Lands’ End says sales rose nearly 5 percent in the third quarter and the company ended the three-month period with a profit, but Lands’ End stock took a dive on Thursday as the latest plan to save former parent company Sears Holdings Corp. emerged.
The Dodgeville-based clothing retailer reported net income of $3.3 million, or 10 cents a share, for the thirteen weeks that ended Nov. 2 compared with net income of $162,000, or 1 cent a share, for the same period last year.
An income tax benefit of just under $4 million in the most recent quarter contributed to the positive results.
Sales for the quarter were $341.6 million, up from $325.5 million, a year ago — the sixth consecutive quarter of sales growth, said CEO and president Jerome Griffith.
Customers snapped up cold-weather apparel, with “double-digit gains” in outerwear sales, women’s fleece purchases that “exceeded our expectations,” and an encouraging response to new sweater styles, Griffith told a conference call with financial analysts.
Perhaps casting a shadow over the results is the continuing question over the survival of Sears — parent company to Lands’ End from 2002 to 2014 — including the news Thursday that ESL Holdings is offering to buy the rest of Sears for up to $4.6 billion in cash and stock in order to keep Sears from being liquidated.
ESL is the hedge fund founded by Eddie Lampert, who is also the chairman of Sears. Lampert and ESL own nearly half of Illinois-based Sears, which filed for Chapter 11 bankruptcy protection in October.
For Lands’ End, “Sears has not been part of our long-term growth strategy,” Griffith said.
As of Nov. 2, Lands’ End had 125 shops within Sears stores, down 63 from a year ago. Forty-three of those 125 Sears stores are slated to close and another 33 have leases that expire by the end of January, likely leaving fewer than 50 Lands’ End shops at Sears by the end of 2019, said Jim Gooch, executive vice president and chief financial officer at Lands’ End.
But Lands’ End now has 16 of its own brand-name stores and plans to open another 10 to 15 next year.
Gooch said Lands’ End will open 50 to 60 stores over the next four years “which we believe will make up for the lost sales at Sears.”
CEO Griffith said the last two stores that opened, in New Jersey, are showing some of the strongest sales.
“I believe we have a viable, profitable and expandable store model which complements our successful online presence,” Griffith said. “We have an extremely loyal customer base who are excited to visit us.”
Gooch said the Dodgeville company plans to boost its advertising budget substantially in 2019.
Griffith said the sales momentum continued over Thanksgiving weekend and Cyber Monday. “I’m proud of our team and highly encouraged about the progress we’re making,” he said.
Lands’ End stock closed Thursday at $17.93 a share, down $3.30, or 15.5 percent, from its closing price of $21.23 on Wednesday.
The Associated Press contributed to this report.