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Oxford Industries, Inc. (OXM) Q1 2021 Results - Earnings Call

2021-06-10 08:32

Oxford Industries, Inc. (NYSE:OXM) Q1 2021 Results Conference Call June 9, 2021 4:30 PM ET

Company Participants

Anne Shoemaker - Treasurer

Tom Chubb - Chairman & CEO

Scott Grassmyer - CFO

Conference Call Participants

Edward Yruma - KeyBanc Capital Markets

Tracy Kogan - Citigroup

Susan Anderson - B. Riley

Dana Telsey - Telsey Advisory Group

Steve Marotta - CL King

Operator

Greetings, and welcome to the Oxford Industries, Inc., First Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Anne Shoemaker, Treasurer. Thank you. You may begin.

Anne Shoemaker

Thank you, and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and in the Q&A session may constitute forward-looking statements with the meaning of federal securities laws. Forward-looking statements are not guarantees, and actual results may differ materially from those expressed or implied in the forward-looking statements.

Important factors that could cause actual results of operations or our financial condition to differ are discussed in our press release issued earlier today and in documents filed by us with the SEC, including the risk factors contained in our Form 10-K. We undertake no duty to update any forward-looking statements.

During this call, we will be discussing certain non-GAAP financial measures. You can find a reconciliation of non-GAAP to GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at oxfordinc.com. Due to the material impact of COVID-19 on our business in fiscal 2020, we will also include comparisons to our fiscal 2019 results.

And now, I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO; and Scott Grassmyer, CFO. Thank you for your attention.

And now I'd like to turn the call over to Tom Chubb.

Tom Chubb

Thank you, Anne, and thanks to all of you for joining us this afternoon. We are extremely pleased to be reporting an incredibly strong start to fiscal 2021. We took decisive actions at the start of the pandemic to protect our people, our brands and our liquidity, this combined with our focus over the past year on delivering happiness to our customers and investing in enhanced digital marketing and store capabilities as well as in our bars and restaurants, have strengthened our foundation for profitable growth.

As consumers have become increasingly more comfortable returning to physical shopping, our overall engagement levels have greatly accelerated, leading to strong momentum across our entire portfolio of brands. Given conditions last year, it is not surprising that we were able to post strong sales gains across all brands and all channels of distribution during the first quarter of fiscal 2021 as compared to the first quarter of fiscal 2020.

What's much more impressive about our first quarter 2021 performance is how it compares to the first quarter of 2019. We believe that the comparison to 2019 is much more informative for most purposes than comparing to 2020. Accordingly, during our discussion today, we will focus on the positive traction we have made towards returning to and even exceeding our 2019 levels of performance.

First quarter sales came in at $266 million compared to $282 million in fiscal 2019 and versus our guidance range of $220 million to $240 million. It is worth noting that $14 million of the $16 million sales decrease from the first quarter of fiscal 2019 is due to lower sales in Lanier Apparel, which, as you know, we are in the process of exiting.

On an adjusted basis, earnings per share increased to $1.89 compared to earnings of $1.30 in the first quarter of fiscal 2019. Scott will provide more detail in a few minutes, but these results were driven by very strong performance in our e-commerce businesses and outstanding gross margins. Our bar and restaurant business also performed very nicely during the quarter.

In our bricks-and-mortar stores, we generally saw a sequential improvement in traffic and sales in the quarter with regions in Florida, the Southeast and Texas showing the most strength, while the Mid-Atlantic, the Northeast and the Midwest are recovering at a somewhat slower pace.

There is no question that we are benefiting from some pent-up demand so far this spring and summer and the alignment of our brands focus on products related to travel, vacation and social occasions with the consumers' desire to travel and reengage socially. We expect this to continue as more regions of the country begin to normalize. That said we believe that the results we have seen thus far this year and that we are projecting for the balance of the year also demonstrate the value of staying true to our brands during the challenges that we faced last year.

