Oxford Industries Inc: Form 10-Q for the period ended Nov 1, 2025

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 2024 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, Duck Head and Jack Rogers lifestyle brands.

Our business strategy is to drive excellence across a portfolio of lifestyle brands that create sustained, profitable growth. We consider lifestyle brands to be those brands that have a clearly defined and targeted point of view inspired by an appealing lifestyle or attitude. Furthermore, we believe lifestyle brands that create an emotional connection can command greater loyalty and higher price points and create licensing opportunities. We believe the attraction of a lifestyle brand depends on creating compelling product, effectively communicating the respective lifestyle brand message and distributing products to consumers where and when they want them. We believe the principal competitive factors in the apparel industry are the reputation, value, and image of brand names; design of differentiated, innovative or otherwise compelling product; consumer preference; price; quality; marketing; product fulfillment capabilities; and customer service. Our ability to compete successfully in the apparel industry is dependent on our proficiency in foreseeing changes and trends in fashion and consumer preference and presenting appealing products for consumers. Our design-led, commercially informed lifestyle brand operations strive to provide exciting, differentiated fashion products each season as well as certain core products that consumers expect from us.

During Fiscal 2024, 81% of our consolidated net sales were through our direct to consumer channels of distribution, which consist of our brand specific full-price retail stores, e-commerce websites and outlets, as well as our Tommy Bahama food & beverage operations. The remaining 19% of our net sales was generated through our wholesale distribution channels, which complement our direct to consumer operations and provide access to a larger base of consumers. Our wholesale operations consist of sales of products bearing the trademarks of our lifestyle brands to various specialty stores, better department stores, Signature Stores, multi-branded e-commerce retailers and other retailers.

For additional information about our business and our operating segments, see Part I, Item 1. Business of our Fiscal 2024 Form 10-K. Important factors relating to certain risks which could impact our business are described in Part I. Item 1A. Risk Factors of our Fiscal 2024 Form 10-K, as updated by Part II, Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the First Quarter of Fiscal 2025.

Industry Overview

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

This competitive and evolving environment requires that brands and retailers approach their operations, including marketing and advertising, very differently than they have historically and may result in increased operating costs and investments to generate growth or even maintain existing sales levels. The competition and evolution within the industry present significant risks that have been compounded in the current macroenvironment as a result of developments in U.S. trade regulations and geopolitical issues. Other issues, including the availability and cost of credit and elevated interest rates for prolonged periods, have also heightened concern in the current environment. The future geopolitical landscape remains particularly uncertain and any changes in international trade relations, legislation and regulations, including those related to importation and tariffs, taxation, economic and monetary policies, or heightened diplomatic tensions or political and civil unrest, among other potential impacts, could adversely impact the global economy and our operating results. These factors, when combined with heightened promotional activity in our industry, create a complex and challenging retail environment, which has impacted and will continue to impact our businesses and financial results during Fiscal 2025 and has exacerbated some of the inherent challenges to our operations and may continue to do so in the future. There remains significant uncertainty in the macroeconomic environment, and the impact of these and other factors could have a major effect on our businesses.

In addition, compounding the uncertainty and challenges in the current macroeconomic environment, since the start of Fiscal 2025, the U.S. government has announced broad-based, reciprocal tariffs on foreign imports, with the potential for further increases or revisions. The reciprocal tariffs, which in some cases are compounded by “penalty” or “secondary” tariffs on a country-by-country basis, impact substantially all of the countries from which we import products, although at varying rates. These announcements, along with the potential for future changes, has created significant uncertainty in the global trade environment. As previously disclosed, we have been proactively taking steps to mitigate our tariff exposure regardless of the outcome of the U.S. government’s trade decisions. These mitigation efforts include an acceleration in our ongoing efforts to decentralize our product sourcing, coordinating production and shipments into the U.S. during potential periods of delayed application of newly implemented or increased tariffs, negotiations with our vendors and potential price increases. The duration and scope of the tariffs are difficult to predict, along with the extent to which we will be able to offset the impact, and there could be a material negative impact on our results of operations depending on the outcome of the government’s trade decisions.

We believe our lifestyle brands have true competitive advantages, and we continue to invest in our brands’ direct to consumer initiatives and distribution capabilities while further leveraging technology to serve our consumers when and where they want to be served. We continue to believe that our lifestyle brands, with their strong emotional connections with consumers, are well suited to succeed and thrive in the long term while managing the various challenges facing our industry in the current environment. At the same time, we remain cautious in light of extrinsic factors and are proactively working with outside advisors and taking measures to reassess and realign our operating expenses to drive long-term operating margin expansion across our businesses.

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 2025 compared to the First Nine Months of Fiscal 2024:

Net loss per diluted share was $1.39 in the First Nine Months of Fiscal 2025 compared to net earnings per diluted share of $4.74 in the First Nine Months of Fiscal 2024 reflecting (1) noncash impairment charges of $61 million primarily related to Johnny Was recognized in the Third Quarter of Fiscal 2025, (2) increased SG&A, (3) decreased net sales, (4) lower gross margin, (5) increased interest expense and (6) decreased royalties and other operating income. Net earnings and gross margin in the First Nine Months of Fiscal 2025 were also impacted by approximately $18 million of increased cost of goods sold from additional tariffs enacted in Fiscal 2025, net of mitigation efforts.

COMPARABLE SALES

We often disclose comparable sales to provide additional information regarding changes in our results of operations between periods. Our disclosures of comparable sales include net sales from our full-price retail stores and e-commerce sites. We believe that the inclusion of both full-price retail stores and e-commerce sites in the comparable sales disclosures is a more meaningful way of reporting our comparable sales results, given similar inventory planning, allocation and return policies, as well as our cross-channel marketing and other initiatives for the direct to consumer channels. For our comparable sales disclosures, we exclude (1) outlet store sales as those clearance sales are used primarily to liquidate end of season inventory, which may vary significantly depending on the level of end of season inventory on hand and generally occur at lower gross margins than our non-clearance direct to consumer sales, and (2) food & beverage sales, as we do not currently believe that the inclusion of food & beverage sales in our comparable sales disclosures is meaningful in assessing our branded apparel businesses. Historically, we also excluded from our comparable sales disclosures e-commerce flash clearance sales used to liquidate excess inventory; however, given the evolving cadence of marking down retail sales prices associated with our e-commerce operations, we are now including those sales for purposes of our comparable sales disclosures. Comparable sales information reflects net sales, including shipping and handling revenues, if any, associated with product sales.

