Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our results of operations, cash flows, liquidity and capital resources compares Fiscal 2025 to Fiscal 2024 and should be read in conjunction with our consolidated financial statements contained in this report.
The results of operations, cash flows, liquidity and capital resources for Fiscal 2024 compared to Fiscal 2023 are not included in this report on Form 10-K. For a discussion of our results of operations, cash flows, liquidity and capital resources for Fiscal 2024 compared to Fiscal 2023 and certain other financial information related to Fiscal 2024 and Fiscal 2023, refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II. Item 7 of our 2024 Annual Report on Form 10-K, filed with the SEC on March 31, 2025, which is available on the SEC’s website at www.sec.gov and under the Investor Relations section of our website at www.oxfordinc.com.
OVERVIEW
Business Overview
We are a leading branded apparel company that designs, sources, markets and distributes products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head and Jack Rogers lifestyle brands.
Our business strategy is to create sustained profitable growth by driving excellent performance across our portfolio of businesses. We consider lifestyle brands to be those brands that have a clearly defined and targeted point of view inspired by an appealing lifestyle or attitude. Furthermore, we believe lifestyle brands that create an emotional connection can command greater loyalty and higher price points and create licensing opportunities. We believe the attraction of a lifestyle brand depends on creating compelling product, effectively communicating the respective lifestyle brand message and distributing products to consumers where and when they want them. We believe the principal competitive factors in the apparel industry are the reputation, value, and image of brand names; design of differentiated, innovative or otherwise compelling product; consumer preference; price; quality; marketing; product fulfillment capabilities; and customer service. Our ability to compete successfully in the apparel industry is dependent on our proficiency in foreseeing changes and trends in fashion and consumer preference and presenting appealing products for consumers. Our design-led, commercially informed lifestyle brand operations strive to provide exciting, differentiated fashion products each season as well as certain core products that consumers expect from us.
During Fiscal 2025, 82% of our consolidated net sales were through our direct to consumer channels of distribution, which consist of our brand specific full-price retail stores, e-commerce websites and outlets, as well as our Tommy Bahama food and beverage operations. The remaining 18% of our net sales was generated through our wholesale distribution channels, which complement our direct to consumer operations and provide access to a larger base of consumers. Our wholesale operations consist of sales of products bearing the trademarks of our lifestyle brands to various specialty stores, better department stores, Signature Stores, multi-branded e-commerce retailers and other retailers.
For additional information about our business and each of our operating segments, see Part I, Item 1. Business included in this report. Important factors relating to certain risks which could impact our business are described in Part I, Item 1A. Risk Factors of this report.
Industry Overview
We operate in a highly competitive apparel market. No single apparel firm or small group of apparel firms dominates the apparel industry, and our competitors vary by operating segment and distribution channel. The apparel industry is cyclical and highly dependent on the overall level and focus of discretionary consumer spending, which changes as consumer preferences and regional, domestic, and international economic conditions evolve. In recent years, consumers have allocated a smaller portion of discretionary spending to certain product categories, including apparel, while increasing spending on services and other goods. Further, negative economic conditions often have a longer and more pronounced impact on the apparel industry than on other industries, due in part to the discretionary nature of apparel purchases.
This competitive and evolving environment requires brands and retailers to approach their operations, including with respect to marketing, merchandising, advertising, and fulfillment, differently than they have historically and may result in increased operating costs and ongoing investments to generate growth or maintain existing sales levels. The
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expanding use of digital platforms, data analytics, and artificial intelligence-enabled tools across the industry has raised consumer expectations for personalization, convenience, transparency, and speed, while intensifying competition across channels.
These competitive pressures have been further exacerbated by a challenging macroeconomic and geopolitical environment. Significant increases in tariffs on imported goods, subsequent judicial developments affecting certain tariff measures, continued implementation of tariffs under alternative authorities, and broader uncertainty around U.S. trade and tax policy, inflationary pressures, and elevated interest rates for prolonged periods have weighed on consumer confidence and discretionary spending. Geopolitical tensions, including the ongoing war in Ukraine and the U.S.-Iran conflict and potential regime change in Iran as well as other hostilities in the Middle East have added to global uncertainty and have the potential to influence energy markets, transportation costs, and broader supply chain dynamics. Taken together, these conditions have increased volatility and reduced visibility across the global retail and consumer environment.
In response to the uncertain macroenvironment conditions, promotional activity across the industry has increased as retailers seek to offset traffic volatility and stimulate demand, further intensifying price competition. These factors have created a complex and challenging retail environment that impacted our businesses and financial results during Fiscal 2025, exacerbated certain inherent challenges within the apparel industry, and may continue to do so in the future. There remains significant uncertainty in the macroeconomic environment, and the impact of these and other factors could materially affect our businesses.
We believe our lifestyle brands have true competitive advantages, and we continue to invest in our brands’ direct to consumer initiatives and distribution capabilities while further leveraging technology to serve our consumers when and where they want to be served. We continue to believe that our lifestyle brands, with their strong emotional connections with consumers, are well suited to succeed and thrive in the long term while managing the various challenges facing our industry in the current environment. At the same time, we remain cautious in light of extrinsic factors and are proactively taking measures to reassess and realign our operating expenses to drive long-term operating margin expansion across our businesses.
OPERATING SEGMENTS
We identify our operating segments based on the way the chief operating decision maker ("CODM") organizes the components of our business for purposes of allocating resources and assessing performance. Our operating segment structure reflects a brand-focused management approach, emphasizing operational coordination and resource allocation across each brand’s direct to consumer, wholesale and licensing operations, as applicable. Our business is organized as our Tommy Bahama, Lilly Pulitzer, Johnny Was and Emerging Brands reportable segments. For a more extensive description of our reportable segments and Corporate and Other, see Part I, Item 1. Business and Note 2 of our consolidated financial statements, both included in this Annual Report on Form 10-K.
KEY PERFORMANCE INDICATORS
We consider a variety of performance and financial measures in assessing our business, and the key performance indicators used to measure our results are summarized below.
Comparable Sales
We often disclose comparable sales in order to provide additional information regarding changes in our results of operations between periods. Our disclosures of comparable sales include net sales from our full-price retail stores and e-commerce sites. We believe that the inclusion of both full-price retail stores and e-commerce sites in the comparable sales disclosures is a more meaningful way of reporting our comparable sales results, given similar inventory planning, allocation and return policies, as well as our cross-channel marketing and other initiatives for the direct to consumer channels. For our comparable sales disclosures, we exclude (1) outlet store sales as those clearance sales are used primarily to liquidate end of season inventory, which may vary significantly depending on the level of end of season inventory on hand and generally occur at lower gross margins than our non-clearance direct to consumer sales, and (2) food and beverage sales, as we do not currently believe that the inclusion of food and beverage sales in our comparable sales disclosures is meaningful in assessing our total company operations. Comparable sales information reflects net sales, including shipping and handling revenues, if any, associated with product sales.
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For purposes of our disclosures, comparable sales consists of sales through e-commerce sites and any physical full-price retail store that was owned and open as of the beginning of the prior fiscal year and which did not have during the relevant periods, and is not within the current fiscal year scheduled to have, (1) a remodel or other event which would result in a closure for an extended period of time (which we define as a period of two weeks or longer), (2) a greater than 15% change in the size of the retail space due to expansion, reduction or relocation to a new retail space or (3) a relocation to a new space that is significantly different from the prior retail space (including relocations to accommodate an adjacent Tommy Bahama food and beverage concept). For those stores which are excluded based on the preceding sentence, the stores continue to be excluded from comparable sales until the criteria for a new store is met subsequent to the remodel, relocation, or other event. A full-price retail store that is remodeled will generally continue to be included in our comparable sales metrics as a store is not typically closed for longer than a two-week period during a remodel; however, a full-price retail store that is relocated generally will not be included in our comparable sales metrics until that store has been open in the relocated space for the entirety of the prior fiscal year because the size or other characteristics of the store typically change significantly from the prior location. Any stores that were during the prior fiscal year or current fiscal year, or which we plan to close or vacate in the current fiscal year, as well as any pop-up or temporary store locations, are excluded from our comparable sales metrics.
Definitions and calculations of comparable sales differ among retail companies, and therefore comparable sales metrics disclosed by us may not be comparable to the metrics disclosed by other companies.
Gross Profit and Gross Margin
Gross profit represents net sales less cost of goods sold. Gross profit as a percentage of net sales is referred to as gross margin. Cost of goods sold primarily represents the cost of merchandise sold, including the cost of duties and inbound freight from suppliers. Our gross profit is variable in nature and generally follows changes in net sales. We believe that gross profit and gross margin are useful measures because they allow management, analysts, investors and others to evaluate the profit we generate from our sales, before operating and other expenses and income.