Our commitment to the happy upbeat and optimistic messages of our brands and delivering those messages to our consumers through our products and services is paying off handsomely as the world reengages. In addition, we are seeing positive returns on the investments we have made and continue to make in enhancing our brand's creative content, in improving our omni-channel customer service and continuing to hone our digital marketing capabilities and in our stores, bars and restaurants.

In our biggest brand, Tommy Bahama, we are anchored in the relaxed island lifestyle. We deliver this lifestyle to our guests through our amazing products, our wonderful stores and e-commerce website and very importantly, through our bars and restaurants. By staying true to our Libby Island life brand message and making the types of investments outlined above, we were able to deliver outstanding first quarter results.

Sales overall came close to 2019 levels, driven by healthy gains in e-commerce and restaurants, while stores in the wholesale continue to improve sequentially. Very importantly, increased full price selling and stronger initial IMUs, coupled with excellent expense control, helped contribute to a marked improvement in gross margin, operating margin and a 36% increase in operating income over first quarter 2019. We are delighted with the margins we achieved for the quarter.

Finally, we were pleased to see that while performance in our men's business was strong. Our women's business at Tommy Bahama was even stronger. We are honored to have the dedicated cadre of true Tommy Bahama fans that comprise our very loyal customer base. That said we believe there is room on the island to delight even more customers. Through the investments we are making and the priorities we have established, we are intent on expanding our customer reach while continuing to serve our loyal guests.

Staying anchored to its resort seat lifestyle and as we say, being the sunshine served Lilly Pulitzer very well during the first quarter. Lilly's product priority for spring '21 was feel good fashion with a focus on happy color and print, easy sheet comfortable pieces and a resort state of mind. This focus, together with the investments that we have made in enhancing our brand creative and enhancing our store and digital capabilities, paid off in strong first quarter results.

We continue to see strong growth from e-commerce, while our stores in the wholesale business continue to improve, as consumers feel increasingly comfortable engaging in the physical world. In total, first quarter '21 sales exceeded first quarter 2019 sales, and operating margin came in at an impressive 27% as compared to 21% in 2019.

Our luxletic and lounge product continued to drive growth, and we saw a healthy rebound in our dress business as her social calendar begins to fill up. At the same time, our golf and tennis collections have also been bright spots, and the consumer is showing strong renewed interest in swim as she thinks about travel and vacation this summer.

Our recent results demonstrate that we have the product she wants and our brand message is resonating with her. We look forward to continuing to drive a strong business through the balance of the year. Our smaller brands, Southern Tide, The Beaufort Bonnet Company and Duck Head also had a great first quarter, all posting meaningful sales gains above first quarter 2019 levels. All three-year poised to contribute to our profitability this year.

We are very pleased with our first quarter results and are excited about the balance of the year. Scott will provide more details in our guidance momentarily, but I will say that we do expect to have a strong year, particularly in terms of profitability. Our enthusiasm is based on both external factors as well as the internal priorities that we have been focusing on for the last year.

I'll start with the external factors. As the summer progresses, we expect some of the regions that have been slow to recover, for us, namely the Mid-Atlantic, the Northeast and the Midwest to pick up momentum. We also believe that consumers will continue to have a high degree of interest in travel, vacation and social events through the year.

Finally, after a long pandemic, consumers appreciate the highly differentiated, happy, colorful upbeat nature of our brands and products more than ever. All of these external factors portend a strong 2021. We are also excited about the benefits we are seeing as the result of our internal priorities. There are but I'll talk -- highlight five here.

First, in our brand message, we have taken care to ensure that our message is sometime true to our core brand values and relevant for today's consumer and marketplace. Second, we have realigned our creative teams and are enhancing our creative content to make sure it is delivering the full impact of our powerful brand messages.

Third, as part of our effort to enhance our digital capabilities, we are improving our ability to capture and analyze customer data in a way that respects her privacy, but also puts us in a position to serve her in a better and more personalized way. It also helps us identify and reach new audiences of potential customers.