For purposes of our disclosures, comparable sales consists of sales through e-commerce sites and any physical full-price retail stores that were owned and open as of the beginning of the prior fiscal year and which did not have during the relevant periods, and is not within the current fiscal year scheduled to have, (1) a remodel or other event which would result in a closure for an extended period of time (which we define as a period of two weeks or longer), (2) a greater than 15% change in the size of the retail space due to expansion, reduction or relocation to a new retail space or (3) a relocation to a new space that is significantly different from the prior retail space (including relocations to accommodate an adjacent Tommy Bahama food & beverage concept). For those stores which are excluded based on the preceding sentence, the stores continue to be excluded from comparable sales until the criteria for a new store is met subsequent to the remodel, relocation, or other event. A full-price retail store that is remodeled will generally continue to be included in our comparable sales metrics as a store is not typically closed for longer than a two-week period during a remodel; however, a full-price retail store that is relocated generally will not be included in our comparable sales metrics until that store has been open in the relocated space for the entirety of the prior fiscal year because the size or other characteristics of the store typically change significantly from the prior location. Any stores that were closed during the prior fiscal year or current fiscal year, or which we expect to close or vacate in the current fiscal year, as well as any pop-up or temporary store locations, are excluded from our comparable sales metrics.

Definitions and calculations of comparable sales differ among companies, and therefore comparable sales metrics disclosed by us may not be comparable to the metrics disclosed by other companies.

DIRECT TO CONSUMER LOCATIONS

The table below provides information about the number of direct to consumer locations for our brands as of the dates specified. The figures below include our permanent locations and exclude any pop-up or temporary store locations which have an initial lease term of 12 months or less.

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RESULTS OF OPERATIONS

THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024

The discussion and tables below compare our statements of operations for the Third Quarter of Fiscal 2025 to the Third Quarter of Fiscal 2024. 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 loss 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.

Net Sales

Consolidated net sales were $307 million in the Third Quarter of Fiscal 2025 compared to net sales of $308 million in the Third Quarter of Fiscal 2024. The decrease in net sales included decreased sales in Tommy Bahama and Johnny Was. These decreases were partially offset by increased sales in Lilly Pulitzer and Emerging Brands.

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

• a decrease in wholesale sales of $8 million, or 11%, including (1) a $6 million decrease in Tommy Bahama, (2) a $1 million decrease in Johnny Was and (3) a $1 million decrease in Lilly Pulitzer. These decreases were partially offset by a $1 million increase in Emerging Brands;
• an increase in e-commerce sales of $5 million, or 5%, including (1) a $3 million increase in Lilly Pulitzer and (2) a $3 million increase in Emerging Brands. These increases were partially offset by (1) a $1 million decrease in Tommy Bahama and (2) a $1 million decrease in Johnny Was;
• an increase in full-price retail sales of $1 million, or 1%, including (1) a $3 million increase in Lilly Pulitzer and (2) a $1 million increase in Emerging Brands. These increases were partially offset by a $2 million decrease in Johnny Was. Tommy Bahama full-price retail sales in the Third Quarter of Fiscal 2025 were comparable to the Third Quarter of Fiscal 2024;
• an increase in food & beverage sales of $1 million, or 3%; and
• outlet sales in the Third Quarter of Fiscal 2025 were comparable to the Third Quarter of Fiscal 2024.

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.

Tommy Bahama:

Tommy Bahama net sales decreased $7 million, or 4%, in the Third Quarter of Fiscal 2025, with a decrease in (1) wholesale sales of $6 million, or 19%, and (2) e-commerce sales of $1 million, or 5%. These decreases were partially offset by an increase in food & beverage sales of $1 million, or 3%. Full-price retail sales and outlet sales in the Third Quarter of Fiscal 2025 were comparable to the Third Quarter of Fiscal 2024. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

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Lilly Pulitzer:

Lilly Pulitzer net sales increased $5 million, or 7%, in the Third Quarter of Fiscal 2025, with an increase in (1) retail sales of $3 million, or 12%, and (2) e-commerce sales of $3 million, or 9%. These increases were partially offset by a decrease in wholesale sales of $1 million, or 10%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:

Johnny Was:

Johnny Was net sales decreased $4 million, or 8%, in the Third Quarter of Fiscal 2025, with a decrease in (1) retail sales of $2 million, or 9%, (2) wholesale sales of $1 million, or 14%, and (3) e-commerce sales of $1 million, or 5%. The following table presents the proportion of net sales by distribution channel for Johnny Was for each period presented:

Emerging Brands:

Emerging Brands net sales increased $5 million, or 17%, in the Third Quarter of Fiscal 2025 including increases in all brands. By distribution channel, the increase in net sales in Emerging Brands included increases in (1) e-commerce sales of $3 million, or 29%, (2) retail sales of $1 million, or 20%, and (3) wholesale sales of $1 million, or 6%. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:

Corporate and Other:

Corporate and Other net sales primarily consist of the elimination of any sales between operating segments.

Gross Profit

The tables below present gross profit by reportable segment and Corporate and Other and in total for the Third Quarter of Fiscal 2025 and the Third Quarter of Fiscal 2024, as well as the dollar change and percentage change between those two periods, and gross margin by reportable segment and Corporate and Other and in total. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.

The decreased gross profit of 5% was primarily due to decreased consolidated gross margin. The decreased gross margin was primarily due to (1) approximately $8 million of increased cost of goods sold from additional tariffs implemented in Fiscal 2025, net of mitigation efforts, (2) a change in sales mix with a higher proportion of net sales occurring during promotional and clearance events at Tommy Bahama and Lilly Pulitzer and (3) a $3 million higher LIFO accounting charge in the Third Quarter of Fiscal 2025 compared to the Third Quarter of Fiscal 2024. These decreases were partially offset by (1) lower freight costs to customers due to improved carrier rates from contract renegotiations, (2) a change in sales mix with wholesale sales representing a lower proportion of net sales and (3) decreased freight rates associated with shipping our products from our vendors.

Tommy Bahama:

The lower gross margin for Tommy Bahama was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) a change in sales mix with a higher proportion of net sales occurring during promotional events, including loyalty award cards and the semi-annual Friends & Family event. These decreases were partially offset by (1) decreased freight costs to customers due to improved carrier rates from contract renegotiations, (2) decreased freight rates associated with shipping our products from our vendors and (3) a change in sales mix with wholesale sales representing a lower proportion of net sales.

