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) November 6, 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 third quarter results of
fiscal year 2002 for the period ended October 26, 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.
November 14, 2001 By: /S/ DONALD R. HUGHES
Donald R. Hughes
Senior Vice President &
Chief Financial Officer
EXHIBIT 99
FOR IMMEDIATE RELEASE
LANDS' END REPORTS RECORD THIRD QUARTER SALES AND EARNINGS
DODGEVILLE, WI ... November 6, 2001 ... Lands' End, Inc. (LE), the
direct merchant of classically styled apparel and home furnishings,
today reported results for its third quarter of fiscal 2002, ended
October 26, 2001.
Total revenue for the third quarter was $376.1 million, up
4 percent from $362.3 million in the same quarter last year. Net
income for the quarter was $12.1 million, compared with $4.4 million
earned in the same quarter last year. Diluted earnings per share
were $0.41, compared with $0.15 in the prior year, representing a new
third quarter company record.
In commenting on the quarter, company president and chief
executive officer David F. Dyer said, "We're delighted with our
strong third quarter results. Our performance in full-price sales,
gross margin and prudent expense control propelled us to the new
record. I believe these results, especially in such uncertain times,
are due to our customers' response to our fresh merchandise, our
improved catalog presentations and our strong quality/value
proposition."
For the third quarter, sales of full-price merchandise to the
U.S. consumer rose 16 percent, while as previously announced,
liquidation sales declined about $15 million. As a percent of total
revenue, gross margin improvement of 3.7 percentage points was due to
reduced liquidation and significantly better vendor sourcing.
Overall selling, general and administrative expenses rose 6.1
percent, due to higher provisions for employee incentives and profit
sharing. However, aside from these provisions, all other SG&A
expenses declined 1.4 percentage points on a relative basis.
NINE MONTH RESULTS
For the nine months just ended, both revenue and operating
income set records for the company. Total revenue was $973.1
million, up about 5 percent from total revenue of $923.7 million
during the same period last year. Net income for the first nine
months of fiscal 2002 was $21.0 million, or $0.71 per diluted share,
compared with net income of $2.9 million, or $0.09 per share in the
same period a year ago. Gross margin has improved 1.5 percentage
points, and selling, general and administrative expenses were reduced
1.3 percentage points, as a percent of the total nine months revenue.
THIRD QUARTER COMMENTS
In the U.S. consumer business, women's and co-ed showed
significant growth during the third quarter. In the specialty
segment, Kids had strong double-digit sales increases, while
Corporate Sales, the non-consumer division that is part of the
specialty segment, showed a double-digit decline, mainly due to the
continued slowdown in national business spending. In local
currencies, the U.K. and Germany had higher merchandise sales than a
year ago, while Japan's were slightly down. When measured in U.S.
dollars, the international business segment was up by about 14
percent, mainly due to double-digit increases in the U.K. and
Germany.
Gross profit in the quarter just ended was $164.9 million, or
43.8 percent of total revenue, compared with $145.2 million, or 40.1
percent of total revenue, in the similar quarter last year. The
strong improvement in gross profit margin was attributable to the
$15.4 million reduction in liquidation sales and continued
improvements in vendor sourcing.
As expected, liquidations of excess inventory were 12 percent of
net merchandise sales in the quarter just ended, compared with 17
percent in the prior year. Third quarter ending inventory was $294
million, up 13 percent from $261 million a year ago, reflecting the
planned earlier receipts of fall merchandise and greater investment
in key styles. Inventory is in excellent condition, significantly
improved from the prior year. We shipped about 92 percent of items
at the time of order placement during the quarter just ended,
consistent with our high standards of customer service and an
improvement over last year's 90 percent first time fulfillment rate.
For the third quarter this year, selling, general and
administrative expenses totaled $144.1 million, compared with $135.7
million last year. As a percentage of total revenue, SG&A was 38.3
percent, compared with 37.5 percent in the similar period last year.
As stated, the change in the SG&A ratio resulted from higher employee
incentives and profit-sharing expense, as well as higher depreciation
and opening costs for our Stevens Point complex. When measured as a
percent of total revenue, these were mostly offset by reductions in
catalog circulation cost, national advertising and all other
operating expenses.
SEGMENT DATA
Segment merchandise sales data for third quarter
(in millions) Percent
3Q02 3Q01 Change
Core business segment $188 $185 + 2 %
Specialty segment 128 123 + 4 %
International segment 32 28 +14 %
Total merchandise sales $348 $336 + 4 %
Internet $ 72 54 +33 %
Segment merchandise sales data (full-price and
liquidation sales) excludes shipping and handling
revenue. Internet merchandise sales are included
in the respective business segments.
BUSINESS OUTLOOK
For the full year, we plan capital expenditures of between $42
million to $45 million, of which about $31 million has been spent
during the first 9 months of fiscal 2002.
Given recent experience, we have a good opportunity to exceed
last year's strong fourth quarter sales and earnings, and if our
momentum continues, we will be successful in doing so. Last year's
fourth quarter double-digit sales and earnings results present a
challenging point of comparison, especially given the current
uncertain economic environment. We are more cautious about post-
Christmas performance and the general softness of consumer spending.
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 revenues, 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 weather on customer purchasing behavior; 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
The company had an audio web cast of its conference call for the
general public on Wednesday, November 6, at 9:30 a.m. CT. This call
covered the company's performance for the third quarter and its business
outlook for the remainder of the year. Register and listen at
http://www.videonewswire.com/event.asp?id=1895. A playback was
available for one week.
