UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended ~~November 2, 2019~~October 31, 2020

	or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File Number: 1-4365

OXFORD INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


Georgia		58-0831862
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

999 Peachtree Street, N.E., Suite 688, Atlanta, Georgia 30309

(Address of principal executive offices) (Zip Code)

(404) 659-2424

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1 par value	OXM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 30, 2019,~~December 4, 2020, there were ~~17,040,004~~16,883,565 shares of the registrant’s common stock outstanding.

Table of Contents

OXFORD INDUSTRIES, INC.

INDEX TO FORM 10-Q

For the Third Quarter of Fiscal ~~2019~~2020


	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)	5
Condensed Consolidated Statements of Operations (Unaudited)	6
Condensed Consolidated Statements of Comprehensive Income (Unaudited)	7
Condensed Consolidated Statements of Cash Flows (Unaudited)	8
Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1621
Item 3. Quantitative and Qualitative Disclosures About Market Risk	4047
Item 4. Controls and Procedures	4147
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	4248
Item 1A. Risk Factors	4248
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4248
Item 3. Defaults Upon Senior Securities	4249
Item 4. Mine Safety Disclosures	4249
Item 5. Other Information	4249
Item 6. Exhibits	4349
SIGNATURES	4450

Table of Contents

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

Our SEC filings and public announcements may include forward-looking statements about future events. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which typically are not historical in nature. We intend for all forward-looking statements contained herein, in our press releases or on our website, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, to be covered by the safe harbor provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Such statements are subject to a number of risks, uncertainties and assumptions including, without limitation, the impact of the current coronavirus (COVID-19) pandemic, including uncertainties about its depth and duration (including resurgence), future store closures or other restrictions (including reduced hours and capacity) due to government mandates, and the effectiveness of store re-openings and cost reduction initiatives (including our ability to effectively renegotiate rent obligations), any or all of which may affect many of the following risks; demand for our products, which may be impacted by competitive conditions and/or evolving consumer shopping patterns; macroeconomic factors that may impact consumer discretionary spending for apparel and related products; the impact of any restructuring initiatives we may undertake in one or more of our business lines, including the process, timing, costs, uncertainties and effects of our announced exit of the Lanier Apparel business; costs of products as well as the raw materials used in those products; expected pricing levels; costs of labor; the timing of shipments requested by our wholesale customers; ~~changes,~~expected outcomes of pending or potential litigation and ~~the impact on our business operations of such~~regulatory actions; changes in international, federal or state tax, trade and other laws and regulations, including the potential imposition of additional ~~duties, tariffs, taxes~~ duties; the ability of business partners, including suppliers, vendors, licensees and landlords, to meet their obligations to us and/or ~~other charges~~continue our business relationship to the same degree in light of current or ~~barriers to trade resulting from ongoing trade developments with China~~future financial stress, staffing shortages, liquidity challenges and/or bankruptcy filings exacerbated by the pandemic; weather; fluctuations and ~~our ability to implement mitigating sourcing strategies; weather;~~volatility in global financial markets; retention of and disciplined execution by key management; the timing and cost of store and restaurant openings and remodels, ~~as well as~~technology implementations and other capital expenditures; acquisition and disposition activities, including our ability to timely recognize expected synergies from acquisitions; ~~expected outcomes of pending or potential litigation and regulatory actions; the impact of any restructuring initiatives we may undertake in one or more of our business lines;~~ access to capital and/or credit markets; the impact of the CARES Act and other legislation; changes in accounting standards and related guidance; and factors that could affect our consolidated effective tax ~~rate.~~rate, including estimated Fiscal 2020 taxable losses eligible for carry back to pre-U.S. Tax Reform periods. Forward-looking statements reflect our expectations at the time such ~~forward looking~~forward-looking statements are made, based on information available at such time, and are not guarantees of performance. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to, those described in Part I,I. Item 1A. Risk Factors contained in our Annual Report on Form 10-K for Fiscal ~~2018,~~2019, as updated in Part II, Item 1A. Risk Factors contained in this report, and those described from time to time in our future reports filed with the SEC. We caution that one should not place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Table of Contents

DEFINITIONS

As used in this report, unless the context requires otherwise, "our," "us" or "we" means Oxford Industries, Inc. and its consolidated subsidiaries; "SG&A" means selling, general and administrative expenses; "SEC" means the United States Securities and Exchange Commission; "FASB" means the Financial Accounting Standards Board; "ASC" means the FASB Accounting Standards Codification; "GAAP" means generally accepted accounting principles in the United States; ~~and~~ "TBBC" means The Beaufort Bonnet ~~Company. Unless otherwise indicated, all references to assets,~~

~~Table of Contents~~

~~liabilities, revenues, expenses or other information in this report reflect continuing operations.~~Company; “Fiscal 2019 Form 10-K” means our Annual Report on Form 10-K for Fiscal 2019; “CARES Act” means the Coronavirus Aid, Relief and Economic Security Act; and “U.S. Tax Reform” means the United States Tax Cuts and Jobs Act. Additionally, the terms listed below reflect the respective period noted:


Fiscal 2021		52 weeks ending January 29, 2022
Fiscal 2020		52 weeks ending January 30, 2021
Fiscal 2019		52 weeks ~~ending~~ended February 1, 2020
Fourth Quarter Fiscal ~~2018~~2020		5213 weeks ~~ended February 2, 2019~~ending January 30, 2021
Third Quarter Fiscal ~~2017~~2020		5313 weeks ended ~~February 3, 2018~~October 31, 2020
Second Quarter Fiscal 2020		13 weeks ended August 1, 2020
First Quarter Fiscal 2020		13 weeks ended May 2, 2020
Fourth Quarter Fiscal 2019		13 weeks ~~ending~~ended February 1, 2020
Third Quarter Fiscal 2019		13 weeks ended November 2, 2019
Second Quarter Fiscal 2019		13 weeks ended August 3, 2019
First Quarter Fiscal 2019		13 weeks ended May 4, 2019
~~Fourth Quarter~~First Nine Months Fiscal ~~2018~~2020		1339 weeks ended ~~February 2, 2019~~
~~Third Quarter Fiscal 2018~~		~~13 weeks ended November 3, 2018~~
~~Second Quarter Fiscal 2018~~		~~13 weeks ended August 4, 2018~~
~~First Quarter Fiscal 2018~~		~~13 weeks ended May 5, 2018~~October 31, 2020
First Nine Months Fiscal 2019		39 weeks ended November 2, 2019
~~First Nine Months Fiscal 2018~~		~~39 weeks ended November 3, 2018~~

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par amounts)

(unaudited)


	November 2,		February 2,		November 3,		October 31,		February 1,		November 2,
	2019		2019		2018		2020		2020		2019
ASSETS
Current Assets
Cash and cash equivalents	$	21,568	$	8,327	$	7,413	$	53,071	$	52,460	$	21,568
Receivables, net		64,593		69,037		69,400		39,513		58,724		64,593
Inventories, net		154,229		160,656		138,150		148,740		152,229		154,229
Prepaid expenses and other current assets		28,438		31,768		36,937		21,139		25,413		28,438
Total Current Assets	$	268,828	$	269,788	$	251,900	$	262,463	$	288,826	$	268,828
Property and equipment, net		190,537		192,576		194,228		178,029		191,517		190,537
Intangible assets, net		175,298		176,176		176,735		156,464		175,005		175,298
Goodwill		66,594		66,621		66,618		23,857		66,578		66,594
Operating lease assets		287,977		—		—		238,259		287,181		287,977
Other non-current assets, net		23,850		22,093		23,272
Other assets, net								42,945		24,262		23,850
Total Assets	$	1,013,084	$	727,254	$	712,753	$	902,017	$	1,033,369	$	1,013,084
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	60,708	$	81,612	$	64,429	$	52,177	$	65,491	$	60,708
Accrued compensation		21,560		24,226		25,426		17,947		19,363		21,560
Current operating lease liabilities		49,901		—		—
Other accrued expenses and liabilities		31,949		36,371		34,984
Current portion of operating lease liabilities								62,839		50,198		49,901
Accrued expenses and other liabilities								43,426		42,727		31,949
Total Current Liabilities	$	164,118	$	142,209	$	124,839	$	176,389	$	177,779	$	164,118
Long-term debt		—		12,993		32,211		34,802		—		—
Non-current operating lease liabilities		293,775		—		—
Other non-current liabilities		17,365		75,286		73,434
Deferred taxes		21,010		18,411		16,922
Non-current portion of operating lease liabilities								244,970		291,886		293,775
Other liabilities								18,394		18,566		17,365
Deferred income taxes								8,516		16,540		21,010
Commitments and contingencies		—		—		—		—		—		—
Shareholders’ Equity
Common stock, $1.00 par value per share		17,040		16,959		16,956		16,884		17,040		17,040
Additional paid-in capital		147,448		142,976		140,876		154,103		149,426		147,448
Retained earnings		357,768		323,515		312,604		252,392		366,793		357,768
Accumulated other comprehensive loss		(5,440)		(5,095)		(5,089)		(4,433)		(4,661)		(5,440)
Total Shareholders’ Equity	$	516,816	$	478,355	$	465,347	$	418,946	$	528,598	$	516,816
Total Liabilities and Shareholders’ Equity	$	1,013,084	$	727,254	$	712,753	$	902,017	$	1,033,369	$	1,013,084

See accompanying notes.

Table of Contents

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Third Quarter

First Nine Months

Fiscal 2019

Fiscal 2018

Fiscal 2019

Fiscal 2018

Net sales

$
241,221

$
233,662

$
825,194

$
808,931

Cost of goods sold

108,241

104,383

346,620

336,209

Gross profit

$
132,980

$
129,279

$
478,574

$
472,722

SG&A

134,231

128,687

417,448

414,747

Royalties and other operating income

3,845

3,113

11,469

10,616

Operating income

$
2,594

$
3,705

$
72,595

$
68,591

Interest expense, net

81

489

1,171

1,872

Earnings before income taxes

$
2,513

$
3,216

$
71,424

$
66,719

Income taxes

845

1,355

18,263

17,107

Net earnings

$
1,668

$
1,861

$
53,161

$
49,612

Net earnings per share:









Basic

$
0.10

$
0.11

$
3.17

$
2.98

Diluted

$
0.10

$
0.11

$
3.15

$
2.95

Weighted average shares outstanding:









Basic

16,773

16,694

16,748

16,672

Diluted

16,934

16,870

16,896

16,826

Dividends declared per share

$
0.37

$
0.34

$
1.11

$
1.02


	Third Quarter				First Nine Months
	Fiscal 2020		Fiscal 2019		Fiscal 2020		Fiscal 2019
Net sales	$	175,135	$	241,221	$	527,466	$	825,194
Cost of goods sold		78,866		108,241		232,386		346,620
Gross profit	$	96,269	$	132,980	$	295,080	$	478,574
SG&A		113,537		134,231		352,201		417,448
Impairment of goodwill and intangible assets		—		—		60,452		—
Royalties and other operating income		3,550		3,845		10,349		11,469
Operating (loss) income	$	(13,718)	$	2,594	$	(107,224)	$	72,595
Interest expense, net		339		81		1,673		1,171
(Loss) earnings before income taxes	$	(14,057)	$	2,513	$	(108,897)	$	71,424
Income tax (benefit) provision		(3,453)		845		(25,422)		18,263
Net (loss) earnings	$	(10,604)	$	1,668	$	(83,475)	$	53,161

Net (loss) earnings per share:
Basic	$	(0.64)	$	0.10	$	(5.04)	$	3.17
Diluted	$	(0.64)	$	0.10	$	(5.04)	$	3.15
Weighted average shares outstanding:
Basic		16,568		16,773		16,576		16,748
Diluted		16,568		16,934		16,576		16,896
Dividends declared per share	$	0.25	$	0.37	$	0.75	$	1.11

See accompanying notes.

Table of Contents

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Third Quarter				First Nine Months				Third Quarter				First Nine Months
	Fiscal 2019		Fiscal 2018		Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019		Fiscal 2020		Fiscal 2019
Net earnings	$	1,668	$	1,861	$	53,161	$	49,612
Net (loss) earnings									$	(10,604)	$	1,668	$	(83,475)	$	53,161
Other comprehensive income (loss), net of taxes:
Net foreign currency translation adjustment		176		(150)		(345)		(1,015)		(114)		176		228		(345)
Comprehensive income	$	1,844	$	1,711	$	52,816	$	48,597
Comprehensive (loss) income									$	(10,718)	$	1,844	$	(83,247)	$	52,816

See accompanying notes.

Table of Contents

OXFORD INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	First Nine Months				First Nine Months
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Cash Flows From Operating Activities:
Net earnings	$	53,161	$	49,612
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net (loss) earnings					$	(83,475)	$	53,161
Adjustments to reconcile net earnings (loss) to cash flows from operating activities:
Depreciation		29,301		29,878		33,389		29,301
Amortization of intangible assets		878		2,055		834		878
Impairment of goodwill and intangible assets						60,452		—
Equity compensation expense		5,698		5,510		5,626		5,698
Amortization of deferred financing costs		298		318		258		298
Deferred income taxes		2,370		1,501
Changes in working capital, net of acquisitions and dispositions:
Deferred income taxes (benefit) expense						(8,024)		2,370
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Receivables, net		4,559		(2,286)		19,737		4,559
Inventories, net		6,203		(14,346)		3,716		6,203
Prepaid expenses and other current assets		(2,348)		943		4,275		(2,348)
Current liabilities		(27,479)		(9,244)		(747)		(27,479)
Other balance sheet changes		2,565		677		(13,364)		2,565
Cash provided by operating activities	$	75,206	$	64,618	$	22,677	$	75,206
Cash Flows From Investing Activities:
Acquisitions, net of cash acquired		—		(354)
Purchases of property and equipment		(26,877)		(30,914)		(21,916)		(26,877)
Other investing activities						(3,000)		—
Cash used in investing activities	$	(26,877)	$	(31,268)	$	(24,916)	$	(26,877)
Cash Flows From Financing Activities:
Repayment of revolving credit arrangements		(122,241)		(221,750)		(222,896)		(122,241)
Proceeds from revolving credit arrangements		109,248		208,152		257,698		109,248
Deferred financing costs paid		(952)		—		—		(952)
Repurchase of common stock						(18,053)		—
Proceeds from issuance of common stock		1,307		1,170		1,097		1,307
Repurchase of equity awards for employee tax withholding liabilities		(2,453)		(2,351)		(1,870)		(2,453)
Cash dividends declared and paid		(18,908)		(17,286)		(12,706)		(18,908)
Other financing activities		(1,033)		—		(459)		(1,033)
Cash used in financing activities	$	(35,032)	$	(32,065)
Cash provided by (used in) financing activities					$	2,811	$	(35,032)
Net change in cash and cash equivalents	$	13,297	$	1,285	$	572	$	13,297
Effect of foreign currency translation on cash and cash equivalents		(56)		(215)		39		(56)
Cash and cash equivalents at the beginning of year		8,327		6,343		52,460		8,327
Cash and cash equivalents at the end of the period	$	21,568	$	7,413	$	53,071	$	21,568
Supplemental disclosure of cash flow information:
Cash paid for interest, net	$	1,162	$	1,598
Cash paid for income taxes	$	13,496	$	16,133

See accompanying notes.

Table of Contents

OXFORD INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

THIRD QUARTER OF FISCAL ~~2019~~2020

1. Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. We believe the accompanying unaudited condensed consolidated financial statements reflect all normal, recurring adjustments that are necessary for a fair presentation of our financial position and results of operations as of the dates and for the periods presented. Results of operations for the interim periods presented are not necessarily indicative of results to be expected for our full fiscal year.

The preparation of our unaudited condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions that affect the amounts reported as assets, liabilities, revenues and expenses in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. ~~Results~~We assessed certain accounting matters, including the carrying value of goodwill, intangible assets and long-lived assets, provisions for credit losses, inventory markdowns and the estimated effective tax rate, that require consideration of forecasted financial information based on information reasonably available to us as well as the uncertain future impacts of the novel coronavirus (COVID-19) pandemic and the Lanier Apparel exit. These assessments resulted in the recognition of certain charges in the First Nine Months of Fiscal 2020, as discussed below and in Note 9. Future changes in the business environment, our expectations and assumptions as compared to the information at the time of this filing regarding the actual magnitude and duration of the COVID-19 pandemic, the actual impact of the Lanier Apparel exit and other factors could have a material impact on our consolidated financial statements in future periods.

COVID-19 Pandemic

In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a pandemic. COVID-19 had a significant effect on overall economic conditions and our operations, resulting in a significant net sales reduction and a significant net loss in the First Nine Months of Fiscal 2020. While our mission remains the enhancement of long-term shareholder value, our focus during this crisis has been, and will continue to be, (1) the health and well-being of our employees, customers and communities, (2) protecting the reputation, value and image of our brands and (3) preserving liquidity.

Due to the COVID-19 pandemic, we saw reduced consumer traffic starting in early March 2020 and temporarily closed all our retail and restaurant locations in March 2020. We began reopening our stores and restaurants in a phased approach on May 3, 2020 with additional stores and restaurants reopening throughout the Second Quarter of Fiscal 2020. Certain retail stores and restaurants, including several in Hawaii and California, were required to close again for certain periods in the Third Quarter of Fiscal 2020 after local jurisdictions reinstated some previous closure requirements, and there can be no assurance that additional closures will not occur as a result of any resurgence of COVID-19 cases and/or additional government mandates or recommendations.

The COVID-19 pandemic is expected to continue to have a material adverse impact on our business, financial condition, results of operations and cash flows for the ~~interim periods presented~~foreseeable future, due to decreased consumer traffic in stores and restaurants; uncertainty as to the continued strength of our brands’ e-commerce websites during the pendency of the pandemic; overall changes in consumer confidence and consumer spending habits; reduced demand from our wholesale customers, several of which have filed for bankruptcy or are ~~not necessarily indicative~~undergoing restructurings and closures; any potential disruptions to our supply chain; and a slowdown in the U.S. and global economies.

For many reasons, including those identified above, the full magnitude of ~~results~~the COVID-19 pandemic continues to be ~~expected~~difficult to predict at this time, and its ultimate duration and severity will depend on future developments. We could experience other potential adverse impacts in the future as a result of the COVID-19 pandemic including additional charges resulting from adjustments to the carrying amount of goodwill, intangible assets and long-lived assets, provisions for credit losses and inventory markdowns as well as potential changes to our estimated effective tax rate.

Table of Contents

As a result of the COVID-19 impact on our First Quarter of Fiscal 2020 net sales and operating results, as well as lower operating results projected for future periods, we concluded that a goodwill impairment test triggering event had occurred during the First Quarter of Fiscal 2020 for the goodwill associated with our Lilly Pulitzer, Southern Tide and TBBC reporting units. Further, we determined that an intangible asset impairment test triggering event had occurred in the First Quarter of Fiscal 2020 for our ~~full fiscal year.~~indefinite-lived Tommy Bahama, Lilly Pulitzer and Southern Tide trademarks. These goodwill and indefinite-lived intangible asset triggering events required the need for a quantitative interim impairment assessment in accordance with our accounting policies as described in Note 1 to our consolidated financial statements included in our Fiscal 2019 Form 10-K. These assessments in the First Quarter of Fiscal 2020 concluded that the fair values of the Southern Tide goodwill and indefinite-lived intangible assets as of May 2, 2020 did not exceed their respective carrying values, resulting in impairment charges as discussed in Note 4. These impairment charges, which totaled $60 million, were recorded in impairment of goodwill and intangible assets in our consolidated statements of operations in the First Quarter of Fiscal 2020. We determined there were no additional triggering events that occurred in the Second Quarter of Fiscal 2020 or Third Quarter of Fiscal 2020 that would require an additional interim impairment test for our goodwill and intangible assets during those quarters.

In the First Quarter of Fiscal 2020, due to the lower operating results and lower projected operating results, we performed recoverability tests for certain other non-current assets, including property and equipment, finite-lived intangible assets and operating lease assets, and we determined that the amounts included in the asset group were recoverable, except for a small charge related to a finite-lived intangible asset in Lanier Apparel included in Note 4. In the Second Quarter of Fiscal 2020, Third Quarter of Fiscal 2020 and the First Nine Months of Fiscal 2020 due to changes in the planned use of certain leased real estate assets, including providing notice of termination of certain retail store leases or plans to discontinue use of certain office space, we recognized impairment charges of $3 million, $3 million and $7 million, respectively. These impairment charges are for fixed assets and operating lease assets, with the substantial majority of the amounts included in SG&A and the remainder included in cost of goods sold in our consolidated statements of operations. The charges in the Second Quarter of Fiscal 2020 were primarily recognized in Tommy Bahama, while the charges in the Third Quarter of Fiscal 2020 were primarily recognized in Lanier Apparel. Refer to Note 9 for additional discussion of the $3 million of impairment charges recognized in the Third Quarter of Fiscal 2020, which are related to the exit of Lanier Apparel. There were no significant operating lease asset or fixed asset impairment charges in the First Nine Months of Fiscal 2019.

The significant accounting policies applied during the interim periods presented are consistent with the significant accounting policies described in our ~~Annual Report on~~Fiscal 2019 Form 10-K, ~~for Fiscal 2018,~~ except for the adoption of the ~~new lease accounting~~credit losses and income tax guidance ~~in Fiscal 2019 as~~ discussed ~~below and in Note 5.~~below.

Accounting Standards Adopted in Fiscal ~~2019~~

In February 2016, the FASB issued revised lease accounting guidance. The guidance requires companies to record substantially all leases, including operating leases, as assets and liabilities on the balance sheet. For these leases, we are required to recognize (1) an operating lease asset which will represent our right to use, or control the use of, a specified asset for a lease term and (2) a lease liability equal to our obligation to make lease payments arising from a lease, measured on a discounted basis. The guidance was adopted on the first day of the First Quarter of Fiscal 2019 using a modified retrospective approach. The modified retrospective approach allows us to apply the standard and related disclosures to the financial statements for the period of adoption and apply the previous guidance in the prior year comparative periods. The adoption of the new guidance had a material impact on our condensed consolidated balance sheet as a result of the non-cash recognition of operating lease assets and operating lease liabilities, but did not have a material impact on our consolidated statements of operations or cash flows. We elected the transition relief package practical expedients by applying previous accounting conclusions to all leases that existed prior to the adoption date. Therefore, we have not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases, or (3) the accounting for initial direct costs that were previously capitalized. We did not elect the practical expedient to use hindsight for leases existing at the adoption date. Refer to Note 5 for additional disclosures and information about accounting for leases.

~~Recently Issued Accounting Standards Applicable to Future Periods~~2020

In June 2016, the FASB issued guidance, as amended, onrelated to the measurement of credit losses on financial ~~instruments. This guidance amends the impairment model by requiring~~instruments, which requires that companies use a forward-looking ~~approach based on~~current expected ~~losses~~loss approach to estimate credit losses on certain financial instruments, including trade ~~receivables. This~~and other receivables, as well as other financial assets and instruments. We estimate current expected credit losses based on our historical collection experience, the financial condition of our customers, an evaluation of current economic conditions and anticipated trends. We adopted the guidance ~~will be effective in~~on the first day of Fiscal 2020 ~~with early~~resulting in a charge to retained earnings, which is included in the shareholders’ equity statement for the First Quarter of Fiscal 2020 included in Note 8, and a reduction to various asset amounts included in our consolidated balance sheet.

In December 2019, the FASB amended its guidance related to accounting for income taxes, which simplified the accounting for income taxes by removing certain exceptions in existing guidance to reduce complexity in certain areas. On the first day of Fiscal 2020, we adopted the provisions related to classification of franchise taxes partially based on income and changes in ownership of foreign equity method investments or foreign subsidiaries on a modified retrospective basis while we adopted the other provisions on a prospective basis. The adoption ~~permitted. We are currently assessing~~of the ~~impact that adopting this~~new guidance ~~will~~did not have an impact on our consolidated financial ~~statements.~~statements as of the first day of Fiscal 2020.