Lilly Pulitzer:

The lower gross margin for Lilly Pulitzer was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) a change in sales mix with e-commerce flash sales representing a higher proportion of net sales. These decreases were partially offset by (1) less significant markdowns during e-commerce flash sales, (2) decreased freight costs to customers due to improved carrier rates from contract renegotiations, (3) decreased freight rates associated with shipping our products from our vendors and (4) a change in sales mix with wholesale sales representing a lower proportion of net sales.

Johnny Was:

The lower gross margin for Johnny Was was primarily due to increased cost of goods sold from additional tariffs implemented in Fiscal 2025. This decrease was partially offset by (1) decreased freight costs to customers due to improved carrier rates from contract renegotiations and (2) a change in sales mix with wholesale sales representing a lower proportion of net sales.

Emerging Brands:

The lower gross margin for Emerging Brands was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) higher markdowns during promotional and clearance events. These decreases were partially offset by (1) decreased freight costs to customers due to improved carrier rates from contract renegotiations and (2) a change in sales mix with e-commerce sales representing a higher proportion of net sales.

Corporate and Other:

The gross profit in Corporate and Other primarily reflects the impact of LIFO accounting adjustments that resulted in a $3 million higher charge in the Third Quarter of Fiscal 2025 than the Third Quarter of Fiscal 2024. The LIFO accounting impact in Corporate and Other in each period includes the net impact of (1) a charge in Corporate and Other when inventory that had been marked down in an operating segment in a prior period was ultimately sold, (2) a credit in Corporate and Other when inventory had been marked down in an operating segment in the current period, but had not been sold as of period end and (3) the change in the LIFO reserve, if any.

SG&A

SG&A was $213 million in the Third Quarter of Fiscal 2025 compared to $205 million in the Third Quarter of Fiscal 2024, with approximately $5 million, or 68%, of the expenses that increased during the Third Quarter of Fiscal 2025 due to increases in employment costs, occupancy costs and depreciation expense attributable to the increase in brick and mortar retail locations. The 4% increase in total SG&A in the Third Quarter of Fiscal 2025 included the following, which, where applicable, includes the SG&A of the new brick and mortar locations:

• $5 million increase in employment costs driven primarily by new brick and mortar retail locations and increased incentive compensation;
• $3 million increase in consulting and professional services related costs;
• $2 million increase in software subscription and consulting related costs;
• $2 million of costs associated with the Third Quarter of Fiscal 2025 organizational realignment initiatives at Johnny Was, including severance costs, consulting fees and store closure related costs; and
• $1 million increase in occupancy costs driven primarily by new brick and mortar retail locations

These increases were partially offset by:

• $4 million decrease in advertising related costs;
• $1 million decrease in amortization of intangible assets; and
• $1 million decrease from the absence of Johnny Was Distribution Center relocation costs incurred in the Third Quarter of Fiscal 2024.

Impairment of goodwill and intangible assets

As a result of triggering events in the Third Quarter of Fiscal 2025, in connection with the preparation of our unaudited condensed consolidated financial statements, we performed interim impairment assessments resulting in noncash impairment charges of $61 million, including $57 million related to Johnny Was intangible assets, which is included in our Johnny Was reportable segment, and $4 million related to Jack Rogers intangible assets and goodwill, which is included in our Emerging Brands reportable segment. Refer to “Basis of Presentation” in Note 1 in the unaudited condensed consolidated financial statements included in this report for additional disclosure regarding the triggering events that led to the interim impairment assessments.

For both Johnny Was and Jack Rogers, the impairment charges reflect the recent declines in net sales and operating results, partially due to U.S. import tariffs implemented in Fiscal 2025, performance below forecasted expectations and negative revisions to projected results. Refer to "Interim Impairment Testing" in Note 7 in the unaudited condensed consolidated financial statements included in this report for additional disclosure regarding the impairment charges recognized in Third Quarter of Fiscal 2025.

Royalties and other operating income

Royalties and other operating income typically consists primarily of income received from third parties from the licensing of our brands. The decreased royalties and other operating income in the Third Quarter of Fiscal 2025 was primarily due to decreased royalty income in Tommy Bahama reflecting the lower sales of our licensing partners.

Operating income (loss)

Operating loss was $85 million in the Third Quarter of Fiscal 2025 compared to $6 million in the Third Quarter of Fiscal 2024. The increased operating loss included lower operating results in all reportable segments and Corporate and Other. Changes in operating results by reportable segment and Corporate and Other are discussed below.

Tommy Bahama:

The lower operating results for Tommy Bahama were due to (1) decreased net sales, (2) increased SG&A and (3) lower gross margin. The increased SG&A was primarily due to (1) $3 million of higher SG&A associated with new retail store and Marlin Bar locations with retail and food & beverage operations, including related employment costs, occupancy costs, administrative expenses and depreciation expense and (2) a $1 million increase in software subscription and consulting costs. These increases were partially offset by $1 million of lower advertising costs.

Lilly Pulitzer:

The decreased operating income for Lilly Pulitzer was due to (1) increased SG&A and (2) lower gross margin. These decreases were partially offset by increased net sales. The increased SG&A was primarily due to (1) $1 million of increased employment costs primarily driven by increased incentive compensation and (2) $1 million of increased variable and distribution costs primarily driven by increased net sales.

Johnny Was:

The lower operating results for Johnny Was were primarily due to (1) the $57 million impairment charge for intangible assets in the Third Quarter of Fiscal 2025, (2) decreased net sales and (3) lower gross margin. These decreases were partially offset by decreased SG&A. The decreased SG&A was primarily due to (1) $3 million of decreased advertising costs, (2) $1 million of decreased amortization of intangible assets, (3) the absence of $1 million in Johnny Was Distribution Center costs incurred in the Third Quarter of Fiscal 2024 and (4) $1 million of decreased occupancy costs associated with the closure of retail store locations. These decreases were partially offset by $2 million of costs associated with Third Quarter of Fiscal 2025 organizational realignment initiatives.

Emerging Brands:

The lower operating results for Emerging Brands were primarily due to (1) the $4 million impairment charge for goodwill and intangible assets associated with Jack Rogers in the Third Quarter of Fiscal 2025, (2) increased SG&A and (3) lower gross margin. These decreases were partially offset by increased net sales. The increased SG&A was primarily due to new retail store operations, including related employment costs, occupancy costs, administrative expenses and depreciation expense.