Fourth, we are honing our skills in measuring the effectiveness of and optimizing the various channels, many of them digital media that we used to reach both existing and potential new customers. Fifth, we continue to enhance our store order fulfillment capabilities. This allows us to use inventory located anywhere in our footprint to satisfy demand from anywhere.

The implications for inventory efficiency, sell-through rates and ultimately, gross margins are huge. We believe the combination of the positive external factors as well as the benefits from our work on our internal priorities gives us ample reason to be bullish on 2021.

In closing, please allow me to express my sincere appreciation for our wonderful and loyal customers and for our world-class employees, an incredible group of women and men who have worked harder than ever over the last 1.5 years to deliver happiness to those customers. Thank you for all you do.

And now, I will turn the call over to Scott for additional detail on our results and our outlook for the balance of the year. Scott?

Scott Grassmyer

Thank you, Tom. As Tom just mentioned, fiscal 2021 is off to a great start with record earnings in the start with record earnings in the first quarter. I'll walk you through how we got there. Sales were stronger than expected, and excluding the impact of the exit of the Lanier Apparel business were comparable to 2019 levels. Our full-price e-commerce channel was 55% higher than in 2019, with significant growth over 2019 in all of our branded businesses.

Our retail store performance reflects the significant regional differences in the pace of recovery. We saw real strength in the Southeast and Southwest, particularly in Florida, where retail sales achieved 2019 levels. However, we are experiencing a much slower recovery in other parts of the country where sales levels in the Northeast, Mid-Atlantic and Midwest, while improving versus Q4, were still over 30% lower than in 2019.

Overall, our retail sales were 16% lower than in 2019. We continue to see improvements so far in the second quarter and expect that improvement to continue as restrictions lift and a summer arise in these areas. Our restaurants benefited from the addition of five Marlin Bars and the strong recovery in certain regions, with a sales increase of 7% compared to 2019. All restaurants are now open except for New York, which we plan to reopen this fall.

We are particularly proud of the work we have done to improve our gross margin, which, on an adjusted basis, expanded 520 basis points over 2019 to 64%. As demand remained high, more of our sales in the first quarter were at full price than in the first quarter of 2019.

Gross margin also benefited from our focus and investments in our direct-to-consumer businesses and lower sales in Lanier Apparel, which has resulted in a meaningful shift in our sales mix to these higher-margin channels of distribution. In the first quarter of 2021, our direct business was 72% of revenue compared to 64% in the first quarter of 2019. We have also increased our IMUs by reducing product cost and selectively increasing prices.

SG& decreased modestly from 2019 levels with lower employment costs, occupancy costs, variable expenses and travel costs, partially offset by increased performance-based incentive compensation. Putting it all together, in the first quarter, our consolidated adjusted operating margin expanded 410 basis points over 2019 to 15%, with operating margin expansion in all operating groups.

Our business is supported by our strong balance sheet and cash flow from operations. Here are some highlights: on a FIFO basis, inventory decreased 29% compared to the end of the first quarter of 2020. Excluding Lanier Apparel, which we are exiting, FIFO inventory decreased 22% compared to the -- into the first quarter of 2020. Tommy Bahama, Lilly Pulitzer and Southern Tide each decreased inventory level significantly year-over-year, with conservative purchases of seasonal inventory and higher-than-expected first quarter sales.

Ongoing enhancements to enterprise order management systems are also contributing to a more efficient use of inventory. On a LIFO basis, inventory decreased 36% compared to the end of the first quarter of 2020.

Supply chain challenges, including higher transit cost and production and transit delays, are ongoing. However, our emphasis on direct-to-consumer channels gives us more flexibility on product release dates.

Our liquidity position is strong with $92 million of cash and no debt at the end of the first quarter. In the first quarter of 2021, cash provided by operating activities was $41 million compared to cash used in operating activities of $46 million in the first quarter of 2020.

