Lands’ End, showing momentum despite the tough economic climate, doubled its net income in the third quarter to $7.2 million, or $0.22 per diluted share, compared to net income of $3.6 million, or $0.11 a share, in the year-ago quarter.
The classic all-American brand said Thursday that its net revenue for the quarter ended Oct. 30 increased 5.9 percent to $360 million, from $340 million in the third quarter last year.
Adjusted EBITDA increased 52.3 percent to $28.6 million in the last quarter, compared to $18.8 million in the year-ago period.
The Dodgeville, Wisc.-based Lands’ End is positioned well during the pandemic because its business is predominantly digital and has limited brick-and-mortar exposure. As of mid-year, the company had 26 stores and was planning to open another five by the end of this year.
Based on results from the September launch of Lands’ End product on kohls.com and in 150 Kohl’s stores, the company plans to expand the Lands’ End assortment and its distribution to 300 Kohl’s stores in 2021.
While the third quarter was strong, the fourth quarter has started slow due to the warm weather during November. Business should pick up through December, which has seen a drop in temperatures and is expected to be colder than last year.
“We were very pleased with our third-quarter performance,” said Jerome Griffith, president and chief executive officer. “Our teams executed at an exceptional level to achieve strong results despite the challenges created by COVID-19. The investments we put toward leveraging data analytics to inform our strategies around product, e-commerce and marketing continued to pay dividends in driving growth in new customers and strong retention rates.
“We have also made great strides in driving improved profitability. To that end, in addition to once again generating double-digit growth in our global e-commerce business, we delivered 52 percent adjusted EBITDA growth in the third quarter. This performance underscores the momentum behind the Lands’ End brand and the progress we are making in delivering long-term profitable growth.”
During the third quarter, the company completed a closing of a $275 million term loan and an increase in its asset-based senior secured credit facility to a maximum of $275 million in borrowings.
“We are pleased to have refinanced our term loan during the third quarter, in a very difficult debt market,” said Jim Gooch, chief operating officer and chief financial officer.
“We believe the strong momentum in our business, along with our enhanced financial flexibility, positions us optimally to continue to execute our long-term growth strategies, as we continue to navigate the continued challenges of the COVID-19 pandemic,” Gooch said. “While we are encouraged by the continued resilience and performance of our global e-commerce business, the fourth quarter has gotten off to a slow start in the U.S., due to the impact of unseasonably warm weather on our heavy outerwear category.
For the fourth quarter, Lands’ End expects net revenue to be between $500 million and $520 million, net income between $13.5 million and $17.5 million, and diluted earnings per share between $0.41 and $0.53. Adjusted EBITDA is seen in the range of $38 million to $43 million.