Lands’ End Inc., citing growth in European e-commerce, wholesale and third-party marketplace revenues offset by a decline in the Outfitters business, saw fourth-quarter net income slip to $19.9 million, or 60 cents a diluted share.
That compares to the $25.5 million, or 78 cents a share, the company earned in the year-ago period.
Adjusted earnings before interest, taxes, depreciation and amortization decreased 6.5 percent to $46.1 million in the fourth quarter ended Jan. 29, compared to $49.3 million in the fourth quarter of fiscal 2019.
Net revenue decreased 2 percent to $538.4 million compared to $549.5 million in the year-ago period.
Still, the company said it beat raised expectations during the quarter, that there’s traction across several categories, and that it remains confident it can achieve its long-term goals of generating $1.9 billion to $2.1 billion in revenues by 2023 and adjusted EBITDA margin in the high, single-digit range. In 2020, the company generated $1.43 billion in sales. The Dodgeville, Wisc.-based retailer is positioned well during the pandemic because its business is predominantly digital and the company operates only 31 stores. A handful of stores were opened last year but none are planned for this year.
“If you look at where the big dollars are, the U.S. is always going to be our largest source of growth,” Jerome Griffith, chief executive officer of Lands’ End, told WWD on Wednesday. “It’s just the lion’s share and it picked up quite well — 7.5 percent for the quarter. With the international business, we picked up 38 percent.”
Fall 2021 Trend: Knitwear
However, the Outfitters unit was down 54 percent last quarter, impacted mostly by declines at national accounts such as American Airlines. “The rest of the Outfitters business is starting to bounce back,” including selling uniforms to schools and small to midsized companies, Griffith said. The Outfitters division accounts for 15 percent of Lands’ End’s total volume.
Griffith cited the development of a marketplace (a rarity among brands) as the biggest innovation underway at Lands’ End. “While it’s still a very small business, we’re encouraged by the response, thus far,” said the CEO. “We skewed these offerings to home-related brands over holiday to align with consumer demand for decor, as they continue to spend most of their time at home.”
The marketplace has just 24 sellers so far, primarily in home, shoes and intimate apparel, including Rockport and Reese Witherspoon’s Draper James line. Going forward, Griffith said, there will be a wide expansion in categories offered on the marketplace. An announcement on the plans is expected soon.
Griffith characterized business at Kohl’s is “great.” Though not an exclusive wholesale relationship, “Our focus over next two years is to maximize that relationship. We remain on track to expand distribution to 300 Kohl’s stores in 2021.”
A Lands’ End comfy look.
Earlier, this week, Lands’ End revealed a string of promotions at the senior level. James Gooch was promoted to president while continuing as chief financial officer; Sarah Rasmusen, chief customer officer, was promoted to executive vice president to oversee information technology and performance marketing functions, and Peter Gray, EVP, chief administrative officer and general counsel, will oversee distribution center operations. Griffith said the shifts enable him to focus on coming up with “big ideas” to meet the brand’s growth objectives.
Lands’ End second biggest innovation in the works is the implementation of a new warehousing system. The three-year, $10 million to $20 million project is expected to provide faster service for customers, better visibility tracking packages, efficiencies managing the warehouse, and more flexibility working with last mile carriers.
Griffith said he’s not concerned about the rate of e-commerce growth possibly slowing as vaccinations roll out, the coronavirus dissipates and more people return to stores. “You’re not going to have a wholesale shift back to where it was,” before the pandemic struck. “People understand the convenience and feel comfortable” with online shopping. “It’s amazing how people are very adaptable.”
Asked how business is this year, Griffith replied, “So far, so good.” Following a robust Christmas season, “January seemed to be a very good month. It didn’t seem to slow. As we come into spring, we feel good about the traction so far. Swimwear, knitwear, lightweight outerwear all seem to be checking.”
New customer acquisition grew 21 percent in 2020 and 14 percent in the fourth quarter as a result of data-driven initiatives and comfort-oriented products supported by the “let’s get comfy” marketing campaign.
With Lands’ End’s e-commerce up by double digits last quarter in Europe, “We continue to see opportunity for growth over the long term in this region, as we execute a similar playbook to what drove improved performance in the U.S. and advance our market share position,” Griffith said.
U.S. wholesale and third-party marketplace revenues increased to $21.3 million, a 298 percent increase driven by putting the entire Lands’ End assortment on kohls.com, and key items in 150 Kohl’s stores.
Lands’ End issued a series of projections, indicating that for the first quarter of this year, net between $275 million and $285 million, driven by global e-commerce, and a net loss of $10.5 million to $8 million, or between 32 cents and 25 cents a share, are seen. Adjusted EBITDA is seen in the range of $4 million to $7 million.
For the full year, Lands’ End sees net revenue reaching between $1.52 billion and $1.57 billion primarily driven by global e-commerce and the continued recovery in the Outfitters business. Net income of $11 million to $19 million, diluted earnings per share of between 34 cents and 58 cents, and adjusted EBITDA of between $88 million to $98 million, are seen.
“We think that from a return to the office standpoint, it’s not going to be the same as what it was before pandemic,” said Griffith. “I think the Monday through Friday, 9-to-5 workdays are gone. I think that most companies that I’ve talked to, quite honestly, are thinking some sort of a hybrid model, and we believe that customers are not going to want to give up the comfort factor.”
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