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Tickers in this Article: OXM, JWN, M, KSS, SHLD, JCP
A food chain is in almost every industry, and when the end users are hurting, that pain is generally transmitted back to the suppliers. So with retailers like Nordstrom (NYSE:JWN), Macy's (NYSE:M) and Kohl's (NYSE:KSS) all facing a tough retail environment, it's not too surprising that Oxford Industries (NYSE:OXM), a producer and marketer of clothes, is facing a challenging environment as well.

Of course, "challenging" is a relative statement. When you look at Oxford's quarterly report released September 9 and see sales down 6%, gross margins down just a little and operating income (net of restructuring charges) actually up a little, that is by no means a bad report.

Segment Performance
Looking a little deeper at performance of the company's largest segment, Tommy Bahama, sales were down 1.8% to $112 million in spite of more store openings, and operating income slid 13% to $18.1 million. This is actually respectable considering the higher selling, general and administrative (SG&A) expenses from opening nine additional retail stores compared to 69 locations in 2007. Actually, sales were down in all of the company's divisions, as sell-through by retailers like Sears Holdings (Nasdaq:SHLD), J.C. Penney (NYSE:JCP) and Kohl's has slowed in the more challenging retail market. (Discover how this market is hit when consumers reduce their spending in Using Consumer Spending As A Market Indicator.)

Oxford Industries is a pretty dull business, but that is one of its most appealing traits in my book. How many newly minted MBAs or venture capitalists want to get into the clothing business? That's not to say that there aren't a host of entertainers, musicians and athletes with aspirations of launching their own brands and clothing lines, but who's to say that they wouldn't be willing to license their brand and image to an existing company like Oxford?

Sales Diversification
I also like the multi-level marketing of the Oxford approach. Tommy Bahama and Ben Sherman are marketed more to upper-end consumers, while Lanier and Oxford Apparel have a broader demographic in mind. While that does not necessarily immunize the company to a tough overall retail market, it does increase the potential audience for the company's products and allows it to capture business all along the continuum of shoppers. (For more on evaluating this industry, check out Analyzing Retail Stocks.)

Right now it is difficult to recommend stock in any company that is heavily exposed to the consumer. I'm sure optimists will point out that "there's light at the end of the tunnel," but I'd answer with "yeah ... and maybe it's an oncoming train." In other words, it would not shock me to see conditions get worse, and these shares are not so screamingly cheap as to coax me into buying right now.

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