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) March 7, 2001
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 by
Lands' End, Inc., announcing its fourth quarter performance and fiscal 2001
results. Also, the company adopted Emerging Issues Task Force (EITFOO-10)
"Accounting For Shipping and Handling Fees and Costs" during the fourth
quarter of fiscal 2001. Financial statements for fiscal years 2001, 2000,
and 1999 are included to reflect the restatements of shipping and handling
revenue and costs.
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.
March 27, 2001 By: /s/ DONALD R. HUGHES
Donald R. Hughes
Senior Vice President &
Chief Financial Officer
EXHIBIT 99
FOR IMMEDIATE RELEASE
LANDS' END REPORTS STRONG FOURTH QUARTER PERFORMANCE
AND FISCAL 2001 RESULTS
DODGEVILLE, WIS. ... March 7, 2001 ... Lands' End, Inc. (LE), the direct
merchant of classic casualwear, today reported results for its fourth quarter
and fiscal year ended January 26, 2001. The results incorporate the newly
adopted FASB requirements for accounting for shipping and handling fees and
expenses.
Total revenue for the fourth quarter of fiscal 2001 was $538.6 million, up
11.5 percent from $483.1 million in the prior year. Net income for the quarter
just ended was $31.8 million, up 12.3 percent from $28.3 million a year ago,
and diluted earnings per share for the quarter just ended were $1.07, compared
with $0.92 in the prior year. The month of January performed well, with sales
up 6 percent, in spite of shifting about $10 million in sales out of the fourth
quarter of fiscal 2001 and into the first quarter of fiscal 2002, as we changed
the timing of our end-of-season clearance catalog.
Total revenue for the 52-week year just ended was $1.462 billion, up 3.2
percent from $1.417 billion in the prior year. Net
income for the year just ended was $34.7 million, down 27.8 percent from the
$48.0 million earned in fiscal 2000, and diluted earnings per share for the
year just ended were $1.14, compared with $1.56 for the prior year. The prior
year includes a non-recurring after-tax increase to net income of $1.1
million, or $0.04 per share.
In commenting on the results, company president and chief executive
officer David F. Dyer said, "We are extremely pleased that our strategic
initiatives of the last two years have resulted in a double digit increase in
both sales and earnings for the fourth quarter. Our merchandising, creative
and marketing decisions really paid off. During the latter part of the year,
we generated great sales momentum and ended fiscal 2001 with the strongest
growth in our 12-month buyer file that we've had in years. This was especially
gratifying in the face of a difficult economy."
SEGMENT SALES DATA FOR FOURTH QUARTER & FULL YEAR
(in millions) Percent
4Q01 4Q00 change
Core business segment $317 $278 +14.0
Specialty segment 135 122 +10.6
International segment 46 50 - 8.5
Internet 86 59 +46.0
FY01 FY00
Core business segment $814 $780 + 4.3
Specialty segment 408 397 + 2.9
International segment 133 143 - 7.0
Internet 218 138 +58.7
Sales data excludes shipping & handling revenue. Internet sales are included
in the respective business segments
The strong growth seen in the core business segment was led by the coed
division, which grew by 23 percent in the fourth quarter and by 16 percent for
the year. The strongest performer in the specialty
business segment was Corporate Sales, which has had double-digit increases
throughout the year and had sales of $170 million in fiscal 2001. During the
fourth quarter, the Kids division had a low double digit sales increase, and
Coming Home a mid single digit sales growth, although both those business had a
slow start in the beginning of the year. Sales in Germany and the U.K improved
in the fourth quarter, though overall performance in the international business
segment was weak, mainly due to soft sales in Japan and currency issues.
Gross profit for the quarter just ended was $235 million, or 43.7 percent
of total revenue, compared with $207 million, or 42.8 percent of total revenue
in the prior year. Improved sourcing and a lower level of liquidations
resulted in higher initial margins that contributed 130 basis points to gross
profit margin. This improvement was partially offset by increased shipping
and handling expenses.
Inventory was $188 million as of January 26, 2001, up 16 percent from $162
million at the end of the prior year. Year-end inventory is in line with
planned levels, and the age and currency of inventory has improved. In the
quarter just ended, liquidations of excess inventory were about 7 percent of
net merchandise sales, compared with 9 percent in the prior year.
