Land's End revenues decline 17.3 percent but reveals upbeat outlook

For the first quarter, net revenue at Land’s End Inc. decreased 17.3 percent to 217 million dollars due to decreased demand attributable to the Covid-19 pandemic. The company said in a statement that net revenue grew 11.1 percent in February 2020 compared to prior year, reflecting strong performances across all business units, while U.S. ecommerce net revenue declined 16.5 percent and International ecommerce net revenue remained approximately flat. Company operated stores achieved comparable store sales growth of 14.2 percent in February before closing mid-March.

Commenting on the first quarter trading, Jerome Griffith, the company’s Chief Executive Officer and President, said: “Following strong trends early in the first quarter, we saw the impact of Covid-19 in mid-March. Beginning in mid-April, we were pleased to see a rebound in our global ecommerce channel, which accelerated to double-digit growth in May. We believe these trends demonstrate the resiliency of our business and we are no less optimistic about our future for several reasons.”

Land’s Ends reveals Q2 and H2 outlook

Gross margin for the first quarter decreased by approximately 230 basis points to 43.4 percent compared to 45.7 percent in the first quarter last year. Net loss was 20.6 million dollars or 64 cents per diluted share compared to 6.8 million dollars or 21 cents per diluted share in the first quarter of fiscal 2019. Adjusted EBITDA decreased to a loss of 11.6 million dollars compared to positive 3 million dollars in the first quarter of fiscal 2019.

For the second quarter of fiscal 2020 the company expects net revenue to decline in the mid to high single digits as compared to the same period last year assuming high single digit growth year over year in its global ecommerce business, retail stores to reopen by the end of June; five new store openings by the end of July, decline in the retail and outfitters businesses, and gross margin pressure to continue into the second quarter due to aggressive promotional environment.

For the second half the company expects net revenue recovery to continue through the back half of the year assuming continued growth in global ecommerce business, retail sales to ramp up by the end of the year, slower recovery of its Outfitters business due to industry pressure on large national accounts, of which 60 percent have exposure to the travel industry, as well as its small and medium sized businesses; expects faster recovery of school uniform business as schools reopen and gross margin to be less pressured than in the first half of the year.

“While the pandemic had an adverse impact on our results in the quarter, we believe that our business model is resilient, particularly our ecommerce channel and we expect all our segments to recover, albeit at different rates. While we remain confident in our ability to achieve our long-term targets, which were on track prior to Covid-19, we now expect these objectives to be met later than we initially planned,” added Jim Gooch, the company’s Chief Operating Officer and Chief Financial Officer.

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