Lands’ End, gaining momentum in its turnaround efforts, sees further growth opportunities by opening company-owned stores, joining online marketplaces and by expanding its uniform business.
That was a big part of the message from Lands’ End president and chief executive officer Jerome Griffith, during an interview Tuesday.
He said the new Kildeer, Ill., store, launched at the end of last April in an open-air center outside Chicago, is “the blueprint” for future freestanding stores; that 40 to 60 stores are seen operating by 2022 from the current 14, and some M&A activity in the business uniform area is a possibility. Lands’ End’s uniform business offers both school and business attire.
In addition to Kildeer, Lands’ End on May 14 opened a store in Burlington, Mass., and three or four more stores will open this year, including in the Staten Island Mall in New York, and in Bridgewater and Bergen County, N.J.
Lands’ End got a big lift in its uniform business by doing uniforms for the 64,000 Delta employees on May 29. “It’s a game-changer,” Griffith said. American Airlines uniforms made by Lands’ End will be introduced by the second half of 2019.
Lands’ End’s network of in-store shops at Sears has been shrinking as Sears closes more of its own doors. There are 159 Lands’ End shops inside Sears. By the end of the third quarter, no more than 132 will be operating.
Griffith said Lands’ End is not seeking to replace the Sears business by opening shops-in-shop in another big retailer. Instead, freestanding stores, giving Lands’ End more control over the experience, are now the way to go. “Open-air centers seem to work for us,” Griffith said. “Our customer likes the convenience. They are a bit more suburban and mobile.”
On Tuesday, the $1.4 billion Lands’ End reported that it narrowed its net loss for the first quarter ended May 4 to $2.6 million, or 8 cents a diluted share, as compared with a loss of $7.8 million, or 24 cents a share, in the first quarter of fiscal 2017.
Adjusted earnings before interest, taxes, depreciation and amortization were $9 million, compared to $1.3 million in the year-ago quarter.
Net revenues for the quarter increased 11.7 percent to $299.8 million from $268.4 million in the year-ago quarter, with the direct segment increasing 19.7 percent to $273.4 million. Revenues in the retail segment decreased 34 percent to $26.5 million, primarily due to fewer Lands’ End shops at Sears and unseasonably cold weather during the first part of spring.
Same-store sales declined 18.9 percent, with same-store sales in Lands’ End shops at Sears dropping 20.4 percent, and same-store sales at the 14 company-operated stores declining 9.9 percent. Griffith cited the unusually cold February and March periods as impacting the stores. He suggested that the decline is “more of a blip than a trend.”
Still, the first-quarter results marked Lands’ End’s fourth straight quarter of topline sales growth and third straight quarter of bottom line improvement.
Other turnaround efforts entail emphasizing personalization online and keying it on the brand’s classic bestsellers, like bathing suits.
“We have been shrinking sku’s,” Griffith told WWD. “We are doing a better job with key items. Customers are reacting well to franchise items and we are doing a better job marketing our key items.” Much of the rationalization involves eliminating some higher-priced, tighter-fitting and more fashion-forward items introduced by the previous regime.
Griffith cited bestsellers during the quarter, among them swimsuits with sun protection; tankinis; knit tops and bottoms; the “Starfish” collection, which includes pants, tops and jackets; colored denim; water shoes; stretch in men’s chinos and shorts; performance polo shirts; T-shirts; sheets, and other home products. According to Griffith, newness, such as introducing fresh prints, embellishments, or technical aspects such as stretch in chinos or reinforced knees in kids pants, helps spur the business.
“Looking ahead, data analytics will remain the driving force behind everything we do as a customer-centric organization,” Griffith said in a statement. “As we further refine our product assortment, advance our digitally driven efforts, enhance our distribution network, and further elevate our infrastructure to support the business, we remain well positioned to achieve our long-term objectives.” Data analytics are being used to personalize customer experience including e-mails.
Overseas, Lands’ End sells online via Debenhams in the U.K. and is examining the possibility of selling through online marketplaces.
The company has also been selling on Amazon for three months. “The results look great,” Griffith said during a conference call. “More than half of clothing searches online start on Amazon.” Lands’ End has a small marketing program with Amazon and sells its key items on the site. On Amazon, “More than half of the customers have never shopped Lands’ End and a third have been lapsed customers — those that haven’t shopped at Lands’ End for over a year.”
Regarding European growth, Griffith said, “We are exploring other platforms and working with Amazon internationally. There are other players and big players in individual markets that we are in talks with. It’s a big opportunity for us. But it’s early days for us. We are not used to selling through someone’s marketplace.”