Good day and welcome to the Oxford Industries, Incorporated Second Quarter Fiscal 2015 Earnings Conference Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Ms. Anne Shoemaker. Please go ahead, ma'am.

Thank you, Shannon, and good afternoon everyone. 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 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 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 fiscal 2014 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 GAAP financial measures to certain non-GAAP financial measures in our press release issued earlier today, which is posted under the Investor Relations tab of our website at oxfordinc.com. Please note that all financial results and outlook information discussed on this call unless otherwise noted are from continuing operation and all earnings per share amount are on a diluted basis. As a reminder, on July 20th, we announced the sale of the Ben Sherman business. The results from the Ben Sherman business are reflected as discontinued op for all periods presented. And now, I'd like to introduce today's call participants. With me today are Tom Chubb, Chairman and CEO; Scott Grassmyer, CFO; Terry Pillow, CEO of Tommy Bahama; and Doug Wood, President of Tommy Bahama. Thank you for your attention. And now I'd like to turn the call over to Tom Chubb.

Good afternoon and thank you for joining us. We are pleased to report very strong second quarter results. We increased topline by 10% and grew adjusted earnings by 23%. We improved our gross margin, gained modest expense leverage, expanded our operating margin and reduced inventory levels. In light of these results in our expectations for the back half of the fiscal year, we have increased our outlook for the full year. Our two terrific lifestyle brands, Tommy Bahama and Lilly Pulitzer continue to drive growth at Oxford. Simply put Lilly Pulitzer is having an amazing year. The positive momentum we saw in the first quarter accelerated in the second quarter. Sales in all channels of distribution exceeded our plan and significantly exceeded the prior year. Comp store sales increased a remarkable 41% with a 124 basis point increase in gross margin. Lilly delivered an operating margin of 30.2%. These outstanding results clearly show what can be achieved with an emotionally connected brand like Lilly Pulitzer that has A plus product, A plus distribution and A plus communication and is supported with superb execution by very talented team of people. E-commerce continues to be the fastest-growing channel distribution at Lilly Pulitzer. And our new stores are generating a great deal of excitement as well. There are now 33 company-owned Lilly Pulitzer stores compared to 26 last year. We opened three new locations in the second quarter, The Mall at Millennia in Orlando, Merrick Park in Coral Gables and Oakbrook Center, our first Lilly store in Chicago. All three came out of the gates strongly and we plan to continue to open stores in locations that will delight the Lilly customer in both existing and new markets. Lilly Pulitzer is an amazing brand that clearly has the potential for significant sustained profitable…

Thanks, Tom. I’d like to walk you through a selection of highlights from our consolidated results for the second quarter of fiscal 2015. Please refer to our press release, which includes some new schedules for the complete results by group and for the company as a whole for the second quarter. As Tom mentioned, Lilly Pulitzer had another remarkable quarter, which coupled with a good performance at Tommy Bahama, drove our results with consolidated sales increasing 10%. On a consolidated basis, our adjusted gross margin expanded over 70 basis points, primarily as a result of changes to our sales mix. Lilly Pulitzer, which has higher gross margins than our other operating groups represented a greater proportion of sales in the quarter. Our direct-to-consumer business, which also has higher gross margin than our wholesale business also increased as a percentage of sales. In addition to the change in our sales mix, our consolidated adjusted gross margin benefited from expansion in both Lilly Pulitzer and Lanier Clothes. These favorable items were partially offset by lower gross margins at Tommy Bahama. SG&A increased by $10 million over last year, primarily due to incremental costs associated with additional Tommy Bahama and Lilly Pulitzer locations and other costs associated with these growing businesses. That said, we were pleased to achieve modest SG&A leverage, primarily due to Lilly Pulitzer strong performance in the quarter. Our consolidated operating margin as adjusted also expanded more than a 100 basis points in the second quarter to 14.3% compared to 13.1% in the prior year period. For the quarter, interest expense declined to $737,000 from $888,000 last year. Our effective tax rate in the quarter also declined to 38.1% from 39.7% in the same period of the prior year, reflecting higher domestic earnings and lower international losses. Adjusted EPS rose…

[Operator Instructions] And we will take our first question from Ed Yruma with KeyBanc Capital Markets. Sir, your line is open. Please check your mute function.

