Oxford Industries Inc.

09/04/2026 | Press release | Distributed by Public on 09/04/2026 06:47

Quarterly Report for Quarter Ending August 1, 2026 (Form 10-Q)

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 Fiscal 2025 Form 10-K.
OVERVIEW
Business Overview
We are a leading branded apparel company that designs, sources, markets and distributes products bearing the trademarks of our portfolio of lifestyle brands: Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head and Jack Rogers.
Our business strategy is to drive excellence across a portfolio of lifestyle brands that create sustained, profitable growth. We consider lifestyle brands to be those brands that have a clearly defined and targeted point of view inspired by an appealing lifestyle or attitude. Furthermore, we believe lifestyle brands that create an emotional connection can command greater loyalty and higher price points and create licensing opportunities. We believe the attraction of a lifestyle brand depends on creating compelling product, effectively communicating the respective lifestyle brand message and distributing products to consumers where and when they want them. We believe the principal competitive factors in the apparel industry are the reputation, value, and image of brand names; design of differentiated, innovative or otherwise compelling product; consumer preference; price; quality; marketing; product fulfillment capabilities; and customer service. Our ability to compete successfully in the apparel industry is dependent on our proficiency in foreseeing changes and trends in fashion and consumer preference and presenting appealing products for consumers. Our design-led, commercially informed lifestyle brand operations strive to provide exciting, differentiated fashion products each season as well as certain core products that consumers expect from us.
During Fiscal 2025, 82% of our consolidated net sales were through our direct to consumer channels of distribution, which consist of our brand specific full-price retail stores, e-commerce websites and outlets, as well as our Tommy Bahama food and beverage operations. The remaining 18% of our net sales were generated through our wholesale distribution channels, which complement our direct to consumer operations and provide access to a larger base of consumers. Our wholesale operations consist of sales of products bearing the trademarks of our lifestyle brands to various specialty stores, better department stores, Signature Stores, multi-branded e-commerce retailers and other retailers.
For additional information about our business and our operating segments, see Part I, Item 1. Business of our Fiscal 2025 Form 10-K. Important factors relating to certain risks which could impact our business are described in Part I, Item 1A. Risk Factors of our Fiscal 2025 Form 10-K.
Industry Overview
We operate in a highly competitive apparel market. No single apparel firm or small group of apparel firms dominates the apparel industry, and our competitors vary by operating segment and distribution channel. The apparel industry is cyclical and highly dependent on the overall level and focus of discretionary consumer spending, which changes as consumer preferences and regional, domestic, and international economic conditions evolve. In recent years, consumers have allocated a smaller portion of discretionary spending to certain product categories, including apparel, while increasing spending on services and other goods. Further, negative economic conditions often have a longer and more pronounced impact on the apparel industry than on other industries, due in part to the discretionary nature of apparel purchases.
This competitive and evolving environment requires brands and retailers to approach their operations, including with respect to marketing, merchandising, advertising, and fulfillment, differently than they have historically and may result in increased operating costs and ongoing investments to generate growth or maintain existing sales levels. The expanding use of digital platforms, data analytics, and artificial intelligence-enabled tools across the industry has raised consumer expectations for personalization, convenience, transparency, and speed, while intensifying competition across channels.
These competitive pressures have been further exacerbated by a challenging macroeconomic and geopolitical environment. Significant uncertainty related to U.S. tariffs on imported goods, and broader uncertainty around U.S. trade
and tax policy, inflationary pressures, including recent significant increases in energy prices, and elevated interest rates have weighed on consumer sentiment and discretionary spending. Geopolitical tensions, including the U.S.-Iran conflict, as well as other hostilities in the Middle East, and the ongoing war in Ukraine, have added to global uncertainty and have influenced, and may continue to influence, energy markets, transportation costs, and broader supply chain dynamics. Taken together, these conditions have increased volatility and reduced visibility across the global retail and consumer environment.
In response to the uncertain macroenvironment conditions, promotional activity across the industry has increased as retailers seek to offset traffic volatility and stimulate demand, further intensifying price competition. These factors have created a complex and challenging retail environment that impacts our businesses and financial results and exacerbated certain inherent challenges within the apparel industry, and may continue to do so in the future. There remains significant uncertainty in the macroeconomic environment, and the impact of these and other factors could materially affect our businesses.
We believe our lifestyle brands have true competitive advantages, and we continue to invest in our brands' direct to consumer initiatives and distribution capabilities while further leveraging technology to serve our consumers when and where they want to be served. We continue to believe that our lifestyle brands, with their strong emotional connections with consumers, are well suited to succeed and thrive in the long term while managing the various challenges facing our industry in the current environment. At the same time, we remain cautious in light of extrinsic factors and are proactively taking measures to reassess and realign our businesses and initiatives to drive long-term operating margin expansion across our businesses.
Tariffs
On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). Prior to the Supreme Court decision, we paid a total of $45 million of tariffs now eligible for refund under the IEEPA tariff refund process, including $40 million and $5 million during Fiscal 2025 and the First Quarter of Fiscal 2026, respectively. We recorded $30 million of additional cost of goods sold relating to these tariffs during Fiscal 2025 with substantially all of the remainder recorded as additional cost of goods sold in the First Half of Fiscal 2026.
During the First Half of Fiscal 2026, we filed claims seeking refunds of previously paid IEEPA tariffs in an aggregate amount of approximately $42 million under Phase I and Phase II of the refund process established by U.S. Customs and Border Protection ("CBP"). We expect to file refund claims for the remaining amount of tariffs paid when a formal process is established for these claims.
During the Second Quarter of Fiscal 2026, we received $29 million of tariff refunds and $1 million of related interest. We applied a loss recovery model to the previously paid IEEPA tariffs. Based on the amount of refunds received, the status of the remaining filed claims and our assessment of collectability, we determined that recovery of the remaining filed tariff refund claims was probable. Accordingly, during the Second Quarter of Fiscal 2026, we recognized the aggregate amount of filed tariff refund claims of $42 million as a reduction of cost of goods sold in the condensed consolidated statements of operations. The interest was recorded in royalties and other operating income in the condensed consolidated statements of operations. The remaining uncollected filed tariff refunds are recorded as tariff receivables in the condensed consolidated balance sheets. Subsequent to the end of the Second Quarter of Fiscal 2026, we received substantially all of the $13 million recorded as a tariff receivable as of August 1, 2026.
Effective February 24, 2026, the U.S. government imposed a temporary 10% tariff under Section 122 of the Trade Act of 1974 on most imports from all countries. Although the U.S. Court of International Trade ruled the tariffs unlawful in May 2026, the judgment was stayed pending appeal, and the tariffs remained in effect until their statutory expiration on July 24, 2026. The Section 122 tariffs were then replaced by tariffs imposed under Section 301 of the Trade Act of 1974 on imports from substantially all countries from which we source product, generally at rates of 10% or 12.5%, depending on the country of origin.
Substantial uncertainty remains regarding the scope, duration and impact of the Section 301 tariffs, as well as the potential for additional or modified U.S. tariffs and retaliatory measures by other countries.
KEY PERFORMANCE INDICATORS
We consider a variety of performance and financial measures in assessing our business, and the key performance indicators used to measure our results are summarized below.
Comparable Sales
We often disclose comparable sales in order to provide additional information regarding changes in our results of operations between periods. Our disclosures of comparable sales include net sales from our full-price retail stores and e-commerce sites. We believe that the inclusion of both full-price retail stores and e-commerce sites in the comparable sales disclosures is a more meaningful way of reporting our comparable sales results, given similar inventory planning, allocation and return policies, as well as our cross-channel marketing and other initiatives for the direct to consumer channels. For our comparable sales disclosures, we exclude (1) outlet store sales as those clearance sales are used primarily to liquidate end of season inventory, which may vary significantly depending on the level of end of season inventory on hand and generally occur at lower gross margins than our non-clearance direct to consumer sales, and (2) food and beverage sales, as we do not currently believe that the inclusion of food and beverage sales in our comparable sales disclosures is meaningful in assessing our total company operations. Comparable sales information reflects net sales, including shipping and handling revenues, if any, associated with product sales.
