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Oxford Industries (OXM -2%) is lower following disappointing Q2 (Jul) earnings results/guidance last night. This apparel company, which owns Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, Beaufort Bonnet and Duck Head focuses on the laid-back vacation vibe. OXM has now missed on EPS in three consecutive earnings, but this miss was notably larger than the prior two. Q2 comps were -1%, which was below guidance of mid-single-digit positive comps.

• Even more concerning was OXM guiding Q3 (Oct) EPS and revenue well below analyst expectations. OXM also lowered full year guidance pretty substantially. OXM now expects negative comps in the low to mid-single-digits for the remainder of the year vs previous expectations from June that assumed mid-single-digit positive comps for the remainder of the year.
• With a generally higher income core customer base, it would be natural to think OXM would be less impacted by macro issues like inflation. However, OXM cited a continued pullback from the consumer. Perhaps even more troubling is that the pullback worsened sequentially as the quarter progressed and continued into August. OXM said the cumulative effect of several years of inflation may be catching up with the consumer.
• OXM also said that its more affluent consumers tend to be more headline and market-sensitive, so that may be impacting purchases. OXM also cited its significant exposure to Florida, which accounts for over a third of its brick-and-mortar business. This channel grew at an exceptional pace coming out of the pandemic but has slowed down as the new post-pandemic world settles in. OXM did accept some blame, it's not all macro issues. OXM conceded that it made some merchandising missteps, including assortment misses and some poor timing of promotional events.
• The silver lining is that traffic has remained strong, which indicates that consumers remain interested in its brands. However, OXM is seeing reduced conversion as consumers have become cautious when making purchase decisions. OXM saw strong full price response to fashion while interest in core styles was more muted. Customers responded to value via promotional events and its outlet stores saw higher sales, which impacted margins.
• Despite the cautious consumer, OXM sounds excited about some new collections such as its Tommy Bahama, Indigo Palms collection of denim and denim-friendly products, which launched early in Q3. OXM said initial reception has been strong. Also, this assortment enhances OXM's ability to be relevant in the cooler months, particularly in the western part of the country, the Midwest, the Mid-Atlantic and the Northeast.

Given the big Q2 miss and surprisingly weak Q3 guidance, we were expecting the stock to be down even more. However, the share price had been pulling back aggressively since early August (-20% before this report), which tells us investors had concerns already and a bad result was likely priced in to some extent. It seems even a higher income brand is not immune from macro issues. We also suspect that consumers are travelling less and OXM's brands focus on vacation vibes, so that is playing a role as well.