Oxford Industries ( OXM) sank more than 20% Tuesday, after the licensed-apparel maker delivered lower-than-expected fiscal first-quarter (ended August) results.

The company, which makes Tommy Bahama, Nautica and Geoffrey Beene clothing and accessories, earned 27 cents a share in the most recent quarter, compared with the consensus analyst estimate of 46 cents. Revenue fell 16% from the previous year to $23.78 million, which also came in about $10 million below expectations.

At Wednesday's closing price of $27.44 a share, Oxford is valued at just 8.6 times expected fiscal 2008 (ending May) earnings of $3.20. This is about half the average earnings multiple of the S&P 500 and represents a 34% discount to the company's historical average valuation.

With that in mind, I'm here to answer readers' questions: Should you buy shares in Oxford Industries or does the stock have further to fall?

The company blamed the shortfall this quarter because of the poor retail market. Oxford sells its apparel mostly to general retailers and department stores like Target ( TGT), Sears ( SHLD) and Wal-Mart ( WMT), all of which have posted slower sales in recent months.

But Oxford also suffered weakness on the high end of its portfolio -- namely Tommy Bahama, which is the company's largest brand. Sales of the casual, island-inspired clothing line fell 4.8% year over year to $99.2 million.

In this case, management pointed out that about two-thirds of the 62 Tommy Bahama stores it runs are located in Florida, California, Arizona and Nevada. These are areas in which real estate prices have been particularly hard hit, which in turn can have an effect on consumer confidence and levels of disposable income.

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In the meantime, the shift from licensed products like Nautica and Geoffrey Beene to operating full brands like Tommy Bahama and Ben Sherman means that Oxford's sales, general and administrative (SG&A) expenses are also on the rise.

SG&A costs were equal to 37.3% of sales in the most recent quarter, compared with just 30.4% a year ago. Chief competitor VF Corp. ( VF) had SG&A expenses equal to 31.8% of sales in its latest quarter.

Another reason for the sharp decline in Oxford shares is the two analyst downgrades the stock has received since the earnings came out. But with the stock now down 45% on the year, and trading for less than nine times earnings, I believe the company will start to look attractive to a financial buyer or a competitor that could buy it and try to cut costs and turn sales around.

In the meantime, the stock sports an attractive 2.6% dividend. This is at the high end of the industry range, and the 18-cent quarterly payment can be comfortably covered with 22% of expected full-year earnings. Investors at the close of trading Nov. 12 will qualify for the next dividend, payable Nov. 30.

So yes, I do believe that Oxford Industries is attractive to purchase at current levels, for patient investors. Even if the consumer outlook continues to slow, and full-year profit expectations come down another 10% to 20%, the stock would still be trading at only around 10 times earnings.

At the same time, the company remains on track to generate steady earnings and cash flow and is returning some of this back to investors through its dividend.
David Peltier is a research associate at TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback; click here to send him an email.

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