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) March 14, 2002
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 fourth quarter performance and fiscal
2002 results.
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.
March 15, 2002 By:/S/ DONALD R. HUGHES
Donald R. Hughes
Senior Vice President &
Chief Financial Officer
FOR IMMEDIATE RELEASE
LANDS' END REPORTS RECORD FOURTH QUARTER
AND FISCAL 2002 EARNINGS
DODGEVILLE, WIS. ... March 14, 2002... Lands' End, Inc. (LE), the direct
merchant of classically styled apparel and home furnishings, today
reported record earnings for its fourth quarter and fiscal year ended
February 1, 2002.
FISCAL YEAR 2002 RECORD RESULTS
Net income for the year ended February 1, 2002 was $66.9 million, or
$2.23 per diluted share, compared to $34.7 million, or $1.14 per diluted
share in the prior year. Total revenue for the year just ended was
$1.569 billion, compared with $1.462 billion for the prior year. This
represents a net income gain of 93 percent on a revenue increase of 7.3
percent.
The fiscal year just ended includes 53 weeks compared to last year's
52 weeks. On a comparable 52-week basis, total revenue increased 5.5
percent.
FOURTH QUARTER RECORD RESULTS
Net income for the 14 weeks ended February 1, 2002 was $45.9
million, or $1.51 per diluted share, compared with $31.8 million, or
$1.07 per diluted share in the prior year's 13-week fourth quarter.
Total revenue for the fourth quarter was $596.0 million, compared with
$538.6 million in the same quarter a year ago. This represents a net
income gain of 44.3 percent on a revenue increase of 10.7 percent. On a
comparable 13-week basis, total revenue increased 5.8 percent from the
prior year.
In commenting on the results, company president and chief executive
officer David F. Dyer said, "We are extremely pleased that we achieved
record results, especially in the face of the challenging business
environment this past year. The initiatives that we started three years
ago, and the focused execution of the past year, contributed to our
success. We are establishing the groundwork for future growth with
programs such as enhanced customer segmentation, new catalogs and
additional Internet innovations."
FOURTH QUARTER HIGHLIGHTS AND COMMENTS
For the 14-week quarter just ended, sales of full-price
merchandise to U.S. consumers rose 11 percent and Internet sales
increased 40 percent, compared with the similar 13-week quarter in
the prior year. On a comparable 13-week basis, sales of full-price
merchandise to U.S. consumers rose 8 percent, and Internet sales were
up 34 percent. As a percentage of total revenue, gross margin
improvement of 1.1 percentage points was the result of significantly
better vendor sourcing. As a percentage of total revenue, selling,
general and administrative expenses declined 1.8 percentage points.
Inventory investments in key items allowed the company to ship 88
percent of its merchandise immediately upon customer order, compared
with 79 percent last year.
The following table shows segment data on both a fiscal and
comparable calendar basis. The additional week in fiscal 2002 added
$24 million in merchandise sales to these periods.
SEGMENT DATA
Segment merchandise sales data for fourth quarter and full year
(in millions)
Percent Percent
change change
4Q02 4Q01 14 weeks 13 weeks
Core business segment $353 $317 +11.2% + 6.6%
Specialty segment 145 134 + 8.6% + 3.0%
International segment 52 46 +12.5% + 8.6%
Total merchandise sales $550 $497 +10.6% + 5.8%
Internet $120 $ 86 +40.1% +33.7%
Percent Percent
change change
FY02 FY01 53 weeks 52 weeks
Core business segment $ 873 $ 814 + 7.3% + 5.5%
Specialty segment 433 408 + 6.0% + 4.2%
International segment 142 133 + 6.8% + 5.4%
Total merchandise sales $1448 $1355 + 6.9% + 5.1%
Internet 299 218 +37.2% +34.7%
Segment merchandise sales data (full-price and
liquidation sales) excludes shipping & handling
revenue. Internet sales are included in the
respective business segments.