Other recently issued guidance that was adopted in Fiscal 2020 did not have a material impact on our consolidated financial statements upon adoption.

Table of Contents

Recently Issued Accounting Standards Applicable to Future Periods

Recent accounting pronouncements pending adoption ~~not discussed above~~ are either not applicable or not expected to have a material impact on our consolidated financial statements.

2. Operating Group Information: 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. Our business is primarily operated through our Tommy Bahama, Lilly Pulitzer, Lanier Apparel and Southern Tide operating groups.

~~Table of Contents~~

Tommy Bahama, Lilly Pulitzer and Southern Tide each design, source, market and distribute apparel and related products bearing their respective trademarks and license their trademarks for other product categories, while Lanier Apparel designs, sources and distributes branded and private label men’s tailored clothing, sportswear and other products. Corporate and Other is a reconciling category for reporting purposes and includes our corporate offices, substantially all financing activities, the elimination of inter-segment sales and any other items that are not allocated to the operating groups, including LIFO inventory accounting adjustments. Because our LIFO inventory pool does not correspond to our operating group definitions, LIFO inventory accounting adjustments are not allocated to the operating groups. Corporate and Other also includes the operations of other businesses which are not included in our operating groups, including the operations of TBBC, Duck Head and our Lyons, Georgia distribution center. ~~For~~As a ~~more extensive description~~result of certain organizational and management reporting changes in the First Quarter of Fiscal 2020, our ~~operating groups, see Part I, Item 1. Business~~Duck Head operations, which were previously included in ~~our Annual Report on Form 10-K~~Lanier Apparel, are considered part of and included in Corporate and Other. All prior period amounts for ~~Fiscal 2018.~~Lanier Apparel and Corporate and Other have been restated to conform to the presentation in the current period.

The table below presents certain financial information (in thousands) about our operating groups, as well as Corporate and Other. For a more extensive description of our operating groups, see Part I, Item 1. Business included in our Fiscal 2019 Form 10-K.

Table of Contents


	Third Quarter				First Nine Months
	Fiscal 2020		Fiscal 2019		Fiscal 2020		Fiscal 2019
Net sales
Tommy Bahama	$	94,905	$	127,023	$	277,143	$	480,623
Lilly Pulitzer		53,714		71,659		176,723		219,809
Lanier Apparel		10,810		28,758		29,985		75,378
Southern Tide		10,023		9,102		27,136		35,704
Corporate and Other		5,683		4,679		16,479		13,680
Consolidated net sales	$	175,135	$	241,221	$	527,466	$	825,194

Depreciation and amortization
Tommy Bahama	$	7,179	$	7,073	$	24,173	$	20,820
Lilly Pulitzer		2,254		2,554		7,585		7,618
Lanier Apparel		629		108		978		313
Southern Tide		174		135		487		404
Corporate and Other		336		323		1,000		1,024
Consolidated depreciation and amortization	$	10,572	$	10,193	$	34,223	$	30,179

Operating income (loss)
Tommy Bahama	$	(7,212)	$	(7,739)	$	(43,286)	$	30,671
Lilly Pulitzer		5,266		10,988		25,676		46,689
Lanier Apparel		(12,500)		1,971		(21,271)		3,738
Southern Tide		(464)		526		(64,809)		4,877
Corporate and Other		1,192		(3,152)		(3,534)		(13,380)
Consolidated operating (loss) income		(13,718)		2,594	$	(107,224)	$	72,595
Interest expense, net		339		81		1,673		1,171
(Loss) earnings before income taxes	$	(14,057)	$	2,513	$	(108,897)	$	71,424

Third Quarter

First Nine Months


Fiscal 2019

Fiscal 2018

Fiscal 2019

Fiscal 2018

Net sales









Tommy Bahama

$
127,023

$
123,130

$
480,623

$
482,990

Lilly Pulitzer

71,659

68,213

219,809

208,463

Lanier Apparel

29,377

29,037

76,871

72,806

Southern Tide

9,102

9,496

35,704

34,745

Corporate and Other

4,060

3,786

12,187

9,927

Total net sales

$
241,221

$
233,662

$
825,194

$
808,931

Depreciation and amortization









Tommy Bahama

$
7,073

$
7,131

$
20,820

$
22,457

Lilly Pulitzer

2,554

2,624

7,618

7,727

Lanier Apparel

146

144

427

424

Southern Tide

135

133

404

394

Corporate and Other

285

304

910

931

Total depreciation and amortization

$
10,193

$
10,336

$
30,179

$
31,933

Operating income (loss)









Tommy Bahama

$
(7,739)

$
(5,141)

$
30,671

$
29,783

Lilly Pulitzer

10,988

9,576

46,689

43,823

Lanier Apparel

1,952

2,261

3,387

3,448

Southern Tide

526

492

4,877

4,399

Corporate and Other

(3,133)

(3,483)

(13,029)

(12,862)

Total operating income

2,594

3,705

$
72,595

$
68,591

Interest expense, net

81

489

1,171

1,872

Earnings before income taxes

$
2,513

$
3,216

$
71,424

$
66,719


	October 31, 2020		February 1, 2020		November 2, 2019
Assets
Tommy Bahama ⁽¹⁾	$	616,049	$	668,197	$	673,788
Lilly Pulitzer ⁽²⁾		182,020		199,913		192,448
Lanier Apparel⁽³⁾		20,783		43,533		52,378
Southern Tide ⁽⁴⁾		30,172		99,667		94,876
Corporate and Other⁽⁵⁾		52,993		22,059		(406)
Consolidated Total Assets	$	902,017	$	1,033,369	$	1,013,084

(1)

Decrease in Tommy Bahama total assets from February 1, 2020 and November 2, 2019 was primarily due to lower operating lease assets, fixed assets and receivables.

(2)

Decrease in Lilly Pulitzer total assets from February 1, 2020 and November 2, 2019 was primarily due to lower operating lease assets and fixed assets.

(3)

Decrease in Lanier Apparel total assets from February 1, 2020 and November 2, 2019 was primarily due to lower receivables and inventories.

(4)

Decrease in Southern Tide total assets from February 1, 2020 and November 2, 2019 was primarily due to the $60 million impairment charge for goodwill and intangible assets in the First Quarter of Fiscal 2020, as well as lower inventories.

(5)

Increase in Corporate and Other total assets from February 1, 2020 was primarily due to increased non-current income tax receivables and inventories. Increase in Corporate and Other total assets from November 2, 2019 was primarily due to increased cash and cash equivalents, non-current income tax receivables and inventories.

1012

Table of Contents

The tables below quantify, for each operating group and in total, the amount of net sales (in thousands) and net sales by distribution channel as a percentage of net sales for each period presented.


	Third Quarter Fiscal 2020
	Net Sales		Retail		E-commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	94,905	37	%	27	%	13	%	23	%	—	%
Lilly Pulitzer		53,714	22	%	66	%	—	%	12	%	—	%
Lanier Apparel		10,810	—	%	—	%	—	%	100	%	—	%
Southern Tide		10,023	4	%	24	%	—	%	72	%	—	%
Corporate and Other		5,683	—	%	54	%	—	%	44	%	2	%
Total	$	175,135	27	%	38	%	7	%	28	%	—	%


	Third Quarter Fiscal 2019												Third Quarter Fiscal 2019
	Net Sales		Retail		E-commerce		Restaurant		Wholesale		Other		Net Sales		Retail		E-commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	127,023	46	%	14	%	14	%	26	%	—	%	$	127,023	46	%	14	%	14	%	26	%	—	%
Lilly Pulitzer		71,659	35	%	55	%	—	%	10	%	—	%		71,659	35	%	55	%	—	%	10	%	—	%
Lanier Apparel		29,377	—	%	1	%	—	%	99	%	—	%		28,758	—	%	—	%	—	%	100	%	—	%
Southern Tide		9,102	—	%	19	%	—	%	81	%	—	%		9,102	—	%	19	%	—	%	81	%	—	%
Corporate and Other		4,060	—	%	57	%	—	%	36	%	7	%		4,679	—	%	55	%	—	%	39	%	6	%
Total	$	241,221	35	%	26	%	7	%	32	%	—	%	$	241,221	35	%	26	%	7	%	32	%	—	%


	Third Quarter Fiscal 2018												First Nine Months Fiscal 2020
	Net Sales		Retail		E-commerce		Restaurant		Wholesale		Other		Net Sales		Retail		E‑commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	123,130	46	%	14	%	13	%	27	%	—	%	$	277,143	36	%	34	%	12	%	18	%	—	%
Lilly Pulitzer		68,213	35	%	53	%	—	%	12	%	—	%		176,723	19	%	64	%	—	%	17	%	—	%
Lanier Apparel		29,037	—	%	—	%	—	%	100	%	—	%		29,985	—	%	—	%	—	%	100	%	—	%
Southern Tide		9,496	—	%	16	%	—	%	84	%	—	%		27,136	3	%	29	%	—	%	68	%	—	%
Corporate and Other		3,786	—	%	50	%	—	%	34	%	16	%		16,479	—	%	65	%	—	%	31	%	4	%
Total	$	233,662	35	%	24	%	7	%	34	%	—	%
Consolidated net sales													$	527,466	26	%	43	%	6	%	25	%	—	%

First Nine Months Fiscal 2019


Net Sales

Retail

E‑commerce

Restaurant

Wholesale

Other

Tommy Bahama

$
480,623

48
%
18
%
13
%
21
%
—
%
Lilly Pulitzer

219,809

43
%
36
%
—
%
21
%
—
%
Lanier Apparel

76,871

—
%
1
%
—
%
99
%
—
%
Southern Tide

35,704

—
%
18
%
—
%
82
%
—
%
Corporate and Other

12,187

—
%
60
%
—
%
32
%
8
%
Total net sales

$
825,194

39
%
22
%
8
%
31
%
—
%


	First Nine Months Fiscal 2018												First Nine Months Fiscal 2019
	Net Sales		Retail		E‑commerce		Restaurant		Wholesale		Other		Net Sales		Retail		E‑commerce		Restaurant		Wholesale		Other
Tommy Bahama	$	482,990	48	%	17	%	13	%	22	%	—	%	$	480,623	48	%	18	%	13	%	21	%	—	%
Lilly Pulitzer		208,463	44	%	35	%	—	%	21	%	—	%		219,809	43	%	36	%	—	%	21	%	—	%
Lanier Apparel		72,806	—	%	—	%	—	%	100	%	—	%		75,378	—	%	—	%	—	%	100	%	—	%
Southern Tide		34,745	—	%	16	%	—	%	84	%	—	%		35,704	—	%	18	%	—	%	82	%	—	%
Corporate and Other		9,927	—	%	54	%	—	%	27	%	19	%		13,680	—	%	59	%	—	%	34	%	7	%
Total net sales	$	808,931	40	%	20	%	8	%	32	%	—	%
Consolidated net sales													$	825,194	39	%	22	%	8	%	31	%	—	%

3. Revenue Recognition and Receivables: Our revenue consists of direct to consumer sales, including our retail store, e-commerce and restaurant 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. Our accounting policies related to revenue recognition for each type of contract with customers, including a description of the related performance obligations, return rights, allowances, discounts, credit terms and other information, is described in the significant accounting policies described in our Fiscal 2019 Form 10-K.

1113

Table of Contents

~~3. Shareholders’ Equity:~~The ~~following tables detail~~table below quantifies the ~~changes~~amount of net sales by distribution channel (in thousands) ~~in our common stock, additional paid-in capital ("APIC"), retained earnings and accumulated other comprehensive (loss) income ("AOCI"),~~ for each period presented.

First Nine Months Fiscal 2019


Common Stock

APIC

Retained Earnings

AOCI

Total
February 2, 2019

$
16,959

$
142,976

$
323,515

$
(5,095)

$
478,355
Net earnings and other comprehensive income

—

—

21,657

(388)

21,269
Shares issued under equity plans

91

331

—

—

422
Compensation expense for equity awards

—

1,876

—

—

1,876
Repurchase of shares

(31)

(2,422)

—

—

(2,453)
Cash dividends declared and paid

—

—

(6,297)

—

(6,297)
Cumulative effect of change in accounting standards

—

—

—

—

—
May 4, 2019

$
17,019

$
142,761

$
338,875

$
(5,483)

$
493,172
Net earnings and other comprehensive income

—

—

29,836

(133)

29,703
Shares issued under equity plans

16

447

—

—

463
Compensation expense for equity awards

—

1,915

—

—

1,915
Repurchase of shares

—

—

—

—

—
Cash dividends declared and paid

—

—

(6,304)

—

(6,304)
Cumulative effect of change in accounting standards

—

—

—

—

—
August 3, 2019

$
17,035

$
145,123

$
362,407

$
(5,616)

$
518,949
Net earnings and other comprehensive income

—

—

1,668

176

1,844
Shares issued under equity plans

5

418

—

—

423
Compensation expense for equity awards

—

1,907

—

—

1,907
Repurchase of shares

—

—

—

—
Cash dividends declared and paid

—

—

(6,307)

—

(6,307)
Cumulative effect of change in accounting standards

—

—

—

—

—
November 2, 2019

$
17,040

$
147,448

$
357,768

$
(5,440)

$
516,816


	Third Quarter				First Nine Months
	Fiscal 2020		Fiscal 2019		Fiscal 2020		Fiscal 2019
Retail	$	47,415	$	83,636	$	134,701	$	324,892
E-commerce		66,135		62,310		226,618		180,736
Restaurant		12,214		17,325		32,505		61,457
Wholesale		49,221		77,595		132,768		256,794
Other		150		355		874		1,315
Net sales	$	175,135	$	241,221	$	527,466	$	825,194

In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to some of our wholesale customers for certain products. We record these discounts, returns and allowances as a reduction to net sales in our consolidated statements of operations and as a reduction to receivables, net in our consolidated balance sheets. As of October 31, 2020, February 1, 2020 and November 2, 2019, reserve balances recorded as a reduction to receivables related to these items were $8 million, $9 million and $9 million, respectively.

We extend credit to certain wholesale customers based on an evaluation of the customer’s financial capacity and condition, usually without requiring collateral. In circumstances where we become aware of a specific wholesale customer’s inability to meet its financial obligations, a specific provision for credit losses is taken as a reduction to accounts receivable to reduce the net recognized receivable to the amount reasonably expected to be collected. Such amounts are ultimately written off at the time that the amounts are not considered collectible. For all other wholesale customer receivable amounts, 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 discussed in Note 1, during Fiscal 2020, we estimated these losses using the current expected loss approach including consideration of the expected impact of the ongoing COVID-19 pandemic on our receivables, while in Fiscal 2019, we estimated these losses using the incurred loss model under the previous guidance. We include such charges for credit losses and write-offs in SG&A in our consolidated statements of operations and as a reduction to receivables, net in our consolidated balance sheets. As of October 31, 2020, February 1, 2020 and November 2, 2019, our provision for credit losses related to receivables was $3 million, $1 million and $1 million, respectively. Provisions for credit losses expense included in our consolidated statement of operations for the Third Quarter of Fiscal 2020 and the First Nine Months of Fiscal 2020 were $0 million and $4 million, respectively, while write-offs of credit losses for the Third Quarter of Fiscal 2020 and the First Nine Months of Fiscal 2020 were $2 million and $2 million, respectively. Both provisions for credit losses expense included in our consolidated statement of operations and write-offs of credit losses for the Third Quarter of Fiscal 2019 and the First Nine Months of Fiscal 2019 were $0 million.

Substantially all amounts recognized in receivables, net represent trade receivables related to contracts with customers. In addition to trade and other receivables, current income tax receivables of $1 million, $1 million and $1 million and tenant allowances due from landlord of $3 million, $1 million and $2 million are included in receivables, net in our consolidated balance sheet as of October 31, 2020, February 1, 2020 and November 2, 2019, respectively. As of October 31, 2020, February 1, 2020 and November 2, 2019, prepaid expenses and other current assets included $3 million, $3 million and $4 million, respectively, representing the estimated value of inventory for expected wholesale and direct to consumer sales returns. We did not have any significant contract assets related to contracts with customers, other than trade receivables and the value of inventory associated with expected sales returns, as of October 31, 2020, February 1, 2020 and November 2, 2019.

An estimated sales return liability of $6 million, $3 million and $3 million for expected direct to consumer returns is classified in accrued expenses and other liabilities in our consolidated balance sheet as of October 31, 2020, February 1, 2020 and November 2, 2019, respectively. Contract liabilities for gift cards purchased by consumers and merchandise credits received by customers but not yet redeemed, less any breakage income recognized to date, is included in accrued expenses and other liabilities in our consolidated balance sheets and totaled $12 million, $12 million and $11 million as of October 31, 2020, February 1, 2020, and November 2, 2019, respectively.

1214

Table of Contents

First Nine Months Fiscal 2018


Common Stock

APIC

Retained Earnings

AOCI

Total
February 3, 2018

$
16,839

$
136,664

$
280,395

$
(4,074)

$
429,824
Net earnings and other comprehensive income

—

—

20,567

(581)

19,986
Shares issued under equity plans

128

236

—

—

364
Compensation expense for equity awards

—

1,718

—

—

1,718
Repurchase of shares

(30)

(2,321)

—

—

(2,351)
Cash dividends declared and paid

—

—

(5,759)

—

(5,759)
Cumulative effect of change in accounting standards

—

—

(117)

—

(117)
May 5, 2018

$
16,937

$
136,297

$
295,086

$
(4,655)

$
443,665
Net earnings and other comprehensive income

—

—

27,184

(284)

26,900
Shares issued under equity plans

14

436

—

—

450
Compensation expense for equity awards

—

1,880

—

—

1,880
Repurchase of shares

—

—

—

—

—
Cash dividends declared and paid

—

—

(5,763)

—

(5,763)
Cumulative effect of change in accounting standards

—

—

—

—

—
August 4, 2018

$
16,951

$
138,613

$
316,507

$
(4,939)

$
467,132
Net earnings and other comprehensive income

—

—

1,861

(150)

1,711
Shares issued under equity plans

5

351

—

—

356
Compensation expense for equity awards

—

1,912

—

—

1,912
Repurchase of shares

—

—

—

—

—
Cash dividends declared and paid

—

—

(5,764)

—

(5,764)
Cumulative effect of change in accounting standards

—

—

—

—

—
November 3, 2018

$
16,956

$
140,876

$
312,604

$
(5,089)

$
465,347
Net earnings and other comprehensive income

—

—

16,679

(6)

16,673
Shares issued under equity plans

3

283

—

—

286
Compensation expense for equity awards

—

1,817

—

—

1,817
Repurchase of shares

—

—

—

—

—
Cash dividends declared and paid

—

—

(5,768)

—

(5,768)
Cumulative effect of change in accounting standards

—

—

—

—

—
February 2, 2019

$
16,959

$
142,976

$
323,515

$
(5,095)

$
478,355

Substantially all amounts included in AOCI in our consolidated balance sheets, as well as any related changes, for each period presented, reflect the net foreign currency translation adjustment related to our Tommy Bahama investments and operations in Canada, Australia and Japan. NaN amounts were reclassified from AOCI to our consolidated statements of operations for any period presented.

4. ~~Revenue Recognition:~~Intangible Assets and Goodwill: ~~Our revenue consists~~As discussed in Note 1, the COVID-19 pandemic has had, and is expected to continue to have, a significant negative impact on each of ~~direct to consumer sales, including~~ our ~~retail store, e-commerce~~operating groups. Thus, certain goodwill and restaurant operations, and wholesale sales, which are included in net sales in our consolidated statements of operations, as well as royalty income, which represents substantially all amounts 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. Our accounting policies related to revenue recognition for each type of contract with customers, including a description of the related performance obligations, return rights, allowances, discounts, credit terms and other information, is describedindefinite-lived intangible asset impairment testing was required in the ~~significant accounting policies described in our Annual Report on Form 10-K for~~First Quarter of Fiscal ~~2018.~~

~~Table of Contents~~

~~The table below quantifies the amount of net sales by distribution channel (in thousands) for each period presented.~~

Third Quarter

First Nine Months


Fiscal 2019

Fiscal 2018

Fiscal 2019

Fiscal 2018

Retail

$
83,636

$
80,624

$
324,892

$
322,940

E-commerce

62,310

56,392

180,736

164,277

Restaurant

17,325

16,329

61,457

63,089

Wholesale

77,595

79,654

256,794

256,432

Other

355

663

1,315

2,193

Net sales

$
241,221

$
233,662

$
825,194

$
808,931

~~Substantially all amounts recognized in receivables, net represent receivables related to contracts~~2020, with customers. In the ordinary course of our wholesale operations, we offer discounts, allowances and cooperative advertising support to some of our wholesale customers for certain products. We record these discounts, returns and allowances as a reduction to net sales in our consolidated statements of operations and as a reduction to receivables, net in our consolidated balance sheets. As of November 2, 2019, February 2, 2019 and November 3, 2018, reserve balances recorded as a reduction to receivables related to these items were $9 million, $7 million and $8 million, respectively.

In addition to trade and other receivables, income tax receivables of $1 million, $1 million and $4 million and tenant allowances due from landlord of $2 million, $0 million and $0 million are included in receivables, net in our consolidated balance sheet as of November 2, 2019, February 2, 2019 and November 3, 2018, respectively. As of November 2, 2019, February 2, 2019 and November 3, 2018, prepaid expenses and other current assets included $4 million, $2 million and $2 million, respectively, representing the estimated value of inventory for wholesale and direct to consumer sales returns. We did not have any significant contract assets related to contracts with customers, other than receivables and the value of inventory associated with reserves for expected sales returns, as of November 2, 2019, February 2, 2019 and November 3, 2018.

An estimated sales return liability of $3 million, $3 million and $2 million for expected direct to consumer returns is classified in other accrued expenses and liabilities in our consolidated balance sheet as of November 2, 2019, February 2, 2019 and November 3, 2018, respectively. Contract liabilities for gift cards purchased by consumers and merchandise credits received by customers but not yet redeemed, less any breakage income recognized to date, is included in other accrued expenses and liabilities in our consolidated balance sheets and totaled $11 million, $12 million and $10 million as of November 2, 2019, February 2, 2019, and November 3, 2018, respectively.

~~5. Leases:~~ We enter into real estate lease agreements for retail, food and beverage, office and warehouse/distribution space, as well as leases for certain equipment. Our leases have varying terms and expirations and may have provisions to extend, renew or terminate the lease agreement at our discretion, among other terms and conditions. Our retail and restaurant leases typically provide for contingent rent based on sales if certain sales thresholds are achieved. Most of our leases provide for payments 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. Payments for real estate taxes, sales taxes, insurance and other operating expenses are not included in lease expense. Our lease agreements do not include any material residual value guarantees or material restrictive financial covenants.

Substantially all of our leases are classified as long-term operating leases, which have not historically been recognized as assets and liabilities in our consolidated balance sheets. When a non-cancelable long-term operating lease includes fixed escalation clauses or lease incentives for rent holidays, rent expense is generally recognized on a straight-line basis over the initial term of the lease from the date that we take possession of the space and assumes that any termination options includedno additional tests required in the ~~lease will not be exercised. Contingent rents, including those based on a percentage~~Second Quarter of ~~retail sales over stated levels,~~Fiscal 2020 and rental payment increases based on a contingent future event have been recognized as the expense is incurred. The difference between the rents payable under the lease and the amount recognized on a straight-line basis has historically been recorded in other non-current liabilities in our consolidated balance sheets, with the exception of the amounts recognized in current lease liabilities. Also, any tenant improvement allowance amounts received from the landlord have historically been deferred as a liability in our consolidated balance sheets and then recognized in our consolidated statements of operations as a reduction to rent

~~Table of Contents~~

expense over the term of the lease agreement on a straight-line basis. Deferred rent in our consolidated balance sheets, including tenant improvement allowances and all amounts in non-current and current liabilities, as of February 2, 2019 was $61 million.