Selling, general and administrative expenses in the fourth quarter of
fiscal 2001 increased 12.8 percent to $182 million,
compared with $161 million in the prior year. As a percentage of total
revenue, SG&A was 33.8 percent, compared with 33.4 percent in the prior year.
Higher catalog costs, partially offset by relatively lower national
advertising, were the primary factors responsible for the change in SG&A
ratio for the quarter just ended.
BUSINESS OUTLOOK
For the first five weeks of the current first quarter, total revenue is up
about 19 percent. However, more than half of this increase is due to the shift
in the timing of our end-of-season clearance catalog. We are taking a
conservative approach to our business in light of the uncertainty in the U.S.
economy, particularly in the retail environment.
For fiscal 2002, a 53-week year that will end on February 1, 2002, the
company expects that sales will increase in the single digit range, and we
expect gross profit margin to show continued improvement. As a result, we
expect an increase in diluted earnings per share of at least 20 percent for the
year as a whole.
As described later in our statement regarding forward-looking information,
our business's profit level is sensitive to many factors, including changes in
sales volume, which are difficult for us, like most retailers, to accurately
predict.
FASB REQUIREMENTS
During the fourth quarter, the company was required to adopt the Financial
Accounting Standards Board (FASB) Emerging Issues Task Force "Accounting for
Shipping and Handling Fees and Costs" (EITF 00-10). Accordingly, shipping and
handling revenue and expense, which had been netted within selling, general and
administration expenses, are now reclassified into revenue and cost of goods
sold. This reclassification has no effect on income, but it does require a
restatement of total revenue, cost of goods sold, gross profit, and
selling, general and administrative expenses. A schedule providing the
restatement of all comparative prior period financial statements will be issued
following this earnings release.
Lands' End is a direct merchant of traditionally styled, classic
casualwear offered to customers around the world through regular mailings of
its monthly and specialty catalogs and via the Internet at www.landsend.com.
*********************************************************************
SUPPLEMENTAL INFORMATION FY2001 FY2000
(in millions, excluding Willis & Geiger)
Twelve-month buyers 6.7 6.2
Three-year buyers 11.2 10.3
Catalogs mailed 269 236
Capital expenditures $50.7 $28.0
Depreciation & amortization $23.4 $20.7
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, 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 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.
Contact Charlotte LaComb: 608-935-4835
CONSOLIDATED STATEMENTS OF OPERATIONS
Lands' End, Inc. & Subsidiaries
(Amounts in thousands, except per share data)
13 weeks ended 52 weeks ended
Jan. 26, Jan. 28, Jan. 26, Jan. 28,
2001 2000 2001 2000
Net merchandise sales $496,993 $449,628 $1,354,974 $1,319,823
Shipping and handling
revenue 41,564 33,501 107,309 97,063
Total revenue 538,557 483,129 1,462,283 1,416,886
Cost of merchandise sales 259,963 241,559 728,446 727,291
Shipping & handling costs 43,160 34,774 112,158 99,791
Total cost of sales 303,123 276,333 840,604 827,082
Gross profit 235,434 206,796 621,679 589,804
Selling, general and
administrative expenses 181,863 161,198 560,019 512,647
Reversal of non-recurring
charge - - - (1,774)
Income from operations 53,571 45,598 61,660 78,931
Other income (expense):
Interest expense (364) (365) (1,512) (1,890)
Interest income 790 827 2,244 882
Other (3,516) (1,106) (7,381) (1,679)
Total other income
(expense), net (3,090) (644) (6,649) (2,687)
Income before income taxes 50,481 44,954 55,011 76,244
Income tax provision 18,678 16,633 20,354 28,210
Net income $ 31,803 $ 28,321 $ 34,657 $ 48,034
Basic earnings per share $ 1.08 $ 0.94 $ 1.15 $ 1.60
