SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 12, 1999
LANDS' END, INC.
(exact name of registrant as specified in its charter)
DELAWARE 1-9769 36-2512786
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification Number)
of incorporation)
Lands' End Lane, Dodgeville, Wisconsin 53595
(Address of principal executive offices) (Zip Code)
Registrant's telephone number 608-935-9341
including area code
INFORMATION INCLUDED IN THIS REPORT
Item 5. Other Events.
Attached as Exhibit 99.1 and Exhibit 99.2 to this report
are two news releases issued by Lands' End, Inc., discussing a non-
recurring charge of $11.1 million taken in the fourth quarter of
fiscal 1999, and the anticipated future annual savings expected
from these events.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, its duly authorized officer and
chief financial officer.
LANDS' END, INC.
Date February 19, 1999 By: /s/ STEPHEN A. ORUM
Stephen A. Orum
Executive Vice President &
Chief Financial Officer
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
LANDS' END ANNOUNCES RESTRUCTURING
DODGEVILLE, WIS. ... January 12, 1999 ...At a meeting with
company employees today, Lands' End, Inc. (LE) president and
chief executive officer David F. Dyer announced a restructuring
plan that will result in the elimination of 94 of the 888
salaried positions within the company. The positions being
eliminated are in all major divisions and at all levels,
including 9 at the officer level. Some of these positions have
or will be eliminated through attrition -- individuals who have
resigned for various reasons since November and will not be
replaced -- and a few positions that will cease to exist in the
near future. Hourly operations staff in the company's
distribution and customer sales and service centers will not be
affected.
The company also announced that it plans to liquidate its
Willis & Geiger division, as a suitable buyer has not been found.
Willis & Geiger has 12 employees housed in Madison, Wisconsin.
In addition, the company plans to close 3 of its 19 outlet stores
in March of this year as it becomes more effective to liquidate
overstocks through print media and through the Internet. Those
salaried positions affected by these actions are included in the
total number of positions eliminated.
With the exception of those positions being eliminated
through attrition, all employees leaving the company, about 60,
will receive an enhanced severance package that includes
educational assistance and outplacement services. Most of the
eliminated positions are at the Dodgeville headquarters.
In talking with employees, Dyer explained that while sales
have increased 35 percent over the past 4 years, the total number
of professional staff in the United States rose 58 percent. "By
organizing our core business into individual business units,
there has been duplication of tasks and responsibilities that
have not been supported by our sales growth. By restructuring
our organization into functional areas, not only will we be more
efficient, we will also be much more effective. This is by far
the toughest business decision I've had to make, and I know it
will be hard on everyone. But I know we can not continue to
support this large a staff, nor can we operate as cohesively as
we need to, without restructuring our company along more
traditional lines," said Dyer.
"These changes will also help us in our efforts to return to
the profit levels we have experienced in the past, which is an
important goal for Lands' End. In these efforts, however, we
will do nothing that will jeopardize those service functions for
which we are so well known. The quality of our merchandise will
not change, unless for the better. The quality of our customer
service will not change, unless for the better. We will focus
attention on inventory management to assure that we have product
on hand when the customer wants it and to quickly eliminate
product that is not selling," he said. "And while we certainly
will be careful in our hiring practices, we will be adding about
5 senior level managers to make sure we have the talent and
skills we need."
The costs associated with these changes will be included in
a restructuring charge that will be taken in the fourth quarter
of fiscal 1999, which ends on January 29. Additional details
will be included in the January 14th report on the company's
holiday results.
Lands' End is a leading direct merchant of traditionally
styled, classically inspired clothing, offered to customers
throughout the world through regular mailings of its monthly and
specialty catalogs and the Internet.
-0-
Contact Charlotte LaComb: 608-935-4835
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
LANDS' END REPORTS HOLIDAY RESULTS
DODGEVILLE, WIS. ... January 14, 1999 ... Lands' End, Inc. (LE),
the direct merchant of classic casualwear, today reported that
net sales for the eight weeks ended December 25, 1998, totaled
$412 million, up 8.5 percent from sales of $380 million during
the eight weeks ended December 26, 1997.
