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UNITED STATES
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 11, 2001
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
of incorporation) Number)
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 to this report is a news release issued by
Lands' End, Inc., announcing its holiday results for the period ended
December 22, 2000.
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.
January 24, 2001 By: /s/ STEPHEN A. ORUM
Stephen A. Orum
Executive Vice President &
Chief Financial Officer
EXHIBIT 99
FOR IMMEDIATE RELEASE
LANDS' END REPORTS HOLIDAY RESULTS
DODGEVILLE, WIS. ... January 11, 2001 ... Lands' End, Inc. (LE), today
reported that net sales for the eight weeks ended December 22, 2000 totaled
$394 million, up 12 percent from sales of $352 million during the same
period ended December 24, 1999. In December alone, net sales were up 16
percent over the prior year.
Net income for the current year eight-week period was $33.9 million,
up 1.6 percent from the $33.4 million earned in the holiday period in 1999.
Diluted earnings per share for the eight-week period just ended were $1.13,
compared with $1.08 in the prior year. Management expects positive
earnings for the fourth quarter, compared with the prior year, but
anticipates that earnings for the full year will be substantially lower
than in the prior year. (See Business Outlook)
In commenting on the eight-week holiday results, company president and
chief executive officer David F. Dyer said, "Sales in this holiday season
have been very gratifying. As planned, we added back our post-Thanksgiving
catalog and shifted the timing of our fall/winter mailings. As a result,
we had solid increases in all of our U.S. businesses, continuing the sales
momentum that began earlier in the fall.
"Because of the strong concentrated demand in some of our most popular
items, we have had a significant increase of backorders to fill in the
holiday period, which has put pressure on our expense structure in the
short term. We also encountered challenges brought on by unprecedented
snowstorms in Wisconsin. These factors caused significantly higher
expenses in overtime and other operational costs. Going forward, we will
analyze these pressures on expenses and develop operational strategies to
reduce them and improve our efficiency. But, as always, we will put our
commitment to customer service first."
During the holiday period just ended, sales growth was driven by an
increase in page circulation and strong response to merchandise offerings.
U.S. catalog demand increased greater than 20 percent, but due to increased
backorders and out-of-stocks, resulted in a 15 percent U.S. net sales gain.
This year's catalog circulation and prospecting strategies, as well as the
changes in the timing of mailings, were extremely successful. They not
only produced strong sales, but also generated more than 1.2 million new
buyers. Year to date, the company's current-year customer file is up 10
percent.
Sales on the company's Internet site www.landsend.com were almost 50
percent higher than those in the holiday period of the prior year. In the
current fiscal year, e-commerce sales have grown to account for about 16
percent of total net sales. Corporate Sales, the company's business-to-
business division, continued its double-digit gains and currently accounts
for about 12 percent of total net sales. The international segment's sales
were down almost 12 percent, due to the strong dollar versus weak foreign
currencies and to weak sales in Japan.
Gross profit in the eight-week period just ended was $190.7 million,
or 48.5 percent of net sales, compared with $169.1 million, or 48.0 percent
of net sales in the prior year's corresponding period. This year's
increase in gross profit margin was primarily due to improved sourcing.
At the end of the eight-week period, inventory was up 8 percent to
$168 million, and the company is pleased with the quality of its current
inventory. This compares to $155 million a year ago and to $243 million two
years ago. Liquidations of excess inventory were 5 percent of total net
sales in each of the last two holiday periods. The company shipped about
80 percent of items at the time of order placement during the holiday
period, compared with 86 percent during the same period last year.
In the eight-week period just ended, selling, general and
administrative expenses rose to $135.1 million, or 34.3 percent of net
sales, compared with $115.6 million, or 32.8 percent of net sales, in last
year's holiday period. More than half of the increase resulted from planned
circulation increases, while an additional 50 basis points was due to
higher customer shipping and handling expenses associated with lower first-
time fulfillment.
Net income for the eight-week period just ended includes a foreign
currency exchange after-tax loss of $0.8 million, compared with no effect
in
the prior year two-month period.
47-WEEK RESULTS
For the first 47 weeks of fiscal 2001, net sales were $1.252 billion,
an increase of 2.4 percent from sales of $1.222 billion during the similar
period of the prior year. Net income in the 47 weeks just ended was $36.8
million, or $1.20 per share, compared with $53.1 million, or $1.72 per
share in the prior year. The prior year includes an addition to net income
(after-tax) of $1.1 million, or $0.04 per share, from the reversal of a
portion of a prior non-recurring charge. Excluding that effect, net income
for the 47-week period ended December 24, 1999 was $52.0 million or $1.68
per share.
BUSINESS OUTLOOK
In looking forward to the remainder of the quarter, the company has re-
instituted its January primary full-price catalog, and will mail its usual
end-of-season clearance catalog late in the month. The company continues
to expect substantial improvement in sales and earnings for the fourth
quarter, as well as somewhat positive sales growth for the full year. The
company now expects the improvement in gross profit margin to be slightly
less than the 115 basis points previously expected. The company currently
expects that diluted earnings per share for the full fiscal year will be
significantly down from the prior year's $1.52, rather than flat to
somewhat lower as previously estimated.