Segment EBITDA
Segment earnings before interest, taxes, depreciation and amortization ("EBITDA") is the measure we use to assess the profitability of our operating segments. Segment EBITDA is calculated as net sales less cost of goods sold and total SG&A of the operating segment, and it excludes amounts reflected in Corporate EBITDA, income tax expense (benefit), interest expense, net, depreciation and amortization and other infrequent operating charges (impairments of goodwill, intangible assets and equity method investments). Segment EBITDA as a percentage of segment net sales is referred to as segment EBITDA margin.
We changed our segment profit measure in the Fourth Quarter of Fiscal 2025 to segment EBITDA. We believe that segment EBITDA is a useful measure because it allows management, analysts, investors, and other interested parties to evaluate the profitability of our business operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation, amortization), financing decisions (interest), tax strategies (income taxes), and infrequent operating charges (impairments of goodwill, intangible assets and equity method investments).
Net Earnings (Loss) and EBITDA
We believe that net earnings (loss) and EBITDA, along with the adjusted measure of EBITDA are useful measures of operating performance. Net earnings (loss) represents our profitability after the effects of all operating and other expenses and income. EBITDA helps us, analysts, investors, and other interested parties assess the underlying profitability of our operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation, amortization), financing decisions (interest), and tax strategies (income taxes).
The adjusted measure of EBITDA eliminates certain infrequent operating charges (impairments of goodwill, intangible assets and equity method investments) that we do not believe are reflective of our ongoing business performance. This adjusted measure helps us, analysts, investors, and other interested parties evaluate our operating performance on a comparable basis from period-to-period so that we can better understand the ongoing factors and trends affecting our business operations. We also use Adjusted EBITDA to forecast our performance, evaluate our actual results against our forecasts and compare our results to others in the industries that we serve.
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See “Non-GAAP Financial Measures” below for a reconciliation of EBITDA and Adjusted EBITDA to net earnings (loss), the most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”).
Key Operating Results
The following table sets forth our consolidated operating results (in thousands, except per share amounts) for Fiscal 2025 and Fiscal 2024:
Fiscal
Fiscal 2025
Fiscal 2024
Net sales
Gross profit
Gross margin
Net earnings (loss)
EBITDA
Impairment of goodwill, intangible assets and equity method investments
Adjusted EBITDA
Net earnings (loss) per diluted share
Weighted average shares outstanding - diluted
Net loss per diluted share was $1.86 in Fiscal 2025 compared to net earnings per diluted share of $5.87 in Fiscal 2024. The decrease in net earnings in Fiscal 2025 was due to (1) noncash impairment charges of $61 million primarily related to Johnny Was recognized during Fiscal 2025, (2) decreased net sales, (3) lower gross margin, (4) increased SG&A, (5) increased interest expense and (6) decreased royalties and other operating income.
DIRECT TO CONSUMER LOCATIONS
The table below provides information about the number of direct to consumer locations for our brands as of the dates specified. For acquired businesses, locations are only included subsequent to the date of acquisition. The amounts below include our permanent locations and exclude any pop-up or temporary store locations which have an initial lease term of 12 months or less.
January 31,
February 1,
February 3,
January 28,
Tommy Bahama full-price retail stores
Tommy Bahama retail-food and beverage locations
Tommy Bahama outlets
Total Tommy Bahama locations
Lilly Pulitzer full-price retail stores
Johnny Was full-price retail stores
Johnny Was outlets
Total Johnny Was locations
Southern Tide full-price retail stores
TBBC full-price retail stores
Total Oxford direct to consumer locations
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RESULTS OF OPERATIONS
The following table sets forth the specified line items in our consolidated statements of operations both in dollars (in thousands) and as a percentage of net sales. We have calculated all percentages based on actual data, but percentage columns may not add due to rounding.
Fiscal 2025
Fiscal 2024
Fiscal 2023
Net sales
Cost of goods sold
Gross profit
Depreciation and amortization
Impairment of goodwill, intangible assets and equity method investments
Total Operating expenses
Royalties and other operating income
Operating income (loss)
Interest expense, net
Earnings (loss) before income taxes
Income taxes (benefit)
Net earnings (loss)
Net earnings (loss) per share
Weighted average shares outstanding - diluted
The following table presents the proportion of our consolidated net sales by distribution channel for each period presented. We have calculated all percentages below on actual data, and percentages may not add to 100 due to rounding.
Fiscal 2025
Fiscal 2024
Fiscal 2023
Retail
E-commerce
Food and beverage
Wholesale
Total
FISCAL 2025 COMPARED TO FISCAL 2024
The discussion and tables below compare certain line items included in our consolidated statements of operations for Fiscal 2025 to Fiscal 2024, except where indicated otherwise. Each dollar and share amount included in the tables is in thousands except for per share amounts. We have calculated all percentages based on actual data, and percentage columns in tables may not add due to rounding. Individual line items of our consolidated statements of operations, including gross profit, may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.
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Net Sales
Fiscal
Fiscal 2025
Fiscal 2024
$ Change
% Change
Tommy Bahama
Lilly Pulitzer
Johnny Was
Emerging Brands
Corporate and Other
Consolidated net sales
Consolidated net sales were $1,478 million in Fiscal 2025 compared to net sales of $1,517 million in Fiscal 2024. Net sales decreased in Tommy Bahama and Johnny Was, partially offset by increased sales in Lilly Pulitzer and Emerging Brands.
The decrease in net sales by distribution channel consisted of the following:
• a decrease in full-price retail store sales of $15 million, or 3%, including (1) a $16 million decrease in Tommy Bahama and (2) a $9 million decrease in Johnny Was. These decreases were partially offset by (1) a $5 million increase in Emerging Brands and (2) a $4 million increase in Lilly Pulitzer;
• a decrease in e-commerce sales of $13 million, or 3%, including (1) an $18 million decrease in Tommy Bahama and (2) an $11 million decrease in Johnny Was. These decreases were partially offset by (1) a $10 million increase in Emerging Brands and (2) a $7 million increase in Lilly Pulitzer;
• a decrease in wholesale sales of $13 million, or 5%, including (1) an $11 million decrease in Tommy Bahama, (2) a $5 million decrease in Johnny Was and (3) a $1 million decrease in Emerging Brands. These decreases were partially offset by a $3 million increase in Lilly Pulitzer;
• a decrease in outlet sales of $1 million, or 2%, including (1) a $1 million decrease in Johnny Was and (2) a $1 million decrease in Tommy Bahama; and
• an increase in food and beverage sales of $4 million, or 4%.
Tommy Bahama:
Tommy Bahama net sales decreased $41 million, or 5%, in Fiscal 2025, with a decrease in (1) e-commerce sales of $18 million, or 8%, (2) full-price retail sales of $16 million, or 5%, (3) wholesale sales of $11 million, or 8%, and (4) outlet sales of $1 million, or 1%. These decreases were partially offset by an increase in food and beverage sales of $4 million, or 4%. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:
Fiscal 2025
Fiscal 2024
Retail
E-commerce
Food and beverage
Wholesale
Total
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Lilly Pulitzer:
Lilly Pulitzer net sales increased $14 million, or 4%, in Fiscal 2025, with an increase in each channel of distribution including an increase in (1) e-commerce sales of $7 million, or 4%, (2) retail sales of $4 million, or 3%, and (3) wholesale sales of $3 million, or 6%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:
Fiscal 2025
Fiscal 2024
Retail
E-commerce
Wholesale
Total
Johnny Was:
Johnny Was net sales decreased $26 million, or 13%, in Fiscal 2025, with a decrease in each channel of distribution including a decrease in (1) e-commerce sales of $11 million, or 13%, (2) full-price retail sales of $9 million, or 13%, (3) wholesale sales of $5 million, or 14% , and (4) outlet sales of $1 million, or 21%. The following table presents the proportion of net sales by distribution channel for Johnny Was for each period presented:
Fiscal 2025
Fiscal 2024
Retail
E-commerce
Wholesale
Total
Emerging Brands:
Emerging Brands net sales increased $14 million, or 11%, in Fiscal 2025. Net sales increased in TBBC, Duck Head and Southern Tide and were partially offset by decreased sales in Jack Rogers. The increase in net sales in Emerging Brands by distribution channel included increases in (1) e-commerce sales of $10 million, or 17%, and (2) retail sales of $5 million, or 27%, as we opened new retail locations. These increases were partially offset by a decrease in wholesale sales of $1 million, or 1%. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:
Fiscal 2025
Fiscal 2024
Retail
E-commerce
Wholesale
Total
Corporate and Other:
Corporate and Other net sales primarily consist of the elimination of any sales between operating segments.
