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 11, 1999
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 99.3 to this report is a news release
issued by Lands' End, Inc., discussing its reported results
for its fourth quarter and fiscal year ended January 29, 1999,
including its statements about goals for Internet sales, anticipated
cost savings, and possible circulation reductions and their
anticipated effects on sales or profits.
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 April 8, 1999 By: /s/ STEPHEN A. ORUM
Stephen A. Orum
Executive Vice President &
Chief Financial Officer
EXHIBIT 99.3
FOR IMMEDIATE RELEASE
LANDS' END REPORTS FISCAL 1999
YEAR-END AND FOURTH QUARTER RESULTS
DODGEVILLE, WIS ... March 11, 1999 ...Lands' End, Inc. (LE),
today reported results for its fourth quarter and fiscal year
ended January 29, 1999.
Net sales for the 52-week year just ended totaled $1.371 billion,
compared with $1.264 billion in the prior year, an increase of
8.5 percent. The increase in sales was primarily due to
additional catalogs and pages mailed to customers. The growth in
sales came primarily from the company's specialty businesses.
Sales from foreign-based operations were up slightly for the
year, while sales from the core business, represented by the
monthly and prospecting catalogs, were down from the prior year.
Net income for the year just ended was $31.2 million, down 51
percent from the $64.2 million the company earned in fiscal 1998.
Diluted earnings per share for the year just ended were $1.01,
compared with $2.00 per share for the prior year. The diluted
weighted average number of common shares outstanding was 30.8
million for fiscal 1999 and 32.1 million for fiscal 1998.
As previously reported, in the third and fourth quarters of
fiscal 1999, the company had after-tax non-recurring charges of
$0.9 million and $7.0 million, respectively, or $0.26 per share
for the entire fiscal year. In the first quarter of fiscal 1998
the company had an after-tax gain of $4.9 million, or $0.15 per
share, from the sale of its majority interest in The Territory
Ahead. Before the effect of these adjustments, net income for
fiscal 1999 was $39.1 million, or $1.27 per share, compared with
$59.2 million, or $1.85 per share in fiscal 1998.
Net sales in the fourth quarter of fiscal 1999 were $541 million,
up 12.6 percent from the fourth quarter of the prior year, when
net sales were $480 million. Net income for the quarter just
ended was $25.7 million, down 37.7 percent from $41.3 million in
the similar period a year ago. Including the effect of the non-
recurring charge discussed above, diluted earnings per share for
the quarter just ended were $0.84. Excluding that effect,
diluted earnings per share for the quarter just ended were $1.07,
compared with $1.32 in fiscal 1998.
In commenting on the results, company president and chief
executive officer David F. Dyer said, "We've made much progress
in this past quarter, especially in getting our inventory more
closely aligned with sales, restructuring our organization into
functional operating units and putting people in key leadership
roles. Going forward, I believe our strengths as a premier
direct merchant will enable us to position Lands' End as a major
e-commerce player, in addition to a being a leading catalog
company.
"One of the bright spots for us this year has been the Internet
growth. Internet sales were $61 million in fiscal 1999, more
than triple the $18 million of the prior year. From an expense
perspective, it is less costly to advertise and take orders on
the Internet, and over time, we will be able to mail fewer
catalogs to those customers who prefer e-commerce shopping.
Within three or four years, I would like to see a significant
part of our sales coming via the Internet," he said.
Gross profit for the year just ended was $617 million, or 45.0
percent of net sales, compared with $588 million, or 46.6 percent
of net sales, for the prior year. The decrease in gross profit
margin was primarily due to more steep markdowns on higher sales
of liquidated merchandise, especially in the fourth quarter when
the company aggressively addressed its overstock situation, as
well as from lower initial markups. Liquidations were about 10
percent of total net sales in fiscal 1999, compared with 8
percent in the prior year.
Year-end inventory was $220 million, down 9 percent from $241
million in fiscal 1998. Inventory throughout the entire year was
higher as the company experienced softening sales, especially in
the third quarter. To correct this, the company instituted price
rollbacks, price reductions and some promotional pricing in the
fourth quarter. This helped increase sales, but also had a
negative effect on gross profit margin for the year and
especially for the fourth quarter. The company's goal is to ship
at least 90 percent of all items when the customer places an
order. In fiscal 1999, the company achieved a first-time
fulfillment rate of 91 percent.
