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Lands’ End Misses Q2 Expectations, Shares Rise Regardless

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Classically preppy clothier Lands’ End has seen its sales slide for a third successive quarter since separating from former parent company Sears Holdings Corp. last year.

The Dodgeville, Wisconsin-based brand on Thursday reported a perilous 36.4 percent drop in profit to $7.5 million for the three months ended July 31, down from $11.8 million in the second quarter of 2014.

Retail sales fell nearly 13 percent to $47.6 million in that time, driven in part by the small number of Lands’ End Shops in Sears’ stores, while a lack of consumer interest in the brand’s spring/summer collections as well as less promotions registered a 9.5 percent decrease in the direct segment (including catalogs and online) to $264.7 million.

President and CEO Federica Marchionni, who was hired away from Dolce & Gabbana in February to refresh the 50-year-old label, called the results “challenging.”

“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 statement. “While many of our initiatives are in early stages of implementation, we are taking specific actions intended to deliver a strong product offering, a cohesive marketing proposition, an effective go-to-market strategy and a state-of-the-art operating platform to support our strategic growth plans for the future.”

Her words had an immediate impact: Despite the weak second quarter and 10 percent drop in revenue to $312.4 million, Lands’ End stock climbed by more than 5 percent after the results were released.

As of July 31, the company operates 229 Lands’ End Shops at Sears (down from 247 a year ago), 14 global Lands’ End Inlet stores and four international shop-in-shops.

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