# Oxford Industries Inc: Form 10-Q for the period ended Oct 29, 2022

- Company: [Oxford Industries Inc](/companies/oxm.md) (CIK 75288)
- Form: 10-Q
- Filed: 2022-12-08
- Accepted by EDGAR: Dec 8, 2022, 17:00 ET
- Period: 2022-10-29
- Accession: 0000075288-22-000019
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/75288/000007528822000019/oxm-20221029x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/75288/000007528822000019/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-10-29.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-31 to 2022-10-29 | $313.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-01-30 to 2022-10-29 | $1.03bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2022-07-31 to 2022-10-29 | $115.3m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2022-01-30 to 2022-10-29 | $372.8m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2022-07-31 to 2022-10-29 | $197.7m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2022-01-30 to 2022-10-29 | $656.2m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2022-07-31 to 2022-10-29 | $175.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2022-01-30 to 2022-10-29 | $495.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-07-31 to 2022-10-29 | $27.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-01-30 to 2022-10-29 | $178.7m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2022-07-31 to 2022-10-29 | $7.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-01-30 to 2022-10-29 | $43.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-31 to 2022-10-29 | $19.7m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-01-30 to 2022-10-29 | $133.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-07-31 to 2022-10-29 | $1.22 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-01-30 to 2022-10-29 | $8.19 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-31 to 2022-10-29 | $1.25 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-01-30 to 2022-10-29 | $8.36 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-31 to 2022-10-29 | 16,139,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-01-30 to 2022-10-29 | 16,333,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-01-30 to 2022-10-29 | $86.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-01-30 to 2022-10-29 | $32.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2022-01-30 to 2022-10-29 | $26.6m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2022-01-30 to 2022-10-29 | $86.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2022-10-29 | $15.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-10-29 | $299.5m | us-gaap:AssetsCurrent |
| Total assets | at 2022-10-29 | $1.14bn | us-gaap:Assets |
| Current liabilities | at 2022-10-29 | $230.4m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2022-10-29 | $130.4m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2022-10-29 | $533.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 109,672 characters.

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 2021 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 Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC and Duck Head lifestyle brands.

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 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; the design of differentiated, innovative or otherwise compelling product; consumer preference; price; quality; marketing (including through rapidly shifting digital and social media vehicles); product fulfillment capabilities; and customer service. Our ability to compete successfully in the apparel industry is 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.

Tommy Bahama and Lilly Pulitzer, in the aggregate, represented 90% of our consolidated net sales in Fiscal 2021. During Fiscal 2021, 80% of our consolidated net sales were through our direct to consumer channels of distribution, which consist of our brand specific full-price retail stores and e-commerce websites, Tommy Bahama food and beverage operations and Tommy Bahama outlets. The remaining 20% of our net sales was generated through our wholesale distribution channels. Our 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 base of consumers.

For additional information about our business and our operating groups in Fiscal 2021, see Part I, Item 1. Business of our Fiscal 2021 Form 10-K. Important factors relating to certain risks which could impact our business are described in Part II, Item 1A. Risk Factors of this report and Part I. Item 1A. Risk Factors of our Fiscal 2021 Form 10-K.

### Industry and Recent Macroeconomic Conditions Overview

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

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

We believe our lifestyle brands have true competitive advantages, and we continue to invest in and leverage 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.

The COVID-19 pandemic has had a significant effect on overall economic conditions and our operations in recent years and accelerated or exacerbated many of the changes in the industry. In Fiscal 2021, the economic environment improved significantly with a rebound in retail traffic starting in March 2021 and other improvements as the year progressed, although certain stores were closed for portions of Fiscal 2021, particularly in the First Quarter of Fiscal 2021. This exceptionally strong consumer demand, along with the strength of our brands, resulted in record earnings for us during Fiscal 2021 and the First Nine Months of Fiscal 2022. The strong earnings in recent periods are despite certain challenges in the retail apparel market, including labor shortages, supply chain disruptions and product and operating cost increases in Fiscal 2021 and Fiscal 2022. We, as well as others in our industry, have increased prices to attempt to offset inflationary pressures.

There can be no assurance that the strong consumer demand of Fiscal 2021 and Fiscal 2022 will continue for our business or the broader retail apparel market. There remains significant uncertainty in the macroeconomic environment as to the impact of changing consumer discretionary spending habits, recent supply chain and other business disruptions, ongoing operating cost increase and other inflationary pressures, rising interest rates, the duration and severity of the pandemic and general economic conditions. Thus, the ultimate impact of these items on our business remains uncertain at this time.

### Johnny Was Acquisition

On September 19, 2022, we acquired the Johnny Was California lifestyle brand and related operations, which includes the design, sourcing, marketing and distribution of collections of affordable luxury, artisan-inspired bohemian apparel, accessories and home goods. Johnny Was products are sold through the Johnny Was website and retail stores as well as select department stores and specialty stores.

The purchase price for the acquisition of Johnny Was totaled $270 million in cash, subject to adjustment based on net working capital as of the closing date of the acquisition. After giving effect to the preliminary estimated working capital adjustment, the purchase price paid at closing was $271 million. We used cash and short-term investments on hand and borrowings under our U.S. Revolving Credit Agreement to finance the transaction. Refer to Note 7 included in the unaudited condensed consolidated financial statements included in this report for additional information about the acquisition of Johnny Was.

In the 12 months ended October 29, 2022, the Johnny Was business generated approximately $209 million of net sales. On an annual basis, we anticipate that gross margins, excluding the impact of any inventory step-up charges related to purchase accounting, will be approximately 65% and earnings before interest and taxes, excluding the impact of any inventory step-up charges and amortization of intangible assets, which have not been finalized at this time as we have not completed our assessment and allocation of fair value of the acquired assets and liabilities, will be in the mid to high teen percentage of net sales. We expect that the business will continue to grow as each channel of distribution grows. During the 12 months ended October 2022, e-commerce, retail and wholesale represented 41%, 34% and 25%, respectively, of the net sales of Johnny Was.

The financial information included in the results of operations discussion below for the Third Quarter of Fiscal 2022 and the First Nine Months of Fiscal 2022, includes the six weeks from the September 19, 2022 acquisition through the October 29, 2022 quarter end only. Therefore, the amounts included in the results of operations below are not indicative of results for a full quarter or a nine month period.

### Lanier Apparel Exit

In Fiscal 2021, we exited our Lanier Apparel business, a business which had been focused on moderately priced tailored clothing and related products. This decision aligns with our stated business strategy of developing and marketing compelling lifestyle brands. It also took into consideration the increased macroeconomic challenges faced by the Lanier Apparel business, many of which were magnified by the COVID-19 pandemic. The operating results of the Lanier Apparel business in Fiscal 2021 largely reflect activities associated with the ongoing wind down of operations following the 2020 announcement that we would be exiting the business. In Fiscal 2021, Lanier Apparel’s net sales were $25 million and represented 2% of our consolidated net sales. We do not expect any future net sales, operations or charges for Lanier Apparel. Refer to Note 11 in our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2021 Form 10-K for additional information about the Lanier Apparel exit.

### Key Operating Results:

The following table sets forth our consolidated operating results (in thousands, except per share amounts) for the First Nine Months of Fiscal 2022 compared to the First Nine Months of Fiscal 2021:

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ ​ | ​ ​ Fiscal 2021 |
| --- | --- | ---: | --- | ---: |
| Net sales | ​ | $1,029,044 | ​ | $842,163 |
| Operating income | ​ | $178,664 | ​ | $133,496 |
| Net earnings | ​ | $133,686 | ​ | $105,913 |
| Net earnings per diluted share | ​ | $8.19 | ​ | $6.29 |
| Weighted average shares outstanding - diluted | ​ | 16,333 | ​ | 16,841 |

Net earnings per diluted share were $8.19 in the First Nine Months of Fiscal 2022 compared to $6.29 in the First Nine Months of Fiscal 2021. The 30% increase in net earnings per diluted share was primarily due to a 26% increase in net earnings as well as a 3% reduction in weighted average shares outstanding due to our share repurchase program which commenced in the Fourth Quarter of Fiscal 2021. The higher net earnings were primarily due to higher operating income in Tommy Bahama partially offset by (1) the First Nine Months of Fiscal 2021 including a $12 million gain on sale of investment in an unconsolidated entity and (2) a higher effective tax rate in the First Nine Months of Fiscal 2022.

### STORE COUNT

The table below provides information about the number of direct to consumer locations for our brands as of the dates specified. For acquired brands, locations are only included subsequent to the date of acquisition. The amounts below include our permanent locations and exclude any pop-up or temporary store locations which have an initial lease term of 12 months or less.

| ​ ​ ​ | ​ ​ | ​ October 29, 2022 | ​ ​ | ​ January 29, 2022 | ​ ​ | ​ October 30, 2021 | ​ ​ | ​ January 30, 2021 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Tommy Bahama retail stores |  | 102 |  | 102 |  | 103 |  | 105 |
| Tommy Bahama retail-restaurant locations |  | 21 |  | 21 |  | 21 |  | 20 |
| Tommy Bahama outlets |  | 35 |  | 35 |  | 35 |  | 35 |
| Total Tommy Bahama locations |  | 158 |  | 158 |  | 159 |  | 160 |
| Lilly Pulitzer retail stores |  | 59 |  | 58 |  | 59 |  | 59 |
| Johnny Was retail stores | ​ | 64 | ​ | — | ​ | — | ​ | — |
| Johnny Was outlets | ​ | 2 | ​ | — | ​ | — | ​ | — |
| Total Johnny Was locations | ​ | 66 | ​ | — | ​ | — | ​ | — |
| Southern Tide retail stores | ​ | 5 | ​ | 4 | ​ | 4 | ​ | 3 |
| TBBC retail stores | ​ | 2 | ​ | 1 | ​ | — | ​ | — |
| Total Oxford locations |  | 290 |  | 221 |  | 222 |  | 222 |

On September 28, 2022, Hurricane Ian made landfall in Southwest Florida. The hurricane resulted in store closures at many of our Florida direct to consumer locations for a few days that week and caused significant property damage across the region. Substantially all of our direct to consumer locations returned to normal operating hours shortly after the hurricane. However, two of our locations in Naples, Florida, including a retail-restaurant location, suffered significantly greater damage as a result of the hurricane, resulting in those locations being closed for a longer period. Both of these locations reopened in November 2022. We estimate that the impact of the hurricane on our net sales during the Third Quarter of Fiscal 2022 was approximately $3 million. While all of our direct to consumer locations have reopened, due to the significant damage to the region and the potential impact on tourism, consumer demand and retail traffic, there remains uncertainty about the ultimate impact of Hurricane Ian on our business during the next few months.

### RESULTS OF OPERATIONS

### THIRD QUARTER OF FISCAL 2022 COMPARED TO THIRD QUARTER OF FISCAL 2021

The discussion and tables below compare our statements of operations for the Third Quarter of Fiscal 2022 to the Third Quarter of Fiscal 2021. 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.

