Oxford Industries (OXM)

Fashion conglomerate Oxford Industries (NYSE:OXM) beat Wall Street’s revenue expectations in Q4 CY2024, but sales fell by 3.4% year on year to $390.5 million. On the other hand, next quarter’s revenue guidance of $385 million was less impressive, coming in 4.9% below analysts’ estimates. Its non-GAAP profit of $1.37 per share was 8.1% above analysts’ consensus estimates.

Company Overview

The parent company of Tommy Bahama, Oxford Industries (NYSE:OXM) is a lifestyle fashion conglomerate with brands that embody outdoor happiness.

Thanks to social media and the internet, not only are styles changing more frequently today than in decades past but also consumers are shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some apparel and accessories companies have made concerted efforts to adapt while those who are slower to move may fall behind.

Oxford Industries's primary competitors include PVH Corp (NYSE: PVH), Ralph Lauren (NYSE: RL), VF Corp (NYSE: VFC), Perry Ellis (NASDAQ: PERY), and Columbia Sportswear (NASDAQ: COLM).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Oxford Industries grew its sales at a sluggish 6.2% compounded annual growth rate. This was below our standard for the consumer discretionary sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Oxford Industries’s recent performance shows its demand has slowed as its annualized revenue growth of 3.7% over the last two years was below its five-year trend.

This quarter, Oxford Industries’s revenue fell by 3.4% year on year to $390.5 million but beat Wall Street’s estimates by 1.7%. Company management is currently guiding for a 3.3% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its products and services will face some demand challenges.

Oxford Industries’s operating margin has been trending up over the last 12 months and averaged 6.5% over the last two years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports paltry profitability for a consumer discretionary business.

In Q4, Oxford Industries generated an operating profit margin of 5.2%, up 25.3 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Oxford Industries’s EPS grew at an unimpressive 9.1% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its operating margin didn’t expand.

In Q4, Oxford Industries reported EPS at $1.37, down from $1.90 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 8.1%. Over the next 12 months, Wall Street expects Oxford Industries’s full-year EPS of $6.69 to grow 4.7%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Oxford Industries has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 7.4%, subpar for a consumer discretionary business.

Oxford Industries’s free cash flow clocked in at $48.53 million in Q4, equivalent to a 12.4% margin. The company’s cash profitability regressed as it was 1.2 percentage points lower than in the same quarter last year, but it’s still above its two-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Oxford Industries historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 10.7%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. On average, Oxford Industries’s ROIC increased by 1.1 percentage points annually over the last few years. This is a good sign, and we hope the company can continue improving.

Oxford Industries reported $9.47 million of cash and $449.2 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $200.6 million of EBITDA over the last 12 months, we view Oxford Industries’s 2.2× net-debt-to-EBITDA ratio as safe. We also see its $2.47 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was encouraging to see Oxford Industries beat analysts’ revenue and EPS expectations this quarter. On the other hand, its full-year revenue and EPS guidance fell short, making this a softer quarter. The stock traded down 6.6% to $58.52 immediately following the results.

Updated: May 16, 2025 at 10:52 PM EDT

Are you wondering whether to buy Oxford Industries or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Oxford Industries falls short of our quality standards. To kick things off, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. On top of that, Oxford Industries’s same-store sales performance has disappointed, and its projected EPS for the next year is lacking.

Oxford Industries’s P/E ratio based on the next 12 months is 8.4x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $51 on the company (compared to the current share price of $57.10).

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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