Oxford Industries plunges after tariff costs crush annual profit
Apparel maker beats quarterly estimates but full-year earnings collapse 68% amid $30M in tariff headwinds
Oxford Industries shares fell sharply after the apparel maker reported fourth-quarter results that beat expectations while revealing a dramatic collapse in annual profitability, as tariff costs continued to ravage margins across its portfolio of lifestyle brands.
The Atlanta-based company, which owns Tommy Bahama, Lilly Pulitzer and Johnny Was, reported fourth-quarter adjusted earnings per share of negative 9 cents, dramatically surpassing the consensus estimate of a 94-cent loss, according to analyst data from StreetInsider. Revenue of $374.5 million exceeded forecasts by 22.5%, reaching well above the $305.6 million expected by analysts.
But beneath the quarterly beat lay a much deeper deterioration. Full-year adjusted EPS for fiscal 2025 plummeted to $2.11 from $6.68 in the prior year, a 68% collapse that reflects the severe impact of trade policy on the company's earnings power. Tariff costs alone reduced annual earnings by $1.25 to $1.50 per share, representing approximately $30 million in expenses.
The relentless tariff pressure has compressed gross margins to 60.7% from 62.9% in the previous year, with Oxford anticipating a further 300 basis point contraction in the fourth quarter driven by both increased duties and a higher proportion of promotional activity to clear inventory. The company had previously projected net tariff impacts of $25 million to $35 million before refining the estimate to $25 million to $30 million, or $1.25 to $1.50 per share after tax.
Brand performance revealed growing divergence across Oxford's portfolio. Johnny Was suffered a 20% sales decline in the fourth quarter and had previously recorded an impairment charge in the third quarter, attributed to revised future projections and ongoing difficulties mitigating elevated tariff rates. The brand has struggled particularly with products difficult to source outside of China, where tariff rates remain highest.
Tommy Bahama, Oxford's largest brand by revenue, also experienced margin compression despite maintaining relatively stronger sales trends. The company has accelerated its supply chain diversification strategy, shifting production to countries including India, Vietnam and Bangladesh to reduce dependence on Chinese manufacturing. Oxford has also implemented price increases of 4% to 8% to partially offset rising costs, though these measures have not fully alleviated margin pressure.
"We are taking decisive action to mitigate tariff impacts through sourcing diversification and pricing actions, while maintaining our focus on long-term brand equity," the company stated in prepared remarks accompanying the earnings release.
Looking ahead, Oxford provided guidance for fiscal 2026 that suggests stabilization rather than recovery. The company projects adjusted EPS between $2.10 and $2.70, representing essentially flat performance compared to fiscal 2025 results, with revenue expected to range between $1.475 billion and $1.530 billion. The guidance factors in approximately $12 million, or 60 cents per share, of ongoing tariff impact from the annualized effect of tariffs enacted in April 2025.
Despite the earnings deterioration, Oxford raised its quarterly dividend by 1% to 70 cents per share, signaling confidence in cash flow generation even amid margin pressure. The company currently trades at approximately 9.5 times forward earnings, with six analysts rating the stock a hold and a consensus target price of $36.50, according to market data.
The broader apparel industry faces similar challenges, with nearly all U.S. apparel imports likely to be subject to higher tariffs in 2026. Fashion executives across the sector are planning additional price increases, with some non-luxury brands anticipating hikes exceeding 5% in the coming year.
Oxford's shares have declined significantly over the past 12 months, trading well below their 52-week high of $60.24 reached in early 2025. The stock closed at $31.89 on Thursday, down 3.3%, as investors weighed the implications of the company's flat earnings guidance against ongoing tariff headwinds that show little sign of abating.