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Third Quarter Fiscal 2022 ​ ​ | ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Fiscal 2021 ​ ​ | ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ $ Change ​ ​ | ​ ​ ​ | ​ ​ ​ % Change ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Net sales |  | $313,033 |  | 100.0% | ​ | $247,729 | ​ | 100.0% | ​ | $65,304 |  | 26.4% |
| Cost of goods sold | ​ | 115,339 |  | 36.8% | ​ | 95,191 |  | 38.4% | ​ | 20,148 |  | 21.2% |
| **Gross profit** | ​ | $197,694 |  | 63.2% | ​ | $152,538 |  | 61.6% | ​ | $45,156 |  | 29.6% |
| SG&A | ​ | 175,027 |  | 55.9% | ​ | 137,505 |  | 55.5% | ​ | 37,522 |  | 27.3% |
| Royalties and other operating income | ​ | 4,648 |  | 1.5% | ​ | 15,574 |  | 6.3% | ​ | (10,926) |  | (70.2)% |
| **Operating income** | ​ | $27,315 |  | 8.7% | ​ | $30,607 |  | 12.4% | ​ | $(3,292) |  | (10.8)% |
| Interest expense, net | ​ | 698 |  | 0.2% | ​ | 222 |  | 0.1% | ​ | 476 |  | 214.4% |
| **Earnings before income taxes** | ​ | $26,617 |  | 8.5% | ​ | $30,385 |  | 12.3% | ​ | $(3,768) |  | (12.4)% |
| Income tax expense | ​ | 6,951 |  | 2.2% | ​ | 4,400 |  | 1.8% | ​ | 2,551 |  | 58.0% |
| **Net earnings** | ​ | $19,666 |  | 6.3% | ​ | $25,985 |  | 10.5% | ​ | $(6,319) |  | (24.3)% |
| **Net earnings per diluted share** | ​ | $1.22 | ​ | ​ ​ | ​ | $1.54 | ​ | ​ ​ | ​ | $(0.32) | ​ | (20.8)% |
| Weighted average shares outstanding - diluted | ​ | ​ 16,139 |  | ​ ​ | ​ | ​ 16,872 |  | ​ ​ | ​ | ​ (733) |  | (4.3)% |

### Net Sales

| ​ ​ ​ | ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ ​ | ​ ​ Fiscal 2021 | ​ | ​ ​ ​ $ Change | ​ ​ ​ ​ ​ ​ % Change ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Tommy Bahama | ​ | $178,645 | ​ | $148,454 | ​ | $30,191 | 20.3% |
| Lilly Pulitzer | ​ | 84,053 | ​ | 72,157 | ​ | 11,896 | 16.5% |
| Johnny Was | ​ | ​ 22,661 | ​ | — | ​ | 22,661 | 100.0% |
| Emerging Brands | ​ | 26,912 | ​ | 22,082 | ​ | 4,830 | 21.9% |
| Lanier Apparel | ​ | — | ​ | 4,232 | ​ | (4,232) | (100.0)% |
| Corporate and Other | ​ | 762 | ​ | 804 | ​ | (42) | (5.2)% |
| **Consolidated net sales** | ​ | $313,033 | ​ | $247,729 | ​ | $65,304 | 26.4% |

Consolidated net sales were $313 million in the Third Quarter of Fiscal 2022 compared to net sales of $248 million in the Third Quarter of Fiscal 2021, with an increase in each brand and channel of distribution. The 26% increase in net sales included double-digit percentage increases in each of our Tommy Bahama, Lilly Pulitzer and Emerging Brands operating groups as well as $23 million of sales for Johnny Was, which was acquired during the Third Quarter of Fiscal 2022. These increases were partially offset by a $4 million decrease in sales for Lanier Apparel, which we exited in Fiscal 2021. The higher net sales were due to a combination of increased volume as well as price increases, which were implemented in order to mitigate increased product and other costs. The Third Quarter of Fiscal 2022 included the unfavorable impact of Hurricane Ian in Southwest Florida, which we estimate reduced our net sales by approximately $3 million.

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

- an increase in full-price retail sales of $18 million, or 22%, including (1) a 12% aggregate increase in full-price retail sales in Tommy Bahama, Lilly Pulitzer and Emerging Brands driven primarily by increased consumer traffic and average dollars per transaction partially offset by lower conversion rates, and (2) $8 million of full-price retail sales in Johnny Was;
- an increase in full-price e-commerce sales of $17 million, or 26%, including (1) $9 million of full-price e-commerce sales in Johnny Was and (2) a 12% aggregate increase in e-commerce sales in Tommy Bahama, Lilly Pulitzer and Emerging Brands;
- an increase in wholesale sales of $17 million, or 32%, with this increase primarily due to higher order books as wholesale accounts increased their buys for Fiscal 2022 compared to Fiscal 2021, with $5 million of wholesale sales for Johnny Was in the Third Quarter of Fiscal 2022 largely offset by $4 million of wholesale sales for Lanier Apparel in the Third Quarter of Fiscal 2021;
- an increase in e-commerce flash clearance sales of $9 million, or 45%;
- an increase in restaurant sales of $3 million, or 17%; and
- an increase in outlet sales of $2 million, or 15%.

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.

| ​ ​ ​ ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ ​ Fiscal 2021 ​ |
| --- | ---: | ---: |
| Retail | 36% | 37% |
| E-commerce | 34% | 33% |
| Restaurant | 7% | 8% |
| Wholesale | 22% | 21% |
| **Total** | 100% | 100% |

#### Tommy Bahama:

Tommy Bahama net sales increased $30 million, or 20%, in the Third Quarter of Fiscal 2022, with an increase in each channel of distribution. The increase in net sales in Tommy Bahama included increases in (1) wholesale sales of $14 million, or 53%, with this increase primarily due to higher order books as wholesale accounts increased their buys for Fiscal 2022 compared to Fiscal 2021, (2) full-price retail sales of $8 million, or 14%, (3) restaurant sales of $3 million, or 17%, with high single-digit percentage increases in locations open the full quarter of both periods as well as increased sales at the New York and Palm Desert locations, which were not open the full quarter in the Third Quarter of Fiscal 2021, (4) e-commerce sales of $3 million, or 9%, and (5) outlet sales of $2 million, or 14%. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

| ​ ​ ​ ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 |
| --- | ---: | ---: |
| Retail | 44% | 47% |
| E-commerce | 20% | 22% |
| Restaurant | 13% | 13% |
| Wholesale | 23% | 18% |
| Total | 100% | 100% |

#### Lilly Pulitzer:

Lilly Pulitzer net sales increased $12 million, or 16%, in the Third Quarter of Fiscal 2022, with an increase in each channel of distribution. The increase in net sales in Lilly Pulitzer included increases in (1) e-commerce flash clearance sales of $9 million, or 45%, as Lilly Pulitzer had increased levels of inventory available for the e-commerce flash clearance sales in Fiscal 2022 after having more limited end of season inventory in Fiscal 2021, (2) wholesale sales of $1 million, or 16%, (3) full-price e-commerce sales of $1 million, or 5%, and (4) retail 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:

| ​ ​ ​ ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 |
| --- | ---: | ---: |
| Retail | 27% | 31% |
| E-commerce | 62% | 58% |
| Wholesale | 11% | 11% |
| **Total** | 100% | 100% |

#### Johnny Was:

Johnny Was net sales were $23 million in the six weeks following the September 19, 2022 acquisition through the end of the quarter. During the six-week period, e-commerce, retail and wholesale sales were 41%, 38% and 21% of the net sales of Johnny Was. As the net sales are for less than half the fiscal quarter, the percentage of net sales by distribution channel are not indicative of the proportion of net sales for the full Third Quarter of Fiscal 2022 or any other fiscal quarter.

#### Emerging Brands:

Emerging Brands net sales increased $5 million, or 22%, in the Third Quarter of Fiscal 2022, with an increase in each of the TBBC, Duck Head and Southern Tide businesses comprising Emerging Brands. By brand, the increase in net sales included increases in (1) TBBC of $4 million, or 50%, (2) Duck Head of $1 million, or 57%, and (3) Southern Tide of $0 million, or 2%. By distribution channel, the $5 million increase included increases of (1) $3 million, or 44%, in e-commerce, (2) $1 million, or 8%, in wholesale, and (3) $0 million, or 46%, in the Southern Tide and TBBC retail businesses, as those brands continue to open new retail locations. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:

| ​ ​ ​ | ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 ​ |
| --- | --- | ---: | ---: |
| Retail | **​** | 5% | 4% |
| E-commerce |  | 40% | 34% |
| Wholesale |  | 55% | 62% |
| **Total** |  | 100% | 100% |

#### Lanier Apparel:

There were no Lanier Apparel net sales in the Third Quarter of Fiscal 2022, compared to $4 million of net sales in the Third Quarter of Fiscal 2021.

#### Corporate and Other:

Corporate and Other net sales primarily consist of net sales of our Lyons, Georgia distribution center business as well as our Oxford America business, which we exited in Fiscal 2022.

### Gross Profit

The tables below present gross profit by operating group and in total for the Third Quarter of Fiscal 2022 and the Third Quarter of Fiscal 2021, as well as the dollar change and percentage 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 Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ ​ % Change ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Tommy Bahama | ​ | $115,641 | ​ | $91,773 | ​ | $23,868 |  | 26.0% |
| Lilly Pulitzer | ​ | 52,993 | ​ | 48,668 | ​ | 4,325 |  | 8.9% |
| Johnny Was | ​ | 14,597 | ​ | — | ​ | 14,597 |  | 100.0% |
| Emerging Brands | ​ | 13,426 | ​ | 11,770 | ​ | 1,656 |  | 14.1% |
| Lanier Apparel | ​ | — | ​ | 2,195 | ​ | (2,195) |  | (100.0)% |
| Corporate and Other | ​ | 1,037 | ​ | (1,868) | ​ | 2,905 |  | NM% |
| **Consolidated gross profit** | ​ | $197,694 | ​ | $152,538 | ​ | $45,156 |  | 29.6% |
| **Notable items included in amounts above:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| LIFO adjustments in Corporate and Other | ​ | $(650) | ​ | $2,197 | ​ |  |  | ​ |
| Inventory step-up charge included in Johnny Was | ​ | $1,376 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in cost of goods sold | ​ | $— | ​ | $(684) | ​ | ​ ​ | ​ | ​ ​ |

| ​ ​ ​ | ​ ​ | ​ ​ Third Quarter Fiscal 2022 ​ | ​ ​ ​ Fiscal 2021 ​ |
| --- | --- | ---: | ---: |
| Tommy Bahama |  | 64.7% | 61.8% |
| Lilly Pulitzer |  | 63.0% | 67.4% |
| Johnny Was | ​ | 64.4% | —% |
| Emerging Brands |  | 49.9% | 53.3% |
| Lanier Apparel |  | —% | 51.9% |
| Corporate and Other |  | NM% | NM% |
| **Consolidated gross margin** |  | 63.2% | 61.6% |

The increased gross profit of 30% was primarily due to the 26% increase in net sales as well as increased consolidated gross margin. The higher gross margin included (1) lower freight costs of $5 million, or 175 basis points, after incurring $6 million, or 270 basis points of incremental freight costs in the Third Quarter of Fiscal 2021, (2) a $3 million lower LIFO accounting charge in the Third Quarter of Fiscal 2022 compared to the Third Quarter of Fiscal 2021, (3) improved initial product margins, as certain sales prices were increased more than the increased product costs, and (4) the lack of any Lanier Apparel sales, which had lower gross margins than our branded businesses. These items were partially offset by (1) the impact of the Lilly Pulitzer e-commerce flash sale, which represented a larger proportion of net sales and had lower gross margins in the Third Quarter of Fiscal 2022, (2) the $1 million inventory step up charge related to the Johnny Was acquisition in the Third Quarter of Fiscal 2022, and (3) the lack of a favorable adjustment of Lanier Apparel exit charges in cost of goods sold after a $1 million favorable adjustment of Lanier Apparel exit charges in cost of goods sold in the Third Quarter of Fiscal 2021.

In the Third Quarter of Fiscal 2021, freight costs increased significantly from prior periods, including rate increases for both ocean and air shipments as well as the increased utilization of air freight on inbound products as we navigated our need for inventory and the supply chain challenges. The increased inbound freight rates, which have moderated somewhat from the peak, have continued into Fiscal 2022. However, our use of air freight has decreased as we have placed seasonal inventory purchases on an earlier timeline to reduce the risk of late delivery of our products. These factors resulted in a significant negative impact on our gross margin during the Second Half of Fiscal 2021, but not as significant of a negative impact on our gross margin in the Second Half of Fiscal 2022. In Fiscal 2022 freight costs are still elevated by approximately 50 to 100 basis points as compared to pre-pandemic levels.

#### Tommy Bahama:

The higher gross margin for Tommy Bahama was primarily due to reduced freight costs in the Third Quarter of Fiscal 2022, after significantly higher freight costs were incurred in the Third Quarter of Fiscal 2021, as well as improved initial product margins. These items were partially offset by a change in sales mix with wholesale sales representing a higher proportion of net sales in the Third Quarter of Fiscal 2022.

#### Lilly Pulitzer:

The lower gross margin for Lilly Pulitzer was primarily due to (1) a change in sales mix with e-commerce flash clearance sales, which typically have gross margins in the low 40% range, representing a larger proportion of net sales and (2) lower gross margins on the e-commerce flash clearance sales, as the gross margin achieved in the Third Quarter of Fiscal 2021 was higher than typical due to less end of season inventory available in Fiscal 2021. This was partially offset by lower freight costs and improved initial product margins.

