Greetings and welcome to the Oxford Industries Fourth Quarter 2019 Earnings Call. [Operator Instructions] I would now like to turn the conference over to your host, Anne Shoemaker, Treasurer for Oxford Industries. Thank you. You may begin.

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 within the meaning of Federal Security 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 our 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. Please note that all per share amounts discussed on this call are on a diluted basis. Our disclosures about comparable sales include sales from our full-price stores and e-commerce sites, and excludes sales associated with outlet stores and e-commerce flash clearance sales. 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.

Thank you for joining us this afternoon. Just two weeks ago, I would have wanted to spend a good amount of time on our fiscal 2019 results and share with you the details of our exciting plans for 2020. With the recent events associated with the COVID-19 outbreak that no longer seems as relevant. First and foremost, our thoughts are with the people who have been affected by the COVID-19 virus as well as everyone who is working to protect and serve impacted communities. During these unprecedented times, our priority is and will continue to be the health and well-being of our employees, our customers and the communities in which we live and work. To the extent it provides a framework for our current environment, I'm going to spend just a moment on our fiscal 2019 results and then spend the rest of our time on how we are responding to the current environment. Our consolidated financial results for fiscal 2019 were fairly consistent with fiscal 2018. However, looking at our performance in more detail shows that big strides were made in the right place. Our direct businesses which are 70% of our sales were strong with positive comps in all quarters of the year by brand and on a consolidated basis. Importantly, our e-commerce business led the charge with 10% year-over-year growth and 11% comp and now represents 23% of sales. At the same time, our wholesale sales declined in 2019 as many of those retailers continued to face strategic challenges with sales to department stores representing only 11% of our consolidated revenue. We would love to continue to partner with these retailers, but in some cases their business model is becoming more challenging and our strategy reflects that. Our adjusted earnings of $4.32 per share, which were flat…

[Operator Instructions] Our first question comes from the line of Paul Lejuez with Citi. Please proceed with your question.

It's Tracy Kogan filling in for Paul. I had two questions. The first is, your - on your inventory. Your inventory levels looked to be in good shape. I was just wondering if there was any difference in levels by brand and then was wondering how your discussions with your retail partners are going and how they are planning inventory for the remainder of this year. And then just secondly what is your maintenance CapEx level, like what level can we think of as where you might call out this year as you get rid of some of those discretionary things you spoke of? Thanks.

Okay. Thank you very much, Tracy and I'll tackle the wholesale partners question and then let Scott talk to you a little bit about inventory by group and how low we might be able to go with the capital expenditures. On the wholesale front obviously at this point, I would say probably the majority of our customers, if not overwhelming majority, are closed in their bricks and mortar stores. Those who are still open, and there are not many of them, but those who are, I think, are not doing much business. And so obviously those people will have to react with our own inventory plans. And I think as you would expect, we're getting lots of requests for delays in delivery, reductions in the quantity of product purchased, requests for extended terms, all of those things. And obviously we're going to work through those issues. We have a lot of great partners that we want to navigate this situation together with and come out successfully on the back end. But I think all of the things that you would expect are happening. Obviously, we're factoring those into our own forward inventory plans. And when I mentioned our efforts to cancel or reduce or otherwise modify our forward inventory purchases we're covering not only our direct to consumer businesses with that, but also our wholesale businesses and we've made tremendous progress on that. It's ongoing, but we've made lots of headway on that already. Our teams are fully engaged on that. We've got a team of wholesale and other leaders from across our business, all business units, working together, sharing ideas and information. I am very pleased. I think we'll do a good job on the - on managing those inventory levels as well as preserving our good relationships with our wholesale customers as we navigate through a very difficult time that neither one of us created. Scott can fill you in a little bit now on inventory by group and also on the CapEx.

Yes.

Thank you.

Tommy Bahama and Lanier Apparel were both down inventory wise and Lilly Pulitzer was up just a little bit in inventory. And then on CapEx, roughly $15 million is kind of the maintenance number. Now some of that can still be deferred even if it's in the maintenance category, but - so there is a substantial opportunity in our CapEx to reduce spending if need be.

