Is Lands End going out of business in 2023?
Is Lands End going out of business? Gary Comer established the retail chain “Lands End” in 1963. Although the store has been open for many years, the retail chain has recently been having financial difficulties. The parent company, Sears, stated in 2013 that more than 100 locations, including Lands End, would be closed.
Despite these closings, Lands End is still operating. The business has been able to streamline its processes and focus on its key strengths. These days, their main business is running an internet store where they offer clothing and accessories. Additionally, they still operate a few brick-and-mortar locations.
Despite facing financial difficulties, the business was able to survive and is still doing well as a retail outlet today. They remain a popular choice for many shoppers and continue to provide quality items for their customers. Let us learn more about the business in this article.
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Overview of the company
The American apparel and home furnishing company Lands’ End was established in 1963. It is headquartered in Dodgeville, Wisconsin. It sells casual clothing, luggage, and furniture for the home. The company maintains 28 retail storefronts. They are mostly in the Upper Midwest and Hawaii. But the majority of its business is done through mail-order and online sales.
Customers have opened their homes to the Lands’ End catalog for almost 60 years. With the advent of Landsend.com in 1995, the historic company made its mark with warm customer service. They offer high-quality clothing for the entire family online. Today, Lands’ End opens the doors to its newest house: six states with company-run stores.
The company was purchased by Sears in 2002 for $2 billion in cash. Lands End was a division of Sears Holdings from 2002 to 2014. Lands’ End separated from Sears Holdings in 2014 and went public on the NASDAQ with the ticker code LE.
Sears Holdings filed for Chapter 11 bankruptcy in 2019. After that, Lands’ End stated that it would close the last of its store-within-a-store locations inside Sears stores. By the end of 2019, the final one would shut down, the business claimed.
As of the end of 2022, the business had 28 retail outlets. The company was valued by market capitalization at $0.3 billion in July 2023.
Lands’ End updates its projections
Lands End has revised its outlook for the rest of the year. It was due to an “uncertain” and “volatile” macroenvironment.
For its third fiscal quarter of 2022, the company fell short of sales and earnings projections. It stunned investors, sending its shares plunging about 30% on December 1, 2022. In the third quarter of 2021, Lands’ End reported a net income of $7.4 million. In contrast to that, the third quarter of 2022 had a net loss of $4.7 million. Over the prior year, the total revenue for the quarter declined by 1.3%.
Jim Gooch is the president and chief financial officer. On the earnings call, he cited the reasons for the lower-than-expected revenue. It includes margin pressure from shipping costs, raised industry-wide marketing expenditures, and margin mix from the growth in their third-party business.
“Our fourth-quarter and full-year updated outlook represent the challenges created by the macroeconomic environment. It also reflects the impact of inflation on the consumer,” he added.
In December 2022, Lands End operated about 30 of its own locations in the United States. According to their report, same-store sales increased 13.0% between the third quarters of 2022 and 2021. Customers returning to in-store shopping are driving more and more revenue for retailers. From January through August 2022, more than 4 out of 5 retail sales were made in-store.
Although e-commerce peaked in the early stages of the pandemic, it has since returned to normal. Global net revenue from e-commerce at Lands End fell 4.6% in the third quarter of 2022. It dropped by 1.3% within the United States. It decreased by over 20% outside of the United States. Thus “negatively affected by inflation and geopolitical upheaval in Europe,” according to Gooch.
Lands End aims to boost promotions for the fourth quarter. This was to maintain a competitive edge, like other retailers with a surplus of inventory.
Customers got 70% off using an online coupon. To ensure that it had enough inventory to fulfill demand during the fall and holiday seasons, Lands’ End extended lead times and receipts.
As of October 28, 2022, its inventory stood at $564.9 million. It is an increase of almost 18% from the same period in the previous year. Inventory levels won’t return to normal at Lands End until the spring or summer of 2023.
New Lands’ End’s CEO wants to increase sales and add locations
In 2017, when departing CEO Jerome Griffith joined Lands End, the company was facing a serious issue: “the database for our core customer was decreasing.”
