Tag Archives: NASDAQ:LE

Lands End: Zacks’ Bear of the Day Play

American retailers are seeing a seismic shift in shopping habits, and overall tastes.  Stores that are adapting to these changes are making their brick and mortar stores more exciting with the addition of spas, climbing walls, and even a giant fish tank to test fishing rods.  These new “attractions” are enticing customers to come into the store and buy their products.

But some stores, especially in apparel, are getting crushed by online shopping and the physical stores are basically becoming a big showroom.  Potential customers go into the store to check out the clothes, but then they just take a picture of the clothes to find the same item online for a cheaper price. This is one of the major reasons for the death of the American mall, and its negatively impacting the Zacks Bear of the Day, Lands End Inc. (LESnapshot Report) as well.

This Zacks Rank #5 (Strong Sell) operates as a multi-channel retailer. It offers men’s, women’s, and kids’ apparel, outerwear and swimwear; specialty apparel; accessories; footwear; and home products. The Company operates in two segments: Direct and Retail. It offers products through catalogs, online at http://www.landsend.com and affiliated specialty and international Websites, and through retail locations. Lands’ End, Inc. is based in Dodgeville, Wisconsin.

Recent Earnings Miss

The company reported Q1 16 results on June 1, and they significantly missed both the Zacks Earnings and Revenue Consensus estimates.   Land End saw year over year losses in Net revenues -8.4%, Same store sales -7.1%, lower gross margins 49% vs. 47.4%, and posted a net loss of $5.8 million.  The company also decreased store shops at Sears as well.

According to Federica Marchionni, CEO, stated, “We continued to make progress across a number of initiatives; we remained focused on strengthening our core business and launching additional collections that we believe will drive future profitable growth. While we are encouraged by the initial wins, our financial results in the first quarter were impacted by the overall weakness in the retail environment, including aggressive discounting and promotional activity.”

Price and Earnings Consensus Graph

As you can see in the graph below, both the stock price and estimates have been declining for over a year.

Declining Estimates

Over the past 30 days estimates for Q2 16, Q3 16, FY 16 and FY 17 have all seen significant declines; Q2 16 fell from $0.16 to -$0.02, Q3 16 dropped from $0.25 to $0.04, FY 16 plummeted from $1.30 to $0.60, FY 17 crashed from $1.47 to $0.85.

Bottom Line

The apparel segment is highly competitive and it is facing big headwinds from online retailers, and off price retailers.  To combat these headwinds, LE is improving their online presence, but they still have a difficult road ahead.

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Lands End: Zacks’ Bear of the Day Play

Lands’ End, Inc. (LESnapshot Report) has joined the ranks of struggling retailers as its products aren’t connecting with consumers. This Zacks Rank #5 (Strong Sell) is expected to see declining earnings in 2015.

Lands’ End is a Wisconsin-based retailer that was formerly owned by Sears. Founded in 1963 as a catalog for yachtsmen, the company now offers clothing, accessories, and footwear for men, women and children through catalogs, its online web site, and in retail stores primarily located in Sears and some standalone Lands’ End Inlet stores.

It is especially well known for its winter apparel, swimsuits and footwear.

As of May 1, 2015 it operated 235 Lands’ End Shops at Sears, 14 global Lands’ End Inlet stores and 5 international shop-in-shops.

First Quarter Sales Disappoint

On June 4, Lands End reported its first quarter results and beat the Zacks Consensus by 2 cents. Earnings were $0.05 compared to the Zacks Consensus of $0.03.

But the earnings surprise doesn’t tell you the whole story with the retailers. It’s all about sales and inventories.

Merchandise sales and services fell 9.4% to $299.4 million from a year ago, with currency translation impacting by $9 million.

The Direct segment fell 8.2% to $253.4 million while Retail fell 15.5% to $46 million.

Being associated with Sears doesn’t appear to be helping the brand.

Same store sales fell 12.1%, driven by lower sales in the company’s Lands’ End Shops at Sears.

Gross margin remained unchanged at 49% in the quarter.

Tranformational Period to Come

While the company called the retail environment “challenging” it also said that the next 12 to 18 months will be an important “transformational period” where it will focus on product design and enhancing technology.

Lands End has a strong brand and loyal customers. But its product mix has been off this year.

This is the problem with many retailers right now. Consumers are spending, but they are fickle. They’ll turn on a brand in a heart beat.

Estimates Fall

Given the pessimistic near term outlook, it’s not surprising that estimates have been cut for 2015.

The 2015 Zacks Consensus Estimate has sunk to $1.46 from $2.00 in the last week.

That’s an earnings decline of 39% compared to 2014. Lands End made $2.39 last year.

Earnings are only expected to rebound to $1.69 in 2016.

Shares Sink

It’s been a tough 2015 for Lands End shareholders. Shares have sunk to new 52-week lows and are now lower than the IPO price in 2014.

Is Lands End a value play?

Shares are trading at 12.5x, which is well under the average of the S&P 500 of 18.1.

It has a price-to-book ratio of 2.0. A P/B under 3.0 usually indicates value.

Lands End also has a price-to-sales ratio of just 0.5. A P/S ratio under 1.0 can mean a company is undervalued.

It’s not surprising, given these fundamentals, that Lands End has a Zacks Style Score for value of A.

But until those estimates turn around, it’s still a Zacks Rank #5 (Strong Sell).

