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Lands' End (LE) Q1 Earnings Beat Estimates, Digital Sales Up
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Shares of Lands' End, Inc. (LE - Free Report) increased 6.5% during the trading session on Jun 2, following the company’s better-than-expected first-quarter fiscal 2021 results. Markedly, the company’s top and the bottom line improved on a year-over-year basis. Strength in the company’s global e-commerce business along with recovery of the Outfitters business drove quarterly results. Stellar start prompted management to raise fiscal 2021 guidance. The uni-channel retailer of casual clothing, accessories, footwear and home products also provided an upbeat view for the second quarter.
In the past three months, shares of this Zacks Rank #3 (Hold) company have increased 3.6% against the industry’s decline of 2.7%.
Let’s Delve Deeper
Lands' End posted earnings of 8 cents a share that beat the Zacks Consensus Estimate of a loss of 27 cents. In the year-ago quarter, the company had reported a loss of 64 cents.
The company generated net revenues of $321.3 million that beat the Zacks Consensus Estimate of $283.2 million. The top line surged 48.1% year on year and increased 22.4% from first-quarter fiscal 2019 levels. Management highlighted that a strong underlying business supported the quarter’s performance, as it continued to emerge from the impacts of the pandemic. Additionally, strength across a number of key categories including swimwear, sleepwear and knits as well as prudent marketing strategies acted as upsides.
The company’s global e-commerce revenues came in at $260 million, up 44.4% year on year. Markedly, U.S. e-commerce increased 46.6%, while international e-commerce rallied 37% driven by growth in Europe. Total global e-commerce customer file expanded 27%, with 71% growth in new customers.
Moreover, Outfitters net revenues increased 27.9% to $40.7 million, driven by higher demand within the company’s travel-related national accounts and school uniform customers. Third Party net revenues (including U.S. wholesale revenues and sales in third-party marketplaces) surged 87.3% year over year to $11.8 million, buoyed by the launch of Lands’ End product on Kohls Corporation’s (KSS - Free Report) website and across 150 Kohl’s retail locations during third-quarter fiscal 2020.
Image Source: Zacks Investment Research
An Insight Into Margins
Gross profit increased 56.8% year over year to $147.7 million. Also, gross margin expanded 260 basis points (bps) to 46%. The upside was driven by merchandise margin expansion in the U.S. e-commerce channel driven by improved promotional strategies and persistent use of data analytics, partially offset by increased shipping costs and surcharges as well as higher sales mix from the lower-margin Third Party channel.
Further, selling and administrative (S&A) expenses increased 18.6% to $125.5 million. S&A expenses, as a rate of sales, fell 970 bps to 39.1% on leverage from higher sales. This was partially offset by increased digital marketing expenses.
Meanwhile, adjusted EBITDA amounted to $22.5 million, reflecting an improvement of $34.1 million from a loss of $11.6 million in the year-ago period. This was primarily driven by higher sales, gross margin expansion and prudent cost-controlling actions.
Lands' End ended the quarter with cash and cash equivalents of $36.2 million, net long-term debt of $242.8 million and total stockholders’ equity of $370.2 million. Further, inventories at the end of the quarter were $394.3 million.
At the end of the quarter, net cash used in operations amounted to $38.7 million. For fiscal 2021, the company expects capital expenditures worth approximately $26 million.
As of Apr 30, 2021, it had $80 million of borrowings and $178.1 million availability under its asset-based senior secured credit facility. The company had $268.1 million of term loan debt facility debt as of Apr 30, 2021.
Outlook
Management is confident about attaining its long-term growth targets, backed by strong growth witnessed in the company’s e-commerce platform, faster than expected recovery of its Outfitters business and a data-driven approach toward business fundamentals.
For second-quarter fiscal 2021, the company projects net revenues of $345-$355 million. In the year-ago quarter, the company posted revenues of $312 million. Further, adjusted EBITDA is envisioned in the band of $20-$23 million. The company forecasts earnings in the range of 5-12 cents per share. In the prior-year quarter, the company reported earnings of 13 cents per share. We note that the Zacks Consensus Estimate for second-quarter revenues is pegged at $329.2 million, while the consensus mark for the bottom line is pegged at a loss of 14 cents.
For fiscal 2021, management now expects net revenues in the bracket of $1.61-$1.65 billion compared with the prior expectation of $1.52-$1.57 billion. In fiscal 2020, the company’s top line amounted to $1.43 billion. Further, adjusted EBITDA is projected in the range of $114-$122 million compared with earlier guidance of $88-$98 million. Earnings per share are expected between 84 cents and $1.04 compared with earnings in the range of 34-58 cents anticipated earlier. In fiscal 2020, the company posted earnings of 33 cents. The Zacks Consensus Estimate for revenues and earnings is pegged at $1.61 billion and 49 cents, respectively, for fiscal 2021.
Tapestry, Inc. (TPR - Free Report) has a long-term earnings growth rate of 10% and currently carries a Zacks Rank #2 (Buy).