For purposes of our disclosures, comparable sales consists of sales through e-commerce sites and any physical full-price retail store that was owned and open as of the beginning of the prior fiscal year and which did not have during the relevant periods, and is not within the current fiscal year scheduled to have, (1) a remodel or other event which would result in a closure for an extended period of time (which we define as a period of two weeks or longer), (2) a greater than 15% change in the size of the retail space due to expansion, reduction or relocation to a new retail space or (3) a relocation to a new space that is significantly different from the prior retail space (including relocations to accommodate an adjacent Tommy Bahama food and beverage concept). For those stores which are excluded based on the preceding sentence, the stores continue to be excluded from comparable sales until the criteria for a new store is met subsequent to the remodel, relocation, or other event. A full-price retail store that is remodeled will generally continue to be included in our comparable sales metrics as a store is not typically closed for longer than a two-week period during a remodel; however, a full-price retail store that is relocated generally will not be included in our comparable sales metrics until that store has been open in the relocated space for the entirety of the prior fiscal year because the size or other characteristics of the store typically change significantly from the prior location. Any stores that were closed during the prior fiscal year or current fiscal year, or which we plan to close or vacate in the current fiscal year, as well as any pop-up or temporary store locations, are excluded from our comparable sales metrics.
Definitions and calculations of comparable sales differ among retail companies, and therefore comparable sales metrics disclosed by us may not be comparable to the metrics disclosed by other companies.
Gross Profit and Gross Margin
Gross profit represents net sales less cost of goods sold. Gross profit as a percentage of net sales is referred to as gross margin. Cost of goods sold primarily represents the cost of merchandise sold, including the cost of duties and inbound freight from suppliers. Our gross profit is variable in nature and generally follows changes in net sales. We believe that gross profit and gross margin are useful measures because they allow management, analysts, investors and others to evaluate the profit we generate from our sales, before operating and other expenses and income.
Segment EBITDA
Segment earnings before interest, taxes, depreciation and amortization ("EBITDA") is the measure we use to assess the profitability of our operating segments. Segment EBITDA is calculated as net sales less cost of goods sold and total SG&A of the operating segment, and it excludes amounts reflected in Corporate EBITDA, income tax expense (benefit), interest expense, net, depreciation and amortization and other infrequent operating charges (impairments of goodwill, intangible assets and equity method investments). Segment EBITDA as a percentage of segment net sales is referred to as segment EBITDA margin.
We believe that segment EBITDA is a useful measure because it allows management, analysts, investors, and other interested parties to evaluate the profitability of our business operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation and amortization), financing decisions (interest), tax
strategies (income taxes), and infrequent operating charges (impairments of goodwill, intangible assets and equity method investments).
Net Earnings and EBITDA
We believe that net earnings and EBITDA, along with the adjusted measure of EBITDA ("Adjusted EBITDA"), are useful measures of operating performance. Net earnings represents our profitability after the effects of all operating and other expenses and income. EBITDA helps us, analysts, investors, and other interested parties assess the underlying profitability of our operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation and amortization), financing decisions (interest), and tax strategies (income taxes).
Adjusted EBITDA eliminates certain infrequent operating charges (impairments of goodwill, intangible assets and equity method investments), if any, that we do not believe are reflective of our ongoing business performance. This adjusted measure helps us, analysts, investors, and other interested parties evaluate our operating performance on a comparable basis from period-to-period so that we can better understand the ongoing factors and trends affecting our business operations. We use EBITDA, or Adjusted EBITDA, if applicable, to forecast our performance, evaluate our actual results against our forecasts and compare our results to others in the industries that we serve.
See "Non-GAAP Financial Measures" below for a reconciliation of EBITDA to net earnings, the most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP").
Key Operating Results:
The following table sets forth our consolidated operating results (in thousands, except per share amounts) for the First Half of Fiscal 2026 compared to the First Half of Fiscal 2025:
First Half
Fiscal 2026 Fiscal 2025
Net sales $ 785,778 $ 796,004
Gross profit $ 535,012 $ 499,911
Gross margin 68.1 % 62.8 %
Net earnings $ 63,955 $ 42,873
EBITDA $ 124,757 $ 95,166
Net earnings per diluted share $ 4.25 $ 2.83
Weighted average shares outstanding - diluted 15,042 15,175
Net earnings per diluted share was $4.25 in the First Half of Fiscal 2026 compared to $2.83 in the First Half of Fiscal 2025 reflecting (1) higher gross margin and (2) increased royalties and other operating income. These increases were partially offset by (1) decreased net sales and (2) increased SG&A.
DIRECT TO CONSUMER LOCATIONS
The table below provides information about the number of direct to consumer locations for our brands as of the dates specified. The figures below include our permanent locations and exclude any pop-up or temporary store locations which have an initial lease term of 12 months or less.
August 1,
2026 		January 31,
2026 		August 2,
2025 		February 1,
2025
Tommy Bahama full-price retail stores 104 102 103 106
Tommy Bahama retail-food and beverage locations 29 28 26 24
Tommy Bahama outlets 38 37 38 36
Total Tommy Bahama locations 171 167 167 166
Lilly Pulitzer full-price retail stores 70 67 66 64
Johnny Was full-price retail stores 70 75 75 77
Johnny Was outlets 3 3 3 3
Total Johnny Was locations 73 78 78 80
Southern Tide full-price retail stores 31 34 36 30
TBBC full-price retail stores 8 9 9 5
Total Oxford direct to consumer locations 353 355 356 345
We regularly evaluate our direct to consumer locations and may close, relocate, remodel or convert stores to optimize our store footprint and support the long-term performance of our brands. In light of current macroeconomic conditions, we have recently increased our scrutiny of new, extended and underperforming brick and mortar opportunities. During the First Half of Fiscal 2026, we realigned our store fleet by converting the Johnny Was full-price retail store on King Street in Charleston, South Carolina, and the Southern Tide full-price retail store in Boca Raton, Florida, into Lilly Pulitzer full-price retail stores.
RESULTS OF OPERATIONS
SECOND QUARTER OF FISCAL 2026 COMPARED TO SECOND QUARTER OF FISCAL 2025
The discussion and tables below compare our statements of operations for the Second Quarter of Fiscal 2026 to the Second Quarter of Fiscal 2025. 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, including gross profit, may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.
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. The table also includes net earnings per diluted share and diluted
weighted average shares outstanding (in thousands), as well as the change and the percentage change for each of these items as compared to the same period of the prior year.
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 394,376 100.0 % $ 403,143 100.0 % $ (8,767) (2.2) %
Cost of goods sold 103,247 26.2 % 155,518 38.6 % (52,271) (33.6) %
Gross profit $ 291,129 73.8 % $ 247,625 61.4 % $ 43,504 17.6 %
SG&A 212,270 53.8 % 208,996 51.8 % 3,274 1.6 %
Depreciation and amortization 17,198 4.4 % 16,585 4.1 % 613 3.7 %
Total operating expenses 229,468 58.2 % 225,581 56.0 % $ 3,887 1.7 %
Royalties and other operating income 7,155 1.8 % 3,367 0.8 % 3,788 112.5 %
Operating income $ 68,816 17.4 % $ 25,411 6.3 % $ 43,405 170.8 %
Interest expense, net 1,489 0.4 % 1,548 0.4 % (59) (3.8) %
Earnings before income taxes $ 67,327 17.1 % $ 23,863 5.9 % $ 43,464 182.1 %
Income taxes 18,360 4.7 % 7,171 1.8 % 11,189 156.0 %
Net earnings $ 48,967 12.4 % $ 16,692 4.1 % $ 32,275 193.4 %
Net earnings per diluted share $ 3.25 $ 1.12 $ 2.13 190.7 %
Weighted average shares outstanding - diluted 15,078 14,944 134 0.9 %
The following table presents the proportion of our consolidated net sales by distribution channel for each period presented. We have calculated all percentages below on actual data, and percentages may not add to 100 due to rounding.
