Oxford Industries Inc . (NYSE:OXM) reported a challenging third quarter for fiscal 2024, with a notable miss on earnings per share (EPS) and a decline in revenue compared to the same period last year. Despite these setbacks, the company's stock experienced a slight uptick in aftermarket trading.
Summary Paragraph
Oxford Industries reported an adjusted net loss per share of $0.11, falling short of the forecasted EPS of $0.11. The company's consolidated net sales for the quarter were $308 million, down from $327 million in Q3 2023. Following the announcement, Oxford's stock price rose by 1.88% in aftermarket trading, closing at $84.86.
Key Takeaways
- Oxford Industries reported a quarterly loss, missing EPS expectations.
- Revenue declined year-over-year, impacted by external factors such as hurricanes.
- Stock price increased in aftermarket trading, reflecting mixed investor sentiment.
- The company continues to expand its retail footprint with new store openings.
- Oxford Industries maintains a focus on stabilizing and expanding operating margins.
Company Performance
Oxford Industries faced a challenging quarter, with a decline in both revenue and earnings. The company attributed part of the sales loss to adverse weather conditions, specifically hurricanes. Despite the financial setbacks, Oxford Industries is expanding its retail presence, having opened 12 new stores during the quarter, bringing its total to 342.
Financial Highlights
- Revenue: $308 million, down from $327 million in Q3 2023.
- Adjusted net loss per share: $0.11.
- Gross margin contracted by 100 basis points to 63%.
- Operating loss: $3 million, translating to a -1.1% operating margin.
Earnings vs. Forecast
Oxford Industries reported an EPS of -$0.11, significantly below the forecasted $0.11, marking a substantial miss in expectations. This performance contrasts with previous quarters where the company met or exceeded forecasts, highlighting the impact of external challenges this quarter.
Market Reaction
Despite the disappointing earnings report, Oxford Industries' stock price rose by 1.88% in aftermarket trading. This increase suggests that investors may be optimistic about the company's long-term strategies or reassured by its retail expansion plans. The stock's current price of $84.86 is within its 52-week range, which spans from $72.24 to $113.88.
Company Outlook
Looking forward, Oxford Industries projects fiscal 2024 net sales between $1.500 billion and $1.520 billion, anticipating a 3-4% decline. The company aims to stabilize and expand operating margins as its primary focus for 2025, with plans to increase its store count by 30 locations.
Executive Commentary
CEO Tom Chubb (NYSE:CB) emphasized the importance of innovation, stating, "When we deliver innovation, newness and excitement, our customers respond favorably." He also highlighted the company's focus on margins, saying, "Our number one priority is stabilizing and expanding our operating margins."
Q&A
During the earnings call, analysts inquired about the company's wholesale bookings and its preparedness for potential tariff changes. Oxford Industries expressed caution in wholesale channels but showed confidence in its ability to handle external challenges.
Risks and Challenges
- Continued impact from inflation could pressure consumer spending.
- The promotional retail environment is intensifying, potentially affecting margins.
- External factors such as weather events may disrupt operations and sales.
- Potential tariff changes could impact cost structures.
- The challenging consumer environment may hinder revenue growth.
Full transcript - Oxford Industries Inc (OXM) Q3 2025:
Conference Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Smith.
Thank you. You may begin.
Brian Smith, Investor Relations, Oxford Inc.: Thank you, and good afternoon. Before we begin, I would like to remind participants that certain statements made on today's call and Q and A session may constitute forward looking statements within the meaning of the 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 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 ks. 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 atoxfordinc.com. Now I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO and Scott Grassmeyer, our CFO and COO. Thank you for your attention.
And now I'd like to turn the call over to Tom Chubb.
Tom Chubb, Chairman and CEO, Oxford Inc.: Good afternoon and thank you for joining us. We are excited to be in the midst of a holiday season where the consumer appears to be regaining confidence and is more willing to make discretionary purchases. I'm going to start with a summary of the Q3, then move to our expectations and plans for the Q4, and finally give you a bit of a sneak preview on our plans for 2025. But before jumping into the results of the Q3, I want to acknowledge the multiple headwinds faced by our brands in the Q3, including the conclusion of the most intense election cycle in recent memory and the impact of 2 major hurricanes that devastated parts of the Southeastern United States. You will recall that during last quarter's call, we anticipated a relatively soft third quarter, primarily due to macro factors and set our guidance accordingly.
