OXFORD INDUSTRIES INC

Previous wording

Our business strategy is to drive excellence across a portfolio of lifestyle brands that create sustained, profitable growth. 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 (including through rapidly shifting digital and social media vehicles); 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.

Current wording

Our business strategy is to drive excellence across a portfolio of lifestyle brands that create sustained, profitable growth. 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.

Previous wording

On September 19, 2022, we acquired Johnny Was. Johnny Was products are sold through the Johnny Was website and full-price retail stores and outlets as well as select department stores and specialty stores. We continue to execute acquisition and integration activities in connection with the Johnny Was acquisition, such as investing in distribution and technology infrastructure. The financial information included in the results of operations discussion below for Fiscal 2022, includes only the nineteen weeks from the September 19, 2022 acquisition through January 28, 2023. Therefore, the amounts included in the results of operations below for Fiscal 2022 are not indicative of results for a full year. Refer to Note 4 and Note 2 of our consolidated financial statements included in this report for additional information about the Johnny Was acquisition.

Current wording

In Fiscal 2022, we acquired Johnny Was. Johnny Was products are sold through the Johnny Was website and full-price retail stores and outlets as well as select department stores and specialty stores. The financial information included in the results of operations discussion below for Fiscal 2022 includes only the nineteen weeks from the September 19, 2022 acquisition date through January 28, 2023. Therefore, the amounts included in the results of operations below for Fiscal 2022 are not indicative of results for a full year. Refer to Note 4 of our consolidated financial statements included in this report for additional information about the Johnny Was acquisition.

Previous wording

During Fiscal 2023, 80% 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 20% 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.

Current wording

During Fiscal 2024, 81% 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 19% 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.

Previous wording

For additional information about our business and each of our operating groups, 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.

Current wording

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.

Previous wording

We operate in a highly competitive apparel market that continues to evolve rapidly with the expanding application of technology to fashion retail. No single apparel firm or small group of apparel firms dominates the apparel industry, and our competitors vary by operating group and distribution channel. The apparel industry is cyclical and very dependent on the overall level and focus of discretionary consumer spending, which changes as consumer preferences and regional, domestic and international economic conditions change. Also, in recent years consumers have chosen to spend less of their discretionary spending on certain product categories, including apparel, while spending more on services and other product categories. Further, negative economic conditions often have a longer and more severe impact on the apparel industry than on other industries due, in part, to apparel purchases often being more of a discretionary purchase.

Current wording

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 very dependent on the overall level and focus of discretionary consumer spending, which changes as consumer preferences and regional, domestic and international economic conditions change. Also, in recent years consumers have chosen to spend less of their discretionary spending on certain product categories, including apparel, while spending more on services and other product categories. Further, negative economic conditions often have a longer and more severe impact on the apparel industry than on other industries due, in part, to apparel purchases often being more of a discretionary purchase.

Previous wording

This competitive and evolving environment requires that brands and retailers approach their operations, including marketing and advertising, very differently than they have historically and may result in increased operating costs and investments to generate growth or even maintain existing sales levels. While the competition and evolution present significant risks, especially for traditional retailers who fail or are unable to adapt, we believe it also presents a tremendous opportunity for brands and retailers to capitalize on the changing consumer environment.

Current wording

This competitive and evolving environment requires that brands and retailers approach their operations, including marketing and advertising, very differently than they have historically and may result in increased operating costs and investments to generate growth or even maintain existing sales levels. The competition and evolution within the industry present significant risks, particularly in the current macroenvironment, with heightened concerns about inflation, compounded by significant uncertainty about U.S. trade and tax regulations, geopolitical issues, the availability and cost of credit and elevated interest rates for prolonged periods. Other factors such as disruptions to global shipping and distribution networks from the recent attacks on commercial shipping vessels in the Red Sea have led to container shortages and changes to vessel availability resulting in shipment delays and increased freight costs. The future geopolitical landscape also remains particularly uncertain following the results of the recent elections in the United States in November 2024. Any resulting changes in international trade relations, legislation and regulations, including those related to taxation and importation, notably, the new administration’s implementation of recently enacted tariffs and threats of additional tariff increases, economic and monetary policies, or heightened diplomatic tensions or political and civil unrest, among other potential impacts, could adversely impact the global economy and our operating results. These factors, when combined with heightened promotional activity in our industry, create a complex and challenging retail environment, which impacted our businesses and financial results during Fiscal 2024 and has exacerbated some of the inherent challenges to our operations 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 have a major effect on our businesses.

