Weak traffic, Sears sales plague Lands' End holiday

Weak retail traffic and fewer sales at Sears hurt Lands’ End Inc. during the peak holiday season.

The retailer said it expects that for the period ending Jan. 30, earnings are expected to fall 20% to 26% from the year-earlier period to between $34 million to $37 million. On a per-share basis, the retailer forecast earnings of $1.06 to $1.16. Analysts polled by Thomson Reuters had been expecting $1.38 a share in earnings.

Lands’ End said it expects merchandise sales and service to fall up to 5% from the year earlier to $505 million to $515 million. Sales in its retail segment are expected to fall between 16% to 18%, while currency volatility is expected to dent its overseas business.

"During the fourth quarter, we were disappointed by the performance of our cold weather assortment, especially during the peak holiday period,” said Edgar Huber, Lands' End's president and CEO. “We also experienced mixed customer reactions to some of our fashion investments in key women's categories such as sweaters and knits. The international direct business continued to show improvements in gross margin but had revenue decreases which were significantly impacted by currency translation. The retail segment revenue decrease resulted from the right-sizing of our Lands' End Shops at Sears, declines in store traffic and a decrease in Shop Your Way Rewards credits."

In relation to the full year, Huber added: "We are committed to transforming Lands' End into a global lifestyle brand. The full year results of the US Direct businesses show measurable improvements in all major metrics including revenue, gross profit and gross margin. Despite the challenges of the international direct business and the Retail Segment, we expect to deliver full year Adjusted EBITDA improvement of $10 million to $15 million compared to the prior year. Over the past two years, we have redesigned the merchandise architecture, enhanced our digital shopping experience, implemented a more targeted promotional strategy, aggressively managed inventory and reduced operating expenses."