Lands' End Swings to a Loss

Lands' End Inc. swung to a loss in its latest quarter, dragged by a steep sales decline and aggressive discounting to woo customers.

"Our financial results in the first quarter were impacted by the overall weakness in the retail environment, including aggressive discounting and promotional activity," said Chief Executive Federica Marchionni. "While we expect the retail environment will be very challenging," she said, Lands End expects e-commerce initiatives and new product offerings to result in sequential improvement beginning in the current period.

Wisconsin-based Lands' End, which spun off from Sears Holdings Corp. in 2014 and runs many of its shops inside Sears stores, is the latest in a big batch of disappointing first-quarter retail results. Stores across the spectrum have been hurt by dwindling foot traffic as shoppers increasingly turn to online retailer Amazon.com, fast-fashion chains and discounters.

To keep their share of consumers' wallets, many retailers have resorted to deep discounting. For Lands' End, such promotional activity helped push its gross profit margin down to 47.4% from 49% a year earlier. And discounting didn't prevent a sharp sales slide. At stores open at least a year, a key retail metric, sales fell 7.1%. The decline was, however, an improvement from recent quarters, and part of it was due to the shutting of some shops at Sears' locations.

In all, Lands' End reported a loss of $5.76 million, or 18 cents a share, down from a year-earlier profit of $1.72 million, or 5 cents a share.

Revenue declined 8.7% to $273.4 million. Analysts surveyed by Thomson Reuters projected 2 cents in adjusted earnings per share and $293.2 million in revenue.

Shares in the company, down 28% this year through Tuesday's close, were inactive premarket.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

June 01, 2016 08:25 ET (12:25 GMT)

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