We were on track to finish within the forecast, but then the impact of the 2 hurricanes pushed us below the bottom of the range for both sales and earnings per share. The election among other noteworthy world events was a major distraction for our more mature headline sensitive consumer over the last several months, culminating with the election early in Q4. Also during the Q3, Hurricanes Helene and Milton impacted the Southeastern United States within only a few weeks of each other. The Southeastern United States is our most important and significant region with Florida loans representing approximately 1 third of our direct to consumer business. All of these factors impacted our business during the quarter and were exacerbated by a consumer that already felt pinched by the cumulative effects of several years of high inflation.
We should also point out that we own a portfolio of premium brands that sell primarily at full price with very limited exposure to the off price and outlet channels. These value oriented channels have been thriving as cautious consumers seek special offers and clearance pricing. We believe our full price premium strategy has been and will be a long term competitive strength, But in the current environment, it is a headwind to our top line while acting as a tailwind for others in our space. Scott will provide more details in his section, but we ended the quarter with sales of $308,000,000 and adjusted net loss per share of $0.11 for the quarter coming in below our guidance range. We estimate that as a result of the hurricanes, we lost at least $4,000,000 of sales.
We also incurred significant incremental expenses for cleanup efforts and assistance to our employees in need, resulting in a cumulative $0.14 negative per share impact from the hurricanes. I'm so proud and grateful for the generosity of our associates across the enterprise who pitched in, in so many ways to help the people in the communities that we serve and operate to recover from the devastation. This includes not only donations of money, but of time and effort to collect and provide the goods and relief that was needed most. The resiliency of our people in Florida, Georgia and the Carolinas and the generosity of our people throughout the country are among the characteristics that make Oxford such a great company. Moving to our results.
The decline in sales reflects the continuation of the negative comp store sales trends that we experienced in the first half of the year continuing throughout most of the third quarter. While there was some choppiness, the Q3 looked slightly worse than the first half of this year. Continuing the trend from the first half of this year, our results in the third quarter were driven by reduced conversion while traffic has remained healthy, indicating that our consumer is interested in our brands, but continues to be cautious when making purchase decisions. Consumers also continue to react strongly to fashion and new and differentiated products, while interest in core styles is more muted. We believe that we have corrected some of the missteps that we have previously discussed and are prepared well with fresh and new products for the holiday and upcoming resort travel season.
Our consumer also responded to our value offering in the quarter with a higher proportion of sales during the quarter occurring during promotional events and at our outlet stores than in last year's Q3. Despite short term headwinds affecting our results, we have not backed off on investing in the business with new stores, Marlin Bars, our new distribution center and technology among other strategic investments, all of which are adding expense at a time when top line is weak, hurting bottom line in the near term, but continuing to strengthen us for the long term. During the quarter, we opened 12 net new retail locations that brings our total store count to 342 compared to 309 at the end of the Q3 of fiscal 2023. Our balance sheet and liquidity have remained strong allowing us to continue investing in the future of our business including our store pipeline and Lyons, Georgia distribution center project which Scott will detail shortly and cash returned directly to shareholders through our quarterly dividend. Moving on to the Q4, November started on a similar trajectory to the Q3, but once we got past the election, business began to improve and we had a strong finish to November with a very solid Thanksgiving weekend.
As you're aware, this year's calendar provides the shortest possible selling period between Thanksgiving and Christmas compared to the longest possible period in the prior year. This obviously means that we have to get our holiday business done in a more compressed time period. Accordingly, we are delighted that we have what we believe are outstanding products and marketing plans for holiday and are encouraged by the results we are seeing. We have been thrilled by the performance of Tommy Bahama's Indigo Palms Denim collection, particularly on the men's side, the new men's luxe sweater offering and the new Tommy Bahama Palm Voyage women's collection. Indigo Poms was a bright spot even during the tough third quarter and performed extremely well during November.