Second Quarter
Fiscal 2026 Fiscal 2025
Retail 41% 41%
E-commerce 38% 37%
Food and Beverage 8% 7%
Wholesale 13% 15%
Total 100% 100%
Net Sales
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Tommy Bahama $ 230,942 $ 229,003 $ 1,939 0.8 %
Lilly Pulitzer 85,194 90,268 (5,074) (5.6) %
Johnny Was 41,404 45,415 (4,011) (8.8) %
Emerging Brands 37,086 38,530 (1,444) (3.7) %
Corporate and Other (250) (73) (177) NM %
Consolidated net sales $ 394,376 $ 403,143 $ (8,767) (2.2) %
Consolidated net sales were $394 million in the Second Quarter of Fiscal 2026 compared to net sales of $403 million in the Second Quarter of Fiscal 2025. The decrease in net sales included decreased sales in Lilly Pulitzer, Johnny Was and Emerging Brands. These decreases were partially offset by increased sales in Tommy Bahama.
The changes in net sales by distribution channel consisted of the following:
•a decrease in wholesale sales of $9 million, or 14%, including (1) a $5 million decrease in Tommy Bahama, (2) a $2 million decrease in Emerging Brands, (3) a $1 million decrease in Johnny Was and (4) a $1 million decrease in Lilly Pulitzer;
•a decrease in full-price retail sales of $3 million, or 2%, including (1) a $3 million decrease in Lilly Pulitzer, (2) a $2 million decrease in Emerging Brands and (3) a $1 million decrease in Johnny Was. These decreases were partially offset by a $2 million increase in Tommy Bahama;
•an increase in e-commerce sales of $1 million, or less than 1%, including (1) a $2 million increase in Emerging Brands and (2) a $1 million increase in Tommy Bahama. These increases were partially offset by (1) a $1 million decrease in Johnny Was and (2) a $1 million decrease in Lilly Pulitzer;
•an increase in food and beverage sales of $3 million, or 11%; and
•outlet sales in the Second Quarter of Fiscal 2026 were comparable to the Second Quarter of Fiscal 2025.
Tommy Bahama:
Tommy Bahama net sales increased $2 million, or 1%, in the Second Quarter of Fiscal 2026, with an increase in (1) food and beverage sales of $3 million, or 11%, (2) full-price retail sales of $2 million, or 3% and (3) e-commerce sales of $1 million, or 2%. These increases were partially offset by a decrease in wholesale sales of $5 million, or 15%. Outlet sales in the Second Quarter of Fiscal 2026 were comparable to the Second Quarter of Fiscal 2025. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:
Second Quarter
Fiscal 2026 Fiscal 2025
Retail 46% 45%
E-commerce 29% 29%
Food and Beverage 14% 13%
Wholesale 11% 13%
Total 100% 100%
Lilly Pulitzer:
Lilly Pulitzer net sales decreased $5 million, or 6%, in the Second Quarter of Fiscal 2026, with a decrease in (1) retail sales of $3 million, or 8%, (2) wholesale sales of $1 million, or 9%, and (3) e-commerce sales of $1 million, or 2%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:
Second Quarter
Fiscal 2026 Fiscal 2025
Retail 36% 37%
E-commerce 50% 48%
Wholesale 14% 15%
Total 100% 100%
Johnny Was:
Johnny Was net sales decreased $4 million, or 9%, in the Second Quarter of Fiscal 2026, with a decrease in (1) full-price retail sales of $1 million, or 9%, (2) wholesale sales of $1 million, or 20%, and (3) e-commerce sales of $1 million, or 7%. Outlet sales in the Second Quarter of Fiscal 2026 were comparable to the Second Quarter of Fiscal 2025. The following table presents the proportion of net sales by distribution channel for Johnny Was for each period presented:
Second Quarter
Fiscal 2026 Fiscal 2025
Retail 39% 38%
E-commerce 47% 46%
Wholesale 14% 16%
Total 100% 100%
Emerging Brands:
Emerging Brands net sales decreased $1 million, or 4%, in the Second Quarter of Fiscal 2026 including a decrease in Southern Tide partially offset by increases in Duck Head and Jack Rogers. By distribution channel, the decrease in net sales in Emerging Brands included a decrease in (1) wholesale sales of $2 million, or 15%, and (2) retail sales of $2 million, or 19%. These decreases were partially offset by an increase in e-commerce sales of $2 million, or 9%. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:
Second Quarter
Fiscal 2026 Fiscal 2025
Retail 19% 23%
E-commerce 56% 49%
Wholesale 25% 28%
Total 100% 100%
Corporate and Other:
Corporate and Other net sales primarily consist of the elimination of any sales between operating segments.
Gross Profit
The tables below present gross profit by reportable segment and Corporate and Other and in total for the Second Quarter of Fiscal 2026 and the Second Quarter of Fiscal 2025, as well as the dollar change and percentage change between those two periods, and gross margin by reportable segment and Corporate and Other and in total. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Tommy Bahama $ 162,420 $ 138,951 $ 23,469 16.9 %
Lilly Pulitzer 66,485 58,993 7,492 12.7 %
Johnny Was 36,092 28,140 7,952 28.3 %
Emerging Brands 25,911 22,786 3,125 13.7 %
Corporate and Other 221 (1,245) 1,466 NM %
Consolidated gross profit $ 291,129 $ 247,625 $ 43,504 17.6 %
Second Quarter
Fiscal 2026 Fiscal 2025
Tommy Bahama 70.3% 60.7%
Lilly Pulitzer 78.0% 65.4%
Johnny Was 87.2% 62.0%
Emerging Brands 69.9% 59.1%
Corporate and Other NM% NM%
Consolidated gross margin 73.8% 61.4%
The increased gross profit was due to increased consolidated gross margin partially offset by decreased net sales. The increased gross margin was primarily due to (1) the favorable impact of recognizing $42 million of tariff refund claims as a reduction of cost of goods sold, (2) updated assortment, sourcing and pricing strategies across our portfolio that resulted in higher initial mark-ups ("IMUs"), (3) a change in sales mix with off-price wholesale sales representing a lower proportion of net sales and (4) a $1 million lower LIFO accounting charge in the Second Quarter of Fiscal 2026 compared to the Second Quarter of Fiscal 2025. These factors were partially offset by a change in sales mix with a higher proportion of net sales occurring during promotional events at Tommy Bahama, Lilly Pulitzer and Emerging Brands.
Tommy Bahama:
The higher gross margin for Tommy Bahama was primarily due to (1) the favorable impact of tariff refund claims recognized as a reduction of cost of goods sold, (2) updated assortment, sourcing and pricing strategies resulting in higher IMUs and (3) a change in sales mix with off-price wholesale sales representing a lower proportion of net sales. These factors were partially offset by a change in sales mix with a higher proportion of net sales occurring during promotional events, including loyalty award cards and end of season clearance events.
Lilly Pulitzer:
The higher gross margin for Lilly Pulitzer was primarily due to (1) the favorable impact of tariff refund claims recognized as a reduction of cost of goods sold, (2) updated assortment, sourcing and pricing strategies resulting in higher IMUs and (3) a change in sales mix with off-price wholesale sales representing a lower proportion of net sales. These factors were partially offset by (1) a change in sales mix with a higher proportion of net sales occurring during promotional events, including e-commerce flash sales and (2) more significant markdowns during e-commerce flash sales.
Johnny Was:
The higher gross margin for Johnny Was was primarily due to (1) the favorable impact of tariff refund claims recognized as a reduction of cost of goods sold, (2) updated assortment, sourcing and pricing strategies resulting in higher IMUs, (3) a change in sales mix with off-price wholesale sales representing a lower proportion of net sales and (4) a revised promotional strategy to have fewer promotional events than in previous periods.
Emerging Brands:
The higher gross margin for Emerging Brands was primarily due to (1) the favorable impact of tariff refund claims recognized as a reduction of cost of goods sold and (2) a change in sales mix with e-commerce sales representing a higher proportion of net sales. These increases were partially offset by (1) a change in sales mix with a higher proportion of net sales occurring during promotional events and (2) more significant markdowns during promotional events.
Corporate and Other:
The gross profit in Corporate and Other primarily reflects the impact of LIFO accounting adjustments, which decreased by $1 million in the Second Quarter of Fiscal 2026 compared to the Second Quarter of Fiscal 2025.