Corporate and Other:

The lower operating results in Corporate and Other were primarily due to (1) increased SG&A and (2) a higher LIFO accounting charge. The increased SG&A was primarily due to (1) $1 million of increased professional and consulting costs and (2) $1 million of increased costs associated with the project to build a new distribution center in Lyons, Georgia.

Interest expense, net

The increased interest expense in the Third Quarter of Fiscal 2025 was primarily due to a higher average outstanding debt balance during the Third Quarter of Fiscal 2025 than the Third Quarter of Fiscal 2024.

Income tax

Our effective tax rate will vary from period to period from a typical annual effective tax rate of approximately 25% based on various factors including, but not limited to, the geographic mix of earnings, enacted tax legislation, state and local taxes, tax audit findings and settlements, and the interaction of various global tax strategies. Due to lower earnings during the third quarter as compared to our other fiscal quarters, certain discrete or other items recognized in the third quarter typically have a more pronounced impact and result in the effective tax rate of the third quarter not being indicative of the effective tax rate for the full fiscal year. Non-cash impairment charges further reduced earnings in the Third Quarter of Fiscal 2025.

For both the Third Quarter of Fiscal 2025 and Third Quarter of Fiscal 2024, our effective tax rate of 26.6% and 42.5%, respectively, included the impact of discrete, favorable U.S. federal return-to-provision adjustments primarily related to an increase in the research and development tax credit partially offset by an increase to the uncertain tax position related to the research and development tax credit.

Net earnings

Net loss per diluted share was $4.28 in the Third Quarter of Fiscal 2025 compared to $0.25 in the Third Quarter of Fiscal 2024 reflecting (1) noncash impairment charges of $61 million primarily related to Johnny Was recognized in the Third Quarter of Fiscal 2025, (2) lower gross margin, (3) increased SG&A, (4) increased interest expense, (5) decreased net sales and (6) decreased royalties and other operating income. Net earnings and gross margin in the Third Quarter of Fiscal 2025 were impacted by approximately $8 million of increased cost of goods sold from additional tariffs enacted in Fiscal 2025, net of mitigation efforts.

RESULTS OF OPERATIONS

FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024

The discussion and tables below compare our statements of operations for the First Nine Months of Fiscal 2025 to the First Nine Months of Fiscal 2024. 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 (loss) 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.

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Net Sales

Consolidated net sales were $1,103 million in the First Nine Months of Fiscal 2025 compared to net sales of $1,126 million in the First Nine Months of Fiscal 2024. The decrease in net sales included decreased sales in Tommy Bahama and Johnny Was. These decreases were partially offset by increased sales in Lilly Pulitzer and Emerging Brands.

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

• a decrease in full-price retail sales of $10 million, or 2%, including (1) a $12 million decrease in Tommy Bahama and (2) a $7 million decrease in Johnny Was. These decreases were partially offset by (1) a $5 million increase in Emerging Brands and (2) a $4 million increase in Lilly Pulitzer;
• a decrease in wholesale sales of $7 million, or 3%, including (1) a $9 million decrease in Tommy Bahama and (2) a $2 million decrease in Johnny Was. These decreases were partially offset by (1) a $2 million increase in Lilly Pulitzer and (2) a $1 million increase in Emerging Brands;
• a decrease in e-commerce sales of $5 million, or 1%, including (1) a $12 million decrease in Tommy Bahama and (2) a $7 million decrease in Johnny Was. These decreases were partially offset by (1) an $8 million increase in Lilly Pulitzer and (2) a $6 million increase in Emerging Brands;
• a decrease in outlet sales of $1 million, or 1%, reflecting a $1 million decrease in Johnny Was; and
• food & beverage sales in the First Nine Months of Fiscal 2025 were comparable to the First Nine Months of Fiscal 2024.

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.

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Tommy Bahama:

Tommy Bahama net sales decreased $33 million, or 5%, in the First Nine Months of Fiscal 2025, with a decrease in (1) e-commerce sales of $12 million, or 8%, (2) full-price retail sales of $12 million, or 5%, and (3) wholesale sales of $9 million, or 8%. Food & beverage sales and outlet sales in the First Nine Months of Fiscal 2025 were comparable to the First Nine Months of Fiscal 2024. The following table presents the proportion of net sales by distribution channel for Tommy Bahama for each period presented:

Lilly Pulitzer:

Lilly Pulitzer net sales increased $14 million, or 6%, in the First Nine Months of Fiscal 2025, with an increase in each channel of distribution. The increase in net sales in Lilly Pulitzer included increases in (1) e-commerce sales of $8 million, or 7%, (2) retail sales of $4 million, or 5%, and (3) wholesale sales of $2 million, or 6%. The following table presents the proportion of net sales by distribution channel for Lilly Pulitzer for each period presented:

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Johnny Was:

Johnny Was net sales decreased $16 million, or 11%, in the First Nine Months of Fiscal 2025, with a decrease in each channel of distribution. The decrease in net sales in Johnny Was included decreases in (1) full-price retail sales of $7 million, or 13%, (2) e-commerce sales of $7 million, or 11%, (3) wholesale sales of $2 million, or 8%, and (4) outlet sales of $1 million, or 23%. The following table presents the proportion of net sales by distribution channel for Johnny Was for each period presented:

Emerging Brands:

Emerging Brands net sales increased $12 million, or 12% in the First Nine Months of Fiscal 2025. Increases included increased sales in TBBC, Southern Tide and Duck Head partially offset by decreased sales in Jack Rogers. The increase in net sales in Emerging Brands by distribution channel included increases in all channels of distribution including in (1) e-commerce sales of $6 million, or 15%, (2) retail sales of $5 million, or 31%, and (3) wholesale sales of $1 million, or 3%. The following table presents the proportion of net sales by distribution channel for Emerging Brands for each period presented:

Corporate and Other:

Corporate and Other net sales primarily consist of the elimination of any sales between operating segments.

Gross Profit

The tables below present gross profit by reportable segment and Corporate and Other and in total for the First Nine Months of Fiscal 2025 and the First Nine Months of Fiscal 2024, as well as the dollar change and percentage change between those two periods, and gross margin by reportable segment and Corporate and Other and in total. Our gross profit and gross margin, which is calculated as gross profit divided by net sales, may not be directly comparable to those of our competitors, as the statement of operations classification of certain expenses may vary by company.