Pursuant to the revised lease accounting guidance adopted in Fiscal 2019, we determine if an arrangement is a lease at contract inception. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The significant judgments in calculating the present value of lease obligations include determining the lease term and lease payment amounts, which are dependent upon our assessment of the likelihood of exercising any renewal or termination options that are at our discretion, as well as the discount rate applied to the unpaid lease payments. Operating leases are included in operating lease assets, current operating lease liabilities and non-current operating lease liabilities in our consolidated balance sheet. The operating lease asset at commencement reflects the operating lease liability reduced for any lease incentives, including tenant improvement allowances. Lease expense for operating leases is recognized on a straight-line basis over the lease term, which is consistent with the previous guidance. Variable rental payments based on a percentage of retail sales over contractual levels and variable incremental rental payments adjusted periodically for inflation are both recognized as incurred.

We account for the underlying operating lease asset at the individual lease level. Typically, we do not include any renewal or termination options at our discretion in the underlying lease term as the probability of exercise is not reasonably certain. The revised lease guidance requires us to discount unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, our incremental borrowing rate. As our leases typically do not provide an implicit rate, we use an estimated incremental borrowing rate based on information available at commencement date, or as of February 3, 2019 for any leases in place at adoption of the revised guidance. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Finance leases are not material to our consolidated financial statements.

~~Substantially all lease expense is included in SG&A in our consolidated statements of operations. For~~ the Third Quarter of Fiscal ~~2019,~~2020, and resulted in significant impairment charges in Southern Tide as shown in the tables below.

Intangible assets by category are summarized below (in thousands):


	October 31,		February 1,		November 2,
	2020		2020		2019
Intangible assets with finite lives	$	51,929	$	51,929	$	51,929
Accumulated amortization and impairment		(42,965)		(41,924)		(41,631)
Total intangible assets with finite lives, net		8,964		10,005		10,298

Intangible assets with indefinite lives:
Tommy Bahama Trademarks	$	110,700	$	110,700	$	110,700
Lilly Pulitzer Trademarks		27,500		27,500		27,500
Southern Tide Trademarks		9,300		26,800		26,800
Total intangible assets, net	$	156,464	$	175,005	$	175,298

Intangible assets, by operating ~~lease expense was $16 million~~group and ~~variable lease expense was $8 million, resulting~~ in total, lease expense of $24 million. For the First Nine Months of Fiscal 2019, operating lease expense was $49 million and variable lease expense was $25 million, resulting in total lease expense of $74 million. As of November 2, 2019, the weighted-average remaining operating lease term was seven years and the weighted-average discount rate for ~~operating leases was 5%. Cash paid for lease amounts included in the measurement of operating lease liabilities in the Third Quarter of~~ Fiscal 2019 and the First Nine Months of Fiscal ~~2019 was $18 million and $53 million, respectively.~~

~~As of November 2, 2019, the required lease liability payments for the fiscal years specified below were~~2020 are as follows (in thousands):


	Tommy		Lilly		Lanier		Southern		Corporate
	Bahama		Pulitzer		Apparel		Tide		and Other		Total
Balance February 2, 2019	$	110,700	$	29,216	$	246	$	29,401	$	6,613	$	176,176
Impairment		—		—		—		—		—		—
Amortization		—		(475)		(31)		(291)		(374)		(1,171)
Balance, February 1, 2020		110,700		28,741		215		29,110		6,239		175,005
Impairment		—		—		(207)		(17,500)		—		(17,707)
Amortization		—		(318)		(8)		(216)		(292)		(834)
Balance, October 31, 2020	$	110,700	$	28,423	$	—	$	11,394	$	5,947	$	156,464

Operating lease
Remainder of 2019

$
17,066
2020

62,622
2021

65,589
2022

61,399
2023

58,279
2024

45,664
After 2024

92,256
Total lease payments

$
402,875
Less: Difference between discounted and undiscounted lease payments

59,199
Present value of lease liabilities

$
343,676

Goodwill, by operating group and in total, for Fiscal 2019 and the First Nine Months of Fiscal 2020 are as follows (in thousands):


	Tommy		Lilly		Southern		Corporate
	Bahama		Pulitzer		Tide		and Other		Total
Balance February 2, 2019	$	754	$	19,522	$	42,745	$	3,600	$	66,621
Impairment		—		—		—		—		—
Other, including foreign currency		(43)		—		—		—		(43)
Balance, February 1, 2020		711		19,522		42,745		3,600		66,578
Impairment		—		—		(42,745)		—		(42,745)
Other, including foreign currency		24		—		—		—		24
Balance, October 31, 2020	$	735	$	19,522	$	—	$	3,600	$	23,857

~~Table~~

5. Debt: We had $35 million of ~~Contents~~

~~Disclosures related to periods prior to adoption~~indebtedness outstanding as of ~~revised accounting guidance~~

~~Total rent expense in Fiscal 2018 was $96 million, which includes minimum rents, sales taxes, real estate taxes, insurance and other operating expenses and contingent rents incurred~~October 31, 2020 under all leases. Payments for real estate taxes, sales taxes, insurance, other operating expenses and contingent percentage rent are included in rent expense, but are generally not included in the aggregate minimum rental commitments, as, in many cases, the amounts payable in future periods are not quantified in the lease agreement or may be dependent on future events. The total amount of such charges included in total rent expense above were $28 million in Fiscal 2018. As of February 2, 2019, the aggregate minimum base rental commitments for all non-cancelable operating leases with original terms in excess of one year were $68 million, $66 million, $62 million, $59 million, and $51 million for each of the next five years and $124 million thereafter.

~~6. Debt:~~ ~~In July 2019, we amended~~ our $325 million Fourth Amended and Restated Credit Agreement (as amended, the “U.S. Revolving Credit Agreement”) by entering into the First Amendment to the Fourth Amended and Restated Credit Agreement to (1) extend the maturity of the facility to July 2024, and (2) modify certain provisions including a reduction of interest rates on certain borrowings and a reduction in unused line fees. We had 0 amounts outstanding as of November 2, 2019 under the U.S. Revolving Credit Agreement,, compared to borrowings of ~~$13~~$0 million as of each of February 1, 2020 and November 2, ~~2019 and borrowings of $32 million as of November 3, 2018.~~2019. 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 borrowing rate of 2.0% as of October 31, 2020), unused

Table of Contents

line fees and letter of credit fees based upon average unused availability or utilization, (3) requires periodic interest payments with principal due at maturity (July 2024), 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.

To the extent cash flow needs 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. Our U.S. Revolving Credit Agreement is also used to establish collateral for certain insurance programs and leases and to finance trade letters of credit for product purchases, which reduce the amounts available under our line of credit when issued. ~~As of November 2, 2019, $3 million of letters of credit were outstanding under our U.S. Revolving Credit Agreement.~~ After considering these limitations and the amount of eligible assets in our borrowing base, as of ~~November 2, 2019,~~October 31, 2020, we had ~~$313~~$287 million in unused availability under the U.S. Revolving Credit Agreement, subject to certain limitations on borrowings.

6. Leases: In the ordinary course of business, we enter into real estate lease agreements for retail, food and beverage, office and warehouse/distribution space, as well as leases for certain equipment. Our 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 ten years or less and typically require monthly rent payments with specified rent escalations periodically 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 retail and restaurant leases often provide for contingent rent payments based on sales if certain sales thresholds are achieved. For many of our real estate lease agreements, we obtain lease incentives from the landlord for tenant improvement or other allowances. Our lease agreements do not include any material residual value guarantees or material restrictive financial covenants.

Substantially all of our leases are classified as long-term operating leases. Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The significant judgments in calculating the present value of lease obligations include determining the lease term and lease payment amounts, which are dependent upon our assessment of the likelihood of exercising any renewal or termination options that are at our discretion, as well as the discount rate applied to the future lease payments. The operating lease asset at commencement represents the amount of the operating lease liability reduced for any lease incentives, including tenant improvement allowances. Lease expense for operating leases is generally recognized on a straight-line basis over the lease term. Variable rental payments for real estate taxes, sales taxes, insurance, other operating expenses and contingent rent based on a percentage of net sales or adjusted periodically for inflation are not included in lease expense used to calculate the present value of lease obligations recognized in our consolidated balance sheet, but instead are recognized as incurred.

We account for the underlying operating lease at the individual lease level. Typically, we do not include any renewal or termination options at our discretion in the underlying lease term at the time of lease commencement as the probability of exercise is not reasonably certain. The lease guidance requires us to discount future lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, our estimated incremental borrowing rate. As our leases do not provide an implicit rate, we use an estimated incremental borrowing rate based on information available at commencement date. Our estimated incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis over the lease term to borrow an amount equal to the lease payments.

During the First Quarter of Fiscal 2020, the FASB provided for an optional practical expedient that simplifies how a lessee accounts for rent concessions that are a direct consequence of the COVID-19 pandemic. The practical expedient only applies if a lease is modified to allow for a rental concession and (1) the revised consideration is substantially the same as, or less than, the original consideration in the lease agreement, (2) the reduction in lease payments relates to payments due on or before June 30, 2021, and (3) no other substantive changes have been made

Table of Contents

to the terms of the leases. The practical expedient provides that, if the above conditions are met for the lease agreement, the lessee is not required to assess whether the eligible rent concessions are lease modifications. We have elected to apply the practical expedient for all eligible lease modifications resulting in the rent concession being recorded as an adjustment to variable lease payments and recognized in our statement of operations in that period. The amounts of concessions recognized in our consolidated statement of operations pursuant to this practical expedient in the First Nine Months of Fiscal 2020 was $2 million. For leases that do not meet the criteria for the practical expedient, we account for the amendment and concession as a lease modification requiring lease remeasurement with the concession recognized over the remaining term of the lease agreement.

Substantially all lease expense is included in SG&A in our consolidated statements of operations. For the Third Quarter of Fiscal 2020 operating lease expense, which includes amounts used in determining the operating lease liability and operating lease asset, was $16 million and variable lease expense was $5 million, resulting in total lease expense of $21 million compared to $24 million of total lease expense in the Third Quarter of Fiscal 2019. For the First Nine Months of Fiscal 2020, operating lease expense was $48 million and variable lease expense was $21 million resulting in total lease expense of $70 million, compared to $74 million of total lease expense in the First Nine Months of Fiscal 2019. As of October 31, 2020, the weighted-average remaining operating lease term was 6.1 years and the weighted-average discount rate for operating leases was 4.3%. Cash paid for lease amounts included in the measurement of operating lease liabilities in the First Nine Months of Fiscal 2020 was $41 million, while cash paid for lease amounts included in the measurement of operating lease liabilities in the First Nine Months of Fiscal 2019 was $53 million.

As of October 31, 2020, the stated lease liability payments for the fiscal years specified below were as follows (in thousands):


	Operating lease
Remainder of 2020	$	26,194
2021		66,935
2022		62,875
2023		56,178
2024		44,489
2025		31,624
After 2025		62,849
Total lease payments	$	351,144
Less: Difference between discounted and undiscounted lease payments		43,335
Present value of lease liabilities	$	307,809

7. Income Taxes: Our effective income tax rate for the Third Quarter of Fiscal 2020 and the First Nine Months of Fiscal 2020 was a benefit of 24.6% and a benefit of 23.3%, respectively. Our effective tax rate for the Third Quarter of Fiscal 2019 and the First Nine Months of Fiscal 2019 was an expense of 33.6% and an expense of 25.6%, respectively. The difference between the U.S. federal statutory income tax rate of 21% and our effective income tax rate for all periods presented include a variety of factors, including those discussed in the following paragraph, as well as the impact of state income taxes, the impact of foreign operations rate differential, valuation allowances and other carry-forwards, the deductibility of certain charges and changes in enacted tax regulations, each as applicable. On March 27, 2020, the CARES Act was signed into law, with applicable provisions reflected in our financial statements upon enactment. This law included several taxpayer favorable provisions which impact us, including allowing the carryback of net operating losses to periods prior to U.S. Tax Reform, accelerated depreciation of certain leasehold improvement costs and relaxed interest expense limitations, as well as non-income tax benefits including deferral of employer FICA payments and an employee retention credit.

The income tax benefit in the First Nine Months of Fiscal 2020 reflects the benefit on the operating losses including the favorable impact of the CARES Act, which provides for the carry back of our Fiscal 2020 net operating losses to pre-U.S. Tax Reform tax years, which had a federal income tax rate of 35%. This benefit was offset by certain unfavorable items including (1) the non-deductibility of certain goodwill impairment charges, resulting in an estimated effective income tax benefit rate of approximately 17% on the impairment charges, (2) the impact of book

Table of Contents

to tax timing differences which may reduce the amount of expenses deductible for income tax return purposes in Fiscal 2020 and (3) restricted stock which vested in the period with a vesting date price lower than the grant date price.

8. Shareholders’ Equity: The following tables detail the changes (in thousands) in our common stock, additional paid-in capital ("APIC"), retained earnings and accumulated other comprehensive (loss) income ("AOCI"), for each period presented.


	Fiscal 2019
	Common Stock		APIC		Retained Earnings		AOCI		Total
February 2, 2019	$	16,959	$	142,976	$	323,515	$	(5,095)	$	478,355
Comprehensive income		—		—		21,657		(388)		21,269
Shares issued under equity plans		91		331		—		—		422
Compensation expense for equity awards		—		1,876		—		—		1,876
Repurchase of shares		(31)		(2,422)		—		—		(2,453)
Cash dividends declared and paid		—		—		(6,297)		—		(6,297)
Cumulative effect of change in accounting standards		—		—		—		—		—
May 4, 2019	$	17,019	$	142,761	$	338,875	$	(5,483)	$	493,172
Comprehensive income		—		—		29,836		(133)		29,703
Shares issued under equity plans		16		447		—		—		463
Compensation expense for equity awards		—		1,915		—		—		1,915
Repurchase of shares		—		—		—		—		—
Cash dividends declared and paid		—		—		(6,304)		—		(6,304)
Cumulative effect of change in accounting standards		—		—		—		—		—
August 3, 2019	$	17,035	$	145,123	$	362,407	$	(5,616)	$	518,949
Comprehensive income		—		—		1,668		176		1,844
Shares issued under equity plans		5		418		—		—		423
Compensation expense for equity awards		—		1,907		—		—		1,907
Repurchase of shares		—		—		—		—		—
Cash dividends declared and paid		—		—		(6,307)		—		(6,307)
Cumulative effect of change in accounting standards		—		—		—		—		—
November 2, 2019	$	17,040	$	147,448	$	357,768	$	(5,440)	$	516,816
Comprehensive income		—		—		15,332		779		16,111
Shares issued under equity plans		4		327		—		—		331
Compensation expense for equity awards		—		1,922		—		—		1,922
Repurchase of shares		(4)		(271)		—		—		(275)
Cash dividends declared and paid		—		—		(6,307)		—		(6,307)
Cumulative effect of change in accounting standards		—		—		—		—		—
February 1, 2020	$	17,040	$	149,426	$	366,793	$	(4,661)	$	528,598

Table of Contents


	First Nine Months Fiscal 2020
	Common Stock		APIC		Retained Earnings		AOCI		Total
February 1, 2020	$	17,040	$	149,426	$	366,793	$	(4,661)	$	528,598
Comprehensive loss		—		—		(66,784)		(591)		(67,375)
Shares issued under equity plans		56		350		—		—		406
Compensation expense for equity awards		—		1,682		—		—		1,682
Repurchase of shares		(378)		(1,824)		(17,721)		—		(19,923)
Cash dividends declared and paid		—		—		(4,194)		—		(4,194)
Cumulative effect of change in accounting standards		—		—		(499)		—		(499)
May 2, 2020	$	16,718	$	149,634	$	277,595	$	(5,252)	$	438,695
Comprehensive loss		—		—		(6,087)		933		(5,154)
Shares issued under equity plans		158		202		—		—		360
Compensation expense for equity awards		—		1,884		—		—		1,884
Repurchase of shares		—		—		—		—		—
Cash dividends declared and paid		—		—		(4,235)		—		(4,235)
Cumulative effect of change in accounting standards		—		—		—		—		—
August 1, 2020	$	16,876	$	151,720	$	267,273	$	(4,319)	$	431,550
Comprehensive loss		—		—		(10,604)		(114)		(10,718)
Shares issued under equity plans		8		323		—		—		331
Compensation expense for equity awards		—		2,060		—		—		2,060
Repurchase of shares				—		—		—		—
Cash dividends declared and paid		—		—		(4,277)		—		(4,277)
Cumulative effect of change in accounting standards		—		—		—		—		—
October 31, 2020	$	16,884	$	154,103	$	252,392	$	(4,433)	$	418,946

During the First Quarter of Fiscal 2020, we repurchased 0.3 million shares of our common stock under an open market stock repurchase program (Rule 10b5-1 plan) and repurchased 0.1 million shares of our common stock pursuant to our stock incentive plans. During the Second Quarter of Fiscal 2020, we granted 0.1 million service-based restricted shares of our common stock, subject to the recipient remaining an employee through the July 2023 vesting date, which are included in common stock in the table above. Additionally, during the Second Quarter of Fiscal 2020, we granted 0.1 million restricted share units, subject to the recipient remaining an employee through July 2023 and the satisfaction of certain performance metrics, which are not included in common stock in the table above. Our stock incentive plans are described in Note 8 to our consolidated financial statements included in our Fiscal 2019 Form 10-K.

As of the end of the Third Quarter of Fiscal 2020 and the First Nine Months of Fiscal 2020, there were 0.4 million of restricted shares and restricted share units outstanding that were excluded from the diluted earnings per share calculation because we incurred a net loss for the period and their inclusion would be anti-dilutive. NaN restricted shares or restricted share units were excluded from the diluted earnings per share calculation in the Third Quarter of Fiscal 2019 or the First Nine Months of Fiscal 2019.

9. Lanier Apparel Exit: In the Third Quarter of Fiscal 2020, we made the decision to exit our Lanier Apparel business, which is expected to be completed during the Second Half of Fiscal 2021. This decision is to further our stated business strategy, which is to develop and market compelling lifestyle brands, and takes into consideration the increased near-term challenges faced by the Lanier Apparel business as a result of the COVID-19 pandemic.

In connection with the planned exit of our Lanier Apparel business, we recorded pre-tax charges of $10 million in the Lanier Apparel operating group during the Third Quarter of Fiscal 2020. These charges consist of (1) $6 million of inventory markdowns, the substantial majority of which reversed in Corporate and Other as part of LIFO accounting, (2) $2 million of operating lease asset impairment charges for leased space that we intend to vacate prior to the end of the lease term, (3) $1 million of employee charges, including severance and employee retention

Table of Contents

costs, (4) $1 million of non-cash fixed asset impairment charges, primarily related to leasehold improvements, and (5) $1 million of charges related to our Merida manufacturing facility, which ceased operations in the Third Quarter of Fiscal 2020. The inventory markdowns and manufacturing facility charges, which total $6 million in the aggregate, are included in cost of goods sold in Lanier Apparel, while the charges for operating lease asset impairments, employee charges, and fixed asset impairments, which total $4 million in the aggregate, are included in SG&A in Lanier Apparel. No significant amounts have been paid as of October 31, 2020 for these charges and substantially all of the employee charges incurred during the Third Quarter of Fiscal 2020 are recorded in accrued expenses and other liabilities in our consolidated balance sheet as of October 31, 2020.

In addition to these charges incurred in the Third Quarter of Fiscal 2020, we currently expect to incur incremental Lanier Apparel exit charges totaling approximately $5 million through the Second Half of Fiscal 2021, which consists of additional employee charges for employees retained during the exit and the acceleration of certain post-exit contractual commitments.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto contained in this report and the consolidated financial statements, notes to consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our ~~Annual Report on~~Fiscal 2019 Form ~~10-K for Fiscal 2018.~~10-K.

OVERVIEW

Business Overview

We are a ~~global~~leading apparel company that designs, sources, markets and distributes products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer and Southern Tide lifestyle brands and other owned and licensed brands as well as private label apparel products. During Fiscal ~~2018,~~2019, 93% of our net sales were from products bearing brands that we own and ~~69%~~97% of our net sales were ~~through our direct to consumer channels of distribution. In Fiscal 2018, 96% of our consolidated net sales were to customers located~~ in the United ~~States, with the sales outside the United States consisting primarily of our Tommy Bahama product sales in Canada and the Asia-Pacific region.~~States.

~~Table of Contents~~

Our business strategy is to develop and market compelling lifestyle brands and products that evoke a strong emotional response from our target consumers. 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, like Tommy Bahama, Lilly Pulitzer and Southern Tide, can command greater loyalty and higher price points at retail and create licensing ~~opportunities, which may drive higher earnings.~~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; consumer preference; price; quality; marketing; product fulfillment capabilities; and customer service. Our ability to compete successfully in ~~styling and marketing~~the apparel industry is directly related to 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 products each season.

To further strengthen each lifestyle brand’s connections with consumers, we directly communicate with consumers through digital and print media on a regular basis. We believe our ability to effectively communicate the images, lifestyle and productsDuring Fiscal 2019, 70% of our brands and create an emotional connection with consumers is critical to the success of our brands. Advertising for our brands often attempts to convey the lifestyle of the brand as well as a specific product.

~~We distribute our owned lifestyle branded products primarily~~net sales were through our direct to consumer channels ~~consisting~~ of distribution, which consists of our brand-specific full-price retail stores, our e-commerce websites, our Tommy Bahama food and ~~Lilly Pulitzer retail stores~~beverage operations and our ~~e-commerce sites for~~ Tommy Bahama ~~Lilly Pulitzer and Southern Tide, and through~~outlets. The remaining 30% of our net sales are generated from our wholesale distribution channels. Our direct to consumer operations provide us with the opportunity to interact directly with our customers, present to them a broad assortment of our current season products and immerse them in the theme of the lifestyle brand. We believe that presenting our products in a setting specifically designed to showcase the lifestyle on which the brands are based enhances the image of our brands. Our Tommy Bahama and Lilly Pulitzer full-price retail stores provide high visibility for our brands and products and allow us to stay close to the preferences of our consumers, while also providing a platform for long-term growth for the brands. In Tommy Bahama, we also operate restaurants and Marlin Bars, generally adjacent to a Tommy Bahama full-price retail store location, which we believe further enhance the brand’s image with consumers. Our e-commerce websites provide the opportunity to increase revenues by reaching a larger population of consumers and at the same time allow our brands to provide a broader range of products.

~~The~~ wholesale operations consist of net sales of products bearing our lifestyle brands, which complement our direct to consumer operations and provide access to a larger group of ~~consumers. As we seek to maintain~~consumers, and the ~~integrity~~net sales of our lifestyle brands by limiting promotional activity in our full-price retail stores and e-commerce websites, we generally target wholesale customers that follow this same approach in their stores. Our wholesale customers for our Tommy Bahama, Lilly Pulitzer and Southern Tide brands generally include various specialty stores, Signature Stores for Lilly Pulitzer and Southern Tide, better department stores and multi-branded e-commerce retailers. Within our Lanier Apparel operating group, we sell tailored clothing and sportswear products under licensed, private label and owned brands. Lanier Apparel’s customers include department stores, discount and off-price retailers, warehouse clubs, national chains, specialty stores and multi-branded e-commerce retailers.group.

The disposal of discontinued, end of season or excess inventory is an ongoing part of any apparel business, and our operating groups have historically utilized a variety of methods to sell such inventory, including outlet stores in Tommy Bahama, e-commerce flash sales in Lilly Pulitzer, and off-price retailers in each operating group. Our focus in disposing of the excess inventory for our lifestyle brands is to do so in a brand appropriate setting and achieve an acceptable margin.Industry Overview

~~All of our~~Our operating groups operate in highly competitive apparel markets ~~in which numerous U.S. and foreign-based apparel firms compete.~~that continue 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 direct competitors vary by operating group and distribution channel. We believe the principal competitive factors in the apparel industry are reputation, value, and image of brand names; design; consumer preference; price; quality; marketing; product fulfillment capabilities; and customer service.

The apparel industry is cyclical and very dependent upon the overall level and focus of discretionary consumer spending, which changes as consumer preferences and regional, domestic and international economic conditions change.

