Lands’ End posts best results in 3 years

Lands’ End’s renewed embrace of its traditional customer continues to pay off, as the retailer on Thursday posted its strongest quarter in three years and investors reacted enthusiastically.

Shares in the Dodgeville-based company jumped 26% after Lands’ End reported rising sales and profits — results that keep the firm on the turnaround track.

For the quarter ended Feb. 2, Lands’ End earned $39.8 million, or $1.24 a share.

Nearly $22 million of the profit, or 88 cents a share, came not from the firm’s performance but from benefits under the recently enacted federal tax reform.

But even without the tax benefit, Lands’ End’s bottom line was its fattest since the fourth quarter of 2014. And the latest results represented the second straight profitable quarter after seven consecutive quarterly losses that totaled $161 million.

Most of that cumulative loss was on paper, as Lands’ End wrote off half the book value of its brand name — the result of slumping performance under former CEO Federica Marchionni.

But the firm now is plotting a new course, or, in a manner of speaking, an old one. It has scrapped such Marchionni initiatives as an upscale line of pricier, more fashion-forward clothing and reoriented its emphasis to the classic styles that have defined the company for decades.

In a statement on the latest financial results, Jerome Griffith, who took over as CEO last March, alluded to the renewed approach. During 2017, Lands’ End “stabilized the brand” and “reconnected with our core customer,” Griffith said.

Revenue totaled $510.6 million in the quarter, compared with $458.8 million a year ago. The latest period, however, included 14 weeks, while the year-ago quarter had 13.

It was the third straight quarter of year-over-year sales growth, after more than two years of declines.

Speaking with analysts on a conference call, Griffith said Lands’ End plans to open four to six stand-alone stores this year, according to a transcript of the call posted on the website Seeking Alpha. The first of the new stores will be in the Chicago area.

While primarily a catalog and online retailer, Lands’ End wants to expand its independent brick-and-mortar presence beyond the 11 locations it now operates.

The retailer also has 174 shops within Sears department stores — a legacy of Sears’ former ownership of Lands’ End — but those numbers have declined as Sears closes locations.