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Gross Profit
The tables below present gross profit by reportable segment and Corporate and Other and in total for Fiscal 2025 and Fiscal 2024, as well as the change between those two periods and gross margin by reportable segment and Corporate and Other and in total. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.
Fiscal 2025
Fiscal 2024
$ Change
% Change
Tommy Bahama
Lilly Pulitzer
Johnny Was
Emerging Brands
Corporate and Other
Consolidated gross profit
Notable items included in amounts above:
LIFO adjustments in Corporate and Other
Fiscal 2025
Fiscal 2024
Tommy Bahama
Lilly Pulitzer
Johnny Was
Emerging Brands
Corporate and Other
Consolidated gross margin
The decreased gross profit of 6% was primarily due to (1) the 3% decrease in net sales and (2) decreased consolidated gross margin. The decreased gross margin was primarily due to (1) approximately $30 million of increased cost of goods sold from additional tariffs enacted in Fiscal 2025, (2) a change in sales mix with a higher proportion of net sales occurring during promotional and clearance events at Tommy Bahama and Lilly Pulitzer and (3) a $5 million higher LIFO accounting charge in Fiscal 2025 compared to Fiscal 2024. These decreases were partially offset by (1) lower freight costs to customers due to improved carrier rates from contract renegotiations and (2) a change in sales mix with wholesale sales representing a lower proportion of net sales.
Tommy Bahama:
The lower gross margin for Tommy Bahama was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) a change in sales mix with a higher proportion of net sales occurring during promotional events, including loyalty award cards, Flip Side, end of season clearance events and semi-annual Friends & Family events. These decreases were partially offset by (1) lower freight costs to customers due to improved carrier rates from contract renegotiations, (2) decreased freight rates associated with shipping our products from our vendors and (3) a change in sales mix with wholesale sales representing a lower proportion of net sales.
Lilly Pulitzer:
The lower gross margin for Lilly Pulitzer was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025, (2) a change in sales mix with a higher proportion of net sales occurring during promotional events, including e-commerce flash sales and (3) a change in sales mix with off-price wholesale sales representing a higher proportion of wholesale sales. These decreases were partially offset by lower freight costs to customers due to improved carrier rates from contract renegotiations.
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Johnny Was:
The lower gross margin for Johnny Was was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) a change in sales mix with full-price wholesale sales representing a lower proportion of wholesale sales. These decreases were partially offset by a change in sales mix with full-price retail and e-commerce sales representing a higher proportion of net sales resulting from fewer sales occurring during promotional and clearance events.
Emerging Brands:
The lower gross margin for Emerging Brands was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) higher markdowns during promotional and clearance events. These decreases were partially offset by a change in sales mix with wholesale sales representing a lower proportion of net sales.
Corporate and Other:
The gross profit in Corporate and Other primarily reflects the impact of LIFO accounting adjustments that resulted in a $5 million higher charge in Fiscal 2025 compared to Fiscal 2024.
Fiscal 2025
Fiscal 2024
$ Change
% Change
SG&A (as a % of net sales)
Notable items included in amounts above:
Johnny Was organizational realignment initiatives
Johnny Was Distribution Center relocation costs
SG&A was $818 million in Fiscal 2025 compared to SG&A of $787 million in Fiscal 2024 with approximately $15 million, or 47%, of the increase due to the increase in bricks and mortar retail locations. The 4% increase in total SG&A in Fiscal 2025 included the following, each of which includes the SG&A of the new bricks and mortar locations:
• $13 million increase in employment costs driven primarily by new bricks and mortar retail locations, increased incentive compensation and increased medical benefit costs;
• $8 million increase in software subscription related costs;
• $6 million increase in occupancy costs driven primarily by new bricks and mortar retail locations;
• $6 million increase in consulting and professional services related costs; and
• $5 million increase in the provision for credit losses primarily due to the Saks Global bankruptcy.
These increases were partially offset by:
• $7 million decrease in advertising costs; and
• $1 million decrease in miscellaneous expenses including samples, supplies and travel related costs.
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Depreciation and Amortization
Fiscal 2025
Fiscal 2024
$ Change
% Change
Depreciation and amortization
Depreciation and amortization (as a % of net sales)
Notable items included in amounts above:
Amortization of Johnny Was intangible assets
The lower depreciation and amortization expense was primarily driven by a $3 million decrease in amortization of intangible assets. This decrease was partially offset by a $2 million increase in depreciation expense primarily driven by a $6 million increase in depreciation related to new retail stores and Marlin Bar locations and partially offset by decreases in other classes of assets.
Impairment of goodwill, intangible assets and equity method investments
We performed interim impairment assessments in the Third Quarter of Fiscal 2025 that resulted in noncash impairment charges for goodwill and intangible assets totaling $61 million, including $57 million related to Johnny Was intangible assets, which is included in our Johnny Was reportable segment, and $4 million related to Jack Rogers intangible assets and goodwill, which is included in our Emerging Brands reportable segment.
For both Johnny Was and Jack Rogers, the impairment charges reflect the recent declines in net sales and operating results, partially due to U.S. import tariffs implemented in Fiscal 2025, performance below forecasted expectations and negative revisions to projected results. Refer to “Note 5—Intangible Assets and Goodwill” for additional disclosure regarding the impairment charges recognized during Fiscal 2025. There were no other impairment charges for goodwill, intangible assets or equity method investments in Fiscal 2025.
There were no impairment charges for goodwill, intangible assets or equity method investments in Fiscal 2024.
Royalties and other operating income
Fiscal 2025
Fiscal 2024
$ Change
% Change
Royalties and other operating income
Royalties and other operating income typically consist of royalty income received from third parties from the licensing of our brands. The decreased royalties and other operating income during Fiscal 2025 was primarily due to decreased royalty income in Tommy Bahama reflecting the lower sales of our licensing partners that were negatively impacted by the additional U.S. import tariffs enacted in Fiscal 2025.
Operating income (loss)
Fiscal 2025
Fiscal 2024
$ Change
% Change
Operating income (loss)
Operating income (loss) (as a % of net sales)
Notable items included in amounts above:
LIFO adjustments in Corporate and Other
Johnny Was organizational realignment initiatives
Amortization of Johnny Was intangible assets
Johnny Was intangible asset impairment charge
Jack Rogers intangible asset and goodwill impairment charge
Johnny Was Distribution Center relocation costs
Operating loss was $31 million in Fiscal 2025 compared to operating income of $119 million in Fiscal 2024. The decreased operating results were primarily due to (1) noncash impairment charges of $61 million primarily related to Johnny Was recognized during Fiscal 2025, (2) decreased net sales, (3) lower gross margin, (4) increased SG&A and (5)
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decreased royalties and other operating income. These decreases were partially offset by decreased depreciation and amortization expenses.
Interest expense, net
Fiscal 2025
Fiscal 2024
$ Change
% Change
Interest expense, net
The higher interest expense in Fiscal 2025 was primarily due to higher average outstanding debt during Fiscal 2025 than Fiscal 2024.
Income taxes
Fiscal 2025
Fiscal 2024
$ Change
% Change
Income tax expense (benefit)
Effective tax rate
Our effective tax rate will vary from period to period from a typical annual effective tax rate of approximately 25% based on various factors including, but not limited to, the geographic mix of earnings, enacted tax legislation, state and local taxes, tax audit findings and settlements, and the interaction of various global tax strategies. Refer to Note 11 of our consolidated financial statements included in this report for our income tax rate reconciliation and other information about our income tax expense (benefit) for Fiscal 2025 and Fiscal 2024.
For Fiscal 2025, our effective tax rate was 26.9%, which primarily reflects the unfavorable net discrete tax expense for shortfalls in stock-based compensation vesting during Fiscal 2025. This unfavorable factor was partially offset by (1) favorable U.S. federal return-to-provision adjustments primarily related to an increase in the research and development tax credit and benefits associated with certain adjustments pertaining to U.S. taxation on foreign earnings, (2) the benefit derived from a reduction in income tax expense as a result of the receipt of interest from a U.S. federal income tax receivable and (3) the remeasurement of deferred tax balances due to changes in state tax rates.