~~Table of Contents~~

Increasingly, consumers are choosing 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. ~~We believe the changes in consumer preferences for discretionary spending, the current global economic conditions~~

The competitive and ~~economic uncertainty continue to impact the business of each of our operating groups and the apparel industry as a whole.~~

Due to the imposition by the United States of higher tariffs on apparel and related products manufactured in China, our net sales, cost of goods sold, operating income and net earnings are expected to be impacted in the second half of Fiscal 2019 as well as in Fiscal 2020, to the extent that we are unable to offset the additional costs by moving product sourcing from China, successfully negotiating price reductions from third party manufacturers or increasing sales prices on select products. During Fiscal 2018, approximately 54% of our apparel and related products were from producers located in China. During Fiscal 2019, we have made progress in shifting production from China, particularly for goods to be received late in the fiscal year, resulting in our expectation that the proportion of products sourced from China in Fiscal 2019 will be slightly lower than in Fiscal 2018. We anticipate more meaningful reductions in the proportion of our apparel and related products sourced from China in Fiscal 2020.

~~We believe the retail apparel market is~~ evolving very rapidly and in ways that are having a disruptive impact on traditional fashion retailing. The application of technology, including the internet and mobile devices, to fashion retail provides consumers increasing access to multiple, responsive distribution platforms and an unprecedented ability to communicate directly with brands and retailers. As a result, consumers have more information and greater control over information they receive as well as broader, faster and cheaper access to goods than ever before. This, along with the coming of age of the “millennial” generation, is revolutionizing the way that consumers shop for fashion and other goods, which continues to be evidenced by weakness and store closures for certain department stores and mall-based retailers, decreased consumer retail traffic, a more promotional retail environment ~~expansion of off-price and discount retailers, and a shift from bricks and mortar to internet purchasing. These changes~~ may require that brands and retailers approach their operations, including marketing and advertising, very differently than historical practices and may result in increased operating costs and capital investments to generate growth or even maintain ~~their~~ current sales levels.

While this competition and evolution ~~in the fashion retail industry~~ presents 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.

Table of Contents

We believe our lifestyle brands have true competitive advantages in this new retailing paradigm, and we are 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.

~~Specifically,~~COVID-19 Pandemic

In March 2020, the World Health Organization characterized the outbreak of a novel coronavirus (COVID-19) as a pandemic. COVID-19 has had a significant effect on overall economic conditions and our operations, and is the primary reason for a 36% reduction in net sales in the First Nine Months of Fiscal 2020, a significant net loss in the First Nine Months of Fiscal 2020 after many years of profitable operating results and an expected net loss for the full year of Fiscal 2020. While our mission remains the enhancement of long-term shareholder value, our focus during this crisis has been, and will continue to be, (1) the health and well-being of our employees, customers and communities, (2) protecting the reputation, value and image of our brands and (3) preserving liquidity.

Due to the COVID-19 pandemic, we ~~believe~~saw reduced consumer traffic starting in early March 2020 and temporarily closed all our ~~lifestyle brands~~retail and restaurant locations in March 2020. We began reopening our stores and restaurants in early May with additional stores and restaurants reopening throughout the Second Quarter of Fiscal 2020. We have ~~opportunities for long-term growth in~~reopened substantially all of our direct to consumer ~~businesses. We anticipate increased sales~~locations in a phased approach in accordance with local government guidelines and with additional safety protocols. Substantially all locations are experiencing reduced traffic, limited operating hours and capacity, seating and other limitations, with such factors impacting individual locations very differently. Certain retail stores and restaurants, including several in Hawaii and California, were required to close again for certain periods in the Third Quarter of Fiscal 2020 after local jurisdictions reinstated some previous closure requirements, and there can be no assurance that additional closures will not occur as a result of any resurgence of COVID-19 cases and/or additional government mandates or recommendations. Generally, locations with attached restaurants or Marlin Bars, in outdoor centers and in drivable resort vacation destinations have performed better than locations in indoor malls. At the same time, the shift from in-store shopping to online shopping has accelerated during the COVID-19 pandemic resulting in strong growth in our e-commerce ~~operations, which are~~businesses during the First Nine Months of Fiscal 2020.

There is significant uncertainty as to the duration and severity of the pandemic as well as the associated business disruption, impact on discretionary spending and restrictions on our ongoing operations. Thus, the ultimate impact of the pandemic cannot be reasonably estimated at this time. However, the COVID-19 pandemic is expected to ~~grow at~~continue to have a ~~faster rate than comparable~~material adverse impact on our business, results of operations, cash flows and financial condition for the foreseeable future due to the anticipated lower net sales ~~through~~from our bricks and mortar ~~store locations.~~ locations; reduced demand from our wholesale customers, several of which filed for bankruptcy in 2020 or are undergoing restructurings or closures; the uncertainty as to the continued strength of our brands’ e-commerce websites during the pendency of the pandemic; overall changes in consumer confidence and consumer spending habits; any potential disruptions to our supply chain; and a slowdown in the U.S. and global economies.

We ~~also~~have $287 million of availability pursuant to our U.S. Revolving Credit Agreement as of October 31, 2020. Considering this, among other factors, we believe ~~growth can be achieved through prudent expansion~~we have adequate liquidity and the financial discipline to address the near-term challenges related to the COVID-19 pandemic. Actions we have taken to mitigate the impact of ~~bricks and mortar full-price retail store and restaurant~~this pandemic on our business, operations and modest comparable full-price retail store and restaurant sales increases. We expect there will continue to be desirable locations to add new retail stores to our portfolio, but at a measured and selective pace, and believe that an effective bricks and mortar retail strategy is an important component to the e-commerce operations for long-term success in today’s retail apparel environment.liquidity include:

We believe our lifestyle brands have an opportunity for modest sales increases in their wholesale businesses in the long term. However, we must be diligent in our effort to avoid compromising the integrity of our brands by maintaining or growing sales with wholesale customers that may not be aligned with our long-term strategy. This is particularly important with the challenges in the department store channel, which represented approximately 12% of our consolidated net sales in Fiscal 2018, compared to approximately 14% in Fiscal 2017. The management of wholesale distribution for our lifestyle brands resulted in a decrease in wholesale sales in Fiscal 2018. While we anticipate modest growth in our wholesale sales in Fiscal 2019, there could be additional reductions in wholesale sales in future years, as the amount of sales to certain wholesale accounts could decrease if the number of doors that carry our product decreases, the volume sold for a particular door is reduced or the account is exited altogether. We anticipate that sales increases in our wholesale businesses in the long term will stem primarily from certain current customers adding within their existing door count and increasing their online business; increased sales to online retailers; and our selective addition of new

●

we furloughed and laid off a significant number of our retail, restaurant and office employees;

●

certain salaried employees, including our Chief Executive Officer, Chief Financial Officer and other executives, took temporary reductions in base salary during Fiscal 2020;

●

our Board of Directors elected to reduce its cash retainers for Fiscal 2020;

●

we worked with our suppliers to cancel, delay or suspend future product deliveries;

1822

Table of Contents

●

we worked with our wholesale customers to identify suitable changes to our business arrangements;

●

we negotiated equitable rental arrangements with most of our retail and restaurant landlords, believing that the payment of rents for both the closure and subsequent periods is inappropriate due to the impact of the COVID-19 pandemic, and are continuing those discussions with many landlords;

●

under the CARES Act, we deferred the employer portion of FICA payments and obtained employee retention credits for certain compensation paid to employees even while they were not working during the COVID-19 pandemic;

●

we suspended, cancelled or deferred certain capital expenditures, reducing our capital expenditure expectations for Fiscal 2020;

●

we drew down certain amounts on our U.S. Revolving Credit Agreement to increase our cash position and preserve financial flexibility; and

●

our Board of Directors reduced the rate of our dividend payable in Fiscal 2020.

~~wholesale customers who generally present~~Also, we established management committees, reporting to our Chief Executive Officer, to continue to monitor the COVID-19 pandemic and ~~merchandise~~its impact and are taking the necessary measures to protect the health and safety of our ~~products in a way that is consistent with our full-price, direct to consumer distribution strategy. We also believe that there are opportunities for modest sales growth for~~ employees and customers.

Lanier Apparel Exit

In the Third Quarter of Fiscal 2020, we made the decision to exit our Lanier Apparel business, which is expected to be completed during the Second Half of Fiscal 2021. This decision is to further our stated business strategy, which is to develop and market compelling lifestyle brands, and takes into consideration the increased near-term challenges faced by the Lanier Apparel business as a result of the COVID-19 pandemic.

In connection with the planned exit of our Lanier Apparel business, we recorded pre-tax charges of $10 million in the ~~future through new product programs~~Lanier Apparel operating group during the Third Quarter of Fiscal 2020. These charges consist of (1) $6 million of inventory markdowns, the substantial majority of which reversed in Corporate and ~~licenses.~~

~~We believe~~Other as part of LIFO accounting, (2) $2 million of operating lease asset impairment charges for leased space that we ~~must continue~~intend to ~~invest in our lifestyle brands~~vacate prior to ~~take advantage~~the end of ~~their long-term growth opportunities. Investments include capital expenditures~~the lease term, (3) $1 million of employee charges, including severance and employee retention costs, (4) $1 million of non-cash fixed asset impairment charges, primarily related to leasehold improvements, and (5) $1 million of charges related to our Merida manufacturing facility, which ceased operations in the direct to consumer operations, such as technology enhancements, e-commerce initiatives and retail store and restaurant build-out for new, relocated or remodeled locations, as well as distribution center and administrative office expansion initiatives. Additionally, we anticipate increased employment and other administrative function costs to support ongoing business operations and fuel future sales growth.Third Quarter of Fiscal 2020.

In addition to these charges incurred in the ~~midst~~Third Quarter of Fiscal 2020, we currently expect to incur incremental Lanier Apparel exit charges totaling approximately $5 million through the ~~changes~~Second Half of Fiscal 2021, which consists of additional employee charges for employees retained during the exit and the acceleration of certain post-exit contractual commitments.

For additional information about our business and each of our operating groups, see Part I, Item 1. Business included in our industry, an important initiative for us has been to increase the profitability of the Tommy Bahama business. These initiatives generally focus on increasing gross margin and operating margin through efforts such as: product cost reductions; selective price increases; reducing inventory purchases; redefining our approach to inventory clearance; effectively managing controllable and discretionary operating expenses; taking a more conservative approach to retail store openings and lease renewals; and improving Asia-Pacific operating results. While we have made progress on these initiatives in recent years, improving the profitability of the Tommy Bahama business will remain a primary focus.

We continue to believe it is important to maintain a strong balance sheet and liquidity. We believe positive cash flow from operations, coupled with the strength of our balance sheet and liquidity, will provide us with sufficient resources to fund future investments in our owned lifestyle brands. While we believe we have significant opportunities to appropriately deploy our capital and resources in our existing lifestyle brands, our strong cash flows from operations and ample borrowing capacity provide us the ability to continue to evaluate opportunities to add additional lifestyle brands to our portfolio in the future if we identify appropriate targets that meet our investment criteria. While we are actively exploring acquisition opportunities, investment opportunities for the types of large brands with the attributes that we desire are not always available at an acceptable price. Therefore, our interest in acquiring smaller brands and earlier stage companies has increased in recent years, particularly in businesses where we may have the opportunity to more fully integrate the brand into our existing infrastructure and shared services functions. Currently, the market for desirable lifestyle brands, both large and small, is very competitive and the expectations of sellers are high relative to the historical operating results and opportunities of the brand.

Fiscal 2019 Form 10-K. Important factors relating to certain risks ~~many of which are beyond our ability to control or predict,~~ which could impact our business, including those resulting from the COVID-19 pandemic, are described in Part I,II, Item 1A. Risk Factors inof this report and Part I. Item 1A. Risk Factors of our ~~Annual Report on~~Fiscal 2019 Form ~~10-K for Fiscal 2018.~~10-K.

Key Operating Results:

Table of Contents

The following table sets forth our consolidated operating results (in thousands, except per share amounts) for the First Nine Months of Fiscal ~~2019~~2020 compared to the First Nine Months of Fiscal ~~2018~~2019


	First Nine Months				First Nine Months
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Net sales	$	825,194	$	808,931	$	527,466	$	825,194
Operating income	$	72,595	$	68,591
Net earnings	$	53,161	$	49,612
Net earnings per diluted share	$	3.15	$	2.95
Weighted average shares outstanding - diluted		16,896		16,826
Operating (loss) income					$	(107,224)	$	72,595
Net (loss) earnings					$	(83,475)	$	53,161
Net (loss) earnings per diluted share					$	(5.04)	$	3.15
Weighted average shares outstanding -- diluted						16,576		16,896

The ~~higher~~net loss per share in the First Nine Months of Fiscal 2020 compared to positive net earnings per ~~diluted~~ share in the First Nine Months of Fiscal 2019 was primarily due to ~~higher~~(1) the impact of COVID-19 on the operating results of each of our operating groups, (2) the $60 million Southern Tide impairment charge recognized in the First Quarter of Fiscal 2020, (3) the non-deductibility of certain goodwill impairment charges resulting in a lower effective tax rate on our loss in the First Nine Months of Fiscal 2020 than the effective tax rate on our income in ~~Lilly Pulitzer, Tommy Bahama~~the First Nine Months of Fiscal 2019, and ~~Southern Tide~~(4) $10 million of charges related to the Lanier Apparel exit. These items were partially offset by the improved operating results in Corporate and ~~lower interest expense.~~

~~COMPARABLE SALES~~

~~We often disclose comparable sales in order~~Other, which were primarily due to ~~provide additional information regarding changes in our results~~the favorable impact of ~~operations between periods. Our disclosures~~LIFO accounting primarily resulting from the reversal of ~~comparable sales include net sales from full-price retail stores and e-commerce sites, excluding sales associated with e-commerce flash clearance sales. We believe that the inclusion of both~~

~~Table of Contents~~

~~full-price retail stores and e-commerce sites~~inventory markdowns recognized 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 channel. For our comparable sales disclosures, we exclude (1) outlet store sales, warehouse 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) restaurant sales, as we do not currently believe that the inclusion of restaurant sales in our comparable sales disclosures is meaningful in assessing our consolidated results of operations. Comparable sales information reflects net sales, including shipping and handling revenues, if any, associated with product sales.

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 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 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, are excluded from our comparable sales.

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.operating groups.

STORE COUNT

The table below provides store count information for Tommy Bahama, ~~and~~ Lilly Pulitzer and Southern Tide as of the dates specified. The table includes our permanent stores and excludes any pop-up or temporary store locations which have an initial lease term of less than 12 months. Due to the impact of the COVID-19 pandemic, all our stores and restaurants were closed beginning in March 2020. We began reopening our stores and restaurants starting on May 3, 2020 in a phased approach in accordance with local government guidelines and with additional safety protocols implemented. Certain retail stores and restaurants in some jurisdictions, including Hawaii and California, were required to close again for certain periods in the Third Quarter of Fiscal 2020 after local jurisdictions reinstated some previous closure requirements. Substantially all locations are experiencing reduced traffic, limited operating hours and capacity, seating and other limitations, with such factors impacting individual locations very differently.


	November 2,	February 2,	November 3,	February 3,	October 31,	February 1,	November 2,	February 2,
	2019	2019	2018	2018	2020	2020	2019	2019
Tommy Bahama retail stores	111	113	113	110	106	111	111	113
Tommy Bahama retail-restaurant locations	17	17	17	18	19	16	17	17
Tommy Bahama outlets	37	37	38	38	35	35	37	37
Total Tommy Bahama locations	165	167	168	166	160	162	165	167
Lilly Pulitzer retail stores	63	62	60	57	59	61	63	62
Southern Tide retail stores					3	1	—	—
Total Oxford locations	228	229	228	223	222	224	228	229

RESULTS OF OPERATIONS

THIRD QUARTER OF FISCAL ~~2019~~2020 COMPARED TO THIRD QUARTER OF FISCAL ~~2018~~2019

The discussion and tables below compare our statements of operations for the Third Quarter of Fiscal ~~2019~~2020 to the Third Quarter of Fiscal ~~2018.~~2019. Each dollar and percentage change provided reflects the change between these fiscal periods unless 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 may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.

2024

Table of Contents

The following table sets forth the specified line items in our unaudited condensed consolidated statements of operations both in dollars (in thousands) and as a percentage of net sales as well as the dollar change and the percentage change as compared to the same period of the prior ~~year.~~year:


	Third Quarter												Third Quarter
	Fiscal 2019				Fiscal 2018				$ Change		% Change		Fiscal 2020				Fiscal 2019				$ Change		% Change

Net sales	$	241,221	100.0	%	$	233,662	100.0	%	$	7,559	3.2	%	$	175,135	100.0	%	$	241,221	100.0	%	$	(66,086)	(27.4)	%
Cost of goods sold		108,241	44.9	%		104,383	44.7	%		3,858	3.7	%		78,866	45.0	%		108,241	44.9	%		(29,375)	(27.1)	%
Gross profit	$	132,980	55.1	%	$	129,279	55.3	%	$	3,701	2.9	%	$	96,269	55.0	%	$	132,980	55.1	%	$	(36,711)	(27.6)	%
SG&A		134,231	55.6	%		128,687	55.1	%		5,544	4.3	%		113,537	64.8	%		134,231	55.6	%		(20,694)	(15.4)	%
Royalties and other operating income		3,845	1.6	%		3,113	1.3	%		732	23.5	%		3,550	2.0	%		3,845	1.6	%		(295)	(7.7)	%
Operating income	$	2,594	1.1	%	$	3,705	1.6	%	$	(1,111)	(30.0)	%
Operating (loss) income													$	(13,718)	(7.8)	%	$	2,594	1.1	%	$	(16,312)	NM	%
Interest expense, net		81	0.0	%		489	0.2	%		(408)	(83.4)	%		339	0.2	%		81	0.0	%		258	318.5	%
Earnings before income taxes	$	2,513	1.0	%	$	3,216	1.4	%	$	(703)	(21.9)	%
Income taxes		845	0.4	%		1,355	0.6	%		(510)	(37.6)	%
Net earnings	$	1,668	0.7	%	$	1,861	0.8	%	$	(193)	(10.4)	%
(Loss) earnings before income taxes													$	(14,057)	(8.0)	%	$	2,513	1.0	%	$	(16,570)	NM	%
Income tax (benefit) provision														(3,453)	(2.0)	%		845	0.4	%		(4,298)	NM	%
Net (loss) earnings													$	(10,604)	(6.1)	%	$	1,668	0.7	%	$	(12,272)	NM	%

Net Sales


	Third Quarter								Third Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change		Fiscal 2020		Fiscal 2019		$ Change		% Change
Tommy Bahama	$	127,023	$	123,130	$	3,893	3.2	%	$	94,905	$	127,023	$	(32,118)	(25.3)	%
Lilly Pulitzer		71,659		68,213		3,446	5.1	%		53,714		71,659		(17,945)	(25.0)	%
Lanier Apparel		29,377		29,037		340	1.2	%		10,810		28,758		(17,948)	(62.4)	%
Southern Tide		9,102		9,496		(394)	(4.1)	%		10,023		9,102		921	10.1	%
Corporate and Other		4,060		3,786		274	7.2	%		5,683		4,679		1,004	21.5	%
Total net sales	$	241,221	$	233,662	$	7,559	3.2	%
Consolidated net sales									$	175,135	$	241,221	$	(66,086)	(27.4)	%

Consolidated net sales ~~increased $8~~decreased $66 million, or 3%27%, in the Third Quarter of Fiscal ~~2019.~~2020, primarily due to the impact of the COVID-19 pandemic, which has had a negative impact on our retail, wholesale and restaurant operations, impacted by, among other things, reduced traffic after locations reopened and the temporary closures at some locations, while our e-commerce business has generated very strong growth. The ~~increase~~decrease in ~~consolidated~~ net sales ~~was primarily driven~~included decreases in (1) full-price retail sales of $32 million, or 45%, (2) wholesale sales of $28 million, or 37%, (3) restaurant sales of $5 million, or 30%, and (4) outlet sales of $4 million, or 33%. These decreases were partially offset by ~~(1) a $6~~increased e-commerce sales of $4 million, or 6%, comparable sales increase to $91 million in the Third Quarter of Fiscal 2019 from $85 million in the Third Quarter of Fiscal 2018, with comparable sales increases in both Tommy Bahama and Lilly Pulitzer, (2)including a ~~$2 million~~51% increase in ~~off-price direct to consumer~~full-price e-commerce sales ~~including the Lilly Pulitzer~~and a 41% decrease in e-commerce flash clearance sale, (3) an incremental net sales increase of $2 million associated with non-comp retail store operations primarily resulting from an increase at Lilly Pulitzer and (4) a $1 million increase in restaurant sales in Tommy Bahama. These increases were partially offset by a $2 million net decrease in wholesale sales. The changes in net sales by operating group are discussed below.

The following table presents the proportion of our consolidated net sales by distribution channel for each period presented:


	Third Quarter				Third Quarter
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Retail	35	%	35	%	27	%	35	%
E-commerce	26	%	24	%	38	%	26	%
Restaurant	7	%	7	%	7	%	7	%
Wholesale	32	%	34	%	28	%	32	%
Total	100	%	100	%	100	%	100	%

Tommy Bahama:

Tommy Bahama net sales ~~increased $4~~decreased $32 million, or 3%25%, in the Third Quarter of Fiscal ~~2019.~~2020. The ~~increase~~decrease in net sales in Tommy Bahama ~~net~~included decreases in (1) full-price retail sales ~~was~~of $19 million, or 42%, primarily due to ~~(1) a $3~~the impact of COVID-19 on retail store operations as well as reduced store count, (2) wholesale sales of $10 million, or ~~6%, comparable sales increase to $58 million in the Third Quarter of Fiscal 2019 from $55 million in the Third Quarter of Fiscal 2018 and (2) a $1 million increase in restaurant~~

2125

Table of Contents

32%, primarily due to lower full-price sales, ~~primarily reflecting the net impact~~(3) restaurant sales of $5 million, or 30%, and (4) outlet store sales ~~at remodeled, opened and closed restaurants, as well as increased sales in existing restaurants.~~of $5 million, or 35%. These ~~increases~~decreases were partially offset by ~~a $1~~increased e-commerce sales of $7 million, ~~decrease in wholesale sales, reflecting lower full-price wholesale sales and higher off-price wholesale sales. Sales in outlets and non-comp retail stores were generally comparable period-over-period.~~or 38%. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:


	Third Quarter				Third Quarter
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Retail	46	%	46	%	37	%	46	%
E-commerce	14	%	14	%	27	%	14	%
Restaurant	14	%	13	%	13	%	14	%
Wholesale	26	%	27	%	23	%	26	%
Total	100	%	100	%	100	%	100	%

Lilly Pulitzer:

Lilly Pulitzer net sales ~~increased $3~~decreased $18 million, or 5%25%, in the Third Quarter of Fiscal ~~2019.~~2020. The ~~increase~~decrease in net sales in Lilly Pulitzer ~~net~~included decreases in (1) retail sales ~~was~~of $13 million, or 52%, primarily ~~driven by (1) a $2 million increase in~~due to the impact of COVID-19 on retail store operations as well as reduced store count, (2) e-commerce flash clearance sales ~~with the September 2019 “After Party Sale” generating $31 million~~ of ~~net sales, (2) a $2~~$12 million, or 6%41%, ~~comparable sales increase to $28 million~~as a portion of Lilly Pulitzer’s semiannual e-commerce flash clearance sale, which has historically taken place entirely in the ~~Third~~third quarter, was held in the Second Quarter of Fiscal ~~2019 from $27 million in the Third Quarter of Fiscal 2018,~~2020, and (3) ~~an incremental net~~wholesale sales ~~increase~~ of $1 million, ~~associated with non-comp retail store operations.~~or 10%, due to lower full-price sales partially offset by higher off-price sales. These ~~increases~~decreases were partially offset by ~~a $1~~increased full-price e-commerce sales of $8 million, ~~decrease in wholesale sales reflecting lower full-price and off-price wholesale sales.~~or 93%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:


	Third Quarter				Third Quarter
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Retail	35	%	35	%	22	%	35	%
E-commerce	55	%	53	%	66	%	55	%
Wholesale	10	%	12	%	12	%	10	%
Total	100	%	100	%	100	%	100	%

Lanier Apparel:

~~The~~ Lanier Apparel net sales ~~increase of 1%~~decreased $18 million, or 62% in the Third Quarter of Fiscal ~~2019 reflects increases~~2020 resulting from decreases in ~~certain~~most of the replenishment, seasonal and other programs ~~including increased sales in~~for the branded and private label ~~Cole Haan and Duck Head businesses. These increases were partially offset by decreased volume~~businesses, including a large pants program for a warehouse club that did not repeat in ~~various seasonal, in-stock and replenishment programs for certain branded businesses.~~Fiscal 2020.

