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Bear of the Day: Oxford Industries (OXM)

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Even Oxford Industries, Inc. (OXM - Free Report) can't defeat the recent apparel gloom. This Zacks Rank #5 (Strong Sell) saw sales at Tommy Bahama slammed in the fiscal first quarter.

Oxford Industries operates three popular, upscale apparel and accessory brands including Tommy Bahama, Lilly Pulitzer and Southern Tide. It operates e-commerce sites, through its own retail stores and also through department store channels.

Big Miss in the Fiscal First Quarter

On June 7, Oxford reported its fiscal first quarter results and missed the Zacks Consensus by 9 cents. Earnings were $1.26 compared to the consensus of $1.35.

The disappointment came in the Tommy Bahama line, which saw same store sales comps plunge 13% in its worst quarter since the third quarter of 2009, which was during the dark days of the Great Recession.

Traffic decreased in the quarter but Tommy seemed to suffer from the same malaise as a lot of other retailers: a luxury brand sickness.

Tommy's clothes and accessories sell at higher price points.

Results were better at Lilly Pulitzer, which saw same store sales comps up 1%. Lilly was so hot last year, that it's going to be hard for that brand to lap those numbers going forward.

Estimates Cut for Fiscal 2016 and Fiscal 2017

Given the disappointment to start the new year, it's not surprising that analysts cut their full year estimates.

Four estimates were cut in the last 60 days for fiscal 2016, pushing down the Zacks Consensus Estimate to $3.70 from $4.03.

The company made $3.64 in fiscal 2015 so analysts are expecting only about 1.6% earnings growth this year.

Any Good News?

There are a few bright spots for Oxford.

Inventories were kept at a reasonable level which means there doesn't have to be a fire sale at Tommy Bahama to right the ship.

Additionally, the company said in June that sales trends in the second quarter at Tommy were already much improved.

The company also recently acquired southern upscale brand Southern Tide. It is mainly an e-commerce operation but it has one store and there are plans for two more to open this year.

Shares Near 2016 Lows

Investors have been dumping the apparel retail stocks this year and Oxford Industries is no exception.

Shares are cheaper than they were in 2015, but still trade with a forward P/E of 15.6. That's cheaper than the average of the S&P 500 which is about 18x but it's not dirt cheap by any means.

You will get paid a dividend for your patience, however, which is currently yielding 1.8%.

If you really want to be in the apparel retail space, you may want to consider Hanesbrands Inc. (HBI - Free Report) while Oxford is working through its issues.

Hanesbrands is a Zacks Rank #2 (Buy). It is cheaper than Oxford, with a forward P/E of just 13.6.

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Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.

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