For Fiscal 2024, our effective income tax rate was 20.2%, which primarily reflects (1) the benefit derived from an increase in research and development tax credits, (2) a reduction in income tax expense as a result of the receipt of interest from a U.S. federal net operating loss ("NOL") carryback claim, (3) a benefit attributable to the vesting of restricted stock awards at a price exceeding the grant date fair value, (4) favorable effects of changes in the fair value of life insurance policies and (5) benefits associated with certain adjustments pertaining to U.S. taxation on foreign earnings. These favorable items were partially offset by (1) unfavorable items related to the non-deductible amounts associated with executive compensation and (2) an increase in uncertain tax positions.
Net earnings
Fiscal
Fiscal 2025
Fiscal 2024
Net sales
Operating income (loss)
Net earnings (loss)
Net earnings (loss) per diluted share
Weighted average shares outstanding - diluted
Net loss per diluted share was $1.86 in Fiscal 2025 compared to net earnings per diluted share of $5.87 in Fiscal 2024. The decrease in net earnings in Fiscal 2025 was due to (1) noncash impairment charges of $61 million primarily related to Johnny Was recognized during Fiscal 2025, (2) decreased net sales, (3) lower gross margin, (4) increased SG&A, (5) increased interest expense and (6) decreased royalties and other operating income. These decreases were partially offset by decreased depreciation and amortization expenses.
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EBITDA
Fiscal 2025
Fiscal 2024
$ Change
% Change
Tommy Bahama Segment EBITDA
Lilly Pulitzer Segment EBITDA
Johnny Was Segment EBITDA
Emerging Brands Segment EBITDA
Corporate and Other EBITDA
Adjusted EBITDA
Adjusted EBITDA as a % of net sales
Notable items included in amounts above:
LIFO adjustments in Corporate and Other
Johnny Was organizational realignment initiatives
Johnny Was Distribution Center relocation costs
Adjusted EBITDA was $96 million in Fiscal 2025 compared to $187 million in Fiscal 2024. The decreased Adjusted EBITDA was primarily due to lower segment EBITDA in all operating segments and in Corporate and Other. Changes in segment EBITDA by operating segment are discussed below.
Tommy Bahama:
Fiscal 2025
Fiscal 2024
$ Change
% Change
Net sales
Gross profit
Gross margin
Segment EBITDA
Segment EBITDA as % of net sales
The decreased segment EBITDA for Tommy Bahama was due to (1) decreased net sales, (2) increased SG&A and (3) lower gross margin. The increased SG&A was primarily due to (1) $9 million of higher SG&A associated with new retail store and Marlin Bar locations with retail and food and beverage operations, including related employment costs, occupancy costs and administrative expenses and (2) $2 million of increased software subscription and consulting costs. These increases were partially offset by $1 million of decreased variable and distribution costs primarily driven by lower sales.
Lilly Pulitzer:
Fiscal 2025
Fiscal 2024
$ Change
% Change
Net sales
Gross profit
Gross margin
Segment EBITDA
Segment EBITDA as % of net sales
The decreased segment EBITDA for Lilly Pulitzer was primarily due to (1) increased SG&A and (2) lower gross margin. These decreases were partially offset by increased net sales. The increased SG&A was primarily due to (1) $5 million of increased software subscription and consulting expenses, (2) $3 million of increased variable and distribution costs primarily driven by higher sales and (3) $1 million of higher SG&A associated with new retail store locations, including related employment costs, occupancy costs and administrative expenses. These increases were partially offset by $2 million of decreased advertising costs.
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Johnny Was:
Fiscal 2025
Fiscal 2024
$ Change
% Change
Net sales
Gross profit
Gross margin
Segment EBITDA
Segment EBITDA as % of net sales
Notable items included in amounts above:
Johnny Was organizational realignment initiatives
Johnny Was Distribution Center relocation costs
The decreased segment EBITDA for Johnny Was was primarily due to (1) decreased net sales and (2) lower gross margin. These decreases were partially offset by decreased SG&A. The decreased SG&A was primarily due to (1) $6 million of decreased advertising costs, (2) $3 million of decreased variable and distribution costs primarily due to lower sales and (3) the absence of $3 million in Johnny Was Distribution Center relocation costs incurred during Fiscal 2024. These decreases were partially offset by (1) a $3 million increase in the provision for credit losses primarily driven by the Saks Global bankruptcy and (2) $3 million of costs associated with organizational realignment initiatives.
Emerging Brands:
Fiscal 2025
Fiscal 2024
$ Change
% Change
Net sales
Gross profit
Gross margin
Segment EBITDA
Segment EBITDA as % of net sales
The decreased segment EBITDA for Emerging Brands was primarily due to (1) increased SG&A and (2) lower gross margin. These decreases were partially offset by increased net sales. The increased SG&A was primarily due to new retail store operations, including related employment costs, occupancy costs and administrative expenses.
Corporate and Other:
Fiscal 2025
Fiscal 2024
$ Change
% Change
Net sales
Gross profit
Corporate EBITDA
Notable items included in amounts above:
LIFO adjustments in Corporate and Other
The decreased Corporate EBITDA was primarily due to (1) increased SG&A and (2) a higher LIFO accounting charge. The increased SG&A was primarily due to (1) $4 million of increased employment costs primarily driven by increased incentive compensation and medical benefit costs, (2) $3 million of increased professional and consulting costs and (3) $2 million of increased costs associated with the project to build a new distribution center in Lyons, Georgia.
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Non-GAAP Financial Measures
The following tables set forth reconciliations of net earnings (loss) to EBITDA and Adjusted EBITDA. EBITDA is calculated as net sales less cost of goods sold and total SG&A, and it excludes income tax expense (benefit), interest expense, net and depreciation and amortization. Adjusted EBITDA is EBITDA less other infrequent operating charges (impairments of goodwill, intangible assets and equity method investments). We believe that the presentation of EBITDA and Adjusted EBITDA, which are not GAAP financial measures, when considered together with the corresponding GAAP financial measures and the reconciliations to those measures, provide meaningful supplemental information to both management and investors that is indicative of our core operations. We believe that EBITDA is a useful measure of operating performance because it helps us, analysts, investors, and other interested parties assess the underlying profitability of our operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation, amortization), financing decisions (interest) and tax strategies (income taxes). Adjusted EBITDA helps us, analysts, investors, and other interested parties evaluate our operating performance on a comparable basis from period-to-period so that we can better understand the ongoing factors and trends affecting our business operations. We also use Adjusted EBITDA, to forecast our performance, evaluate our actual results our forecasts and compare our results to others in the industries that we serve. We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. The table below showing consolidated totals reconciles GAAP net earnings () to EBITDA and Adjusted EBITDA:
Fiscal 2025
Fiscal 2024
GAAP net income (loss)
Depreciation and amortization
Interest expense, net
Income tax expense (benefit)
EBITDA
Impairment of goodwill, intangible assets and equity method investments
Adjusted EBITDA
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Our primary source of revenue and cash flow is through our design, sourcing, marketing and distribution of branded apparel products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head and Jack Rogers lifestyle brands. We primarily distribute our products to our customers via direct to consumer channels of distribution, but we also distribute our products via wholesale channels of distribution.
Our primary uses of cash flow include the purchase of our branded apparel products from third party suppliers located outside of the United States, as well as operating expenses, including employee compensation and benefits, operating lease commitments and other occupancy-related costs, marketing and advertising costs, information technology costs, variable expenses, distribution costs, other general and administrative expenses and the periodic payment of interest. Additionally, we use our cash to fund capital expenditures and other investing activities, dividends, share repurchases and repayment of indebtedness, if any. In the ordinary course of business, we maintain certain levels of inventory, extend credit to our wholesale customers and pay our operating expenses. Thus, we require a certain amount of ongoing working capital to operate our business. Our need for working capital is typically seasonal with the greatest working capital requirements to support our larger spring, summer and holiday direct to consumer seasons. Our capital needs depend on many factors including the results of our operations and cash flows, future growth rates, the need to finance inventory levels and the success of our various products.
We have a long history of generating sufficient cash flows from operations to satisfy our cash requirements for our ongoing capital expenditure needs as well as payment of dividends and repayment of our debt. Thus, we believe our anticipated future cash flows from operating activities will provide (1) sufficient cash over both the short and long term to satisfy our ongoing operating cash requirements, (2) ample funds to continue to invest in our lifestyle brands, direct to consumer initiatives and information technology projects, (3) additional cash flow to repay outstanding debt and (4) sufficient cash for other strategic initiatives such as acquisitions and share repurchases. Also, if cash inflows are less than cash outflows, we have access to amounts under our $325 million Fourth Amended and Restated Credit Agreement (as amended, the “U.S. Revolving Credit Agreement”), subject to its terms, which is described below.
