LANDS' END, INC. (LE) SEC Filing 10-Q Quarterly report for the period ending Friday, November 2, 2018
Net revenue for the third quarter increased 4.9% to $341.6 million from $325.5 million in the third quarter last year. Direct segment net revenue increased 8.1% to $313.8 million, as compared to the same period last year. Retail segment net revenue decreased 21.0% to $27.8 million, from $35.2 million in the third quarter last year, due to the reduction in Lands’ End Shops at Sears locations. Same store sales increased by 11.8% overall, with U.S. Company operated stores increasing by 15.1% and same store sales in Lands’ End Shops at Sears increasing by 11.7%. At the end of the third quarter, there were 63 fewer Lands' End Shops at Sears.
Gross margin increased approximately 60 basis points to 44.2% from 43.6% in the third quarter last year.
Net income was $3.3 million, or $0.10 earnings per diluted share, as compared to Net income of $0.2 million, or $0.01 earnings per diluted share, in the third quarter of fiscal 2017.
Adjusted EBITDA(1) grew 22.1% to $15.7 million compared to $12.9 million in the third quarter of fiscal 2017.
The following information was filed by LANDS' END, INC. on Thursday, December 6, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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- 18487859_164Financial - DebtEvents of Default The Debt Facilities include customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross defaults related to certain other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, and material judgments and change of control.
- 18487859_71Financial - Earnings24 24 Gross profit increased $9.0 million to $151.0 million and gross margin increased to 44.2% of total Net revenue, in Third Quarter 2018, compared with $142.0 million, and gross margin of 43.6% of total Net revenue, in Third Quarter 2017.
- 18487859_77Financial - EarningsRetail segment gross margin increased approximately 570 basis points to 39.9% of Net revenue, in Third Quarter 2018, compared to 34.2% of Net revenue, in Third Quarter 2017 through full priced selling mix, promotional productivity and improved quality of our seasonal assortment, which led to higher sell through and reduced markdowns.
- 18487859_165Other - OtherNet cash used in operating activities decreased to $52.2 million in the Year-to-Date 2018 from a net cash use of $87.8 million in the Year-to-Date 2017, primarily driven by improved working capital management through: Lower Accounts payable payments in Fiscal 2018 due to timing of inventory receipts and payments, 30 30 Higher receipts from Accounts receivable, net in Fiscal 2018 due to high customer receivables outstanding at the beginning of the year related to the Delta Airlines launch.
- 18487859_109Financial - EarningsDirect segment gross margin decreased approximately 70 basis points to 44.6% of Net revenue for Year- 26 26 to-Date 2018, compared with 45.3% of Net revenue for Year-to-Date 2017.
- 18487859_86Financial - ExpenseDepreciation and amortization expense was $7.4 million in Third Quarter 2018, an increase of $1.0 million or 16.0%, compared with $6.4 million in Third Quarter 2017, primarily attributable to an increase in depreciation associated with our ongoing multi-year ERP system implementation.
- 18487859_121Financial - ExpenseDepreciation and amortization expense was $20.4 million in Year-to-Date 2018, an increase of $1.4 million, or 7.3%, compared with $19.0 million in Year-to-Date 2017, primarily attributable to an increase in depreciation associated with our ongoing multi-year ERP system implementation.
- 18487859_37Revenue - ProductThus, lower than expected fourth quarter net revenue could have an adverse impact on our annual operating results.
- 18487859_124Other - OtherThe increase was primarily due to improved growth in our Direct business, partially offset by closures of Lands' End Shops at Sears.
- 18487859_47Financial - IncomeWhile Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance, and useful to investors, because: EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax costs or benefits.
- 18487859_74Financial - EarningsDirect segment gross margin decreased approximately 20 basis points to 44.6% of total Net revenue in Third Quarter 2018, compared with 44.8% of total Net revenue in Third Quarter 2017.
- 18487859_4Other - OtherRisk Factors" in our Annual Report filed on Form 10-K for the year ended February 2, 2018 and "Part II, Item 1A Risk Factors" of this Quarterly Report on Form 10-Q, for a discussion of the uncertainties, risks and assumptions associated with these statements.
- 18487859_103Revenue - ProductThe decrease was primarily attributable to a reduction of our Lands' End Shops at Sears locations and a 7.1% decrease in Lands' End Shops at Sears Same Store Sales.
- 18487859_39Other - OtherCash provided by operating activities is typically higher in the fourth quarter of the fiscal year due to reduced working capital requirements during that period.
- 18487859_85Financial - ExpenseThe $0.7 million, or 6.8%, increase was largely attributable to an increase in personnel costs and incentive accruals.
- 18487859_196Other - OtherThese risks and uncertainties include those risks, uncertainties and factors discussed in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended February 2, 2018, as modified by "Part II, Item 1A Risk Factors" of this Quarterly Report on Form 10-Q.
- 18487859_81Financial - ExpenseThe basis point increase was largely attributable to the increased marketing investment in addition to personnel costs and incentive accruals related to the continued growth of the US Direct business.
- 18487859_181Revenue - ProductEffective First Quarter 2018, we adopted authoritative guidance related to revenue recognition from contracts with customers using the modified retrospective method.