Turning to our outlook. The positive momentum we experienced in the first quarter has continued, and we expect to deliver strong revenue and earnings in the second quarter. Sales in the second quarter expected to be in a range of $300 million to $310 million compared to $302 million in the second quarter of 2019.

Impacting sales in the second quarter is the wind down of our Lanier Apparel business. We estimate Lanier Apparel revenue to decline to approximately $5 million in the second quarter of fiscal 2021 compared to $20 million in the second quarter of fiscal 2019.

Strong full price sales, a shift of our sales mix towards our brands and our direct-to-consumer channels and higher IMUs in the second quarter are expected to contribute to a meaningful increase in consolidated gross margin over 2019.

On an adjusted basis, earnings per share for the second quarter of 2021 are expected to be in the range of $2.15 to $2.35 compared to $1.84 per share in the second quarter of 2019. Our third quarter is historically our smallest sales and earnings quarter due to the seasonality of our brands.

We also put end of season inventory in both the third and fourth quarters with the highly profitable Lilly Pulitzer after-party sales as the most notable of our events. High sell-throughs in the first quarter and elevated sales levels planned in the second quarter are expected to reduce the availability of excess inventory for these clearance events.

As a result of lower planned revenue from clearance events in the third quarter and the impact of the Lanier Apparel exit, we're projecting an adjusted loss in the quarter in a range of $0.20 to $0.35 per share compared to adjusted earnings of $0.10 per share in the third quarter of 2019.

With our better-than-expected first quarter results, combined with our projection for a strong finish to the year, driven by continued strength planned in our full-price e-commerce channel, retail and restaurant channels of distribution, we are raising our previously issued guidance for 2021.

We now expect sales in the range of $1.015 billion to $1.05 billion compared to net sales of $1.12 billion in 2019. For the full year, Lanier Apparel sales are expected to be approximately $20 million or $75 million lower than 2019, with no Lanier Apparel sales planned in the fourth quarter.

Adjusted earnings per share for 2021 are expected to exceed 2019 levels, benefiting from meaningful gross margin expansion. SG&A for the full year is expected to be comparable with 2019, with lower employment costs, occupancy costs and travel costs, partially offset by increased performance-based incentive compensation and investments in marketing, including top of the funnel expenditures.

We now expect adjusted earnings in a range of $4.85 to $5.15 per share compared to $4.32 per share in 2019. We plan to continue investing in our growth opportunities, primarily in information technology initiatives, such as the redesign and relaunch of the Lilly Pulitzer mobile app and additional development of digital marketing and customer service enhancements.

We also plan to open new retail stores and a new Marlin Bar at Town Square in Las Vegas, which will replace our full-service restaurant in the center. In 2021, capital expenditures for the full year are expected to be approximately $35 million comparable to 2019 levels.

We appreciate your time today and will now turn over the call for questions. Hilary?

Question-and-Answer Session

Operator

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Edward Yruma of KeyBanc Capital Markets. Please state your question.

Edward Yruma

Hey, good afternoon, guys. Thanks for taking the question. Congrats on a good quarter. I guess, first, I want to click on our gross margin a little bit, obviously, an incredibly powerful performance there. In terms of last year, I know you had inventory that you packed away. Was there a benefit from a cost basis when you kind of brought that inventory back into flow this year?

And then as a follow-up, as you think longer-term about the DTC penetration, particularly in the Tommy brand. Do you think you kind of hit a peak? Or do you think that the direct business can continue to grow as a percent of overall sales? Thank you.

Tom Chubb

I'll maybe take the first one, Ed and then flip it to -- or I'll take the second one, excuse me, and then flip it over to Scott to talk about any benefit that we might have had to gross margin. But I do, Ed, believe that DTC as a percentage of the total can continue to grow. Certainly, it will be a larger part this year, I think, than it was in 2019 as wholesale is recovering. I do think our wholesale business is very healthy. We're performing well at all of our key customers, which is great to see. But over the long term, we do expect DTC to be the primary driver of growth. Scott, do you want to talk about the gross margin?