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Working Capital
($ in thousands)
January 31,
February 1,
$ Change
% Change
Total current assets
Total current liabilities
Working capital
Working capital ratio
Our working capital ratio is calculated by dividing total current assets by total current liabilities. Current assets as of January 31, 2026 were comparable to February 1, 2025. Decreases in current assets included decreases in (1) receivables of $5 million, (2) inventories of $2 million and (3) cash and cash equivalents of $1 million. These decreases were offset by an increase in prepaid expenses and other current assets of $8 million. Current liabilities as of January 31, 2026 increased from February 1, 2025 primarily due to increases in (1) accrued compensation of $6 million, (2) current operating lease liabilities of $6 million and (3) other accrued expenses and liabilities of $5 million.
Balance Sheet
The following tables set forth certain information included in our consolidated balance sheets (in thousands). Below each table are explanations for any significant changes in the balances as of January 31, 2026 as compared to February 1, 2025.
Current Assets:
January 31,
February 1,
$ Change
% Change
Cash and cash equivalents
Receivables, net
Inventories, net
Prepaid expenses and other current assets
Total current assets
Cash and cash equivalents were $8 million as of January 31, 2026, compared to $9 million as of February 1, 2025. The cash and cash equivalents balance as of January 31, 2026 and February 1, 2025 represent typical cash amounts maintained on an ongoi ng basis in our operations, which generally ranges from $5 million to $10 million at any given time. Any excess cash is generally used to repay amounts outstanding under our U.S. Revolving Credit Agreement.
The decreased receivables, net as of January 31, 2026, was due primarily to (1) a decrease in insurance receivables of $6 million related to payments received in Fiscal 2025 and (2) an increase in the provision for credit losses of $5 million. These decreases were partially offset by an increase in income tax receivables of $6 million. Income tax receivables are now presented within receivables, net, to provide a more concise and meaningful presentation.
Inventories, net, included a $92 million and $85 million LIFO reserve as of January 31, 2026, and February 1, 2025, respectively. The increase in the LIFO reserve was partially offset by slight inventory increases in all operating segments, with the exception of Johnny Was, driven primarily by increased tariffs. As of January 31, 2026, we had $11 million of additional costs capitalized into inventory related to the U.S. tariffs implemented in Fiscal 2025.
The increased prepaid expenses and other current assets as of January 31, 2026, was primarily due to increases in prepaid software costs.
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Non-current Assets:
January 31,
February 1,
$ Change
% Change
Property and equipment, net
Intangible assets, net
Goodwill
Operating lease assets
Other assets, net
Deferred income taxes
Total non-current assets
Property and equipment, net as of January 31, 2026, increased as capital expenditures primarily relating to the project to build a new distribution center in Lyons, Georgia and the opening of new Tommy Bahama Marlin Bars and retail stores across our portfolio exceeded depreciation during Fiscal 2025.
The decrease in intangible assets, net as of January 31, 2026, was primarily due to the $59 million of intangible asset impairment charges primarily related to Johnny Was during Fiscal 2025, as discussed in Note 5 to the consolidated financial statements. Intangible assets, net decreased further due to the amortization of intangible assets acquired in the acquisition of Johnny Was.
The decrease in goodwill as of January 31, 2026, was primarily due to the $2 million goodwill impairment charge related to Jack Rogers during Fiscal 2025, as discussed in Note 5 to the consolidated financial statements.
Operating lease assets as of January 31, 2026, increased primarily due to the addition of new leased locations, or the extension of existing leased locations, exceeding the recognition of amortization related to existing operating leases and the termination or reduced term of certain operating leases.
Other assets as of January 31, 2026, increased primarily due to (1) an increase in capitalizable implementation costs associated with cloud computing arrangements and (2) an increase in the fair value of life insurance policies associated with our deferred compensation plans.
Deferred income taxes increased as of January 31, 2026, due primarily to the recognition of deferred tax benefits associated with the impairment charges related to Johnny Was and Jack Rogers.
Liabilities:
January 31,
February 1,
$ Change
% Change
Total current liabilities
Long-term debt
Non-current portion of operating lease liabilities
Other non-current liabilities
Total liabilities
Current liabilities increased as of January 31, 2026, primarily due to (1) accrued compensation of $6 million primarily due to increased accrued incentive compensation, (2) current operating lease liabilities of $6 million primarily due to the opening of new retail stores and (3) other accrued expenses and liabilities of $5 million primarily due to an increase in accrued duties and tariffs.
The increase in long-term debt as of January 31, 2026, was the result of (1) lower net earnings, (2) capital expenditures primarily associated with the project to build a new distribution center in Lyons, Georgia, (3) share repurchases, (4) payments of dividends and (5) working capital requirements exceeding cash flow from operations.
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The non-current portion of operating lease liabilities increased as of January 31, 2026, due to the addition of new leased locations, and the extension of existing leased locations, exceeding the payments related to existing operating leases and the termination or reduced term of certain operating leases.
The increase in other non-current liabilities as of January 31, 2026, was the result of increases in legal related reserves.
Statement of Cash Flows
The following table sets forth the net cash flows resulting in the change in our cash and cash equivalents (in thousands):
Fiscal 2025
Fiscal 2024
Fiscal 2023
Cash provided by operating activities
Cash used in investing activities
Cash used in financing activities
Net change in cash and cash equivalents
Changes in cash flows in Fiscal 2025 and Fiscal 2024 related to operating activities, investing activities and financing activities are discussed below.
Operating Activities:
In Fiscal 2025 and Fiscal 2024, operating activities provided $120 million and $194 million of cash, respectively. The cash flow from operating activities for each period primarily consisted of net earnings for the relevant period adjusted, as applicable, for non-cash activities including impairment charges, depreciation, amortization, equity-based compensation, gains on sale of assets and other non-cash items as well as the net impact of changes in deferred income taxes and operating assets and liabilities.
In Fiscal 2025, changes in operating assets and liabilities had a favorable impact on cash flow from operations. Increases in noncurrent liabilities and current liabilities and decreases in receivables and inventories increased cash flow from operations. These increases were partially offset by an increase in other noncurrent assets, prepaid expenses and other current assets and income tax receivables, which decreased cash flow from operations. In Fiscal 2024 changes in operating assets and liabilities had a favorable impact on cash flow from operations primarily driven by income tax receivables. We received $19 million in income tax receivables in Fiscal 2024 associated with the benefit of the Fiscal 2020 operating losses filed in Fiscal 2021, which was partially offset by a $5 million receivable associated with our Fiscal 2023 tax return filed in Fiscal 2024. Other changes had a slightly unfavorable impact on cash flow from operations driven by increases in inventories and receivables that decreased cash flow from operations partially offset by an increase in current liabilities and a decrease in prepaid expenses that increased cash flow from operations.
Investing Activities:
In Fiscal 2025 and Fiscal 2024, investing activities used $108 million and $143 million of cash, respectively. On an ongoing basis, our cash flow primarily consists of our capital expenditures, which totaled $108 million and $134 million in Fiscal 2025 and Fiscal 2024, respectively. The decrease in Fiscal 2025 was primarily due to the opening of fewer new retail stores and Tommy Bahama Marlin Bars in Fiscal 2025 than in Fiscal 2024. We also spent $54 million of capital expenditures related to the new distribution center in Lyons, Georgia in Fiscal 2025 compared to $69 million in Fiscal 2024.
During Fiscal 2024, we paid $8 million associated with acquisitions, including the acquisition of intellectual property rights at Lilly Pulitzer and two former Lilly Pulitzer Signature Stores.
Financing Activities:
In Fiscal 2025 and Fiscal 2024, financing activities used $13 million and $49 million of cash, respectively. If net cash requirements exceed our net cash flows, we may borrow amounts from our U.S. Revolving Credit Agreement consistent with our use of long-term debt to satisfy cash flow needs during Fiscal 2025. Alternatively, to the extent we are
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in a net debt position, if net cash requirements are less than our net cash flows, we may repay amounts outstanding on our U.S. Revolving Credit Agreement, if any.
In Fiscal 2025, we also repurchased $55 million of shares, paid $42 million of dividends and repurchased $2 million of shares to cover employee tax liabilities related to the vesting of shares of our common stock. In Fiscal 2024, we paid $43 million of dividends and repurchased $6 million of shares to cover employee tax liabilities related to the vesting of shares of our common stock.
