Apparel company Lands' End (LE 19.20) reported its fiscal fourth quarter results this morning and they were pretty much in-line with the preliminary results the retailer shared on February 9. In other words, they were short on revenue growth, same-store sales growth, and profitability.
Briefly, net revenue for the period decreased 3.1% to $458.8 million, paced by a 2.6% drop in direct segment net revenue of $398.5 million. Fewer Lands' End shops and a 1.7% decrease in same-store sales contributed to the overall downturn in net revenue.
Gross margin for the fourth quarter fell 340 basis points to 38.6%, which stemmed from the highly promotional retail environment and a $2.3 million inventory writedown for the Company's Canvas by Lands' End brand.
The net loss for the period was $94.8 million, or $2.96 per share. On an adjusted basis, Lands' End fourth quarter net income was $13.0 million, or $0.41 per share, compared to $22.6 million, or $0.71 per share, in the same period a year ago.
It is no mystery why Lands' End had a tough go of it in the fourth quarter. The apparel companies have been the hardest-hit group in the retail sector on account of declining mall traffic, increased online competition, a lack of pricing power, a lack of product differentiation, and shifting consumer buying preferences, not to mention residual concerns about the possible implementation of a border adjustment tax.
For fiscal 2016, Lands' End reported a 5.6% decline in net revenue of $1.34 billion, a 6.0% decrease in same-store sales, and an adjusted net loss of $0.06 per share versus an adjusted profit of $1.26 per share for fiscal 2015.
Lands' End didn't provide any specific revenue or earnings guidance in its press release. Management noted that the company saw sequential improvement in its fourth quarter results, but conceded that it needs to strengthen its competitive position and develop and execute a strategic plan to leverage its brand heritage and e-commerce platform.
Management is going to focus on efforts aimed at driving growth, profitability and shareholder value over the long term, which is one way of saying that the short term might not look so hot as it goes about transforming its business to achieve long-term success.
The latter point notwithstanding, LE has actually been a very hot stock so far this year, surging 27% without the aid really of a strong operational catalyst, which suggests short-covering activity might be a factor that has exacerbated the stock's gains. Despite that hefty move, LE is still down 28% over the last 52 weeks, which is a move more in-line with the recognized struggles for the apparel companies.