8-K 1 decresultsfy02.txt FORM 8-K OF HOLIDAY RESULTS AS OF 12/28/01 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) January 17, 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 on January 17, 2002, by Lands' End, Inc., announcing its holiday results for the period ended December 28, 2001. 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. January 17, 2002 By: /S/ DONALD R. HUGHES Donald R. Hughes Senior Vice President & Chief Financial Officer EXHIBIT 99 FOR IMMEDIATE RELEASE LANDS' END REPORTS RECORD HOLIDAY RESULTS DODGEVILLE, WIS. ... January 17, 2002 ... Lands' End, Inc. (LE), the direct merchant of classically styled apparel and home furnishings, today reported results for the nine-week holiday period ended December 28, 2001, compared with the eight-week holiday period ended December 22, 2000. Total revenue for the nine-week period was $462.6 million, up 8 percent from $427.1 million during the prior year's eight week holiday season. Net income for the nine-week period was $43.6 million, up 29 percent from $33.9 million earned in the eight-week holiday period in calendar 2000. Diluted earnings per share for the fiscal 2002 holiday period were $1.45, compared with $1.13 last year. The additional week in this holiday period represented $13 million in revenue and had no material impact on net income. On a comparable 8- week calendar, total revenue was up about 5 percent. Commenting on the holiday results, company president and chief executive officer David F. Dyer said, "Our record holiday season has extended the momentum of a sensational year. Our collective merchandising, creative and operational teams harnessed the great potential inherent in our brand. We provided our customers with great service, quality products and creative presentations. And our customers, in turn, rewarded us with a highly successful holiday season." The solid sales improvement was fueled by successful inventory management. While the inventory investment was up from last year, the company shipped 88 percent of its merchandise immediately upon customer order, compared to 80 percent in last year's holiday period. Sales of full-price merchandise to U.S. consumers rose 8.5 percent, while Internet sales increased 35 percent in the holiday period. As a percentage of total revenue, gross margin improvement of 2 percentage points was the result of significantly better vendor sourcing and a somewhat lower level of liquidations. Overall selling, general and administrative expenses were 6.3 percent higher. However, as a percentage of total revenue, SG&A expenses declined 0.6 percentage points. FORTY-EIGHT WEEK RECORD RESULTS Year to date, total revenue for the forty-eight weeks was $1.44 billion, an increase of 6.3 percent from $1.35 billion during the similar forty-seven week period in the prior year. Net income, year to date, was $64.7 million, or $2.16 per diluted share, compared with $36.8 million, or $1.20 per share, earned in the forty-seven weeks of the prior year. HOLIDAY COMMENTS The core business segment sales showed strong growth, with an 18 percent increase in women's and an 8 percent increase in the coed division. In the specialty segment, the home division was up 15 percent, Kids was up 5 percent, and Corporate Sales, the business outfitters division, was about flat. International sales were very strong, up 18 percent from the prior year, led by the German and United Kingdom businesses. Gross profit in the nine-week period just ended was $216.3 million, or 46.8 percent of total revenue, compared with $191.4 million, or 44.8 percent of total revenue in the similar eight-week period a year ago. The increase in gross profit margin was primarily due to continued sourcing improvements with a somewhat lower level of liquidations. Liquidations of excess inventory were 4 percent of total merchandise sales in the holiday period just ended, compared with 5 percent a year ago. At the end of the holiday period, inventory was $216 million, up from $168 million a year ago. This increase was the result of accelerating spring/summer receipts and investing in key continuing styles to insure continued high initial fulfillment. The company is pleased with the quality of its inventory and has a lower level of inventory to be liquidated on hand, compared with last year. In the nine-week period just ended, selling, general and administrative expenses were $144.3 million, or 31.2 percent of total revenue, compared with $135.7 million, or 31.8 percent of total revenue, in last year's eight-week holiday period. The improved leverage was primarily due to better