Liquidity and Capital Resources
We have a long history of generating sufficient cash flows from operations to satisfy our cash requirements for our ongoing capital expenditure needs as well as payment of dividends and repayment of our debt. Thus, we believe our anticipated future cash flows from operating activities will provide (1) sufficient cash over both the short and long term to satisfy our ongoing operating cash requirements, (2) funds to complete our multi-year project to build a new distribution center in Lyons, Georgia to enhance the direct to consumer throughput capabilities of our brands, (3) funds to continue to invest in our businesses, including direct to consumer initiatives and information technology projects, (4) additional cash flow to repay debt that may be outstanding and (5) sufficient cash for other strategic initiatives.
Our capital needs depend on many factors including the results of our operations and cash flows, future growth rates, the need to finance inventory and the success of our various products. To the extent cash flow needs in the future exceed cash flow provided by our operations, we will have access, subject to its terms, to our U.S. Revolving Credit Agreement to provide funding for operating activities, capital expenditures and acquisitions, if any, and any other investing or financing activities.
Our cash, short-term investments and debt levels in future periods may not be comparable to historical amounts as we continue to assess, and possibly make changes to, our capital structure, including those related to borrowings from additional credit facilities, sales of debt or equity securities or the repurchase of shares of our stock in the future. Changes in our capital structure, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
$325 Million U.S. Revolving Credit Agreement
On March 6, 2023, we amended the U.S. Revolving Credit Agreement to, among other things, mature in March 2028. The U.S. Revolving Credit Agreement amended and restated our Fourth Amended and Restated Credit Agreement (the “Prior Credit Agreement”).
Pursuant to the U.S. Revolving Credit Agreement, the interest rate applicable to our borrowings under the U.S. Revolving Credit Agreement is based on either the Term Secured Overnight Financing Rate plus an applicable margin of 135 to 185 basis points or prime plus an applicable margin of 25 to 75 basis points.
The U.S. Revolving Credit Agreement generally (1) is limited to a borrowing base consisting of specified percentages of eligible categories of assets, (2) accrues variable-rate interest (weighted average interest rate of 5% as of January 31, 2026), unused line fees and letter of credit fees based upon average utilization or unused availability, as applicable, (3) requires periodic interest payments with principal due at maturity and (4) is secured by a first priority security interest in substantially all of the assets of Oxford Industries, Inc. and its domestic subsidiaries, including accounts receivable, books and records, chattel paper, deposit accounts, equipment, certain general intangibles, inventory, investment property (including the equity interests of certain subsidiaries), negotiable collateral, life insurance policies, supporting obligations, commercial tort claims, cash and cash equivalents, eligible trademarks, proceeds and other personal property.
We issue standby letters of credit under the U.S. Revolving Credit Agreement. Outstanding letters of credit under the U.S. Revolving Credit Agreement reduce the amount of borrowings available to us when issued and, as of January 31, 2026, and February 1, 2025, totaled $5 million and $5 million, respectively.
As of January 31, 2026 and February 1, 2025, we had $116 million and $31 million, respectively, of borrowings outstanding and $203 million and $289 million in unused availability, respectively, under the U.S. Revolving Credit Agreement.
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Compliance with Covenants
The U.S. Revolving Credit Agreement is subject to a number of affirmative covenants regarding the delivery of financial information, compliance with law, maintenance of property, insurance requirements and conduct of business. Also, the U.S. Revolving Credit Agreement is subject to certain negative covenants or other restrictions including, among other things, limitations on our ability to (1) incur debt, (2) guaranty certain obligations, (3) incur liens, (4) pay dividends to shareholders, (5) repurchase shares of our common stock, (6) make investments, (7) sell assets or stock of subsidiaries, (8) acquire assets or businesses, (9) merge or consolidate with other companies or (10) prepay, retire, repurchase or redeem debt.
Additionally, the U.S. Revolving Credit Agreement contains a financial covenant that applies only if excess availability under the agreement for three consecutive business days is less than the greater of (1) $23.5 million or (2) 10% of availability. In such case, our fixed charge coverage ratio as defined in the U.S. Revolving Credit Agreement must not be less than 1.0 to 1.0 for the immediately preceding 12 fiscal months for which financial statements have been delivered. This financial covenant continues to apply until we have maintained excess availability under the U.S. Revolving Credit Agreement of more than the greater of (1) $23.5 million or (2) 10% of availability for 30 consecutive days.
We believe that the affirmative covenants, negative covenants, financial covenants and other restrictions under the U.S. Revolving Credit Agreement are customary for those included in similar facilities entered into at the time we amended the U.S. Revolving Credit Agreement. During Fiscal 2025 and as of January 31, 2026, no financial covenant testing was required pursuant to our U.S. Revolving Credit Agreement or the Prior Credit Agreement, as applicable, as the minimum availability threshold was met at all times. As of January 31, 2026, we were compliant with all applicable covenants related to the U.S. Revolving Credit Agreement.
Operating Lease Commitments:
In the ordinary course of business, we enter into long-term real estate lease agreements for our direct to consumer locations, which include both retail store and food and beverage locations, and office and warehouse/distribution space, as well as leases for certain equipment. Our real estate leases have varying terms and expirations and may have provisions to extend, renew or terminate the lease agreement at our discretion, among other provisions. Our real estate lease terms are typically for a period of 10 years or less and typically require monthly rent payments with specified rent escalations during the lease term. Our real estate leases usually provide for payments of our pro rata share of real estate taxes, insurance and other operating expenses applicable to the property, and certain of our leases require payment of sales taxes on rental payments. Also, our direct to consumer location leases often provide for contingent rent payments based on sales if certain sales thresholds are achieved. Base rent amounts specified in the leases are included in determining the operating lease liabilities included in our consolidated balance sheet, while amounts for real estate taxes, sales tax, insurance, other operating expenses and contingent rent applicable to the properties pursuant to the respective leases are not included in determining the operating lease liabilities included in our consolidated balance sheets.
These leases require us to make a substantial amount of cash payments on an annual basis. Base rent amounts required to be paid in the future over the remaining lease terms under our existing leases as of January 31, 2026, totaled $572 million, including $88 million, $80 million, $78 million, $62 million and $52 million of required payments in each of the next five years. Additionally, amounts for real estate taxes, sales tax, insurance, other operating expenses and contingent rent applicable to the properties pursuant to the respective operating leases are required to be paid in the future, but the amounts payable in future periods are, in most cases, not quantified in the lease agreement or are dependent on factors which may not be known at this time. Such amounts incurred in Fiscal 2025 totaled $41 million.
Refer to Note 1 and Note 7 of our consolidated financial statements for additional disclosures about our operating lease agreements and related commitments.
Capital Expenditures:
Capital expenditures of $108 million for Fiscal 2025 decreased compared to the $134 million in Fiscal 2024. The decrease in Fiscal 2025 was primarily due to the opening of fewer new retail stores and Tommy Bahama Marlin Bars in Fiscal 2025 than in Fiscal 2024. We also spent $54 million of capital expenditures related to the new distribution center in Lyons, Georgia in Fiscal 2025 compared to $69 million in Fiscal 2024. Our capital expenditure amounts in future years will fluctuate from the amounts incurred in Fiscal 2025 and prior years depending on the investments we believe appropriate for that year to support future expansion of our businesses.
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Dividends:
On March 23, 2026, our Board of Directors approved a cash dividend of $0.70 per share payable on May 1, 2026 to shareholders of record as of the close of business on April 17, 2026.
Although we have paid dividends each quarter since we became a public company in July 1960, including $42 million in total, or $2.76 per common share, in Fiscal 2025, we may discontinue or modify dividend payments at any time if we determine that other uses of our capital, including payment of outstanding debt, funding of acquisitions, funding of capital expenditures or repurchases of outstanding shares, may be in our best interest; if our expectations of future cash flows and future cash needs outweigh the ability to pay a dividend; or if the terms of our credit facility, other debt instruments or applicable law limit our ability to pay dividends. We may borrow to fund dividends or repurchase shares in the short term subject to the terms and conditions of our credit facility, other debt instruments and applicable law. All cash flow from operations will not be paid out as dividends. For details about limitations on our ability to pay dividends, see the discussion of our U.S. Revolving Credit Agreement above and in Note 6 of our consolidated financial statements contained in this report.
Share Repurchases:
On December 10, 2024, our Board of Directors authorized us to spend up to $100 million to repurchase shares of our stock. This authorization superseded and replaced all previous authorizations to repurchase shares of our stock. During Fiscal 2025, we repurchased 842,007 shares of our common stock at an average price of $59.38 for $50 million as part of an open market repurchase program (Rule 10b5-1 plan) under the December 10, 2024 authorization.
On March 24, 2025, our Board of Directors authorized us to spend up to $100 million to repurchase shares of our stock. This authorization superseded and replaced all previous authorizations to repurchase shares of our stock and has no automatic expiration. During Fiscal 2025, we repurchased 114,477 shares of our common stock at an average price of $40.46 for $5 million in open market repurchases under the March 24, 2025 authorization.