That’s bad news for any business, but customers have historically provided Lands End with long-term value. According to Griffith, a Lands’ End customer sticks with the business for 18 years on average. Thus, expanding its clientele became a top priority.
At the ICR conference on January 20, 2023, Griffith stated: “If each client gets a year older every year, they’re all going to pass away, so you don’t wish that to happen.” You want those in your database to either remain the same age or get younger.
The business attempted to attract millennial customers at one time but changed policy when it didn’t work. According to Griffith, “the typical Lands End customer is in their mid-50s. So it made more sense to target Gen X customers rather than try to appeal to a younger audience. That helps explain why the company has teamed up with retailers including Amazon, Target, and Kohl’s.”
As the brand’s new CEO, Andrew McLean, who was selected in September 2022, will carry out that goal of expanding the Lands End consumer base.
At the conference, McLean stated, “We’ve seen heat from how you attract customers online: It’s not making it any cheaper. As a result, we must consider new methods of customer acquisition. The database must continue to be updated.”
Future objectives for McLean include opening physical locations. But timing is unclear because the company can only handle so much at once. Lands’ End already operates a physical channel through its catalog business. McLean described that as “an incredible physical manifestation of our brand.”
“In February 2023, a new merchant will take over the company’s leadership role in merchandising. But otherwise, we are happy about our team,” according to McLean.
What will Lands End face after a difficult 2022?
Business has been difficult for Lands End for many quarters. But the iconic all-American fashion company suddenly sees some hope for the future.
Andrew McLean told WWD that even though more losses are expected in the near future, “At least for the initial part of the year, we see ourselves coming back to some sort of growth. Five quarters in a row saw no business growth for us. And as we gain market share, I believe we now have a chance to see sales begin to flatten and move in the correct direction.”
Reporters questioned McLean on March 16, 2023. It was right after the release of the company’s fourth-quarter top- and bottom-line results. McLean stated that:
“The strategy places the greatest focus on investing in the company’s core businesses. They are: swimwear, outerwear, layering, and catalogs.”
He said that it’s unclear to him if there will be a downturn or what the effects of the most recent U.S. bank failures will be. He anticipates either a “minor reduction or a minor rise” in revenues in the coming months.
While there is some hope in the first half of 2023, McLean added that at this stage it is at least “opaque,” or challenging to predict or guess on, the second half of 2023.
The idea is to focus on the main categories where we excel, according to McLean. “We have 7 million consumers, so for a company of our size, there is much to deal with there.”
The Dodgeville, Wisconsin-based retailer reported a net loss of $3.3 million, or $0.10 per diluted share. It was for the fourth quarter that concluded on January 28. This is down from a net income of $7.1 million, or $0.21 per diluted share, in the same period of fiscal 2021.
Like the fourth quarter of fiscal 2021, when adjusted earnings before interest, taxes, depreciation, and amortization were $27.3 million, they were $24.2 million this time around. Compared to the same quarter last year, when net revenue was $555.4 million, it dropped by 4.6 percent to $529.6 million.
Besides swimwear, McLean claimed that “all things that you wear to go on vacation provide opportunities for growth.” This includes totes, hats, slides, and swim skirts.
The firm forecasts the following for fiscal 2023:
- It is projected that net revenue will range between $1.56 billion and $1.62 billion
- Between $6 million and $1 million will be lost in net loss, and between $0.18 and $0.03 will be lost in diluted profits per share
- Between $72 million and $82 million in adjusted EBITDA.
Conclusion
Since Lands End has embraced the digital world, its popularity and revenues have increased. The brand has added eco-friendly and organic apparel collections to its range of offerings. It is thus making major strides in sustainable fashion. As a result, Lands End keeps providing high-quality clothes and household goods at low costs.
As a US company with a long history of providing premium goods at competitive prices, Lands End is well-known. This business has expanded and is still a well-liked choice for clients of all ages. It’s because of its dedication to offering top-notch customer service. Thus, we could conclude that Lands’ End is still operating and still providing a variety of services to customers.