Scott Grassmyer

Yes, there was really no kind of significant cost difference from what we carried over. What has that allowed us to do was really not have a lot of excess inventory last year that we are flooding the market with. And I think it really helped with our brand health. And I think our merchandising team did a great job of really taking what we could merchandise well into that spring line. And it just allowed us not to have to buy a bunch of inventory for early spring we already had it. It also helped with some of the transit delays because that inventory was already here. So, we really had no delays there.

Edward Yruma

Got it. And one other follow-up. I know you guys mentioned you were taking some tactical price increases. I know historically, you've done that as you've introduced new product or roll out some new functionality. Are the price increases on kind of a similar basis as you bring out new product? Or are you taking more kind of wholesale approach to some of the price increases? Thanks

Tom Chubb

It's more selective, Ed, than it is across the board type of pricing increases.

Scott Grassmyer

Yes, also as we get in more performance type products, where new products that we introduce in the performance area tend to have a higher gross margin also.

Operator

Our next question is from Paul Lejuez with Citigroup. Please state your question.

Tracy Kogan

It's Tracy Kogan filling in for Paul. I had two questions. I guess the first is on the supply chain. I'm wondering, if the delays you're seeing there are contributing to what you expect to be having a lack of clearance inventory in third quarter? Is that really just more related to your sell-throughs?

And then my second question was I was just wondering in the Tommy business, how much your outlet business was hurt by lack of international tourism. If you could maybe give some color on the difference in performance in your outlets versus your full price stores? Are those in-tourist regions versus those that are not? Thanks a lot.

Tom Chubb

Okay. On the supply chain question and any impact that, that may be having on the Lilly Pulitzer after-party sale later in the year, the way that I would answer that, Tracy, is the primary driver of the root cause, if you will, of not having as much inventory as the higher sell-through that we've had year-to-date. However, the supply chain issues make it harder for us to chase inventory really for full-price business as well as, as for that would ultimately end up leaving us possibly with more inventory for the after-party sale.

So, we are having some challenges with delays in shipping as well as some delays in production at the factory end due to the COVID pandemic. As much as possible, we've obviously tried to factor all of that into our forecast and think we've sort of captured that. But the real cause is the higher-than-anticipated full price selling during the early part of the year. And then on the outlet stores?

Scott Grassmyer

Yes. Our outlets are down similar to our total retail. We don't really benefit that much from international travel, not the way some brands might and our outlet stores there. While the sales are down, the gross margins are very healthy in our outlet, so we just have a much leaner in inventory, and the inventory is very good inventory. And we're able to get a little bit better pricing, having to discount a little less than we had to in previous years. So overall, outlet businesses, sales are down, but margins are up. So it's pretty healthy.

Operator

Our next question is from Susan Anderson of B. Riley. Please state your question.

Susan Anderson

Hi, good evening, nice to see the improvement in the quarter. I'm curious, I think you mentioned that you expect the Northern states to pick up as they've started to open. I'm curious if you've seen that penetrate or seeing them start to pick up just yet? And then also, if the South has continued to perform well, and then also curious what you're seeing in Hawaii is that's opened up now?

Tom Chubb

Yes. So as to the Mid-Atlantic, Northeast and Midwest, which were the three sort of lagging regions that we called out, they are improving. If you look at the more recent performance versus the performance earlier in the year, the general trend there is good. And I think it's as you would expect, as people start to get out more or feeling more comfortable as some of the restrictions start to get lifted and more people are vaccinated. People want to be out shopping and buying stuff, and we think that actually plays out for us really well.

In those states, summertime is a really good time to have people out shopping for our brands, which are all about warm weather and sunshine and all those types of things. And in the South, I'd say that relative to any other year, the performance continues to be very good. We're pleased with what we're seeing there. I will point out that Florida always slows down for us during the summer time a bit versus other times of the year. And I think you have that. It won't be a relative slowdown as compared to other years, but it will be less of our overall sales picture during the summer months.