We repurchased a total of 956,484 shares in open market repurchases at an average price of $57.12 for $55 million during Fiscal 2025. As of January 31, 2026, $95 million remained under the Board of Directors' authorization.
We repurchased no shares in open market transactions in Fiscal 2024 and $20 million in Fiscal 2023.
Additionally, during Fiscal 2025, Fiscal 2024 and Fiscal 2023, we purchased $2 million, $6 million and $10 million, respectively, of shares from our employees to cover employee tax liabilities related to the vesting of shares of our stock.
Other Liquidity Items:
We have not entered into agreements which meet the SEC’s definition of an off balance sheet financing arrangement, other than operating leases, and have made no financial commitments or guarantees with respect to any unconsolidated subsidiaries or special purpose entities.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP in a consistent manner. The preparation of these financial statements requires the selection and application of accounting policies. Further, the application of GAAP requires us to make estimates and judgments about future events that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We base our estimates on historical experience, current trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions. We believe it is possible that other professionals, applying reasonable judgment to the same set of facts and circumstances, could develop and support a range of alternative estimated amounts. We believe that we have appropriately applied our critical accounting policies. However, in the event that inappropriate assumptions or methods were used relating to the critical accounting policies, our consolidated statements of operations could be materially misstated.
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A detailed summary of significant accounting policies is included in Note 1 of our consolidated financial statements contained in this report. The following is a brief discussion of the more significant estimates, assumptions and judgments we use or the amounts most sensitive to change from outside factors.
Revenue Recognition and Accounts Receivable
Our revenue consists of direct to consumer sales, including our retail store, e-commerce and food and beverage operations, and wholesale sales, as well as royalty income, which is included in royalties and other income in our consolidated statements of operations. We recognize revenue when performance obligations under the terms of the contracts with our customers are satisfied, which generally occurs when we deliver our products to our direct to consumer and wholesale customers.
In our direct to consumer operations, which represented 82% of our consolidated net sales in Fiscal 2025, consumers have certain rights to return product within a specified period and are eligible for certain point of sale discounts. We make estimates of reserves for products which were sold prior to the balance sheet date but that we anticipate may be returned by the consumer subsequent to that date. The determination of direct to consumer return reserve amounts requires judgment and consideration of historical and current trends, evaluation of current economic trends and other factors. As of January 31, 2026, our direct to consumer return reserve liability was $9 million compared to $10 million as of February 1, 2025. A 10% change in the direct to consumer sales return reserve as of January 31, 2026 would have had an impact of less than $1 million on net earnings in Fiscal 2025.
In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to some of our wholesale accounts for certain products. As certain allowances, other deductions and returns are not finalized until the end of a season, program or other event which may not have occurred yet, we estimate such discounts, allowances and returns on an ongoing basis to estimate the consideration from the customer that we expect to ultimately receive. Significant considerations in determining our estimates for these amounts for wholesale customers may include historical and current trends, agreements with customers, projected seasonal or program results, an evaluation of current economic conditions, specific program or product expectations and retailer performance. As of January 31, 2026 and February 1, 2025, our total reserves for discounts, returns and allowances for our wholesale businesses were $3 million and $3 million, respectively. If these allowances changed by 10% it would have had an impact of approximately $1 million on net earnings in Fiscal 2025.
We extend credit to certain wholesale customers based on an evaluation of the customer’s financial capacity and condition, usually without requiring collateral. We recognize estimated provisions for credit losses based on our historical collection experience, the financial condition of our customers, an evaluation of current economic conditions, anticipated trends, and the risk characteristics of the receivables, each of which is subjective and requires certain assumptions. As of January 31, 2026 and February 1, 2025, our provision for credit losses for our wholesale receivables was $4 million and $1 million, respectively. The increase in the provision was primarily due to losses associated with the bankruptcy of two wholesale customers. If the provision for credit losses changed by 10% it would have had an impact of less than $1 million on net earnings in Fiscal 2025.
Inventories, net
For operating segment reporting, our inventory is carried at the lower of the first-in, first-out (“FIFO”) cost or market. We evaluate the composition of our inventories for identification of distressed inventory at least quarterly. We estimate the amount of goods that we will not be able to sell in the normal course of business and write down the value of these goods as necessary. As the amount to be ultimately realized for the goods is not necessarily known at period end, we must use certain assumptions considering historical experience, inventory quantity, quality, age and mix, historical sales trends, future sales projections, consumer and retailer preferences, market trends, general economic conditions and our anticipated plans to sell the inventory.
For consolidated financial reporting, $153 million, or 93%, of our inventories were valued at the lower of the last-in, first-out (“LIFO”) cost or market after deducting the $92 million LIFO reserve as of January 31, 2026. The remaining $12 million of our inventories were valued at the lower of FIFO cost or market as of January 31, 2026. LIFO reserves are based on the Producer Price Index (“PPI”) as published by the United States Department of Labor. We write down inventories valued at the lower of LIFO cost or market when LIFO cost exceeds market value.
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As of January 31, 2026, we had recorded a reserve of $1 million related to inventory on the lower of FIFO cost or market method and for inventory on the lower of LIFO cost or market method with markdowns in excess of our LIFO reserve. A 10% change in the amount of such markdowns would have had an impact of less than $1 million on net earnings in Fiscal 2025. A change in the markdowns of our inventory valued at the lower of LIFO cost or market method that is not marked down in excess of our LIFO reserve typically would not be expected to have a material impact on our consolidated financial statements. A change in inventory levels, the mix of inventory by category or the PPI at the end of future fiscal years compared to amounts as of January 31, 2026 could result in a material impact on our consolidated financial statements in the future.
Given the significant amount of uncertainty surrounding the year-end LIFO calculation, including the estimate of year-end inventory balances, the proportion of inventory in each category and the year-end PPI, we have not typically adjusted our LIFO reserve in the first three quarters of a fiscal year. However, due to changes in the levels of inflation throughout Fiscal 2025, in addition to our Fourth Quarter adjustment at the end of Fiscal 2025, we also recognized an adjustment to the LIFO reserve in the Third Quarter of Fiscal 2025. Our policy of typically not adjusting the LIFO reserve at interim periods may result in significant LIFO accounting adjustments in the fourth quarter of a fiscal year. We do recognize changes in markdown reserves during each quarter of the fiscal year as those amounts can be estimated on an interim basis.
Business Combinations
From time-to-time, we make strategic acquisitions that may have a material effect on our consolidated results of operations and financial position. The measurement principle for the assets acquired and the liabilities assumed in a business combination is at estimated fair value as of the acquisition date, with certain exceptions.
At acquisition, we use estimates that can be complex and require significant judgments to record the fair value of purchased intangible assets, which primarily consist of trademarks, as well as customer relationships and reacquired rights. The fair values and useful lives of these intangible assets are estimated based on our assessment as well as independent third party appraisals in some cases. Additionally, at acquisition we must determine whether the intangible asset has an indefinite or finite life and account for it accordingly. Refer to “Note 5—Intangible Assets and Goodwill” for additional details about intangible assets.
Goodwill is recognized as the amount by which the cost to acquire a business exceeds the fair value of identified tangible and intangible assets acquired, net of assumed liabilities. Thus, the amount of goodwill recognized in connection with a business combination depends on the fair values assigned to the individual assets acquired and liabilities assumed in a business combination. Goodwill is allocated to the respective reporting unit at the time of acquisition. Refer to “Note 5—Intangible Assets and Goodwill” for additional information about our goodwill amounts.
At acquisition, assumptions and estimates about various items with significant uncertainty are required to determine the fair value of intangible assets and goodwill. When determining the fair value of intangible assets, including trademarks, customer relationships and other items, significant assumptions may include our planned use of the asset as well as estimates of net sales, royalty income, operating income, growth rates, royalty rates for the trademarks, a risk-adjusted, market-based cost of capital for the discount rates, income tax rates, anticipated cash flows and probabilities of cash flows, among other factors. Our fair value assessment may also consider any comparable market transactions. The use of different assumptions related to these uncertain factors at acquisition could result in a material change to the amounts of intangible assets and goodwill initially recorded at acquisition, which could result in a material impact on our consolidated financial statements.
