-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JvTjykkvZSZbTlaEm6+eFoMMMnorkxILQGg3iV9GrNTslXseRgkGYywC/ojLc6LG jZ3tsGzyCPIpKkobI6gBug== /in/edgar/work/20000815/0000799288-00-000077/0000799288-00-000077.txt : 20000922 0000799288-00-000077.hdr.sgml : 20000921 ACCESSION NUMBER: 0000799288-00-000077 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000728 ITEM INFORMATION: FILED AS OF DATE: 20000815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANDS END INC CENTRAL INDEX KEY: 0000799288 STANDARD INDUSTRIAL CLASSIFICATION: [5961 ] IRS NUMBER: 362512786 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09769 FILM NUMBER: 702642 BUSINESS ADDRESS: STREET 1: ONE LANDS END LN CITY: DODGEVILLE STATE: WI ZIP: 53595 BUSINESS PHONE: 6089359341 MAIL ADDRESS: STREET 1: ONE LANDS END LANE STREET 2: ONE LANDS END LANE CITY: DODGEVILLE STATE: WI ZIP: 53595 8-K 1 0001.txt 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) August 10, 2000 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 Number) of incorporation) 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 99.1 to this report is a news release issued by Lands' End, Inc., discussing second quarter results for the period ended July 28, 2000, and business outlook for the fiscal year. 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. Date August 15, 2000 By: /s/ STEPHEN A. ORUM Stephen A. Orum Executive Vice President & Chief Financial Officer EXHIBIT 99.1 FOR IMMEDIATE RELEASE LANDS' END REPORTS SECOND QUARTER DODGEVILLE, WIS. ... August 10, 2000 ... Lands' End, Inc. (LE), today reported that net sales for its second quarter ended July 28, 2000, totaled $255.5 million, about flat with sales of $254.6 million in the same quarter last year. For the quarter just ended, there was a net loss of $1.9 million, and the diluted loss per share was $0.06, compared with net earnings of $4.5 million, or $0.14 per diluted share, in the prior year. For the first six months of the current year, net sales were $521.6 million, down 4 percent from net sales of $544.2 million during the first half of last year. Excluding last year's first half sales from the company's discontinued Willis & Geiger business, sales in this year's first half were down 2 percent from the prior year. The net loss in the first half of fiscal 2001 was $1.6 million, or a loss of $0.05 per diluted share, compared with earnings of $11.0 million, or $0.36 per diluted share, in the first six months of the prior fiscal year. Last year's first half includes an addition to net income (after-tax) of $1.0 million, or $0.03 per share, from the reversal of a portion of the non-recurring charge taken in the fourth quarter of fiscal 1999. The company's chief executive officer, David Dyer, said that the loss for the quarter was unexpected and disappointing. "Based on sales trends that we saw earlier in the quarter, we had already revised our business outlook downward. As it turned out, compared to that outlook, gross profit was significantly less than expected. Liquidation sales, though lower than last year, were still higher than expected, primarily in Japan. We also experienced significant increases in costs. These factors hurt us on profitability." The principal factors contributing to the unexpected loss include 1) the adverse effect on gross profit resulting from liquidation sales, primarily in Japan, and increased reserves for inventory obsolescence in both the United States and Japan; 2) increases in fixed and variable expenses; and 3) increases in catalog advertising expense. Compared to the prior year, sales trends during the quarter were weaker than initially expected and inconsistent across product lines. The company saw continued strong sales in women's knits and swimwear, and in coed knits. However, we had soft sales in other product lines, especially men's and women's tailored. Corporate Sales continued to grow in double-digits, although their sales were somewhat lower than expected toward the end of the quarter. Internet sales at www.landsend.com were 70 percent higher, compared with the second quarter last year. Sales in the core business segment, represented by the primary monthly, prospecting and tailored clothing catalogs, were flat, as were sales in the specialty business segment, composed of Corporate Sales, Kids and Coming Home, compared with the prior year. Sales in the international business segment, composed of operations in Japan, the U.K. and Germany, were up about 2 percent from last year. Gross profit in the quarter just ended was $122.9 million, or 48.1 percent of net sales, compared with $118.2 million, or 46.4 percent of net sales, in the same quarter last year. The improvement in gross profit margin over the comparable period was due to higher initial