Selling, general and administrative expenses rose 11 percent to
$544 million in fiscal 1999, compared with $490 million in the
prior year. As a percentage of sales, SG&A was 39.7 percent in
fiscal 1999 and 38.8 percent in fiscal 1998. The increase in the
SG&A ratio was mainly the result of lower productivity in the
catalogs due to an increase in pages and catalogs mailed and a
weaker response from customers. Additional factors increasing
the SG&A ratio were relatively higher salaries and benefits,
higher Year 2000 expenses, and increased investment in the
Internet site. This was partially offset by lower bonus and
profit sharing expense due to lower profitability. The number of
full-price catalogs mailed totaled 259 million in fiscal 1999, up
12 percent from the prior year, while the total number of pages
mailed was increased by about 10 percent.
Over the past two years, catalog circulation has increased 22
percent and page circulation by 38 percent. This level of
circulation was due in part from our efforts to clear excess
inventory in the fourth quarter. Starting this fall, circulation
of catalogs and pages will be reduced to eliminate less
profitable mailings. This will have a negative effect on sales
growth, but is expected to have a positive impact on profits by
increasing catalog productivity, or sales per page.
Lands' End is a direct merchant of traditionally styled, classic
casualwear for the family, products for bed and bath, shoes, and
accessories offered to customers through regular mailings of its
monthly and specialty catalogs and the Internet.
*******************************************************
Supplemental information FY 1999 FY 1998 Percent
(in millions) change
Twelve-month buyers 6.1 5.9 + 3.4%
Three-year buyers 10.1 9.6 + 5.2%
Names on mailing list 29.5 27.2 + 8.5%
Capital expenditures $46.8 $47.7 - 1.9%
Depreciation & amortization $18.7 $15.1 +23.8%
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Statements in this release that are not historical are forward
looking, including, without limitation, statements about goals
for Internet sales, anticipated cost savings, and possible
circulation reductions and their anticipated effects on sales or
profits. As such, these statements are inherently subject to a
number of risks and uncertainties. Future results may be
materially different from those expressed or implied by these
statements due to various factors that may occur. Such factors
include, but are not limited to the following: general economic
or business conditions, both domestic and foreign; continued
growth rates for e-commerce shopping; the company's ability to
attract customers to the Internet; technology developments and
their availability and cost; customer response to product
offerings and initiatives; costs associated with printing and
mailing catalogs; dependence on consumer seasonal buying
patterns; and fluctuations in foreign currency exchange rates.
-0-
Contact Charlotte LaComb: 608-935-4835
CONSOLIDATED STATEMENTS OF OPERATIONS
Lands' End, Inc. & Subsidiaries
(Amounts in thousands, except per share data)
13 weeks 13 weeks 52 weeks 52 weeks
ended ended ended ended
Jan. 29, Jan. 30, Jan. 29, Jan. 30,
1999 1998 1999 1998
Net sales $541,172 $480,418 $1,371,375 $1,263,629
Cost of sales 309,938 253,941 754,661 675,138
Gross profit 231,234 226,477 616,714 588,491
Selling, general and
administrative expenses 178,853 161,209 544,446 489,923
Non-recurring charge 11,100 - 12,600 -
Income from operations 41,281 65,268 59,668 98,568
Other income (expense):
Interest expense (1,466) (696) (7,734) (1,995)
Interest income 8 214 16 1,725
Other 957 (1,122) (2,450) (4,278)
Total other income
(expense), net (501) (1,604) (10,168) (4,548)
Income before income taxes
and non-recurring gain 40,780 63,664 49,500 94,020
Income tax provision 15,089 22,410 18,315 34,787
Net income before
non-recurring gain 25,691 41,254 31,185 59,233
Non-recurring gain (net of
income taxes) - - - 4,917
Net income $ 25,691 $ 41,254 $ 31,185 $ 64,150
Basic earnings per share
before non-recurring gain $ 0.85 $ 1.33 $ 1.02 $ 1.86
Basic earnings per share
from non-recurring gain $ - $ - $ - $ 0.15
Basic earnings per share $ 0.85 $ 1.33 $ 1.02 $ 2.01
Diluted earnings per share $ 0.84 $ 1.32 $ 1.01 $ 2.00
Basic weighted average
shares outstanding 30,207 31,024 30,471 31,851
Diluted weighted average
