Lands’ End, capitalizing on a strong response to its swimwear, reduced supply chain costs, and more targeted promotions, narrowed its loss last quarter and kept out a small revenue gain in a challenging macroeconomic environment.
The classic-styled, all-American brand reported Thursday a net loss of $1.7 million, or $0.05 loss per diluted share, compared to a net loss of $2.4 million or $0.07 loss per diluted share, in the first quarter of fiscal 2022.
More from WWD
Adjusted EBITDA increased by 41.3 percent, or $5.7 million, to $19.5 million compared to $13.8 million in the first quarter of fiscal 2022.
Net revenue increased 1.9 percent to $309.6 million, compared to $303.7 million in the year-ago quarter. The results beat analysts’ revenue estimates.
Lands’ End stock price closed up 32 percent, or $2.03, to $8.30 on Thursday.
“We leaned into our strengths and owned what we are good at,” Andrew McLean, chief executive officer, told WWD on Thursday.
With swimwear, “We knocked the cover off the ball. We got a good read on swim earlier in the year and understood what the trends were.” He said swim was up 8 percent last quarter. “The one-piece continues to excel for us,” in particular the tankini and the seamless one-piece. “We built a basket around that,” meaning a basket of products that would be purchased along with swimmers, such as swim dresses, totes, towels and hats.
McLean further explained that “across the board, we cut inventory everywhere,” but Lands’ End has been assorting swim and swim-related items together, encouraging multiple sales per basket. He also said the company on Instagram made swimming more shoppable. “We made it a swimming destination.”
Going forward, “We feel we will hang onto most of the gains we made in the first quarter,” McLean said. “But it’s hard. Customers are quite fickle. I’ve never seen it [business] so choppy. There are ups and downs, day-to-day.”
McLean said Lands’ End will be “having more constant newness” into the back half of this year and really picking up into next year.” Instead of two major drops during the year — spring and fall, there will be eight to 10 drops.
In a conference call with investors and retail analysts, McLean cited efforts to reach a greater number of younger customers. “For example, we’re weighing our marketing of the swim and vacation stories more heavily on Instagram, where we can broaden our customer base and reach a younger audience that recognizes Lands’ End as an authority in the category,” he said.
Aside from swimming, the company saw good momentum in linen and core knit tops as well as seasonally appropriate attire, such as long-sleeve T-shirts and woven tops for both men and women. In addition, bottoms for both men and women performed well, McLean said. “In our experience, that bodes well for sales of tops. Customers are responding well to the overall newness in our assortment. As we move forward, we are committed to regularly injecting newness into our offerings throughout seasons and across categories.”
Lands’ End, starting in spring 2024, will begin selling Costco through a licensee producing Lands’ End adult and kids fashion.
Lands’ End has also been building up business with online marketplaces such as those operated by Kohl’s, Target, Amazon and others.
McLean said the Outfitters business has “plenty of opportunity ahead. Both on its own and as a potential customer acquisition engine for our consumer business. Recently, we signed a five-year extension with American Airlines, which takes that agreement to 2028.” The partnership with Delta concluded last quarter.
With its distribution to third-party marketplaces, “We see significant opportunity in our newer partners, including Target and our most recent addition, Macy’s, which we launched this quarter,” McLean said.
Regarding the international business, McLean cited “an opportunity for us to grow demand and earnings faster than our core US business.…We’re exploring various opportunities to expose our products in new geographies, including through online expansion, distribution partners, and license fees . In our existing Europe business, we are reacting to ongoing lower levels of consumer demand in the region by applying much of the approach that has been critical to our success in the US This includes a focus on key categories where we have authority in Europe, particularly linen and dresses and incorporating newness in the assortment.”
McLean noted several recent key hires, including Stuart Hogue as senior vice president, US e-commerce and starting in June, Jim O’Connor as the senior vice president and general manager of Lands’ End Outfitters.
E-commerce net revenue was $203.1 million, a decrease of 7.3 percent from $219.1 million in the first quarter of fiscal 2022. Compared to the first quarter of fiscal 2022, US e-commerce net revenue increased 1.6 percent and international e-commerce net revenue decreased by 42.5 percent. The increase in US e-commerce was primarily driven by “targeted promotions within swim and adjacent product categories,” the company indicated.
The decrease in international e-commerce was due to lower consumer demand in Europe and the closing of Lands’ End Japan at the end of fiscal 2022.
Outfitters’ net revenue was $74 million, an increase of 37.1 percent from $54 million in the first quarter of 2022, primarily driven by inventory sales to Delta Air Lines in connection with the conclusion of the five-year contract.
Third-party net revenue was $23 million, an increase of 6.2 percent from $21.6 million in the first quarter of fiscal 2022, primarily attributed to growth in existing and new online marketplaces.
Retail net revenue was $9.5 million, an increase of 5.7 percent from $9 million in the first quarter of 2022.
Lands’ End’s company-operated stores in the US experienced an increase of 9.5 percent in same-store sales compared to first quarter of 2022.
Best of WWD
Click here to read the full article.