It was clear sailing for Lands’ End in its first quarter since being spun off by Sears Holdings Corp. and going public in April.
This story first appeared in the June 13, 2014 issue of WWD. Subscribe Today.
Merchandise improvements, targeted marketing and better inventory and expense controls drove the net up 48.1 percent to $10.9 million compared with $7.3 million in the year-ago period.
Investors were impressed and pushed the stock up 8.2 percent, or $2.18, to $28.81 on the Nasdaq.
“We were very pleased with the results, especially in the U.S. We see the strong trend continuing,” Edgar Huber, president and chief executive officer of the Dodgeville, Wis.-based brand, told WWD.
Huber said there was a “positive customer response to our merchandising and marketing strategies” and the company remains focused on “improving the contemporary relevance of the Lands’ End brand.”
Huber’s strategy revolves around growing Lands’ End into a global “lifestyle” brand and some steps have been taken. In February, the Lands’ End Coastal Living body-care line, including hand creams, body lotions and shower gels, was launched. Huber said it was too early to reach a verdict on Coastal Living. Nevertheless, it’s expected that within the next few months, Lands’ End will reveal additional brand extensions to further project a lifestyle approach. The company has also expanded its range of sizes and fits in several categories.
Adjusted earnings before interest, taxes, depreciation and amortization increased 35.2 percent to $23.8 million in the quarter ended May 2, compared with $17.6 million in the year-ago period. Merchandise sales and services increased 3.6 percent to $330.5 million from $319 million a year ago. The direct segment rose 4.8 percent to $276 million while the retail segment slipped 2.3 percent to $54.4 million. Same-store sales increased 3.4 percent.
Huber suggested that Lands’ End was able to transcend the generally poor retail climate because it sells more products direct-to-consumer, rather than through brick-and-mortar, which was impacted by the harsh winter in the first quarter. He said Lands’ End, with its lower dependence on brick-and-mortar, doesn’t have the floor set constraints of most retailers and the company was able to sell fall-winter products longer than other retailers. Lands’ End continues to be sold inside Sears stores. Sears store closings had an impact on Lands’ End’s total sales, though Huber noted there were comparable-store sales gains. Lands’ End manages its shops-in-shop at Sears.
Swim, dresses and boys and girls products were the strongest categories last quarter, specifically Beach Living swim products, girls dresses and boys graphic T-shirts.