Denim is a category that works in all geographies year round, but is especially important in cooler geographies and during the cooler times of year. We are excited about the impact Indigo Palms is currently having and the potential it has to help us grow our business in the years to come. We are equally excited about our new luxe sweater at
Conference Operator: $
Tom Chubb, Chairman and CEO, Oxford Inc.: at $118 This year, we are also having tremendous success with the new Marlin Luxe Cotton Silk Cashmere Blend Half Zip (ASX:ZIP) at $178 and the Sunbury half zip at $158 The luxe sweaters are not only selling very well, but they are also helping push gross margins and average order value higher. On the Wyndham side, CommVoyage, which are elevated travel ready separates, has performed very well in our own channels and also in our key wholesale accounts. We love to see this because on the wholesale floor, we are going head to head with our competitors and we are winning. We have also seen great success in Lilly with whimsical new products like the Ellery sweater and seemingly anything with bows or sequins on it. The takeaway from all of this is that when we deliver innovation, newness and excitement, our customers respond favorably.
The reaction to our products and an apparent change in the trajectory of consumer sentiment is driving improving comp store sales post election that have begun to reverse the disappointing trends experienced the last several quarters. Looking ahead to fiscal 2025, our number one priority is stabilizing and expanding our operating margins. As we plan for the year, we are encouraged by recent sales trends in our business. We are also encouraged by our forward wholesale bookings. While there is plenty of reason to be optimistic, we're going to be cautious about getting overly exuberant with our comp assumptions for the year and we'll be focused on improving operating margin through better expense control and leverage.
We look forward to outlining our fiscal 2025 plans for you in more detail in March. While we are disappointed in our Q3 results, we are confident in the product our teams have developed and our business to date in the Q4 and plans for the remainder of the holiday and resort season. We are very grateful to our team and wish all of them and all of you a very happy holiday season. I'll now hand the call over to Scott, who will provide more details on the quarter and our outlook for the balance of the year. Scott?
Scott Grassmeyer, CFO and COO, Oxford Inc.: Thank you, Tom. As Tom mentioned, we finished the quarter with top and bottom line results below our expectations. There were several macroeconomic headwinds across the marketplace that negatively affected our financial results during the quarter, most notably the continued challenging consumer environment, distractions due to the elections and the hurricanes that impacted the Southeastern United States. In the Q3 of fiscal 2024, consolidated net sales of $308,000,000 decreased compared to sales of $327,000,000 in the Q3 of fiscal 2023 and below our guidance range of $310,000,000 to 325,000,000 dollars As Tom mentioned, we estimate that we lost approximately $4,000,000 in sales from evacuation closures for many of our Southeastern locations and the temporary closure of several stores in Florida, including 3 stores in a restaurant location in St. Armands Circle outside of Sarasota that were heavily damaged.
Most of these St. Armands locations remain closed through the majority of the Q4. Including the impact of the hurricanes, sales in our full price brick and mortar locations were down 6% driven by high single digit negative comps, partially offset by the addition of new store locations. E commerce sales decreased 11%. Our food and beverage and outlet locations performed better with a 4% and 3% sales increase respectively driven by new locations and partially offset by low single digit negative comps.
Our wholesale channel, which was particularly challenging in the first half of this year, had a challenging third quarter with sales down 2% compared to the Q3 of 2023 as the specialty store business across our brands continues to struggle, partially offset by increased sales to major department stores. Adjusted gross margin contracted 100 basis points to 63%, driven primarily by a higher proportion of net sales occurring during promotional events in Tommy Bahama, Willie Pulitzer and Johnny Wuss. Across our 3 major brands, we continue to see strong responses from consumers to our promotional and end of season clearance events. We're able to partially offset this decrease in Lilly Pulitzer through lower discounts and markdowns and in our emerging brands group through our continued efforts to improve our inventory position and reduce the need for off price wholesale and promotional DTC sales. Adjusted SG and A expenses increased 5 percent to $201,000,000 compared to $191,000,000 last year.
During the Q3 of fiscal 2024, we incurred higher expenses related to recent and ongoing investments in our business primarily from the addition of 33 net new brick and mortar locations open since the Q3 of last year including 4 new Tommy Bahama Mall and Mall locations. Costs related to some of the approximately 5 net new brick and mortar locations and 2 additional Tommy Bahama Marlin Bar locations that we expect to open in the Q4 or early in the Q1 of fiscal 2025. The addition of the Jack Rogers (NYSE:ROG) brand acquired in the Q4 of fiscal 2023 and approximately $1,000,000 in incremental hurricane related costs including salaries, wages and additional assistance paid to employees who were affected by the hurricanes as well as cleanup cost. Result of this yield is a $3,000,000 adjusted operating loss or negative 1.1 percent operating margin compared to 21,000,000 operating profit dollars operating profit or 6.6% in the prior year. The decrease in adjusted operating income reflects SG and A investments and lower gross margins.