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Lands' End (LE) Q1 Earnings Beat Estimates, Digital Sales Up
Shares of Lands' End, Inc. (LE - Free Report) increased 6.5% during the trading session on Jun 2, following the company’s better-than-expected first-quarter fiscal 2021 results. Markedly, the company’s top and the bottom line improved on a year-over-year basis. Strength in the company’s global e-commerce business along with recovery of the Outfitters business drove quarterly results. Stellar start prompted management to raise fiscal 2021 guidance. The uni-channel retailer of casual clothing, accessories, footwear and home products also provided an upbeat view for the second quarter.
In the past three months, shares of this Zacks Rank #3 (Hold) company have increased 3.6% against the industry’s decline of 2.7%.
Let’s Delve Deeper
Lands' End posted earnings of 8 cents a share that beat the Zacks Consensus Estimate of a loss of 27 cents. In the year-ago quarter, the company had reported a loss of 64 cents.
The company generated net revenues of $321.3 million that beat the Zacks Consensus Estimate of $283.2 million. The top line surged 48.1% year on year and increased 22.4% from first-quarter fiscal 2019 levels. Management highlighted that a strong underlying business supported the quarter’s performance, as it continued to emerge from the impacts of the pandemic. Additionally, strength across a number of key categories including swimwear, sleepwear and knits as well as prudent marketing strategies acted as upsides.
The company’s global e-commerce revenues came in at $260 million, up 44.4% year on year. Markedly, U.S. e-commerce increased 46.6%, while international e-commerce rallied 37% driven by growth in Europe. Total global e-commerce customer file expanded 27%, with 71% growth in new customers.
Moreover, Outfitters net revenues increased 27.9% to $40.7 million, driven by higher demand within the company’s travel-related national accounts and school uniform customers. Third Party net revenues (including U.S. wholesale revenues and sales in third-party marketplaces) surged 87.3% year over year to $11.8 million, buoyed by the launch of Lands’ End product on Kohls Corporation’s (KSS - Free Report) website and across 150 Kohl’s retail locations during third-quarter fiscal 2020.
An Insight Into Margins
Gross profit increased 56.8% year over year to $147.7 million. Also, gross margin expanded 260 basis points (bps) to 46%. The upside was driven by merchandise margin expansion in the U.S. e-commerce channel driven by improved promotional strategies and persistent use of data analytics, partially offset by increased shipping costs and surcharges as well as higher sales mix from the lower-margin Third Party channel.
Further, selling and administrative (S&A) expenses increased 18.6% to $125.5 million. S&A expenses, as a rate of sales, fell 970 bps to 39.1% on leverage from higher sales. This was partially offset by increased digital marketing expenses.
Meanwhile, adjusted EBITDA amounted to $22.5 million, reflecting an improvement of $34.1 million from a loss of $11.6 million in the year-ago period. This was primarily driven by higher sales, gross margin expansion and prudent cost-controlling actions.
Lands End, Inc. Price, Consensus and EPS Surprise
Lands End, Inc. price-consensus-eps-surprise-chart | Lands End, Inc. Quote
Financial Details
Lands' End ended the quarter with cash and cash equivalents of $36.2 million, net long-term debt of $242.8 million and total stockholders’ equity of $370.2 million. Further, inventories at the end of the quarter were $394.3 million.
At the end of the quarter, net cash used in operations amounted to $38.7 million. For fiscal 2021, the company expects capital expenditures worth approximately $26 million.
As of Apr 30, 2021, it had $80 million of borrowings and $178.1 million availability under its asset-based senior secured credit facility. The company had $268.1 million of term loan debt facility debt as of Apr 30, 2021.
Outlook
Management is confident about attaining its long-term growth targets, backed by strong growth witnessed in the company’s e-commerce platform, faster than expected recovery of its Outfitters business and a data-driven approach toward business fundamentals.
For second-quarter fiscal 2021, the company projects net revenues of $345-$355 million. In the year-ago quarter, the company posted revenues of $312 million. Further, adjusted EBITDA is envisioned in the band of $20-$23 million. The company forecasts earnings in the range of 5-12 cents per share. In the prior-year quarter, the company reported earnings of 13 cents per share. We note that the Zacks Consensus Estimate for second-quarter revenues is pegged at $329.2 million, while the consensus mark for the bottom line is pegged at a loss of 14 cents.
For fiscal 2021, management now expects net revenues in the bracket of $1.61-$1.65 billion compared with the prior expectation of $1.52-$1.57 billion. In fiscal 2020, the company’s top line amounted to $1.43 billion. Further, adjusted EBITDA is projected in the range of $114-$122 million compared with earlier guidance of $88-$98 million. Earnings per share are expected between 84 cents and $1.04 compared with earnings in the range of 34-58 cents anticipated earlier. In fiscal 2020, the company posted earnings of 33 cents. The Zacks Consensus Estimate for revenues and earnings is pegged at $1.61 billion and 49 cents, respectively, for fiscal 2021.
2 Hot Retail Stocks to Consider
Target Corporation (TGT - Free Report) , flaunting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 13.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tapestry, Inc. (TPR - Free Report) has a long-term earnings growth rate of 10% and currently carries a Zacks Rank #2 (Buy).
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
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