The decreased gross profit of 5% was primarily due to (1) the 2% decrease in net sales and (2) lower consolidated gross margin. The decreased gross margin was primarily due to (1) approximately $18 million of increased cost of goods sold from additional tariffs enacted in Fiscal 2025, net of mitigation efforts, (2) a change in sales mix with a higher proportion of net sales occurring during promotional and clearance events at Tommy Bahama and Lilly Pulitzer and (3) a $1 million higher LIFO accounting charge in the First Nine Months of Fiscal 2025 compared to the First Nine Months of Fiscal 2024. These decreases were partially offset by (1) decreased freight rates associated with shipping our products from our vendors and (2) lower markdowns on net sales to off-price wholesale customers.

Tommy Bahama:

The lower gross margin for Tommy Bahama was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) a change in sales mix with a higher proportion of net sales occurring during promotional events, including loyalty award cards, Flip Side, end of season clearance events and semi-annual Friends & Family events. These decreases were partially offset by decreased freight rates associated with shipping our products from our vendors.

Lilly Pulitzer:

The lower gross margin for Lilly Pulitzer was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) a change in sales mix with a higher proportion of net sales occurring during promotional events. These decreases were partially offset by (1) decreased freight rates associated with shipping our products from our vendors and (2) lower markdowns on net sales to off-price wholesale customers.

Johnny Was:

The lower gross margin for Johnny Was was primarily due to increased cost of goods sold from additional tariffs implemented in Fiscal 2025. This decrease was partially offset by (1) a change in sales mix with full-price retail and e-commerce sales representing a higher proportion of net sales resulting from fewer sales occurring during promotional and clearance events and (2) lower markdowns on net sales to off-price wholesale customers.

Emerging Brands:

The lower gross margin for Emerging Brands was primarily due to (1) increased cost of goods sold from additional tariffs implemented in Fiscal 2025 and (2) higher markdowns during promotional and clearance events. These decreases were partially offset by lower markdowns on net sales to off-price wholesale customers.

Corporate and Other:

The gross profit in Corporate and Other primarily reflects the impact of LIFO accounting adjustments that resulted in a $1 million higher LIFO accounting charge in the First Nine Months of Fiscal 2025 compared to the First Nine Months of Fiscal 2024. The LIFO accounting impact in Corporate and Other in each period includes the net impact of (1) a charge in Corporate and Other when inventory that had been marked down in an operating segment in a prior period was ultimately sold, (2) a credit in Corporate and Other when inventory had been marked down in an operating segment in the current period, but had not been sold as of period end and (3) the change in the LIFO reserve, if any.

SG&A

SG&A was $661 million in the First Nine Months of Fiscal 2025 compared to $635 million in the First Nine Months of Fiscal 2024, with approximately $15 million, or 54%, of the expenses that increased during the First Nine Months of Fiscal 2025 due to increases in employment costs, occupancy costs and depreciation expense attributable to the increase in brick and mortar retail locations. The 4% increase in total SG&A in the First Nine Months of Fiscal 2025 included the following, which, where applicable, includes the SG&A of the new brick and mortar locations:

• $13 million increase in employment costs driven primarily by increased incentive compensation and new brick and mortar retail locations;
• $7 million increase in software subscription and consulting related costs;
• $6 million increase in occupancy costs driven primarily by new brick and mortar retail locations;
• $5 million increase in consulting and professional services related costs;
• $2 million of costs associated with organizational realignment initiatives at Johnny Was including severance costs, consulting fees and store closure related costs;
• $2 million of increased costs associated with the project to build a new distribution center in Lyons, Georgia; and
• $1 million increase in depreciation expense.

These increases were partially offset by:

• $6 million decrease in advertising costs;
• $2 million decrease in amortization of intangible assets; and
• $2 million decrease from the absence of Johnny Was Distribution Center relocation expenses incurred in the First Nine Months of Fiscal 2024.

Impairment of goodwill and intangible assets

As a result of triggering events in the Third Quarter of Fiscal 2025, in connection with the preparation of our unaudited condensed consolidated financial statements, we performed interim impairment assessments resulting in noncash impairment charges of $61 million, including $57 million related to Johnny Was intangible assets, which is included in our Johnny Was reportable segment, and $4 million related to Jack Rogers intangible assets and goodwill, which is included in our Emerging Brands reportable segment. Refer to “Basis of Presentation” in Note 1 in the unaudited condensed consolidated financial statements included in this report for additional disclosure regarding the triggering events that led to the interim impairment assessments.

For both Johnny Was and Jack Rogers, the impairment charges reflect the recent declines in net sales and operating results, partially due to U.S. import tariffs implemented in Fiscal 2025, performance below forecasted expectations and negative revisions to projected results. Refer to "Interim Impairment Testing" in Note 7 in the unaudited condensed consolidated financial statements included in this report for additional disclosure regarding the impairment charges recognized in Third Quarter of Fiscal 2025.

Royalties and other operating income

Royalties and other operating income typically consists primarily of income received from third parties from the licensing of our brands. The decreased royalties and other operating income in the First Nine Months of Fiscal 2025 was primarily due to decreased royalty income in Tommy Bahama reflecting the lower sales of our licensing partners.

Operating income (loss)

39

Operating loss was $23 million in the First Nine Months of Fiscal 2025 compared to operating income of $99 million in the First Nine Months of Fiscal 2024. The decreased operating results included lower operating results in all reportable segments and Corporate and Other. Changes in operating income (loss) by reportable segment and Corporate and Other are discussed below.

Tommy Bahama:

The decreased operating income for Tommy Bahama was due to (1) decreased net sales, (2) increased SG&A and (3) lower gross margin. The increased SG&A was primarily due to (1) $8 million of higher SG&A associated with new retail store and Marlin Bar locations with retail and food & beverage operations, including related employment costs, occupancy costs, administrative expenses and depreciation expense and (2) a $2 million increase in software subscription and consulting costs. These increases were partially offset by (1) $1 million of decreased variable and distribution costs primarily driven by lower sales and (2) $1 million of decreased advertising costs.

Lilly Pulitzer:

The decreased operating income for Lilly Pulitzer was primarily due to (1) increased SG&A and (2) lower gross margin. These decreases were partially offset by increased net sales. The increased SG&A was primarily due to (1) $4 million of increased software subscription and consulting expenses, (2) $2 million of increased variable and distribution costs primarily driven by higher sales and (3) $1 million of higher SG&A associated with new retail store locations, including related employment costs, occupancy costs, administrative expenses and depreciation expense. These increases were partially offset by $2 million of decreased advertising costs.

