Oxford Industries, Inc. Business Information, Profile, and History
Atlanta, Georgia 30308
History of Oxford Industries, Inc.
Oxford Industries, Inc., one of America's leading apparel manufacturers, has spent most of its history plotting a course for steady growth by providing affordably priced sportswear to retail chains; it later sought to dramatically increase profits by aggressively acquiring higher-end labels and turning out upscale merchandise.
Oxford Industries started as the "temporary" wartime livelihood of Tommy, Sartain, and Hicks Lanier, three Nashville-bred brothers. They had originally joined forces in 1934 by investing in a venture that produced and sold dictaphones and business forms. Business went well and they were able to expand throughout the southeast until 1941, when the onset of World War II brought the supply of their products' component materials to a standstill. The brothers were casting about for an interim investment when, in 1942, a friend pointed them in the direction of Oxford of Atlanta, a small company that merchandised and sold mens' and boys' shirts and slacks, garnering about $1 million in annual sales. Despite the brothers' lack of experience in the apparel business, the three drew upon their sales skills and quickly set about expanding the company.
In 1943 Oxford bought its first manufacturing facility, the Champion Garment Company, in Rome, Georgia, and the company name was promptly changed to the Oxford Manufacturing Company. The limited supply of retail merchandise during the war, coupled with the ability of the Lanier brothers to procure more than the company's allotted amount of material, helped the company immeasurably; according to Sartain, "there was such a shortage of merchandise in those days there was no need for a designer label to sell good. If pants had two legs and the button fly would work, you could sell them."
As the war drew to a close, demand for clothing grew, and Oxford added manufacturing plants in Vidalia and Monroe, Georgia, and Tupelo, Mississippi. The building in Vidalia had originally been used as a bowling alley; for a time the lanes were used as cutting tables. In 1944 the brothers were able to buy out their partners; the "temporary" investment had taken on a life of its own.
After the war one of Oxford's most popular items was a line of slack-suit sets (consisting of a sportshirt and slacks made from the same material, sometimes with a belt from the same material) made from Army surplus twill that were marketed prepackaged in two colors--blue and tan. Over time retailers began to ask for more of one color or another based on consumer demand, and at this point Hicks Lanier decided to return to the dictaphone business. According to Sartain, Hicks felt that "anything this complex is not for me. I'm going back to the dictating machine, where customers only want one model, one size, and one color."
Oxford came out of the postwar recession with a growth strategy that centered on dramatically increasing manufacturing capability and expanding its product lines while maintaining its focus on sportswear. Oxford sought to use its large-scale production force to supply the national retail chains, foremost among them J.C. Penney. By 1950 it had begun to lay the groundwork by opening a new 40,000-square-foot plant in Vidalia, as well as an office in New York City. Throughout the decade expansion of existing plants and the acquisition of nine others greatly increased production strength. The strategy seemed to pay off. In 1950 sales were $3.5 million; by 1954 they had reached $10 million.
High-volume production methods allowed Oxford to provide both branded and unbranded lines, which by this time included mens' suits and sports jackets and womens' apparel as well. Thus it was able to penetrate the national chains--its merchandise appeared in such stores as J.C. Penney, Montgomery Ward, and National Shirt Shops&mdash well as smaller retailers and mail order companies.
The popularity of the slack-suit set that had fueled the company's early growth began to fade in the 1950s. Oxford expanded into outerwear, denim clothing, and womens' shirts, and in 1956 it began to produce slacks for J.C. Penney. By 1959 sales had reached $29 million (47 percent of this figure from pants sales), and J.C. Penney accounted for 44 percent of Oxford's total business. In that year Oxford bought the Freezer Shirt Corporation, a South Carolina-based manufacturer capable of turning out 36,000 shirts a week.
The advent of the mens' tailored shirt for women, an item first manufactured at the urging of J.C. Penney, broached the womenswear market for the first time. In 1961 Oxford acquired Aansworth Shirt Makers, a womens' sportswear company, and renamed its product line Cos Cob, facilitating penetration into the womenswear market. The growing strength of Oxford's higher-margin womenswear line helped its profit margin during this period of expansion. In 1962 womenswear made up 23 percent of the company's manufacturing volume, yet accounted for 35 percent of the company's earnings.