Diluted earnings per share $ 1.07 $ 0.92 $ 1.14 $ 1.56
Basic weighted average
shares outstanding 29,412 30,149 30,047 30,085
Diluted weighted average
shares outstanding 29,623 30,923 30,422 30,854
CONSOLIDATED BALANCE SHEETS
Lands' End, Inc. & Subsidiaries
(Amounts in thousands)
Jan. 26, Jan. 28,
2001 2000
Assets
Current assets:
Cash and cash equivalents $ 75,351 $ 76,413
Receivables, net 19,808 17,753
Inventory 188,211 162,193
Prepaid advertising 17,627 16,572
Other prepaid expenses 9,715 5,816
Deferred income tax benefit 10,973 10,661
Total current assets 321,685 289,408
Property, plant and equipment, at cost:
Land and buildings 104,815 102,776
Fixtures and equipment 203,845 175,910
Leasehold improvements 4,630 4,453
Construction in progress 4,289 -
Total property, plant and equipment 317,579 283,139
Less - accumulated depreciation
and amortization 132,286 117,317
Property, plant and equipment, net 185,293 165,822
Intangibles, net 651 966
Total assets $507,629 $456,196
Liabilities and shareholders' investment
Current liabilities:
Lines of credit $ 16,940 $ 11,724
Accounts payable 96,168 74,510
Reserve for returns 9,061 7,869
Accrued liabilities 41,135 43,754
Accrued profit sharing 2,357 2,760
Income taxes payable 13,213 10,255
Total current liabilities 178,874 150,872
Deferred income taxes 14,567 9,117
Shareholders' investment:
Common stock, 40,221 shares issued 402 402
Donated capital 8,400 8,400
Additional paid-in capital 31,908 29,709
Deferred compensation (121) (236)
Accumulated other comprehensive income 5,974 2,675
Retained earnings 489,087 454,430
Treasury stock, 10,945 and 10,071
shares at cost, respectively (221,462) (199,173)
Total shareholders' investment 314,188 296,207
Total liabilities and
shareholders' investment $507,629 $456,196
CONSOLIDATED STATEMENTS OF CASH FLOWS
Lands' End, Inc. & Subsidiaries
(In thousands)
Twelve months ended
Jan. 26, Jan. 28,
2001 2000
Cash flows from (used for)
operating activities:
Net income $ 34,657 $ 48,034
Adjustments to reconcile net income to net
cash flows from operating activities-
Non-recurring credit - (1,774)
Depreciation and amortization 23,432 20,715
Deferred compensation expense 115 158
Deferred income taxes 5,138 8,270
Loss on disposal of fixed assets 437 926
Changes in assets and liabilities:
Receivables (2,055) 3,330
Inventory (26,018) 57,493
Prepaid advertising (1,055) 4,785
Other prepaid expenses (3,899) 1,773
Accounts payable 21,658 (13,412)
Reserve for returns 1,192 676
Accrued liabilities (1,091) (7,664)
Accrued profit sharing (403) 504
Income taxes payable 2,958 (4,323)
Tax benefit of stock options 2,199 2,715
Other 3,299 672
Net cash flows from operating activities 60,564 122,878
Cash flows used for investing activities:
Cash paid for capital additions (44,553) (28,013)
Net cash flows used for investing activities: (44,553) (28,013)
Cash flows from (used for)financing activities:
Proceeds from (payment of) short-term debt 5,216 (27,218)
Purchases of treasury stock (27,988) (4,516)
Issuance of treasury stock 5,699 6,641
Net cash flows used for
financing activities (17,073) (25,093)
Net increase (decrease) in cash and
cash equivalents (1,062) 69,772
Beginning cash and cash equivalents 76,413 6,641
Ending cash and cash equivalents $ 75,351 $ 76,413
LANDS' END, INC. & SUBSIDIARIES
The following is a reclassification of the Lands' End financial statements for
fiscal years 2001, 2000 and 1999.
Accounting for shipping and handling fees and costs
In July 2000, the Emerging Issues Task Force issued EITF 00-10, "Accounting
for shipping and handling fees and costs" ("EITF 00-10"). Under provisions of
EITF 00-10, amounts billed to a customer in a sale transaction related to
shipping and handling represent revenues earned for the goods provided and
should be classified as sales revenue. As required, the company adopted
EITF 00-10 in its consolidated financial statements during the fourth quarter
of fiscal 2001 and has restated all comparative prior period financial
statements.
