Lands’ End stock dives after surprise loss and revenue decline, as gross margin contracts and inventories jump
Shares of Lands’ End Inc. took a 15.2% premarket dive Thursday, after the casual clothing and footwear retailer reported a surprise fiscal third-quarter loss and revenue that surprisingly declined, as increased transportation costs hurt margins and as inventories jumped. For the quarter to Oct. 28, the company swung to a net loss of $4.7 million, or 14 cents a share, from net income of $7.4 million, or 22 cents a share, in the year-ago period. Revenue slipped 1.3% to $370.98 million. The average estimate of two analysts surveyed by FactSet was for earnings per share of 6 cents and for revenue to rise to $382.7 million. Cost of sales rose 6.5% to $222.6 million, as gross margin contracted to 40.0% from 44.4%. Inventories increased 17.7% to $564.9 million. “We took a concerted effort to improve our in-stock positions by increasing our lead times and receipting our Fall/Holiday inventory earlier,” said Chief Financial Officer Jim Gooch. “While this largely drove our 18% increase in inventories at the end of the third quarter, we are well positioned to meet our customers’ needs as we move through the holiday season.” He expects inventories to normalize by the end of Spring/Summer 2023. For the fourth quarter, revenue is expected to be between $510 million and $530 million, compared with the FactSet average estimate of $576 million. The stock has tumbled 41.1% year to date through Wednesday, while the S&P 500 has lost 14.4%.
