Delaware | 001-09769 | 36-2512786 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1 Lands’ End Lane Dodgeville, Wisconsin | 53595 | |
(Address of Principal Executive Offices) | (Zip Code) |
Exhibit Number | Description | |
99.1 | Press Release of Lands’ End, Inc. dated March 17, 2016 |
Date: March 17, 2016 | By: | /s/ James F. Gooch |
James F. Gooch | ||
Title: Executive Vice President, Chief Operating Officer/Chief Financial Officer and Treasurer (Principal Financial Officer) |
Exhibit No. | Description | |
99.1 | Press Release of Lands’ End, Inc. dated March 17, 2016 |
• | Net revenue was $473.5 million as compared to $504.6 million in the fourth quarter last year. Direct segment net revenue decreased 5.2% to $409.1 million. Retail segment net revenue decreased 11.5% to $64.4 million driven by an 8.7% decrease in same store sales and a reduction in the number of Lands' End Shops at Sears. |
• | Gross margin was 42.0% as compared to 44.0% in the fourth quarter last year due to an increase in promotions as compared to last year in response to a difficult retail environment and unseasonably warm weather. |
• | Net loss was $39.5 million, or $1.23 per diluted share, as compared to net income of $33.1 million, or $1.03 per diluted share in the fourth quarter last year. Excluding a $98.3 million ($62.0 million after tax) non-cash impairment charge related to the write-down of the the Lands’ End trade name, an indefinite-lived intangible asset, Adjusted Net income1 in the fourth quarter of 2015 was $22.6 million, or $0.71 per diluted share. Excluding the impact of a product recall, Adjusted Net income1 in the fourth quarter of 2014 was $35.9 million, or $1.12 per diluted share. |
• | Adjusted EBITDA2 was $48.1 million compared to $70.4 million in the fourth quarter of fiscal 2014. Fourth quarter fiscal 2015 Adjusted EBITDA2 excludes the $98.3 million non-cash impairment charge related to the write-down of the Lands’ End trade name. Fourth quarter fiscal 2014 Adjusted EBITDA2 excludes the impact of a product recall. |
• | Net revenue was $1.42 billion as compared to $1.56 billion in fiscal 2014. Direct segment net revenue decreased 8.0% to $1.21 billion. Retail segment net revenue decreased 12.8% to $204.6 million driven by a 9.3% decrease in same store sales and a reduction in the number of Lands' End Shops at Sears. |
• | Net loss was $19.5 million, or $0.61 per diluted share, as compared to net income of $73.8 million or $2.31 per diluted share for the same period last year. Excluding a $98.3 million ($62.0 million after tax) non-cash impairment charge related to the Lands’ End trade name and the impact of the reversal of a product recall accrual, Adjusted Net income1 was $40.4 million, or $1.26 per diluted share in fiscal 2015. Excluding the impact of a product recall, Adjusted Net income1 in fiscal 2014 was $76.6 million, or $2.39 per diluted share. |
• | Adjusted EBITDA2 was $107.3 million compared to $164.3 million in fiscal 2014. Fiscal 2015 Adjusted EBITDA2 excludes the $98.3 million non-cash impairment charge related to the write-down of the Lands’ End trade name and the impact of the reversal of the product recall accrual. Fiscal 2014 Adjusted EBITDA2 excludes the impact of the product recall. The impact of changes in currency exchange rates negatively impacted fiscal 2015 Adjusted EBITDA2 by approximately $12.0 million. |