shares outstanding 30,452 31,359 30,763 32,132
CONSOLIDATED BALANCE SHEETS
Lands' End, Inc. & Subsidiaries Jan. 29, Jan. 30,
(Dollars in thousands) 1999 1998
Assets
Current assets:
Cash and cash equivalents $ 6,641 $ 6,338
Receivables, net 21,083 15,443
Inventory 219,686 241,154
Prepaid advertising 21,357 18,513
Other prepaid expenses 7,589 5,085
Deferred income tax benefit 17,947 12,613
Total current assets 294,303 299,146
Property, plant and equipment, at cost:
Land and buildings 102,018 81,781
Fixtures and equipment 154,663 118,190
Leasehold improvements 5,475 5,443
Construction in progress - 12,222
Total property, plant and equipment 262,156 217,636
Less - accumulated depreciation
and amortization 101,570 84,227
Property, plant and equipment, net 160,586 133,409
Intangibles, net 1,030 917
Total assets $455,919 $433,472
Liabilities and shareholders' investment
Current liabilities:
Lines of credit $ 38,942 $ 32,437
Accounts payable 87,922 83,743
Reserve for returns 7,193 6,128
Accrued liabilities 54,392 34,942
Accrued profit sharing 2,256 4,286
Income taxes payable 14,578 20,477
Total current liabilities 205,283 182,013
Deferred income taxes 8,133 8,747
Shareholders' investment:
Common stock, 40,221 shares issued 402 402
Donated capital 8,400 8,400
Additional paid-in capital 26,994 26,457
Deferred compensation (394) (1,047)
Accumulated other comprehensive income 2,003 875
Retained earnings 406,396 375,211
Treasury stock, 10,317 and 9,281
shares at cost, respectively (201,298) (167,586)
Total shareholders' investment 242,503 242,712
Total liabilities and
shareholders' investment $455,919 $433,472
CONSOLIDATED STATEMENTS OF CASH FLOWS
Lands' End, Inc. & Subsidiaries Twelve months ended
(In thousands) Jan. 29, Jan. 30,
1999 1998
Cash flows from (used for) operating activities:
Net income $ 31,185 $ 64,150
Adjustments to reconcile net income to net
cash flows from operating activities-
Depreciation and amortization 18,731 15,127
Deferred compensation expense 653 323
Deferred income taxes (5,948) (1,158)
Pre-tax gain on sale of subsidiary - (7,805)
Loss on disposal of fixed assets 586 1,127
Changes in current assets and liabilities
excluding the effects of acquisitions
and divestitures:
Receivables (5,640) (7,019)
Inventory 21,468 (104,545)
Prepaid advertising (2,844) (7,447)
Other prepaid expenses (2,504) (1,366)
Accounts payable 4,179 11,616
Reserve for returns 1,065 944
Accrued liabilities 19,593 8,755
Accrued profit sharing (2,030) 1,349
Income taxes payable (5,899) (1,047)
Other 1,665 64
Net cash flows from (used for)
operating activities 74,260 (26,932)
Cash flows from (used for) investing activities:
Cash paid for capital additions (46,750) (47,659)
Proceeds from sale of subsidiary - 12,350
Net cash flows used for investing activities (46,750) (35,309)
Cash flows from (used for) financing activities:
Proceeds from short-term borrowings 6,505 21,242
Purchases of treasury stock (35,557) (45,899)
Issuance of treasury stock 1,845 409
Net cash flows used for financing activities (27,207) (24,248)
Net increase (decrease) in cash and
cash equivalents 303 (86,489)
Beginning cash and cash equivalents 6,338 92,827
Ending cash and cash equivalents $ 6,641 $ 6,338
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF OPERATIONS AND THE CONSOLIDATED BALANCE SHEETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> JAN-29-1999 JAN-30-1998
<PERIOD-END> JAN-29-1999 JAN-30-1998
<CASH> 6,641 6,338
<SECURITIES> 0 0
<RECEIVABLES> 21,083 15,443
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<INVENTORY> 219,686 241,154
<CURRENT-ASSETS> 294,303 299,146
<PP&E> 262,156 217,636
<DEPRECIATION> 101,570 84,227
<TOTAL-ASSETS> 455,919 433,472
<CURRENT-LIABILITIES> 205,283 182,013
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0 0
0 0
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<CGS> 754,661 675,138
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<OTHER-EXPENSES> 2,940<F1> 4,906<F1>
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<INCOME-PRETAX> 49,500 101,825
<INCOME-TAX> 18,315 37,675
<INCOME-CONTINUING> 31,185 64,150
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<F1>Expenses included in Other Income and Expenses on the Consolidated
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<F2>Per SFAS 128 the EPS os Basic
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