#### Johnny Was:

The Johnny Was gross profit and gross margin for the six weeks following the September 19, 2022 acquisition through the end of the quarter was unfavorably impacted by the $1 million of incremental cost of goods sold resulting from the charge related to the step up of inventory to fair value at acquisition. Thus, we do not believe the gross profit or gross margin is indicative of the gross profit or gross margin for the Third Quarter of Fiscal 2022 or any other fiscal quarter for Johnny Was. On an annual basis, with no impact of inventory step-up charges, Johnny Was gross margins have historically been and are expected to be approximately 65%, after conforming to our accounting policy of classifying outbound freight charges in cost of goods sold rather than SG&A.

#### Emerging Brands:

The lower gross margin for Emerging Brands was primarily due to more inventory markdowns and increased freight costs partially offset by a change in sales mix with direct to consumer sales representing a greater proportion of net sales.

#### Lanier Apparel:

There was no gross profit for Lanier Apparel in the Third Quarter of Fiscal 2022. The Third Quarter of Fiscal 2021 for Lanier Apparel included the gross profit impact of net sales as we were exiting the business, as well as a reduction in inventory markdowns associated with the exit of Lanier Apparel.

#### Corporate and Other:

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

### SG&A

| ​ ​ ​ | ​ ​ | ​ ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | ---: | --- | --- | --- |
| SG&A | ​ | $175,027 ​ | $137,505 ​ | $37,522 |  | 27.3% |
| SG&A (as a % of net sales) | ​ | 55.9% | 55.5% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Tommy Bahama lease termination charge | ​ | $— ​ | $4,850 ​ | ​ ​ | ​ | ​ ​ |
| Amortization of Johnny Was intangible assets | ​ | $1,641 ​ | $— ​ | ​ ​ | ​ | ​ ​ |
| TBBC change in fair value of contingent consideration | ​ | $— ​ | $786 ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in SG&A | ​ | $— ​ | $559 ​ | ​ ​ | ​ | ​ ​ |
| Transaction expenses and integration costs associated with the Johnny Was acquisition included in Corporate and Other | ​ | $2,783 ​ | $— ​ | ​ ​ | ​ | ​ ​ |

SG&A was $175 million in the Third Quarter of Fiscal 2022 compared to SG&A of $138 million in the Third Quarter of Fiscal 2021, with approximately $14 million of the increase due to the SG&A of Johnny Was. The 27% increase in SG&A in the Third Quarter of Fiscal 2022 included the following, each of which reflects increases due to the acquisition of Johnny Was: (1) increased employment costs of $17 million, primarily due to increased head count, pay rate increases and other employment cost increases, particularly in our direct to consumer and distribution center operations, (2) a $7 million increase in advertising expense, (3) a $5 million increase in variable expenses related to higher sales, including credit card transaction fees, supplies, commissions, royalties and other expenses, (4) a $5 million increase in occupancy expenses, including increases in base rent amounts, percentage rent, occupancy related operating costs and other items, (5) $3 million of charges related to transaction expenses and integration costs associated with the Johnny Was acquisition, (6) a $3 million increase in administrative expenses including professional fees, travel and other items, (7) a $2 million increase in amortization of intangible assets and (8) a $1 million increase in depreciation expense. These items were partially offset by the absence of $5 million of Tommy Bahama lease termination charges, $1 million of TBBC change in fair value of contingent consideration and $1 million of Lanier Apparel exit charges in the Third Quarter of Fiscal 2022.

### Royalties and other operating income

| ​ ​ ​ | ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | --- | ---: | --- | --- | --- | --- |
| Royalties and other operating income | ​ | $4,648 | ​ | $15,574 | ​ | $(10,926) |  | (70.2)% |
| **Notable items included in amounts above:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Gain on sale of investment in unconsolidated entity | ​ | $— | ​ | $(11,586) | ​ | ​ ​ | ​ | ​ ​ |

Royalties and other operating income typically consists primarily of income received from third parties from the licensing of our brands, but the Third Quarter of Fiscal 2021 also included a $12 million gain on sale of investment in unconsolidated entity. Royalty income in the Third Quarter of Fiscal 2022 increased primarily due to increased royalty income in both Tommy Bahama and Lilly Pulitzer.

### Operating income (loss)

| ​ ​ ​ | ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | --- | ---: | --- | --- | --- | --- |
| Tommy Bahama | ​ | $18,984 | ​ | $5,531 | ​ | $13,453 |  | 243.2% |
| Lilly Pulitzer | ​ | 12,688 | ​ | 15,985 | ​ | (3,297) |  | (20.6)% |
| Johnny Was | ​ | ​ 117 | ​ | ​ — | ​ | ​ 117 |  | 100.0% |
| Emerging Brands | ​ | 3,729 | ​ | 4,103 | ​ | (374) |  | (9.1)% |
| Lanier Apparel | ​ | — | ​ | 348 | ​ | (348) |  | (100.0)% |
| Corporate and Other | ​ | (8,203) | ​ | 4,640 | ​ | (12,843) |  | NM% |
| **Consolidated operating income** | ​ | $27,315 | ​ | $30,607 | ​ | $(3,292) |  | (10.8)% |
| **Notable items included in amounts above:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| LIFO adjustments in Corporate and Other | ​ | $(650) | ​ | $2,197 | ​ |  |  | ​ |
| Inventory step-up charge included in Johnny Was | ​ | $1,376 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in cost of goods sold | ​ | $— | ​ | $(684) | ​ | ​ ​ | ​ | ​ ​ |
| Tommy Bahama lease termination charge | ​ | $— | ​ | $4,850 | ​ | ​ ​ | ​ | ​ ​ |
| Amortization of Johnny Was intangible assets | ​ | $1,641 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| TBBC change in fair value of contingent consideration | ​ | $— | ​ | $786 | ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in SG&A | ​ | $— | ​ | $559 | ​ | ​ ​ | ​ | ​ ​ |
| Transaction expenses and integration costs associated with the Johnny Was acquisition included in Corporate and Other | ​ | $2,783 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| Gain on sale of investment in unconsolidated entity | ​ | $— | ​ | $(11,586) | ​ | ​ ​ | ​ | ​ ​ |

Operating income was $27 million in the Third Quarter of Fiscal 2022 compared to $31 million in the Third Quarter of Fiscal 2021. The decreased operating income was primarily due to the Third Quarter of Fiscal 2021 including a gain on sale of an investment in an unconsolidated entity, with no such gain in the Third Quarter of Fiscal 2022, and lower operating income in Lilly Pulitzer. These items were partially offset by higher operating income in Tommy Bahama. Changes in operating income (loss) by operating group are discussed below.

#### Tommy Bahama:

| ​ ​ ​ | ​ ​ | ​ ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | ---: | ---: | --- | --- |
| Net sales | ​ | $178,645 ​ | $148,454 ​ | $30,191 |  | 20.3% |
| Gross profit | ​ | $115,641 ​ | $91,773 ​ | $23,868 | ​ | 26.0% |
| Gross margin | ​ | 64.7% | 61.8% |  |  | ​ |
| Operating income | ​ | $18,984 ​ | $5,531 ​ | $13,453 |  | 243.2% |
| Operating income as % of net sales | ​ | 10.6% | 3.7% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Tommy Bahama lease termination charge | ​ | $— ​ | $4,850 ​ | ​ ​ | ​ | ​ ​ |

The increased operating income for Tommy Bahama was due to higher sales, gross margin and royalty income partially offset by increased SG&A. The increased SG&A was primarily due to (1) $9 million of increased employment costs, with the majority of the increase in retail and restaurant operations, (2) a $2 million increase in occupancy expenses including increases in base rent amounts, percentage rent, occupancy related operating costs and other items, (3) $2 million of increased variable expenses related to higher sales, including credit card transaction fees, supplies, commissions, royalties and other expenses, and (4) a $2 million increase in advertising expense. These SG&A increases were partially offset by the absence of $5 million of Tommy Bahama lease termination charges in the Third Quarter of Fiscal 2022.

#### Lilly Pulitzer:

| ​ ​ ​ | ​ ​ | ​ ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | ---: | ---: | --- | ---: |
| Net sales | ​ | $84,053 ​ | $72,157 ​ | $11,896 |  | 16.5% |
| Gross profit | ​ | $52,993 ​ | $48,668 ​ | $4,325 | ​ | 8.9% |
| Gross margin | ​ | 63.0% | 67.4% |  |  | ​ |
| Operating income | ​ | $12,688 ​ | $15,985 ​ | $(3,297) |  | (20.6)% |
| Operating income as % of net sales | ​ | 15.1% | 22.2% |  |  | ​ |

The decreased operating income for Lilly Pulitzer was due to increased SG&A and lower gross margin partially offset by higher sales and royalty income. The increased SG&A was primarily due to (1) $2 million of increased advertising expense, (2) $2 million of increased employment costs, (3) $1 million of increased variable expenses resulting from the higher net sales, and (4) $1 million of higher depreciation expense.

#### Johnny Was:

| ​ ​ ​ | ​ ​ | ​ ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | ---: | ---: | --- | --- |
| Net sales | ​ | $22,661 ​ | $— ​ | $22,661 |  | 100.0% |
| Gross profit | ​ | $14,597 ​ | $— ​ | $14,597 | ​ | 100.0% |
| Gross margin | ​ | 64.4% | —% |  |  | ​ |
| Operating income | ​ | $117 ​ | $— ​ | $117 |  | 100.0% |
| Operating income as % of net sales | ​ | 0.5% | —% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Inventory step-up charge included in Johnny Was | ​ | $1,376 ​ | $— ​ | ​ ​ | ​ | ​ ​ |
| Amortization of Johnny Was intangible assets | ​ | $1,641 ​ | $— ​ | ​ ​ | ​ | ​ ​ |

Johnny Was operating income in the six weeks following the September 19, 2022 acquisition through the end of the quarter was negatively impacted by $1 million of charges related to inventory step-up charges and $2 million of amortization of intangible assets. As the operating results are for less than half the fiscal quarter, the operating results are not necessarily indicative of the Johnny Was operating results of the Third Quarter of Fiscal 2022.

#### Emerging Brands:

| ​ ​ ​ | ​ ​ | ​ ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | ---: | --- | --- | --- |
| Net sales | ​ | $26,912 ​ | $22,082 ​ | $4,830 |  | 21.9% |
| Gross profit | ​ | $13,426 ​ | $11,770 ​ | $1,656 | ​ | 14.1% |
| Gross margin | ​ | 49.9% | 53.3% |  |  | ​ |
| Operating income | ​ | $3,729 ​ | $4,103 ​ | $(374) |  | (9.1)% |
| Operating income as % of net sales | ​ | 13.9% | 18.6% |  |  | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| TBBC change in fair value of contingent consideration | ​ | $— ​ | $786 ​ | ​ ​ | ​ | ​ ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |

The decreased operating income for Emerging Brands was due to increased SG&A and lower gross margin partially offset by higher net sales. The increased SG&A included (1) higher SG&A associated with the Southern Tide and TBBC retail store operations, including related employment costs and occupancy costs, (2) increased variable expenses resulting from increased sales, (3) higher advertising expense and (4) increased administrative expenses associated with the Emerging Brands businesses. These increases in SG&A were partially offset by the lack of a TBBC change in fair value of contingent consideration in the Third Quarter of Fiscal 2022 after incurring a $1 million charge for TBBC change in fair value of contingent consideration in the Third Quarter of Fiscal 2021.

#### Lanier Apparel:

| ​ ​ ​ | ​ ​ | ​ ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | ---: | --- | --- | --- |
| Net sales | ​ | $— ​ | $4,232 ​ | $(4,232) |  | (100.0)% |
| Gross profit | ​ | $— ​ | $2,195 ​ | $(2,195) | ​ | (100.0)% |
| Gross margin | ​ | —% | 51.9% |  |  | ​ ​ |
| Operating income | ​ | $— ​ | $348 ​ | $(348) |  | (100.0)% |
| Operating income as % of net sales | ​ | —% | 8.2% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in cost of goods sold | ​ | $- ​ | $(684) ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in SG&A | ​ | $- ​ | $559 ​ | ​ ​ | ​ | ​ ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |

There was no operating income for Lanier Apparel in the Third Quarter of Fiscal 2022. The Third Quarter of Fiscal 2021 for Lanier Apparel included the operating income resulting from the net sales, cost of goods sold and SG&A as we were exiting the Lanier Apparel business, including the net impact related to Lanier Apparel exit charges.