Moving beyond operating income, effective tax rate was impacted by certain discrete events that were amplified by our operating loss. Interest expense was $1,000,000 lower compared to the Q3 of fiscal 2023 resulting from lower average debt levels. With all this we ended with $0.11 of adjusted net operating loss per share which includes approximately $0.14 negative impact associated with loss revenue and additional expenses related to the hurricanes. I'll now move on to our balance sheet, beginning with inventory. During the Q3 of fiscal 2024, inventory decreased slightly on a LIFO basis.
On a FIFO basis, inventory increased slightly by $2,000,000 or 1% with inventory relatively flat in all of our operating groups. We ended the quarter with outstanding long term debt of $58,000,000 as our $104,000,000 of cash flow from operations in the 1st 9 months of fiscal 'twenty four were outpaced by our elevated level of capital expenditures of $92,000,000 primarily related to Alliance Georgia Distribution Center project and the addition of new brick and mortar locations. Dollars 33,000,000 of dividends and changes in working capital needs as the 3rd quarter is historically our lowest operating cash flow quarter. I'll now spend some time on our outlook for 2024. We finished the Q3 fiscal 2024 with negative comps of 10% which was lower than our previous forecast of low to mid single digit negative comps for the quarter.
Despite a negative 10% comp in the 3rd quarter, comp sales figures in the 4th quarter to date have improved and are slightly negative. We believe this improvement in the 4th quarter will continue and result in slightly negative comps in the low single digit range in the 4th quarter. These assumptions are consistent with our previous expectations from September that assume low to mid single digit native comps for the remainder of the year. However, as a result of the miss in the 3rd quarter, the impact of the hurricanes and continued weakness in the wholesale channel, we have revised our sales forecast accordingly. Our revised sales forecast includes a $3,000,000 reduction in sales in the 4th quarter from store and restaurant closures resulting from the hurricanes.
For the full 52 week year, we now expect net sales to between $1,500,000,000 $1,520,000,000 or a decline of 3% to 4% compared to sales of $1,570,000,000 in the 53 week fiscal 2023. Our updated sales plan for the full year of 2024 now includes low to mid single digit sales declines in Tommy Bahama, Lilly Pulitzer and Johnny was partially offset by sales growth in the low single digit range for the emerging brands group. By channel, we expect low to mid single digit sales decreases in the e com and full price retail channels. We expect wholesale sales which were down $22,000,000 in the 1st 9 months of the year to be down another $4,000,000 in the Q4 of 2024. We expect growth in our outlets as those locations continue to perform better than our full price locations in the current environment and in our food and beverage locations that will benefit from the addition of 4 new Marlin Bar locations during the year.
Consistent with our previous guidance, we still anticipate gross margin for the year will decline by approximately 50 to 100 basis points compared to the prior year. This expected increased activity during promotional events across our brands will more than offset the gross margin benefit from proportionally lower wholesale sales. For the year, we expect SG and A to grow in the mid single digit range due to the investments in our business, including expanding our store count by a net of approximately 30 locations with 4 new Tommy Bahama Marlin Bars, continued IT investments and addition of Jack Rogers. Additionally, as discussed during our last call, we expect the Jack Rogers brand acquired in the Q4 of fiscal 2023 to generate an operating loss of approximately $2,500,000 in 2024 as we reset and refocus the business. We also anticipate lower interest expense of $3,000,000 for the year compared to $6,000,000 in 2023 and higher royalty income higher royalty and other income primarily from a full year of the time of the Palma Miramante Resort.
