SALES OFF AT LANDS’ END, STAGE, BUT CHARMING SHOPPES RALLIES
Byline: Thomas J. Ryan
NEW YORK — While many stores have rejoiced as Christmas sales poured in, it was no holiday for Lands’ End and Stage Stores.
Lands’ End, reporting Thursday a 16.9 percent tumble in fourth-quarter sales, said that while part of the shortfall was due to a planned cutback in circulation, it also reflected tepid customer response to offerings.
Stage Stores, which reported a 9.1 percent sales drop and earlier this month announced the departure of its chief executive, vowed to revive sales in 2000.
However, Charming Shoppes, which also reported fourth-quarter figures on Thursday, seems to be benefiting from strong traffic at strip centers.
Sales for the catalog company, based in Dodgeville, Wis., dropped 16.9 percent to $449.6 million from $541.2 million.
The slide was expected, since the firm said in January that sales during November and December were down almost 15 percent, principally due to fewer catalog mailings, reduced liquidation sales and overall poor customer response.
In January, sales tumbled 24 percent due to a 30 percent reduction in pages.
Earnings rose 10.2 percent to $28.3 million, or 92 cents a share, from $25.7 million, or 84 cents, but the prior year included a charge to cut jobs and liquidate Willis & Geiger. Earnings, excluding the charge, sank 12.4 percent and missed analysts’ consensus estimate of $1.09.
Shares rose 4 5/8 to 35 1/2 Thursday on the New York Stock Exchange after the firm said it planned to hike page circulation 6 percent this year, with a greater projected increase in sales due to improved merchandise.
Last year, catalog mailings declined 8.9 percent to 236 million from 259 million in 1998 in an effort to reduce unprofitable mailings.
The firm also said it planned to increased profit margins in 2000 by 225 basis points as a result of changes in sourcing and vendor negotiations.
About one-third of the better margins will be used for investments in Internet and national advertising.
Internet sales last year soared to $138 million from $61 million.
“We continue to find that more than 20 percent of our Internet buyers are new to Lands’ End, and believe that this channel will continue to be an important growth opportunity for us,” said David F. Dyer, president and chief executive.
“I am optimistic about our revamped merchandise line, and initial indications show our new products performing at or above expectations.
“Going forward, I expect improved performance as we refine our circulation plans, particularly for our all-important holiday season.”
Sales in the first quarter are expected to be flat, with 5 percent fewer catalog pages mailed. Earnings will be “somewhat weaker,” while most improvement is seen in the fourth. Inventories at year-end fell 26 percent to $162 million.
In the year, earnings jumped 54 percent to $48 million, or $1.56, from $31.2 million, or $1.01. The prior year included $8 million in charges.
Sales dipped 3.8 percent to $1.32 billion. Sales in Specialty Business segments grew 9 percent to $397 million due to its corporate sales division, but fell 9 percent to $780 million in its core Lands’ End catalog.
The Houston specialty apparel chain lost $109.6 million in the fourth quarter, buried by $131.1 million in pretax charges to cover store closings; write-downs of inventory, goodwill and long-lived assets, and severance costs.
The prior year’s loss was $2.9 million.
James Marcus, vice chairman and chief financial officer, also cited “an increased level of promotional activity which increased our level of markdowns without generating enough incremental unit sales to offset the decline in the average price of units sold.”
Sales fell 9.1 percent to $324.8 million due to the closing of 31 stores; same-store sales dropped 7.8 percent.
The firm has 648 stores under the Stage, Bealls and Palais Royal names.
The firm is searching for a new ceo to succeed Carl Tooker, who left Feb. 22.
Stage noted that it was in full compliance of its credit agreement. In the full year, the loss was $129.1 million after charges versus earnings of $3.7 million, or 13 cents, a year ago. Sales dipped 4.4 percent to $1.12 billion.
The owner of Fashion Bug earned $8.6 million, or 8 cents, against a $9.1 million loss a year ago, but the prior year included a $20.2 million charge to close stores and exit men’s wear. Excluding special items, earnings climbed to $8.1 million, or 8 cents, from $4 million, or 4 cents.
Sales advanced 28 percent to $348.4 million due to the acquisition of Modern Woman in August 1999 and Catherine’s Stores in early January 2000.
Both chains sell women’s large sizes. There was an 11 percent comp gain at Fashion Bug.
“Same-store sales at our core Fashion Bug division increased significantly, evidence that our merchandise strategy is working,” said Dorrit J. Bern, chairman and ceo.
“We continued to achieve significant expansion in gross margins with over 300 basis points improvement during 1999. We completed two acquisitions, Catherines Stores Corp. and Modern Woman, which will strategically position us as a leader in the women’s large-size apparel business.”
For 2000, there are plans for about 100 new Fashion Bugs and further improvement in merchandising margins.
“We are projecting to drive earnings growth at least 25 percent,” Bern said. The year-end store count was 1,740.
In the full year, earnings reached $45.1 million, or 43 cents, against a $20.1 million loss.
Excluding special items, earnings rose to $39.2 million, or 38 cents, from $15.1 million, or 15 cents. Sales climbed 15.6 percent to $1.2 billion.