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Lands’ End Ran Aground Again in Q3

Lands’ End posted yet another lackluster quarter Thursday, reporting that net revenue for the three months ended Oct. 31 fell 11 percent from $373.1 million to $334.4 million, but CEO Federica Marchionni insisted that the Dodgeville, Wisconsin-based clothier made important progress on a number of initiatives.

“We revamped the product presentation and messaging in our core catalog, expanded our e-commerce business with site enhancements and a fully shoppable digital catalog, debuted a spectacular campaign with renowned photographer Bruce Weber and opened our first ever pop-up stores on New York’s Fifth Avenue and in Boston’s Copley Square,” said the executive, who was hired away from Dolce & Gabbana in February to refresh the 50-year-old preppy label.

Even so, direct-to-consumer net revenue slipped 10.1% to $287.8 million owing to lower sales in the U.S. market, while net revenue in the retail segment was down 11.7% to $46.6 million, driven by a decrease in same-store sales and a smaller number of Lands’ End Shops in Sears’ stores.

“Sales in the third quarter were impacted by the challenging retail environment, as well as unseasonably warm weather which negatively affected the performance of our cold weather categories,” Marchionni said, citing the same issues that plagued a number of U.S. brands in Q3. “Our sales performance was also the result of a pullback in promotions to focus on higher margin sales, reduced catalog circulation to lapsed and less profitable customers and a lack of product acceptance.”

As a result, gross profit for the third quarter was $162.4 million, or 48.6% of net revenues, compared with $183.3 million in the same period a year ago. Net income, meanwhile, was $10.7 million, or $0.33 per diluted share, down from $18 million, or $0.56 per diluted share.

Marchionni continued, “Looking ahead, we remain intently focused on the continued execution of our strategic initiatives, particularly around marketing and branding, as well as in our e-commerce and catalog businesses. We remain committed to our brand strategy which is grounded in bringing the quality, value and service that Lands’ End is known for, to a broader customer base.”