Lands’ End rebounds with first quarterly profit in 2 years
Results at Lands’ End Inc. continued to rebound in the third quarter, with revenue up and the company turning its first quarterly profit since fall of 2015.
The profit was modest — $162,000. But it followed seven straight quarters of red ink, most of it from paper losses as the Dodgeville-based clothing retailer wrote down half the book value of its brand name amid reeling performance under former CEO Federica Marchionni.
Sales rose too, for the second quarter in a row. The uptick in revenue came after nine consecutive quarters of year-over-year declines.
“Overall, as we continued to execute on our strategic initiatives, we stabilized the business and laid the foundation to enable us to capitalize on the opportunities that lie ahead,” CEO Jerome Griffith said in a statement. “We are now focused on building off of this momentum.”
For the 13 weeks ended Oct. 27,
Lands’ End posted sales of $325.5 million, up 4.5% from the third quarter of 2016. The $162,000 in net income amounted to a penny a share, compared with a 23-cent loss a year ago.
Sales in the company’s online and catalog unit, which make up the great bulk of overall revenue, were up 6.7%. Sales at brick-and-mortar locations, most of them departments inside Sears stores, fell 10.8%.
Driving the decline at physical stores was the closing of 31 Lands’ End shops inside Sears stores over the previous year. Lands’ End finished the third quarter with 188 locations inside Sears, and that number will fall further.
Another 14 of the shops will close after leases expire in January, James Gooch, chief financial officer and chief operating officer for Lands’ End, said Tuesday on a conference call.
Until spinning off the Dodgeville firm in April 2014, Sears owned Lands’ End for 12 years, and at one point hosted more than 270 Lands’ End shops.
Amid the continuing uncoupling from Sears, Lands’ End is testing concepts as it plans to expand its small number of standalone stores. The first new standalone store is to open in the first half of 2018, followed by “a handful” of additional locations over the year, Griffith said during the call.
Griffith, a former CEO at luggage retailer Tumi Holdings, took over at Lands’ End in March. He replaced an interim team that guided the company for about six months following the September 2016 departure of Marchionni.
Marchionni, who led Lands’ End for just 19 months, tried unsuccessfully to bring a more fashion-oriented sensibility to a brand better known for traditional styles and family appeal. Under Griffith, the company now appears to be returning to its roots.