Southern Tide:

Southern Tide net sales ~~decreased 4%~~increased $1 million, or 10%, in the Third Quarter of Fiscal ~~2019~~2020 due to ~~lower wholesale~~a $1 million, or 36%, increase in e-commerce sales ~~partially~~and increased retail store sales resulting from the opening of three Southern Tide retail stores since the Fourth Quarter of Fiscal 2019. Wholesale sales were generally comparable as decreased full-price sales were offset by increased ~~e-commerce sales. The lower wholesale~~off-price sales ~~primarily resulted from lower off-price wholesale sales.~~as Southern Tide sold a significant amount of prior season inventory in the Third Quarter of Fiscal 2020. The following table presents the proportion of net sales by distribution channel for Southern Tide for each period presented:


	Third Quarter				Third Quarter
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Retail					4	%	—	%
E-commerce	19	%	16	%	24	%	19	%
Wholesale	81	%	84	%	72	%	81	%
Total	100	%	100	%	100	%	100	%

2226

Table of Contents

Corporate and Other:

Corporate and Other net sales increased $1 million, or 22%, in the Third Quarter of Fiscal 2020 primarily ~~consist of the~~due to increased net sales ~~of TBBC and our Lyons, Georgia distribution center operations. The increase in net sales was due to sales growth~~ in TBBC.

Gross Profit

The tables below present gross profit by operating group and in total for the Third Quarter of Fiscal ~~2019~~2020 and the Third Quarter of Fiscal ~~2018,~~2019, 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.


	Third Quarter								Third Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change		Fiscal 2020		Fiscal 2019		$ Change		% Change
Tommy Bahama	$	76,467	$	75,738	$	729	1.0	%	$	56,444	$	76,467	$	(20,023)	(26.2)	%
Lilly Pulitzer		40,954		38,290		2,664	7.0	%		32,830		40,954		(8,124)	(19.8)	%
Lanier Apparel		8,628		8,580		48	0.6	%		(4,978)		8,210		(13,188)	NM	%
Southern Tide		4,395		4,475		(80)	(1.8)	%		3,420		4,395		(975)	(22.2)	%
Corporate and Other		2,536		2,196		340	15.5	%		8,553		2,954		5,599	NM	%
Total gross profit	$	132,980	$	129,279	$	3,701	2.9	%
Consolidated gross profit									$	96,269	$	132,980	$	(36,711)	(27.6)	%
Notable items included in amounts above:
LIFO adjustments in Corporate and Other	$	(35)	$	(57)					$	(5,645)	$	(35)

Lanier Apparel exit charges in cost of goods sold									$	6,415	$	—


	Third Quarter				Third Quarter
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Tommy Bahama	60.2	%	61.5	%	59.5	%	60.2	%
Lilly Pulitzer	57.2	%	56.1	%	61.1	%	57.2	%
Lanier Apparel	29.4	%	29.5	%	(46.0)	%	28.5	%
Southern Tide	48.3	%	47.1	%	34.1	%	48.3	%
Corporate and Other	NM		NM		NM	%	NM	%
Consolidated gross margin	55.1	%	55.3	%	55.0	%	55.1	%

The ~~increase~~decrease in consolidated gross profit in the Third Quarter of Fiscal ~~2019~~2020 was primarily due to ~~increased~~the lower net sales ~~partially offset by~~as well as lower gross margin. The lower consolidated gross margin reflects lower gross margin in ~~Tommy Bahama and Lanier Apparel~~each operating group except for Lilly Pulitzer, as discussed below. During the Third Quarter of Fiscal 2020, we recognized the negative impact of $7 million of inventory markdowns, which ~~was~~were partially offset by ~~(1) improved gross margin in Lilly Pulitzer~~a $6 million LIFO accounting credit. In the Third Quarter of Fiscal 2019, we recognized $1 million of inventory markdowns and ~~Southern Tide and (2)~~ a ~~change in sales mix as Tommy Bahama and Lilly Pulitzer represented a larger proportion of our net sales. Changes in gross margin by operating group are discussed below.~~minimal impact from LIFO accounting.

Tommy Bahama:

The decrease in gross margin for Tommy Bahama was ~~primarily driven by (1)~~due to lower gross margin in both the direct to consumer and wholesale ~~business reflecting a larger proportion~~channels of ~~off-price wholesale sales as well as lower gross margins on wholesale sales and (2)~~distribution. The lower gross margin in the direct to consumer ~~business~~channel was primarily due to (1) a greater proportion of promotional sales in the Third Quarter of Fiscal 2020 as certain end of season sales and promotions historically held in the second quarter were moved to the third quarter in Fiscal 2020 and (2) a change in sales mix as e-commerce sales represented a greater proportion of direct to consumer sales in the Third Quarter of Fiscal 2020. The lower gross margin in the wholesale channel of distribution was primarily due to a change in sales mix as a greater proportion of wholesale sales were ~~associated with Tommy Bahama promotional events including our Friends and Family, Boracay pant and loyalty award card events.~~off-price sales.

Table of Contents

Lilly Pulitzer:

The increase in gross margin for Lilly Pulitzer was primarily due to (1) a change in sales mix aswith full-price direct to consumer sales ~~represented~~representing a larger proportion of net sales ~~and~~as the e-commerce flash clearance sale was smaller in the Third Quarter of Fiscal 2020 as a portion of the e-commerce flash clearance sale occurred in the Second Quarter of Fiscal 2020, (2) ~~improved~~higher gross ~~margin~~margins in the full-price, direct to consumer channel of distribution, reflecting higher initial margins and the impact of no in-store clearance sale in the Third Quarter of Fiscal 2020 due to concerns about attracting large crowds in our stores during the COVID-19 pandemic, and (3) higher gross margins in the e-commerce flash clearance sale ~~and wholesale channels~~in the Third Quarter of ~~distribution.~~Fiscal 2020.

~~Table of Contents~~

Lanier Apparel:

The ~~decrease in~~negative gross margin for Lanier Apparel was primarily due to ~~a change~~(1) $6 million of Lanier Apparel exit charges in ~~sales mix~~cost of goods sold, including inventory markdowns and charges related to our Merida manufacturing facility, as ~~a greater proportion of sales~~discussed in Note 9 in the ~~Third Quarter of Fiscal 2019 were related~~unaudited condensed consolidated financial statements included in this report, and (2) lower gross margin on various programs due to ~~private label programs.~~the challenging tailored clothing market.

Southern Tide:

The ~~increase~~decrease in gross margin for Southern Tide was primarily due to (1) increased inventory markdowns and lower profitability on off-price sales, (2) more significant discounts and allowances in all channels of distribution, and (3) a change in sales mix as ~~e-commerce sales represented a greater proportion of net sales and~~ off-price wholesale sales represented a ~~lower~~larger proportion of ~~net~~ sales.

Corporate and Other:

The gross profit in Corporate and Other primarily reflects ~~(1)~~ the gross profit of TBBC, ~~(2)~~Duck Head and the ~~gross profit of our~~ Lyons, Georgia distribution center ~~and (3)~~as well as the impact of LIFO accounting adjustments. The primary ~~driver~~drivers for the higher gross profit ~~was~~were (1) the $6 million net favorable impact of LIFO accounting with a LIFO accounting credit in the Third Quarter of Fiscal 2020 and a minimal LIFO accounting impact in the Third Quarter of Fiscal 2019 and (2) the gross profit ~~associated with the increased~~resulting from higher net ~~sales of TBBC.~~sales. The LIFO accounting impact in Corporate and Other in each period primarily reflects (1) a charge in Corporate and Other when inventory that had been marked down to the estimated net realizable value in an operating group in a prior period is ultimately sold or (2) a credit in Corporate and Other when inventory has been marked down to the estimated net realizable value in an operating group in the current period, but ~~the inventory~~ has not been sold as of period end.

SG&A


	Third Quarter										Third Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change		Fiscal 2020			Fiscal 2019			$ Change		% Change
SG&A	$	134,231		$	128,687		$	5,544	4.3	%	$	113,537		$	134,231		$	(20,694)	(15.4)	%
SG&A (as a % of net sales)		55.6	%		55.1	%						64.8	%		55.6	%
Amortization of Tommy Bahama Canada intangible assets	$	—		$	378
Notable items included in amounts above:
Amortization of Lilly Pulitzer Signature Store intangible assets	$	80		$	93						$	68		$	80
Lanier Apparel exit charges in SG&A											$	3,701		$	—
Amortization of Southern Tide intangible assets	$	73		$	72						$	72		$	73

The ~~higher~~lower SG&A in the Third Quarter of Fiscal ~~2019~~2020 was primarily due to (1) ~~increases in SG&A~~decreased employment costs of $16 million primarily due to ~~support the businesses, including increased salaries, wages, employee benefits, variable costs and other operating expenses~~reductions in our ~~ongoing~~employment costs in response to COVID-19, including layoffs, reduced hours in direct to consumer operations or pay reductions, reductions in incentive compensation amounts, suspension of the company match for our 401(k) plan and employee credits related to employee retention partially offset by certain severance amounts, (2) a $3 million reduction in occupancy expenses primarily resulting from the impact of fewer Tommy Bahama and Lilly Pulitzer bricks and mortar locations, certain negotiated rent reductions and lower costs for utilities, maintenance and related expenses, (3) a $2 million decrease in certain variable expenses including selling,

Table of Contents

shipping, royalties and commission costs, (4) a $2 million decrease in travel expenses, (5) a $1 million ~~increase~~reduction in advertising ~~expense~~expenses, and ~~(3) incremental SG&A associated with the cost of operating additional direct to consumer locations.~~(6) decreases in other expenses including administrative and general expenses. These ~~increases~~decreases were partially offset by ~~a $2~~$4 million ~~reduction~~of Lanier Apparel exit charges in ~~incentive compensation amounts.~~SG&A, as discussed in Note 9 in the unaudited condensed consolidated financial statements included in this report.

Royalties and other operating income


	Third Quarter								Third Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change		Fiscal 2020		Fiscal 2019		$ Change		% Change
Royalties and other operating income	$	3,845	$	3,113	$	732	23.5	%	$	3,550	$	3,845	$	(295)	(7.7)	%

Royalties and other operating income primarily reflects income received from third parties from the licensing of our brands. The ~~increased~~decreased royalties and other income in the Third Quarter of Fiscal ~~2019 reflects~~2020 was due to reduced royalty income in Lilly Pulitzer partially offset by increased royalty income in ~~both~~ Tommy ~~Bahama and Lilly Pulitzer.~~Bahama.

~~Table of Contents~~

Operating income (loss)


	Third Quarter								Third Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change		Fiscal 2020		Fiscal 2019		$ Change		% Change
Tommy Bahama	$	(7,739)	$	(5,141)	$	(2,598)	(50.5)	%	$	(7,212)	$	(7,739)	$	527	6.8	%
Lilly Pulitzer		10,988		9,576		1,412	14.7	%		5,266		10,988		(5,722)	(52.1)	%
Lanier Apparel		1,952		2,261		(309)	(13.7)	%		(12,500)		1,971		(14,471)	NM	%
Southern Tide		526		492		34	6.9	%		(464)		526		(990)	NM	%
Corporate and Other		(3,133)		(3,483)		350	10.0	%		1,192		(3,152)		4,344	NM	%
Total Operating Income	$	2,594	$	3,705	$	(1,111)	(30.0)	%
Consolidated Operating (Loss) Income									$	(13,718)	$	2,594	$	(16,312)	NM	%
Notable items included in amounts above:
LIFO adjustments in Corporate and Other	$	(35)	$	(57)					$	(5,645)	$	(35)
Amortization of Tommy Bahama Canada intangible assets	$	—	$	378
Lanier Apparel exit charges in cost of goods sold									$	6,415	$	—
Amortization of Lilly Pulitzer Signature Store intangible assets	$	80	$	93					$	68	$	80
Lanier Apparel exit charges in SG&A									$	3,701	$	—
Amortization of Southern Tide intangible assets	$	73	$	72					$	72	$	73

The ~~decrease in~~lower operating ~~income~~results in the Third Quarter of Fiscal ~~2019 was~~2020 were primarily due to ~~higher SG&A~~the $10 million of Lanier Apparel exit charges, as discussed in Note 9 in the unaudited condensed consolidated financial statements included in this report, and ~~lower gross margin, partially offset by~~ the impact of ~~higher net sales. On an~~COVID-19 on each operating ~~group basis, the decrease in operating income reflects lower operating results in Tommy Bahama and Lanier Apparel~~group. These items were partially offset by improved operating results in ~~Lilly Pulitzer and~~ Corporate and ~~Other.~~Other, which was primarily due to the favorable impact of LIFO accounting as the substantial majority of inventory markdowns are reversed in Corporate and Other as part of LIFO accounting. Changes in operating income (loss) by operating group are discussed below.

Tommy Bahama:


	Third Quarter										Third Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change		Fiscal 2020			Fiscal 2019			$ Change		% Change
Net sales	$	127,023		$	123,130		$	3,893	3.2	%	$	94,905		$	127,023		$	(32,118)	(25.3)	%
Gross profit	$	76,467		$	75,738		$	729	1.0	%	$	56,444		$	76,467		$	(20,023)	(26.2)	%
Gross margin		60.2	%		61.5	%						59.5	%		60.2	%
Operating income	$	(7,739)		$	(5,141)		$	(2,598)	(50.5)	%
Operating income as % of net sales		(6.1)	%		(4.2)	%
Amortization of Tommy Bahama Canada intangible assets	$	—		$	378

Operating (loss) income											$	(7,212)		$	(7,739)		$	527	6.8	%
Operating (loss) income as % of net sales												(7.6)	%		(6.1)	%

The ~~larger~~improved operating ~~loss~~results for Tommy Bahama ~~was primarily due to higher SG&A and lower gross margin, partially offset by increased net sales and royalty income. The higher SG&A for~~in the Third Quarter of Fiscal ~~2019 reflects increased salaries, wages, employee benefits, variable~~2020 were primarily due to a lower SG&A which offset the lower gross profit resulting from lower sales and lower gross margin. The lower SG&A was primarily due to (1) $14 million of lower employment costs, (2) $2 million of lower occupancy costs, primarily resulting from the operation of fewer bricks and ~~other operating~~mortar locations, certain negotiated rent reductions and lower costs for utilities, maintenance and related expenses, (3) a $2 million decrease in ~~our ongoing operations, partially offset by lower incentive compensation amounts.~~

~~Lilly Pulitzer:~~

Third Quarter


Fiscal 2019

Fiscal 2018

$ Change

% Change

Net sales

$
71,659

$
68,213

$
3,446

5.1
%
Gross profit

$
40,954

$
38,290

$
2,664

7.0
%
Gross margin

57.2
%

56.1
%





Operating income

$
10,988

$
9,576

$
1,412

14.7
%
Operating income as % of net sales

15.3
%

14.0
%





Amortization of Lilly Pulitzer Signature Store intangible assets

$
80

$
93

travel, general and administrative expenses, (4) a

2529

Table of Contents

The increase in operating income in Lilly Pulitzer was primarily due to higher net sales, gross margin and royalty income partially offset by higher SG&A. The higher SG&A for the Third Quarter of Fiscal 2019 included (1) SG&A increases to support the planned growth of the business, including additional employment costs, (2) a $1$1 million ~~increase~~decrease in advertising expense, and ~~(3)~~(5) a $1 million ~~of incremental SG&A associated with the cost of operating additional retail stores.~~decrease in variable selling expenses and credit card transaction fees.

~~Lanier Apparel:~~Lilly Pulitzer:


	Third Quarter										Third Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change		Fiscal 2020			Fiscal 2019			$ Change		% Change
Net sales	$	29,377		$	29,037		$	340	1.2	%	$	53,714		$	71,659		$	(17,945)	(25.0)	%
Gross profit	$	8,628		$	8,580		$	48	0.6	%	$	32,830	��	$	40,954		$	(8,124)	(19.8)	%
Gross margin		29.4	%		29.5	%						61.1	%		57.2	%
Operating income	$	1,952		$	2,261		$	(309)	(13.7)	%	$	5,266		$	10,988		$	(5,722)	(52.1)	%
Operating income as % of net sales		6.6	%		7.8	%						9.8	%		15.3	%
Notable items included in amounts above:
Amortization of Lilly Pulitzer Signature Store intangible assets											$	68		$	80

The ~~decrease in~~lower operating income for Lanier Apparel was primarily due to higher SG&A, partially offset by the higher net sales. The higher SG&A for the Third Quarter of Fiscal 2019 was primarily due to increased selling, shipping and advertising expenses partially offset by lower incentive compensation amounts.

~~Southern Tide:~~

Third Quarter


Fiscal 2019

Fiscal 2018

$ Change

% Change

Net sales

$
9,102

$
9,496

$
(394)

(4.1)
%
Gross profit

$
4,395

$
4,475

$
(80)

(1.8)
%
Gross margin

48.3
%

47.1
%





Operating income

$
526

$
492

$
34

6.9
%
Operating income as % of net sales

5.8
%

5.2
%





Amortization of Southern Tide intangible assets

$
73

$
72

~~The increase in operating income for Southern Tide was primarily due to lower SG&A and higher gross margin partially offset by lower net sales. The lower SG&A~~Lilly Pulitzer in the Third Quarter of Fiscal ~~2019~~2020 was primarily due to ~~decreased incentive compensation amounts.~~

~~Corporate~~lower sales partially offset by lower SG&A and ~~Other:~~

Third Quarter


Fiscal 2019

Fiscal 2018

$ Change

% Change

Net sales

$
4,060

$
3,786

$
274

7.2
%
Gross profit

$
2,536

$
2,196

$
340

15.5
%
Operating loss

$
(3,133)

$
(3,483)

$
350

10.0
%
LIFO adjustments in Corporate and Other

$
(35)

$
(57)

higher gross margin. The ~~smaller operating loss in Corporate and Other~~lower SG&A was primarily due to (1) $2 million of lower employment costs, (2) $1 million of lower occupancy costs, primarily resulting from the ~~increased net sales.~~operation of fewer bricks and mortar locations, certain negotiated rent reductions and lower costs for utilities, maintenance and related expenses and (3) reductions in other amounts, including travel, general and administrative expenses. These decreases in SG&A were partially offset by $1 million of higher marketing expense.

~~Interest expense, net~~Lanier Apparel:


	Third Quarter								Third Quarter
	Fiscal 2019		Fiscal 2018		$ Change		% Change		Fiscal 2020			Fiscal 2019			$ Change		% Change
Interest expense, net	$	81	$	489	$	(408)	(83.4)	%
Net sales									$	10,810		$	28,758		$	(17,948)	(62.4)	%
Gross profit									$	(4,978)		$	8,210		$	(13,188)	NM	%
Gross margin										(46.0)	%		28.5	%
Operating (loss) income									$	(12,500)		$	1,971		$	(14,471)	NM	%
Operating (loss) income as % of net sales										(115.6)	%		6.9	%
Notable items included in amounts above:
Lanier Apparel exit charges in cost of goods sold									$	6,415		$	—
Lanier Apparel exit charges in SG&A									$	3,701		$	—

~~Interest expense decreased~~In the Third Quarter of Fiscal 2020, we made the decision to exit our Lanier Apparel business, which is expected to be completed during the Second Half of Fiscal 2021. The lower operating results for Lanier Apparel in the Third Quarter of Fiscal ~~2019 primarily~~2020 were due to $10 million of Lanier Apparel exit charges, lower ~~average debt outstanding~~sales and lower gross margin. The Lanier Apparel exit charges primarily consist of inventory markdowns and charges related to our Merida manufacturing facility, which are included in cost of goods sold, as well as ~~higher interest income.~~operating lease asset impairment charges, employee charges, and fixed asset impairment charges, which are included in SG&A. The Lanier Apparel exit charges are discussed in Note 9 in the unaudited condensed consolidated financial statements included in this report. The Lanier Apparel exit charges in SG&A generally offset reductions in SG&A for variable expenses, employment costs and other operating expenses.

2630

Table of Contents

~~Income taxes~~Southern Tide:


	Third Quarter										Third Quarter
	Fiscal 2019			Fiscal 2018			$ Change		% Change		Fiscal 2020			Fiscal 2019			$ Change		% Change
Income taxes	$	845		$	1,355		$	(510)	(37.6)	%
Effective tax rate		33.6	%		42.1	%
Net sales											$	10,023		$	9,102		$	921	10.1	%
Gross profit											$	3,420		$	4,395		$	(975)	(22.2)	%
Gross margin												34.1	%		48.3	%
Operating (loss) income											$	(464)		$	526		$	(990)	NM	%
Operating (loss) income as % of net sales												(4.6)	%		5.8	%
Notable items included in amounts above:
Amortization of Southern Tide intangible assets											$	72		$	73

The ~~net~~lower operating results for Southern Tide in the Third Quarter of Fiscal 2020 were primarily due to lower gross margin which offset the impact of higher sales with comparable SG&A. Lower SG&A for employment costs, advertising and other operating expenses were generally offset by the increased SG&A associated with the Southern Tide retail store operations.

Corporate and Other:


	Third Quarter
	Fiscal 2020		Fiscal 2019		$ Change		% Change
Net sales	$	5,683	$	4,679	$	1,004	21.5	%
Gross profit	$	8,553	$	2,954	$	5,599	NM	%
Operating income (loss)	$	1,192	$	(3,152)	$	4,344	NM	%
Notable items included in amounts above:
LIFO adjustments in Corporate and Other	$	(5,645)	$	(35)

The improved operating results for Corporate and Other were primarily due to the $6 million favorable impact of LIFO accounting, as well as higher net sales, partially offset by increased SG&A expenses in Corporate and Other.

Interest expense, net


	Third Quarter
	Fiscal 2020		Fiscal 2019		$ Change		% Change
Interest expense, net	$	339	$	81	$	258	318.5	%

The increased interest expense in the Third Quarter of Fiscal 2020 was primarily due to higher levels of debt outstanding partially offset by interest income earned on cash invested in money market accounts in the Third Quarter of Fiscal 2020.

Income tax (benefit) provision


	Third Quarter
	Fiscal 2020			Fiscal 2019			$ Change		% Change
Income tax (benefit) provision	$	(3,453)		$	845		$	(4,298)	NM	%
Effective tax rate		24.6	%		33.6	%

Income taxes were a tax benefit in the Third Quarter of Fiscal 2020 resulting from an operating loss and the impact of certain items as noted below, as compared to a tax expense in the Third Quarter of Fiscal 2019 resulting from operating income. Due to the amount of loss and earnings in the Third Quarter of Fiscal 2020 and the Third Quarter of Fiscal 2019, respectively, discrete items, the results of our foreign operations or other items that impact our income taxes ~~often results~~resulted in a more significant ~~or unusual~~ impact on the effective tax rate ~~in the third quarter of our fiscal year given the significantly lower operating income during the third quarter~~ as compared to other periods.

The income tax benefit in the ~~other quarters~~Third Quarter of Fiscal 2020 reflects the benefit of the operating losses including the favorable impact of the CARES Act, which provides for the carry back of our ~~fiscal year. Thus, the effective~~Fiscal 2020 net operating losses to pre-

Table of Contents

U.S. Tax Reform tax years, which had a federal income tax rate ~~for~~of 35%. In the ~~third quarter is not indicative of the effective tax rate anticipated for the full year. Our effective tax rate for the full year~~Third Quarter of Fiscal ~~2019 is expected~~2020, this benefit was offset by the impact of changes in estimated book to ~~be approximately 26%.~~tax timing differences which may reduce the amount of expenses deductible for income tax return purposes in Fiscal 2020.

