On Thursday, Citi made a significant adjustment to the price target for Oxford Industries (NYSE:OXM), reducing it from $92.00 to $65.00, while maintaining a Sell rating on the stock. The firm explained that the company's sales and gross margin (GM) have fallen short of both consensus and guidance, which has resulted in a miss on the bottom line.
The company experienced a progressive weakening in sales trends each month of the quarter, with a notable decline in the latter part of July. The current quarter-to-date (QTD) trends have also been weak.
This underperformance prompted management at Oxford Industries to revise their second-half comparable sales forecast from a mid-single-digit increase to a low-single-digit to mid-single-digit decrease.
Furthermore, the second-half earnings per share (EPS) projections were lowered from the initial range of $2.99-3.19 to a new range of $1.58-1.88, which stands in contrast to the consensus estimate of $3.00. The third-quarter EPS guidance has been set at $0.00-0.20, starkly below the consensus of $1.09.
The analyst noted that the company's consumer base is becoming increasingly selective and value-conscious, which is putting pressure on conversion rates. This shift comes after several years of robust sales growth, where sales in fiscal year 2023 were 40% higher than in fiscal year 2019. This was a period characterized by economic reopening, increased travel, and favorable demographic shifts towards states like Florida and Texas.
However, Oxford Industries now confronts a challenging macroeconomic environment and tough comparisons to previous years of strong performance. Visibility into potential sales improvements remains limited. Citi's analyst emphasized the maintenance of the Sell rating in light of these factors, signaling a cautious stance on the company's stock amidst the current challenges.
In other recent news, Oxford Industries has faced significant challenges in the fiscal year 2024. The company reported second-quarter earnings with sales of $420 million and adjusted earnings per share of $2.70, both figures falling short of the initial guidance. This was primarily attributed to a downturn in consumer sentiment, leading to a downward revision of the company's full-year sales forecast.
Oxford Industries now predicts a 2% to 4% decline in full-year net sales from the $1.57 billion reported in 2023, with adjusted EPS forecasted to range from $7 to $7.30.
Telsey Advisory Group has consequently adjusted its outlook on Oxford Industries, reducing the price target to $86 from the previous $110 while maintaining a Market Perform rating. Despite the challenges, Oxford Industries plans to open 30 new stores and invest in IT improvements.
The company expects negative comparable sales in the low to mid-single-digit range for the remainder of the year. However, anticipated growth in direct-to-consumer segments and the Johnny Was and Emerging Brands Group is projected to partially offset declines in Tommy Bahama and Lilly Pulitzer.
InvestingPro Insights
In light of the recent downgrade by Citi, it's important to consider additional data points and insights provided by InvestingPro. Oxford Industries, with a market capitalization of $1.31 billion, is trading at a high earnings multiple, specifically a P/E ratio of 32.36. This is quite elevated when compared to the adjusted P/E ratio for the last twelve months as of Q2 2025, which stands at 10.15, suggesting that the stock may be currently overvalued.
Oxford Industries has shown an impressive gross profit margin of 62.56% over the last twelve months as of Q2 2025, which is a strong indicator of the company's ability to maintain profitability despite challenging market conditions. Furthermore, the company has demonstrated a commitment to shareholder returns, having raised its dividend for 3 consecutive years, and impressively maintained dividend payments for 54 consecutive years, currently offering a dividend yield of 3.2%.
While the near-term outlook may be clouded by the reduced guidance and cautious sentiment, InvestingPro Tips highlight that analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. Additionally, the stock is trading near its 52-week low, which could potentially offer an attractive entry point for long-term investors. For those considering Oxford Industries' stock, more in-depth analysis and additional InvestingPro Tips can be found at https://www.investing.com/pro/OXM, where 10 tips are currently listed.
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