#### Corporate and Other:

| ​ ​ ​ | ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | --- | ---: | --- | --- | --- | --- |
| Net sales | ​ | $762 | ​ | $804 | ​ | $(42) |  | (5.2)% |
| Gross profit | ​ | $1,037 | ​ | $(1,868) | ​ | $2,905 | ​ | NM% |
| Operating loss | ​ | $(8,203) | ​ | $4,640 | ​ | $(12,843) |  | NM% |
| **Notable items included in amounts above:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| LIFO adjustments in Corporate and Other | ​ | $(650) | ​ | $2,197 | ​ | ​ ​ | ​ | ​ ​ |
| Transaction expenses and integration costs associated with the Johnny Was acquisition | ​ | $2,783 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| Gain on sale of investment in unconsolidated entity | ​ | $— | ​ | $(11,586) | ​ | ​ ​ | ​ | ​ ​ |

The lower operating results in Corporate and Other were primarily a result of (1) the Third Quarter of Fiscal 2021 including a $12 million gain on sale of an investment in an unconsolidated entity, (2) $3 million of transaction expenses and integration costs associated with the Johnny Was acquisition and (3) increased SG&A, including increased employment costs. The impact of these items were partially offset by a $3 million favorable impact from LIFO accounting.

### Interest expense, net

| ​ ​ ​ | ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ ​ | ​ ​ ​ ​ $ Change | ​ ​ ​ ​ ​ % Change ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Interest expense, net | ​ | $698 | ​ | $222 | ​ | $476 | 214.4% |

The higher interest expense in the Third Quarter of Fiscal 2022 was primarily due to borrowings pursuant to our U.S. Revolving Credit Agreement to fund a portion of the acquisition of Johnny Was, while there was no debt outstanding in the Third Quarter of Fiscal 2021. The interest expense for the Third Quarter of Fiscal 2021 primarily consisted of unused line fees and amortization of deferred financing fees associated with the U.S. Revolving Credit Agreement.

### Income tax provision

| ​ ​ ​ | ​ ​ | ​ ​ ​ Third Quarter Fiscal 2022 | ​ ​ ​ Fiscal 2021 ​ | ​ ​ ​ ​ $ Change | ​ ​ ​ ​ ​ % Change ​ |
| --- | --- | ---: | ---: | ---: | ---: |
| Income tax expense | ​ | $6,951 ​ | $4,400 ​ | $2,551 | 58.0% |
| Effective tax rate | ​ | 26.1% | 14.5% |  | ​ |

The Third Quarter of Fiscal 2021 benefitted from the utilization of benefits associated with certain capital losses to substantially offset the gain recognized on the sale of an unconsolidated entity in the Third Quarter of Fiscal 2021, resulting in the effective tax rate during the Third Quarter of Fiscal 2021 being unusually low. Further, due to the lower earnings during the third quarter as compared to our other fiscal quarters, certain discrete or other items recognized in the third quarter may have a more pronounced impact resulting in the effective tax rate of the third quarter not being indicative of the effective tax rate for the full fiscal year. We expect our annual effective tax rate for Fiscal 2022 to be between 24% and 25%.

### Net earnings

| ​ ​ ​ | ​ ​ | ​ ​ Third Quarter Fiscal 2022 | ​ | ​ ​ Fiscal 2021 |
| --- | --- | ---: | --- | ---: |
| Net sales | ​ | $313,033 | ​ | $247,729 |
| Operating income | ​ | $27,315 | ​ | $30,607 |
| Net earnings | ​ | $19,666 | ​ | $25,985 |
| Net earnings per diluted share | ​ | $1.22 | ​ | $1.54 |
| Weighted average shares outstanding - diluted | ​ | 16,139 | ​ | 16,872 |

Net earnings per diluted share were $1.22 in the Third Quarter of Fiscal 2022 compared to $1.54 in the Third Quarter of Fiscal 2021. The decreased net earnings per diluted share was primarily due to (1) the Third Quarter of Fiscal 2021 including a gain on sale of an investment in an unconsolidated entity in Corporate and Other, (2) lower operating income in Lilly Pulitzer and (3) a higher effective tax rate. These items were partially offset by higher operating income in Tommy Bahama.

### FIRST NINE MONTHS OF FISCAL 2022 COMPARED TO FIRST NINE MONTHS OF FISCAL 2021

The discussion and tables below compare our statements of operations for the First Nine Months of Fiscal 2022 to the First Nine Months of Fiscal 2021. 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 Nine Months Fiscal 2022 | ​ | ​ ​ ​ | ​ ​ | ​ ​ Fiscal 2021 | ​ | ​ ​ ​ | ​ ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Net sales | ​ | $1,029,044 | ​ | 100.0% | ​ | $842,163 |  | 100.0% | ​ | $186,881 | ​ | 22.2% |
| Cost of goods sold | ​ | 372,824 |  | 36.2% | ​ | 313,414 |  | 37.2% | ​ | 59,410 |  | 19.0% |
| **Gross profit** | ​ | $656,220 |  | 63.8% | ​ | $528,749 |  | 62.8% | ​ | $127,471 |  | 24.1% |
| SG&A | ​ | 495,574 |  | 48.2% | ​ | 420,997 |  | 50.0% | ​ | 74,577 |  | 17.7% |
| Royalties and other operating income | ​ | 18,018 |  | 1.8% | ​ | 25,744 |  | 3.1% | ​ | (7,726) |  | (30.0)% |
| **Operating income** | ​ | $178,664 |  | 17.4% | ​ | $133,496 |  | 15.9% | ​ | $45,168 |  | 33.8% |
| Interest expense, net | ​ | 1,214 |  | 0.1% | ​ | 685 |  | 0.1% | ​ | 529 |  | 77.2% |
| **Earnings before income taxes** | ​ | $177,450 |  | 17.2% | ​ | $132,811 |  | 15.8% | ​ | $44,639 |  | 33.6% |
| Income tax expense | ​ | 43,764 |  | 4.3% | ​ | 26,898 |  | 3.2% | ​ | 16,866 |  | 62.7% |
| **Net earnings** | ​ | $133,686 |  | 13.0% | ​ | $105,913 |  | 12.6% | ​ | $27,773 |  | 26.2% |
| **Net earnings per diluted share** | ​ | $8.19 | ​ | ​ ​ | ​ | $6.29 | ​ | ​ ​ | ​ | $1.90 | ​ | 30.2% |
| Weighted average shares outstanding - diluted | ​ | ​ 16,333 |  | ​ ​ | ​ | ​ 16,841 |  | ​ ​ | ​ | ​ (508) |  | (3.0)% |

### Net Sales

| ​ ​ ​ | ​ ​ | ​ ​ First Nine Months Fiscal 2022 | ​ ​ | ​ ​ Fiscal 2021 | ​ ​ | ​ ​ ​ $ Change | ​ ​ ​ ​ ​ ​ % Change ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Tommy Bahama | ​ | $650,677 | ​ | $513,985 | ​ | $136,692 | 26.6% |
| Lilly Pulitzer | ​ | 264,763 | ​ | 233,066 | ​ | 31,697 | 13.6% |
| Johnny Was | ​ | ​ 22,661 | ​ | — | ​ | 22,661 | 100.0% |
| Emerging Brands | ​ | 88,588 | ​ | 67,336 | ​ | 21,252 | 31.6% |
| Lanier Apparel | ​ | — | ​ | 24,743 | ​ | (24,743) | (100.0)% |
| Corporate and Other | ​ | 2,355 | ​ | 3,033 | ​ | (678) | (22.4)% |
| **Consolidated net sales** | ​ | $1,029,044 | ​ | $842,163 | ​ | $186,881 | 22.2% |

Consolidated net sales were $1,029 million in the First Nine Months of Fiscal 2022 compared to net sales of $842 million in the First Nine Months of Fiscal 2021. The 22% increase in net sales included double-digit percentage increases in each of our Tommy Bahama, Lilly Pulitzer, and Emerging Brands operating groups as well as $23 million of sales for Johnny Was, which was acquired during the Third Quarter of Fiscal 2022. These increases were partially offset by a $25 million decrease in sales for Lanier Apparel, which we exited in Fiscal 2021. In the First Nine Months of Fiscal 2021, and particularly in the First Quarter of Fiscal 2021, consumer traffic and our operations had only partially rebounded from the impacts of the COVID-19 pandemic as we still had certain store closures and operating restrictions in certain regions, wholesale customer demand was still soft and most of the consumer traffic improvement occurred after the First Quarter of Fiscal 2021. The higher net sales were due to a combination of increased volume as well as price increases, which were implemented in order to mitigate increased product and other costs.

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

- an increase in full-price retail sales of $76 million, or 27%, including (1) a 24% aggregate increase in full-price retail sales in Tommy Bahama, Lilly Pulitzer and Emerging Brands driven primarily by increased consumer traffic and average dollars per transaction partially offset by lower conversion rates, and (2) $8 million of full-price retail sales in Johnny Was;
- an increase in full-price e-commerce sales of $45 million, or 19%, including (1) a 15% aggregate increase in e-commerce sales in Tommy Bahama, Lilly Pulitzer and Emerging Brands and (2) $9 million of full-price e-commerce sales in Johnny Was;
- an increase in wholesale sales of $32 million, or 17%, with this increase primarily due to (1) higher order books as wholesale accounts in Tommy Bahama, Lilly Pulitzer and Emerging Brands increased their buys for Fiscal 2022 compared to Fiscal 2021 and (2) $5 million of wholesale sales for Johnny Was offset by a reduction of $25 million of wholesale sales for Lanier Apparel, with no sales in the First Nine Months of Fiscal 2022;
- an increase in e-commerce flash clearance sales of $16 million, or 86%;
- an increase in restaurant sales of $11 million, or 15%; and
- an increase in outlet sales of $7 million, or 18%.

The following table presents the proportion of our consolidated net sales, including the net sales of Johnny Was and Lanier Apparel, by distribution channel for each period presented. We have calculated all percentages below on actual data, and percentages may not add to 100 due to rounding.

| ​ ​ ​ ​ | ​ ​ First Nine Months Fiscal 2022 | ​ ​ Fiscal 2021 |
| --- | ---: | ---: |
| Retail | 39% | 38% |
| E-commerce | 31% | 31% |
| Restaurant | 8% | 8% |
| Wholesale | 21% | 22% |
| **Total** | 100% | 100% |

#### Tommy Bahama:

Tommy Bahama net sales increased $137 million, or 27%, in the First Nine Months of Fiscal 2022, with an increase in each channel of distribution. The increase in net sales in Tommy Bahama included increases in (1) full-price retail sales of $56 million, or 29%, (2) wholesale sales of $37 million, or 44%, (3) e-commerce sales of $26 million, or 21%, (4) restaurant sales of $11 million, or 15%, with low double-digit percentage increases in locations open the full quarter of both periods as well as increased sales at the New York and Palm Desert locations, which were not open the full quarter in the Third Quarter of Fiscal 2021, and (5) outlet sales of $7 million, or 17%. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

| ​ ​ ​ ​ | ​ ​ First Nine Months Fiscal 2022 | ​ ​ Fiscal 2021 |
| --- | ---: | ---: |
| Retail | 46% | 46% |
| E-commerce | 23% | 24% |
| Restaurant | 12% | 14% |
| Wholesale | 19% | 16% |
| Total | 100% | 100% |

#### Lilly Pulitzer:

Lilly Pulitzer net sales increased $32 million, or 14%, in the First Nine Months of Fiscal 2022, with an increase in each channel of distribution. The increase in net sales in Lilly Pulitzer included increases in (1) e-commerce flash clearance sales of $16 million, or 86%, as Lilly Pulitzer had increased levels of inventory available for the e-commerce flash clearance sales in Fiscal 2022 after having more limited end of season inventory in Fiscal 2021, (2) retail sales of $9 million, or 11%, (3) wholesale sales of $6 million, or 15%, with higher full-price sales and lower off-price sales and (4) full-price e-commerce sales of $1 million, or 1%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:

| ​ ​ ​ ​ | ​ ​ First Nine Months Fiscal 2022 | ​ ​ Fiscal 2021 |
| --- | ---: | ---: |
| Retail | 34% | 35% |
| E-commerce | 49% | 48% |
| Wholesale | 17% | 17% |
| **Total** | 100% | 100% |

#### Johnny Was:

Johnny Was net sales were $23 million in the six weeks following the September 19, 2022 acquisition through the end of the quarter. During the six-week period ecommerce, retail and wholesale sales were 41%, 38% and 21% of the net sales. As the net sales are for less than half of one fiscal quarter, the percentage of net sales by distribution channel are not indicative of the proportion of net sales that are typical for the nine month period ended October 29, 2022.

