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) May 9, 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 first quarter results of fiscal year 2002
for the period ended April 27, 2001.
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.
May 16, 2001 By: /S/ DONALD R. HUGHES
Donald R. Hughes
Senior Vice President &
Chief Financial Officer
EXHIBIT 99
FOR IMMEDIATE RELEASE
LANDS' END REPORTS STRONG GAINS IN SALES
AND EARNINGS FOR FIRST QUARTER
DODGEVILLE, WIS. ... May 9, 2001 ... Lands' End, Inc. (LE), the direct
merchant of classically styled apparel and home furnishings, today reported
results for its first quarter of fiscal year 2002, ended April 27, 2001.
Total revenue for the first quarter just ended was $311.1 million, up 9
percent from $285.8 million in the prior year's quarter. Net income for the
quarter just ended was $5.9 million, and diluted earnings per share were
$0.20, compared with net income of $292 thousand, or $0.01, for the same
period last year.
In commenting on the results, company president and chief executive officer
David F. Dyer said, "We're extremely pleased with our first quarter
performance, having demonstrated strong sales and a significant improvement
in earnings. This was especially gratifying in the face of a difficult
economy. The credit goes to all our Lands' End associates who continue to
function as a solid team. The company is increasingly well positioned for
future growth."
Segment merchandise sales data for first quarter
(in millions) Percent
1Q02 1Q01 Change
Core business segment $173 $161 + 8 %
Specialty segment 86 79 + 9 %
International segment 28 26 + 7 %
Total merchandise sales $287 266 + 8 %
Internet $ 54 $ 39 +40 %
Segment merchandise sales data excludes shipping
and handling revenue. Internet merchandise sales
are included in the respective business segments.
As previously announced, we had shifted the timing of a major clearance
catalog and added a Kids catalog, which, taken together, accounted for about
two-thirds of the first quarter sales increase. Growth in the core business
segment was led by strength in the women's and co-ed divisions. A portion
of this growth came from mailing the Lands' End core May catalog one week
earlier than last year. In the specialty segment, the Kids division showed
the strongest growth; Corporate Sales grew in the low-single digits,
reflecting a slowdown in national business spending; and Coming Home, which
features products for bed and bath, was relatively flat. All international
businesses had double-digit sales increases when measured in their local
currencies, and overall international sales in U.S. dollars were also
improved.
Gross profit for the quarter just ended was $132 million, or 42.4 percent of
total revenue, compared with $120 million, or 41.9 percent of total revenue
in the prior year. Merchandise gross profit margin rose due to higher
initial margins from improved sourcing.
Liquidation of excess inventory was 11 percent of net merchandise sales for
the first quarter of both years. Inventory was $198 million as of April 27,
2001, up 10 percent from $179 million at the same time last year. Inventory
is currently in line with the sales increase and with planned levels, and
the quality of inventory is improved from the prior year.
For the first quarter this year, selling, general and administrative
expenses were $121 million, up 3 percent from $118 million in the prior
year. As a percentage of total revenue, SG&A was 39.0 percent, compared
with 41.4 percent in the prior year. More than half of the improvement in
the SG&A ratio was due to a reduction in national advertising expenses,
bringing them more in line with historical levels of spending. In addition,
higher sales productivity per page resulted in relatively lower catalog
costs.
BUSINESS OUTLOOK
We continue to take a conservative approach to our business in light of the
uncertainty in the U.S. economy, particularly in the retail environment.
For fiscal 2002, a 53-week year that will end on February 1, 2002, the
company expects that sales will increase in the single digit range, and we
expect gross profit margin to show continued improvement compared to the
prior year. As a result, we expect an increase in diluted earnings per
share of at least 20 percent for the year as a whole.
As described later in our statement regarding forward-looking information,
our business's profit level is sensitive to many factors, including changes
in sales volume, which are difficult for us, like most retailers, to
accurately predict.
Lands' End is a direct merchant of traditionally styled, classic products
offered to customers around the world through regular mailings of its
monthly and specialty catalogs and via the Internet at www.landsend.com.
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 2002, 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; overall consumer confidence and general economic
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; fluctuations in foreign currency exchange rates; and
changes that may have different effects on the various sectors in which we
operate (e.g., rather than individual consumers, the Corporate Sales
Division, included in the specialty segment, sells to numerous
corporations, and certain of these sales are for their corporate
promotional activities). 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 was a live, audio webcast of the company's conference call for the
general public on May 9 at 9:30 CT. This call covered the company's
performance for the first quarter and its business outlook for the
remainder of the year. A playback was available for one week at
videonewswire.com/LANDSEND/050901.