Johnny Was:

The decreased operating results for Johnny Was was primarily due to (1) the $57 million impairment charge for intangible assets in the Third Quarter of Fiscal 2025, (2) decreased net sales and (3) lower gross margin. These decreases were partially offset by decreased SG&A. The decreased SG&A was primarily due to (1) $4 million of decreased advertising costs, (2) $2 million of decreased amortization of intangible assets and (3) the absence of $2 million in Johnny Was Distribution Center costs incurred in the First Nine Months of Fiscal 2024. These decreases were partially offset by $2 million of costs associated with organizational realignment initiatives.

Emerging Brands:

The decreased operating income for Emerging Brands was primarily due to (1) the $4 million impairment charge for goodwill and intangible assets associated with Jack Rogers in the Third Quarter of Fiscal 2025, (2) increased SG&A and (3) lower gross margin. These decreases were partially offset by increased net sales. The increased SG&A was primarily due to new retail store operations, including related employment costs, occupancy costs, administrative expenses and depreciation expense.

Corporate and Other:

41

The lower operating results in Corporate and Other were primarily a result of (1) increased SG&A and (2) a higher LIFO accounting charge. The increased SG&A was primarily due to (1) $5 million of increased employment costs primarily driven by increased incentive compensation, (2) $3 million of increased professional and consulting costs and (3) $2 million of increased costs associated with the project to build a new distribution center in Lyons, Georgia.

Interest expense, net

The increased interest expense in the First Nine Months of Fiscal 2025 was primarily due to a higher average outstanding debt balance during the First Nine Months of Fiscal 2025 than the First Nine Months of Fiscal 2024.

Income tax

Our effective tax rate will vary from period to period from a typical annual effective tax rate of approximately 25% based on various factors including, but not limited to, the geographic mix of earnings, enacted tax legislation, state and local taxes, tax audit findings and settlements, and the interaction of various global tax strategies.

For the First Nine Months of Fiscal 2025, our effective tax rate was 26.7%, which primarily reflects (1) the unfavorable net discrete tax expense for shortfalls in stock-based compensation vesting during the First Nine Months of Fiscal 2025 and (2) a net increase in uncertain tax positions. These unfavorable factors were partially offset by (1) favorable U.S. federal return-to-provision adjustments primarily related to an increase in the research and development tax credit, (2) the benefit derived from a reduction in income tax expense as a result of the receipt of interest from a U.S. federal income tax receivable and (3) the remeasurement of deferred tax balances due to changes in state tax rates.

For the First Nine Months of Fiscal 2024, our effective income tax rate was 22.7%, which primarily reflects (1) the favorable net discrete tax benefits for stock-based compensation vesting during the First Nine Months of Fiscal 2024, (2) increases in the research and development tax credit and (3) adjustments to the U.S. taxation on foreign earnings resulting in a reduction in the effective tax rate.

Net earnings

Net loss per diluted share was $1.39 in the First Nine Months of Fiscal 2025 compared to net earnings per diluted share of $4.74 in the First Nine Months of Fiscal 2024 reflecting (1) noncash impairment charges of $61 million primarily related to Johnny Was recognized in the Third Quarter of Fiscal 2025, (2) increased SG&A, (3) decreased net sales, (4) lower gross margin, (5) increased interest expense and (6) decreased royalties and other operating income. Net earnings and gross margin in the First Nine Months of Fiscal 2025 were impacted by approximately $18 million of increased cost of goods sold from additional tariffs enacted in Fiscal 2025, net of mitigation efforts.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Our primary source of revenue and cash flow is through our design, sourcing, marketing and distribution of branded apparel products bearing the trademarks of our Tommy Bahama, Lilly Pulitzer, Johnny Was, Southern Tide, TBBC, Duck Head and Jack Rogers lifestyle brands. We primarily distribute our products to our customers via direct to consumer channels of distribution, but we also distribute our products via wholesale channels of distribution.

Our primary uses of cash flow include the purchase of our branded apparel products from third party suppliers located outside of the United States, as well as operating expenses, including employee compensation and benefits, operating lease commitments and other occupancy-related costs, marketing and advertising costs, information technology costs, variable expenses, distribution costs, other general and administrative expenses and the periodic payment of interest. Additionally, we use our cash to fund capital expenditures and other investing activities, dividends, share repurchases and repayment of indebtedness, if any. In the ordinary course of business, we maintain certain levels of inventory, extend credit to our wholesale customers and pay our operating expenses. Thus, we require a certain amount of ongoing working capital to operate our business. Our need for working capital is typically seasonal with the greatest working capital requirements to support our larger spring, summer and holiday direct to consumer seasons. Our capital needs depend on many factors including the results of our operations and cash flows, anticipated growth rates, the need to finance inventory levels and the success of our various products.

Working Capital

($ in thousands)

Our working capital ratio is calculated by dividing total current assets by total current liabilities.

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 November 1, 2025 as compared to November 2, 2024.

Current Assets:

Cash and cash equivalents were $8 million as of November 1, 2025, compared to $7 million as of November 2, 2024. We aim to maintain a cash balance in our operations on an ongoing basis that ranges from $5 million to $10 million with any excess cash generally used to repay amounts outstanding under our U.S. Revolving Credit Agreement.

The decreased receivables, net as of November 1, 2025, was primarily due to decreased trade receivables resulting from lower wholesale sales.

Inventories, net, included an $88 million and $84 million LIFO reserve as of November 1, 2025, and November 2, 2024, respectively. Inventories increased slightly primarily as a result of $4 million of additional costs capitalized into inventory related to the U.S. tariffs implemented in Fiscal 2025.

The decreased income tax receivable as of November 1, 2025 was primarily due to the receipt of $19 million in income tax receivables in the Fourth Quarter of Fiscal 2024 partially offset by an increase in income tax receivables recognized in the First Nine Months of Fiscal 2025.

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

Non-current Assets:

Property and equipment, net as of November 1, 2025, increased as capital expenditures primarily relating to the project to build a new distribution center in Lyons, Georgia and the opening of new Tommy Bahama Marlin Bars and retail stores across our portfolio exceeded depreciation during the 12 months ended November 1, 2025.