#### Emerging Brands:

Emerging Brands net sales increased $21 million, or 32%, in the First Nine Months of Fiscal 2022, with an increase in each of the TBBC, Southern Tide and Duck Head businesses comprising Emerging Brands. By brand, the increase in net sales included increases in (1) TBBC of $12 million, or 59%, to $31 million, (2) Southern Tide of $7 million, or 17%, to $51 million, and (3) Duck Head of $2 million, or 51%, to $7 million. By distribution channel, the $21 million increase included increases of (1) $10 million, or 40%, in e-commerce, (2) $9 million, or 24%, in wholesale, and (3) $2 million, or 69%, in the Southern Tide and TBBC retail businesses, as those brands continue to open new retail locations. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ ​ Fiscal 2021 |
| --- | --- | ---: | ---: |
| Retail | ​ | 5% | 4% |
| E-commerce |  | 39% | 37% |
| Wholesale |  | 56% | 59% |
| **Total** |  | 100% | 100% |

#### Lanier Apparel:

There were no Lanier Apparel net sales in the First Nine Months of Fiscal 2022, compared to $25 million of net sales in the First Nine Months of Fiscal 2021.

#### Corporate and Other:

Corporate and Other net sales primarily consist of net sales of our Lyons, Georgia distribution center business as well as our Oxford America business, which we exited in Fiscal 2022. The decrease in net sales was primarily due to lower sales in Oxford America.

### Gross Profit

The tables below present gross profit by operating group and in total for the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021, as well as the dollar change and percentage 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.

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ | ​ ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Tommy Bahama | ​ | $419,781 | ​ | $326,681 | ​ | $93,100 |  | 28.5% |
| Lilly Pulitzer | ​ | 179,841 | ​ | 161,718 | ​ | 18,123 |  | 11.2% |
| Johnny Was | ​ | 14,597 | ​ | — | ​ | 14,597 |  | 100.0% |
| Emerging Brands | ​ | 43,901 | ​ | 36,278 | ​ | 7,623 |  | 21.0% |
| Lanier Apparel | ​ | — | ​ | 12,255 | ​ | (12,255) |  | (100.0)% |
| Corporate and Other | ​ | (1,900) | ​ | (8,183) | ​ | 6,283 |  | NM% |
| **Consolidated gross profit** | ​ | $656,220 | ​ | $528,749 | ​ | $127,471 |  | 24.1% |
| **Notable items included in amounts above:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| LIFO adjustments in Corporate and Other | ​ | $3,087 | ​ | $9,616 | ​ |  |  | ​ |
| Inventory step-up charge included in Johnny Was | ​ | $1,376 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in cost of goods sold | ​ | $— | ​ | $(2,826) | ​ | ​ ​ | ​ | ​ ​ |

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ ​ Fiscal 2021 |
| --- | --- | ---: | ---: |
| Tommy Bahama |  | 64.5% | 63.6% |
| Lilly Pulitzer |  | 67.9% | 69.4% |
| Johnny Was | ​ | 64.4% | —% |
| Emerging Brands |  | 49.6% | 53.9% |
| Lanier Apparel |  | —% | 49.5% |
| Corporate and Other |  | NM% | NM% |
| **Consolidated gross margin** |  | 63.8% | 62.8% |

The increased gross profit of 24% was primarily due to the 22% increase in net sales as well as increased consolidated gross margin. The higher gross margin included (1) a $7 million lower LIFO accounting charge in the First Nine Months of Fiscal 2022 compared to the First Nine Months of Fiscal 2021, (2) the lack of any Lanier Apparel sales, which had lower gross margins than our branded businesses, (3) improved initial product margins, as certain sales prices were increased more than the increased product costs, and (4) lower freight costs of $1 million, after incurring approximately 100 basis points of incremental freight costs in the First Nine Months of Fiscal 2021. These items were partially offset by (1) the impact of the Lilly Pulitzer e-commerce flash sale, which represented a larger proportion of net sales and had lower gross margins in the First Nine Months of Fiscal 2022, (2) the lack of a favorable adjustment of Lanier Apparel exit charges in cost of goods sold after a $3 million favorable adjustment of Lanier Apparel exit charges in cost of goods sold in the First Nine Months of Fiscal 2021 and (3) the $1 million inventory step up charge related to the Johnny Was acquisition in the Third Quarter of Fiscal 2022.

In the Third Quarter of Fiscal 2021, freight costs increased significantly from prior periods, including rate increases for both ocean and air shipments as well as the increased utilization of air freight on inbound products as we navigated our need for inventory and the supply chain challenges. The increased inbound freight rates, which have moderated somewhat from the peak, have continued into Fiscal 2022. However, our use of air freight has decreased as we have placed seasonal inventory purchases on an earlier timeline to reduce the risk of late delivery of our products. These factors resulted in a significant negative impact on our gross margin during the Second Half of Fiscal 2021, but not as significant of a negative impact on our gross margin in the Second Half of Fiscal 2022. In Fiscal 2022 freight costs are still elevated by approximately 50 to 100 basis points as compared to pre-pandemic levels.

#### Tommy Bahama:

The higher gross margin for Tommy Bahama was primarily due to reduced freight costs in the First Nine Months of Fiscal 2022, after significantly higher freight costs were incurred in the Third Quarter of Fiscal 2021, as well as improved initial product margins. These items were partially offset by (1) a change in sales mix with wholesale sales representing a higher proportion of net sales, (2) the impact of a higher proportion of Tommy Bahama direct to consumer sales occurring during periodic Friends and Family, loyalty award card, Flip Side marketing or end of season clearance events, and (3) increased food costs in our food and beverage business.

#### Lilly Pulitzer:

The lower gross margin for Lilly Pulitzer was primarily due to (1) a change in sales mix with e-commerce flash clearance sales, which typically have gross margins in the low 40% range, representing a larger proportion of net sales and (2) lower gross margins on the e-commerce flash clearance sales, as the gross margin achieved in the Third Quarter of Fiscal 2021 was higher than typical e-commerce flash clearance sales gross margins due to less end of season inventory available in Fiscal 2021. This was partially offset by lower freight costs and improved initial product margins.

#### Johnny Was:

The Johnny Was gross profit and gross margin for the six weeks following the September 19, 2022 acquisition through the end of the quarter was unfavorably impacted by $1 million of incremental cost of goods sold resulting from the charge related to the step up of inventory to fair value at acquisition. Thus, we do not believe the gross profit or gross margin in the six week period is indicative of the gross profit or gross margin for the First Nine Months of Fiscal 2022 or any other fiscal period for Johnny Was. On an annual basis, with no impact of inventory step-up charges, Johnny Was gross margins have historically been and are expected to be approximately 65%, after conforming to our accounting policy of classifying outbound freight charges in cost of goods sold rather than SG&A.

#### Emerging Brands:

The lower gross margin for Emerging Brands was primarily due to more inventory markdowns and increased freight costs partially offset by a change in sales mix with direct to consumer sales representing a greater proportion of net sales.

#### Lanier Apparel:

There was no gross profit for Lanier Apparel in the First Nine Months of Fiscal 2022. The First Nine Months of Fiscal 2021 for Lanier Apparel included the gross profit impact of net sales as we were exiting the business, as well as a reduction in inventory markdowns associated with the exit of Lanier Apparel.

#### Corporate and Other:

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

### SG&A

| ​ ​ ​ | ​ | ​ ​ ​ First Nine Months Fiscal 2022 | ​ ​ ​ Fiscal 2021 | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | ---: | --- | --- | --- |
| SG&A | ​ | $495,574 ​ | $420,997 ​ | $74,577 |  | 17.7% |
| SG&A (as a % of net sales) | ​ | 48.2% | 50.0% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Tommy Bahama lease termination charge | ​ | $— ​ | $4,850 ​ | ​ ​ | ​ | ​ ​ |
| Amortization of Johnny Was intangible assets | ​ | $1,641 ​ | $— ​ | ​ ​ | ​ | ​ ​ |
| TBBC change in fair value of contingent consideration | ​ | $— ​ | $786 ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in SG&A | ​ | $— ​ | $3,788 ​ | ​ ​ | ​ | ​ ​ |
| Transaction expenses and integration costs associated with the Johnny Was acquisition included in Corporate and Other | ​ | $2,783 ​ | $— ​ | ​ ​ | ​ | ​ ​ |

SG&A was $496 million in the First Nine Months of Fiscal 2022 compared to SG&A of $421 million in the First Nine Months of Fiscal 2021. The increase includes the net impact of approximately $14 million of SG&A associated with Johnny Was in the First Nine Months of Fiscal 2022 and $10 million of SG&A and exit charges of Lanier Apparel in the First Nine Months of Fiscal 2021, which are reflected in the changes in each category noted in the following paragraph, as applicable.

The 18% increase in SG&A in the First Nine Months of Fiscal 2022 included (1) increased employment costs of $35 million, primarily due to increased head count, pay rate increases and other employment cost increases, particularly in our direct to consumer and distribution center operations, (2) a $14 million increase in advertising expense, (3) an $11 million increase in variable expenses related to higher sales, including credit card transaction fees, supplies, commissions, royalties and other expenses, (4) a $7 million increase in occupancy expenses, including increases in base rent amounts, percentage rent, occupancy related operating costs and other items, (5) a $5 million increase in administrative expenses including professional fees, travel and other items, (6) $3 million of charges related to transaction expenses and integration costs associated with the Johnny Was acquisition, (7) a $2 million increase in depreciation expense, and (8) a $2 million increase in amortization of intangible assets expense. These items were partially offset by the absence of $5 million of Tommy Bahama lease termination charges, $4 million of Lanier Apparel exit charges and $1 million of TBBC change in fair value of contingent consideration in the First Nine Months of Fiscal 2022.

### Royalties and other operating income

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | --- | --- | --- |
| Royalties and other operating income | ​ | $18,018 | ​ | $25,744 | ​ | $(7,726) |  | (30.0)% |
| **Notable items included in amounts above:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Gain on sale of investment in unconsolidated entity | ​ | $— | ​ | $(11,586) | ​ | ​ ​ | ​ | ​ ​ |

Royalties and other operating income typically consists primarily of income received from third parties from the licensing of our brands, but the First Nine Months of Fiscal 2021 also included a $12 million gain on sale of investment in unconsolidated entity. Royalty income in the First Nine Months of Fiscal 2022 increased primarily due to increased royalty income in both Tommy Bahama and Lilly Pulitzer.