SG&A
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
SG&A 212,270 208,996 $ 3,274 1.6 %
SG&A (as a % of net sales) 53.8 % 51.8 %
SG&A was $212 million in the Second Quarter of Fiscal 2026 compared to $209 million in the Second Quarter of Fiscal 2025. The 2% increase in total SG&A in the Second Quarter of Fiscal 2026 included the following:
•$3 million increase in costs related to new brick and mortar retail and food and beverage locations;
•$1 million increase in software related costs;
•$1 million increase in variable and distribution costs primarily due to costs associated with moving operations between our Lyons, Georgia distribution centers and temporarily operating two distribution centers during the transition to the newly constructed facility;
•$1 million of store closure related charges; and
•$1 million increase in advertising related costs.
These increases were partially offset by:
•$4 million decrease in incentive compensation.
Depreciation and Amortization
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Depreciation and amortization $ 17,198 $ 16,585 $ 613 3.7 %
Depreciation and amortization (as a % of net sales) 4.4 % 4.1 %
The higher depreciation and amortization expense was primarily driven by a $1 million increase in depreciation of property and equipment associated with our new distribution center in Lyons, Georgia.
Royalties and other operating income
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Royalties and other operating income $ 7,155 $ 3,367 $ 3,788 112.5 %
Royalties and other operating income typically consists primarily of income received from third parties from the licensing of our brands. The increased royalties and other operating income in the Second Quarter of Fiscal 2026 was primarily due to increased royalty income in Tommy Bahama reflecting higher sales by our licensing partners. Also, in the Second Quarter of Fiscal 2026, $1 million of interest was received related to tariff refunds.
Operating income
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Operating income $ 68,816 $ 25,411 $ 43,405 170.8 %
Operating income (as a % of net sales) 17.4 % 6.3 %
Operating income was $69 million in the Second Quarter of Fiscal 2026 compared to operating income of $25 million in the Second Quarter of Fiscal 2025. The increased operating results were primarily due to (1) higher gross margin and (2) increased royalties and other operating income. These increases were partially offset by (1) decreased net sales and (2) increased SG&A.
Interest expense, net
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Interest expense, net 1,489 1,548 $ (59) (3.8) %
Interest expense, net in the Second Quarter of Fiscal 2026 was comparable to the Second Quarter of Fiscal 2025.
Income tax
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Income tax expense 18,360 7,171 $ 11,189 156.0 %
Effective tax rate 27.3 % 30.1 %
Our effective tax rate will vary from period to period from a typical annual effective tax rate of approximately 25% based on various factors including, but not limited to, the geographic mix of earnings, enacted tax legislation, state and local taxes, tax audit findings and settlements, and the interaction of various global tax strategies.
For the Second Quarter of Fiscal 2026 and the Second Quarter of Fiscal 2025, our effective tax rate of 27.3% and 30.1%, respectively, primarily reflects the unfavorable net discrete tax expense for shortfalls in stock-based compensation vesting during each respective quarter.
Net earnings
Second Quarter
Fiscal 2026 Fiscal 2025
Net sales $ 394,376 $ 403,143
Operating income $ 68,816 $ 25,411
Net earnings $ 48,967 $ 16,692
Net earnings per diluted share $ 3.25 $ 1.12
Weighted average shares outstanding - diluted 15,078 14,944
Net earnings per diluted share was $3.25 in the Second Quarter of Fiscal 2026 compared to $1.12 in the Second Quarter of Fiscal 2025 reflecting (1) higher gross margin, (2) increased royalties and other operating income and (3) a lower effective tax rate. These increases were partially offset by (1) decreased net sales and (2) increased SG&A.
EBITDA
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Tommy Bahama Segment EBITDA $ 51,276 $ 34,316 $ 16,960 49.4 %
Lilly Pulitzer Segment EBITDA 24,973 17,788 7,185 40.4 %
Johnny Was Segment EBITDA 9,354 (1,280) 10,634 830.8 %
Emerging Brands Segment EBITDA 6,598 4,010 2,588 64.5 %
Corporate and Other EBITDA (6,187) (12,838) 6,651 NM%
EBITDA $ 86,014 $ 41,996 $ 44,018 104.8 %
EBITDA as a % of net sales 21.8 % 10.4 %
EBITDA was $86 million in the Second Quarter of Fiscal 2026 compared to $42 million in the Second Quarter of Fiscal 2025. The increased EBITDA was primarily due to higher segment EBITDA in all operating segments and in Corporate and Other. Changes in segment EBITDA by reportable segment and Corporate and Other are discussed below.
Tommy Bahama:
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 230,942 $ 229,003 $ 1,939 0.8 %
Gross profit $ 162,420 $ 138,951 $ 23,469 16.9 %
Gross margin 70.3 % 60.7 %
Segment EBITDA $ 51,276 $ 34,316 $ 16,960 49.4 %
Segment EBITDA as % of net sales 22.2 % 15.0 %
The increased segment EBITDA for Tommy Bahama was due to (1) higher gross margin and (2) increased net sales. These increases were partially offset by increased SG&A. The increased SG&A was primarily due to (1) $3 million associated with new brick and mortar retail and food and beverage locations, (2) a $2 million increase in advertising costs, (3) a $1 million increase in occupancy costs and (4) a $1 million increase in consulting and professional services related costs.
Lilly Pulitzer:
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 85,194 $ 90,268 $ (5,074) (5.6) %
Gross profit $ 66,485 $ 58,993 $ 7,492 12.7 %
Gross margin 78.0 % 65.4 %
Segment EBITDA $ 24,973 $ 17,788 $ 7,185 40.4 %
Segment EBITDA as % of net sales 29.3 % 19.7 %
The increased segment EBITDA for Lilly Pulitzer was primarily due to higher gross margin. This increase was partially offset by (1) decreased net sales and (2) increased SG&A. The increased SG&A was primarily due to a $1 million increase in software related costs.
Johnny Was:
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 41,404 $ 45,415 $ (4,011) (8.8)%
Gross profit $ 36,092 $ 28,140 $ 7,952 28.3 %
Gross margin 87.2% 62.0%
Segment EBITDA $ 9,354 $ (1,280) $ 10,634 830.8 %
Segment EBITDA as % of net sales 22.6% (2.8)%
The increased segment EBITDA for Johnny Was was primarily due to (1) higher gross margin and (2) decreased SG&A. These increases were partially offset by decreased net sales. The decreased SG&A was primarily due to a $2 million decrease in advertising costs.
Emerging Brands:
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 37,086 $ 38,530 $ (1,444) (3.7) %
Gross profit $ 25,911 $ 22,786 $ 3,125 13.7%
Gross margin 69.9% 59.1%
Segment EBITDA $ 6,598 $ 4,010 $ 2,588 64.5 %
Segment EBITDA as % of net sales 17.8% 10.4%
The increased segment EBITDA for Emerging Brands was primarily due to higher gross margin. This increase was partially offset by (1) decreased net sales and (2) increased SG&A. The increased SG&A was primarily due to $1 million of Southern Tide store closure related charges.
Corporate and Other:
Second Quarter
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ (250) $ (73) $ (177) NM%
Gross profit $ 221 $ (1,245) $ 1,466 NM%
Corporate EBITDA $ (6,187) $ (12,838) $ 6,651 NM%
Corporate and Other EBITDA increased primarily due to (1) decreased SG&A and (2) a lower LIFO accounting charge. The decreased SG&A was primarily due to (1) a $3 million decrease in employment costs primarily driven by decreased incentive compensation and (2) a $2 million decrease in consulting and professional services related costs.
RESULTS OF OPERATIONS
FIRST HALF OF FISCAL 2026 COMPARED TO FIRST HALF OF FISCAL 2025
The discussion and tables below compare our statements of operations for the First Half of Fiscal 2026 to the First Half of Fiscal 2025. 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, including gross profit, may not be directly comparable to those of our competitors, as classification of certain expenses may vary by company.
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. The table also includes net earnings per diluted share and diluted weighted average shares outstanding (in thousands), as well as the change and the percentage change for each of these items as compared to the same period of the prior year.
