Lands' End Sales Slide 10%

Lands' End Inc. said sales slid 10% in its second quarter as the retailer saw declines across all its markets and products.

Chief Executive Federica Marchionni said the quarter was challenging, and results "did not meet company expectations."

"However, we believe we have a firm understanding of the areas of weakness that led to the performance decline and are in the process of addressing them," she said in a news release.

Lands' End was spun off from Sears Holdings Corp. in April 2014 as Sears sought to focus on its core assets. Like many retailers, Lands' End has struggled with weak sales amid a tough retail industry characterized by intense competition and heavy promotions.

For the quarter ended July 31, revenue in the company's direct business—which includes Internet and catalog sales—fell 9.5% to $264.7 million, driven by declines across all of its markets and products. Lands' End said customers didn't take as well to its spring and summer collections as last year, while its scaled-back promotions also fell short.

Foreign exchange also brought down revenue by $8 million.

The direct business makes up the majority of Lands' End's sales.

Retail-segment sales, which include Lands' End shops inside Sears stores, tumbled 13% to $47.6 million amid fewer shops and a 7.5% decline in same-store sales.

In all, Lands' End reported a profit of $7.46 million, or 23 cents a share, down from $11.8 million, or 37 cents a share, a year earlier.

Earnings included a benefit of five cents a share from the reversal of a product recall accrual.

Net sales fell 10% to $312.4 million.

Gross margin narrowed to 46.3% from 48.5% a year earlier, hurt by currency exchange rates, increased competition and air freight costs.

Shares of Lands' End, up 6.6% in premarket trading, are down 56% this year.

Write to Chelsey Dulaney at [e-mail]

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(END) Dow Jones Newswires

September 03, 2015 10:05 ET (14:05 GMT)

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