margins primarily associated with sourcing improvements and a lower level of sales of liquidated merchandise. However, margins in the quarter just ended were lower than anticipated, primarily due to high levels of liquidation sales in Japan, increased reserves for inventory obsolescence, and higher markdowns at retail outlets in the United States. Liquidation of excess inventory was about 8 percent of net sales during this year's second quarter, compared with about 10 percent in the prior year. In the quarter just ended, selling, general and administrative expenses were $125.6 million, or 49.1 percent of net sales, compared with $109.4 million, or 43.0 percent, in the similar period last year. The increase in the SG&A ratio between the periods was primarily due to increases in catalog and national advertising, as well as relatively higher fixed expenses. Page and catalog circulation were higher during the quarter just ended, principally due to increased prospecting, especially to inactive buyers, and to later mailings of certain catalogs. Productivity, or sales per page, declined. National advertising costs were about $3 million higher than in the prior year, and there was an additional $4 million of fixed expense due to higher spending on information technology. Inventory at the end of the quarter was $207 million, up 9 percent from $190 million in the prior year. Our first-time fulfillment rate for the quarter just ended was about 88 percent, up from 84 percent last year and consistent with our annual goal. BUSINESS OUTLOOK Looking forward for the full year, we now expect an improvement in gross profit margin of about 200 basis points over last year, rather than 225 as previously announced, principally due to further liquidations in Japan. This is consistent with the improvement of 200 basis points in the first half of the year. The company's catalog mailing strategy currently includes a 6 percent increase in United States page circulation for the first nine months of the fiscal year. However, due to aggressive fourth quarter circulation plans, the company now expects page circulation in the fourth quarter to be up 20 percent as we add holiday catalogs back to the mailing plan and shift the timing of holiday mailings. This is in contrast to the overall 6 percent increase in page circulation for the full year as previously announced. In view of these plans and their emphasis on the holiday period, the company expects that the fourth quarter will represent a substantial improvement over the prior year in both sales and earnings, but anticipates downward trends in sales and earnings for the third quarter. As previously stated, the company anticipates that its sales for the full year will increase by less than 6 percent over the prior year. Based on the disappointing results through the first half of the year, the company no longer believes that it can achieve the 20 percent increase in earnings per share that was previously anticipated. We currently believe that we can achieve somewhat positive earnings growth for the year. However, the upcoming holiday season will be critically important as we see the full effect of our merchandising and circulation strategies. If the trends of weak sales and higher costs through the first six months of the fiscal year continue into the holiday period, our current business plans will be at risk. "Obviously, our ability to predict future sales and earnings has not been borne out by experience so far this year," said David Dyer. "We need to adopt a wait-and-see approach to the rest of the year. The holiday season is always very important to us but it is really the key to a successful year this time out." Lands' End is a direct merchant of traditionally styled, classic casualwear offered to customers through regular mailings of its monthly and specialty catalogs and via the Internet. 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 2001 sales, gross profit margin, and earnings, as well as anticipated sales trends, timing of catalogs and future development of our business strategy, are 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; general economic or business conditions, both domestic and foreign; effects of shifting patterns of e-commerce versus catalog purchases; costs associated with printing and mailing catalogs; dependence on consumer seasonal buying patterns; and fluctuations in foreign currency exchange rates. Our future results could, of course, be affected by other factors as well. 