Net income for the eight-week period just ended was $25.1
million, down 36 percent from the $39.0 million earned in the
similar holiday period in 1997. Diluted earnings per share for
the eight-week period just ended were $0.83, compared with $1.24
in the prior year. This year's holiday period includes a non-
recurring charge of $11.1 million. Excluding that charge, net
income for the eight-week period just ended was $32.1 million, or
$1.06 per share. The diluted weighted average number of common
shares outstanding for the period just ended was 30.4 million,
compared with 31.4 million in the prior year.
The increase in sales during the holiday period was mainly
due to additional catalogs and pages mailed and price reductions.
The growth in sales came primarily from the specialty businesses,
as well as from foreign-based operations. Sales from the core
business, represented by the regular monthly and prospecting
catalogs were flat. During the eight weeks just ended, the
number of pages mailed in the U.S. was higher than in the prior
year's holiday period, which lowered productivity, or sales per
page. Higher inventory levels throughout the holiday period
resulted in fewer lost sales and backorders, which had a positive
impact on overall net sales.
Gross profit in the eight-week period just ended was $183.3
million, or 44.5 percent of net sales, compared with $183.9
million, or 48.4 percent of net sales in the prior year's holiday
period. The decrease in gross profit margin was primarily due to
steeper markdowns on a greater amount of liquidation sales and
lower initial markups.
During the past two months, the company instituted price
rollbacks, price reductions and some promotional pricing on
selected products. This helped increase sales but also had a
negative effect on gross profit margin.
Inventory was $243 million as of December 25, 1998, compared
with $248 million a year ago. During the eight-week period just
ended, liquidations of excess inventory were 7 percent of net
sales, compared with 4 percent in the same period last year.
Selling, general and administrative expenses rose 9 percent
to $131.5 million in the eight-week period just ended, compared
with $120.5 million in last year's holiday period.
SG&A as a percentage of sales was 31.9 percent, compared
with 31.7 percent in the prior year. Relative costs were
slightly higher, primarily due to increased mailings of catalogs
and pages, but this was mostly offset by lower bonus and profit
sharing expenses, due to decreased earnings.
As announced, the company has taken a non-recurring charge
of $11.1 million in the fourth quarter of fiscal 1999, which ends
on January 29. This charge includes costs associated with
severance payments due to organizational restructuring,
liquidation of the Willis & Geiger division, closing of 3 outlet
stores, and discontinuance of the MontBell business. The company
anticipates future annual savings of about $10-$12 million from
these actions. Next year, the company anticipates additional net
savings of about $6 million as a result of lower paper prices and
diminished use of return envelopes in the catalogs, partially
offset by increased postage rates.
Forty-seven week results
For the first 47 weeks of fiscal 1999, net sales were $1.242
billion, an increase of 7 percent from sales of $1.163 billion
during the similar period of the prior year. Net income in the
47 weeks just ended was $30.6 million, or $0.99 per share,
compared with $61.9 million, or $1.92 per share in the prior
year. Without the non-recurring charge, net income for the
47-week period just ended was $38.6 million or $1.25 per share.
Last year's net income includes an after-tax gain of $4.7
million, or $0.15 per share, from the sale of the company's
majority interest in The Territory Ahead. Excluding this non-
recurring gain, net income in the first 47 weeks of the prior
year (fiscal 1998) was $57.2 million, or $1.79 per share.
Lands' End is a leading direct merchant of traditionally
styled, classically inspired clothing offered to customers
throughout the world through regular mailings of its monthly and
specialty catalogs and the Internet.
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Statements in this release that are not historical, including,
without limitation, statements regarding anticipated savings, are
considered forward-looking and speak only as of today's date. As
such, these statements are subject to a number of risks and
uncertainties. Future results expressed or implied by these
statements may be materially different from those anticipated,
due to various factors that may occur. Such factors include, but
are not limited to the following: general economic or business
conditions, both domestic and foreign; customer response to
product offerings and initiatives; costs associated with printing
and mailing catalogs; dependence on consumer seasonal buying
patterns; and fluctuations in foreign currency exchange rates.