### Operating income (loss)

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | --- | --- | --- |
| Tommy Bahama | ​ | $130,508 | ​ | $73,515 | ​ | $56,993 |  | 77.5% |
| Lilly Pulitzer | ​ | 60,358 | ​ | 61,713 | ​ | (1,355) |  | (2.2)% |
| Johnny Was | ​ | ​ 117 | ​ | ​ — | ​ | ​ 117 |  | 100.0% |
| Emerging Brands | ​ | 15,456 | ​ | 13,565 | ​ | 1,891 |  | 13.9% |
| Lanier Apparel | ​ | — | ​ | 2,053 | ​ | (2,053) |  | (100.0)% |
| Corporate and Other | ​ | (27,775) | ​ | (17,350) | ​ | (10,425) |  | NM% |
| **Consolidated operating income** | ​ | $178,664 | ​ | $133,496 | ​ | $45,168 |  | 33.8% |
| **Notable items included in amounts above:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| LIFO adjustments in Corporate and Other | ​ | $3,087 | ​ | $9,616 | ​ |  |  | ​ |
| Inventory step-up charge included in Johnny Was | ​ | $1,376 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in cost of goods sold | ​ | $— | ​ | $(2,826) | ​ | ​ ​ | ​ | ​ ​ |
| Tommy Bahama lease termination charge | ​ | $— | ​ | $4,850 | ​ | ​ ​ | ​ | ​ ​ |
| Amortization of Johnny Was intangible assets | ​ | $1,641 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| TBBC change in fair value of contingent consideration | ​ | $— | ​ | $786 | ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in SG&A | ​ | $— | ​ | $3,788 | ​ | ​ ​ | ​ | ​ ​ |
| Transaction expenses and integration costs associated with the Johnny Was acquisition included in Corporate and Other | ​ | $2,783 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| Gain on sale of investment in unconsolidated entity | ​ | $— | ​ | $(11,586) | ​ |  |  | ​ |

Operating income was $179 million in the First Nine Months of Fiscal 2022 compared to $133 million in the First Nine Months of Fiscal 2021. The increased operating income was primarily due to higher net sales, gross margin and royalty income partially offset by increased SG&A. By operating group, the increased operating income was due to higher operating income in Tommy Bahama partially offset by the lower operating results in Corporate and Other, which included a $12 million gain on sale of investment in unconsolidated entity in the First Nine Months of Fiscal 2021, as well as other smaller changes in our other operating groups. Changes in operating income (loss) by operating group are discussed below.

#### Tommy Bahama:

| ​ ​ ​ | ​ | ​ ​ ​ First Nine Months Fiscal 2022 | ​ ​ ​ Fiscal 2021 | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | ---: | ---: | --- | --- |
| Net sales | ​ | $650,677 ​ | $513,985 ​ | $136,692 |  | 26.6% |
| Gross profit | ​ | $419,781 ​ | $326,681 ​ | $93,100 | ​ | 28.5% |
| Gross margin | ​ | 64.5% | 63.6% |  |  | ​ |
| Operating income | ​ | $130,508 ​ | $73,515 ​ | $56,993 |  | 77.5% |
| Operating income as % of net sales | ​ | 20.1% | 14.3% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Tommy Bahama lease termination charge | ​ | $— ​ | $4,850 ​ | ​ ​ | ​ | ​ ​ |

The increased operating income for Tommy Bahama was primarily due to higher sales, gross margin and royalty income partially offset by increased SG&A. The increased SG&A was primarily due to (1) $25 million of increased employment costs, with the majority of the increase in retail and restaurant operations, (2) $8 million of increased variable expenses related to higher sales, including credit card transaction fees, supplies, commissions, royalties and other expenses, (3) a $4 million increase in advertising expense, (4) a $4 million increase in occupancy expenses including increases in base rent amounts, percentage rent, occupancy related operating costs and other items and (5) a $1 million increase in administrative expenses including professional fees, travel and other items. These SG&A increases were partially offset by (1) the absence of $5 million of Tommy Bahama lease termination charges in the Third Quarter of Fiscal 2022 and (2) a $1 million reduction in depreciation expense.

#### Lilly Pulitzer:

| ​ ​ ​ | ​ | ​ ​ ​ First Nine Months Fiscal 2022 | ​ ​ ​ Fiscal 2021 | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | ---: | ---: | --- | ---: |
| Net sales | ​ | $264,763 ​ | $233,066 ​ | $31,697 |  | 13.6% |
| Gross profit | ​ | $179,841 ​ | $161,718 ​ | $18,123 | ​ | 11.2% |
| Gross margin | ​ | 67.9% | 69.4% |  |  | ​ ​ |
| Operating income | ​ | $60,358 ​ | $61,713 ​ | $(1,355) |  | (2.2)% |
| Operating income as % of net sales | ​ | 22.8% | 26.5% |  |  | ​ |

The lower operating income for Lilly Pulitzer was primarily due to increased SG&A and lower gross margin partially offset by higher sales and royalty income. The increased SG&A was primarily due to (1) $7 million of increased advertising expense, (2) $4 million of increased employment costs, (3) $3 million of higher depreciation expense, (4) $2 million of variable expenses related to higher net sales including credit card transaction fees, supplies and other expenses, and (5) $2 million of professional and other fees, primarily related to various ongoing direct to consumer and brand initiatives.

#### Johnny Was:

| ​ ​ ​ | ​ | ​ ​ ​ First Nine Months Fiscal 2022 | ​ ​ ​ Fiscal 2021 | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | ---: | ---: | --- | --- |
| Net sales | ​ | $22,661 ​ | $— ​ | $22,661 |  | 100.0% |
| Gross profit | ​ | $14,597 ​ | $— ​ | $14,597 | ​ | 100.0% |
| Gross margin | ​ | 64.4% | —% |  |  | ​ ​ |
| Operating income | ​ | $117 ​ | $— ​ | $117 |  | 100.0% |
| Operating income as % of net sales | ​ | 0.5% | —% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Inventory step-up charge included in Johnny Was | ​ | $1,376 ​ | $— ​ | ​ ​ | ​ | ​ ​ |
| Amortization of Johnny Was intangible assets | ​ | $1,641 ​ | $— ​ | ​ ​ | ​ | ​ ​ |

Johnny Was operating income in the six weeks from September 19, 2022 through the end of the fiscal quarter on October 29, 2022 included $1 million of inventory step-up charges and $2 million of amortization of intangible assets, which negatively impacted the operating income of Johnny Was. As the operating results for Johnny Was are for only six weeks, the operating results for this period are not indicative of the Johnny Was operating results for the First Nine Months of Fiscal 2022.

#### Emerging Brands:

| ​ ​ ​ | ​ | ​ ​ ​ First Nine Months Fiscal 2022 | ​ ​ ​ Fiscal 2021 | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | ---: | ---: | --- | --- |
| Net sales | ​ | $88,588 ​ | $67,336 ​ | $21,252 |  | 31.6% |
| Gross profit | ​ | $43,901 ​ | $36,278 ​ | $7,623 | ​ | 21.0% |
| Gross margin | ​ | 49.6% | 53.9% |  |  | ​ ​ |
| Operating income | ​ | $15,456 ​ | $13,565 ​ | $1,891 |  | 13.9% |
| Operating income as % of net sales | ​ | 17.4% | 20.1% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| TBBC change in fair value of contingent consideration | ​ | $— ​ | $786 ​ | ​ ​ | ​ | ​ ​ |

The increased operating income for Emerging Brands was primarily due to higher net sales partially offset by increased SG&A and lower gross margin. The increased SG&A included (1) higher SG&A associated with the Southern Tide and TBBC retail store operations, including related employment costs and occupancy costs, (2) increased variable expenses resulting from increased sales, (3) higher advertising expense and (4) increased administrative expenses associated with the Emerging Brands businesses. These increases in SG&A were partially offset by the lack of a TBBC change in fair value of contingent consideration in the First Nine Months of Fiscal 2022 after incurring a $1 million charge for TBBC change in fair value of contingent consideration in the First Nine Months of Fiscal 2021.

#### Lanier Apparel:

| ​ ​ ​ | ​ | ​ ​ ​ First Nine Months Fiscal 2022 | ​ ​ ​ Fiscal 2021 | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | ---: | ---: | --- | --- |
| Net sales | ​ | $— ​ | $24,743 ​ | $(24,743) |  | (100.0)% |
| Gross profit | ​ | $— ​ | $12,255 ​ | $(12,255) | ​ | (100.0)% |
| Gross margin | ​ | —% | 49.5% |  |  | ​ |
| Operating income | ​ | $— ​ | $2,053 ​ | $(2,053) |  | (100.0)% |
| Operating income as % of net sales | ​ | —% | 8.3% |  |  | ​ |
| **Notable items included in amounts above:** | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in cost of goods sold | ​ | $— ​ | $(2,826) ​ | ​ ​ | ​ | ​ ​ |
| Lanier Apparel exit charges in SG&A | ​ | $— ​ | $3,788 ​ | ​ ​ | ​ | ​ ​ |

There was no operating income for Lanier Apparel in the First Nine Months of Fiscal 2022. The First Nine Months of Fiscal 2021 for Lanier Apparel included the operating income resulting from the net sales, cost of goods sold and SG&A as we were exiting the Lanier Apparel business, including the net impact related to Lanier Apparel exit charges.

#### Corporate and Other:

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ | ​ ​ ​ $ Change | ​ ​ | ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | --- |
| Net sales | ​ | $2,355 | ​ | $3,033 | ​ | $(678) |  | (22.4)% |
| Gross profit | ​ | $(1,900) | ​ | $(8,183) | ​ | $6,283 | ​ | NM% |
| Operating loss | ​ | $(27,775) | ​ | $(17,350) | ​ | $(10,425) |  | NM% |
| **Notable items included in amounts above:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| LIFO adjustments in Corporate and Other | ​ | $3,087 | ​ | $9,616 | ​ |  |  | ​ ​ |
| Transaction expenses and integration costs associated with the Johnny Was acquisition | ​ | $2,783 | ​ | $— | ​ | ​ ​ | ​ | ​ ​ |
| Gain on sale of investment in unconsolidated entity | ​ | $— | ​ | $(11,586) | ​ | ​ ​ | ​ | ​ ​ |

The lower operating results in Corporate and Other were primarily a result of (1) the First Nine Months of Fiscal 2021 including a $12 million gain on sale of an investment in an unconsolidated entity, with no such gain in the First

Nine Months of Fiscal 2022, (2) $3 million of transaction expenses and integration costs associated with the Johnny Was acquisition and (3) increased SG&A, including increased employment costs and other operating expenses. The impact of these items was partially offset by a $7 million favorable impact from LIFO accounting.

### Interest expense, net

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ | ​ ​ ​ $ Change | ​ ​ ​ ​ ​ % Change |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Interest expense, net | ​ | $1,214 | ​ | $685 | ​ | $529 | 77.2% |

The higher interest expense in the First Nine Months of Fiscal 2022 was primarily due to borrowings pursuant to our U.S. Revolving Credit Agreement to fund a portion of the acquisition of Johnny Was, while there was no debt outstanding in the First Nine Months of Fiscal 2021. The interest expense for the First Nine Months of Fiscal 2021 primarily consisted of unused line fees and amortization of deferred financing fees associated with the U.S. Revolving Credit Agreement.

### Income tax provision

| ​ ​ ​ | ​ | ​ ​ ​ First Nine Months Fiscal 2022 | ​ ​ ​ Fiscal 2021 | ​ ​ ​ $ Change | ​ ​ ​ ​ ​ % Change |
| --- | --- | ---: | ---: | ---: | ---: |
| Income tax expense | ​ | $43,764 ​ | $26,898 ​ | $16,866 | 62.7% |
| Effective tax rate | ​ | 24.7% | 20.3% |  | ​ |

Both the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021 benefitted from the favorable impact of certain items that resulted in a lower tax rate than the more typical annual effective tax rate. The income tax expense in both the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021 included the benefit of the utilization of certain net operating loss carryforward amounts in certain state and foreign jurisdictions, the recognition of certain tax credit amounts and the vesting of restricted stock awards at a price higher than the grant date fair value. These favorable items were partially offset by certain unfavorable permanent items which are not deductible for income tax purposes. Additionally, and more significantly, the income tax expense in the First Nine Months of Fiscal 2021 included the benefit of a $2 million net reduction in uncertain tax positions resulting from the settlement of those uncertain tax position amounts in the First Quarter of Fiscal 2021 and the utilization of benefits associated with certain capital losses to substantially offset the gain recognized on the sale of an unconsolidated entity in the Third Quarter of Fiscal 2021.

We expect our annual effective tax rate for Fiscal 2022 to be between 24% and 25%.