Previous wording

However, 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.

Current wording

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.

Previous wording

We identify our operating groups based on the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Our operating group 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. Subsequent to our acquisition of Johnny Was in September 2022, our business is organized as our Tommy Bahama, Lilly Pulitzer, Johnny Was and Emerging Brands operating groups. Operating results for periods prior to Fiscal 2022 also include the Lanier Apparel operating group, which we exited in Fiscal 2021. For a more extensive description of our reportable operating groups and Corporate and Other, see Part I, Item 1. Business and Note 2 of our consolidated financial statements, both included in this report.

Current wording

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. Subsequent to our acquisition of

Previous wording

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, excluding sales associated with e-commerce flash clearance sales. 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 and e-commerce flash clearance 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.

Current wording

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.

Previous wording

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. 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 closed during the prior fiscal year or current fiscal year, or which we expect 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.

Current wording

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 closed during the prior fiscal year or current fiscal year, or which we expect 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.

Previous wording

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

Current wording

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.

Previous wording

The following table presents the proportion of our consolidated net sales, including any net sales of Johnny Was and Lanier Apparel, 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.

Current wording

The following table presents the proportion of our consolidated net sales, including the net sales of Johnny Was that was acquired during Fiscal 2022, 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.

Previous wording

The discussion and tables below compare certain line items included in our consolidated statements of operations for Fiscal 2023, which includes 53 weeks, to Fiscal 2022, which includes 52 weeks, 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.

Current wording

The discussion and tables below compare certain line items included in our consolidated statements of operations for Fiscal 2024, which includes 52 weeks, to Fiscal 2023, which includes 53 weeks, 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.

Previous wording

Consolidated net sales were $1.6 billion in the 53 week Fiscal 2023 compared to net sales of $1.4 billion in the 52 week Fiscal 2022. The 11% increase in net sales included (1) a $130 million increase in sales for Johnny Was, which we owned for 19 out of the 52 weeks of Fiscal 2022 and (2) single-digit percentage increases in each of our Tommy Bahama, Lilly Pulitzer, and Emerging Brands operating groups. We estimate that the 53rd week in Fiscal 2023 provided an approximate $16 million benefit to our consolidated net sales.

Current wording

Consolidated net sales were $1.5 billion in the 52 week Fiscal 2024 compared to net sales of $1.6 billion in the 53 week Fiscal 2023. Net sales decreased in Tommy Bahama, Lilly Pulitzer, and Johnny Was, which were partially offset by increased sales in Emerging Brands. We estimate that the 53rd week in Fiscal 2023 provided an approximate $16 million benefit to our consolidated net sales for the prior year.

Previous wording

The increase in net sales by distribution channel consisted of the following:

Current wording

The decrease in net sales by distribution channel consisted of the following:

Previous wording

Tommy Bahama net sales increased $19 million, or 2%, in Fiscal 2023, with an increase in (1) e-commerce sales of $10 million, or 5%, (2) wholesale sales of $8 million, or 5%, (3) food and beverage sales of $7 million, or 6%, and (4) outlet sales of $3 million, or 5%. These increases were partially offset by a decrease in full-price retail sales of $9 million, or 3%. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

Current wording

Tommy Bahama net sales decreased $29 million, or 3%, in Fiscal 2024, with a decrease in (1) wholesale sales of $17 million, or 11%, driven primarily by decreases in sales to off-price, department store, and specialty store wholesale customers, (2) full-price retail sales of $14 million, or 4%, and (3) e-commerce sales of $2 million, or 1%. These decreases were partially offset by an increase in (1) outlet sales of $3 million, or 5%, and (2) food and beverage sales of $1 million, or 1%. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

Previous wording

Lilly Pulitzer net sales increased $4 million, or 1%, in Fiscal 2023, with an increase in e-commerce flash clearance sales of $7 million, or 13%. This increase was partially offset by a decrease in full-price e-commerce sales of $3 million, or 3%. Wholesale sales and full-price retail sales were comparable in Fiscal 2023 to Fiscal 2022. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:

Current wording

Lilly Pulitzer net sales decreased $20 million, or 6%, in Fiscal 2024, with a decrease in (1) e-commerce sales of $18 million, or 11%, and (2) wholesale sales of $2 million, or 3%. These decreases were partially offset by an increase in retail sales of $1 million, or 1%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:

Previous wording

partially offset by a slight sales decrease in TBBC. By distribution channel, the $10 million increase included increases of (1) $7 million, or 126%, in retail sales as we opened new retail locations and (2) $6 million, or 12%, in e-commerce. These increases were partially offset by a $3 million, or 5%, decrease in wholesale sales that includes the impact of the acquisition and conversion of six former Southern Tide Signature Store operations to company owned retail stores. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:

Current wording

Emerging Brands net sales increased $2 million, or 1%, in Fiscal 2024, including (1) an increase in sales in Jack Rogers that was acquired during the Fourth Quarter of Fiscal 2023 and (2) an increase in Duck Head sales. These increases were partially offset by a decrease in (1) Southern Tide sales and (2) TBBC sales. By distribution channel, increased net sales included (1) an increase in retail sales as we opened new retail locations and (2) e-commerce sales. These increases were partially offset by a decrease in wholesale sales. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:

Previous wording

The tables below present gross profit by operating group and in total for Fiscal 2023 and Fiscal 2022, as well as the change between those two periods and gross margin by operating group 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.

Current wording

The tables below present gross profit by reportable segment and Corporate and Other and in total for Fiscal 2024 and Fiscal 2023, 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.

Previous wording

The lower gross margin for Lilly Pulitzer was primarily due to (1) a change in sales mix with flash clearance sales representing a larger proportion of net sales, (2)higher loyalty reward discounts driven by the new loyalty program implemented in 2023 and (3) a change in sales mix with off-price sales representing a larger proportion of wholesale sales. These decreases were partially offset by (1) an increase in initial product margins and (2) reduced freight costs resulting primarily from lower ocean freight rates.

Current wording

The lower gross margin for Lilly Pulitzer was primarily due to (1) full-price retail and e-commerce sales representing a lower proportion of net sales with more sales occurring during promotional and clearance events, including the e-commerce flash clearance events, (2) a change in sales mix with off-price wholesale sales representing a higher proportion of wholesale sales and (3) higher loyalty reward discounts driven by increased participation in Lilly Pulitzer’s loyalty program.

Previous wording

The higher gross margin for Emerging Brands was primarily due to (1) fewer inventory markdowns and (2) a change in sales mix with direct to consumer sales representing a greater proportion of net sales. This increase was partially offset by lower gross margin on wholesale sales due to off-price wholesale sales of previously marked down inventory representing a greater proportion of wholesale sales.

Current wording

The higher gross margin for Emerging Brands was primarily due to (1) improved inventory levels resulting in lower off-price wholesale sales and lower promotional e-commerce sales and (2) a change in sales mix with retail sales representing a larger proportion of net sales.

Previous wording

The gross profit in Corporate and Other primarily includes the impact of LIFO accounting adjustments, the sales of the Lyons, Georgia distribution center operations to third parties and the sales of the Oxford America business. The primary driver for the decreased gross profit was the $7 million higher LIFO accounting charge. The LIFO accounting impact in Corporate and Other in each period includes the net impact of (1) a charge in Corporate and Other when inventory that had been marked down in an operating group in a prior period was ultimately sold, (2) a credit in Corporate and Other when inventory had been marked down in an operating group in the current period, but had not been sold as of period end and (3) the change in the LIFO reserve.

Current wording

The gross profit in Corporate and Other primarily reflects the impact of LIFO accounting adjustments that resulted in a $6 million lower charge in Fiscal 2024 compared to Fiscal 2023. The LIFO accounting impact in Corporate and Other in each period includes the net impact of (1) a charge in Corporate and Other when inventory that had been marked down in an operating segment in a prior period was ultimately sold, (2) a credit in Corporate and Other when inventory had been marked down in an operating segment in the current period, but had not been sold as of period end and (3) the change in the LIFO reserve, if any.