-0-
Contact Charlotte LaComb: 608-935-4835
PRELIMINARY AND UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
Lands' End, Inc. & Subsidiaries
(Amounts in thousands, except per share data)
8 weeks 8 weeks 47 weeks 47 weeks
ended ended ended ended
Dec. 25 Dec. 26, Dec. 25, Dec. 26,
1998 1997 1998 1997
Net sales $412,195 $379,889 $1,242,398 $1,163,100
Cost of sales 228,909 196,022 673,632 617,219
Gross profit 183,286 183,867 568,766 545,881
Selling, general and
administrative expenses 131,479 120,535 497,072 449,249
Non-recurring charge 11,100 - 12,600 -
Income from operations 40,707 63,332 59,094 96,632
Other income (expense):
Interest expense (1,358) (567) (7,626) (1,866)
Interest income 5 54 13 1,565
Other 541 (211) (2,866) (3,367)
Total other income
(expense), net (812) (724) (10,479) (3,668)
Income before income taxes
and non-recurring gain 39,895 62,608 48,615 92,964
Income tax provision 14,762 23,621 17,988 35,764
Net income before
non-recurring gain 25,133 38,987 30,627 57,200
Non-recurring gain (net of
income taxes) - - - 4,683
Net income $ 25,133 $ 38,987 $ 30,627 $ 61,883
Basic earnings per share
before non-recurring gain $ 0.83 $ 1.25 $ 1.00 $ 1.79
Basic earnings per share
from non-recurring gain $ - $ - $ - $ 0.15
Basic earnings per share $ 0.83 $ 1.25 $ 1.00 $ 1.94
Diluted earnings per share $ 0.83 $ 1.24 $ 0.99 $ 1.92
Basic weighted average
shares outstanding 30,239 31,108 30,502 31,935
Diluted weighted average
shares outstanding 30,392 31,438 30,787 32,191
PRELIMINARY AND UNAUDITED
CONSOLIDATED BALANCE SHEETS
Lands' End, Inc. & Subsidiaries Dec. 25, Dec. 26,
(Amounts in thousands) 1998 1997
Assets
Current assets:
Cash and cash equivalents $ 5,271 $ 43,397
Receivables 29,772 21,606
Inventory 242,823 247,694
Prepaid advertising 14,483 10,489
Other prepaid expenses 6,786 6,010
Deferred income tax benefit 9,550 9,511
Total current assets 308,685 338,707
Property, plant and equipment, at cost:
Land and buildings 101,598 80,877
Fixtures and equipment 151,547 117,741
Leasehold improvements 5,448 4,295
Construction in progress - 10,374
Total property, plant and equipment 258,593 213,287
Less - accumulated depreciation
and amortization 100,432 86,294
Property, plant and equipment, net 158,161 126,993
Intangibles, net 1,047 890
Total assets $467,893 $466,590
Liabilities and shareholders' investment
Current liabilities:
Lines of credit $ 28,313 $ 29,442
Accounts payable 93,059 107,149
Reserve for returns 13,381 10,172
Accrued liabilities 59,639 37,316
Accrued profit sharing 2,246 3,608
Income taxes payable 12,294 28,591
Total current liabilities 208,932 216,278
Deferred income taxes 7,291 8,122
Shareholders' investment:
Common stock, 40,221 shares issued 402 402
Donated capital 8,400 8,400
Additional paid-in capital 26,676 26,359
Deferred compensation (800) (1,083)
Currency translation adjustments 2,213 968
Retained earnings 405,838 372,944
Treasury stock, 9,981 and 9,236
shares at cost, respectively (191,059) (165,800)
Total shareholders' investment 251,670 242,190
Total liabilities and
shareholders' investment $467,893 $466,590
5
1,000
11-MOS 11-MOS
JAN-29-1999 JAN-30-1998
DEC-25-1998 DEC-26-1997
5271 43397
0 0
29772 21606
0 0
242823 247694
308685 338707
258593 213287
100432 86294
467893 466590
208932 216278
0 0
0 0
0 0
402 402
251268 241788
467893 466590
1242398 1163100
1242398 1163100
673632 617219
673632 617219
3227 3944
0 0
7626 1866
48615 97647
17988 35764
30627 61883
0 0
0 0
0 0
30627 61883
1.00 1.79
0.99 1.92
PerSFAS 128 the EPS is Basic
Expenses included in Other Income and Expense on Consolidated Statement
of Operations