Sorry about that. Congratulations on a very solid quarter. And good afternoon. I guess first on Lilly, obviously extraordinary comps there. Can you give a little more insight into kind of what was driving the comp, was it specific new product introduction? Was there a lift from e-com? Were there specific stores that outperformed?

Well, we really -- it sort of was positive across the board, all channels of distribution, bricks and mortar, new stores, old stores, e-com, everything was up. I will say that as we would anticipate, e-com was stronger than stores, but stores were very strong in the comp and there were of course certain stores that outperformed others. But it was just good all the way around. And the couple of things that I would point out, Ed, that I think are noteworthy is that during the quarter, the conversion rate was up over 20% versus the second quarter of last year and that had a huge amount to do with the comp performance. Traffic was also up. I believe the conversion rate has everything to do with the strength of the product that we had on the floor. And then the other thing that I would call out that it’s really a standout in what was a terrific quarter for them was how strong the business was in July. July has typically been kind of a bad month for Lilly Pulitzer. But they specifically played to it a bit stronger this year and the way they float merchandise and what they had available on the floor in July and it worked. It drove a very good month in July.

Got it. And if you hindsight the second quarter, I guess how would you characterize your performance in respect to balance at Tommy Bahama between comp and promotion? I know that you’ve had some success like in fourth quarter with tweaking some of the promotional offer to drive sales, but obviously I know you’re really trying to run a full-price business. So how would you characterize the way that you ran business in the second quarter and how should we think about promotional level going forward?

Well, in the second quarter and I will let Doug add on to this in a minute. But if you look at the total sort of Mother’s Day, which is actually first quarter through the end of the second quarter of that total period, we did several marketing events. One of those was the Polo Polo’ha promotion that we did in the latter part of the second quarter. Overall, those worked really well and drove a lot of business. We do think in the hindsight, I am glad you brought that up, that some of the stuff we did more in the Mother's Day period probably ended up pulling some sales forward into Q1. So, some of the strength that we saw in the first quarter probably came at the expense of the second quarter. Then the second thing I would say is this calendar for the first time since '09, you had this full extra week between Memorial Day and Father's Day. I don't think we anticipated how that would impact our business, maybe as well as we would've liked to in hindsight. And then the last thing is we pointed out in the call was that, while our men's comp for the quarter was we think very solid women's actually comp down for the quarter. And we think that has to do with lack of newness and really the product that was offered then. The good news though and this is what I feel very good about is, I think to the extent we had any weakness in the second quarter in Tommy, I think we are very clear on what those issues are. And Doug and Terry and the team have actually been focused on these issues really for the past years. So those include all the efforts that you’re well familiar with to strengthen and add to the women's team and our marketing team in Seattle. These things we think will pay off a lot in the future, particularly as we move into the spring of 2016. And Doug, anything you would like to add on to that?

I think the only, the last thing and you covered a lot of Ed’s questions. On the going forward as we look for the holiday, we’re looking at all, basically doing the same thing we did last year. But we actually believe that we’ve got some terrific products coming out as well as some really strong creative from just product marketing standpoint. So we feel pretty good going forward.

Great. And one final question. Tom, wholesale I think you indicated was down, any kind of sense as to what’s going on in the wholesale channel, obviously mix results there at least by the publicly reported retailers? And then are you seeing any kind of share loss do you think on the floors with some of your major wholesale customers? Thank you.

Well, I will let Doug again add onto this at the end. But I think Ed, it’s very important to remember that in Tommy Bahama, our wholesale business has always had a big specialty store component. And as you well know, that's a very challenged piece of the market right now. Unfortunately, a lot of that segment of the market is really going away. And that presents some headwind for Tommy Bahama. I will let Doug elaborate on this. But in the department store channel, we actually are pretty pleased with the way that we have been performing in the sportswear departments in those channels. Doug, do you want to elaborate on that a little?

Yes. I mean just focusing on department stores a bit, we still had a very much of full-price offering in department stores. So as we look at our partners in that channel, we’ve had a very good year with them and we actually expect to have a good rest of the year with them. And it really comes back to this specialty store part of the market it’s really starting to fall off. And it’s something that hasn’t just started, it’s been going on for several years. And we see anything that’s been impacting our business is there.

Great. Thanks so much everyone.

Thanks a lot, Ed.

And we next move to Rick Patel with Stephens Incorporated.