The decrease in intangible assets, net as of November 1, 2025, was primarily due to the $59 million of intangible asset impairment charges during the Third Quarter of Fiscal 2025, as discussed in Note 7 of our unaudited condensed consolidated financial statements included in this report. Intangible assets, net as of November 1, 2025, further decreased due to the amortization of intangible assets acquired in the acquisition of Johnny Was partially offset by the purchase of intellectual property rights by Lilly Pulitzer during the Fourth Quarter of Fiscal 2024.

The decrease in goodwill as of November 1, 2025, was primarily due to the $2 million goodwill impairment charge during the Third Quarter of Fiscal 2025, as discussed in Note 7 of our unaudited condensed consolidated financial statements included in this report.

Operating lease assets as of November 1, 2025, increased primarily due to the addition of new leased locations, and the extension of existing leased locations, exceeding the recognition of amortization related to existing operating leases and the termination or reduced term of certain operating leases.

The increase in other assets, net as of November 1, 2025, was primarily due to an increase in capitalizable implementation costs associated with cloud computing arrangements.

Deferred income taxes increased as of November 1, 2025, due primarily to the recognition of deferred tax benefits associated with the impairment charges in Johnny Was and Jack Rogers.

Liabilities:

Current liabilities increased as of November 1, 2025, due to (1) increased accrued compensation driven primarily by increased accrued incentive compensation and (2) increased accounts payable driven by the timing of payments. These increases were partially offset by decreased current lease liabilities due to timing associated with our fiscal calendar.

The increase in long-term debt as of November 1, 2025 was the result of (1) lower net earnings, (2) capital expenditures primarily associated with the project to build a new distribution center in Lyons, Georgia, (3) share repurchases, (4) payments of dividends and (5) working capital requirements exceeding cash flow from operations.

The non-current portion of operating lease liabilities increased as of November 1, 2025, due to the addition of new leased locations and extension of existing leased locations exceeding the payments related to existing operating leases and the termination or reduced term of certain operating leases.

Other non-current liabilities increased as of November 1, 2025 as a result of increases in liabilities associated with our deferred compensation plans.

Statement of Cash Flows

The following table sets forth the net cash flows for the First Nine Months of Fiscal 2025 and the First Nine Months of Fiscal 2024 (in thousands):

Changes in cash flows in the First Nine Months of Fiscal 2025 and the First Nine Months of Fiscal 2024 related to operating activities, investing activities and financing activities are discussed below.

Operating Activities:

In the First Nine Months of Fiscal 2025 and the First Nine Months of Fiscal 2024, operating activities provided $70 million and $104 million of cash, respectively. The cash flow from operating activities for each period primarily consisted of net earnings for the relevant period adjusted, as applicable, for non-cash activities including impairment charges, depreciation, amortization of intangible assets, equity-based compensation and other non-cash items as well as the net impact of changes in deferred income taxes and operating assets and liabilities.

In the First Nine Months of Fiscal 2025, the net change in operating assets and liabilities was primarily due to decreases in current liabilities and increases in prepaid expenses, income tax receivables and other current assets that decreased cash flow from operations, partially offset by a decrease in inventories and receivables that increased cash flow from operations. In the First Nine Months of Fiscal 2024, the net change in operating assets and liabilities was primarily due to decreases in current liabilities and increases in receivables, and prepaid expenses and other current assets that decreased cash flow from operations, partially offset by a decrease in inventories that increased cash flow from operations.

Investing Activities:

In the First Nine Months of Fiscal 2025 and the First Nine Months of Fiscal 2024, investing activities used $93 million and $94 million of cash, respectively. On an ongoing basis, our cash flow used in investing activities primarily consists of our capital expenditures, which totaled $93 million and $92 million in the First Nine Months of Fiscal 2025 and the First Nine Months of Fiscal 2024, respectively.

Financing Activities:

In the First Nine Months of Fiscal 2025 and the First Nine Months of Fiscal 2024, financing activities provided $21 million and used $10 million of cash, respectively. In the First Nine Months of Fiscal 2025, we repurchased $57 million of shares of our stock, including $2 million of shares to cover employee tax liabilities related to the vesting of shares, and paid $32 million in dividends. In the First Nine Months of Fiscal 2024, we paid $33 million in dividends and repurchased $6 million of shares to cover employee tax liabilities related to the vesting of shares of our common stock.

If net cash requirements exceed our net cash flows, we may borrow amounts from our U.S. Revolving Credit Agreement consistent with our use of long-term debt to satisfy cash flow needs during the First Nine Months of Fiscal 2025. Alternatively, to the extent we are in a net debt position, if net cash requirements are less than our net cash flows, we may repay amounts outstanding on 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 (1) sufficient cash over both the short and long term to satisfy our ongoing operating cash requirements, (2) funds to complete our multi-year project to build a new distribution center in Lyons, Georgia to enhance the direct to consumer throughput capabilities of our brands, (3) funds to continue to invest in our businesses, including direct to consumer initiatives and information technology projects, (4) additional cash flow to repay debt that may be outstanding and (5) sufficient cash for other strategic initiatives such as acquisitions and share repurchases.

To the extent cash flow needs, for acquisitions or otherwise, in the future exceed cash flow provided by our operations, we will have access, subject to its terms, to our $325 million U.S. Revolving Credit Agreement to provide funding for operating activities, capital expenditures and acquisitions, if any, and any other investing or financing activities. The U.S. Revolving Credit Agreement matures in March 2028.

We issue standby letters of credit under the U.S. Revolving Credit Agreement. Outstanding letters of credit under the U.S. Revolving Credit Agreement reduce the amount of borrowings available to us when issued and, as of November 1, 2025, February 1, 2025, and November 2, 2024, totaled $5 million, $5 million and $5 million, respectively.

As of November 1, 2025, February 1, 2025 and November 2, 2024 we had $140 million, $31 million and $58 million, respectively, of borrowings outstanding and $179 million, $289 million and $262 million, respectively, in unused availability under the U.S. Revolving Credit Agreement.

Our cash, short-term investments and debt levels in future periods may not be comparable to historical amounts as we continue to assess, and possibly make changes to, our capital structure, including borrowings from additional credit facilities, sales of debt or equity securities or the repurchase of shares of our stock in the future. Changes in our capital structure, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Compliance with Covenants

The U.S. Revolving Credit Agreement is subject to a number of affirmative covenants regarding the delivery of financial information, compliance with law, maintenance of property, insurance requirements and conduct of business. Also, the U.S. Revolving Credit Agreement is subject to certain negative covenants or other restrictions including, among other things, limitations on our ability to (1) incur debt, (2) guaranty certain obligations, (3) incur liens, (4) pay dividends to shareholders, (5) repurchase shares of our common stock, (6) make investments, (7) sell assets or stock of subsidiaries,

(8) acquire assets or businesses, (9) merge or consolidate with other companies or (10) prepay, retire, repurchase or redeem debt.