fulfillment levels that allowed us to convert demand to sales at a higher rate. SEGMENT DATA Segment merchandise sales data for holiday period (in millions) Holiday Holiday Percent FY02 FY01 Change Core business segment $276 $255 + 8 % Specialty segment 111 105 + 6 % International segment 40 34 + 18 % Total merchandise sales $427 $394 + 8 % Internet $ 92 $ 68 + 35% Segment merchandise sales data (full-price and liquidation sales) excludes shipping and handling revenue. Internet merchandise sales are included in the respective business segments. BUSINESS OUTLOOK For the current fiscal year, the company estimates capital expenditures at $42 million, and for fiscal 2003, they are currently planned to be approximately $35 million. Given the first 11 months of this fiscal year and current expectations for the month of January, the company believes that diluted earnings per share will be in the range of $2.11 to $2.18 for fiscal 2002. Looking forward to our performance in fiscal 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. While we are extremely pleased with our progress this year, overall economic conditions are creating a degree of caution in our outlook for the upcoming first and second quarters. 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. 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 2002 and 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 Corporate Sales 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=2661. 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. -0- Contact Charlotte LaComb: 608-935-4835 PRELIMINARY AND UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS Lands' End, Inc. & Subsidiaries (Amounts in thousands, except per share data) 9 weeks 8 weeks 48 weeks 47weeks ended ended ended ended Dec. 28, Dec. 22, Dec. 28, Dec. 22, 2001 2000 2001 2000 Revenue Net merchandise sales $426,803 $393,607 $1,325,150 $1,251,588 Shipping and handling revenue 35,789 33,487 110,498 99,232 Total revenue 462,592 427,094 1,435,648 1,350,820 Cost of sales Cost of merchandise sales 210,639 202,886 688,188 671,369 Shipping and handling costs 35,644 32,830 109,434 101,827 Total cost of sales 246,283 235,716 797,622 773,196 Gross profit 216,309 191,378 638,026 577,624 Selling, general and administrative expenses 144,287 135,722 529,429 513,879 Income from operations 72,022 55,656 108,597 63,745 Other income (expense): Interest expense (80) (381) (1,221) (1,529) Interest income 256 248 1,239 1,702 Other (1,528) (1,714) (4,284) (5,579) Total other expense, net (1,352) (1,847) (4,266) (5,406) Income before income taxes 70,670 53,809 104,331 58,339 Income tax provision 27,023 19,910 39,646 21,586 Net income $ 43,647 $ 33,899 $ 64,685 $ 36,753 Basic earnings per share $ 1.48 $ 1.14 $ 2.20 $ 1.22 Diluted earnings per share $ 1.45 $ 1.13 $ 2.16 $ 1.20 Basic weighted average shares outstanding 29,475 29,828 29,438 30,122 Diluted weighted average shares outstanding 30,077 30,031 29,917 30,503 PRELIMINARY AND UNAUDITED CONSOLIDATED BALANCE SHEETS Lands' End, Inc. & Subsidiaries Dec. 28, Dec. 22, (Dollars in thousands) 2001 2000 Assets Current assets: Cash and cash equivalents $176,707 $119,148 Receivables, net 22,421 28,192 Inventory 215,544 167,850 Prepaid advertising 11,676 14,470 Other prepaid expenses 8,397 7,484 Deferred income tax benefit 11,628 9,820 Total current assets 446,373 346,964 Property, plant and equipment, at cost: Land and buildings 117,241 103,607 Fixtures and equipment 104,838 103,460 Computer hardware and software 119,577 97,811 Leasehold improvements 4,823 4,453 Construction in progress - 2,262 Total property, plant and equipment 346,479 311,593 Less - accumulated depreciation and amortization 151,917 130,249 Property, plant and equipment, net 194,562 181,344 Other assets 2,801 2,648 Total assets $643,736 $530,956 Liabilities and shareholders' investment Current liabilities: Lines of credit $ 15,216 $ 7,898 Accounts payable 109,214 108,285 Reserve for returns 17,214 17,449 Accrued liabilities 59,296 52,220 Accrued profit sharing 4,742 2,358 Income taxes payable 32,070 20,725 Total current liabilities 237,752 208,935 Deferred income taxes 12,194 8,740 Shareholders' investment: Common stock, 40,221 shares issued 402 402 Donated capital 8,400 8,400 Additional paid-in capital 38,689 31,541 Deferred compensation (60) (126) Accumulated other comprehensive income 3,235 4,813 Retained earnings 553,772 491,183 Treasury stock, 10,352 and 11,031 shares at cost, respectively (210,648) (222,932) Total shareholders' investment 393,790 313,281 Total liabilities and shareholders' investment $643,736 $530,956