As Lands’ End winds down its presence at Sears, it’s starting up with Kohl’s in the fall.
Lands’ End will distribute its products on kohls.com and in 150 Kohl’s stores, starting in fall 2020. The partnership, said Lands’ End president and chief executive officer Jerome Griffith, provides a “meaningful opportunity to expand brand awareness and drive incremental sales.”
The deal also reflects the innovative ways at Kohl’s, which also has a partnership with Amazon whereby Amazon returns can be brought to Kohl’s stores.
Lands’ End Inc. reported healthy top and bottom line gains for the fourth quarter and 2019 overall, paving the way for accelerating growth strategies. Net income was $25.5 million or $0.78 earnings per diluted share, in the fourth quarter ended Jan. 31, compared to $16.2 million, or $0.50 earnings per diluted share, in the year-ago quarter. Net revenue for the fourth quarter increased 9.4 percent to $549.5 million, compared to $502.3 million in the fourth quarter a year ago, largely reflecting revenue from the American Airlines launch and e-commerce growth of 7.2 percent. This was partially offset by 49 fewer Lands’ End Shops at Sears, resulting in a $21.5 million revenue decline. Excluding the Sears operations, net revenue would have increased by 14.3 percent.
U.S. e-commerce revenues grew 7.4 percent and were driven by increased demand for key items and a growth in new customer acquisition.
Gross margin increased by about 90 basis points to 39.8 percent as compared to 38.9 percent a year ago, which the company said was primarily due to a more disciplined promotional strategy.
Adjusted EBITDA grew 29.7 percent to $49.3 million, compared to $38 million in the fourth quarter a year ago.
The American Airlines shipments totaled about $40 million in the fourth quarter, with the remainder of the launch expected to be delivered in the first quarter of fiscal 2020. The full launch is now anticipated to total between $45 million and $47 million.
Responding to the coronavirus, Lands’ End has closed its 26 U.S company-operated stores through March 29. Jim Gooch, chief operating officer and chief financial officer, said that in light of the temporary closings, “We have adjusted our business operations to provide customers our full e-commerce and customer service experience, while ensuring the safety of our employees. However, we have seen a negative impact on customer demand over the past week, as expected, given the concerns related to the coronavirus. Based on the macro uncertainty and rapidly changing business environment in the U.S., we will not be issuing guidance for fiscal 2020 at this time.”
“First and foremost, we are closely monitoring the coronavirus situation and our thoughts are with all of those affected,” said ceo Griffith. “In regard to fiscal 2019, it was an incredible year both in terms of financial performance and strategic accomplishments. We delivered strong revenue and adjusted EBITDA growth for the fourth quarter and the year, illustrating our continued progress across our core growth strategies. We also successfully completed the American Airlines’ uniform launch to over 50,000 employees in early March.
For the year, Lands’ End’s net income was $19.3 million, or $0.60 earnings a diluted share, versus net income of $11.6 million or $0.36 earnings a share, in fiscal 2018. Adjusted EBITDA grew by 10.6 percent to $77.9 million compared to $70.5 million in fiscal 2018.
Net revenue was flat at $1.45 billion. Excluding the net revenue decline from Sears operations of $75.3 million, net revenue would have increased by 5.4 percent. U.S. e-commerce sales grew 7.4 percent. Same-store sales for U.S.-operated stores increased by 6 percent. Gross margin increased about 50 basis points to 42.9 percent, compared to 42.4 percent in fiscal 2018.