### Net earnings

| ​ ​ ​ | ​ | ​ ​ First Nine Months Fiscal 2022 | ​ | ​ ​ Fiscal 2021 |
| --- | --- | ---: | --- | ---: |
| Net sales | ​ | $1,029,044 | ​ | $842,163 |
| Operating income | ​ | $178,664 | ​ | $133,496 |
| Net earnings | ​ | $133,686 | ​ | $105,913 |
| Net earnings per diluted share | ​ | $8.19 | ​ | $6.29 |
| Weighted average shares outstanding - diluted | ​ | 16,333 | ​ | 16,841 |

Net earnings per diluted share were $8.19 in the First Nine Months of Fiscal 2022 compared to $6.29 in the First Nine Months of Fiscal 2021. The 30% increase in net earnings per diluted share was primarily due to a 26% increase in net earnings as well as a 3% reduction in weighted average shares outstanding due to our share repurchase program which commenced in the Fourth Quarter of Fiscal 2021. The higher net earnings were primarily due to higher operating income in Tommy Bahama partially offset by (1) the First Nine Months of Fiscal 2021 including a $12 million gain on sale of investment in an unconsolidated entity and (2) a higher effective tax rate in the First Nine Months of Fiscal 2022.

### 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 and Duck Head 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 contract manufacturers 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, distribution costs, other general and administrative expenses and the periodic payment of interest, if any. 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, future growth rates, the need to finance inventory levels and the success of our various products.

We have a long history of generating sufficient cash flows from operations to satisfy our cash requirements for our ongoing capital expenditure needs as well as payment of dividends and repayment of our debt. Thus, we believe our anticipated future cash flows from operating activities will provide (1) sufficient cash over both the short and long term to satisfy our ongoing operating cash requirements, (2) ample opportunity to continue to invest in our lifestyle brands, direct to consumer initiatives and information technology projects, (3) additional cash flow to repay outstanding debt and (4) sufficient cash for other strategic initiatives. Also, if cash inflows are less than cash outflows, we have access to amounts under our U.S. Revolving Credit Agreement, subject to its terms, which is described below.

### Key Liquidity Measures

*($ in thousands)*

| ​ ​ | ​ ​ | ​ ​ October 29, 2022 | ​ ​ | ​ ​ January 29, 2022 | ​ ​ | ​ ​ October 30, 2021 | ​ ​ | ​ ​ January 30, 2021 | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Total current assets | ​ | $299,495 | ​ | $400,335 | ​ | $366,953 | ​ | $258,316 | ​ |
| Total current liabilities | ​ | $230,395 | ​ | $226,166 | ​ | $207,172 | ​ | $196,252 | ​ |
| Working capital | ​ | $69,100 | ​ | $174,169 | ​ | $159,781 | ​ | $62,064 | ​ |
| Working capital ratio | ​ | 1.30 | ​ | 1.77 | ​ | 1.77 | ​ | 1.32 | ​ |

Our working capital ratio is calculated by dividing total current assets by total current liabilities. Current assets as of October 29, 2022, decreased from October 30, 2021 primarily due to the decrease in cash and cash equivalents and short-term investments, which was used to fund a portion of the Johnny Was acquisition purchase price, partially offset by increased inventories, receivables and prepaid expenses and other current assets, including the assets related to Johnny Was. Current liabilities as of October 29, 2022 increased from October 30, 2021 primarily due to the current liabilities associated with Johnny Was. Changes in current assets and current liabilities are discussed below.

### 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 as of October 29, 2022 as compared to October 30, 2021.

#### Current Assets:

| ​ ​ ​ | ​ ​ | ​ ​ October 29, 2022 | ​ ​ | ​ ​ January 29, 2022 | ​ ​ | ​ ​ October 30, 2021 | ​ ​ | ​ ​ January 30, 2021 | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Cash and cash equivalents | ​ | $14,976 | ​ | $44,859 | ​ | $37,976 | ​ | $66,013 | ​ |
| Short-term investments | ​ | ​ — | ​ | ​ 164,890 | ​ | ​ 150,036 | ​ | ​ — | ​ |
| Receivables, net | ​ | 64,497 | ​ | 34,550 | ​ | 46,266 | ​ | 30,418 | ​ |
| Inventories, net | ​ | 171,639 | ​ | 117,709 | ​ | 90,981 | ​ | 123,543 | ​ |
| Income tax receivable | ​ | ​ 19,740 | ​ | ​ 19,728 | ​ | ​ 18,085 | ​ | ​ 17,975 | ​ |
| Prepaid expenses and other current assets | ​ | 28,643 | ​ | 18,599 | ​ | 23,609 | ​ | 20,367 | ​ |
| Total current assets | ​ | $299,495 | ​ | $400,335 | ​ | $366,953 | ​ | $258,316 | ​ |

Cash and cash equivalents and short-term investments were $15 million as of October 29, 2022, compared to $188 million as of October 30, 2021. The decrease in cash and cash equivalents and short-term investments from October 30, 2021 was due to the use of cash and short-term investments to fund a portion of the Johnny Was acquisition purchase price, with the remainder funded via borrowings pursuant to our U.S. Revolving Credit Agreement.

The increased receivables, net as of October 29, 2022 included $11 million of receivables associated with Johnny Was. Additionally, receivables in our other business increased due to (1) higher wholesale sales, (2) a reduction in estimated customer allowances and credit losses related to wholesale receivables, (3) increased credit receivables and (4) additional amounts due from landlords for tenant improvement allowances. Inventories, net, which is net of a $75 million and $62 million LIFO reserve as of October 29, 2022 and October 30, 2021, respectively, increased to a more normalized level as of October 29, 2022 and also included inventories of $25 million associated with Johnny Was. The planned increase in inventories of our existing brands was primarily due to (1) inventory throughout Fiscal 2021 at lower than optimal levels, when a stronger than anticipated rebound in consumer demand outpaced inventory purchases, (2) increases resulting from the earlier receipt of inventory in Fiscal 2022 to mitigate supply chain risks, (3) anticipated sales growth in each of our brands for the remainder of Fiscal 2022 and early Fiscal 2023 and (4) increased product costs. The inventory increases in our brands were partially offset by the impact of LIFO accounting, including the $13 million increase in the LIFO reserve, which was primarily due to the impact of the inflationary environment on the LIFO reserve.

Income tax receivable primarily relates to the income tax receivable associated with tax returns for Fiscal 2020, which included the carry back of operating losses to offset taxable income from previous years. The increase in prepaid expenses and other current assets as of October 29, 2022 was primarily due to prepaid expenses and other current assets associated with Johnny Was.

#### Non-current Assets:

| ​ ​ ​ | ​ ​ | ​ ​ October 29, 2022 | ​ ​ | ​ ​ January 29, 2022 | ​ ​ | ​ ​ October 30, 2021 | ​ ​ | ​ ​ January 30, 2021 | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Property and equipment, net | ​ | $173,391 | ​ | $152,447 | ​ | $156,672 | ​ | $159,732 | ​ |
| Intangible assets, net | ​ | 287,626 | ​ | 155,307 | ​ | 155,527 | ​ | 156,187 | ​ |
| Goodwill | ​ | 116,268 | ​ | 23,869 | ​ | 23,909 | ​ | 23,910 | ​ |
| Operating lease assets | ​ | ​ 237,078 | ​ | ​ 195,100 | ​ | ​ 200,508 | ​ | ​ 233,775 | ​ |
| Other assets, net | ​ | 26,459 | ​ | 30,584 | ​ | 29,234 | ​ | 33,714 | ​ |
| Total non-current assets | ​ | $840,822 | ​ | $557,307 | ​ | $565,850 | ​ | $607,318 | ​ |

Property and equipment, net as of October 29, 2022 increased primarily due to the addition of $22 million of property and equipment associated with Johnny Was. This increase was partially offset by the net impact of depreciation expense exceeding capital expenditures during the 12 months ended October 29, 2022. Intangible assets, net and goodwill as of October 29, 2022, increased primarily due to the $133 million of intangible assets and $92 million of goodwill associated with Johnny Was. Operating lease assets as of October 29, 2022 increased primarily due to the operating lease assets associated with Johnny Was of $54 million. This increase was partially offset by the net impact of the recognition of amortization related to existing operating leases and the termination or reduced term of certain operating leases which exceeded the operating lease assets associated with new or extended operating leases in our existing businesses. The decrease in other assets, net as of October 29, 2022, was primarily due to a decrease in assets set aside for potential deferred compensation obligations, which was partially offset by other assets associated with Johnny Was.

#### Liabilities:

| ​ ​ ​ | ​ ​ | ​ ​ October 29, 2022 | ​ ​ | ​ ​ January 29, 2022 | ​ ​ | ​ ​ October 30, 2021 | ​ ​ | ​ ​ January 30, 2021 | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Total current liabilities | ​ | $230,395 | ​ | $226,166 | ​ | $207,172 | ​ | $196,252 | ​ |
| Long-term debt | ​ | 130,449 | ​ | — | ​ | — | ​ | — | ​ |
| Non-current portion of operating lease liabilities | ​ | 225,921 | ​ | 199,488 | ​ | 206,484 | ​ | 239,963 | ​ |
| Other non-current liabilities | ​ | 18,058 | ​ | 21,413 | ​ | 21,779 | ​ | 23,691 | ​ |
| Deferred income taxes | ​ | ​ 2,455 | ​ | ​ 2,911 | ​ | ​ 1,899 | ​ | ​ — | ​ |
| Total liabilities | ​ | $607,278 | ​ | $449,978 | ​ | $437,334 | ​ | $459,906 | ​ |

Current liabilities increased as of October 29, 2022 primarily due to current liabilities of $30 million associated with Johnny Was, with increases in accounts payable, accrued compensation and current portion of operating lease liabilities and accrued expenses and other liabilities each generally due to the liabilities of Johnny Was. This increase was partially offset by lower income tax payable, accounts payable and accrued expenses and other liabilities related to our other businesses.

The long-term debt of $130 million as of October 29, 2022, was primarily due to borrowing certain amounts to fund a portion of the acquisition of Johnny Was. Non-current portion of operating lease liabilities as of October 29, 2022, increased primarily due to $46 million of operating lease liability amounts associated with Johnny Was. This was partially offset by the net impact of the payment of operating lease liabilities and reductions in liabilities related to the termination or reduced term of certain operating leases which exceeded the operating lease liabilities associated with new or extended operating leases. Other non-current liabilities as of October 29, 2022 decreased primarily due to decreases in deferred compensation liabilities.

### Statement of Cash Flows

The following table sets forth the net cash flows for the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021 (in thousands):

| ​ ​ ​ | ​ ​ | ​ ​ First Nine Months Fiscal 2022 | ​ | ​ ​ Fiscal 2021 | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Cash provided by operating activities | ​ | $86,255 | ​ | $157,085 | ​ |
| Cash used in investing activities | ​ | (129,700) | ​ | (162,546) | ​ |
| Cash provided by (used in) financing activities | ​ | 13,160 | ​ | (23,135) | ​ |
| Net change in cash and cash equivalents | ​ | $(30,285) | ​ | $(28,596) | ​ |

Cash and cash equivalents and short-term investments, in the aggregate, were $15 million and $188 million as of October 29, 2022 and October 30, 2021, respectively. The decrease in cash and cash equivalents and short-term investments from October 30, 2021 was due to the use of cash and short-term investments to fund the acquisition of Johnny Was, with the remainder of the purchase price funded via borrowings pursuant to our U.S. Revolving Credit Agreement. Changes in cash flows in the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021 related to operating activities, investing activities and financing activities are discussed below.

#### Operating Activities:

In the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021, operating activities provided $86 million and $157 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 depreciation, equity-based compensation, gain on sale of our interest in an unconsolidated entity, 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 Nine Months of Fiscal 2022, changes in operating assets and liabilities had a net unfavorable impact on cash flow from operations, while in the

First Nine Months of Fiscal 2021 the changes in operating assets and liabilities had a net favorable impact on cash flow from operations.

In the First Nine Months of Fiscal 2022, the net change in operating assets and liabilities was primarily due to an increase in inventories and receivables and a decrease in current liabilities, all of which decreased cash flow from operations. In the First Nine Months of Fiscal 2021, the net change in operating assets and liabilities was primarily due to a decrease in inventories and an increase in current liabilities, both of which increased cash flow from operations, partially offset by an increase in receivables which decreased cash flow from operations. The significant favorable impact in the First Nine Months of Fiscal 2021 was primarily due to the stronger than expected rebound in consumer demand outpacing inventory purchases, which resulted in lower than optimal inventory levels in Fiscal 2021, and the conversion of Lanier Apparel working capital into cash during the exit of Lanier Apparel.