Additionally, the U.S. Revolving Credit Agreement contains a financial covenant that applies only if excess availability under the agreement for three consecutive business days is less than the greater of (1) $23.5 million or (2) 10% of availability. In such case, our fixed charge coverage ratio as defined in the U.S. Revolving Credit Agreement must not be less than 1.0 to 1.0 for the immediately preceding 12 fiscal months for which financial statements have been delivered. This financial covenant continues to apply until we have maintained excess availability under the U.S. Revolving Credit Agreement of more than the greater of (1) $23.5 million or (2) 10% of availability for 30 consecutive days.

We believe that the affirmative covenants, negative covenants, financial covenants and other restrictions under the U.S. Revolving Credit Agreement are customary for those included in similar facilities entered into at the time we amended the U.S. Revolving Credit Agreement. During the First Nine Months of Fiscal 2025 and as of November 1, 2025, no financial covenant testing was required pursuant to the U.S. Revolving Credit Agreement, as the minimum availability threshold was met at all times. As of November 1, 2025, we were compliant with all applicable covenants related to the U.S. Revolving Credit Agreement.

Operating Lease Commitments:

Refer to Note 4 in our unaudited condensed consolidated financial statements included in this report for additional information about our operating lease commitments as of November 1, 2025.

Dividends:

On December 9, 2025, our Board of Directors approved a cash dividend of $0.69 per share payable on January 30, 2026 to shareholders of record as of the close of business on January 16, 2026. Although we have paid dividends each quarter since we became a public company in July 1960, we may discontinue or modify dividend payments at any time if we determine that other uses of our capital, including payment of outstanding debt, funding of acquisitions, funding of capital expenditures or repurchases of outstanding shares, may be in our best interest; if our expectations of future cash flows and future cash needs outweigh the ability to pay a dividend; or if the terms of our credit facility, other debt instruments or applicable law limit our ability to pay dividends. We may borrow to fund dividends or repurchase shares in the short term subject to the terms and conditions of our credit facility, other debt instruments and applicable law. All cash flow from operations will not be paid out as dividends.

Share Repurchases:

As disclosed in our Quarterly Report on Form 10-Q for the Third Quarter of Fiscal 2024, on December 10, 2024, our Board of Directors authorized us to spend up to $100 million to repurchase shares of our stock. This authorization superseded and replaced all previous authorizations to repurchase shares of our stock. During the First Quarter of Fiscal 2025, we repurchased 842,007 shares of our common stock at an average price of $59.38 for $50 million as part of an open market repurchase program (Rule 10b5-1 plan) under the December 10, 2024 authorization.

On March 24, 2025, our Board of Directors authorized us to spend up to $100 million to repurchase shares of our stock. This authorization superseded and replaced all previous authorizations to repurchase shares of our stock and has no automatic expiration. During the Second Quarter of Fiscal 2025, we repurchased 114,477 shares of our common stock at an average price of $40.46 for $5 million in open market repurchases under the March 24, 2025 authorization.

During the Third Quarter of Fiscal 2025, we repurchased no shares of our common stock. During the First Nine Months of Fiscal 2025, we repurchased a total of 956,484 shares in open market repurchases at an average price of $57.12 for $55 million. During the Third Quarter of Fiscal 2024 and First Nine Months of Fiscal 2024, there were no open market repurchases.

As of November 1, 2025, $95 million remained under the Board of Director's authorization.

Capital Expenditures:

Capital expenditures of $93 million for the First Nine Months of Fiscal 2025 increased compared to the $92 million in the First Nine Months of Fiscal 2024. Our capital expenditures in the First Nine Months of Fiscal 2025 related primarily to

(1) the multi-year project to build a new distribution center in Lyons, Georgia to create a modern and more efficient distribution center for our brands and (2) Tommy Bahama Marlin Bar locations and retail store openings across our portfolio.

Other Liquidity Items:

Our contractual obligations as of November 1, 2025 except for the increased debt outstanding, as discussed above, have not changed materially from the contractual obligations outstanding at February 1, 2025, as disclosed in our Fiscal 2024 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 2024 Form 10-K. During the Third Quarter of Fiscal 2025, there have not been any significant changes to our critical accounting policies and estimates, other than the estimates used in our interim impairment testing described in Note 1 and Note 7 in our unaudited condensed consolidated financial statements included in this report. A detailed summary of significant accounting policies is included in Note 1 to our consolidated financial statements contained in our Fiscal 2024 Form 10-K.

SEASONAL ASPECTS OF OUR BUSINESS

Each of our operating segments is impacted by seasonality as the demand by specific product or style, as well as by distribution channel, may vary significantly depending on the time of year. As a result, our quarterly operating results and working capital requirements fluctuate significantly from quarter to quarter. Typically, the demand for products for our larger brands is higher in the spring, summer and holiday seasons and lower in the fall season (the third quarter of our fiscal year). Thus, our third quarter historically has had the lowest net sales and net earnings compared to other quarters. Further, the impact of certain unusual or non-recurring items, economic conditions, our e-commerce flash clearance sales, wholesale product shipments, weather, acquisitions or other factors affecting our operations may vary from one year to the next. Therefore, due to the potential impact of these items, we do not believe that net sales or operating income in the Third Quarter of Fiscal 2025 is indicative of the expected proportion of amounts by quarter for future periods.

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 2024 Form 10-K. There have not been any material changes in our exposure to these risks during the Third Quarter of Fiscal 2025 other than our increased exposure to interest rates resulting from our increased borrowings relative to February 1, 2025.

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 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our business is subject to numerous risks. Investors should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Fiscal 2024 Form 10-K, which could materially affect our business, financial condition or operating results. We operate in a competitive and rapidly changing business environment and additional risks and uncertainties that we currently consider immaterial or are not presently known to us may also adversely affect our business. The risks described in our Fiscal 2024 Form 10-K, as amended and updated in our Quarterly Report on Form 10-Q for the First Quarter of Fiscal 2025, are not the only risks facing our company.