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.
Your participation represents your consent to these terms and
conditions. The call was recorded by Lands' End, and your
participation on this call also constitutes your consent to having
any comments or statements you make appear on a transcript or
broadcast of this call.
Contact Charlotte LaComb: 608-935-4835
PRELIMINARY AND UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
Lands' End, Inc. & Subsidiaries
(Amounts in thousands, except per share data)
Three months ended Nine months ended
Oct. 26, Oct. 27, Oct. 26, Oct. 27,
2001 2000 2001 2000
Revenue
Net merchandise sales $348,357 $336,391 $898,348 $857,981
Shipping and handling
revenue 27,758 25,870 74,708 65,745
Total revenue 376,115 362,261 973,056 923,726
Cost of sales
Cost of merchandise sales 185,247 190,663 477,549 468,483
Shipping and handling
costs 25,952 26,389 73,790 68,998
Total cost of sales 211,199 217,052 551,339 537,481
Gross profit 164,916 145,209 421,717 386,245
Selling, general and
administrative expenses 144,050 135,713 385,142 378,156
Income from operations 20,866 9,496 36,575 8,089
Other income (expense):
Interest expense (658) (801) (1,141) (1,148)
Interest income 59 235 984 1,454
Other (843) (1,878) (2,757) (3,865)
Total other expense, net (1,442) (2,444) (2,914) (3,559)
Income before income taxes 19,424 7,052 33,661 4,530
Income tax provision 7,284 2,609 12,623 1,676
Net income $ 12,140 $ 4,443 $ 21,038 $ 2,854
Basic earnings per share $ 0.41 $ 0.15 $ 0.72 $ 0.09
Diluted earnings per share $ 0.41 $ 0.15 $ 0.71 $ 0.09
Basic weighted average
shares outstanding 29,335 30,290 29,376 30,261
Diluted weighted average
shares outstanding 29,782 30,491 29,798 30,681
PRELIMINARY AND UNAUDITED
CONSOLIDATED BALANCE SHEETS
Lands' End, Inc. & Subsidiaries Oct. 26, Oct. 27,
(Dollars in thousands) 2001 2000
Assets
Current assets:
Cash and cash equivalents $ 12,339 $ 20,031
Receivables, net 18,390 21,992
Inventory 294,344 260,503
Prepaid advertising 34,266 42,586
Other prepaid expenses 10,755 8,769
Deferred income tax benefit 11,628 10,661
Total current assets 381,722 364,542
Property, plant and equipment, at cost:
Land and buildings 116,949 103,371
Fixtures and equipment 106,554 104,338
Computer hardware and software 116,744 95,740
Leasehold improvements 4,675 4,453
Construction in progress - 1,301
Total property, plant and equipment 344,922 309,203
Less - accumulated depreciation
and amortization 150,517 131,581
Property, plant and equipment, net 194,405 177,622
Intangibles, net 654 670
Total assets $576,781 $ 542,834
Liabilities and shareholders' investment
Current liabilities:
Lines of credit $ 53,885 $ 70,239
Accounts payable 108,386 109,940
Reserve for returns 10,472 8,521
Accrued liabilities 51,763 39,722
Accrued profit sharing 3,508 184
Income taxes payable 9,025 1,136
Total current liabilities 237,039 229,742
Deferred income taxes 12,304 9,117
Shareholders' investment:
Common stock, 40,221 shares issued 402 402
Donated capital 8,400 8,400
Additional paid-in capital 33,060 31,541
Deferred compensation (69) (147)
Accumulated other comprehensive income 3,417 3,688
Retained earnings 510,125 457,284
Treasury stock, 11,091 and 9,977
shares at cost, respectively (227,897) (197,193)
Total shareholders' investment 327,438 303,975
Total liabilities and
shareholders' investment $ 576,781 $ 542,834
PRELIMINARY AND UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Lands' End, Inc. & Subsidiaries Nine Months Ended
(In thousands) Oct. 26, Oct. 27,
2001 2000
Cash flows from (used for) operating activities:
Net income $ 21,038 $ 2,854
Adjustments to reconcile net income to
net cash flows from operating activities:
Depreciation and amortization 19,578 17,220
Deferred compensation expense 52 89
Loss on disposal of fixed assets 364 40
Deferred income taxes (2,918) -
Tax benefit of stock options 1,152 1,832
Changes in current assets and
liabilities:
Receivables, net 1,418 (4,239)
Inventory (106,133) (98,310)
Prepaid advertising (16,639) (26,014)
Other prepaid expenses (1,040) (2,953)
Accounts payable 12,218 35,430
Reserve for returns 1,411 652
Accrued liabilities 12,536 (2,611)
Accrued profit sharing 1,151 (2,576)
Income taxes payable (4,188) (9,119)
Other (2,557) 1,013
Net cash flows used for operating
activities (62,557) (86,692)
Cash flows used for investing activities:
Cash paid for capital additions (30,965) (30,185)
Net cash flows used for investing activities (30,965) (30,185)
Cash flows from (used for) financing activities:
Proceeds from short-term debt 36,945 58,515
Purchases of treasury stock (12,388) (2,249)
Issuance of treasury stock 5,953 4,229
Net cash flows from financing
activities 30,510 60,495
Net decrease in cash and cash equivalents (63,012) (56,382)
Beginning cash and cash equivalents 75,351 76,413
Ending cash and cash equivalents $ 12,339 $ 20,031