For investors who don’t want to wait around for the “transformation”, you should consider Express (EXPRSnapshot Report). It’s a Zacks Rank #1 (Strong Buy) and has already been through a turnaround process in the last year.

Want More of Our Best Recommendations?

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

Lands’ End: Zacks’ Bear of the Day Play

Trends come and trends go. Remember those sweet “Members Only” jackets. That’s right, I’m talking to you. How about a more recent, very forgettable trend? Trucker hats anyone? If I see Von Dutch again I may just vomit. Unfortunately it’s very hard to stay relevant as a retailer. Sometimes a bigger fish comes in and eats your lunch. Other times, the market just turns away. Even soccer moms switch their style up. Which is probably what’s slapping down this retailer and today’s Bear of the Day, Lands’ End (LE).

Founded in the great city of Chicago originally as a sailboat equipment partner, Lands’ End branched off into a clothing retailer that specializes in casual clothing, luggage and home furnishings. The majority of their business is conducted through mail order and online sales. Once a part of Sears Holdings , Lands’ End was spun off in April 2014.

The recent news surrounding Lands’ End was the resignation of Edgar Huber from the Board and from his roles as President and CEO of the company. Mr. Huber’s resignation from the Board was effective as of February 1, 2015. As part of the severance, Mr. Huber is getting his $850,000 per year base salary for 24 months, a lump sum payment equal to accrued vacation pay, continued health insurance coverage for 24 months and accelerated vesting and payment of $247,976.67 under the company’s Annual Incentive Plan. In the age of “golden parachutes” it’s a very mild and palettable package.

Former President of Dolce & Gabbana Ms. Federica Marchionni took over the reins and is looking to right the ship after a third quarter that saw lower sales but better margins which helped surprise earnings to the upside. Q3 came in at 56 cents versus estimates for 40 cents.

Analysts, however, remain bearish despite a change at the helm. Analysts slashed estimates for the current quarter, next quarter, the current year and next year as well. These downside estimate revisions have dropped the Zacks Consensus Estimates from $2.65 for the current year all the way down to $2.38. What’s more troubling though is the change to next year’s estimate. Analysts are looking for $2.15 per share versus previous consensus of $2.75. That 60 cent drop isn’t as worrisome as the fact that analysts are looking for next year’s numbers to shrink 23 cents per share compared to this year’s numbers. That’s the opposite of the story that you’d like to hear.

The stock price was doing very well shortly after the spin-off. LE more than doubled from the mid-$25 range shortly after going public to nearly $56 by late December 2014. But news of Huber’s resignation helped send shares tumbling, dropping all the way down to $33.16. Shares have traded sideways since the dramatic drop and now are hovering just above $35.

But the technical picture shows a stock that is following through on a stochastic sell signal from overbought territory. The commodity channel index is becoming increasingly bearish as well, dipping from over 100 through the zero line and now sits down at -169.63. Yesterday, with the market in the green across the board LE was off 3%.

Lands’ End: Zacks’ Bull of the Day Play

Lands’ End, Inc. (LE) celebrated its first quarter spun-off from Sears Holdings by beating the Zacks Consensus Estimate by 117%. This Zacks Rank #1 (Strong Buy) is cashing in on its strong catalog brand even as investors are being cautious.

Lands’ End is a Wisconsin-based retailer that was formerly owned by Sears. Founded in 1963 as a catalog for yachtsmen, the company now offers clothing, accessories, and footwear for men, women and children through catalogs, its online web site, and in retail stores primarily located in Sears and some standalone Lands’ End Inlet stores.

It is especially well known for its winter apparel and footwear.

Big Beat in the Second Quarter

On Sep 10, Lands’ End reported its first earnings results since it went IPO in March of this year.

It easily beat the Zacks Consensus Estimate, reporting $0.37 compared to the Consensus of just $0.17.

Sales rose 5.4% to $347.2 million from the second quarter of last year. The Direct segment, which includes catalog and online sales, rose 7.1% to $292.6 million. That’s the company’s largest segment.

Its retail sales declined 2.9% to $54.6 million even though same store sales increased 2.8%. This was the result of fewer Lands’ End retail spaces within Sears and Sears own particular troubles.

Gross margin, a key metric for retailers, rose 310 basis points to 48.5% year over year.

The customer is responding to the product. Being attached to Sears appears to be hurting, not helping, sales.

Estimates Rise

When a company reports earnings for the first time, the analysts never really know what to expect. There is usually a lot of tinkering with estimates afterwards.

That appears to be the case with Lands’ End as well.

1 estimate has moved higher since the report for Fiscal 2014, pushing the Zacks Consensus sup to $2.52 from $2.29.

The analysts are also bullish on Fiscal 2015 with 1 estimate moving higher for that year as well within the last month. The 2015 Zacks Consensus Estimate has risen to $2.60 from $2.48.

Shares Soar on Earnings Beat

Investors loved the big beat in the company’s first quarter out of the gate. They pushed the shares up to a new high.

But despite the quick move higher by the shares, they’re not excessively priced.

Lands’ End has a forward P/E of just 16.6 which is just below the average of the S&P 500 of 17.

Lands’ End is also in a top ranked industry, the retail- catalog industry. It ranks #1 out of 265 Zacks Rank Industries.

For investors looking for a retailer with a strong brand and online presence, Lands End is one to keep on your short list.

Want More of Our Best Recommendations?

Zacks’ Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.

Learn More>>

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.