Oxford Industries (OXM) has received a new Hold rating, initiated by BTIG analyst, Janine Stichter.
Janine Stichter has given her Hold rating due to a combination of factors that span Oxford Industries’ solid and stable portfolio of brands, the impact of macro headwinds, and the absence of a near-term catalyst. Stichter recognizes the strong performance of Oxford’s major brands, Tommy Bahama and Lilly Pulitzer, which together make up approximately 80% of the company’s sales. Additionally, their customer base, which consists of older and affluent demographics, has proved to be resilient. Despite this, the company’s significant gains post-COVID are starting to normalize, which combined with macro headwinds, could potentially push the company into negative growth territory by 2024.
Stichter also points out that while strategic growth investments are a smart move for the long term, they are likely to put pressure on margins into 2024, resulting in a second consecutive year of compression. Based on lower top-line growth, she estimates that the EPS for 2024 will be 6% below consensus. Although Oxford’s shares are trading below historical averages and peers, Stichter views this as fair given the slowing momentum, lack of a catalyst, and reduced visibility. The company’s growth opportunities, particularly with Tommy Bahama’s potential to expand its under-penetrated women’s business, are unlikely to cause significant near-term shifts. Lastly, she anticipates a continued normalization of margins into 2024, despite them having moved structurally higher.
In another report released on November 6, B.Riley Financial also initiated coverage with a Hold rating on the stock with a $90.00 price target.
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Oxford Industries (OXM) Company Description:
Oxford Industries, Inc. engages in the design, sourcing, and marketing of apparel products. Its brands include Tommy Bahama, Lilly Pulitzer, Southern Tide, and licensed brands of tailored clothing and golf apparel. The company was founded by John Hicks Lanier, Thomas C. Chubb III, and Sartain Lanier in 1942 and is headquartered in Atlanta, GA.
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