When Oxford went public in 1960 with an offering of 240,000 class A common shares and began trading on the American Stock Exchange and the Philadelphia and Baltimore stock exchanges, the company had more than 3,000 employees and $31 million in sales.
The years from 1955 to 1963 brought Oxford 18 apparel companies (six in 1963 alone) and a total of 23 plants. In 1963 sales increased $21 million to reach $61 million, and the company's stock split. By 1964 Oxford was listed on the New York Stock Exchange.
One of the men responsible for Oxford's tremendous growth in this period, President Tommy Lanier, was killed in a plane crash near Paris on June 3, 1962, in a disaster that also took the lives of many of Atlanta's civic leaders. Sartain Lanier was thus the last of the co-founding brothers to remain directly involved with Oxford's operations.
Several technological advances greatly changed the business and Oxford was among the first apparel manufacturers to take advantage of them. First was the production process that allowed Dacron and cotton poplin slacks to be sewed without unattractive puckers at the seams--Oxford was the first to master the technique and ran large quantities of this product. Another production advance came with the introduction of "permanent press" material in 1965. The handling of this fabric proved problematic for many manufacturers because of its unique properties. Oxford was one of the first to take advantage of its potential and use it to make mens' and boys' slacks and then womens' shirts, dresses, and sportswear.
When Oxford moved its headquarters into a new 70,000-square-foot site in Atlanta in 1965, the company had grown to include more than 7,000 employees and had topped $81.7 million in net annual sales. Expansion continued with a new 200,000-square-foot plant in Vidalia and a 125,000-square-foot slacks plant and distribution center in Monroe in 1966. Another important development was the 1966 acquisition of Wright Manufacturing Company, a manufacturer and national distributor of mens' slacks that had previously served as an independent contractor.
Although fiscal 1967 brought increased sales of $116.2 million, earnings fell sharply after years of growth (they had more than tripled in the previous five years). A sour retail atmosphere, widespread cutbacks and markdowns of inventories, and increased textile and labor costs (stemming from new minimum wage legislation) all took their toll. Thus, Oxford's 25th anniversary year brought a change in name to Oxford Industries, Inc. and marked the beginning of an intensive reorganization process. Its many sales forces, product lines, and manufacturing plants were seen as too often duplicating efforts. With Sartain Lanier in firm control as both chairman and president, the company set out to respond to changes in the economy and society at large. Oxford shed its marginally profitable businesses in rainwear and outerwear manufacturing. Prices were increased, and the company started to look for ways to lower labor costs. One of its first moves was to lease a plant in Agua Prieta, Mexico, directly across the border from its plant in Douglass, Arizona, in 1968. The minimum wage there was 35 cents an hour.
In 1968 Oxford acquired Lanier Business Products, the office equipment distributor and manufacturer that was a descendant of the Lanier brothers' original business venture. Oxford paid 349,999 shares of class A common stock for Lanier's 1.1 million shares. The strong performance of the business products division--which in 1970 comprised 11 percent of revenue--helped cushion the effects of the apparel divisions' sluggish sales, which were blamed on inflation, rising unemployment, and continuing recession.
The menswear division at this time contributed over 65 percent of volume for Oxford. The cornerstone of its business continued to be sales to Sears Roebuck, J.C. Penney, and Montgomery Ward of branded and unbranded apparel. The popularity of leisure suits was also a factor. The womenswear division, which in 1970 came under the control of John Hicks Lanier, Sartain Lanier's son, sought to make its clothing more fashionable and to this end moved its offices from Atlanta to New York City, the hub of the domestic fashion world.
Sales began to climb again in 1971 and continued to do so throughout the early 1970s. The cost of U.S. labor and the recession that followed the OPEC oil embargo, as well as overarching societal change, radically altered the apparel industry during this period. The large-scale entry of women into the workforce in the 1970s created demand for affordable, office-friendly sportswear, and so Cos Cob in 1974 cast off its lines of separates to capitalize on the demand for coordinates. Another change in the apparel industry centered on the increasing diversity of clothing worn in blue collar occupations. Finally, the increase in white-collar jobs throughout the 1960s and 1970s proved very good for the shirt business. Although the recession of 1974-1975 caused a loss of sales of 2.8 percent, by 1976 apparel sales had increased 15.7 percent to over $230.5 million.
