Lands’ End recorded a bigger-than-expected net loss attributable to common shareholders in the third quarter of 2023, despite a modest increase in total net revenue and a decrease in overall expenses. The company’s net loss for the quarter that ended October 28, 2023, was $26 million, or $0.60 per share, compared to a net income of $80.3 million, or $1.86 per share, in the prior-year period. The loss was driven by a decline in sales across all of the company’s segments, coupled with a higher effective tax rate and increased interest expenses..
Quarterly net revenue grew by 1.7% year-over-year to $423.8 million from $416.6 million. The top-line improvement primarily stemmed from a 4.4% increase in direct-to-consumer sales to $330.8 million, while revenue from international operations was relatively flat at $24.5 million. However, these gains were offset by a 33.6% slump in revenue from the wholesale channel, which dropped from $75.5 million in Q3 2022 to $50 million in Q3 2023, leading to an overall decline in revenue in the brands segment..
Lands’ End’s SG&A expenses decreased by approximately $15.1 million in the third quarter, from $178 million in the previous year to $162.9 million in 2023. This reduction was driven by lower store-related expenses due to the closure of underperforming stores and a decline in advertising expenses. However, this improvement was partially offset by higher fulfillment costs and increased compensation expenses..
The company’s cost of goods sold also experienced a slight decrease from $264.8 million to $263.7 million, reflecting the impact of global supply chain disruptions easing and cost-containment initiatives. Nevertheless, the gross profit margin remained under pressure, declining from 37.9% in Q3 2022 to 37.3% in Q3 2023. This was partly attributed to increased promotional activity and clearance sales..
Despite the financial challenges, Lands’ End maintains a positive outlook for the upcoming holiday season, anticipating continued growth in its direct-to-consumer business. The company also remains focused on implementing various initiatives to drive long-term profitability, including the rationalization of its store portfolio, reductions in operating expenses, and continued investments in e-commerce and marketing initiatives..