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. PRELIMINARY AND UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS Lands' End, Inc. & Subsidiaries (Amounts in thousands, except per share data) Three months ended Six months ended July 28, July 30, July 28, July 30, 2000 1999 2000 1999 Net sales $255,545 $254,616 $521,590 $544,225 Cost of sales 132,674 136,400 277,820 300,575 Gross profit 122,871 118,216 243,770 243,650 Selling, general and administrative expenses 125,598 109,429 245,177 225,715 Reversal of non-recurring charge - (275) - (1,598) Income from operations (2,727) 9,062 (1,407) 19,533 Other income (expense): Interest expense (217) (358) (347) (967) Interest income 500 36 1,219 38 Other (542) (1,672) (1,987) (1,204) Total other income (expense), net (259) (1,994) (1,115) (2,133) Income (loss) before income taxes (2,986) 7,068 (2,522) 17,400 Income tax provision (benefit) (1,105) 2,615 (933) 6,438 Net income (loss) $ (1,881) $ 4,453 $ (1,589) $ 10,962 Basic earnings (loss) per share $ (0.06) $ 0.15 $ (0.05) $ 0.37 Diluted earnings (loss) per share $ (0.06) $ 0.14 $ (0.05) $ 0.36 Basic weighted average shares outstanding 30,295 30,057 30,246 30,032 Diluted weighted average shares outstanding 30,722 30,783 30,791 30,656 PRELIMINARY AND UNAUDITED CONSOLIDATED BALANCE SHEETS Lands' End, Inc. & Subsidiaries July 28, July 30, (Dollars in thousands) 2000 1999 Assets Current assets: Cash and cash equivalents $ 20,050 $ 6,270 Receivables, net 15,986 13,060 Inventory 206,854 189,983 Prepaid advertising 17,718 17,964 Other prepaid expenses 8,214 6,311 Income taxes receivable 1,244 - Deferred income tax benefit 10,661 17,947 Total current assets 280,727 251,535 Property, plant and equipment, at cost: Land and buildings 102,910 102,437 Fixtures and equipment 190,678 158,675 Leasehold improvements 4,453 4,774 Total property, plant and equipment 298,041 265,886 Less - accumulated depreciation and amortization 129,112 110,961 Property, plant and equipment, net 168,929 154,925 Intangibles, net 659 949 Total assets $450,315 $407,409 Liabilities and shareholders' investment Current liabilities: Lines of credit $ 19,200 $ 23,950 Accounts payable 79,822 70,979 Reserve for returns 5,388 4,027 Accrued liabilities 35,741 42,458 Accrued profit sharing 180 469 Income taxes payable - 1,754 Total current liabilities 140,331 143,637 Deferred income taxes 9,117 8,133 Shareholders' investment: Common stock, 40,221 shares issued 402 402 Donated capital 8,400 8,400 Additional paid-in capital 31,541 28,665 Deferred compensation (178) (293) Accumulated other comprehensive income 3,824 1,801 Retained earnings 452,841 417,358 Treasury stock, 9,926 and 10,156 shares at cost, respectively (195,963) (200,694) Total shareholders' investment 300,867 255,639 Total liabilities and shareholders' investment $450,315 $407,409 PRELIMINARY AND UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Lands' End, Inc. & Subsidiaries Six Months Ended (In thousands) July 28, July 30, 2000 1999 Cash flows from (used for) operating activities: Net income $ (1,589) $ 10,962 Adjustments to reconcile net income to net cash flows from operating activities- Pre-tax non-recurring credit - (1,598) Depreciation and amortization 11,629 10,275 Deferred compensation expense 58 101 Loss on disposal of fixed assets - 538 Changes in assets and liabilities: Receivables, net 1,767 8,023 Inventory (44,661) 29,703 Prepaid advertising (1,146) 3,393 Other prepaid expenses (2,398) 1,278 Accounts payable 5,312 (16,943) Reserve for returns (2,481) (3,166) Accrued liabilities (9,446) (9,922) Accrued profit sharing (2,580) (1,787) Income taxes payable (11,499) (12,824) Other 2,981 1,469 Net cash flows from (used for) operating activities (54,053) 19,502 Cash flows used for investing activities: Cash paid for capital additions (12,996) (5,486) Net cash flows used for investing activities (12,996) (5,486) Cash flows from (used for) financing activities: Proceeds from (payment of) short-term debt 7,476 (14,992) Purchases of treasury stock (1,019) (4,504) Issuance of treasury stock 4,229 5,109 Net cash flows from (used for) financing activities 10,686 (14,387) Net decrease in cash and cash equivalents (56,363) (371) Beginning cash and cash equivalents 76,413 6,641 Ending cash and cash equivalents $ 20,050 $ 6,270 EX-27 2 0002.txt
5 This schedule contains summary financial information extracted from the Consolidated Statements of Operations and the Consolidated Balance Sheets and it qualified in its entirety by reference to such financial statements. 1,000 6-MOS 6-MOS JAN-26-2001 JAN-28-2000 JUL-28-2000 JUL-30-1999 20,050 6,270 0 0 15,986 13,060 0 0 206,854 189,983 280,727 251,535 298,041 265,886 129,112 110,961 450,315 407,409 140,331 143,637 0 0 0 0 0 0 402 402 300,465 255,237 450,315 407,409 521,590 544,225 521,590 544,225 277,820 300,575 277,820 300,575 2749 1383 0 0 347 967 (2,522) 17,400 (933) 6,438 (1,589) 10,962 0 0 0 0 0 0 (1,589) 10,962 (0.05) 0.37 (0.05) 0.36
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