Our next question comes from the line of Rick Patel with Needham & Company. Please proceed with your question.

Have you seen an acceleration in online sales since your stores closed in mid-March? I'm just curious if the restrictions on travel have consumers in a holding pattern in terms of buying anything right now. And to what extent are you using digital channels today to manage store level inventories?

So with respect to what we've seen in e-commerce, I would say overall it's been down a bit. Our products are and our brands are highly discretionary as you know. They're highly correlated with social events, social activity and travel. So in the early phases of this, overall we've seen a bit of a downturn in e-commerce. That said, it has been a little bit uneven and in some places we're seeing very strong business and good response to some very creative marketing things that our brands are doing and so we're working. Obviously, the plans we had for e-commerce at this time of year are kind of out the window and the teams are working very rapidly and very creatively to come up with messages that are appropriate for the times and resonate with the customers and we've seen some great things happen on that regard this week for sure.

Great. And then also a question on the wholesale channel. How much of your first-quarter business in this channel was complete before the virus concerns escalated in mid-March? I'm just curious how much of your wholesale business is a lot versus what's vulnerable to being canceled.

I don't know that we have - I don't - we didn't anticipate that question frankly, Rick, and I don't know that I can tell you. It would have been a lot of it because people are obviously trying to get spring inventory on the floor for spring selling and so we tend to be, I think it's fair to say, fairly front loaded during the first quarter. But I don't know exactly how much. And then the other thing is that it takes a little while for retailers sometimes to put on the brakes. And last week we were still shipping some wholesale. Now it was down over what you would have normally expected but we were still shipping it. That was down from the week before and I would imagine that that will continue to dwindle down, but it didn't dry up immediately.

And last question on the Marlin Bars store openings for this year. Are they moving full steam ahead or have you put the brakes on those?

At the moment the brakes kind of on everything. We - as this thing really picked up steam I guess going back two or three weeks ago, we put the brakes on all CapEx projects. Typically we're approving things sort of a year in advance. Scott sent out a memo to all of the groups that said, even if it was approved before you need to check back in with us before you do anything. And so right now, everything is sort of on hold. But what we will start to do is as we get a little more clarity on where this thing is headed we'll prioritize which things we want to release and obviously critical maintenance things would be at the top of the list. But then beyond that, it would be projects that are actually going to be revenue generators. So some things in e-com and some things in retail and restaurant are probably good things.

Yes. And, Rick, we did get the two Marlin Bars opened in February, so Las Olas Boulevard and we have one at Dania Pointe, both in South Florida. So those two did get open in early February.

Our next question comes from the line of Ed Yruma with KeyBanc Capital Markets. Please proceed with your question.

I guess first, I'm just trying to square the comments on, obviously you're managing receipts, but you're also kind of committing that you're not going to engage in heavily promotional activity. Is it fair to assume you're going to pack away some inventory that doesn't move or how should we think about kind of exiting this and the disposition of inventory, one? Two, I know that there is quite a bit of special occasion items that probably are going to be pretty weak. So if you could kind of contextualize how big of maybe the Lilly Pulitzer business that is that would be helpful. And then three, I know you mentioned the Tommy Bahama furlough. Are you, at this stage, doing the same at Lilly Pulitzer? Thank you.