Good afternoon everyone. And I'll add my congrats, I had to do a double take on that Lilly comp.

Thank you. We did too Rick. Scott stayed up all night checking those numbers.

I’m sure he did. I also have a question on the weakness that Tommy women’s. So were there any particular categories that missed expectations or was there general weakness around this area of the store? And I think you touched upon this. But is there anything you can do to improve the assortment ahead of how they are just more of a spring turnaround?

Once again, I’m going to let Doug and Terry jump in here in a second. But I would say that I think we will see some of the impact of the efforts we made in the design area will start to show up in resort. But in spring 2016, in terms of the product that you’ll see on the floor, I really think you’ll see a remarkable change spring versus spring. And Doug or Terry, do you want to comment on some of the categories?

Yes. Rick, this is Terry. It’s been over a year since we made the changes that we talked about in the remarks that Bradley O'Brien is the new head of design in both men's and women's as she has been more. Obviously as Tom just mentioned, spring '16 will be the first true with we see the total impact of that. But you’re absolutely right, I mean, we started making -- we realized we had some issues start making some changes in the third quarter product that we’re shipping and even more changes in the fourth quarter product that I think going forward in the fourth quarter product we have and the offering we have is very, very good. As far as the deliveries, it was pretty much across all categories. And that as we’ve been saying, we’ve been growing the women’s business and during this Father’s Day period, we were able to take advantage of somebody coming in and buying for him and finding something for her and we did saw that slowdown a little bit from the delivery that we had. But we are certain that we’re ahead of it and we’ve got back half products to drive the business. And when we get to spring, we think we fully turn the corner.

And I know it’s early, but as you think about 2016, can you talk about any initial real estate plans for Lilly. I’m curious, do you expect to stay east of the Mississippi as you like to stay or do you think we can do some stores in newer market?

Well, I think one of the things that we’ve been very excited about this quarter that we called out was the success that we had in Merrick Park, which is in Coral Gables, really the greater Miami area. And while that’s Florida, it’s not necessarily the part of Florida that we've been the strongest in. So that was nice to see that one come out of the gate strong. And then the other one that we really liked a lot was Oak Brook in the Chicago area and for us that’s sort of new territory. And we came out of the gates extremely strong there, even though we opened, I believe in August or was it either July or August, which is not necessarily the best time a year for us to open up, but it had a very strong start. And then for next year, we’ve got a couple of good ones coming. We've got one coming in Dallas at the NorthPark Mall. We've got one coming at the new Disney development next spring. Sometimes we’ve got one coming in Destin, Florida next spring and then one in Richmond. So I guess, you got one there that’s truly sort of the Western type location for us in NorthPark. And then we continue to work on other opportunity since well.

Great. And then one last question, if I may. Just given the pullback in the Chinese Won, do you see any opportunity to save on manufacturing costs? If you can perhaps remind us with your sourcing exposure to China is like and if we do see a benefit when we should expect to see that go through?

Rick, obviously it’s a very volatile situation over there and things are literally changing from our hour to the next. But we’re obviously paying a lot of attention to it. And in terms of our exposure, China is the predominant sourcing location for us, since bigger than any other sourcing location. So we are hopeful that we may be able to pick up some cost of goods savings there but I think it would be a little premature to try to quantify that in anyway.

Thanks, everyone and good luck this fall.

Okay. Thanks a lot, Rick.

Thanks, Rick.

[Operator Instructions] And we next move to Eric Beder with Wunderlich Securities.

Good afternoon and congratulation for this solid quarter.

Thank you, Eric.

In next quarter, you have the Waikiki set up and the movement in headquarters in Oxford Tommy Bahama. Could you go over I guess where the gains going to be from the move and what -- when should we see Waikiki opening and how should we think about that as we look for the Japanese market?

Okay. Did you say the gain from the move, Eric?

What are you going to gain in terms of ability to work harder or better or more efficiently how do you -- how is that move effective?

While the number one thing that we gain from it is that we will have an office space to work in. Our existing Tommy Bahama headquarters, which you’ve seen before I believe, unfortunately our lease ran out after 11 or 12 years. And so while it was good location for us for a long time, our lease ran out, we had to do something. As you know, the Seattle real estate market is very high and we actually needed a little bit more space than we had in the old space. It does allow us to reposition some people and have departments that should be sitting together, sitting next to each other and do some other updates to the working environment that will benefit us. But it's really driven as much as anything about the lease expiration. On the Waikiki opening, I’m going to let Doug maybe comment on that. That’s something that we obviously are very excited about and have anticipated for a long time and its coming soon.