(in thousands, except share data) | January 29, 2016 | January 30, 2015 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 228,368 | $ | 221,454 | ||||
Restricted cash | 3,300 | 3,300 | ||||||
Accounts receivable, net | 32,061 | 30,073 | ||||||
Inventories, net | 329,203 | 301,367 | ||||||
Prepaid expenses and other current assets | 24,972 | 31,408 | ||||||
Total current assets | 617,904 | 587,602 | ||||||
Property and equipment, net | 109,831 | 101,223 | ||||||
Goodwill | 110,000 | 110,000 | ||||||
Intangible assets, net | 430,000 | 528,712 | ||||||
Other assets | 20,791 | 22,462 | ||||||
TOTAL ASSETS | $ | 1,288,526 | $ | 1,349,999 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 146,097 | $ | 132,796 | ||||
Other current liabilities | 83,992 | 107,553 | ||||||
Total current liabilities | 230,089 | 240,349 | ||||||
Long-term debt | 500,838 | 505,988 | ||||||
Long-term deferred tax liabilities | 157,252 | 181,045 | ||||||
Other liabilities | 15,838 | 18,424 | ||||||
TOTAL LIABILITIES | 904,017 | 945,806 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Common stock, par value $0.01- authorized: 480,000,000 shares; issued and outstanding: 31,991,668, 31,956,521, respectively | 320 | 320 | ||||||
Additional paid-in capital | 344,244 | 342,294 | ||||||
Retained earnings | 49,329 | 68,877 | ||||||
Accumulated other comprehensive loss | (9,384 | ) | (7,298 | ) | ||||
Total stockholders’ equity | 384,509 | 404,193 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,288,526 | $ | 1,349,999 |
13 Weeks Ended | 52 Weeks Ended | |||||||||||||||
(in thousands except per share data) | January 29, 2016 | January 30, 2015 | January 29, 2016 | January 30, 2015 | ||||||||||||
REVENUES | ||||||||||||||||
Net revenue: | $ | 473,543 | $ | 504,566 | $ | 1,419,778 | $ | 1,555,353 | ||||||||
Cost of sales (excluding depreciation and amortization) | 274,433 | 282,358 | 767,189 | 819,422 | ||||||||||||
Gross profit | 199,110 | 222,208 | 652,589 | 735,931 | ||||||||||||
Selling and administrative | 151,040 | 153,476 | 545,301 | 573,335 | ||||||||||||
Depreciation and amortization | 4,525 | 5,074 | 17,399 | 19,703 | ||||||||||||
Intangible asset impairment | 98,300 | — | 98,300 | — | ||||||||||||
Other operating expense (income), net | 39 | 3,205 | (3,327 | ) | 3,250 | |||||||||||
Operating (loss) income | (54,794 | ) | 60,453 | (5,084 | ) | 139,643 | ||||||||||
Interest expense | 6,211 | 6,170 | 24,826 | 20,494 | ||||||||||||
Other income, net | (461 | ) | (561 | ) | (671 | ) | (1,408 | ) | ||||||||
(Loss) income before income taxes | (60,544 | ) | 54,844 | (29,239 | ) | 120,557 | ||||||||||
Income tax (benefit) expense | (21,086 | ) | 21,749 | (9,691 | ) | 46,758 | ||||||||||
NET (LOSS) INCOME | $ | (39,458 | ) | $ | 33,095 | $ | (19,548 | ) | $ | 73,799 | ||||||
NET (LOSS) INCOME PER COMMON SHARE ATTRIBUTABLE TO STOCKHOLDERS | ||||||||||||||||
Basic: | $ | (1.23 | ) | $ | 1.04 | $ | (0.61 | ) | $ | 2.31 | ||||||
Diluted: | $ | (1.23 | ) | $ | 1.03 | $ | (0.61 | ) | $ | 2.31 | ||||||
Basic weighted average common shares outstanding | 31,992 | 31,957 | 31,979 | 31,957 | ||||||||||||
Diluted weighted average common shares outstanding | 31,992 | 32,053 | 31,979 | 32,016 |
• | EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax costs, and |
◦ | For the 13 and 52 weeks ended January 29, 2016 and January 30, 2015, we exclude the loss on disposal of property and equipment as management considers the gains or losses on disposal of assets to result from investing decisions rather than ongoing operations. |
• | Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of results. We have adjusted our results for these items to make our statements more comparable and therefore more useful to investors as the items are not representative of our ongoing operations. |
◦ | For the 13 and 52 weeks ended January 29, 2016 we exclude the impairment of our indefinite-lived trade name asset as this is a non-cash charge that is an unusual event that affects the comparability of our financial results. |
◦ | For the 13 and 52 weeks ended January 30, 2015, we recorded an accrual related to a recall of selected styles of children’s sleepwear that did not meet the federal flammability standard. For the 52 weeks ended January 29, 2016, an amount was reversed due to lower than estimated customer return rates for the recalled products despite our efforts to contact impacted customers. These are unusual events that affect the comparability of our financial results. |
13 Weeks Ended | ||||||||||||||||
(in thousands except per share data) | January 29, 2016 | January 30, 2015 | ||||||||||||||
Amount | per Diluted Common Share | Amount | per Diluted Common Share | |||||||||||||
Net (loss) income | $ | (39,458 | ) | $ | (1.23 | ) | $ | 33,095 | $ | 1.03 | ||||||
Intangible asset impairment, net of tax | 62,017 | 1.94 | — | — | ||||||||||||
Product recall, net of tax | — | — | 2,844 | 0.09 | ||||||||||||
Adjusted net income and earnings per share (1) | $ | 22,559 | $ | 0.71 | $ | 35,939 | $ | 1.12 |
52 Weeks Ended | ||||||||||||||||
(in thousands except per share data) | January 29, 2016 | January 30, 2015 | ||||||||||||||
Amount | per Diluted Common Share | Amount | per Diluted Common Share | |||||||||||||
Net (loss) income | $ | (19,548 | ) | $ | (0.61 | ) | $ | 73,799 | $ | 2.31 | ||||||
Intangible asset impairment, net of tax | 62,017 | 1.94 | — | — | ||||||||||||
Product recall, net of tax | (2,063 | ) | (0.06 | ) | 2,844 | 0.09 | ||||||||||
Adjusted net income and earnings per share (1)(3) | $ | 40,406 | $ | 1.26 | $ | 76,643 | $ | 2.39 |
13 Weeks Ended | |||||||||||||
January 29, 2016 | January 30, 2015 | ||||||||||||
(in thousands) | $’s | % of Net Sales | $’s | % of Net Sales | |||||||||
Net (loss) income | $ | (39,458 | ) | (8.3 | )% | $ | 33,095 | 6.6 | % | ||||
Income tax (benefit) expense | (21,086 | ) | (4.5 | )% | 21,749 | 4.3 | % | ||||||
Other income, net | (461 | ) | (0.1 | )% | (561 | ) | (0.1 | )% | |||||
Interest expense | 6,211 | 1.3 | % | 6,170 | 1.2 | % | |||||||
Operating (loss) income | (54,794 | ) | (11.6 | )% | 60,453 | 12.0 | % | ||||||
Intangible asset impairment | 98,300 | 20.8 | % | — | — | % | |||||||
Depreciation and amortization | 4,525 | 1.0 | % | 5,074 | 1.0 | % | |||||||
Product recall | — | — | % | 4,713 | 0.9 | % | |||||||
Loss on disposal of property and equipment | 39 | — | % | 194 | — | % | |||||||
Adjusted EBITDA (2) | $ | 48,070 | 10.2 | % | $ | 70,434 | 14.0 | % |
52 Weeks Ended | |||||||||||||
January 29, 2016 | January 30, 2015 | ||||||||||||
(in thousands) | $’s | % of Net Sales | $’s | % of Net Sales | |||||||||
Net (loss) income | $ | (19,548 | ) | (1.4 | )% | $ | 73,799 | 4.8 | % | ||||
Income tax (benefit) expense | (9,691 | ) | (0.7 | )% | 46,758 | 3.0 | % | ||||||
Other income, net | (671 | ) | — | % | (1,408 | ) | (0.1 | )% | |||||
Interest expense | 24,826 | 1.7 | % | 20,494 | 1.3 | % | |||||||