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 785,778 100.0 % $ 796,004 100.0 % $ (10,226) (1.3) %
Cost of goods sold 250,766 31.9 % 296,093 37.2 % (45,327) (15.3) %
Gross profit $ 535,012 68.1 % $ 499,911 62.8 % $ 35,101 7.0 %
SG&A 423,158 53.9 % 414,740 52.1 % 8,418 2.0 %
Depreciation and amortization 33,578 4.3 % 33,549 4.2 % 29 NM
Total operating expenses 456,736 58.1 % 448,289 56.3 % $ 8,447 1.9 %
Royalties and other operating income 12,903 1.6 % 9,995 1.3 % 2,908 29.1 %
Operating income $ 91,179 11.6 % $ 61,617 7.7 % $ 29,562 48.0 %
Interest expense, net 3,771 0.5 % 3,274 0.4 % 497 15.2 %
Earnings before income taxes $ 87,408 11.1 % $ 58,343 7.3 % $ 29,065 49.8 %
Income taxes 23,453 3.0 % 15,470 1.9 % 7,983 51.6 %
Net earnings $ 63,955 8.1 % $ 42,873 5.4 % $ 21,082 49.2 %
Net earnings per diluted share $ 4.25 $ 2.83 $ 1.43 50.5 %
Weighted average shares outstanding - diluted 15,042 15,175 (133) (0.9) %
The following table presents the proportion of our consolidated net sales by distribution channel for each period presented. We have calculated all percentages below on actual data, and percentages may not add to 100 due to rounding.
First Half
Fiscal 2026 Fiscal 2025
Retail 40% 40%
E-commerce 33% 33%
Food and Beverage 9% 8%
Wholesale 18% 19%
Total 100% 100%
Net Sales
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Tommy Bahama $ 455,578 $ 445,178 $ 10,400 2.3 %
Lilly Pulitzer 175,567 189,310 (13,743) (7.3) %
Johnny Was 79,254 88,888 (9,634) (10.8) %
Emerging Brands 75,710 72,778 2,932 4.0 %
Corporate and Other (331) (150) (181) NM %
Consolidated net sales $ 785,778 $ 796,004 $ (10,226) (1.3) %
Consolidated net sales were $786 million in the First Half of Fiscal 2026 compared to net sales of $796 million in the First Half of Fiscal 2025. The decrease in net sales included decreased sales in Lilly Pulitzer and Johnny Was. These decreases were partially offset by increased sales in Tommy Bahama and Emerging Brands.
The changes in net sales by distribution channel consisted of the following:
•a decrease in wholesale sales of $13 million, or 8%, including (1) a $6 million decrease in Tommy Bahama, (2) a $5 million decrease in Johnny Was and (3) a $1 million decrease in Lilly Pulitzer. Emerging Brands wholesale sales in the First Half of Fiscal 2026 were comparable to the First Half of Fiscal 2025;
•a decrease in full-price retail sales of $3 million, or 1%, including (1) a $4 million decrease in Lilly Pulitzer, (2) a $3 million decrease in Johnny Was and (3) a $1 million decrease in Emerging Brands. These decreases were partially offset by a $5 million increase in Tommy Bahama;
•a decrease in e-commerce sales of $2 million, or 1%, including (1) an $8 million decrease in Lilly Pulitzer and (2) a $2 million decrease in Johnny Was. These decreases were partially offset by (1) a $5 million increase in Emerging Brands and (2) a $4 million increase in Tommy Bahama;
•an increase in food and beverage sales of $8 million, or 12%; and
•outlet sales in the First Half of Fiscal 2026 were comparable to the First Half of Fiscal 2025.
Tommy Bahama:
Tommy Bahama net sales increased $10 million, or 2%, in the First Half of Fiscal 2026, with an increase in (1) food and beverage sales of $8 million, or 12%, (2) full-price retail sales of $5 million, or 3%, and (3) e-commerce sales of $4 million, or 4%. These increases were partially offset by a decrease in wholesale sales of $6 million, or 9%. Outlet sales in the First Half of Fiscal 2026 were comparable to the First Half of Fiscal 2025. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:
First Half
Fiscal 2026 Fiscal 2025
Retail 45% 45%
E-commerce 25% 24%
Food and Beverage 15% 14%
Wholesale 15% 17%
Total 100% 100%
Lilly Pulitzer:
Lilly Pulitzer net sales decreased $14 million, or 7%, in the First Half of Fiscal 2026, with a decrease in (1) e-commerce sales of $8 million, or 10%, (2) retail sales of $4 million, or 6%, and (3) wholesale sales of $1 million, or 4%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:
First Half
Fiscal 2026 Fiscal 2025
Retail 36% 36%
E-commerce 44% 45%
Wholesale 20% 19%
Total 100% 100%
Johnny Was:
Johnny Was net sales decreased $10 million, or 11%, in the First Half of Fiscal 2026, with a decrease in (1) wholesale sales of $5 million, or 28%, (2) full-price retail sales of $3 million, or 10%, and (3) e-commerce sales of $2 million, or 5%. Outlet sales in the First Half of Fiscal 2026 were comparable to the First Half of Fiscal 2025. The following table presents the proportion of net sales by distribution channel for Johnny Was for each period presented:
First Half
Fiscal 2026 Fiscal 2025
Retail 39% 38%
E-commerce 45% 42%
Wholesale 16% 20%
Total 100% 100%
Emerging Brands:
Emerging Brands net sales increased $3 million, or 4%, in the First Half of Fiscal 2026 including increases in Duck Head, Jack Rogers and TBBC partially offset by a decrease in Southern Tide. By distribution channel, the increase in net sales in Emerging Brands included an increase in e-commerce sales of $5 million, or 14%. This increase was partially offset by a decrease in retail sales of $1 million, or 10%. Wholesale sales in the First Half of Fiscal 2026 were comparable to the First Half of Fiscal 2025. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:
First Half
Fiscal 2026 Fiscal 2025
Retail 18% 21%
E-commerce 48% 44%
Wholesale 34% 35%
Total 100% 100%
Corporate and Other:
Corporate and Other net sales primarily consist of the elimination of any sales between operating segments.
Gross Profit
The tables below present gross profit by reportable segment and Corporate and Other and in total for the First Half of Fiscal 2026 and the First Half of Fiscal 2025, as well as the dollar change and percentage change between those two periods, and gross margin by reportable segment and Corporate and Other and in total. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Tommy Bahama $ 309,949 $ 278,676 $ 31,273 11.2 %
Lilly Pulitzer 121,768 123,922 (2,154) (1.7) %
Johnny Was 60,974 56,258 4,716 8.4 %
Emerging Brands 46,618 43,100 3,518 8.2 %
Corporate and Other (4,297) (2,045) (2,252) NM %
Consolidated gross profit $ 535,012 $ 499,911 $ 35,101 7.0 %
First Half
Fiscal 2026 Fiscal 2025
Tommy Bahama 68.0% 62.6%
Lilly Pulitzer 69.4% 65.5%
Johnny Was 76.9% 63.3%
Emerging Brands 61.6% 59.2%
Corporate and Other NM% NM%
Consolidated gross margin 68.1% 62.8%
The increased gross profit was due to increased consolidated gross margin partially offset by decreased sales. The increased gross margin was primarily due to (1) the favorable impact of recognizing $42 million of tariff refund claims as a reduction of cost of goods sold, (2) updated assortment, sourcing and pricing strategies across our portfolio that resulted in higher IMUs and (3) a change in sales mix with off-price wholesale sales representing a lower proportion of net sales. These factors were partially offset by (1) approximately $10 million of increased cost of goods sold from additional tariffs implemented starting in Fiscal 2025, (2) a change in sales mix with a higher proportion of net sales occurring during promotional events at Tommy Bahama, Lilly Pulitzer and Emerging Brands and (3) a $3 million higher LIFO accounting charge in the First Half of Fiscal 2026 compared to the First Half of Fiscal 2025.
Tommy Bahama:
The higher gross margin for Tommy Bahama was primarily due to (1) the favorable impact of tariff refund claims recognized as a reduction of cost of goods sold, (2) updated assortment, sourcing and pricing strategies that resulted in higher IMUs and (3) a change in sales mix with off-price wholesale sales representing a lower proportion of net sales. These factors were partially offset by (1) increased cost of goods sold from additional tariffs implemented starting in Fiscal 2025 and (2) a change in sales mix with a higher proportion of net sales occurring during promotional events, including loyalty award cards, end of season clearance events and the semi-annual Friends & Family event.