Net earnings


	Third Quarter				Third Quarter
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Net sales	$	241,221	$	233,662	$	175,135	$	241,221
Operating income	$	2,594	$	3,705
Net earnings	$	1,668	$	1,861
Net earnings per diluted share	$	0.10	$	0.11
Weighted average shares outstanding - diluted		16,934		16,870
Operating (loss) income					$	(13,718)	$	2,594
Net (loss) earnings					$	(10,604)	$	1,668
Net (loss) earnings per diluted share					$	(0.64)	$	0.10
Weighted average shares outstanding -- diluted						16,568		16,934

The ~~lower~~ net ~~earnings~~loss per ~~diluted~~ share in the Third Quarter of Fiscal ~~2019~~2020 compared to positive net earnings per share in the Third Quarter of Fiscal 2020 was primarily due to ~~lower~~the $10 million of Lanier Apparel exit charges and the impact of COVID-19 on the operating results ~~in Tommy Bahama and Lanier Apparel.~~of each of our operating groups. These ~~lower operating results~~items were partially offset by the improved operating results in ~~Lilly Pulitzer and~~ Corporate and Other, ~~lower interest expense and a lower effective tax rate.~~which were primarily due to the favorable impact of LIFO accounting primarily resulting from the reversal of inventory markdowns recognized in the operating groups.

FIRST NINE MONTHS OF FISCAL ~~2019~~2020 COMPARED TO FIRST NINE MONTHS OF FISCAL ~~2018~~2019

The discussion and tables below compare our statements of operations for the First Nine Months of Fiscal ~~2019~~2020 to the First Nine Months of Fiscal ~~2018.~~2019. Each dollar and percentage change provided reflects the change between these fiscal periods unless 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 may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Net sales

$
825,194

100.0
%

$
808,931

100.0
%

$
16,263

2.0
%
Cost of goods sold

346,620

42.0
%

336,209

41.6
%

10,411

3.1
%
Gross profit

$
478,574

58.0
%

$
472,722

58.4
%

$
5,852

1.2
%
SG&A

417,448

50.6
%

414,747

51.3
%

2,701

0.7
%
Royalties and other operating income

11,469

1.4
%

10,616

1.3
%

853

8.0
%
Operating income

$
72,595

8.8
%

$
68,591

8.5
%

$
4,004

5.8
%
Interest expense, net

1,171

0.1
%

1,872

0.2
%

(701)

(37.4)
%
Earnings before income taxes

$
71,424

8.7
%

$
66,719

8.2
%

$
4,705

7.1
%
Income taxes

18,263

2.2
%

17,107

2.1
%

1,156

6.8
%
Net earnings

$
53,161

6.4
%

$
49,612

6.1
%

$
3,549

7.2
%


	First Nine Months
	Fiscal 2020				Fiscal 2019				$ Change		% Change
Net sales	$	527,466	100.0	%	$	825,194	100.0	%	$	(297,728)	(36.1)	%
Cost of goods sold		232,386	44.1	%		346,620	42.0	%		(114,234)	(33.0)	%
Gross profit	$	295,080	55.9	%	$	478,574	58.0	%	$	(183,494)	(38.3)	%
SG&A		352,201	66.8	%		417,448	50.6	%		(65,247)	(15.6)	%
Impairment of goodwill and intangible assets		60,452	11.5	%		—	—	%		60,452	100.0	%
Royalties and other operating income		10,349	2.0	%		11,469	1.4	%		(1,120)	(9.8)	%
Operating (loss) income	$	(107,224)	(20.3)	%	$	72,595	8.8	%	$	(179,819)	NM	%
Interest expense, net		1,673	0.3	%		1,171	0.1	%		502	42.9	%
(Loss) earnings before income taxes	$	(108,897)	(20.6)	%	$	71,424	8.7	%	$	(180,321)	NM	%
Income tax (benefit) provision		(25,422)	(4.8)	%		18,263	2.2	%		(43,685)	NM	%
Net (loss) earnings	$	(83,475)	(15.8)	%	$	53,161	6.4	%	$	(136,636)	NM	%

Net Sales


	First Nine Months
	Fiscal 2020		Fiscal 2019		$ Change		% Change
Tommy Bahama	$	277,143	$	480,623	$	(203,480)	(42.3)	%
Lilly Pulitzer		176,723		219,809		(43,086)	(19.6)	%

2732

Table of Contents

~~Net Sales~~

First Nine Months

Fiscal 2019

Fiscal 2018

$ Change

% Change

Tommy Bahama

$
480,623

$
482,990

$
(2,367)

(0.5)
%
Lilly Pulitzer

219,809

208,463

11,346

5.4
%
Lanier Apparel

76,871

72,806

4,065

5.6
%
Southern Tide

35,704

34,745

959

2.8
%
Corporate and Other

12,187

9,927

2,260

22.8
%
Total net sales

$
825,194

$
808,931

$
16,263

2.0
%

Lanier Apparel		29,985		75,378		(45,393)	(60.2)	%
Southern Tide		27,136		35,704		(8,568)	(24.0)	%
Corporate and Other		16,479		13,680		2,799	20.5	%
Consolidated net sales	$	527,466	$	825,194	$	(297,728)	(36.1)	%

Consolidated net sales ~~increased $16~~decreased $298 million, or 2%36%, in the First Nine Months of Fiscal ~~2019.~~2020 primarily due to the impact of the COVID-19 pandemic, which has had a negative impact on our retail, wholesale and restaurant operations, impacted by, among other things, reduced traffic after locations reopen and temporary closures, while our e-commerce business has generated very strong growth. The ~~increase~~decreases in ~~consolidated~~ net sales ~~was primarily driven by~~included decreases in (1) ~~a $14~~full-price retail sales of $169 million, or 4%60%, ~~comparable~~(2) wholesale sales ~~increase to $388~~of $124 million, ~~in the First Nine Months~~or 48%, (3) restaurant sales of ~~Fiscal 2019 from $375~~$29 million, ~~in the First Nine Months~~or 47%, and (4) outlet sales of ~~Fiscal 2018, with comparable sales increases in both Tommy Bahama and Lilly Pulitzer, and (2) an incremental net sales increase of $6~~$21 million, ~~associated with non-comp retail store operations, resulting from an increase at Lilly Pulitzer.~~or 49%. These ~~increases in net sales~~decreases were partially offset by ~~(1) a $2~~increased e-commerce sales of $46 million, ~~decrease in restaurant sales in Tommy Bahama, (2) a $1 million decrease in wholesale sales~~or 25%, primarily due to more demand as consumers shifted to online shopping as well as increased online marketing and ~~(3) a $1 million decrease in off-price direct~~promotional events to ~~consumer sales as the decrease in Tommy Bahama outlet sales was partially offset by increased Lilly Pulitzer e-commerce flash sales.~~further engage consumers. The changes in net sales by operating group are discussed below.

The following table presents the proportion of our consolidated net sales by distribution channel for each period presented:


	First Nine Months				First Nine Months
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Retail	39	%	40	%	26	%	39	%
E-commerce	22	%	20	%	43	%	22	%
Restaurant	8	%	8	%	6	%	8	%
Wholesale	31	%	32	%	25	%	31	%
Total	100	%	100	%	100	%	100	%

Tommy Bahama:

Tommy Bahama net sales decreased $2$203 million, or 1%42%, in the First Nine Months of Fiscal ~~2019 due to (1) a $6 million~~2020. The decrease in ~~wholesale~~net sales ~~primarily reflecting decreased~~in Tommy Bahama included decreases in (1) full-price ~~wholesale~~retail sales ~~(2) a $2~~of $109 million, ~~decrease in restaurant sales~~or 58%, primarily due to the ~~net~~ impact of ~~certain restaurant closures, remodels and openings since the beginning of Fiscal 2018~~COVID-19 on retail store operations as well as ~~lower~~reduced store count, (2) wholesale sales ~~at existing~~of $52 million, or 52%, including a decrease in full-price and off-price sales, (3) restaurant ~~locations~~sales of $29 million, or 47%, and ~~(3) a $2 million decrease in~~(4) outlet store sales ~~due to lower sales at existing outlet stores and the net sales impact~~ of ~~outlet store closures.~~$22 million, or 50%. These decreases were partially offset by ~~a $7~~increased e-commerce sales of $9 million, or 3%, increase in comparable sales to $252 million in the First Nine Months of Fiscal 2019 from $245 million in the First Nine Months of Fiscal 2018. The net sales of non-comp retail stores were generally comparable period-over-period.10%. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

First Nine Months


Fiscal 2019

Fiscal 2018

Retail

48
%
48
%
E-commerce

18
%
17
%
Restaurant

13
%
13
%
Wholesale

21
%
22
%
Total

100
%
100
%


	First Nine Months
	Fiscal 2020		Fiscal 2019
Retail	36	%	48	%
E-commerce	34	%	18	%
Restaurant	12	%	13	%
Wholesale	18	%	21	%
Total	100	%	100	%

Lilly Pulitzer:

~~The~~ Lilly Pulitzer net sales ~~increase of $11~~decreased $43 million, or 5%20%, in the First Nine Months of Fiscal ~~2019 was primarily the result of (1) an incremental~~2020. The decrease in net sales ~~increase~~in Lilly Pulitzer included decreases in (1) retail sales of $6$60 million, ~~associated with non-comp~~or 64%, primarily due to the impact of COVID-19 on retail store operations as well as reduced store count and (2) wholesale sales of $16 million, or 34%, primarily due to lower full-price sales. These decreases were partially offset by increased e-commerce sales of $33 million, or 42%, including a 63% increase in full-price e-commerce sales and a 7% increase in e-commerce flash sales to

2833

Table of Contents

including the operation of additional retail stores and increased gift card breakage income, (2) a $2 million increase in wholesale sales reflecting increases in both full-price and off-price wholesale sales, (3) a $2 million, or 2%, increase in comparable sales to $121 million in the First Nine Months of Fiscal 2019 from $119 million in the First Nine Months of Fiscal 2018, and (4) a $2 million increase in e-commerce flash clearance sales.$32 million. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:

First Nine Months


Fiscal 2019

Fiscal 2018

Retail

43
%
44
%
E-commerce

36
%
35
%
Wholesale

21
%
21
%
Total

100
%
100
%


	First Nine Months
	Fiscal 2020		Fiscal 2019
Retail	19	%	43	%
E-commerce	64	%	36	%
Wholesale	17	%	21	%
Total	100	%	100	%

Lanier Apparel:

~~The~~ Lanier Apparel net sales ~~increase of $4~~decreased $45 million, or 6%60% in the First Nine Months of Fiscal 2020 resulting from decreases in most of the replenishment, seasonal and other programs for the branded and private label businesses, including a large pants program for a warehouse club that did not repeat in Fiscal 2020. These decreases were partially offset by $3 million of sales of COVID-19 related personal protective equipment such as masks and gowns.

Southern Tide:

Southern Tide net sales decreased $9 million, or 24%, in the First Nine Months of Fiscal ~~2019 was primarily~~2020 due to ~~increased volume~~an $11 million, or 38%, decrease in ~~various seasonal, in-stock and replenishment programs, including initial shipments for certain programs in the First Nine Months of Fiscal 2019. These increases were~~wholesale sales partially offset by ~~(1) decreased~~a $2 million, or 24%, increase in e-commerce sales and a $1 million increase in ~~other programs, including lower volume for programs~~retail store sales resulting from the ~~exit~~opening of certain programs and customers, including programs with customers who filed for bankruptcy in Fiscal 2018, and (2) certain programs that had initial shipments in the First Nine Months of Fiscal 2018. While the Cole Haan and Duck Head businesses both had significant sales growth rates in the First Nine Months of Fiscal 2019, those business still represent a small proportion of Lanier Apparel’s net sales.

~~Southern Tide:~~

~~The~~three Southern Tide ~~net sales increase~~retail stores since the Fourth Quarter of $1 million, or 3%, in the First Nine Months of Fiscal 2019 was due to higher sales in both the e-commerce and wholesale channels of distribution, with e-commerce growing at a faster pace than wholesale sales.Fiscal. The following table presents the proportion of net sales by distribution channel for Southern Tide for each period presented:


	First Nine Months				First Nine Months
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Retail					3	%	—	%
E-commerce	18	%	16	%	29	%	18	%
Wholesale	82	%	84	%	68	%	82	%
Total	100	%	100	%	100	%	100	%

Corporate and Other:

Corporate and Other net sales increased $3 million, or 21%, in the First Nine Months of Fiscal 2020 primarily ~~consist of the~~due to increased net sales ~~of TBBC and our Lyons, Georgia distribution center operations. The increase in net sales was due to sales growth~~ in TBBC.

Gross Profit

The tables below present gross profit by operating group and in total for the First Nine Months of Fiscal ~~2019~~2020 and the First Nine Months of Fiscal ~~2018,~~2019, as well as the change between those two periods and gross margin by operating group and in ~~total for those periods.~~total. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be

2934

Table of Contents

~~sales, may not be~~ directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Tommy Bahama

$
294,500

$
295,982

$
(1,482)

(0.5)
%
Lilly Pulitzer

138,252

132,877

5,375

4.0
%
Lanier Apparel

22,055

20,893

1,162

5.6
%
Southern Tide

17,688

17,307

381

2.2
%
Corporate and Other

6,079

5,663

416

7.3
%
Total gross profit

$
478,574

$
472,722

$
5,852

1.2
%
LIFO adjustments in Corporate and Other

$
810

$
109





Tommy Bahama Japan inventory markdown charges

$
—

$
461

Inventory step-up charges in Corporate and Other

$
—

$
157


	First Nine Months				First Nine Months
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019		$ Change		% Change
Tommy Bahama	61.3	%	61.3	%	$	161,711	$	294,500	$	(132,789)	(45.1)	%
Lilly Pulitzer	62.9	%	63.7	%		108,582		138,252		(29,670)	(21.5)	%
Lanier Apparel	28.7	%	28.7	%		(583)		21,226		(21,809)	NM	%
Southern Tide	49.5	%	49.8	%		7,934		17,688		(9,754)	(55.1)	%
Corporate and Other	NM		NM			17,436		6,908		10,528	NM	%
Consolidated gross margin	58.0	%	58.4	%
Consolidated gross profit					$	295,080	$	478,574	$	(183,494)	(38.3)	%
Notable items included in amounts above:
LIFO adjustments in Corporate and Other					$	(9,287)	$	810
Lanier Apparel exit charges in cost of goods sold					$	6,415	$	—


	First Nine Months
	Fiscal 2020		Fiscal 2019
Tommy Bahama	58.3	%	61.3	%
Lilly Pulitzer	61.4	%	62.9	%
Lanier Apparel	(1.9)	%	28.2	%
Southern Tide	29.2	%	49.5	%
Corporate and Other	NM	%	NM	%
Consolidated gross margin	55.9	%	58.0	%

The ~~increase~~decrease in consolidated gross profit in the First Nine Months of Fiscal ~~2019~~2020 was ~~primarily~~ due to ~~increased~~the lower net sales ~~partially offset by~~and lower gross margin. The lower consolidated gross margin ~~was primarily due to~~reflects lower gross margin in ~~Lilly Pulitzer~~each operating group as discussed below. During the First Nine Months of Fiscal 2020, we recognized the negative impact of $14 million of inventory markdowns which were partially offset by a $9 million LIFO accounting credit. In the First Nine Months of Fiscal 2019, we recognized $2 million of inventory markdowns and a $1 million LIFO accounting charge.

Tommy Bahama:

The decrease in gross margin for Tommy Bahama was primarily driven by (1) lower gross margin in the full-price direct to consumer channel primarily due to a change in sales mix as ~~Lanier Apparel~~a greater proportion of sales ~~which typically have~~were related to promotion events, (2) lower gross ~~margins than our other businesses, represented a higher proportion of our net sales.~~

~~Tommy Bahama:~~

~~The gross~~ margin ~~for Tommy Bahama was comparable reflecting (1)~~in the wholesale channel resulting from a change in sales mix ~~with retail store and e-commerce sales representing~~as a greater proportion of ~~net~~wholesale sales were off-price wholesale sales as well as increased inventory markdowns, and ~~wholesale~~(3) certain fixed asset and ~~outlet store sales representing a lower proportion~~operating lease asset impairment charges related to the restructuring of ~~net sales and (2) the First Nine Months of Fiscal 2018 including certain~~our Tommy Bahama Japan inventory markdown charges with no such charges in the First Nine Months of Fiscal 2019. These favorable items were partially offset by the impact of a greater proportion of net sales in the direct to consumer business being associated with promotional events, including our Friends and Family, loyalty award cards and other promotion events.sourcing operations.

Lilly Pulitzer:

The decrease in gross margin for Lilly Pulitzer ~~reflects~~was primarily due to (1) ~~a greater proportion~~increased promotions and discounting in each channel of ~~off-price wholesale sales, which had lower gross~~distribution, particularly during the First Half of Fiscal 2020, and (2) increased inventory markdowns. These unfavorable items were partially offset by higher initial margins in the First Nine Months of Fiscal 2019, and (2) higher costs associated with gift with purchase and other promotional events resulting in lower gross margin in the full-price direct to consumer business. These unfavorable items were partially offset by the impact of higher gift card breakage income.2020.

Lanier Apparel:

The negative gross margin for Lanier Apparel was ~~comparable~~primarily due to (1) the $6 million of Lanier Apparel exit charges in cost of goods sold, including inventory markdowns and charges related to our Merida manufacturing facility, as discussed in Note 9 in the unaudited condensed consolidated financial statements included in this report, (2) an increase in inventory markdowns in the First Half of Fiscal 2020, and (3) lower gross margin ~~changes in~~on various programs ~~and~~due to the challenging tailored clothing market. Each of these items had a more significant gross margin impact on the lower sales ~~mix generally offset.~~volume of the First Nine Months of Fiscal 2020.

3035

Table of Contents

Southern Tide:

The decrease in gross margin for Southern Tide was primarily due to ~~the prior year including an insurance recovery~~(1) increased inventory markdowns and lower profitability on ~~certain~~off-price sales related to excess inventory and (2) more significant discounts and allowances in all channels of distribution. These items were partially offset by a change in sales mix ~~as e-commerce~~with direct to consumer sales ~~represented~~representing a ~~greater~~larger proportion of net ~~sales.~~sales in the First Nine Months of Fiscal 2020.

Corporate and Other:

The gross profit in Corporate and Other primarily reflects ~~(1)~~ the gross profit of TBBC, ~~(2)~~Duck Head and the ~~gross profit of our~~ Lyons, Georgia distribution center ~~and (3)~~as well as the impact of LIFO accounting adjustments. The ~~increased~~primary drivers for the higher gross profit ~~primarily reflects~~were (1) the ~~impact of higher~~$10 million net ~~sales in TBBC partially offset by the unfavorable~~favorable impact of LIFO accounting with a LIFO accounting credit in the First Nine Months of Fiscal 2020 and a LIFO accounting charge in the First Nine Months of Fiscal 2019 ~~compared to~~and (2) the ~~First Nine Months of Fiscal 2018.~~gross profit resulting from the higher net sales. The LIFO accounting impact in Corporate and Other in each period primarily reflects (1) a charge in Corporate and Other when inventory that had been marked down to the estimated net realizable value in an operating group in a prior period is ultimately sold or (2) a credit in Corporate and Other when inventory has been marked down to the estimated net realizable value in an operating group in the current period, but ~~the inventory~~ has not been sold as of period end.

SG&A

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

SG&A

$
417,448

$
414,747

$
2,701

0.7
%
SG&A (as a % of net sales)

50.6
%

51.3
%





Amortization of Tommy Bahama Canada intangible assets

$
—

$
1,141

Amortization of Lilly Pulitzer Signature Store intangible assets

$
240

$
281

Amortization of Southern Tide intangible assets

$
218

$
216

Tommy Bahama Japan restructuring SG&A charges

$
590

$
3,206


	First Nine Months
	Fiscal 2020			Fiscal 2019			$ Change		% Change
SG&A	$	352,201		$	417,448		$	(65,247)	(15.6)	%
SG&A (as a % of net sales)		66.8	%		50.6	%
Notable items included in amounts above:
Amortization of Lilly Pulitzer Signature Store intangible assets	$	204		$	240
Amortization of Southern Tide intangible assets	$	216		$	218
Lanier Apparel exit charges in SG&A	$	3,701		$	—
Tommy Bahama Japan charges	$	—		$	590

The ~~increase in~~lower SG&A in the First Nine Months of Fiscal ~~2019~~2020 was primarily due to (1) ~~increases~~decreased employment costs of $50 million primarily due to reductions in ~~SG&A~~our employment cost in response to ~~support~~COVID-19, including the ~~businesses,~~temporary furlough of substantially all retail and restaurant employees while direct to consumer operations were closed, layoffs, reduced hours or pay reductions for certain employees, reductions in incentive compensation amounts, suspension of the company match for our 401(k) plan and employee retention credits, partially offset by certain severance amounts, (2) a $9 million reduction in certain variable expenses including ~~increased salaries, wages, employee benefits, variable~~credit card transaction fees, shipping costs, commissions, supplies and other ~~operating~~variable expenses, (3) a $9 million reduction in ~~our ongoing operations,~~occupancy expenses primarily resulting from fewer Tommy Bahama and ~~(2)~~Lilly Pulitzer bricks and mortar locations, certain negotiated rent reductions and lower costs for utilities, maintenance and related expenses, (4) a $4 million decrease in travel expenses, (5) a $2 million ~~of incremental SG&A~~reduction in advertising expenses, and (6) a $1 million decrease in Tommy Bahama Japan charges, which related to charges associated with the ~~cost~~restructure and exit of ~~operating additional retail stores and restaurants.~~our Tommy Bahama Japan operations, with no such charges in the First Nine Months of Fiscal 2020. These ~~increases~~decreases were partially offset by (1) ~~a $5~~$6 million ~~reduction~~of increased estimated provisions for credit losses and other charges related to bankruptcies and credit exposure with respect to multiple customers, (2) Lanier Apparel exit charges in ~~incentive compensation expense, (2) a $3~~SG&A of $4 million ~~decrease~~consisting of operating lease asset impairment charges, employee charges, and fixed asset impairment charges, as discussed in ~~advertising expense,~~Note 9 in the unaudited condensed consolidated financial statements included in this report, and (3) a $3 million ~~reduction~~increase in ~~restructuring~~depreciation expense including impairment charges for certain retail locations.

Table of Contents

Impairment of goodwill and intangible assets

In the First Nine Months of Fiscal 2020, impairment charges for goodwill and intangible assets totaling $60 million were recognized in Southern Tide. The impairment charges for Southern Tide primarily reflect the impact of COVID-19 on the operations, plans and strategy of the Southern Tide business. In addition, a small impairment charge was recognized in Lanier Apparel related to a trademark acquired in a prior year that was not deemed recoverable. Refer to Note 1 and Note 4 in the ~~Tommy Bahama Japan operations and (4) a $1 million decrease~~unaudited condensed consolidated financial statements included in ~~amortization~~this report for additional discussion regarding the impairment charges recognized in the First Nine Months of ~~Tommy Bahama Canada~~Fiscal 2020. There were no impairment charges for goodwill or intangible ~~assets.~~assets in the prior year period.

Royalties and other operating income

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Royalties and other operating income

$
11,469

$
10,616

$
853

8.0
%


	First Nine Months
	Fiscal 2020		Fiscal 2019		$ Change		% Change
Royalties and other operating income	$	10,349	$	11,469	$	(1,120)	(9.8)	%

Royalties and other operating income primarily reflects income received from third parties from the licensing of our brands. The ~~increase in~~decreased royalties and other income in the First Nine Months of Fiscal ~~2019 reflects increased~~2020 was due to lower royalty income in both Tommy Bahama and Lilly Pulitzer.