- 18487859_141Financial - DividendOn April 4, 2014, Lands? End entered into the $515.0 million Term Loan Facility of which proceeds were used to pay a dividend of $500.0 million to a subsidiary of Sears Holdings Corporation immediately prior to the Separation and to pay fees and expenses associated with the Debt Facilities of approximately $11.4 million, with the remaining proceeds used for general corporate purposes.
- 18487859_89Financial - ExpenseInterest expense was $7.3 million in Third Quarter 2018 compared to $6.4 million in Third Quarter 2017, reflective of a rising interest rate environment.
- 18487859_125Financial - ExpenseInterest expense was $21.2 million in Year-to-Date 2018 compared to $18.6 million in Year-to-Date 2017, reflective of a rising interest rate environment.
- 18487859_90Financial - ExpenseOther expense, net was $1.9 million in Third Quarter 2018 compared to other income, net of $0.6 million in Third Quarter 2017, driven by the establishment of a reserve against an indemnification asset.
- 18487859_45Other - OtherOur management uses Adjusted EBITDA to evaluate the operating performance of our businesses for comparable periods, and as an executive compensation metric.
- 18487859_75Financial - EarningsThe gross margin decrease was due to increased shipping costs, partially offset by stronger merchandise margins and effective inventory management of our seasonal assortment.
- 18487859_73Financial - EarningsDirect segment Gross profit increased $9.9 million to $139.9 million in Third Quarter 2018 from $130.0 million in Third Quarter 2017.
- 18487859_108Financial - EarningsDirect segment Gross profit increased 9.3% to $385.3 million in Year-to-Date 2018 from $352.6 million in Year-to-Date 2017.
- 18487859_61Revenue - ProductNet revenue for Third Quarter 2018 was $341.6 million, compared with $325.5 million in the comparable period of the prior year, an increase of $16.1 million, or 4.9%.
- 18487859_96Revenue - ProductNet revenue for Year-to-Date 2018 was $949.3 million, compared with $896.0 million in the comparable period of the prior year, an increase of $53.3 million or 5.9%.
- 18487859_156Other - OtherBase rate borrowings will range from 0.50% to 1.00% for the ABL Facilities.
- 18487859_100Revenue - ProductIn our U.S. eCommerce business, we increased our buyer file and conversion rate helping to drive increased revenue across our assortment.
- 18487859_92Other - OtherThe effective tax rate was 581.6% in Third Quarter 2018 compared with 3.0% in Third Quarter 2017.
- 18487859_129Other - OtherThe effective tax rate was 68.5% in Year-to-Date 2018 compared with 33.7% in Year-to-Date 2017.
- 18487859_18Other - OtherThis section discusses financial instruments of the Company that could have off-balance-sheet risk.
- 18487859_95Other - OtherAs a result of the above factors, Adjusted EBITDA increased 22.1% to $15.7 million in Third Quarter 2018 from $12.9 million in Third Quarter 2017.
- 18487859_132Other - OtherAs a result of the above factors, Adjusted EBITDA increased 54.6% to $32.4 million in Year-to-Date 2018 from $21.0 million in Year-to-Date 2017.
- 18487859_67Revenue - ProductConsolidated Same Store Sales increased 11.8% as compared to the same period of the prior year.
- 18487859_63Revenue - ProductDirect segment Net revenue was $313.8 million for Third Quarter 2018, an increase of $23.5 million, or 8.1%, from the comparable period of the prior year.
- 18487859_98Revenue - ProductDirect segment Net revenue was $863.8 million for Year-to-Date 2018, an increase of $85.2 million, or 10.9%, from the comparable period of the prior year.
- 18487859_139Other - OtherThe Current ABL Facility is available for working capital and other general corporate purposes and, as of November 2, 2018, was undrawn other than for $22.6 million in outstanding letters of credit.
- 18487859_175Other - OtherThe Current ABL Facility is available for working capital and other general corporate purposes and was undrawn at November 2, 2018, other than for $22.6 million in outstanding letters of credit.
- 18487859_171Other - OtherOn November 16, 2017, the Company entered into an asset-based lending credit agreement with Wells Fargo Bank, National Association, which provides for maximum borrowings of $175.0 million for the Company, subject to a borrowing base.
- 18487859_127Financial - ExpenseOther expense in Year-to-Date 2018 was primarily attributable to the reversal of an indemnification asset and accrued interest due to favorable state tax audit, and a reserve taken against the indemnification asset.
- 18487859_120Financial - ExpenseThe $2.4 million, or 9.3%, increase was primarily due to an increase in personnel costs and incentive accruals.
- 18487859_136Revenue - ProductCash generated from our net sales and profitability, and somewhat to a lesser extent our changes in working capital, are driven by the seasonality of our business, with a disproportionate amount of Net revenue and operating cash flows generally occurring in the fourth fiscal quarter of each year.
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- Form Type: Quarterly
- Number of times amended: 0
- Accession Number: 0000799288-18-000064
- Submitted to the SEC: Thursday, December 6, 2018 4:47:06 PM EST
- Accepted by the SEC: Thursday, December 6, 2018
- Period ending: November 2018
- Industry: Retail Family Clothing Stores
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LANDS' END, INC.
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