Lilly Pulitzer:
The higher gross margin for Lilly Pulitzer was primarily due to (1) the favorable impact of tariff refund claims recognized as a reduction of cost of goods sold, (2) updated assortment, sourcing and pricing strategies that resulted in higher IMUs and (3) a change in sales mix with off-price wholesale sales representing a lower proportion of net sales. These factors were partially offset by (1) increased cost of goods sold from additional tariffs implemented starting in Fiscal 2025, (2) a change in sales mix with e-commerce flash sales representing a higher proportion of net sales and (3) more significant markdowns during e-commerce flash sales.
Johnny Was:
The higher gross margin for Johnny Was was primarily due to (1) the favorable impact of tariff refund claims recognized as a reduction of cost of goods sold, (2) a revised promotional strategy to have fewer promotional events than in previous periods, (3) updated assortment, sourcing and pricing strategies that resulted in higher IMUs and (4) a change in sales mix with off-price wholesale sales representing a lower proportion of net sales.
Emerging Brands:
The higher gross margin for Emerging Brands was primarily due to (1) the favorable impact of tariff refund claims recognized as a reduction of cost of goods sold and (2) a change in sales mix with e-commerce sales representing a higher proportion of net sales. These factors were partially offset by (1) increased cost of goods sold from additional tariffs implemented starting in Fiscal 2025, (2) a change in sales mix with a higher proportion of net sales occurring during promotional events and (3) more significant markdowns during promotional events.
Corporate and Other:
The gross profit in Corporate and Other primarily reflects the impact of LIFO accounting adjustments that resulted in a $3 million higher charge in the First Half of Fiscal 2026 than in the First Half of Fiscal 2025.
SG&A
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
SG&A 423,158 414,740 $ 8,418 2.0 %
SG&A (as a % of net sales) 53.9 % 52.1 %
SG&A was $423 million in the First Half of Fiscal 2026 compared to $415 million in the First Half of Fiscal 2025. The 2% increase in total SG&A in the First Half of Fiscal 2026 included the following:
•$5 million increase in costs related to new brick and mortar retail and food and beverage locations;
•$3 million increase in software related costs;
•$3 million increase in variable and distribution costs primarily due to increased variable costs resulting from distribution related expenses associated with moving operations between our Lyons, Georgia distribution centers and temporarily operating two distribution centers during the transition to the newly constructed facility; and
•$2 million of store closure related charges.
These increases were partially offset by:
•$2 million decrease in incentive compensation; and
•$1 million decrease in travel costs.
Depreciation and Amortization
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Depreciation and amortization $ 33,578 $ 33,549 $ 29 0.1 %
Depreciation and amortization (as a % of net sales) 4.3 % 4.2 %
Depreciation and amortization in the First Half of Fiscal 2026 was comparable to the First Half of Fiscal 2025.
Royalties and other operating income
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Royalties and other operating income $ 12,903 $ 9,995 $ 2,908 29.1 %
Royalties and other operating income typically consists primarily of income received from third parties from the licensing of our brands. The increased royalties and other operating income in the First Half of Fiscal 2026 was primarily due to increased royalty income in Tommy Bahama reflecting higher sales by our licensing partners. Also, in the First Half of Fiscal 2026, $1 million of interest was received related to tariff refunds.
Operating income
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Operating income $ 91,179 $ 61,617 $ 29,562 48.0 %
Operating income (as a % of net sales) 11.6 % 7.7 %
Operating income was $91 million in the First Half of Fiscal 2026 compared to operating income of $62 million in the First Half of Fiscal 2025. The increased operating results were primarily due to (1) higher gross margin primarily from $42 million of tariff refunds recognized as a reduction of cost of goods sold and (2) increased royalties and other operating income. These increases were partially offset by (1) decreased net sales and (2) increased SG&A.
Interest expense, net
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Interest expense, net 3,771 3,274 $ 497 15.2 %
The increased interest expense, net in the First Half of Fiscal 2026 was primarily due to a higher average outstanding debt balance during the First Half of Fiscal 2026 than the First Half of Fiscal 2025.
Income tax
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Income tax expense 23,453 15,470 $ 7,983 51.6 %
Effective tax rate 26.8 % 26.5 %
Our effective tax rate will vary from period to period from a typical annual effective tax rate of approximately 25% based on various factors including, but not limited to, the geographic mix of earnings, enacted tax legislation, state and local taxes, tax audit findings and settlements, and the interaction of various global tax strategies.
For the First Half of Fiscal 2026, our effective tax rate of 26.8% primarily reflected the unfavorable net discrete tax expense for shortfalls in stock-based compensation vesting during the First Half of Fiscal 2026.
For the First Half of Fiscal 2025, our effective tax rate of 26.5% primarily reflected the unfavorable net discrete tax expense for shortfalls in stock-based compensation vesting during the First Half of Fiscal 2025. These unfavorable factors were partially offset by the benefit derived from a reduction in income tax expense as a result of the receipt of interest from a U.S. federal income tax receivable.
Net earnings
First Half
Fiscal 2026 Fiscal 2025
Net sales $ 785,778 $ 796,004
Operating income $ 91,179 $ 61,617
Net earnings $ 63,955 $ 42,873
Net earnings per diluted share $ 4.25 $ 2.83
Weighted average shares outstanding - diluted 15,042 15,175
Net earnings per diluted share were $4.25 in the First Half of Fiscal 2026 compared to $2.83 in the First Half of Fiscal 2025 reflecting (1) higher gross margin primarily from $42 million of tariff refunds recognized as a reduction of cost of goods sold and (2) increased royalties and other operating income. These increases were partially offset by (1) decreased net sales and (2) increased SG&A.
EBITDA
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Tommy Bahama Segment EBITDA $ 91,394 $ 72,640 $ 18,754 25.8 %
Lilly Pulitzer Segment EBITDA 39,980 40,840 (860) (2.1) %
Johnny Was Segment EBITDA 8,145 (1,309) 9,454 722.2 %
Emerging Brands Segment EBITDA 9,574 6,861 2,713 39.5 %
Corporate and Other EBITDA (24,336) (23,866) (470) NM%
EBITDA $ 124,757 $ 95,166 $ 29,591 31.1 %
EBITDA as a % of net sales 15.9 % 12.0 %
EBITDA was $125 million in the First Half of Fiscal 2026 compared to $95 million in the First Half of Fiscal 2025. The increased EBITDA was primarily due to higher segment EBITDA in Tommy Bahama, Johnny Was and Emerging Brands. These increases were partially offset by decreases in Lilly Pulitzer and Corporate and Other. Changes in segment EBITDA by reportable segment and Corporate and Other are discussed below.
Tommy Bahama:
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 455,578 $ 445,178 $ 10,400 2.3 %
Gross profit $ 309,949 $ 278,676 $ 31,273 11.2 %
Gross margin 68.0 % 62.6 %
Segment EBITDA $ 91,394 $ 72,640 $ 18,754 25.8 %
Segment EBITDA as % of net sales 20.1 % 16.3 %
The increased segment EBITDA for Tommy Bahama was due to (1) higher gross margin and (2) increased net sales. These increases were partially offset by increased SG&A. The increased SG&A was primarily due to (1) $4 million associated with new brick and mortar retail and food and beverage locations, (2) a $3 million increase in advertising related costs, (3) a $2 million increase in occupancy costs, (4) a $1 million increase in variable and distribution costs resulting from increased net sales and (5) a $1 million increase in consulting and professional services related costs.
Lilly Pulitzer:
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 175,567 $ 189,310 $ (13,743) (7.3) %
Gross profit $ 121,768 $ 123,922 $ (2,154) (1.7) %
Gross margin 69.4 % 65.5 %
Segment EBITDA $ 39,980 $ 40,840 $ (860) (2.1) %
Segment EBITDA as % of net sales 22.8 % 21.6 %
The decreased segment EBITDA for Lilly Pulitzer was primarily due to decreased net sales. This decrease was partially offset by (1) higher gross margin and (2) decreased SG&A. The decreased SG&A was primarily due to a $1 million decrease in variable and distribution costs resulting from decreased net sales.
Johnny Was:
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 79,254 $ 88,888 $ (9,634) (10.8)%
Gross profit $ 60,974 $ 56,258 $ 4,716 8.4 %
Gross margin 76.9% 63.3%
Segment EBITDA $ 8,145 $ (1,309) $ 9,454 722.2 %
Segment EBITDA as % of net sales 10.3% (1.5%)
The increased segment EBITDA for Johnny Was was primarily due to (1) higher gross margin and (2) decreased SG&A. These increases were partially offset by decreased net sales. The decreased SG&A was primarily due to (1) a $3 million decrease in advertising costs, (2) a $1 million decrease in employment costs and (3) a $1 million decrease in occupancy costs.