Operating income (loss)


	First Nine Months
	Fiscal 2020		Fiscal 2019		$ Change		% Change
Tommy Bahama	$	(43,286)	$	30,671	$	(73,957)	NM	%
Lilly Pulitzer		25,676		46,689		(21,013)	(45.0)	%
Lanier Apparel		(21,271)		3,738		(25,009)	NM	%
Southern Tide		(64,809)		4,877		(69,686)	NM	%
Corporate and Other		(3,534)		(13,380)		9,846	NM	%
Consolidated Operating (Loss) Income	$	(107,224)	$	72,595	$	(179,819)	NM	%
Notable items included in amounts above:
LIFO adjustments in Corporate and Other	$	(9,287)	$	810
Lanier Apparel exit charges in cost of goods sold	$	6,415	$	—
Amortization of Lilly Pulitzer Signature Store intangible assets	$	204	$	240
Lanier Apparel exit charges in SG&A	$	3,701	$	—
Lanier Apparel intangible asset impairment charge	$	207	$	—
Amortization of Southern Tide intangible assets	$	216	$	218
Southern Tide goodwill and intangible asset impairment charge	$	60,245	$	—
Tommy Bahama Japan charges	$	—	$	590

The lower operating results in the First Nine Months of Fiscal 2020 were primarily due to (1) the impact of COVID-19 on each operating group, (2) the $60 million Southern Tide impairment charge recognized in the First Quarter of Fiscal 2020 and (3) the $10 million of Lanier Apparel exit charges incurred in the Third Quarter of Fiscal 2020. These items were partially offset by improved operating results in Corporate and Other, which was primarily due to the favorable impact of LIFO accounting due to the reversal of inventory markdowns recognized in the operating groups. Changes in operating income (loss) by operating group are discussed below.

3137

Table of Contents

Tommy Bahama:

~~Operating income (loss)~~

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Tommy Bahama

$
30,671

$
29,783

$
888

3.0
%
Lilly Pulitzer

46,689

43,823

2,866

6.5
%
Lanier Apparel

3,387

3,448

(61)

(1.8)
%
Southern Tide

4,877

4,399

478

10.9
%
Corporate and Other

(13,029)

(12,862)

(167)

(1.3)
%
Total Operating Income

$
72,595

$
68,591

$
4,004

5.8
%
LIFO adjustments in Corporate and Other

$
810

$
109





Tommy Bahama Japan inventory markdown charges

$
—

$
461

Inventory step-up charges in Corporate and Other

$
—

$
157

Amortization of Tommy Bahama Canada intangible assets

$
—

$
1,141

Amortization of Lilly Pulitzer Signature Store intangible assets

$
240

$
281

Amortization of Southern Tide intangible assets

$
218

$
216

Tommy Bahama Japan restructuring SG&A charges

$
590

$
3,206


	First Nine Months
	Fiscal 2020			Fiscal 2019			$ Change		% Change
Net sales	$	277,143		$	480,623		$	(203,480)	(42.3)	%
Gross profit	$	161,711		$	294,500		$	(132,789)	(45.1)	%
Gross margin		58.3	%		61.3	%
Operating (loss) income	$	(43,286)		$	30,671		$	(73,957)	NM	%
Operating (loss) income as % of net sales		(15.6)	%		6.4	%
Notable items included in amounts above:
Tommy Bahama Japan charges	$	—		$	590

The ~~increase in~~lower operating ~~income~~results for Tommy Bahama in the First Nine Months of Fiscal ~~2019~~2020 were primarily due to lower sales and lower gross margin partially offset by lower SG&A. The lower SG&A was primarily due to ~~higher sales partially offset by higher SG&A~~(1) $40 million of lower employment costs, (2) $7 million of lower occupancy costs, primarily resulting from the operation of fewer bricks and mortar locations, certain negotiated rent reductions and lower ~~gross margin. On an operating group basis, the increase~~costs for utilities, maintenance and related expenses, (3) $7 million of lower variable costs such as credit card transaction fees, commissions, shipping fees and supplies, (4) a $3 million decrease in ~~operating income reflects increased operating income~~advertising expense, (5) a $2 million decrease in ~~Lilly Pulitzer, Tommy Bahama and Southern Tide partially offset by~~travel expense, (6) a ~~larger operating loss in Corporate and Other and lower operating income in Lanier Apparel. Changes in operating income (loss) by operating group are discussed below.~~

~~Tommy Bahama:~~

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Net sales

$
480,623

$
482,990

$
(2,367)

(0.5)
%
Gross profit

$
294,500

$
295,982

$
(1,482)

(0.5)
%
Gross margin

61.3
%

61.3
%





Operating income

$
30,671

$
29,783

$
888

3.0
%
Operating income as % of net sales

6.4
%

6.2
%





Tommy Bahama Japan inventory markdown charges

$
—

$
461

Amortization of Tommy Bahama Canada intangible assets

$
—

$
1,141





Tommy Bahama Japan restructuring SG&A charges

$
590

$
3,206

~~The increase in operating income~~$1 million decrease in Tommy Bahama ~~was primarily due~~Japan charges, which related to ~~lower SG&A~~charges associated with the restructure and ~~increased royalty income, partially offset by lower net sales. The lower SG&A for~~exit of our Tommy Bahama Japan operations, with no such charges in the First Nine Months of Fiscal ~~2019 reflects (1) a $4 million decrease~~2020, and (7) decreases in ~~advertising expense, (2) a $4 million reduction in incentive compensation~~other general and ~~(3) a $3 million reduction in restructuring charges related to the Tommy Bahama Japan operations.~~administrative expenses. These decreases were partially offset by a $3 million increase in depreciation expense including impairment charges for certain direct to consumer locations and increased ~~salaries~~provisions for credit losses.

Lilly Pulitzer:


	First Nine Months
	Fiscal 2020			Fiscal 2019			$ Change		% Change
Net sales	$	176,723		$	219,809		$	(43,086)	(19.6)	%
Gross profit	$	108,582		$	138,252		$	(29,670)	(21.5)	%
Gross margin		61.4	%		62.9	%
Operating income	$	25,676		$	46,689		$	(21,013)	(45.0)	%
Operating income as % of net sales		14.5	%		21.2	%
Notable items included in amounts above:
Amortization of Lilly Pulitzer Signature Store intangible assets	$	204		$	240

The lower operating income for Lilly Pulitzer in the First Nine Months of Fiscal 2020 was primarily due to lower sales and ~~wages, employee benefits, variable~~lower gross margin partially offset by lower SG&A. The lower SG&A was primarily due to (1) $8 million of lower employment costs, (2) $2 million of lower occupancy costs, primarily resulting from the operation of fewer bricks and mortar locations, certain negotiated rent reductions and lower costs for utilities, maintenance and related expenses, (3) a $1 million decrease in travel expenses, and (4) reductions in other ~~operating~~general and administrative expenses. These decreases in SG&A were partially offset by (1) $2 million of higher marketing expense and (2) increases in other expenses ~~in our ongoing operations.~~including provisions for credit losses.

3238

Table of Contents

~~Lilly Pulitzer:~~Lanier Apparel:

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Net sales

$
219,809

$
208,463

$
11,346

5.4
%
Gross profit

$
138,252

$
132,877

$
5,375

4.0
%
Gross margin

62.9
%

63.7
%



Operating income

$
46,689

$
43,823

$
2,866

6.5
%
Operating income as % of net sales

21.2
%

21.0
%





Amortization of Lilly Pulitzer Signature Store intangible assets

$
240

$
281


	First Nine Months
	Fiscal 2020			Fiscal 2019			$ Change		% Change
Net sales	$	29,985		$	75,378		$	(45,393)	(60.2)	%
Gross profit	$	(583)		$	21,226		$	(21,809)	NM	%
Gross margin		(1.9)	%		28.2	%
Operating (loss) income	$	(21,271)		$	3,738		$	(25,009)	NM	%
Operating (loss) income as % of net sales		(70.9)	%		5.0	%
Notable items included in amounts above:
Lanier Apparel exit charges in cost of goods sold	$	6,415		$	—
Lanier Apparel exit charges in SG&A	$	3,701		$	—
Lanier Apparel intangible asset impairment charge	$	207		$	—

In the Third Quarter of Fiscal 2020, we made the decision to exit our Lanier Apparel business, which is expected to be completed during the Second Half of Fiscal 2021. The ~~increase in~~lower operating ~~income in Lilly Pulitzer was primarily due to increased net sales and royalty income partially offset by lower gross margin and higher SG&A. The higher SG&A~~results for Lanier Apparel in the First Nine Months of Fiscal ~~2019~~2020 were due to lower sales, $10 million of charges related to the Lanier Apparel exit, and lower gross margin. The Lanier Apparel exit charges primarily consist of inventory markdowns and charges related to our Merida manufacturing facility, which are included ~~(1)~~in cost of goods sold, as well as operating lease asset impairment charges, employee charges, and fixed asset impairment charges, which are included in SG&A. These Lanier Apparel exit charges are discussed in Note 9 in the unaudited condensed consolidated financial statements included in this report. Absent these Lanier Apparel exit charges, SG&A ~~increases~~was comparable as $4 million of increased estimated provisions for credit losses and other charges related to ~~support the planned growth of the business, including additional~~bankruptcies and credit exposure with respect to multiple Lanier Apparel customers were generally offset by reductions in variable expenses, employment costs ~~(2) $2 million of incremental SG&A associated with the cost of~~and other operating ~~additional retail stores and (3) a $1 million increase in incentive compensation amounts.~~expenses.

Southern Tide:

~~Lanier Apparel:~~


	First Nine Months										First Nine Months
	Fiscal 2019			Fiscal 2018			$ Change		% Change		Fiscal 2020			Fiscal 2019			$ Change		% Change
Net sales	$	76,871		$	72,806		$	4,065	5.6	%	$	27,136		$	35,704		$	(8,568)	(24.0)	%
Gross profit	$	22,055		$	20,893		$	1,162	5.6	%	$	7,934		$	17,688		$	(9,754)	(55.1)	%
Gross margin		28.7	%		28.7	%						29.2	%		49.5	%
Operating income	$	3,387		$	3,448		$	(61)	(1.8)	%
Operating income as % of net sales		4.4	%		4.7	%
Operating (loss) income											$	(64,809)		$	4,877		$	(69,686)	NM	%
Operating (loss) income as % of net sales												(238.8)	%		13.7	%
Notable items included in amounts above:
Amortization of Southern Tide intangible assets											$	216		$	218
Southern Tide goodwill and intangible asset impairment charge											$	60,245		$	—

The ~~decrease in~~lower operating ~~income in Lanier Apparel was primarily due to higher SG&A partially offset by the impact of higher net sales. The SG&A increase~~results for Southern Tide in the First Nine Months of Fiscal ~~2019 was~~2020 were primarily due to ~~higher sales-related variable expenses, including increased royalty expense,~~the $60 million impairment charge for goodwill and intangible assets in the First Quarter of Fiscal 2020 as well as ~~higher~~lower sales and lower gross margin partially offset by lower SG&A. Lower SG&A for employment costs, advertising ~~expense, which~~and other expenses were partially offset by ~~lower incentive compensation amounts.~~

~~Southern Tide:~~

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Net sales

$
35,704

$
34,745

$
959

2.8
%
Gross profit

$
17,688

$
17,307

$
381

2.2
%
Gross margin

49.5
%

49.8
%



Operating income

$
4,877

$
4,399

$
478

10.9
%
Operating income as % of net sales

13.7
%

12.7
%





Amortization of Southern Tide intangible assets

$
218

$
216

~~The increase in operating income in Southern Tide was primarily due to higher net sales and lower~~the SG&A partially offset by lower gross margin. The SG&A decrease in the First Nine Months of Fiscal 2019 was primarily due to lower incentive compensation amounts partially offset by increased advertising expense, variable costs associated with the ~~higher sales~~Southern Tide retail store operations and ~~other costs to support future growth of the business.~~increased provisions for credit losses.

3339

Table of Contents

Corporate and Other:

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Net sales

$
12,187

$
9,927

$
2,260

22.8
%
Gross profit

$
6,079

$
5,663

$
416

7.3
%
Operating loss

$
(13,029)

$
(12,862)

$
(167)

(1.3)
%
LIFO adjustments in Corporate and Other

$
810

$
109



Inventory step-up charges in Corporate and Other

$
—

$
157


	First Nine Months
	Fiscal 2020		Fiscal 2019		$ Change		% Change
Net sales	$	16,479	$	13,680	$	2,799	20.5	%
Gross profit	$	17,436	$	6,908	$	10,528	NM	%
Operating loss	$	(3,534)	$	(13,380)	$	9,846	NM	%
Notable items included in amounts above:
LIFO adjustments in Corporate and Other	$	(9,287)	$	810

The ~~larger~~smaller operating loss infor Corporate and Other was primarily due to the ~~unfavorable~~$10 million favorable impact of LIFO accounting and higher sales partially offset by lower gross margins, excluding the impact of LIFO accounting, and higher ~~operating income of TBBC.~~SG&A.

Interest expense, net

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Interest expense, net

$
1,171

$
1,872

$
(701)

(37.4)
%


	First Nine Months
	Fiscal 2020		Fiscal 2019		$ Change		% Change
Interest expense, net	$	1,673	$	1,171	$	502	42.9	%

~~Interest~~The increased interest expense ~~decreased~~in the First Nine Months of Fiscal 2020 was primarily due to higher levels of debt outstanding partially offset by interest income earned on cash invested in money market accounts in the First Nine Months of Fiscal 2020.

Income tax (benefit) provision


	First Nine Months
	Fiscal 2020			Fiscal 2019			$ Change		% Change
Income tax (benefit) provision	$	(25,422)		$	18,263		$	(43,685)	NM	%
Effective tax rate		23.3	%		25.6	%

Income taxes were a tax benefit in the First Nine Months of Fiscal 2020 resulting from an operating loss and the impact of certain discrete and other items as noted below, as compared to a tax expense in the First Nine Months of Fiscal 2019 ~~primarily due to lower average debt outstanding as well as higher interest~~resulting from operating income.

~~Income taxes~~

First Nine Months



Fiscal 2019

Fiscal 2018

$ Change

% Change

Income taxes

$
18,263

$
17,107

$
1,156

6.8
%
Effective tax rate

25.6
%

25.6
%

~~Both periods include~~The income tax benefit in the First Nine Months of Fiscal 2020 reflects the benefit of the operating losses including the favorable impact of the CARES Act, which provides for the carry back of our Fiscal 2020 net operating losses to pre-U.S. Tax Reform tax years, which had a federal income tax rate of 35%. This benefit was partially offset by certain unfavorable items including (1) the non-deductibility of certain impairment charges, resulting in an estimated effective income tax benefit rate of approximately 17% on the impairment charges, (2) the estimated book to tax timing differences and certain discrete non-deductible items, which may reduce the amount of expenses deductible for income tax return purposes in Fiscal 2020 and (3) restricted stock ~~awards that~~which vested ~~during~~in the period with a vesting date price lower than the ~~results of our foreign operations and other items. Our effective tax rate for Fiscal 2019 is expected to be approximately 26%.~~grant date price.

Net earnings

First Nine Months


Fiscal 2019

Fiscal 2018
Net sales

$
825,194

$
808,931
Operating income

$
72,595

$
68,591
Net earnings

$
53,161

$
49,612
Net earnings per diluted share

$
3.15

$
2.95
Weighted average shares outstanding - diluted

16,896

16,826


	First Nine Months
	Fiscal 2020		Fiscal 2019
Net sales	$	527,466	$	825,194
Operating (loss) income	$	(107,224)	$	72,595
Net (loss) earnings	$	(83,475)	$	53,161
Net (loss) earnings per diluted share	$	(5.04)	$	3.15
Weighted average shares outstanding -- diluted		16,576		16,896

Table of Contents

The ~~higher~~net loss per share in the First Nine Months of Fiscal 2020 compared to positive net earnings per ~~diluted~~ share in the First Nine Months of Fiscal 2019 was primarily due to ~~higher~~(1) the impact of COVID-19 on the operating results of each of our operating groups, (2) the $60 million Southern Tide impairment charge recognized in the First Quarter of Fiscal 2020, (3) the non-deductibility of certain goodwill impairment charges resulting in a lower effective tax rate on our loss in the First Nine Months of Fiscal 2020 than the effective tax rate on our income in ~~Lilly Pulitzer, Tommy Bahama~~the First Nine Months of Fiscal 2019 and ~~Southern Tide~~(4) $10 million of charges related to the Lanier Apparel exit. These items were partially offset by the improved operating results in Corporate and ~~lower interest expense.~~Other, which was primarily due to the favorable impact of LIFO accounting resulting from the reversal of inventory markdowns recognized in the operating groups.

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 and Southern Tide lifestyle brands, other owned and licensed brands, and private label apparel products. We distribute our products to our customers via direct to consumer and wholesale channels of distribution. Our primary uses of cash flow include the purchase of products in the operation of our business from third party contract manufacturers outside of the United States, as well as operating expenses, including employee compensation and benefits, occupancy-related costs, marketing and advertising costs, distribution costs, other general and administrative expenses and the payment of ~~periodic~~ interest and other payments related to our financing arrangements.

~~Table of Contents~~

Additionally, we use cash for the funding of capital expenditures, dividends and repayment of indebtedness. 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 working capital to operate our business.

If cash inflows are less than cash outflows, we have access to amounts under our U.S. Revolving Credit Agreement, subject to its terms, which is described below. We may seek to finance our future cash requirements through various methods, including cash flow from operations, borrowings under our current or additional credit facilities, sales of debt or equity securities, and cash on hand.

As of ~~November 2, 2019,~~October 31, 2020, we had ~~$22~~$53 million of cash and cash equivalents on hand, nowith $35 million of borrowings outstanding ~~and $313 million of availability~~ under our U.S. Revolving Credit Agreement. ~~Generally,~~As of October 31, 2020, we ~~anticipate that excess cash, if any, will be used to repay any debt outstanding on~~had $287 million of unused availability under our U.S. Revolving Credit Agreement. We believe our ~~balance sheet~~U.S. Revolving Credit Agreement and anticipated future positive cash flow from operating activities will provide sufficient cash flow to satisfy our ongoing cash requirements as well as ample opportunity to continue to invest in our brands, direct to consumer initiatives and other strategic initiatives.

Key Liquidity Measures


	November 2,			February 2,			November 3,			February 3,			October 31,			February 1,			November 2,			February 2,
($ in thousands)	2019			2019			2018			2018			2020			2020			2019			2019
Total current assets	$	268,828		$	269,788		$	251,900		$	236,118		$	262,463		$	288,826		$	268,828		$	269,788
Total current liabilities	$	164,118		$	142,209		$	124,839		$	135,010		$	176,389		$	177,779		$	164,118		$	142,209
Working capital	$	104,710		$	127,579		$	127,061		$	101,108		$	86,074		$	111,047		$	104,710		$	127,579
Working capital ratio		1.64			1.90			2.02			1.75			1.49			1.62			1.64			1.90
Debt to total capital ratio		—	%		3	%		6	%		10	%		8	%		—	%		—	%		3	%

Our working capital ratio is calculated by dividing total current assets by total current liabilities. Current assets ~~increased~~as of October 31, 2020, decreased from ~~November 3, 2018 to~~ November 2, 2019 due to ~~increased~~decreased receivables, prepaid expenses and inventories ~~and~~offset by increased cash and cash equivalents. Current liabilities as of October 31, 2020 increased from November 2, 2019 primarily due to higher current operating lease liabilities and other accrued expenses partially offset by lower prepaid expenses and other current assets and receivables. Current liabilities increased primarily due to the impact of the revised lease accounting guidance which required the recognition of $50 million of current operating lease liabilities at November 2, 2019, as discussed in Note 5 to the unaudited condensed consolidated financial statements included in this report, partially offset by reductions in accounts payable and accrued ~~compensation and other accrued expenses and liabilities. Changes in current assets and current liabilities are discussed below.~~compensation.

For the ratio of debt to total capital, debt is defined as short-term and long-term debt, and total capital is defined as debt plus shareholders’ equity. Debt was $35 million at October 31, 2020 and $0 million at November 2, 2019, ~~and $32 million at November 3, 2018,~~ while shareholders’ equity was $419 million at October 31, 2020 and $517 million at November 2, ~~2019 and $465 million at November 3, 2018.~~2019. The ~~decrease~~increase in debt

Table of Contents

since November ~~3, 2018~~2, 2019 was primarily due to ~~$107 million~~borrowings to maintain certain amounts of cash ~~flow from operations which was partially offset by cash payments of $33 million for capital expenditures and $25 million for dividends,~~on our balance sheet during the COVID-19 pandemic, resulting in ~~$22~~$53 million of cash and cash equivalents on hand as of October 31, 2020. Additionally, the change in debt reflects the impact of $69 million of cash flow from operations which was offset by cash payments of $35 million for capital expenditures and other investing activities, $19 million for dividends and $20 million for share repurchases. Shareholders’ equity decreased from November 2, ~~2019. Shareholders’ equity increased from November 3, 2018,~~2019, primarily ~~as a result of~~due to net ~~earnings less~~losses, dividends ~~paid.~~paid and shares repurchased during the period. Our debt levels and ratio of debt to total capital in future periods may not be comparable to historical amounts as we continue to assess, and possibly make changes to, our capital structure. Changes in our capital structure in the future, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, the ultimate impact of the COVID-19 pandemic and other factors. The amounts involved may be material.

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 ~~from November 3, 2018~~as of October 31, 2020 as compared to November 2, 2019.

~~Table of Contents~~

Current Assets:


	November 2,		February 2,		November 3,		February 3,		October 31,		February 1,		November 2,		February 2,
	2019		2019		2018		2018		2020		2020		2019		2019
Cash and cash equivalents	$	21,568	$	8,327	$	7,413	$	6,343	$	53,071	$	52,460	$	21,568	$	8,327
Receivables, net		64,593		69,037		69,400		67,542		39,513		58,724		64,593		69,037
Inventories, net		154,229		160,656		138,150		126,812		148,740		152,229		154,229		160,656
Prepaid expenses and other current assets		28,438		31,768		36,937		35,421		21,139		25,413		28,438		31,768
Total current assets	$	268,828	$	269,788	$	251,900	$	236,118	$	262,463	$	288,826	$	268,828	$	269,788

Cash and cash equivalents were $53 million as of October 31, 2020 compared to $22 million as of November 2, ~~2019 compared to $7 million as of November 3, 2018. Typical cash~~2019. Cash amounts maintained on an ongoing basis in our operations generally range from $5 million to $10 million at any given time if we have debt ~~outstanding.~~outstanding; however, due to the uncertainty associated with the COVID-19 pandemic, we borrowed a certain amount of cash during Fiscal 2020 as a precautionary measure. Any ~~excess~~ cash that is ~~generally~~not used to repay ~~any~~ amounts outstanding under our U.S. Revolving Credit Agreement ~~and if cash flow from operations exceeds amounts required to pay any outstanding debt amounts, capital expenditures and dividends, cash outstanding may exceed the typical cash amounts.~~is generally invested in money market investment accounts. The decrease in receivables, net as of ~~November 2, 2019~~October 31, 2020 was primarily due to lower trade receivables resulting from lower wholesale sales during the quarter, a ~~$4 million reduction in income tax~~higher provision for credit losses and lower credit card receivables ~~reflecting the collection~~as of ~~certain income tax receivable amounts.~~November 2, 2020.

Inventories, net, which is net of a $62 million LIFO reserve in both periods, ~~increased~~decreased as of ~~November 2, 2019~~October 31, 2020 primarily due to ~~increases in~~lower inventories in Tommy Bahama, Southern Tide and Corporate and Other partially offset by reductions in Lilly Pulitzer and Lanier Apparel. The increased inventory levels are primarily to support planned sales growth and to increase base inventory levels in certain key item programs and product categories. We believe that inventory levels in each operating group, except Tommy Bahama which had a very modest increase in inventories. The decreases in the operating groups are ~~appropriate to support anticipated sales.~~partially offset by increased inventory in Corporate and Other resulting from the impact of LIFO accounting which requires the reversal of certain inventory markdowns in the operating groups. Prepaid expenses and other current assets decreased as of ~~November 2, 2019~~October 31, 2020 primarily ~~as a result of~~due to lower prepaid ~~rent expense due to the adoption of the revised lease accounting guidance, which resulted in the classification of prepaid rent in~~advertising, samples, royalties and other operating ~~lease assets in our consolidated balance sheet, as well as lower prepaid income taxes.~~expenses.