Yeah. We’re looking at a mid-October opening for Waikiki and its going to be just phenomenal. I mean, I'm gushing over just what we think the facility is going to be able to drive with regards to revenue, both the retail and restaurant. But also give us an opportunity to market, not just to the U.S. where the majority of travel still goes to Waikiki but also to Japan. So this is a big deal for us. We’ve been working on this for a long time and right now we’re looking at mid-October.

Great. And when you look at the Lilly Pulitzer store in Chicago, I know it’s only been open a while. Does that give you kind of the feel that you can be even more aggressive in Midwest? I know you had Cincinnati last year. Do you think that is a strong, can be a strong Lilly Pulitzer market?

Yeah. I think it does have us feeling good. And again, you’re correct to point out that it's very early. You don’t want to read too much into the first six or eight weeks or whatever it is that we've been open there. But it is very, very encouraging to see how well we perform there and it does make us think that there may be more opportunity out there in the Midwest.

Great. And finally, are you going to this 365 Resort campaign for Lilly? What’s been response to your customer base for that and is that something we should obviously expect for that adverse gain?

Yeah. Eric’s talking about the Resort 365 approach, which is really a recognition of the fact that Lilly is in fact a resort chic brand and we’re going to play to that all year along, including during the fall. And what we saw in July, I think is an early indicator of how that can play out for us where in a traditionally weak month for Lilly Pulitzer, we actually had quite a good month. We believe that we’re going to see that continue through the fall months and we’re pretty excited about it but we’ll see. We have a quarter’s play out.

Thank you.

Thanks, Eric.

And we’ll take our next question from Pamela Quintiliano with SunTrust.

Great. Thanks so much for taking my questions and congrats on a fabulous quarter.

Thank you, Pam.

So, I’m going to start. I have two questions for you guys. Starting off with Tommy, can you just remind us again the percentage of business that is women’s? And also are you now fully staffed, or there is still open positions that need to be filled in Tommy? And then lastly, just performing to some of the newer classifications like sunglasses and your reflexology and how all that’s been doing and the customers there responding?

Okay. Just by way of reminder, the women's business in our direct-to-consumer part of Tommy Bahama stores in the e-com is a little bit less than 30%. And then in the wholesale, it’s much smaller than that. So total business, you’re down somewhere in the low 20s I think. And in the direct, the very important direct channel, it’s less than 30% and Terry and Doug will tell you that they don't have any problem seeing over time without putting a specific date on it. But at some point being 50% and then in the wholesale arena, obviously it's very underdeveloped and there is a lot of wide space there. On the design function in Tommy Bahama, they do still have one or two key roles that they are looking to fill in, but they’ve got some great heads of design in place and a great team in place. And then finally on some of the new classifications, maybe Doug can comment on that.

Yeah. And just to go back on wholesale from an opportunity standpoint, we do see women’s sportswear as a huge opportunity at wholesale. But we have a very strong women’s swim wholesale business right now. It’s not big in dollars but in the size of the market, it’s actually has been very, very successful and profitable for us. Just to go right at some of those new launches, the Maui Jim launch that we did at the end of April in our retail stores and then online in June has been very successful and the thing that we just started really kind of connect with that brand and bringing into our environment, their guests has responded by coming in but also our guests has been excited to have access to Maui Jim and so it’s been a really, really good relationship. Relaxology has been kind of a split success rate. The men's has worked very well. Women’s has not performed the way that we wanted it to. However, the sandal and both Relaxology has worked extremely well. So it’s exciting because it’s a footwear. It’s a new category that we’ve been really pushing and to actually have success and keep working on our own stores but also in wholesale for men has been very exciting.

And then as a follow-up, you’ve said wholesale before. Turning to another question, so your wholesale was down 16 this spring product, I’m assuming for the Tommy women’s and have they -- if they have responded well to it?

Doug, do you want to take that one?