Emerging Brands:
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ 75,710 $ 72,778 $ 2,932 4.0 %
Gross profit $ 46,618 $ 43,100 $ 3,518 8.2%
Gross margin 61.6% 59.2%
Segment EBITDA $ 9,574 $ 6,861 $ 2,713 39.5 %
Segment EBITDA as % of net sales 12.6% 9.4%
The increased segment EBITDA for Emerging Brands was primarily due to (1) higher gross margin and (2) increased net sales. These increases were partially offset by increased SG&A. The increased SG&A was primarily due to (1) a $2 million increase in variable and distribution costs primarily driven by increased net sales and (2) $1 million of Southern Tide store closure related charges. These increases were partially offset by a $2 million decrease in employment costs.
Corporate and Other:
First Half
Fiscal 2026 Fiscal 2025 $ Change % Change
Net sales $ (331) $ (150) $ (181) NM
Gross profit $ (4,297) $ (2,045) $ (2,252) NM
Corporate EBITDA $ (24,336) $ (23,866) $ (470) NM
Corporate and Other EBITDA decreased primarily due to a higher LIFO accounting charge. This decrease was partially offset by decreased SG&A. The decreased SG&A was primarily due to (1) a $1 million decrease in employment costs primarily driven by decreased incentive compensation and (2) a $1 million decrease in consulting and professional services related costs.
NON-GAAP FINANCIAL MEASURES
The following table sets forth reconciliations of net earnings to EBITDA. EBITDA is calculated as net sales less cost of goods sold and total SG&A, and it excludes income tax expense (benefit), interest expense, net and depreciation and amortization. Adjusted EBITDA is EBITDA less other infrequent operating charges (impairments of goodwill, intangible assets and equity method investments). We believe that the presentation of EBITDA and Adjusted EBITDA, when impairments of goodwill, intangible assets and equity method investments are incurred, neither of which are GAAP financial measures, provides meaningful supplemental information to both management and investors that is indicative of our core operations when considered together with the corresponding GAAP financial measures and the reconciliations to those measures. We believe that EBITDA is a useful measure of operating performance because it helps us, analysts, investors, and other interested parties assess the underlying profitability of our operations before the effects of certain net expenses that directly arise from our capital investment decisions (depreciation, amortization), financing decisions (interest) and tax strategies (income taxes). EBITDA and Adjusted EBITDA help us, analysts, investors, and other interested parties evaluate our operating performance on a comparable basis from period-to-period so that we can better understand the ongoing factors and trends affecting our business operations. We also use EBITDA, and Adjusted EBITDA when applicable, to forecast our performance, evaluate our actual results against our forecasts and compare our results to others in the industries that we serve. We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. The table below showing consolidated totals reconciles GAAP net earnings to EBITDA:
Second Quarter First Half
Fiscal 2026 Fiscal 2025 Fiscal 2026 Fiscal 2025
GAAP net earnings $ 48,967 $ 16,692 $ 63,955 $ 42,873
Depreciation and amortization 17,198 16,585 33,578 33,549
Interest expense, net 1,489 1,548 3,771 3,274
Income tax expense $ 18,360 $ 7,171 $ 23,453 $ 15,470
EBITDA 86,014 41,996 124,757 95,166
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Our primary source of revenue and cash flow is through our design, sourcing, marketing and distribution of branded apparel products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head and Jack Rogers lifestyle brands. We primarily distribute our products to our customers via direct to consumer channels of distribution, but we also distribute our products via wholesale channels of distribution.
Our primary uses of cash flow include the purchase of our branded apparel products from third party suppliers located outside of the United States, as well as operating expenses, including employee compensation and benefits, operating lease commitments and other occupancy-related costs, marketing and advertising costs, information technology costs, variable expenses, distribution costs, other general and administrative expenses and the periodic payment of interest. Additionally, we use our cash to fund capital expenditures and other investing activities, dividends, share repurchases and repayment of indebtedness, if any. In the ordinary course of business, we maintain certain levels of inventory, extend credit to our wholesale customers and pay our operating expenses. Thus, we require a certain amount of ongoing working capital to operate our business. Our need for working capital is typically seasonal with the greatest working capital requirements to support our larger spring, summer and holiday direct to consumer seasons. Our capital needs depend on many factors including the results of our operations and cash flows, anticipated growth rates, the need to finance inventory levels and the success of our various products.
Cash Flow Activity
The following table sets forth the net cash flows for the First Half of Fiscal 2026 and the First Half of Fiscal 2025 (in thousands):
First Half
Fiscal 2026 Fiscal 2025
Cash provided by operating activities $ 97,300 $ 79,549
Cash used in investing activities (31,470) (54,645)
Cash used in financing activities (64,833) (27,723)
Net change in cash and cash equivalents $ 997 $ (2,819)
Changes in cash flows in the First Half of Fiscal 2026 and the First Half of Fiscal 2025 related to operating activities, investing activities and financing activities are discussed below.
Operating Activities:
In the First Half of Fiscal 2026 and the First Half of Fiscal 2025, operating activities provided $97 million and $80 million of cash, respectively. The cash flow from operating activities for each period primarily consisted of net earnings for the relevant period adjusted, as applicable, for non-cash activities including impairment of property and equipment, depreciation, amortization of intangible assets, amortization of deferred financing costs, equity-based compensation and other non-cash items as well as the net impact of changes in deferred income taxes and operating assets and liabilities.
In the First Half of Fiscal 2026, the net change in operating assets and liabilities from the end of Fiscal 2025 decreased cash provided by operating activities, primarily relating to:
•a decrease in current liabilities, including accounts payable, lease liabilities and accrued compensation due primarily to the timing of payments;
•an increase in both prepaid expenses and other current assets and other balance sheet changes due primarily to increases in prepaid software costs and software as a service ("SaaS") configuration costs; and
•an increase in tariff receivables due to the timing of cash receipts related to previously paid tariffs. This increase was partially offset by a decrease in trade receivables due to lower wholesale sales, the seasonality of our business resulting in a higher proportion of wholesale sales occurring early in our fiscal year and the timing of sales and cash receipts.
These decreases in cash provided by operating activities were partially offset by:
•a decrease in inventories, due to efforts to reduce inventory balances in response to weaker consumer demand and the seasonality of our business, with inventory balances decreasing early in the fiscal year due to a higher proportion of sales typically occurring early in our fiscal year; and
•a decrease in income tax receivables driven by the timing of payments.
In the First Half of Fiscal 2025, the net change in operating assets and liabilities from the end of Fiscal 2024 decreased cash provided by operating activities primarily due to:
•an increase in prepaid expenses and other current assets and other balance sheet changes due primarily to increases in prepaid software costs, SaaS configuration costs and prepaid income taxes.
These decreases in cash provided by operating activities were partially offset by:
•a decrease in income tax receivables due to the timing of cash receipts;
•a decrease in receivables due to the seasonality of our business resulting in a higher proportion of wholesale sales occurring early in our fiscal year and the timing of sales and cash receipts;
•a decrease in inventories due to the seasonality of our business, with inventory balances decreasing early in the fiscal year due to a higher proportion of sales typically occurring early in our fiscal years; and
•an increase in current liabilities due to increased accounts payable driven by the timing of payments.
Investing Activities:
In the First Half of Fiscal 2026 and the First Half of Fiscal 2025, investing activities used $31 million and $55 million of cash, respectively. On an ongoing basis, our cash flow used in investing activities primarily consists of our capital expenditures, which totaled $32 million in the First Half of Fiscal 2026 and $55 million in the First Half of Fiscal 2025. Capital expenditures decreased in the First Half of Fiscal 2026 compared to the First Half of Fiscal 2025 primarily due to lower expenditures related to new brick and mortar retail and food and beverage locations and the Lyons, Georgia distribution center project.
Financing Activities:
In the First Half of Fiscal 2026 and the First Half of Fiscal 2025, financing activities used $65 million and $28 million of cash, respectively.
