Investopedia: Oxford Reaping The Rewards Of Transformation

Change just for the sake of change is a often a really bad idea, as is changing up a successful business plan. And yet, it looks as though a major shift in the business plan has been just the ticket for Oxford Industries (NYSE:OXM), as the company seems to be reaping better margins and a better valuation as it has shifted away from its traditional private label apparel manufacturing business. 

A Decent Beginning to the Fiscal Year 

Oxford got its fiscal year off to a solid state. Revenue rose 27% on a reported basis and was more or less in line with the average analyst expectation. Revenue growth was fueled by the inclusion of sales from the Lilly Pulitzer business that Oxford acquired roughly six months ago and was therefore not part of year-ago sales. The inclusion of this revenue was responsible for two-thirds of the company's reported revenue growth, though the Tommy Bahama business was up nearly 13%. Unfortunately, the turnaround in the Ben Sherman business line continues to falter and revenue was down a further 13%.

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Investopedia: High Cotton Or Not, Phillips-Van Heusen Worth A Look

There are not too many truly cheap stocks out there, nor a surplus of stories that are completely spot-free. In times like these, investors have to move on to stories where certain concerns are inflated or where undervaluation lies beyond the quick valuation ratios and in the cash flow capabilities of the company. Clothing wholesaler and retailer Phillips-Van Heusen (NYSE:PVH) is one such candidate - a quality company that is not necessarily cheap on first blush, but looks like a quality undervalued opportunity.
 
A Solid End to the Year
PVH's earnings are not necessarily easy to digest - the company made a major acquisition (Tommy Hilfiger) and that makes the year-on-year comparisons a little more difficult. To the company's credit, though, they give investors an unusually-extensive amount of financial detail and it looks like the quarter was solid with or without the acquisition.

As reported, revenue jumped almost 128% to just under $1.4 billion, and beat the average analyst guess. The inclusion of over $700 million in Tommy Hilfiger revenue clearly made a major difference, though the core organic growth rate looks like it came in at more than 12%. In particular, the Calvin Klein business rose over 18%, with licensing revenue (from the likes of Warnaco (Nasdaq:WRNC) and G-III Apparel (Nasdaq:GIII)) up 11%.

Profitability was more of a mixed story. Gross margin did improve almost three points, but that was still less than most analysts expected. Likewise, adjusted operating margin of over 9% was not bad but not great relative to expectations. All in all, then, PVH's outperformance this quarter was fueled by higher sales and lower taxes, offset by some margin challenges.


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Investopedia: Higher Costs Are Climbing Up The Value Chain

How much should investors worry about some of the details of Nike's (NYSE:NKE) guidance? More to the point, if this champion of brand value is seeing costs bite into its margin, that cannot be good news for branded consumer product companies in general. After all, if the lions are having to tighten their belts a bit, it stands to reason that those lower on the food chain might be left starving.

Brand Versus Value 

As long as there have been premium brands, there have been companies willing to undercut those prices with products that may sacrifice a little quality (or sometimes only the cachet) but still offer good value. However, because these white label/private label companies typically have lower margins, it is not so surprising that they are very sensitive to input costs.

In other words, it is largely a given that companies like TreeHouse Foods (NYSE:THS) and Cott (NYSE:COT) are going to see some challenges to their gross margins. These companies produce products that do not carry the same labels or brand loyalty of competing products from Unilever (NYSE:UL), Kraft (NYSE:KFT) and Coca-Cola (NYSE:KO). That means that they cannot charge as much for their products and they can really only raise prices if the market leaders do so first. If they close the gap in price between their products and the brand names too much, they lose their business.

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Investopedia: Can Chico's Be Chic Again?

Women's retailer Chico's (NYSE:CHS) was a great growth stock for almost a decade, profiting off its relatively fashionable offerings for working women and ability to differentiate itself from the likes of Gap (NYSE:GPS), Limited Brands (NYSE:LTD) as well as mall anchors like JCPenny (NYSE:JCP) and Dillards (NYSE:DDS). But then Chico's experienced what almost all retailers experience - merchandising missteps, overexpansion, questionable acquisitions and a customer base that just wants to shop somewhere else for a change. 

The good news for retail investors is that there are certainly second acts in retailing (as well as third, and fourth). The question, though, is whether Chico's has whipped itself into shape in time to take advantage of an improving market. (For related reading see 5 Retail Stocks For 2011.)

An Iffy End to the Year
Chico's did not report especially exciting numbers for the fourth quarter, but the market was expecting worse so it all netted out to a "positive quarter", especially as the company gave encouraging sales growth guidance for fiscal 2011.



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