Previous wording

SG&A was $821 million in Fiscal 2023 compared to SG&A of $692 million in Fiscal 2022 with approximately $85 million, or 66%, of the increase due to the SG&A of Johnny Was. The 19% increase in total SG&A in Fiscal 2023 included the following, each of which includes the SG&A of Johnny Was: (1) increased employment costs of $46 million, primarily due to increased head count, pay rate increases and other employment cost increases, including in our direct to

Current wording

SG&A was $855 million in Fiscal 2024 compared to SG&A of $821 million in Fiscal 2023 with approximately $24 million, or 71%, of the increase due to the increase in bricks and mortar retail locations. The 4% increase in total SG&A in Fiscal 2024 included the following, each of which includes the SG&A of the new bricks and mortar locations:

Previous wording

consumer and distribution center operations partially offset by lower incentive compensation amounts, (2) a $22 million increase in advertising expense, (3) a $15 million increase in occupancy expenses, (4) a $12 million increase in variable expenses related to higher sales, including credit card transaction fees, supplies, commissions, royalties and other expense, (5) a $9 million increase in amortization of intangible assets, (6) a $6 million increase in depreciation expense and (7) a $5 million increase in administrative expenses including professional fees, travel and other items. These increases were partially offset by the lack of $3 million in transaction expenses associated with the Johnny Was acquisition in Fiscal 2022. We estimate that the 53rd week in Fiscal 2023 resulted in approximately $11 million of incremental SG&A.

Current wording

We estimate that the 53rd week in Fiscal 2023 resulted in approximately $11 million of incremental SG&A.

Previous wording

In the Fourth Quarter of Fiscal 2023, we also recognized noncash impairment charges of $2 million related to an equity method investment in a smaller lifestyle brand that resulted from the entity’s forecast of future losses. Refer to “Equity Investments in Unconsolidated Entities” in Note 1 in the consolidated financial statements for additional disclosure regarding the impairment charge recognized in Fiscal 2023. There were no impairment charges for equity method investments in Fiscal 2022.

Current wording

There were no impairment charges recognized for goodwill, intangible assets or equity method investments in Fiscal 2024. In Fiscal 2023, noncash impairment charges for goodwill and intangible assets totaling $111 million were recognized in the Johnny Was reporting unit. Refer to Note 5 in the consolidated financial statements included in this report for additional disclosure regarding the Johnny Was impairment charges recognized in Fiscal 2023. We also recognized noncash impairment charges of $2 million related to an equity method investment in a smaller lifestyle brand in the Emerging Brands reporting unit. Refer to “Equity Investments in Unconsolidated Entities” in Note 1 in the consolidated financial statements for additional disclosure regarding the impairment charge recognized in Fiscal 2023.

Previous wording

Royalties and other operating income typically consist of royalty income received from third parties from the licensing of our brands. Royalty income in Fiscal 2023 decreased by $2 million primarily due to (1) $2 million of lower royalties and other operating income in Tommy Bahama resulting from lower sales of our licensing partners and (2) a $2 million loss recognized in the Tommy Bahama Miramonte Resort & Spa reflected in Corporate and Other. The Tommy Bahama Miramonte Resort & Spa was remodeled and rebranded during Fiscal 2023 which led to increased expenses during the remodel and relaunch periods. These decreases were partially offset by a $2 million gain on the sale of the Merida manufacturing facility in Mexico in Fiscal 2023.

Current wording

Royalties and other operating income typically consist of royalty income received from third parties from the licensing of our brands. Royalty income in Fiscal 2024 was comparable to Fiscal 2023. The absence of a $2 million gain recorded in Fiscal 2023 on the sale of the Merida manufacturing facility in Mexico previously operated by our Lanier Apparel operating group, which we exited in Fiscal 2021, was partially offset by increased royalty income received from third parties.

Previous wording

The decreased operating income for Emerging Brands was due to (1) increased SG&A and (2) an impairment charge in an unconsolidated entity. These decreases were partially offset by (1) higher sales and (2) higher gross margin. The increased SG&A included (1) higher SG&A associated with new retail store operations, including related employment costs, occupancy costs and administrative expenses, (2) higher advertising expense and (3) increased variable expenses resulting from increased sales.