In the First Half of Fiscal 2026, net cash repayments of debt were $43 million as our long-term debt decreased due to cash flow from operations exceeding capital expenditures of $32 million and dividends of $22 million.
In the First Half of Fiscal 2025, net cash proceeds from debt were $50 million as our long-term debt increased due to share repurchases of $55 million, capital expenditures of $55 million and dividends of $21 million collectively exceeding cash flow from operations.
Liquidity and Capital Resources
We have a long history of generating sufficient cash flows from operations to satisfy our cash requirements for our ongoing capital expenditure needs as well as payment of dividends and repayment of our debt. Thus, we believe our anticipated future cash flows from operating activities will provide (1) sufficient cash over both the short and long term to satisfy our ongoing operating cash requirements, (2) funds to continue to invest in our businesses, including direct to consumer initiatives and information technology projects, (3) additional cash flow to repay debt that may be outstanding and (4) sufficient cash for other strategic initiatives such as acquisitions and share repurchases.
To the extent cash flow needs, for acquisitions or otherwise, in the future exceed cash flow provided by our operations, we will have access, subject to its terms, to our $325 million U.S. Revolving Credit Agreement to provide funding for operating activities, capital expenditures and acquisitions, if any, and any other investing or financing activities. The U.S. Revolving Credit Agreement matures in March 2028.
We issue standby letters of credit under the U.S. Revolving Credit Agreement. Outstanding letters of credit under the U.S. Revolving Credit Agreement reduce the amount of borrowings available to us when issued and, as of August 1, 2026, January 31, 2026, and August 2, 2025, totaled $6 million, $5 million and $5 million, respectively.
As of August 1, 2026, January 31, 2026, and August 2, 2025, we had $73 million, $116 million and $81 million, respectively, of borrowings outstanding and $240 million, $203 million and $239 million, respectively, in unused availability under the U.S. Revolving Credit Agreement.
Our cash, short-term investments and debt levels in future periods may not be comparable to historical amounts as we continue to assess, and possibly make changes to, our capital structure, including borrowings from additional credit facilities, sales of debt or equity securities or the repurchase of shares of our stock in the future. Changes in our capital structure, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Compliance with Covenants
The U.S. Revolving Credit Agreement is subject to a number of affirmative covenants regarding the delivery of financial information, compliance with law, maintenance of property, insurance requirements and conduct of business. Also, the U.S. Revolving Credit Agreement is subject to certain negative covenants or other restrictions including, among other things, limitations on our ability to (1) incur debt, (2) guaranty certain obligations, (3) incur liens, (4) pay dividends to shareholders, (5) repurchase shares of our common stock, (6) make investments, (7) sell assets or stock of subsidiaries, (8) acquire assets or businesses, (9) merge or consolidate with other companies or (10) prepay, retire, repurchase or redeem debt.
Additionally, the U.S. Revolving Credit Agreement contains a financial covenant that applies only if excess availability under the agreement for three consecutive business days is less than the greater of (1) $23.5 million or (2) 10% of availability. In such case, our fixed charge coverage ratio as defined in the U.S. Revolving Credit Agreement must not be less than 1.0 to 1.0 for the immediately preceding 12 fiscal months for which financial statements have been delivered. This financial covenant continues to apply until we have maintained excess availability under the U.S. Revolving Credit Agreement of more than the greater of (1) $23.5 million or (2) 10% of availability for 30 consecutive days.
We believe that the affirmative covenants, negative covenants, financial covenants and other restrictions under the U.S. Revolving Credit Agreement are customary for those included in similar facilities entered into at the time we amended the U.S. Revolving Credit Agreement. During the First Half of Fiscal 2026 and as of August 1, 2026, no financial covenant testing was required pursuant to the U.S. Revolving Credit Agreement, as the minimum availability threshold was met at all times. As of August 1, 2026, we were compliant with all applicable covenants related to the U.S. Revolving Credit Agreement.
Operating Lease Commitments:
Refer to Note 4 in our unaudited condensed consolidated financial statements included in this report for additional information about our operating lease commitments as of August 1, 2026.
Dividends:
On September 1, 2026, our Board of Directors approved a cash dividend of $0.70 per share payable on October 30, 2026 to shareholders of record as of the close of business on October 16, 2026. Although we have paid dividends 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 or repurchase shares in the short term subject to the terms and conditions of our credit facility, other debt instruments and applicable law. All cash flow from operations will not be paid out as dividends.
Share Repurchases:
On March 24, 2025, our Board of Directors authorized us to spend up to $100 million to repurchase shares of our stock. This authorization superseded and replaced all previous authorizations to repurchase shares of our stock and has no automatic expiration. During the Second Quarter of Fiscal 2026 and First Half of Fiscal 2026, we repurchased no shares of our common stock pursuant to the open market repurchase plan authorization. During the Second Quarter of Fiscal 2025, we repurchased a total of 114,477 shares in open market repurchases at an average price of $40.46 for $5 million under the March 24, 2025 authorization. During the First Half of Fiscal 2025 we repurchased a total of 956,484 shares at an average cost of $57.12 for $55 million, including 842,007 shares of our common stock at an average cost of $59.38 for $50 million under a previous December 10, 2024, Board of Directors authorization of up to $100 million to repurchase shares of our stock.
As of August 1, 2026, $95 million remained under the March 24, 2025, Board of Directors' authorization.
Capital Expenditures:
Capital expenditures of $32 million for the First Half of Fiscal 2026 decreased from $55 million in the First Half of Fiscal 2025 due to decreased capital expenditures related to (1) the opening of food and beverage and retail store locations and (2) the multi-year project to build a new distribution center in Lyons, Georgia.
Capital expenditures do not include SaaS implementation expenditures that were $9 million and $16 million for the First Half of Fiscal 2026 and the First Half of Fiscal 2025, respectively. SaaS implementation costs on the condensed consolidated balance sheets as of August 1, 2026, January 31, 2026, and August 2, 2025, totaled $36 million, $33 million and $35 million and are included in prepaid expenses and other current assets and other assets, net in the condensed consolidated balance sheets. Changes in current and noncurrent SaaS implementation assets are included in prepaid expenses and other current assets and other balance sheet changes, respectively, in the condensed consolidated statements of cash flows.
Other Liquidity Items:
Our contractual obligations as of August 1, 2026, except for the decreased debt outstanding, as discussed above, have not changed materially from the contractual obligations outstanding at January 31, 2026, as disclosed in our Fiscal 2025 Form 10-K. We have not entered into agreements which meet the SEC's definition of an off balance sheet financing arrangement, other than operating leases, and have made no financial commitments or guarantees with respect to any unconsolidated subsidiaries or special purpose entities.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP in a consistent manner. The preparation of these financial statements requires the selection and application of accounting policies. Further, the application of GAAP requires us to make estimates and judgments about future events that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We base our estimates on historical experience, current trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions. We believe it is possible that other professionals, applying reasonable judgment to the same set of facts and circumstances, could develop and support a range of alternative estimated amounts. We believe that we have appropriately applied our critical accounting policies. However, in the event that inappropriate assumptions or methods were used relating to the critical accounting policies, our consolidated statements of operations could be materially misstated.
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 Fiscal 2025 Form 10-K. During the Second Quarter of Fiscal 2026, there have not been any significant changes to our critical accounting policies and estimates. A detailed summary of significant accounting policies is included in Note 1 to our consolidated financial statements contained in our Fiscal 2025 Form 10-K.
SEASONAL ASPECTS OF OUR BUSINESS
Each of our operating segments is impacted by seasonality as the demand by specific product or style, as well as by distribution channel, may vary significantly depending on the time of year. As a result, our quarterly operating results and working capital requirements fluctuate significantly from quarter to quarter. Typically, the demand for products for our larger brands is higher in the spring, summer and holiday seasons and lower in the fall season (the third quarter of our fiscal year). Thus, our third quarter historically has had the lowest net sales and net earnings compared to other quarters. Further, the impact of certain unusual or non-recurring items, economic conditions, our e-commerce flash clearance sales, wholesale product shipments, weather, acquisitions or other factors affecting our operations may vary from one year to the next. Therefore, due to the potential impact of these items, we do not believe that net sales or operating income in the Second Quarter of Fiscal 2026 is indicative of the expected proportion of amounts by quarter for future periods.
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