Lands’ End, the classic all-American brand, is making progress in its year-old turnaround bid by focusing on core products, returning to its roots and gaining ground with customers.
“We are in the early stages of [transitioning] back to being a market leader,” Lands’ End chief executive officer Jerome Griffith told WWD on Thursday right after the company reported that in the fourth quarter, the business turned profitable and saw double-digit increases in direct-to-consumer sales, where the brand does the bulk of its business.
“We made tremendous progress last year,” Griffith said during an interview, citing success in attracting new customers, bringing back some of those who drifted away and “really going back to our roots when you look at our products.”
The company is still in turnaround mode, Griffith said with a degree of caution, but he noted that the company has now racked up three consecutive quarters of sales gains after 11 consecutive quarters of sale reductions.
Lands’ End posted a net profit of $39.8 million in the fourth quarter ended Feb.2, compared to a loss of $94.8 million in the year ago period, and was helped by a $21.9 million tax benefit. Adjusted earnings before interest, taxes, depreciation and amortization were $37.3 million compared to $30.7 million in the year-ago period.
Same-store sales increased 5 percent and total revenues increased 11.3 percent to $510.6 million, including $25.9 million from the extra or 53rd week. Revenues in the direct segment were up 14.3 percent while the retail segment declined 8.7 percent, impacted by store closings by Sears where Lands’ End had in-store shops.
For spring so far, “We are seeing some pretty good movement in swimwear. The big sellers are really our key items — the tankini, the tug-less tank suit and our slender suits. Everything that makes you really look good at the beach. Swimwear is leading the attack for us,” the ceo said. Swimwear is the company’s largest product category in spring and summer.
Griffith said there also was strength in outerwear, knits, flannel shirts, flannel sleepwear, basics such as polo shirts and knit dresses, and overall, “uncomplicated, relaxed styles that relate to the lifestyle of our customer” performed well. In addition, he cited accelerated momentum in home, footwear and accessories.
On the retail front, Lands’ End is planning to have 40 to 60 stores operating over the next five years, from the current 11. “We do make money in our own stores. As Sears continues to close stores we are losing that bricks-and-mortar contact with our customers,” Griffith said, though the company wants to offer “a uni-channel experience” to make shopping convenient. “By dealing much more directly with the customer, we will have more of a bond with them.”
This year, four to six stores will open. Among other geographies, suburban sites are being targeted in the metro New York City area, but not Manhattan. “We want to go where our customer is. Generally, they live in the suburbs,” said Griffith. Lands’ End will also be eyeing areas where a Sears has closed.
Lands’ End is developing a new store concept. Giving a taste for what they will be like, Griffith said they’ll encompass 5,000 to 6,000 square feet, ideally situated in open-air centers that shoppers can drive up to and park; will set up kiosks to shop the broader online assortment, and will devote some space to highlighting the heritage of the company as a sailing supply store that morphed into clothing. Technology will be important, too, and sales staff will be able to quickly access the purchase histories of customers.
Griffith said it was hard to say precisely when Lands’ End will be totally out of Sears. But last year, Lands’ End closed 42 Sears shops, ending 2017 with 174.
Asked if Lands’ End would consider a different partnership with another retailer, such as Nordstrom or Hudson’s Bay, Griffith replied, “We would but what we are concentrating on now from a distribution standpoint is working with other online providers. We started with Amazon recently. Early results look pretty good.” Lands’ End also recently launched in the U.K. with Debenhams online.
Another growth opportunity is selling more uniforms through partnerships like those established with Delta and America Airlines. “We are talking to lots of people and really only want to be associated with organizations that reflect the values of our company,” Griffith said.
Lands’ End has a goal to reach $1.8 billion to $2 billion in annual sales from the current $1.4 billion, even as it continues to streamline its stockkeeping-unit counts in women’s while home is being expanded. “Ultimately, we want to do a few things really well and ensure that we are the destination for key items,” such as the Squall and Expedition jackets and turtlenecks, the ceo said. Lands’ End’s record for annual sales is $1.7 billion.
“We have strengthened our market position by capitalizing on our authentic American heritage, establishing an effective marketing strategy that resonates with our customer and putting place improved business processes that will enable us to operate more effectively and efficiently as an organization,” Griffith said during a conference call. “We have great momentum behind the business as we head into the new year.”