And then as to Hawaii, it's a bit of a mixed bag there. The places that rely heavily on international tourists, especially people coming in from Japan or Australia, and that would be the island of Oahu because there's still issues would travel from those places. They've not recovered as fast as some of the locations like and the big island that are more driven by U.S. tourists. And there are still restrictions in place, but we are seeing a nice recovery, and I think that will continue as the year progresses. I think all of Hawaii will continue to get better, which is a positive for us.

We're thrilled with the results that we saw in the first quarter. But again, that was with certain regions still depressed from where they were in 2019. And as they come back online, we think that bodes well for us.

Susan Anderson

Great. That's very helpful. And then I'm just curious, are you seeing new customers come into all of the brands or the existing customers that are coming back now that maybe shopping the brands pre-COVID, but hadn't shopped them because maybe they hadn't gone indication or something? And now they're coming back or if you're also capturing new customers and if that's in-store or online or both?

Tom Chubb

The answer is yes, yes and yes. We're -- customer counts are building. We're seeing customers that are customers that we've had in the past, and we're adding new customers both online and in-stores, and it's really across all brands. And some of that got a little choppy during the pandemic. Obviously, it was hard to add new customers in stores when the stores were closed. And there was a lot of on there, but all the customer metrics are really looking pretty good through the first quarter of the year, and we think we'll be able to continue that trend. And it's obviously an area of a lot of focus for us as well.

Operator

Your next question is from Dana Telsey of Telsey Advisory Group. Please state your question.

Dana Telsey

Hi, good afternoon and congratulations on the terrific results. As you think about e-commerce, and I believe last year, e-commerce reached nearly 43% of sales, and you had 55% increase in full price now. How are you thinking about percentage of total sales that comes from e-commerce and the margin accretion relative towards that for each of the brands?

Tom Chubb

Yes. So the highest penetration -- or as you know, Lilly has a higher penetration of e-commerce than Tommy does. They both took a big step-up last year. Last year was a very unusual year. As a percentage of the total, it will be a bit smaller this year than it was last year, but it will still, in both brands, be significantly higher than it was in 2019. And overall, total enterprise, I think we're estimating it to be at about 33% for 2021, which will be up pretty significantly over where it was in 2019.

I think '22 is probably the first year where you'll really be able to see where that's going to sort of what the new baseline of e-commerce is because you do still have stores in the wholesale still in a bit of a recovery mode this year, Dana. And so 2022, you probably get that baseline. But then from there, I think e-com probably continues to be the fastest-growing part of the business. And we like it. It's very profitable business for us. I'll let Scott maybe elaborate a little more on the margin impact of the e-com business?

Scott Grassmyer

Yes. Yes. Our e-com is a very profitable business. Even though you have some extra cost around it, you do have a high ticket, which is growing. Our average ticket has been growing, and our initial gross margins are higher. So, we are able to easily fund the extra cost with that margin. So we really do like the e-commerce business, and we have been investing in it, and those investments have been paying off, and we'll continue to invest in that business.

Dana Telsey

Got it. And then just two more follow-ups. One of the things that sounded like you had learned coming out of COVID is how to run the stores more efficiently regarding store labor. As stores have reopened, is this part of the flow-through beyond the gross margin of what's leading to the operating margin increases? And how do you think about labor going forward?

Tom Chubb

Dana, I would say, yes, it is part of the flow-through. We did learn how to operate more efficiently. And I think we're benefiting from that right now. There's a part of that that is sort of intentional, if you will or deliberate. And then I think there's actually a little bit of it that has to do with trouble as many employers are having right now and filling open positions. And we're actually running a little thinner than we want. At the margins, it's probably costing us a few sales dollars. So I'm not sure it would hurt us as on labor cost as a percentage of sales. But in absolute dollars, it's probably -- we're spending less just because we can't get people in.