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. The call was
recorded by Lands' End, and participants on the call did so under the
express condition that their participation constituted their consent to
(i) the copyright terms set forth above, and (ii) having any comments or
statements made appear in any transcript or broadcast of the call.
Contact Charlotte LaComb: 608-935-4835
Preliminary and unaudited
CONSOLIDATED STATEMENTS OF OPERATIONS
Lands' End, Inc. & Subsidiaries
(In thousands, except per share data)
Three months ended
April 27, April 28,
2001 2000
Revenue
Net merchandise sales $287,117 $266,045
Shipping and handling revenue 24,003 19,795
Total revenue 311,120 285,840
Cost of sales
Cost of merchandise 154,913 145,146
Shipping and handling costs 24,263 20,926
Total cost of sales 179,176 166,072
Gross profit 131,944 119,768
Selling, general and
administrative expenses 121,438 118,448
Income from operations 10,506 1,320
Other income
Interest expense (233) (130)
Interest income 636 719
Other (1,536) (1,445)
Total other expense, net (1,133) (856)
Income before income taxes 9,373 464
Income tax provision 3,515 172
Net income $ 5,858 $ 292
Basic earnings per share $ 0.20 $ 0.01
Diluted earnings per share $ 0.20 $ 0.01
Basic weighted average shares outstanding 29,380 30,199
Diluted weighted average shares outstanding 29,620 30,835
Preliminary and unaudited
CONSOLIDATED BALANCE SHEETS
Lands' End, Inc. & Subsidiaries
(In thousands)
April 27, April 28,
2001 2000
Assets
Current assets:
Cash and cash equivalents $ 26,591 $ 45,078
Receivables, net 17,140 17,141
Inventory 197,561 179,143
Prepaid advertising 20,801 21,877
Other prepaid expenses 8,947 7,981
Income taxes receivable 397 63
Deferred income tax benefits 10,973 10,661
Total current assets 282,410 281,944
Property, plant and equipment, at cost:
Land and buildings 104,880 102,788
Fixtures and equipment 103,512 104,194
Computer hardware and software 105,334 74,523
Leasehold improvements 4,642 4,453
Construction in progress 7,461 -
Total property, plant and equipment 325,829 285,958
Less-accumulated depreciation and
amortization 138,134 123,702
Property, plant and equipment, net 187,695 162,256
Intangibles, net 645 637
Total assets $470,750 $444,837
Liabilities and shareholders' investment
Current liabilities:
Lines of credit $ 21,573 $ 18,412
Accounts payable 67,152 72,638
Reserve for returns 7,287 6,014
Accrued liabilities 35,626 36,154
Accrued profit sharing 755 186
Total current liabilities 132,393 133,404
Deferred income taxes 17,251 9,117
Shareholders' investment:
Common stock, 40,221 shares issued 402 402
Donated capital 8,400 8,400
Additional paid-in capital 32,358 31,541
Deferred compensation (103) (204)
Accumulated other comprehensive income 4,477 3,413
Retained earnings 494,945 454,722
Treasury stock, 10,834 and 9,925
shares at cost, respectively (219,373) (195,958)
Total shareholders' investment 321,106 302,316
Total liabilities and shareholders' investment $470,750 $444,837
Preliminary and unaudited
CONSOLIDATED STATEMENTS OF CASH FLOWS
Lands' End, Inc. & Subsidiaries
(In thousands)
Three Months Ended
April 27, April 28,
2001 2000
Cash flows from (used for) operating activities:
Net income $ 5,858 $ 292
Adjustments to reconcile net income to net
cash flows from operating activities-
Depreciation and amortization 6,235 5,990
Deferred compensation expense 18 32
Deferred income taxes 2,684 -
Tax benefit of stock options 450 1,832
Changes in assets and liabilities:
Receivables, net 2,668 612
Inventory (9,350) (16,950)
Prepaid advertising (3,174) (5,305)
Other prepaid expenses 768 (2,165)
Accounts payable (29,016) (1,872)
Reserve for returns (1,774) (1,855)
Accrued liabilities (4,779) (4,653)
Accrued profit sharing (1,602) (2,574)
Income taxes payable (13,610) (10,318)
Other (1,497) 738
Net cash flows used for operating activities (46,121) (36,196)
Cash flows from (used for) investing activities:
Cash paid for capital additions (9,361) (5,042)
Net cash flows used for investing
activities (9,361) (5,042)
Cash flows from (used for) financing activities:
Proceeds from short-term debt 4,633 6,688
Purchases of treasury stock (4) (1,014)
Issuance of treasury stock 2,093 4,229
Net cash flows from financing activities 6,722 9,903
Net decrease in cash and cash equivalents (48,760) (31,335)
Beginning cash and cash equivalents 75,351 76,413
Ending cash and cash equivalents $ 26,591 $ 45,078