Okay. So I'll try to tackle those three questions. And what we're doing on the inventory, and this is one of the great bits of thinking that's come out of our team, and it's obviously we've got a time period right now where we'd be delivering product and there's - I don't even know if we could deliver it, but if we could, it'd just be sitting in the back room of the store collecting dust. So what our teams realized is that we can actually hold on to that inventory, cancel some deliveries that are due to come in later in the year, particularly in December and then hold on to the inventory that was going to hit in April and drop it in December instead having canceled the December delivery. This is requiring a little bit of remerchandising, it's requiring a little bit of thinking about how we're going to market and that kind of thing. But the product doesn't really look that different because in December we're shifting to early spring product anyway. And then there are many similar ideas like that that are allowing us to take advantage of time to get rid of - or not get rid of but to flow inventory properly without too much piling up and without having to get too extreme on promotional type activities. The second question about special occasion dresses, those are obviously very important part of Lilly Pulitzer dresses in the aggregate or I think about 40% of the business and social dresses would be a significant part of that although there are day dresses, casual dresses, all kinds of other dresses too. But those typically are late fall sort of holiday type is where we really get into that a lot. And we think we've got ample time to react to that scenario and change our merchandising assortment strategies a little bit to compensate for the fact that that might not be quite as powerful a category for us. And then the last thing with respect to any employment actions that might happen, look, as we said, we do not like disrupting people's lives. These are very, very difficult decisions for us to make. What we're trying to do is to preserve as many jobs as possible for as long as possible and the big picture goal is to make sure that we navigate the Company through this biologically sort of created situation so that all of us can have a good job and career going forward. And so, I can't - we're sort of taking it on a week-by-week basis. And the actions that we ultimately have to take will dependent in part on - in large part really on how long this goes on.

[Operator Instructions] Our next question comes from the line of Susan Anderson with B. Riley FBR. Please proceed with your question.

I wanted to follow up on the - on Lilly and Tommy's performance through mid-March. Did you say both of them, I guess, were comping positive until they started to kind of fall off due to COVID-19? And then on the supply chain front, are your winter partners fully up and running now in China so there is no issue there?

And the answer is yes, we were looking really good up until I guess about two, two-and-a-half ago. It's amazing how quickly this thing has unfolded. But Tommy was very strong and Lilly was really just incredibly strong in the early part of the year. And we were very excited about what we were seeing, very excited about our plans for the year, all of that, but that obviously has changed a bit. But it was - it is as we're going through this crisis, I think it's - we want to remind ourselves that we were really resonating with our customers and we absolutely know that we can get that back as the world starts to come back to normal whenever it is that that happens. And then the second question?

Supply chain.

Supply chain. Good - great question, too, because probably five or six weeks ago that was what we were worried about with respect to the coronavirus. China was under all kinds of restrictions at that point. Our factories were not at anywhere near full capacity. We kind of worked through that and as of two to three weeks ago we were feeling very good about the supply chain side. China is fundamentally back in the supply business at this point and we were down to the point where we thought it was sort of 5% or so with the product that might end up being late as a result of the problems on that end. So we felt like we sort of conquered that problem and of course, at this point, it's not an issue at all. We can get everything we need or at least we believe we can get everything we need.

Great. Yes, that's amazing how things have changed.

Yes.

I guess one follow-up, just trying to understand the inventory flows. So I guess when looking at your wholesale partners and trying to preserve the brand, are you thinking about keeping now, I guess, some of your inventory versus delivering it if they don't want or if they want to cancel orders versus I guess giving them mark-down money to get rid of it at some point? Thanks.

Well, those are complicated discussions and there is - you can delay, you can cancel, you can do - offer them terms, there are lots of different things that we can do and it's hard to generalize. But we've got to balance our interests and their interests and make sure we are preserving our liquidity while doing - and the integrity of our brands while doing everything we can to help them be successful and to help them navigate this crisis as well. So I think the reality of it is that we will - some stuff will be slower going out than we wanted. We will probably see some extension in our terms I think is reasonable to assume. But these are all things that we're factoring in as we focus on maintaining our liquidity and we're very confident in our ability to do it. It's going to be a rocky year. There is no getting around it. But we think we can successfully navigate the sort of storm and then be in a good position as things start to normalize.

Great. That's helpful. Well, good luck navigating this difficult environment and stay safe and healthy.

Thank you. You too, Susan.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I will turn the floor back to Mr. Chubb for any final comments.

Thank you all very much for your interest. Please stay safe and healthy and we look forward to talking to you again in June.

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.