Additionally, we now expect a flat adjusted effective tax rate of approximately 23 percent consistent with 2023 with both periods benefiting from certain favorable items. Including an estimated $0.11 per share impact from the hurricanes in the 4th quarter on top of the $0.14 from the 3rd quarter, we had spent fiscal 2024 adjusted EPS to be between $6.50 $6.70 versus adjusted EPS of $10.15 last year with decreases in all of our businesses partially offset by the lower interest expense and higher adjusted royalty and other income. In the 13 week Q4 of 2024, we expect sales of $375,000,000 to $395,000,000 compared to sales of $404,000,000 in the 14 week Q4 of 2023. This reflects our low single digit negative comp assumption, lower wholesale sales and 1 week less of sales that resulted in $17,000,000 of sales in Q4 of 2023, partially offset by the addition of non comp stores. We also expect gross margin to be flat, SG and A to grow in the low single digit range, flat interest expense and increased royalty and other income.
We expect this to result in 4th quarter adjusted EPS between $1.18 and $1.38 compared to $1.90 in the Q4 of 2023. Spending on the investments we're making in 2024, like to briefly discuss our CapEx outlook for the Q4. Consistent with our prior quarter guidance, we expect capital expenditures to be approximately $150,000,000 including $92,000,000 incurred during the 1st 9 months of the year compared to $74,000,000 in fiscal 2023 with approximately $75,000,000 related to the significant multi year project to build a new distribution center in Lyons, Georgia that will enhance the direct to consumer throughput capabilities of our brand. Remaining capital expenditures relate to the execution on our pipeline of Marlin Bars, increases in store count across Tommy Bahama, Lilly Pulitzer, Johnny Wuss, Southern Tide and the Beaufort Bonnet Company and increased investments in our various direct to consumer technology systems initiatives. We expect this elevated capital expenditure level to moderate 2025 and further moderate in 2026 and beyond after the completion of the Lyons, Georgia project.
We also have a positive outlook on our cash and liquidity position as well. Cash flows from operations are expected to be very strong giving us ample room to fund the previously mentioned investments, a quarterly dividend and limit the need to borrow on our revolver. Although we do expect a modest debt position for the remainder of the year due to our elevated capital expenditures. Thank you for your time today and we'll now turn the call over to the operator for questions. Matt?
Conference Operator: At this time, we will be conducting a question and answer session. First question is from Ashley Owens from KeyBanc Capital Markets. Please go ahead.
Ashley Owens, Analyst, KeyBanc Capital Markets: Hi, good afternoon. So you mentioned some improvements to store comps so far in the Q4 and holiday being off to a better start. I know you mentioned that outlet continues to track better than full price, but could you just parse that out what you're seeing from a brand perspective in terms of store comps?
Scott Grassmeyer, CFO and COO, Oxford Inc.: Yes. From a brand perspective, all our brands started the quarter in pretty severe negative territory. And then it seemed about the weekend after the election, we started seeing recovery. So all our brands, I think, are slightly negative. Lilly might be slightly positive right now, but they all improving.
And so the negative comp, which started the 1st week or so, we're in double digits negative. We're now in the lower single digit negative range.
Tom Chubb, Chairman and CEO, Oxford Inc.: And to amplify what Scott said, I think the important point is that they're all improving sequentially versus where we were in the Q3, really even the 1st week of November, which is great to see with Lilly being the strongest I think at this point.
Ashley Owens, Analyst, KeyBanc Capital Markets: Okay. Got you. That's helpful. Then just any color on the wholesale order book for resort season, what you're hearing from your specialty and department store partners? And then just as a comparison, can you maybe talk about the magnitude of newness you're anticipating relative to last year and how much you plan to lean into that aspect of the business seeing as it has been working really well?
Unidentified Speaker: Yes. Well, what I'll tell
Tom Chubb, Chairman and CEO, Oxford Inc.: you about the resort, sort of the current wholesale selling is that it's very strong. We're performing well on the floor, which is great. In some cases, we even have wholesale customers trying to reorder products for at once delivery. I'm not sure we're going to be able to satisfy that demand, but it's good to have it for sure. And in terms of what we actually had booked for this time period, we do expect to be down as Scott mentioned in his section a bit year over year in the wholesale for the Q4.
But remember that those were bookings and reorders that would have happened some time ago. Then with respect to the bookings that are for next year, it's early and we don't have anything like the full order booking, but we're very encouraged, I would say, by what we're seeing there. And it all goes back to performance on the wholesale floor. And as I mentioned in my section, what we love about performing well in the wholesale is that on those floor with the great retail partners that we have, you're going head to head with a lot of other great brands and we're holding up and showing up really, really well in that context, often being the top of the department and if not, the very top close to it.
