Oxford Industries Continues to Grow

Atlanta-based apparel maker Oxford Industries (NYS: OXM) recently posted its second-quarter results. Although net income fell, things aren't nearly as bad as they may seem.

Let's dig deeper.

The numbers
Revenues, at $180.6 million, were up by 26% compared to the year-ago quarter. This was mainly because of strong sales of the company's brands, which include Tommy Bahama and the recently acquired Lilly Pulitzer. But strong sales didn't translate into profits; net income for the quarter fell 64% to $2.6 million or $0.16 per share, due largely to a one-time expense of $8.2 million related to repurchasing its senior secured notes.

If you take out one-time items, the company saw adjusted earnings per share of $0.57, beating Street estimates of $0.52 per share.

Growth story
Fellow Fool Shubh Datta correctly pointed out the growth potential of the company back in June after its first-quarter earnings report. Tommy Bahama benefited from increased same-store sales, higher retail sales, and increased e-commerce sales, operating 90 retail stores this quarter.

Oxford Industries improved its revenues and margins, backed by the strength in its direct-to-customer business. Robust cash generation helped the company reduce its debt by 24% to $112.5 million and thereby decrease its interest burden.

Given the company's growth potential, let's see if it is fairly priced compared with its peers:


P/E Ratio

Oxford Industries


Polo Ralph Lauren



Phillips-Van Heusen



Abercrombie & Fitch



Source: Yahoo! Finance.

Oxford's P/E makes the company look extremely inexpensive, especially in comparison to its competitors. With expected earnings growth of 13% over the next five years, the shares may be a good value right now.

The Foolish bottom line
Management seems confident about the strength of its brands. It has raised its full-year earnings outlook to $2.20-$2.30 per share. Given the momentum of Oxford Industries' revenue, I think the company has the potential to come up with good numbers in the future. What do you think?

To stay up to speed on these apparel retailers, click below to:

At the time thisarticle was published Navjot Kaur does not own shares in any of the companies mentioned in this article.The Motley Fool owns shares and has written covered calls on Oxford Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.