LANDS' END, INC. (LE) SEC Filing 10-Q Quarterly report for the period ending Friday, November 2, 2018

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Exhibit 99.1

LANDS' END ANNOUNCES THIRD QUARTER FISCAL 2018 RESULTS

Company continues sales growth with improved profitability

DODGEVILLE, Wis., December 6, 2018 (GLOBE NEWSWIRE) - Lands' End, Inc. (NASDAQ:LE) today announced financial results for the Third Quarter ended November 2, 2018.

Third Quarter Fiscal 2018 Highlights:

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.

Jerome S. Griffith, Chief Executive Officer and President, stated, “Our third quarter results marked the sixth consecutive quarter of sales growth and the fifth consecutive quarter of Adjusted EBITDA increases. We were pleased to see accelerated growth in our Direct segment, which grew approximately 8% as compared to last year, driven by strength in our U.S. eCommerce business, which grew double digits. We have continued the rollout of our own retail stores, and believe we have a viable, profitable and expandable store model which complements our successful online presence. We are extremely pleased to see the momentum across our business continued through the Thanksgiving and Cyber Monday period. Our inventory position is very strong, and we have depth in key items to drive sales over the remainder of the holiday period. As we look forward, we will continue to execute on our strategic plan focusing on product, digitalization, uni-channel distribution and infrastructure to drive consistent performance across the business.”

Balance Sheet and Cash Flow Highlights
Cash and cash equivalents were $105.9 million as of November 2, 2018, compared to $92.9 million on October 27, 2017. Net cash used in operations was $52.2 million for the thirty-nine weeks ended November 2, 2018, compared to net cash used in operations of $87.8 million for the same period last year.
Inventory was $432.0 million as of November 2, 2018, and $423.5 million as of October 27, 2017.
The Company had $152.4 million of availability under its asset-based senior secured credit facility and had $483.4 million of Long-term debt, net as of November 2, 2018.
Conference Call
The Company will host a conference call on Thursday, December 6, 2018, at 8:30 a.m. ET to review its third quarter financial results and related matters. The call may be accessed through the Investor Relations section of the Company's website at http://investors.landsend.com or by dialing (866) 753-5836.
About Lands' End, Inc.
Lands' End, Inc. (NASDAQ:LE) is a leading multi-channel retailer of casual clothing, accessories, footwear and home products. We offer products through catalogs, online at www.landsend.com, international websites, third party


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_164
    Financial - Debt
    Events 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_71
    Financial - Earnings
    24 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_77
    Financial - Earnings
    Retail 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_165
    Other - Other
    Net 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_109
    Financial - Earnings
    Direct 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_86
    Financial - Expense
    Depreciation 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_121
    Financial - Expense
    Depreciation 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_37
    Revenue - Product
    Thus, lower than expected fourth quarter net revenue could have an adverse impact on our annual operating results.
  • 18487859_124
    Other - Other
    The increase was primarily due to improved growth in our Direct business, partially offset by closures of Lands' End Shops at Sears.
  • 18487859_47
    Financial - Income
    While 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_74
    Financial - Earnings
    Direct 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_4
    Other - Other
    Risk 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_103
    Revenue - Product
    The 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_39
    Other - Other
    Cash 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_85
    Financial - Expense
    The $0.7 million, or 6.8%, increase was largely attributable to an increase in personnel costs and incentive accruals.
  • 18487859_196
    Other - Other
    These 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_81
    Financial - Expense
    The 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_181
    Revenue - Product
    Effective First Quarter 2018, we adopted authoritative guidance related to revenue recognition from contracts with customers using the modified retrospective method.
  • 18487859_141
    Financial - Dividend
    On 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_89
    Financial - Expense
    Interest 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_125
    Financial - Expense
    Interest 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_90
    Financial - Expense
    Other 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_45
    Other - Other
    Our management uses Adjusted EBITDA to evaluate the operating performance of our businesses for comparable periods, and as an executive compensation metric.
  • 18487859_75
    Financial - Earnings
    The gross margin decrease was due to increased shipping costs, partially offset by stronger merchandise margins and effective inventory management of our seasonal assortment.
  • 18487859_73
    Financial - Earnings
    Direct segment Gross profit increased $9.9 million to $139.9 million in Third Quarter 2018 from $130.0 million in Third Quarter 2017.
  • 18487859_108
    Financial - Earnings
    Direct 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_61
    Revenue - Product
    Net 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_96
    Revenue - Product
    Net 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_156
    Other - Other
    Base rate borrowings will range from 0.50% to 1.00% for the ABL Facilities.
  • 18487859_100
    Revenue - Product
    In our U.S. eCommerce business, we increased our buyer file and conversion rate helping to drive increased revenue across our assortment.
  • 18487859_92
    Other - Other
    The effective tax rate was 581.6% in Third Quarter 2018 compared with 3.0% in Third Quarter 2017.
  • 18487859_129
    Other - Other
    The effective tax rate was 68.5% in Year-to-Date 2018 compared with 33.7% in Year-to-Date 2017.
  • 18487859_18
    Other - Other
    This section discusses financial instruments of the Company that could have off-balance-sheet risk.
  • 18487859_95
    Other - Other
    As 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_132
    Other - Other
    As 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_67
    Revenue - Product
    Consolidated Same Store Sales increased 11.8% as compared to the same period of the prior year.
  • 18487859_63
    Revenue - Product
    Direct 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_98
    Revenue - Product
    Direct 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_139
    Other - Other
    The 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_175
    Other - Other
    The 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_171
    Other - Other
    On 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_127
    Financial - Expense
    Other 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_120
    Financial - Expense
    The $2.4 million, or 9.3%, increase was primarily due to an increase in personnel costs and incentive accruals.
  • 18487859_136
    Revenue - Product
    Cash 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