Shares of Lands’ End slipped 2.1 percent in early morning trading after the company posted first-quarter results that saw its net loss widen from its year-ago loss.
For the three months ended April 28, the net loss widened to $7.8 million, or 24 cents a diluted share, from a net loss of $5.8 million, or 18 cents, a year ago. Net revenue slipped 1.9 percent to $268.4 million from $273.5 million, a year ago. The direct segment saw revenues dip 1.7 percent to $228.3 million, while retail sales fell 2.8 percent to $40 million due to fewer Lands’ End Shop at Sears doors. Its former parent was Sears Holdings Corp. Comparable-store sales rose 2.1 percent in the quarter.
The company said its gross margin was 45.7 percent, compared with 47.4 percent in the year-ago quarter.
Wall Street was expecting a net loss of 22 cents a diluted share on revenues of $270.1 million. C.L. King analyst Steven L. Marotta said that because the company hasn’t provided guidance for future periods, the top and bottom line “misses” should be viewed as “within the reasonable margin of error.” He has a “Neutral” rating of shares of Lands’ End.
Shares of Lands’ End were trading at $16.30 at 10:07 a.m.
Jerome S. Griffith, chief executive officer, said, “First-quarter results were in line with our expectations, as we continued to make progress across a number of key areas.” He said the company achieved growth in its buyer files, saw improved product sell-through and drove positive comps in the quarter, adding that these are “encouraging signs that we are making the right decisions as we work to drive the business forward.”
He told analysts at the company’s conference call, “We also saw higher sell-through as a result of product enhancements that we have made particularly in swimwear, knitwear and home.”
He also spoke about “developing a brand-appropriate product assortment that represents the Lands’ End brand and is relevant to our customer.” Connected with that is the senior management team’s effort in putting together a longer-term strategic plan for the brand, one he said that will “implement a comprehensive brand vision that has reflected consistently in every aspect of our business, our products, our e-commerce side, stores, catalogs and our marketing messages.”
As part of the company’s go-to-market strategy, Griffith spoke about the product development cycle and product flow, which includes working with suppliers to shorten lead times. “These activities will enable us to enhance the productivity of our inventory and put less focus on promotions to drive sales. As we make more timely and relevant buying decisions for our business, we should achieve gross margin expansion over the long-term,” he said. The ceo also spoke about using better data analytics to do the same analysis it does with its catalog business for other components of the business, noting that Lands’ End is in the “early stages of this digital transformation.” He said over 8 percent of the company’s revenue is transacted online.
Griffith said the company plans to grow the business “from the local talent pool here in Wisconsin.” The company has reduced the number of employees who work in New York, and the ceo said that an important part of the company’s success is merging the design and merchandising talent under one roof.
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