Current wording

Operating income in Fiscal 2024 was comparable to Fiscal 2023. Increases in operating income included (1) higher gross margin, (2) the absence of a $2 million impairment charge in an unconsolidated entity recorded in Fiscal 2023 and (3) increased net sales. These increases were partially offset by increased SG&A. The increased SG&A included (1) higher SG&A associated with new retail store operations, including related employment costs, occupancy costs, administrative expenses and depreciation expense and (2) the addition of Jack Rogers in the Fourth Quarter of Fiscal 2023.

Previous wording

The increased operating loss in Corporate and Other was primarily a result of (1) the $7 million higher LIFO accounting charge in Fiscal 2023 relative to Fiscal 2022 and (2) a $2 million equity investment loss associated with the Tommy Bahama Miramonte Resort & Spa. This decrease was partially offset by (1) decreased SG&A, including decreased incentive compensation amounts, (2) a $2 million gain on the sale of the Merida manufacturing facility in Mexico and (3) the lack of $3 million of transaction expenses and integration costs associated with the Johnny Was acquisition incurred in Fiscal 2022.

Current wording

The improved operating results in Corporate and Other were primarily a result of a $6 million lower LIFO accounting charge in Fiscal 2024 relative to Fiscal 2023. This improvement was partially offset by (1) increased SG&A, including increased employment costs partially offset by decreased incentive compensation and (2) the absence of a $2 million gain on the sale of the Merida manufacturing facility in Mexico.

Previous wording

The higher interest expense in Fiscal 2023 was primarily due to a higher average outstanding debt balance and increased interest rates during Fiscal 2023 than Fiscal 2022. We expect average debt levels in Fiscal 2024 to be lower than Fiscal 2023.

Current wording

The lower interest expense in Fiscal 2024 was primarily due to lower average outstanding debt during Fiscal 2024 than Fiscal 2023.

Previous wording

Both Fiscal 2023 and Fiscal 2022 benefitted from the net favorable impact of certain items that resulted in a lower tax rate than the more typical annual effective tax rate of approximately 25%. Thus, the effective tax rates for Fiscal 2023 and Fiscal 2022 are not indicative of the effective tax rate expected in future periods. 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 for Fiscal 2023 and Fiscal 2022.

Current wording

Both Fiscal 2024 and Fiscal 2023 benefited from the net favorable impact of certain items that resulted in a lower tax rate than the more typical annual effective tax rate of approximately 25%. Thus, the effective tax rates for Fiscal 2024 and Fiscal 2023 are not indicative of the effective tax rate expected in future periods. 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 for Fiscal 2024 and Fiscal 2023.

Previous wording

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. 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.

Current wording

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.

Previous wording

Our working capital ratio is calculated by dividing total current assets by total current liabilities. Current assets as of February 3, 2024 decreased from January 28, 2023 primarily due to decreased inventories of $61 million. These decreases were partially offset by an increase in (1) receivables of $19 million and (2) prepaid expenses and other current assets of $5 million. Current liabilities as of February 3, 2024 decreased from January 28, 2023 primarily due to decreases in (1) accrued compensation of $11 million driven primarily by decreased accrued incentive compensation, (2) accounts payable of $9 million and (3) current operating lease liabilities of $9 million.

Current wording

Our working capital ratio is calculated by dividing total current assets by total current liabilities. Current assets as of February 1, 2025 were comparable to February 3, 2024 primarily due to decreases in (1) income tax receivables of $14 million and (2) prepaid expenses and other current assets of $5 million. These decreases were offset by an increase in (1) receivables of $9 million, (2) inventories of $8 million and (3) cash and cash equivalents of $2 million. Current liabilities as of February 1, 2025 increased from February 3, 2024 primarily due to increases in accounts payable of $19 million. This increase was partially offset by decreases in (1) current operating lease liabilities of $6 million, (2) retail return reserve liabilities of $3 million and (3) accrued taxes payable of $1 million.

Previous wording

Cash and cash equivalents were $8 million as of February 3, 2024, compared to $9 million as of January 28, 2023. The cash and cash equivalents balance as of February 3, 2024 and January 28, 2023 represent typical cash amounts maintained on an ongoing 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.