The acquisition method requires us to record provisional amounts for any items for which the accounting is not complete at the end of a reporting period. We must complete the accounting during the measurement period, which cannot exceed one year. Adjustments made during the measurement period could have a material impact on our financial condition and results of operations. If our operating results, plans for the acquired business and/or macroeconomic conditions, anticipated results or other assumptions change after an acquisition, it could result in the impairment of the acquired intangible assets or goodwill. Also, a change in macroeconomic conditions may not only impact the estimated operating cash flows used in our cash flow models but may also impact other assumptions used in our analysis, including but not limited to, the risk-adjusted market-based cost of capital and/or discount rates.
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Goodwill and Intangible Assets, net
We test goodwill for impairment at the reporting unit level annually on the first day of the fourth quarter and more often if an event occurs or circumstances change that indicate the fair value of a reporting unit is below its carrying amount. We have the option to first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired to determine whether it is necessary to perform the quantitative impairment test. We also have the option to bypass the qualitative assessment entirely for any reporting unit in any period and proceed directly to performing the quantitative impairment test. For each impairment test of goodwill in Fiscal 2025, Fiscal 2024 and Fiscal 2023, we bypassed the qualitative test option and instead performed a quantitative test.
When applying the quantitative assessment, we determine the fair value of our reporting units based on an income approach, or in some cases a combination of an income approach and market approach. The income approach calculates a value based upon the present value of estimated future cash flows, while the market approach uses earnings multiples of similarly situated guideline public companies. Determining the fair value of a reporting unit involves judgment and the use of significant estimates and assumptions, which include assumptions regarding the revenue growth rates and operating margins used to calculate estimated future cash flows, risk-adjusted discount rates and future economic and market conditions. If an annual or interim analysis indicates an impairment of goodwill, the amount of the impairment is recognized in our consolidated financial statements based on the amount that the carrying value exceeds the estimated fair value of the reporting unit.
Intangible assets with indefinite lives, which primarily consist of trademarks, are not amortized but instead evaluated for impairment annually or more frequently if events or circumstances indicate that the intangible asset might be impaired. This analysis is dependent upon a number of uncertain factors described below and is typically performed in conjunction with the goodwill impairment analysis discussed above and is similar to the analysis performed at acquisition.
The fair value of our trademarks is principally determined by the “relief from royalty” approach that assumes the trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method includes assumptions regarding revenue growth rates, royalty rates, risk-adjusted discount rates and future economic and market conditions. If an annual or interim analysis indicates an impairment of an intangible asset with an indefinite useful life, the amount of the impairment is recognized in our consolidated financial statements based on the amount that the carrying value exceeds the estimated fair value of the asset for an intangible asset with an indefinite life or the reporting unit for goodwill.
Indefinite-lived intangible assets and goodwill that have been recently acquired or impaired are typically much more sensitive to changes in assumptions than other intangible asset and goodwill amounts as those amounts have recently been recorded at or adjusted to fair value. Consequently, if operating results, plans for the acquired business and/or macroeconomic conditions change after an acquisition, it could result in the impairment of the acquired intangible assets or goodwill. A change in macroeconomic conditions may not only impact the estimated operating cash flows used in our cash flow models but may also impact other assumptions used in our analysis, including but not limited to, the risk-adjusted market-based cost of capital and/or discount rates. Additionally, we are required to ensure that assumptions used to determine fair value in our analyses are consistent with the assumptions a hypothetical market participant would use. Therefore, the cost of capital discount rates used in our analyses may increase or decrease based on market conditions and trends regardless of whether our actual cost of capital changed.
The use of different assumptions could result in the determination of a different fair value and a different impairment charge or charges in different periods. For further discussion of the methods used and factors considered in our estimates as part of the impairment testing for goodwill and intangible assets with indefinite lives see “Note 1—Business and Summary of Significant Accounting Policies.”
In the Third Quarter of Fiscal 2025, we recognized goodwill and indefinite-lived intangible assets impairment charges totaling $59 million, including $57 million related to Johnny Was intangible assets and $2 million related to Jack Rogers goodwill. Refer to “Note 5—Intangible Assets and Goodwill Intangible” for discussion of the impairment charges recognized in Fiscal 2025. The indefinite-lived trademark associated with Johnny Was and goodwill associated with Jack Rogers, that were both acquired in recent years and impaired and adjusted to fair value during Fiscal 2025, had the least excess of fair value over book value as of January 31, 2026 and February 1, 2025. Thus, if the Johnny Was and Jack Rogers businesses do not achieve the anticipated growth and profitability in future years, or if other significant estimates and assumptions change, additional impairments of the Johnny Was and Jack Rogers intangible assets could be necessary in the future.
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No goodwill and indefinite-lived intangible assets impairment charges were recognized in Fiscal 2024.
Intangible assets with finite lives primarily consist of customer relationships, certain trademarks and reacquired rights. These assets are amortized over their estimated useful lives and reviewed for impairment periodically if events or changes in circumstances indicate that the carrying amount may not be recoverable. If the assets are determined to not be recoverable on an undiscounted cash flow basis and the expected future discounted cash flows of the asset group are less than the carrying amount, an asset group is impaired and a loss is recorded for the amount by which the carrying value of the asset group exceeds its fair value.
In the Third Quarter of Fiscal 2025, we recognized finite-lived intangible assets impairment charges of $2 million related to Jack Rogers. Refer to “Note 5—Intangible Assets and Goodwill” for discussion of the impairment charges recognized in Fiscal 2025. If the Jack Rogers business does not achieve anticipated growth and profitability in future years, or if other significant estimates and assumptions change, additional impairments of the Jack Rogers intangible assets could be necessary in the future.
No finite-lived intangible assets impairment charges were recognized in Fiscal 2024.
Other Fair Value Measurements
For many assets and liabilities, the determination of fair value may not require the use of many assumptions or other estimates. However, in some cases the assumptions or inputs associated with the determination of fair value may require the use of many assumptions which may be internally derived or otherwise unobservable. These assumptions may include the planned use of the assets, anticipated cash flows, probabilities of cash flows, discount rates and other factors. We use certain market-based and internally derived information and make assumptions about the information in (1) determining the fair values of assets and liabilities acquired as part of a business combination, (2) adjusting recognized assets and liabilities to fair value and (3) assessing recognized assets for impairment, including intangible assets, goodwill and other non-current assets.
From time to time, we may recognize asset impairment or other charges related to certain lease assets, property and equipment or other amounts associated with us exiting direct to consumer locations, office space or otherwise. In these cases, we must determine the impairment charge related to the asset group if the assets are determined to not be recoverable on an undiscounted cash flow basis and the expected future discounted cash flows of the asset group are less than the carrying amount. While estimated cash outflows can be determined, in certain cases, if there is an underlying lease, the timing and amount of estimated cash inflows for any sublease rental income and other costs are often uncertain, particularly if there is not a sub-lease agreement in place. Also, we could subsequently negotiate a lease termination agreement that would differ from the estimated amount. Thus, our estimate of an impairment charge related to an asset group could change significantly as we obtain better information in future periods.
Income Taxes
Income taxes included in our consolidated financial statements are determined using the asset and liability method, in which income taxes are recognized based on amounts of income tax payable or refundable in the current year as well as the impact of any items that are recognized in different periods for consolidated financial statement reporting purposes and tax return reporting purposes. Significant judgment is required in determining our income tax provision as there are many transactions and calculations where the ultimate tax outcome is uncertain and tax laws and regulations are often complex and subject to interpretation and judgment. These uncertainties relate to the recognition or changes to the realizability of deferred tax assets, loss carry-forwards, valuation allowances, uncertain tax positions and other matters. Our assessment of these income tax matters requires our consideration of taxable income and other items for historical periods, projected future taxable income, projected future reversals of existing timing differences, tax planning strategies and other information.
The use of different assumptions related to the income tax matters above, as well as a shift in earnings among jurisdictions, changes in tax laws, enacted rates or interpretations, court case decisions, statute of limitation expirations or audit settlements, each could have a significant impact on our income tax rate.
We are subject to income taxes in the U.S. and certain other foreign jurisdictions and are periodically under audit by tax authorities. The final determination of tax audits could be materially different from historical outcomes and may adversely impact our tax expense and cash flows. An increase in our consolidated income tax expense rate from 26.9% to
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27.9% during Fiscal 2025 would have changed net earnings by less than $1 million. See Note 11 of our consolidated financial statements included in this report for further discussion of income taxes.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 1 of our consolidated financial statements included in this report for a discussion of recent accounting pronouncements issued by the FASB that we have not yet adopted that may have a material effect on our financial position, results of operations or cash flows in the future.
SEASONALITY
Each of our operating segments is impacted by seasonality as the demand by specific product or style, as well as by distribution channel, may vary significantly depending on the time of year. For information regarding the impact of seasonality on our business operations, see Part I, Item 1, Business, included in this report.
