Shares of Lands’ End fell 4.5 percent after the company posted a third-quarter loss.
For the three months ended Oct. 28, the net loss was $7.2 million, or 23 cents a diluted share, against net income of $10.7 million, or 33 cents, a year ago. The loss included an inventory write-down and non-recurring personnel costs primarily related to the departure of former chief executive officer Federica Marchionni. Net revenue fell 6.9 percent to $311.5 million from $334.4 million. The company said comparable-store sales fell 14.3 percent, while direct-to-consumer sales slipped 5.5 percent to $272.1 million.
Wall Street was expecting a loss of 5 cents on revenues of $303.6 million.
James Gooch, co-interim ceo and chief financial officer said that the company was disappointed in the quarter’s results, but that the company “aggressively managed our costs and ended the quarter with clean inventory levels.” He added after a review of the company’s performance, the company “developed and begun to implement a number of initiatives that we believe will enable us to better execute our business strategies and drive improved financial performance.” He said some of the initiatives are beginning to take hold in the second half of the quarter and that the company looks forward to building upon the “momentum during the holiday season and beyond.”
Joseph Boitano, co-interim ceo, said, “We now have a more clearly defined and focused strategy in place, which we believe will enable us to better execute on our goal to deliver product that offers newness and innovation, as well as more readily address the lifestyle needs of the Lands’ End customer.”
Boitano said the first priority “is to enhance our classic offering with a focus on key categories that reflect the Lands’ End brand heritage with great quality, fit and value. We have also refined our marketing strategy with enhancements to our catalog presentation and social media efforts.” He said the combined initiatives should position the company to better engage with its customers and win back lapsed customers, as well as attract new customers to the brand.
On a conference call to Wall Street analysts, Gooch said the inventory write-down was in connection with its Canvas by Lands’ End collection, which he said “performed well below our expectations.” He also said the company will be “placing greater emphasis on our classic business, which has been the heart and soul of our brand.”
Boitano said the company will emphasize categories that Lands’ End has been known as a destination, including outerwear, swimwear and sweaters. He also said the company will focus on heritage items, such as cotton sweaters, turtlenecks, woven shirts and chino trousers. The new initiatives will be reflected in the spring assortment and be fully incorporated in its fall 2017 catalog, Boitano said.
Lands’ End shares closed at $16.95 Thursday in Nasdaq trading.