Dana Telsey

Got it. And then as you think about inventory going through the balance of the year, how do you think about inventory as approaching the fourth quarter? And how long this congestion lasts? Everything we hear, it seems like it continues to be extended?

Scott Grassmyer

Yes, it does. One thing we have just did in merchandising calendars to order earlier to build in a little more time for any kind of transit delays, especially for that fourth quarter, especially when you get into resort and then into in the early deliveries of spring, which some of those happened in the first quarter. We plan on attempting to at least ordering and the inventory earlier. And hopefully, any delays will be -- that cushion that we accelerate the orders, we'll absorb that.

So -- and inventory levels, we are operating more efficiently with inventory. As far as we expect to be below 20% in the whole year and whether it will be quite as big a percentage or not, not quite sure. That should be lower all year. I think we can just run the business with less inventory due to some of the investments.

Operator

Our final question is from Steve Marotta of CL King. Please state your question.

Steve Marotta

Tom, maybe you could address, given how this year is shaping up? And there's the reopening, performance is actually very good, very, very good. To the extent I know, you can't talk about next year from a guidance standpoint, but maybe you can talk at a very high level about what you think optimal operating margin is for the business and for the long term?

I'd like to ask you how you expect to lap this next year, but that would be maybe giving too much specific guidance on next year. If you could just frame it a little bit on where you are and where you think you can -- how this can -- you could build off of this? Or if maybe the margins are playing a little bit above themselves at the moment, given all of the dynamics in the industry?

Tom Chubb

Yes. Thank you, Steve. Thanks for the question, and I'll let my partner, Scott, chime in here in a minute with some further detail in thinking on the operating margin long term. But what I would tell you at the very highest level, Steve, and this is a message that we've been trying to deliver since this time last year, is the first couple of months of the pandemic, we were very focused on making sure that we would get through it and financially survive. And as you know, we did that with flying colors.

But really about this time last year, we also pivoted to make sure that we were doing everything we could across all of our brands to emerge from the pandemic even stronger than we went into it. And this was part of our prepared remarks today is that we believe that we are seeing not only the benefits of the reopening, but also the benefits of the priorities that we have internally and that those are paying off. And we do believe that we have come out of this as brands, which ultimately drive our business in a stronger position and what that's helping us do is drive sales.

No doubt, the reopening is part of it. But we think the strength of our brands and the activities and priorities that we've done to bolster those are also paying off. That's resulting in higher gross margins. We've developed skills that have helped -- are helping us operate more efficiently from an operating expense leverage standpoint as well as an inventory efficiency standpoint. And we're also focused on and while we love wholesale and we want to continue our wholesale business, we're very focused on driving our direct-to-consumer businesses.

And when you look at all of those, what I would tell you is it's really hard for me to predict what next year looks like. But over the long term, I do believe we will be expanding our enterprise-wide operating margin. And Scott, if you want to?

Scott Grassmyer

Yes. Total company, I mean, we really expect to be a low double-digit operating margin company. I think we can enter that double-digit territory this year. And at Tommy Bahama, we've always felt there was a lot of room for operating margin improvement. And we really believe this year, we're going to have a lot of progress, and they can get into double digits this year.

Also, we want to get them 12% in North. I don't think that will happen this year. But I think that certainly in the not-too-long-term future to get them there. So -- and then Lilly has great operating margins. They always have, and we think they can maybe expand slightly over '19 margin levels. So -- and so, we think our margin profile is certainly improving, and I think it can continue to improve.

Operator

We have reached the end of the question-and-answer session. I will now turn the call over to Tom Chubb for closing remarks.

Tom Chubb

Thank you, Hillary, and thanks to all of you for your interest in our company and your support. And we look forward to talking to you again in September when we report second quarter results.

Thank you.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.

牛津工业(OXM.US)2021年第一季度业绩电话会
开始时间
2021-06-10 08:32
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