On July 1, 1977, Lanier Business Products was spun off as its own publicly held company and was listed on the New York Stock Exchange. Revenues dropped 29 percent (from $302.3 million in 1976 to $220.5 million in 1977) and Oxford lost 57 percent of its earnings. Oxford returned to focus solely on the apparel business.
That year also brought the ascension of J. Hicks Lanier to the post of president of Oxford. Under his control Oxford sought to enter the 1980s, upgrading its production technology and diversifying its customer base. A computer-operated pattern grading and marking system was introduced in the menswear division in 1976. Computers were also brought in for inventory control and production planning, and some sewing and pressing operations were automated.
In 1978 sales to Sears and J.C. Penney accounted for 55 percent of the company's total sales. The disadvantages of this situation became clear when Oxford saw earnings drop five percent in 1979 as both retailers delayed deliveries on ordered merchandise. Oxford, seen for years as a supplier of "commodities" clothing, sought at this time to broaden its customer base as well as increase sales by venturing into the volatile, higher-margin designer label market.
Perhaps Oxford's most striking success in the designer label market was its first; it sealed an agreement with Ralph Lauren in 1978 to produce a line of all-cotton boys shirts known as Polo for Boys. This arrangement brought Oxford products into such upscale retail establishments as Bloomingdales and Neiman Marcus for the first time. Another major acquisition was the Merona Sport Division of Merona Corporation in 1981. Other labels included Jhane Barnes and Robert Stock.
These efforts brought immediate results. Sales to J.C. Penney and Sears, which in 1978 accounted for 55 percent of sales dropped to 32 percent by 1982, marking an end to Oxford's unhealthy reliance on the two retailers. Designer label sales soared from $4 million in 1980 to $60 million in 1982. Oxford also expanded its private label business by providing merchandise to L.L. Bean, Lands' End, Eddie Bauer, and the Talbots, although private label manufacturing fell from over 80 percent in 1978 to 60 percent in 1983. In 1982 (the year in which Sartain Lanier retired as chairman and his son gained the post) sales increased $100 million over the previous year. In 1983 Oxford became a Fortune 500 company. Profits peaked in 1984 at $25 million.
Oxford's stunning growth ground to a halt in 1985 when earnings dropped 71 percent, to 64 cents a share. Extensive inventories, weak financial controls, and a peak in popularity of its fastest growing labels brought three years of reduced sales. Plants operating below capacity and inventory sell-offs also ate into profits.
Facing growing import strength and a global oversupply of production capacity, Oxford opted for a period of downsizing and restructuring. More merchandise was assembled overseas in such countries as the Dominican Republic and Costa Rica. Some plants in the United States were upgraded with new computer systems and information technologies, while others were closed.
Changes were taking place within the retailers as well. Sears Roebuck temporarily discontinued its mens' tailored clothing line, and J.C. Penney introduced more brand name menswear--these two adjustments taken together cost Oxford $15 million. Oxford also sought to increase distribution at Wal-Mart and Target Stores. Small independent retailers were abandoned and the focus was directed at large chains and department stores. Oxford also proved successful at placing self-contained Polo for Boys "shops" within department stores. These shops were found to increase sales 30 percent to 40 percent per square foot.
Sales began to drop in the apparel market as a whole in 1989 and Oxford responded by paring down lines and reducing inventories. In 1991 the Cos Cob and JBJ lines of womens' sportswear were discontinued, the loss of which cost Oxford $25 million. Also in that year Oxford signed a licensing agreement with Target Stores in which Target was given exclusive rights to design and merchandise the Merona label. By the end of that year Oxford was producing merchandise in 22 countries. Oxford's domestic production was matched by its reliance on offshore production, and it was predicted that an even greater percentage of the company's manufacturing would be shifted overseas. Oxford also repurchased over 2 million shares from 1988 to 1991.
In 1992 J.C. Penney comprised 24 percent of Oxford business, and sales had risen 4.3 percent from the previous year, after three years of reduced sales. Sears expansion of its mens' separates department also proved important, as Oxford was one of its major suppliers. Polo for Boys and Jhane Barnes continued as their strongest labels.
Oxford seems poised to survive the apparel industry convulsions that almost inevitably arise when an oversupply of production capacity becomes apparent. It also sees opportunities for continued growth during this period of industry consolidation through acquisition of cast-offs from other companies and further involvement in the international market.
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