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Lands' End (LE) Offers Prelim. Q4 Results

February 9, 2017 7:42 AM EST

Lands' End, Inc. (NASDAQ: LE) today announced estimated preliminary financial results for the fourth quarter ended January 27, 2017.

Net revenue in the fourth quarter of fiscal 2016 is expected to decrease approximately 3% compared to $473.5 million in the fourth quarter of fiscal 2015. This results from an expected decrease of approximately 2.5% in the Direct segment and a decline of approximately 6% in the Retail segment. The decrease in the Retail segment reflects an estimated comparable sales decline of 3% and 11 fewer Lands’ End Shops at Sears locations compared to last year.

Gross margin is expected to be approximately 38.5% in the fourth quarter of fiscal 2016, compared to 42.0% in the fourth quarter of fiscal 2015 primarily due to the continued highly competitive and promotional retail environment. The Company expects to write down approximately $2.3 million of aged Canvas by Lands’ End inventory in the fourth quarter of fiscal 2016.

The Company is evaluating the results of its annual impairment testing of goodwill and indefinite-lived intangible assets. Consequently, the Company has determined that an impairment of the Lands' End trade name is required. The estimated impairment of $170 million to $180 million will reduce the value of the asset to between $250 million and $260 million, from $430 million. This non-cash accounting charge will not impact the Company's liquidity, cash flows, compliance with debt covenants or any future operations. In the fourth quarter of 2015 the Company recorded an impairment of its Lands’ End trade name of $98.3 million.

Net loss, including the impairment, is expected to be between $92.8 million and $98.8 million, and loss per share is expected to be $2.90 to $3.08 in the fourth quarter of fiscal 2016. Net loss in the fourth quarter of 2015, including the impairment, was $39.5 million, or $1.23 per share.

Adjusted EBITDA1 is expected to be approximately $30 million in the fourth quarter of fiscal 2016, compared to $48.1 million in the fourth quarter of fiscal 2015.

Cash and cash equivalents are expected to be approximately $213 million on January 27, 2017, compared to $228 million on January 29, 2016.

Inventory is expected to be approximately $325 million on January 27, 2017, as compared to $329 million on January 29, 2016.

James Gooch, Co-Interim Chief Executive Officer and Chief Financial Officer, stated, “We continue to see sequential improvement in our sales and gross margin performance, despite the ongoing headwinds in the retail environment. We remained disciplined in controlling costs and managing inventory while taking important steps to better execute our business strategies and stabilize the business. While we still have a lot of work to do, we believe that we are on the right path to improve the business for the long-term.”

The Company currently plans to release its full fourth quarter and fiscal 2016 results, and host a conference call, on March 21, 2017.

 


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