Current wording

Cash and cash equivalents were $9 million as of February 1, 2025, compared to $8 million as of February 3, 2024. The cash and cash equivalents balance as of February 1, 2025 and February 3, 2024 represent typical cash amounts maintained on an ongoing 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.

Previous wording

The increased receivables, net as of February 3, 2024, was primarily due to (1) higher wholesale trade receivables resulting primarily from higher wholesale sales in Tommy Bahama and Lilly Pulitzer in the Fourth Quarter of Fiscal 2023, (2) increased tenant improvement allowance receivables due from landlords resulting from our increased store openings during Fiscal 2023 and (3) an insurance claim filed as a result of the wildfire on the island of Maui that destroyed the Tommy Bahama Marlin Bar in Lahaina, Hawaii in the Third Quarter of Fiscal 2023.

Current wording

The increased receivables, net as of February 1, 2025, was primarily due to (1) increased trade receivables resulting from the timing of sales and cash receipts and (2) increased tenant improvement allowance receivables due from landlords resulting from our increased store openings during Fiscal 2024.

Previous wording

Inventories, net, included a $83 million and $76 million LIFO reserve as of February 3, 2024, and January 28, 2023, respectively. Inventories decreased in our Tommy Bahama, Lilly Pulitzer and Emerging Brands operating groups primarily due to continuing initiatives to focus on closely managing inventory purchases and reducing on-hand inventory levels. We believe that inventory levels in all operating groups are appropriate to support anticipated sales plans.

Current wording

Inventories, net, included a $85 million and $83 million LIFO reserve as of February 1, 2025, and February 3, 2024, respectively. Inventories increased in Tommy Bahama and Lilly Pulitzer primarily due to the early shipment of inventory related to the timing of the Chinese New Year. Inventories decreased in Johnny Was. We believe that inventory levels in all operating segments are appropriate to support anticipated sales plans.

Previous wording

The increase in prepaid expenses and other current assets as of February 3, 2024, was primarily due to an increase in prepaid software costs.* *

Current wording

The decrease in prepaid expenses and other current assets as of February 1, 2025, was primarily due to a decrease in prepaid taxes partially offset by prepaid software costs.

Previous wording

Deferred income taxes decreased as of February 3, 2024, due primarily to the impairment of the Johnny Was goodwill and intangible asset balances that resulted in a change from a net deferred income tax liability position to a net deferred income tax asset position.

Current wording

Deferred income taxes decreased as of February 1, 2025, due primarily to the amortization of acquired intangible assets.

Previous wording

Cash and cash equivalents were $8 million as of February 3, 2024, compared to $9 million as of January 28, 2023. Changes in cash flows in Fiscal 2023 and Fiscal 2022 related to operating activities, investing activities and financing activities are discussed below.

Current wording

Cash and cash equivalents were $9 million as of February 1, 2025, compared to $8 million as of February 3, 2024. Changes in cash flows in Fiscal 2024 and Fiscal 2023 related to operating activities, investing activities and financing activities are discussed below.

Previous wording

In Fiscal 2023 and Fiscal 2022, operating activities provided $244 million and $126 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 2023, changes in operating assets and liabilities had a slightly unfavorable impact on cash flow from operations primarily driven by decreases in current liabilities and increases in prepaid expenses and receivables partially offset by significant decreases in inventory balances. In Fiscal 2022 the changes in operating assets and liabilities had a significant net unfavorable impact on cash flow from operations driven primarily by increases in inventory and prepaid expenses.

Current wording

In Fiscal 2024 and Fiscal 2023, operating activities provided $194 million and $244 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.

Previous wording

In Fiscal 2023 and Fiscal 2022, investing activities used $84 million and $152 million of cash, respectively. On an ongoing basis, our cash flow primarily consists of our capital expenditures, which totaled $74 million and $47 million in Fiscal 2023 and Fiscal 2022, respectively.

Current wording

In Fiscal 2024 and Fiscal 2023, investing activities used $143 million and $84 million of cash, respectively. On an ongoing basis, our cash flow primarily consists of our capital expenditures, which totaled $134 million and $74 million in Fiscal 2024 and Fiscal 2023, respectively. The increase in Fiscal 2024 is primarily due to the opening of new retail stores across our portfolio and $69 million of capital expenditures related to the new distribution center in Lyons, Georgia.