Yeah. Now, we’ve been in market now with it for about a month. We’ve had some good response with -- why don’t we talk about specialty stores on the men, on the wholesale type of men. We actually have a nice distribution that’s starting up in the southeast on women’s and we’ve had a positive response there. We’ve had this positive response in some of our key department store accounts, but it’s still a small business for us. And as we see it, it’s going to take a couple of years because once you get it placed, it’s got to retail. And so we're excited because we’re getting placement and now it’s got to perform on the floor.

Okay. So it’s not as though, despite the product not performing as well as you would have hoped for this past quarter there. It seems like people are liking it for spring, even though it’s early days on the wholesale side.

Absolutely because it’s so new. And, I mean, the product that they’re coming out with spring is definitely when you see it, it’s more sophisticated, not just in quality and design, but in color and print. And there is definitely, there is no doubt that this comes from a new team, but it’s still Tommy Bahama.

Okay. Thank you. That was really helpful. And then turning quickly to really -- and sorry if I missed this before. But post the Target event, you missed down there any new customers, I guess just looking at online activity, any sticky new customers that you didn’t have before that you could kind of correlate?

Yes. We’ve definitely added a significant number of new customers this year, Pam, and there is no doubt some of that came from all the buzz surrounding the Lilly event, but I think there is more to it than that. I think we would add that a lot of those is a result of some of the other things that we’ve been doing in Lilly. And it’s a little bit hard to figure out what came from where, but we have added a lot of new customers this year.

And you had mentioned in the past about some exciting events for the fall. And you had mentioned a little bit in the previous -- answering your previous question. But just can you remind us incrementally what you’re doing different this year than last year with Lilly as we think about the fall marketing?

Well, I think the big focus is this Resort 365 type concept, that’s really developed very strongly over the last year. And I think we’re going to see, this fall very much I think you are going to see -- this fall very much, I think you are going to see what Resort 365 looks like for Lilly. And based on the early read on that, we think it's going to have a positive impact on our business. It is not going to turn fall into spring for us. So I want to manage our expectations but I do think we can see some good year-over-year growth in our fall business there.

So I guess specifically bit deeper, remember last time we had spoken about in conjunction with New York Fashion Week. On conjunction with Fashion Week, you would be doing some event. So let me think about such points that the consumer on just how you’re communicating differently beyond the actual [indiscernible] different?

Well, we did a Resort line presentation a couple of months ago. It wasn’t really a fashion show per se but it was a New York based presentation of the Resort 2015 line. And there are certainly some inventory of that available. I think you can probably find it online or we could send it to you. So that was part of playing to this whole Resort 365 idea. And you know if you look at our website, look at Instagram postering that we’re doing, all the other social media that we’re doing, we the -- the mailers that we do that’s all playing into that. And the message is clear, unequivocal and strong. And it’s….

But no incremental mailer or is there an incremental because I agree it’s a very strong. And I have seen the inventory and I think it’s really capturing the new customer that’s out there, who is already engaged. It’s great timing. I mean, is there anything incremental year-over-year?

You know, I’m not 100% sure about that. It came off the top of my head. I don’t have year-to-year recap of mailers and gift with purchase of that.

Right. That’s where I was going. Okay.

I don't have that at my fingertips and I apologize.

Well, then my last question you guys have been so generous as always with your time. Some other companies have commented just as the volatility in the market, those who cater too little bit more of that affluent consumer who maybe invest in the market has seen some changes in behavior on those days of extreme volatility or just overall concerns with investment. Are you seeing any of that with your customers?

I think there is certainly that potential for that to impact as we’ve certainly seen that in the past if you have major event or a sustained downturn in the market. About the stock market, really the residential real estate market where people tend to get a lot of their feeling of well-being or lack of well-being. So those things can impact someone who is little reluctant to correlate the day-to-day fluctuations with that. I suppose you could but I’m always little reluctant to that. There is no doubt a sustained downturn can have an impact on our business because our gas in both brands are clearly people that are pretty affluent and have both financial assets and tend to have some meaningful real estate assets as well.

Okay. Thank you once again and best of luck going forward.

Thank you, Pam.

And it appears, there are no further questions in queue at this time, I’d like to turn the conference back over to Mr. Chubb for closing remarks.

Okay. Thank you, Shannon and thank you again for your time this afternoon. We have a lot to be excited about at Oxford and we very much appreciate your interest.

And ladies and gentlemen, that does conclude today’s conference. We do thank you for your participation and you may now disconnect. Have a great rest of your day.