On a comparable 13-week basis for the quarter, the strong growth of
the core business segment was led by a 17 percent increase in women's and
a 7 percent increase in coed, while men's was down 3 percent. In the
specialty business segment, Home grew by 12 percent and Kids by 7
percent. Sales for the Business Outfitters division, formerly called
Corporate Sales, were down 7 percent, due to adverse economic conditions.
However, in U.S. dollars, international sales were strong, up 9 percent
from the prior year, led by the German and United Kingdom businesses.
Measured in their local currencies, sales in both Germany and the United
Kingdom showed even stronger results.
Gross profit for the quarter just ended was $267 million, or 44.8
percent of total revenue, compared with $235 million, or 43.7 percent of
total revenue in the prior year. Continued improved vendor sourcing
resulted in higher initial margins.
Inventory was $227 million as of February 1, 2002, compared with
$188 million at the end of the prior year. This year, the company
invested $30 million to accelerate receipts of spring merchandise.
Fourth quarter liquidations of excess inventory were 7.5 percent of net
merchandise sales versus 6.9 percent the year before, reflecting an
additional week of clearance sales due to the calendar shift.
Selling, general and administrative expenses in the fourth quarter
of fiscal 2002 were $191 million, compared with $182 million in the prior
year. As a percentage of total revenue, SG&A was 32.0 percent, compared
with 33.8 percent in the prior year. The improved leverage was primarily
due to better fulfillment levels that allowed us to convert demand to
sales at a higher rate.
BUSINESS OUTLOOK FOR FISCAL 2003
For the quarter to date, on a fiscal basis, total revenue is up mid-
single digits. For the full fiscal year 2003, the company currently
anticipates a single-digit percentage increase in total revenue and a
diluted earnings per share increase in the high-single-digit to low-
double-digit percentage range. Gross profit margin is expected to improve
by 30 to 70 basis points, and capital expenditures are currently planned
to be about $35 million.
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.
**********************************************
SUPPLEMENTAL INFORMATION FY2002 FY2001
(in millions)
Twelve-month buyers 7.0 6.7
Three-year buyers 11.5 11.2
Catalogs mailed 272 269
Capital expenditures $40.5 $44.6
Depreciation & amortization $26.9 $23.4
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 2003 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 Business Outfitters 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 will audio web cast its conference call for the general
public at 9:30 a.m. CT today. This call will cover the company's
performance for the holiday period and its business outlook for the
remainder of the year. Register and listen at
http://www.videonewswire.com/event.asp?id=3558. A playback will be
available for one week.
The conference call and web cast 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 will be 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.
Lands' End is a direct merchant of traditionally styled, classic
casualwear offered to customers around the world through regular mailings
of its monthly and specialty catalogs and via the Internet at
www.landsend.com.
Contact Charlotte LaComb: 608-935-4835
CONSOLIDATED STATEMENTS OF OPERATIONS
Lands' End, Inc. & Subsidiaries
(Amounts in thousands, except per share data)
14 weeks 13 weeks 53 weeks 52 weeks
ended ended ended ended
Feb. 1, Jan. 26, Feb. 1, Jan. 26,
2002 2001 2002 2001
Net merchandise sales $549,882 $496,993 $1,448,230 $1,354,974
Shipping and handling
revenue 46,124 41,564 120,832 107,309
Total revenue 596,006 538,557 1,569,062 1,462,283
Cost of merchandise sales 281,243 259,963 758,792 728,446
Shipping and handling costs 47,654 43,160 121,444 112,158