Non-current Assets:


	November 2,		February 2,		November 3,		February 3,		October 31,		February 1,		November 2,		February 2,
	2019		2019		2018		2018		2020		2020		2019		2019
Property and equipment, net	$	190,537	$	192,576	$	194,228	$	193,533	$	178,029	$	191,517	$	190,537	$	192,576
Intangible assets, net		175,298		176,176		176,735		178,858		156,464		175,005		175,298		176,176
Goodwill		66,594		66,621		66,618		66,703		23,857		66,578		66,594		66,621
Operating lease assets		287,977		—		—		—		238,259		287,181		287,977		—
Other non-current assets, net		23,850		22,093		23,272		24,729
Other assets, net										42,945		24,262		23,850		22,093
Total non-current assets	$	744,256	$	457,466	$	460,853	$	463,823	$	639,554	$	744,543	$	744,256	$	457,466

Table of Contents

Property and equipment, net as of ~~November 2, 2019~~October 31, 2020 decreased primarily ~~as a result~~due to depreciation expense, including impairment of ~~depreciation expense~~certain property and equipment, during the 12 months ended ~~November 2, 2019, partially offset by~~October 31, 2020, exceeding capital expenditures during the same period. The decrease in intangible assets, net and goodwill as of ~~November 2, 2019~~October 31, 2020 was primarily due to ~~amortization of intangible assets~~the impairment charges in Southern Tide in the ~~12 months ended November 2, 2019. The~~First Quarter of Fiscal 2020, as discussed in Note 1 and Note 4 in our unaudited condensed consolidated financial statements included in this report. Operating lease assets as of October 31, 2020 decreased primarily due to the recognition of amortization related to existing operating leases and the termination or reduced term of certain operating leases exceeding the increased operating lease assets ~~amount~~associated with new or extended operating lease agreements that commenced during the last 12 months. The increase in other assets, net was primarily due to the balance as of ~~November 2, 2019 is~~October 31, 2020 including a ~~result of the adoption of the revised lease accounting guidance during~~$17 million income tax receivable associated with our Fiscal ~~2019.~~2020 net operating losses expected to be applied against prior year income tax returns and a $3 million investment in an unconsolidated entity.

~~Table of Contents~~

Liabilities:


	November 2,		February 2,		November 3,		February 3,		October 31,		February 1,		November 2,		February 2,
	2019		2019		2018		2018		2020		2020		2019		2019
Total current liabilities	$	164,118	$	142,209	$	124,839	$	135,010	$	176,389	$	177,779	$	164,118	$	142,209
Long-term debt		—		12,993		32,211		45,809		34,802		—		—		12,993
Non-current operating lease liabilities		293,775		—		—		—
Other non-current liabilities		17,365		75,286		73,434		74,029
Deferred taxes		21,010		18,411		16,922		15,269
Non-current portion of operating lease liabilities										244,970		291,886		293,775		—
Other liabilities										18,394		18,566		17,365		75,286
Deferred income taxes										8,516		16,540		21,010		18,411
Total liabilities	$	496,268	$	248,899	$	247,406	$	270,117	$	483,071	$	504,771	$	496,268	$	248,899

Current liabilities increased as of ~~November 2, 2019~~October 31, 2020 primarily due to ~~the $50 million of current~~higher operating lease liabilities, ~~recognized~~ as certain prior period rent amounts were withheld during the pendency of ~~November 2, 2019, as a result of the adoption of the revised lease accounting guidance during Fiscal 2019~~discussions with real property landlords, and accrued expenses and other liabilities, including higher expected direct to consumer inventory returns and other accrued expenses. These increases were partially offset by ~~reductions~~lower accounts payable, primarily due to lower inventory in transit amounts, and lower accrued compensation, ~~accounts payable and other accrued expenses and liabilities.~~primarily due to lower incentive compensation amounts. The ~~decrease~~increase in long-term debt since November ~~3, 2018~~2, 2019 was primarily due to ~~$107 million~~us borrowing certain amounts of cash ~~flow from operations which was partially offset by~~to maintain on our balance sheet during the COVID-19 pandemic. Additionally, long-term debt reflects the net impact of operating cash ~~payments of $33 million for~~flows, capital expenditures, dividends and ~~$25 million for dividends.~~share repurchases as discussed above.

~~The non-current~~Non-current portion of operating lease liabilities ~~amount~~ as of ~~November 2, 2019 is a result of the adoption of the revised lease accounting guidance during Fiscal 2019. Other non-current liabilities~~October 31, 2020 decreased ~~as of November 2, 2019~~ primarily due to the ~~amount~~payment of operating lease liabilities and reductions in liabilities related to the termination or reduced term of certain operating leases exceeding operating lease liabilities associated with new or extended operating lease agreements that commenced in the last 12 months. Deferred income taxes decreased as of November 3, 2018 including $60 million of deferred rent and deferred rent tenant improvement allowance liabilities which were classified as operating lease assets as of November 2, 2019, as a result of the adoption of the revised lease accounting guidance during Fiscal 2019. This reduction was partially offset by increases in amounts for deferred compensation liabilities and fair value of contingent consideration.

~~Deferred taxes increased as of November 2, 2019~~October 31, 2020 primarily due to timing differences associated with ~~depreciation,~~ amortization and ~~prepaid expenses~~impairment of intangible assets and depreciation partially offset by timing differences associated with inventories.

Statement of Cash Flows

The following table sets forth the net cash flows ~~including continuing and discontinued operations,~~ for the First Nine Months of Fiscal ~~2019~~2020 and the First Nine Months of Fiscal ~~2018~~2019 (in thousands):


	First Nine Months				First Nine Months
	Fiscal 2019		Fiscal 2018		Fiscal 2020		Fiscal 2019
Cash provided by operating activities	$	75,206	$	64,618	$	22,677	$	75,206
Cash used in investing activities		(26,877)		(31,268)		(24,916)		(26,877)
Cash used in financing activities		(35,032)		(32,065)
Cash provided by (used in) financing activities						2,811		(35,032)
Net change in cash and cash equivalents	$	13,297	$	1,285	$	572	$	13,297

Cash and cash equivalents on hand were $53 million and $22 million at October 31, 2020 and ~~$7 million at~~ November 2, 2019, ~~and November 3, 2018,~~ respectively. Changes in cash flows in the First Nine Months of Fiscal ~~2019~~2020 and the First Nine Months of Fiscal ~~2018~~2019 related to operating activities, investing activities and financing activities are discussed below.

Table of Contents

Operating Activities:

In the First Nine Months of Fiscal ~~2019~~2020 and the First Nine Months of Fiscal ~~2018,~~2019, operating activities provided $23 million and $75 million ~~and $65 million, respectively,~~ of ~~cash.~~cash, respectively. The cash flow from operating activities for each period was primarily the result of net earnings (loss) for the relevant period adjusted, as applicable, for non-cash activities including depreciation, amortization, impairment and equity-based compensation, as well as the net impact of changes in deferred taxes and ~~our working capital accounts.~~operating assets and liabilities. In ~~both~~the First Nine Months of Fiscal 2020 changes in operating assets and liabilities had a favorable impact on cash flow from operations, and the First Nine Months of Fiscal 2019, changes in operating assets and liabilities had an unfavorable impact on cash flow from operations.

In the First Nine Months of Fiscal ~~2018, working capital account~~2020, the more significant changes ~~had~~in operating assets and liabilities were decreases in receivables, prepaid expenses and other current assets and inventories, which increased cash flow from operations, partially offset by an unfavorable ~~impact on~~change in other balance sheet changes, which was primarily related to the recognition of a $17 million income tax receivable associated with our Fiscal 2020 net operating losses expected to be applied against prior year income tax returns, which decreased cash flow from operations. In the First Nine Months of Fiscal 2019, the more significant changes in ~~working capital,~~operating assets and liabilities, after considering the non-cash impact of certain reclassifications that resulted from the adoption of the revised lease accounting guidance, were a decrease in current liabilities, which reduced cash flow from operations, partially offset by ~~decreases~~reductions in inventories and receivables, which increased ~~cash flow from~~

~~Table of Contents~~

~~operations. In the First Nine Months of Fiscal 2018, the more significant changes in working capital were an increase in inventories and a decrease in current liabilities, which reduced~~ cash flow from operations.

Investing Activities:

In the First Nine Months of Fiscal ~~2019~~2020 and the First Nine Months of Fiscal ~~2018,~~2019, investing activities used $25 million and $27 million ~~and $31 million, respectively,~~ of cash, ~~which primarily consisted of capital expenditures.~~respectively. On an ongoing basis, our cash flow used in investing activities primarily consists of our capital expenditure investments in our existing brands and acquisitions of new businesses. Our capital expenditures primarily consist of costs associated with information technology initiatives, including e-commerce capabilities; opening, relocating and remodeling retail stores and restaurants; and facilities enhancements for distribution centers and offices. In addition to our capital expenditures, in the First Nine Months of Fiscal 2020, we invested $3 million for a minority interest in an unconsolidated entity, which operates a branded apparel business.

Financing Activities:

In the First Nine Months of Fiscal 2020 and the First Nine Months of Fiscal 2019, financing activities provided $3 million and used $35 million of cash, respectively. During the First Nine Months of Fiscal 2020, we increased debt in order to maintain certain cash amounts on our balance sheet during the COVID-19 pandemic, while positive cash flows from operations were generally offset by capital expenditures and other investing activities, share repurchases and dividends. In the First Nine Months of Fiscal 2019, and the First Nine Months of Fiscal 2018, financing activities used $35 million and $32 million, respectively, of cash. During the First Nine Months of Fiscal 2019 and the First Nine Months of Fiscal 2018, we decreased debt and increased cash as our cash flow from operations was greater than our capital expenditures and payment of dividends.

During the First Nine Months of Fiscal ~~2019 and~~2020, we repurchased $18 million of shares of our common stock pursuant to an open market stock repurchase program, which was suspended on March 17, 2020. During the First Nine Months of Fiscal ~~2018 we paid $19 million~~2020 and ~~$17 million of dividends, respectively. Also, during~~ the First Nine Months of Fiscal 2019 we paid $1$13 million ~~for the payment of certain amounts related to previous acquisitions including the payment of certain holdback~~ and ~~contingent consideration amounts and paid $1~~$19 million ~~related to the refinancing of our revolving credit agreement.~~in dividends, respectively. Both the First Nine Months of Fiscal ~~2019~~2020 and the First Nine Months of Fiscal ~~2018~~2019 included certain amounts related to the issuance of equity pursuant to our employee stock purchase plan and the repurchase of equity awards for employee tax withholding liabilities ~~due to~~resulting from the vesting of equity ~~awards.~~awards during the period. Both the First Nine Months of Fiscal 2020 and the First Nine Months of Fiscal 2019 included certain amounts related to the payment of contingent consideration or other deferred acquisition payment amounts, which are included in other financing activities.

~~If we are in a debt position, we~~We may borrow or pay down debt depending on whether our cash flow from operating activities exceeds our capital expenditures, dividend payments, acquisitions and any other investing or financing activities. Generally, we anticipate that excess cash, if any, will be used to repay any debt on our U.S. Revolving Credit Agreement. However, due to the uncertainty related to the COVID-19 pandemic, we may concurrently hold a certain amount of cash on hand as well as a certain amount of debt under our U.S. Revolving Credit Agreement in the short term. If we have cash and cash

Table of Contents

equivalents in excess of cash required for our ongoing operations, we will generally invest the excess cash in short-term money market investments.

Liquidity and Capital Resources

~~In July 2019,~~As of October 31, 2020, we ~~amended the U.S. Revolving Credit Agreement by entering into the First Amendment to the Fourth Amended~~had $53 million of cash and ~~Restated Credit Agreement to (1) extend the maturity~~cash equivalents on hand, with $35 million of ~~the facility to July 2024, and (2) modify certain provisions including a reduction of interest rates on certain~~ borrowings ~~and a reduction in unused line fees. We had no amounts~~ outstanding ~~as of November 2, 2019~~ under our U.S. Revolving Credit Agreement. As of October 31, 2020, we had $287 million of unused availability under our U.S. Revolving Credit Agreement. We believe our U.S. Revolving Credit Agreement and anticipated future positive cash flow from operating activities will provide sufficient cash flow to satisfy our ongoing cash requirements as well as ample opportunity to continue to invest in our brands, direct to consumer initiatives and other strategic initiatives.

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 borrowing rate of 2.0% as of October 31, 2020), unused line fees and letter of credit fees based upon average unused availability or utilization, (3) requires periodic interest payments with principal due at maturity (July 2024) 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.

To the extent cash flow needs 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. Our U.S. Revolving Credit Agreement is also used to establish collateral for certain insurance programs and leases and to finance trade letters of credit for product purchases, which reduce the amounts available under our line of credit when issued. As of ~~November 2, 2019,~~October 31, 2020, $3 million of letters of credit were outstanding under our U.S. Revolving Credit Agreement. After considering these limitations and the amount of eligible assets in our borrowing base, as of November 2, 2019, we had $313 million in unused availability under the U.S. Revolving Credit Agreement, subject to certain limitations on borrowings.

~~Table of Contents~~

Covenants and Other Restrictions:

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 (i) $23.5 million or (ii) 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 (i) $23.5 million or (ii) 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 the Third Quarter of Fiscal ~~2019~~2020 and as of ~~November 2, 2019,~~October 31, 2020, no financial covenant testing was required pursuant to our U.S. Revolving Credit Agreement as the minimum availability threshold was met at all times. As of ~~November 2, 2019,~~October 31, 2020, we were compliant with all applicable covenants related to the U.S. Revolving Credit Agreement.

Table of Contents

Other Liquidity Items:

We anticipate that we will be able to satisfy our ongoing cash requirements, which generally consist of working capital and other operating activity needs, capital expenditures, interest payments on our debt and dividends, if any, primarily from ~~positive cash flow from operations supplemented by~~ borrowings under our U.S. Revolving Credit ~~Agreement.~~Agreement and positive cash flows from operations in the long term. Our need for working capital is typically seasonal with the greatest requirements generally in the fall and spring of each year. Our capital needs will depend on many factors including the results of our operations and cash flows in the COVID-19 environment and beyond, future growth ~~rate,~~rates, the need to finance inventory levels and the success of our various products. We anticipate that at the maturity of the U.S. Revolving Credit Agreement or as otherwise deemed appropriate, we will be able to refinance the facility or obtain other financing on terms available in the market at that time. The terms of any future financing arrangements may not be as favorable as the terms of the current agreement or current market terms.

On December 8, 2020, our Board of Directors approved a cash dividend of $0.25 per share payable on January 29, 2021 to shareholders of record as of the close of business on January 15, 2021. Although we have paid dividends in each quarter since we became a public company in July 1960, 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 in the short term, ~~based on our expectation of operating cash flows in future periods~~ 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 in all periods. For details about limitations on our ability to pay dividends, see the discussion of the U.S. Revolving Credit Agreement above.

Our contractual obligations as of ~~November 2, 2019~~October 31, 2020 have not changed materially from the contractual obligations outstanding at February ~~2, 2019,~~1, 2020, as disclosed in our ~~Annual Report on~~Fiscal 2019 Form 10-K, ~~for Fiscal 2018 filed with the SEC,~~ other than changes in amounts outstanding under our U.S. Revolving Credit Agreement and operating lease liabilities, as discussed ~~above.~~in Note 5 and Note 6 in the unaudited condensed consolidated financial statements included in this report.

Our anticipated capital expenditures for Fiscal ~~2019,~~2020, including the ~~$27~~$22 million incurred in the First Nine Months of Fiscal ~~2019,~~2020, are expected to be approximately ~~$40~~$30 million. ~~These~~Due to the uncertainty of the COVID-19 pandemic, we deferred and/or cancelled certain capital expenditures ~~are expected~~that were originally planned for Fiscal 2020. However, we continued with certain projects, including various direct to consist primarily of costs associated with information technology initiatives, including e-commerce capabilities; new retail stores and Marlin Bars; and investments to remodel existing retail stores and restaurants.consumer location openings. Our capital expenditure amounts in future years ~~may~~

~~Table of Contents~~

~~increase or decrease~~will fluctuate from the amounts incurred in prior years depending on the information technology initiatives, direct to consumer location openings, relocations and remodels and other infrastructure requirements deemed appropriate for that year to support future expansion of our businesses.

Off Balance Sheet Arrangements

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 to 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 condensed consolidated financial statements, which have been prepared in accordance with GAAP. 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. On an ongoing basis, we evaluate our ~~estimates, including those discussed below.~~estimates. 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.

Table of Contents

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 misstated.

Our critical accounting policies and estimates are discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our ~~Annual Report on~~Fiscal 2019 Form ~~10-K for Fiscal 2018.~~10-K. There have not been any significant changes to ~~the application of~~ our critical accounting policies and estimates during the First Nine Months of Fiscal ~~2019.~~2020. A detailed summary of significant accounting policies is included in Note 1 to our consolidated financial statements contained in our ~~Annual Report on~~Fiscal 2019 Form ~~10-K for Fiscal 2018.~~10-K.

SEASONAL ASPECTS OF OUR BUSINESS

Each of our operating groups 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 details of the impact of seasonality on the historical operating results of each of our operating groups, see the business discussion for each operating group in Part I, Item 1, Business in our ~~Annual Report on~~Fiscal 2019 Form ~~10-K for Fiscal 2018.~~

10-K. As the timing of certain unusual or non-recurring items, economic conditions, wholesale product shipments, weather or other factors affecting our operations may vary from one year to the next, we do not believe that net sales or operating income for any particular quarter or the distribution of net sales and operating income for Fiscal ~~2018~~2019 are ~~necessarily~~ indicative of anticipated results for Fiscal ~~2019~~2020 or expected distribution in future ~~years. Our third quarter has historically been~~years, particularly in light of the COVID-19 pandemic impact on our ~~smallest net sales and~~Fiscal 2020 operating ~~income quarter and that result is expected to continue.~~results.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain interest rate, foreign currency, commodity and inflation risks as discussed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our ~~Annual Report on~~Fiscal 2019 Form ~~10-K for Fiscal 2018.~~10-K. There have not been any ~~significant~~material changes in our exposure to these risks during the First Nine Months of Fiscal ~~2019.~~2020.

~~Table of Contents~~

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our company, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting during the Third Quarter of Fiscal ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4147

Table of Contents

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to litigation and regulatory actions arising in the ordinary course of business. These actions may relate to trademark and other intellectual property, licensing arrangements, real estate, employee relations matters, importing or exporting regulations, taxation ~~employee relation matters~~ or other topics. We are not currently a party to any litigation or regulatory action or aware of any proceedings contemplated by governmental authorities that we believe could reasonably be expected to have a material impact on our financial position, results of operations or cash flows. However, our assessment of any litigation or other legal claims could potentially change in light of the discovery of additional factors not presently known or determinations by judges, juries, or others which are not consistent with our evaluation of the possible liability or outcome of such litigation or claims.

ITEM 1A. RISK FACTORS

Our business is subject to numerous risks. Investors should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for Fiscal 2018, which could materially affect our business, financial condition or operating results. We operate in a competitive and rapidly changing business environment, and ~~additional~~ risks and uncertainties that we currently consider immaterial or are not presently known to us may ~~also~~ adversely affect our business. ~~The risks~~In addition to the other information set forth in this report, investors should carefully consider the risk factors described in Part I. Item 1A. Risk Factors in our ~~Annual~~Fiscal 2019 Form 10-K and Part II. Item 1A. Risk Factors in our Quarterly Report on Form ~~10-K~~10-Q for ~~2018~~the First Quarter of Fiscal 2020, which could materially affect our business, financial condition and/or operating results, as well as the following:

If we are unable to complete an orderly and timely exit of our Lanier Apparel business, or if existing reserves are not adequate to cover our ultimate liabilities, our financial condition, cash flows and results of operations could be adversely affected.

On December 9, 2020, we announced that we are exiting the ~~only~~Lanier Apparel business, which is expected to be completed during the Second Half of Fiscal 2021. We took significant charges and established reserves during the Third Quarter of Fiscal 2020, and have also made estimates as to the future financial impact of an orderly exit. However, if we are unable to effectively and efficiently execute the wind down of our Lanier Apparel business, we may incur additional costs and cash outflows. In particular, the announcement could adversely impact our ongoing relationships with wholesale customers and other third parties, adversely impacting our ability to liquidate inventory and exit the operations in a timely and efficient manner. In addition, given the significant uncertainties about the retail environment during the pendency of the COVID-19 pandemic, there can be no assurance that we will complete the Lanier Apparel exit in a timely fashion in accordance with our current plans. Our announcement and subsequent actions in furtherance of the wind down may subject us to substantial risks ~~facing~~and uncertainties that may result in a material adverse effect on our ~~company.~~financial condition, cash flows and results of operations, including our ability to retain Lanier Apparel employees through the wind down; the potential for other losses in excess of our current expectations, including those resulting from third party relationships impacted by our decision; and the diversion of senior management’s attention from our ongoing operations while executing the exit from the Lanier Apparel business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)	During the Third Quarter of Fiscal ~~2019,~~2020, we did not ~~sell~~make any unregistered sales of equity securities.

~~(b)~~(c)

We have certain stock incentive plans as described in Note 78 to our consolidated financial statements included in our ~~Annual Report on~~Fiscal 2019 Form 10-K, ~~for Fiscal 2018,~~ all of which are publicly announced plans. Under the plans, we can repurchase shares from employees to cover employee tax liabilities related to the vesting of shares of our stock. During the Third Quarter of Fiscal ~~2019,~~2020, no shares were repurchased pursuant to these plans.

InAs disclosed in our Annual Report on Form 10-K for Fiscal 2017 and subsequent annual and quarterly reports, in March 2017, our Board of Directors authorized us to spend up to $50 million to repurchase shares of our stock. This authorization superseded and replaced all previous authorizations to repurchase shares of our stock and has no

Table of Contents

automatic expiration. As of October 31, 2020, $32 million of the authorization remains available for future repurchases of our stock. During the Third Quarter of Fiscal 2020, we did not repurchase any shares of our stock pursuant to this authorization.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

None

ITEM 5. OTHER INFORMATION

None

~~Table of Contents~~

ITEM 6. EXHIBITS


3.1		Restated Articles of Incorporation of Oxford Industries, Inc. (filed as Exhibit 3.1 to the Company’s Form 10-Q for the fiscal quarter ended July 29, 2017)
3.2		Bylaws of Oxford Industries, Inc., as amended (filed as Exhibit 3.2 to the Company’s Form ~~10-K for Fiscal 2017~~8-K filed on August 18, 2020))
31.1		Section 302 Certification by Principal Executive Officer.*
31.2		Section 302 Certification by Principal Financial Officer.*
32		Section 906 Certification by Principal Executive Officer and Principal Financial Officer.*
101.INS		XRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
101.SCH		XBRL Taxonomy Extension Schema Document*
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*
104		Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
		* Filed herewith.

4349

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


December ~~12, 2019~~10, 2020	OXFORD INDUSTRIES, INC.

	(Registrant)

	/s/ K. Scott Grassmyer
	K. Scott Grassmyer
	Executive Vice President - Finance, Chief Financial Officer and Controller
	(Authorized Signatory)

4450


	Operating lease
Remainder of 2019	$	17,066
2020		62,622
2021		65,589
2022		61,399
2023		58,279
2024		45,664
After 2024		92,256
Total lease payments	$	402,875
Less: Difference between discounted and undiscounted lease payments		59,199
Present value of lease liabilities	$	343,676