#### Investing Activities:

In the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021, investing activities used $130 million and $163 million of cash, respectively. During the First Nine Months of Fiscal 2022, we paid $264 million for the September 19, 2022 acquisition of Johnny Was and also converted $165 million of short-term investments into cash to fund a portion of the acquisition. During the First Nine Months of Fiscal 2021, we invested $150 million of excess cash into short-term investments and received $15 million of proceeds from the sale of our investment in an unconsolidated entity.

On an ongoing basis, our cash flow used in investing activities primarily consists of our capital expenditures, which totaled $32 million and $25 million in the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021, respectively. In addition to our capital expenditures in the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021, we also used or generated certain amounts of cash, which are included in other investing activities, related to investments in unconsolidated entities, including minority ownership interests or loans.

On an ongoing basis, our cash flow used in investing activities is expected to primarily consist of our capital expenditure investments in information technology initiatives, including e-commerce capabilities; direct to consumer operations, including opening, relocating and remodeling locations; and facilities enhancements for distribution centers and offices.

#### Financing Activities:

In the First Nine Months of Fiscal 2022 and the First Nine Months of Fiscal 2021, financing activities provided $13 million and used $23 million of cash, respectively. During the First Nine Months of Fiscal 2022, we used cash to repurchase $90 million of shares, including repurchased shares of our stock pursuant to an open market stock repurchase program and equity awards in respect of employee tax withholding liabilities, to pay $27 million of dividends and to pay $2 million of contingent consideration for the final contingent consideration payment related to the TBBC acquisition, which is included in other financing activities. In the First Nine Months of Fiscal 2021, we used cash flow from operations to pay $20 million of dividends, repurchase $3 million of shares, consisting of repurchased shares of equity awards in respect of employee tax withholding liabilities, and pay $1 million of contingent consideration, which is included in other financing activities.

To the extent we are in a net debt position, and our net cash requirements exceed our net cash flows, we may borrow amounts from our U.S. Revolving Credit Agreement, like we did in the First Nine Months of Fiscal 2022. Alternatively, if net cash requirements are less than our net cash flows, we may repay amounts outstanding our U.S. Revolving Credit Agreement, if any.

### 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 sufficient cash flows over both the short and long term to satisfy our ongoing cash requirements and ample opportunity to continue to invest in our lifestyle brands, direct to consumer initiatives, information technology projects and other strategic initiatives. Our capital needs depend on many factors including the results of our operations and cash flows, future growth rates, the need to finance inventory levels and the success of our various products.

To the extent cash flow needs in the future exceed cash flow provided by our operations, as well as our cash and cash equivalents, 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, and any other investing or financing activities. 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 certain product purchases, which reduce the amounts available under our line of credit when issued and totaled $5 million as of October 29, 2022.

As of October 29, 2022, we had $130 million of borrowings outstanding compared to no borrowings outstanding as of October 30, 2021, with the increase primarily due to borrowings to fund the Johnny Was acquisition. As of October 29, 2022, the weighted average interest rate of our borrowings was 4.4%, with interest rates on the individual short-term borrowing tranches ranging from 4.1% to 5.5%. The increase in borrowings, all of which are at variable interest rates, increases our exposure to rising interest rates. As of October 29, 2022, after considering our borrowings, letters of credit and available assets, we had $160 million of unused availability under our U.S. Revolving Credit Agreement.

Our cash, short-term investments and debt levels in future periods will not be comparable to historical amounts, particularly after the completion of the acquisition of Johnny Was in September 2022. Further, we continue to assess, and may possibly make changes to, our capital structure, including borrowings from additional credit facilities, sales of debt or equity securities or the repurchase of additional 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.

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 2022 and as of October 29, 2022, 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 October 29, 2022, we were compliant with all applicable covenants related to the U.S. Revolving Credit Agreement. Refer to Note 5 of our consolidated financial statements included in our Fiscal 2021 Form 10-K for additional information regarding our U.S. Revolving Credit Agreement, including details about affirmative and negative covenants.

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.

#### 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 October 29, 2022.

#### Dividends:

On December 5, 2022, our Board of Directors approved a cash dividend of $0.55 per share payable on January 27, 2023 to shareholders of record as of the close of business on January 13, 2023. 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. For details about limitations on our ability to pay dividends, see the discussion of our U.S. Revolving Credit Agreement above and in Note 5 of our consolidated financial statements contained in our Fiscal 2021 Form 10-K.

#### Share Repurchases:

Refer to Note 6 in our unaudited condensed consolidated financial statements and Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds included in this report for additional information about our share repurchases in Fiscal 2022. As of the date of filing this Form 10-Q, there were no amounts remaining under the open market repurchase program with $50 million remaining under the Board of Directors’ authorization.

#### Capital Expenditures:

Our anticipated capital expenditures for Fiscal 2022, including the $32 million incurred in the First Nine Months of Fiscal 2022, are expected to be approximately $50 million. Our ongoing capital expenditures primarily consist of costs associated with investments in information technology initiatives, including e-commerce capabilities; direct to consumer operations, including opening, relocating and remodeling locations; and facilities enhancements for distribution centers and offices. Our capital expenditure amounts in future years will fluctuate from the amounts incurred in Fiscal 2022 and prior years depending on the investments we believe appropriate for that year to support future expansion of our businesses.

#### Other Liquidity Items:

Our contractual obligations as of October 29, 2022 except for the increased operating lease commitments and increased debt outstanding, both as discussed above, have not changed materially from the contractual obligations outstanding at January 29, 2022, as disclosed in our Fiscal 2021 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 2021 Form 10-K. There have not been any significant changes to our critical accounting policies and estimates during the First Nine Months of Fiscal 2022. A detailed summary of significant accounting policies is included in Note 1 to our consolidated financial statements contained in our Fiscal 2021 Form 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. 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 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 listed in the previous sentence, the COVID-19 pandemic’s more significant negative impact on the First Quarter of Fiscal 2021 than later quarters of Fiscal 2021 and the September 2022 acquisition of Johnny Was, we do not believe that net sales or operating income by quarter in either Fiscal 2021 or Fiscal 2022 are necessarily indicative of the expected proportion of amounts by quarter for future periods.

## Market risk

As filed, 420 characters.

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 Fiscal 2021 Form 10-K. There have not been any material changes in our exposure to these risks during the First Nine Months of Fiscal 2022 other than our increased exposure to interest rates resulting from our increased borrowings.

## Controls and procedures

As filed, 1,509 characters.

### 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 were no changes in our internal controls over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act during the Third Quarter of Fiscal 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On September 19, 2022, we completed the acquisition of Johnny Was. We are in the process of integrating the Johnny Was business processes, information technology systems and other components into our operations and internal controls over financial reporting, and pursuant to the SEC’s guidance that an assessment of a recently acquired business may be omitted from the scope of the assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal controls over financial reporting as of the end of Fiscal 2022 will exclude Johnny Was.

## Risk factors

As filed, 7,165 characters.

Our business is subject to numerous risks. We operate in a competitive and rapidly changing business environment. Investors should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Fiscal 2021 Form 10-K, which could materially affect our business, financial condition or operating results.

Johnny Was, which we acquired during the Third Quarter of Fiscal 2022, is an affordable luxury, artisan-inspired bohemian apparel, accessories and home goods brand that is exposed to similar industry, macroeconomic, operational, cybersecurity and information technology, sourcing, regulatory and other general risks as our other businesses. However, as a result of our acquisition of Johnny Was, there may be heightened or additional risks to our business, financial condition and results of operations relative to those risk factors identified in our Fiscal 2021 Form 10-K that investors should consider in particular, as further described below:

***Integration is a complex process that may be disruptive to our operations and/or impair our ability to recognize the anticipated benefits of the Johnny Was acquisition.*** Integrating Johnny Was into our existing operations will be a complex, time-consuming and expensive process and may create challenges and adverse consequences for us. For example, efforts to integrate support functions, staffing and vendors may be ineffective; we may experience employee turnover, including key management and creative personnel within both Johnny Was and our existing businesses as a result of the transaction and integration process; we may be unable to establish and maintain acceptable standards, controls, procedures and policies consistent with our existing operations, including in key areas such as cybersecurity, digital marketing, compliance and accounting; relationships with customers of Johnny Was and/or our existing businesses may be impaired; and the integration process may divert the attention of our management team from other areas of our business. If we are not able to successfully integrate the Johnny Was business into our operations in a timely and effective manner, the anticipated benefits of the acquisition may not be realized fully or at all, or may take longer to realize than expected.

***The significant indebtedness we incurred in connection with the Johnny Was acquisition could adversely affect us.*** The purchase price for the acquisition of Johnny Was totaled $270 million in cash, subject to adjustment based on net working capital as of the closing date of the acquisition, and we utilized our U.S. Revolving Credit Agreement to finance a significant portion of the purchase price. As of October 29, 2022, we had $130 million of outstanding debt under the U.S. Revolving Credit Agreement. The indebtedness will increase our interest expense and exposure to rising interest rates and could, among other things, reduce our flexibility to respond to changing business and economic conditions, to fund working capital, capital expenditures or other acquisitions or to service general corporate purposes. Furthermore, the indebtedness under the U.S. Revolving Credit Agreement bears interest at variable interest rates, and if interest rates increase, together with the current indebtedness, we will be subject to higher debt service requirements, which could adversely affect our cash flows, business and operations.

***Johnny Was’ sourcing concentration in China exposes us to heightened risks associated with trade regulation.*** In Fiscal 2021, 38% of our products were sourced from China. During the 12 months ended October 29, 2022, Johnny Was sourced more than 90% of its products from a limited number of suppliers in China. As a result of our Johnny Was acquisition, we have heightened concentration risks relating to any potential U.S. trade policies or tariffs regarding China, U.S. Customs and Border Protection actions relating to goods imported from China or other factors such as consumer perception of environmental or social compliance within China.

***Johnny Was’ geographic concentration heightens our exposure to certain regional risks.*** As of October 29, 2022, of Johnny Was’ 66 retail stores, 18 were located in California. In addition, Johnny Was wholesale sales have geographic concentration in the Sun Belt, including in resort destinations, where our Tommy Bahama, Lilly Pulitzer and Southern Tide businesses already have heightened concentrations. As a result of our Johnny Was acquisition, we have heightened exposure to factors that impact these regions, including general economic conditions, weather patterns, natural disasters, public health crises, changing demographics and other factors.

***We recorded a significant amount of goodwill and intangible assets in connection with the Johnny Was acquisition, which could result in impairment charges that adversely impact our financial results.*** Our preliminary allocation of the purchase price for the Johnny Was acquisition, which will be revised during the one year allocation period, as appropriate, resulted in us recording $227 million in goodwill and intangible assets as of October 29, 2022. Goodwill and intangible assets are subject to periodic impairment testing, which requires us to make estimates about future performance and cash flows that are inherently uncertain and can be affected by numerous factors, including changes in economic conditions, income tax rates, interest rates, our results of operations and competitive conditions in the industry. It is possible that we could have an impairment charge for intangible assets or goodwill associated with Johnny Was in future periods if, among other things, economic conditions decline, our strategies for Johnny Was change, the results of operations of Johnny Was are less than anticipated at the time of acquisition, enterprise values and market multiples of comparable businesses decline or interest rates increase. A future impairment charge for intangible assets or goodwill could be material and adversely impact our consolidated financial statements or results of operations.

***Johnny Was’ portfolio of retail stores increases our long-term lease commitments.*** As of October 29, 2022, Johnny Was operated 66 of the total 290 brick-and-mortar locations within our enterprise. Many of the Johnny Was retail stores are located in centers in which one of our other brands also operates a retail store and/or restaurant. In connection with the Johnny Was acquisition, we assumed more than $50 million in lease liabilities under Johnny Was’ leases. Any deterioration in consumer sentiment relating to shopping at bricks-and-mortar retail locations, or the financial condition of one or more of the centers in which Johnny Was operates, could negatively impact our financial performance, result in impairment of operating lease assets and/or other long-lived assets or otherwise have a material adverse effect on our results of operations or financial condition.

Additional risks and uncertainties that we currently consider immaterial or not presently known to us may also adversely affect our business.

Filed Dec 8, 2022.
Source: SEC EDGAR, the filing index for accession 0000075288-22-000019. Last ingested by Listed: Nov 6, 2026, 12:42 ET. No prices; not investment advice.