Total cost of sales 328,897 303,123 880,236 840,604
Gross profit 267,109 235,434 688,826 621,679
Selling, general and
administrative expenses 190,520 181,863 575,662 560,019
Income from operations 76,589 53,571 113,164 61,660
Other income (expense):
Interest expense (209) (364) (1,350) (1,512)
Interest income 537 790 1,521 2,244
Other (2,649) (3,516) (5,406) (7,381)
Total other expense, net (2,321) (3,090) (5,235) (6,649)
Income before income taxes 74,268 50,481 107,929 55,011
Income tax provision 28,390 18,678 41,013 20,354
Net income $ 45,878 $ 31,803 $ 66,916 $ 34,657
Basic earnings per share $ 1.54 $ 1.08 $ 2.27 $ 1.15
Diluted earnings per share $ 1.51 $ 1.07 $ 2.23 $ 1.14
Basic weighted average
shares outstanding 29,772 29,412 29,476 30,047
Diluted weighted average
shares outstanding 30,372 29,623 29,977 30,422
CONSOLIDATED BALANCE SHEETS
Lands' End, Inc. & Subsidiaries Feb. 1, Jan. 26,
(Amounts in thousands) 2002 2001
Assets
Current assets:
Cash and cash equivalents $122,091 $ 75,351
Receivables, net 13,297 19,808
Inventory 227,220 188,211
Prepaid advertising 15,710 17,627
Other prepaid expenses 8,361 7,103
Deferred income tax benefit 15,905 10,973
Total current assets 402,584 319,073
Property, plant and equipment, at cost:
Land and buildings 117,785 104,815
Fixtures and equipment 105,588 103,866
Computer hardware and software 116,000 99,979
Leasehold improvements 4,837 4,630
Construction in progress - 4,289
Total property, plant and equipment 344,210 317,579
Less - accumulated depreciation
and amortization 150,342 132,286
Property, plant and equipment, net 193,868 185,293
Other assets 2,668 3,263
Total assets $599,120 $507,629
Liabilities and shareholders' investment
Current liabilities:
Lines of credit $ 16,169 $ 16,940
Accounts payable 83,363 96,168
Reserve for returns 9,384 9,061
Accrued liabilities 46,910 41,135
Accrued profit sharing 4,781 2,357
Income taxes payable 24,957 13,213
Total current liabilities 185,564 178,874
Deferred income taxes 12,838 14,567
Shareholders' investment:
Common stock, 40,221 shares issued 402 402
Donated capital 8,400 8,400
Additional paid-in capital 39,568 31,908
Deferred compensation (56) (121)
Accumulated other comprehensive income 3,343 5,974
Retained earnings 556,003 489,087
Treasury stock, 10,236 and 10,945
shares at cost, respectively (206,942) (221,462)
Total shareholders' investment 400,718 314,188
Total liabilities and
shareholders' investment $599,120 $507,629
CONSOLIDATED STATEMENTS OF CASH FLOWS
Lands' End, Inc. & Subsidiaries
(In thousands)
Twelve months ended
Feb. 1, Jan. 26,
2002 2001
Cash flows from (used for)
operating activities:
Net income $ 66,916 $ 34,657
Adjustments to reconcile net income to net
cash flows from operating activities-
Depreciation and amortization 26,946 23,432
Deferred compensation expense 65 115
Deferred income taxes (6,661) 5,138
Loss on disposal of fixed assets 2,427 437
Tax benefit of stock options 7,660 2,199
Changes in assets and liabilities:
Receivables, net 6,511 (2,055)
Inventory (39,009) (26,018)
Prepaid advertising 1,917 (1,055)
Other prepaid expenses (1,258) (1,888)
Accounts payable (12,805) 21,658
Reserve for returns 323 1,192
Accrued liabilities 8,465 (1,091)
Accrued profit sharing 2,424 (403)
Income taxes payable 11,744 2,958
Other (2,160) 1,288
Net cash flows from operating activities 73,505 60,564
Cash flows used for investing activities:
Cash paid for capital additions (40,514) (44,553)
Net cash flows used for investing activities: (40,514) (44,553)
Cash flows from (used for)
financing activities:
Proceeds from (payment of) short-term debt (771) 5,216
Purchases of treasury stock (12,388) (27,988)
Issuance of treasury stock 26,908 5,699
Net cash flows from (used for) financing
activities 13,749 (17,073)
Net increase (decrease) in cash and
cash equivalents 46,740 (1,062)
Beginning cash and cash equivalents 75,351 76,413
Ending cash and cash equivalents $122,091 $ 75,351