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 our plans, expectations, assumptions, and
estimations for fiscal 2001, gross profit margin, and earnings, as well as
anticipated sales trends and future development of our business strategy,
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
may be materially different from those expressed or implied by these
statements due to a number of factors. Currently, we believe that the
principal factors that create uncertainty about our future results are the
following: customer response to our merchandise offerings, circulation
changes and other initiatives; the mix of our sales between full price and
liquidation merchandise; general economic or business conditions, both
domestic and foreign; effects of shifting patterns of e-commerce versus
catalog purchases; costs associated with printing and mailing catalogs and
fulfilling orders; dependence on consumer seasonal buying patterns; and
fluctuations in foreign currency exchange rates. Our future results could,
of course, be affected by other factors as well. More information about
these risks and uncertainties may be found in the company's 10-K filings
with the S.E.C.
The company does not undertake to publicly update or revise its
forward-looking statements even if experience or future changes make it
clear that any projected results expressed or implied therein will not be
realized.
WEBCAST ANNOUNCEMENT
There will be a live, audio webcast of the company's conference call
for the general public today at 9:30 CT that will cover the company's
performance for the holiday period and its business outlook for the
remainder of the year. Register and listen at
http://www.videonewswire.com/LANDSEND/110900/. A playback will be available
for one week.
The conference call and webcast consist of copyrighted material that
may not be recorded, reproduced, retransmitted, rebroadcast, stored or
forwarded without Lands' End's express written permission. Your
participation represents your consent to these terms and conditions. The
call will be recorded by Lands' End, and your participation on this call
also constitutes your consent to having any comments or statements you make
appear on a transcript or broadcast of this call.
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, 22, Dec. 24, Dec. 22, Dec. 24,
2000 1999 2000 1999
Net sales $393,607 $352,143 $1,251,588 $1,222,338
Cost of sales 202,886 183,053 671,369 668,785
Gross profit 190,721 169,090 580,219 553,553
Selling, general and
administrative expenses 135,065 115,625 516,474 468,529
Reversal of
non-recurring charge - - - (1,774)
Income from operations 55,656 53,465 63,745 86,798
Other income (expense):
Interest expense (381) (305) (1,529) (1,830)
Interest income 248 135 1,702 190
Other (1,714) (309) (5,579) (882)
Total other expense (1,847) (479) (5,406) (2,522)
Income before income taxes 53,809 52,986 58,339 84,276
Income tax provision 19,910 19,605 21,586 31,182
Net income $ 33,899 $ 33,381 $ 36,753 $ 53,094
Basic earnings per share $ 1.14 $ 1.11 $ 1.22 $ 1.77
Diluted earnings per share $ 1.13 $ 1.08 $ 1.20 $ 1.72
Basic weighted average
shares outstanding 29,828 30,149 30,122 30,079
Diluted weighted average
shares outstanding 30,031 31,036 30,503 30,873
CONSOLIDATED BALANCE SHEETS
Lands' End, Inc. & Subsidiaries
(Amounts in thousands)
Dec. 22, Dec. 24,
2000 1999
Assets
Current assets:
Cash and cash equivalents $119,148 $116,981
Receivables, net 28,192 28,294
Inventory 167,850 155,226
Prepaid advertising 14,470 14,982
Other prepaid expenses 9,483 5,916
Deferred income tax benefits 9,820 16,752
Total current assets 348,963 338,151
Property, plant and equipment, at cost:
Land and buildings 103,607 102,696
Fixtures and equipment 201,271 168,435
Leasehold improvements 4,453 4,543
Construction in progress 2,262 -
Total property, plant and equipment 311,593 275,674
Less-accumulated depreciation
and amortization 130,249 115,528
Property, plant and equipment, net 181,344 160,146
Intangibles, net 649 983
Total assets $530,956 $499,280
Liabilities and shareholders' investment
Current liabilities:
Lines of credit $ 7,898 $ 15,402
Accounts payable 108,285 87,786
Reserve for returns 17,449 12,439
Accrued liabilities 52,220 51,099
Accrued profit sharing 2,358 2,418
Income taxes payable 20,725 21,616
Total current liabilities 208,935 190,760
Deferred income taxes 8,740 8,935
Shareholders' investment:
Common stock, 40,221 shares issued 402 402
Donated capital 8,400 8,400
Additional paid-in capital 31,541 29,708
Deferred compensation (126) (252)
Accumulated other comprehensive income 4,813 1,053
Retained earnings 491,183 459,490
Treasury stock, 11,031 and 10,072
shares at cost, respectively (222,932) (199,216)
Total shareholders' investment 313,281 299,585
Total liabilities and shareholders'
investment $530,956 $499,280