Ashley Owens, Analyst, KeyBanc Capital Markets: Great. Super helpful color. Thanks so much.
Tom Chubb, Chairman and CEO, Oxford Inc.: Thank you, Ashley.
Conference Operator: Our next question is from Janine Spivak from BTIG. Please go ahead.
Ethan Saggey, Analyst, BTIG: Hey, everyone. You got Ethan Saggey on for Janine. First question, just with all the tariff uncertainty out there, it would be helpful to get your thoughts on how the company is currently positioned in terms of sourcing and what plans you may have in place to mitigate some of the potential headwinds from increased tariffs next year?
Tom Chubb, Chairman and CEO, Oxford Inc.: Sure. We'll answer that. The first thing I would say is, who knows what's actually going to happen? There have been quite a few different versions of proposals talked about and it's a little hard to know exactly what might happen. I would say like all or almost all of our peers, we do have exposure to China.
We have really no exposure to Mexico or Canada. So those wouldn't impact us if those were isolated. Of course, a global tariff would impact everything and then a China tariff would impact that business. And our mitigation strategy, if it's a China specific tariff, would be like we did during the first Trump administration. And basically it's a combination of moving production out of China.
We wouldn't be able to move everything, but there are things that we could move out and we would do that. Secondly, we would seek to have our vendors in sign up bear some of the cost of those tariffs and let's call it for argument's sake a fifty-fifty split. We had a lot of success with that last time around. And then in some cases, we might do some what would amount to very small price increases to help offset the tariff impact. But if you look back on when this happened before, we were it was a lot of work, but we were able to navigate through it without what I would call any major damage.
And we would expect the same this time as well.
Ethan Saggey, Analyst, BTIG: Got it. That's really helpful. And then just a follow-up. How is the so far through the holiday season, just how is the promotional activity been across your brands and just in the industry in general compared to your prior expectations?
Tom Chubb, Chairman and CEO, Oxford Inc.: Well, as we commented on in our prepared comments, I mean, we have done more business sort of during our promotional events. And in some cases, maybe have extended the time period for those. And
Unidentified Speaker: I
Tom Chubb, Chairman and CEO, Oxford Inc.: think in the case of Lilly, we offered a little bit slightly more discount this year. Then in terms of the market, that's all baked into the numbers that you saw in the forward guidance. And then in terms of the market, I would say it's very promotional out there. I think it's that's been a staple of holiday seasons for quite a while now. If there was any difference this year, I would just say that I think it started maybe earlier this year than it has in past years.
Like a lot of people, I went out shopping Thanksgiving week and actually ahead of the Thanksgiving holiday and it seemed like almost every retailer you went in was in full promotional mode already. They weren't even waiting for Black Friday. They were already there. And as you know, Nocav, a lot of them went a lot earlier than that.
Conference Operator: Yes, got
Ethan Saggey, Analyst, BTIG: it. Thanks so much. I'll pass it on.
Tom Chubb, Chairman and CEO, Oxford Inc.: Thank you.
Conference Operator: Next (LON:NXT) question is from Mauricio Serna from UBS. Please go ahead.
Mauricio Serna, Analyst, UBS: Great. Sorry, Greg, good afternoon. Thanks for taking my questions. First, to start, you mentioned one of your focus is to improve operating margins in 2025. Maybe could you provide any initial guidepost for margins and also any color
Scott Grassmeyer, CFO and COO, Oxford Inc.: on
Mauricio Serna, Analyst, UBS: sales? And also another follow-up on could you provide like any math on the Tommy Bahama modeling bars in terms of like your contribution to sales so far this year or expectation for this year and going into 2025 given what you the openings that you've made over the last 12 months or so? Thank you.
Tom Chubb, Chairman and CEO, Oxford Inc.: Yes. So nice to hear from you, Mauricio. And I would say with respect to 25, at this point, I don't think we can really go a whole lot beyond what we said in the prepared remarks. We are encouraged by what we've seen in the wholesale bookings. We're encouraged by what we're seeing in our own direct channels at present.
