Oxford Industries Misses Q1; Stock Still Expensive After Drop

Oxford Industries missed Wall Street estimates on both revenue and earnings for its fiscal first quarter, the company said in an earnings filing. Sales at its two largest brands, Tommy Bahama and Lilly Pulitzer, fell year over year. Margins contracted as input costs rose and promotional activity increased, the filing showed. Management's full-year guidance came in below analyst consensus.

Shares fell after the release. The stock still trades above its five-year average forward price-to-earnings multiple, based on consensus estimates. That valuation leaves Oxford exposed if the weak trends continue.

The Q1 miss was driven by softer consumer demand in apparel and higher promotional spending to clear inventory, the company said. The guidance implies the second half will not fully offset the first-quarter disappointment.

What could change the picture? A strong back-to-school season and steady same-store sales in August would reduce the risk of another miss. Cost cuts that protect margins would also help. On the downside, further sales erosion at Tommy Bahama or Lilly Pulitzer, or another guidance reduction, would likely push the stock lower.

Oxford Industries reports fiscal second-quarter results in September. Monthly sales data from the company's retail channels will be the closest real-time signal until then.