance, but KeyBanc sees the quarter as a "squall, not a storm."

What Happened

Oxford Industries said it earned 14 cents per share in the third quarter on revenue of $233.662 million, which fell short of the Street's estimate of 17 cents per share and $242.45 million.

The company also "moderated" its fourth-quarter comparable sales guidance from a high-single digit increase to a low-single digit increase due to demand from the direct to consumer business coming in weaker than expected.

Why It's Important

Despite a third-quarter miss and downward revision in fourth-quarter comp assumptions, there's no visible brand or product issue impacting sales, KeyBanc Capital Markets' Edward Yruma said in a note. The weakness could be attributed to a "confluence of small issues," including website issues, poorer than expected gift promotions in November and December.

The Lanier brand was impacted by a pullback in department store orders despite seeing strong sell-through.

What's Next

So far in the fourth quarter, Oxford Industries indicated weaker-than-expected sales trends which prompted the analyst to revise his estimates lower. Specifically, Yruma's 2018 estimated EPS moves lower from $4.64 to $4.34 and 2019 estimates move lower from $5.17 to $4.70.

KeyBanc maintains an Overweight rating on Oxford Industries' stock with a price target lowered from $104 to $90.

The stock traded down 8 percent to $68.90 at time of publication.

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