But all that said, I think we're going to be pretty cautious about not planning top line too aggressively. And our focus is really going to be on improving the operating margin through better expense management and in some cases reduction and thereby achieving greater operating leverage. And then your second question about the economics of the Merlin bar, Scott, do you want to comment on that?
Scott Grassmeyer, CFO and COO, Oxford Inc.: Yes. So on the Marlin Bars, we talked some in the past about some of these are conversions within existing centers. So we tend to get a very nice lift in the retail side and tend to have a solid food and beverage locations. These units, they cost $3,000,000 to $4,000,000 to build. But the nice thing is the patio area is rent free, which is where a lot of the seating is.
So it's very efficient from a rent standpoint, very efficient from a labor standpoint. And it's pushing the traffic to the store. So the combined Marlin Bar, we tend to see market improvement on profitability from the standalone retail store. Our food and beverage locations tend to average about twice the sales per square foot that just a standalone store average. So it really is not only a profitable venture, but it also is a great customer acquisition tool and brand awareness tool.
Mauricio Serna, Analyst, UBS: Got it. And then if I may, just on the Q4 gross margin guidance, I think you mentioned you expected flat year over year. And I guess that's like improvement relative to what you have for the full year, 50 to 100 basis points contraction. Just wanted to get a better sense of what is driving that sequential improvement?
Scott Grassmeyer, CFO and COO, Oxford Inc.: Probably a little more mix with direct to consumer being a higher percent of the mix is certainly helping there. And we've got a lot of new locations coming in. And our inventory is going in or we believe are in very good shape. So the level of exiting in the season type merchandise should not be too severe of a more down.
Mauricio Serna, Analyst, UBS: Understood. Thank you.
Tom Chubb, Chairman and CEO, Oxford Inc.: Thank you, Mauricio.
Conference Operator: And our last question is from Paul Lachowicz from Citigroup (NYSE:C). Please go ahead.
Unidentified Speaker: Hey, thanks guys. Curious if you could talk about what percent of your sales occur at full price currently, like if you look back over this year versus what you might have seen historically? And curious if you see that percentage changing given the consumer environment that you described? And then second, you mentioned outperformance of the outlets, I believe. Is that driven by stronger traffic or stronger conversion or both?
Maybe if you could just talk about the different comp metrics of full price versus factory stores? Thanks.
Tom Chubb, Chairman and CEO, Oxford Inc.: Well, I would say, Paul, on the first part of your question, we definitely and we've talked about this for each of the last several quarters, We've definitely sold more during the promotional events proportionately than we have in prior years. And that's as we've talked about, that's where some of the pressure on our margin came in like we were down on an adjusted basis, 100 basis points for the Q3 and that's a lot of where that came from.
Scott Grassmeyer, CFO and COO, Oxford Inc.: And as far as outlets, the Lilly True Flash sale in the palm price channel, it's probably around 20% of the business. That doesn't include just the other promotional type activities like when we do a flip side of that, more of our normal product promote activities in a full price at the true all price channel. So we don't have huge timber outlet stores compared to some in the industry, and we are teasing those. The primary goal is to clear. We do make a little bit for, but not a lot.
Unidentified Speaker: Got it. And then I guess just a follow-up on the higher percentage of sales happening during promotional periods. Is it that business performed better than you thought during those promotional events? Or is it just a higher mix of sales because sales were weaker during the non promotional periods?
Tom Chubb, Chairman and CEO, Oxford Inc.: I'd say a little of both. I mean, in some cases, we did outperform expectations on the promotional events. There's no question that full price sales have been lower than we anticipated. And that alone would change the ratio towards the promotional events. But at least in some cases, we did more during the promos than we thought.
And part of that is when you have less full price selling, there's more inventory available during those promotional times.
Unidentified Speaker: Got it. Okay, great. Thank you. Good luck.
Tom Chubb, Chairman and CEO, Oxford Inc.: Thank you.
Conference Operator: This concludes the question and answer session. I'd like to turn the floor back to Tom Shub for any closing comments.
Tom Chubb, Chairman and CEO, Oxford Inc.: Okay. Thank you all very much for your interest. We look forward to talking to you again in March at which time we'll lay out 2025 for you. And until then, we you a very happy holiday season and New Year.
Conference Operator: This concludes all conference call. You may disconnect your lines at this time. Thank you again for your participation.
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