Operating (loss) income | (5,084 | ) | (0.4 | )% | 139,643 | 9.0 | % | ||||||
Intangible asset impairment | 98,300 | 6.9 | % | — | — | % | |||||||
Depreciation and amortization | 17,399 | 1.2 | % | 19,703 | 1.3 | % | |||||||
Product recall | (3,371 | ) | (0.2 | )% | 4,713 | 0.3 | % | ||||||
Loss on disposal of property and equipment | 44 | — | % | 239 | — | % | |||||||
Adjusted EBITDA (2) | $ | 107,288 | 7.6 | % | $ | 164,298 | 10.6 | % |
(in thousands) | January 29, 2016 | January 30, 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net (loss) income | $ | (19,548 | ) | $ | 73,799 | |||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 17,399 | 19,703 | ||||||
Intangible asset impairment | 98,300 | — | ||||||
Product recall | (3,371 | ) | 4,713 | |||||
Amortization of debt issuance costs | 1,741 | 1,563 | ||||||
Loss on disposal of property and equipment | 44 | 239 | ||||||
Stock-based compensation | 2,395 | 2,118 | ||||||
Deferred income taxes | (22,670 | ) | 17,545 | |||||
Change in operating assets and liabilities: | ||||||||
Inventories | (29,819 | ) | 64,252 | |||||
Accounts payable | 10,005 | 19,207 | ||||||
Other operating assets | 3,462 | (9,342 | ) | |||||
Other operating liabilities | (22,047 | ) | 17,324 | |||||
Net cash provided by operating activities | 35,891 | 211,121 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchases of property and equipment | (22,224 | ) | (16,608 | ) | ||||
Net cash used in investing activities | (22,224 | ) | (16,608 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Contributions from / (distributions to) Sears Holdings, net | — | 8,481 | ||||||
Proceeds from issuance of long-term debt | — | 515,000 | ||||||
Payments on term loan facility | (5,150 | ) | (3,862 | ) | ||||
Debt issuance costs | — | (11,433 | ) | |||||
Dividend paid to a subsidiary of Sears Holdings Corporation | — | (500,000 | ) | |||||
Net cash (used in) provided by financing activities | (5,150 | ) | 8,186 | |||||
Effects of exchange rate changes on cash | (1,603 | ) | (3,656 | ) | ||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 6,914 | 199,043 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 221,454 | 22,411 | ||||||
CASH AND CASH EQUIVALENTS, END OF YEAR | $ | 228,368 | $ | 221,454 | ||||
SUPPLEMENTAL INFORMATION: | ||||||||
Supplemental Cash Flow Data: | ||||||||
Unpaid liability to acquire property and equipment | $ | 8,182 | $ | 4,157 | ||||
Income taxes paid | $ | 23,991 | $ | 19,842 | ||||
Interest paid | $ | 22,690 | $ | 18,726 |
13 Weeks Ended | 52 Weeks Ended | |||||||||||||||
(in thousands) | January 29, 2016 | January 30, 2015 | January 29, 2016 | January 30, 2015 | ||||||||||||
Net revenue | ||||||||||||||||
Direct | $ | 409,107 | $ | 431,753 | $ | 1,214,993 | $ | 1,320,642 | ||||||||
Retail | 64,400 | 72,801 | 204,566 | 234,632 | ||||||||||||
Corporate/ other | 36 | 12 | 219 | 79 | ||||||||||||
Total Net revenue | $ | 473,543 | $ | 504,566 | $ | 1,419,778 | $ | 1,555,353 |
13 Weeks Ended | 52 Weeks Ended | |||||||||||||||
(in thousands) | January 29, 2016 | January 30, 2015 | January 29, 2016 | January 30, 2015 | ||||||||||||
Adjusted EBITDA(2): | ||||||||||||||||
Direct | $ | 56,620 | $ | 77,213 | $ | 141,936 | $ | 192,763 | ||||||||
Retail | 387 | 3,059 | (520 | ) | 7,161 | |||||||||||
Corporate/ other | (8,937 | ) | (9,838 | ) | (34,128 | ) | (35,626 | ) | ||||||||
Total adjusted EBITDA(2) | $ | 48,070 | $ | 70,434 | $ | 107,288 | $ | 164,298 |