On its financial statements, the company is disclosing its "shipping and
handling revenue" separately from its "net merchandise sales", and "shipping
and handling costs" are listed separately in costs of sales. Previously, the
company had netted shipping and handling revenue earned against shipping and
handling costs incurred within selling, general and administrative expenses.
The enclosed Exhibits 1, 2 and 3 are condensed consolidated statements of
operations by quarter for the fiscal years ended January 26, 2001, January 28,
2000 and January 29, 1999. For each of these three years, statements of
operations are included that represent the company's new disclosure format,
compared to its former reporting format.
The company's shipping and handling revenue consist of amounts billed to
customers for shipping and handling product. Shipping and handling costs
include shipping supplies, labor to pick and pack the product and
third-party shipping costs.
LANDS' END, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
WITH RECLASSIFICATIONS OF SHIPPING AND HANDLING REVENUE AND COSTS
FISCAL YEAR 2001
(Amounts in thousands, except per share data)
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. YTD
04/28/00 07/28/00 10/27/00 01/26/01 01/26/01
Net merchandise sales $266,045 $255,545 $336,391 $496,993 $1,354,974
Shipping and handling revenue 19,795 20,080 25,870 41,564 107,309
Total revenue 285,840 275,625 362,261 538,557 1,462,283
Cost of sales 145,146 132,674 190,663 259,963 728,446
Shipping and handling costs 20,926 21,683 26,389 43,160 112,158
Total cost of sales 166,072 154,357 217,052 303,123 840,604
Gross profit 119,768 121,268 145,209 235,434 621,679
Selling, general and administrative
expenses 118,448 123,995 135,713 181,863 560,019
Income (loss) from operations 1,320 (2,727) 9,496 53,571 61,660
Total other income (expense) (856) (259) (2,444) (3,090) (6,649)
Income (loss) before income taxes 464 (2,986) 7,052 50,481 55,011
Income tax provision (benefit) 172 (1,105) 2,609 18,678 20,354
Net income (loss) $ 292 $ (1,881) $ 4,443 $ 31,803 $ 34,657
LANDS' END, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
WITHOUT RECLASSIFICATIONS OF SHIPPING AND HANDLING REVENUE AND COSTS
FISCAL YEAR 2001
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr YTD
04/28/00 07/28/00 10/27/00 01/26/01 01/26/01
Net sales $266,045 $255,545 $336,391 $496,993 $1,354,974
Cost of sales 145,146 132,674 190,663 259,963 728,446
Gross profit 120,899 122,871 145,728 237,030 626,528
Selling, general and administrative
expenses 119,579 125,598 136,232 183,459 564,868
Income (loss) from operations 1,320 (2,727) 9,496 53,571 61,660
Total other income (expense) (856) (259) (2,444) (3,090) (6,649)
Income (loss) before income taxes 464 (2,986) 7,052 50,481 55,011
Income tax provision (benefit) 172 (1,105) 2,609 18,678 20,354
Net income (loss) $ 292 $ (1,881) $ 4,443 $ 31,803 % 34,657
Earnings per share data:
Basic earnings per share $ 0.01 $ (0.06) $ 0.15 $ 1.08 $ 1.15
Diluted earnings per share 0.01 (0.06) 0.15 1.07 1.14
Basic weighted average shares outstanding 30,199 30,295 30,290 29,412 30,047
Diluted weighted average shares outstanding 30,835 30,722 30,491 29,623 30,422
LANDS' END, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
WITH RECLASSIFICATIONS OF SHIPPING AND HANDLING REVENUE AND COSTS
FISCAL YEAR 2000
(Amounts in thousands, except per share data)
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. YTD
04/30/99 07/30/99 10/29/99 01/28/00 01/28/00
Net merchandise sales $289,609 $254,616 $325,970 $449,628 $1,319,823
Shipping and handling revenue 21,010 19,459 23,093 33,501 97,063
Total revenue 310,619 274,075 349,063 483,129 1,416,886
Cost of sales 164,175 136,400 185,157 241,559 727,291
Shipping and handling costs 20,954 20,492 23,571 34,774 99,791
Total cost of sales 185,129 156,892 208,728 276,333 827,082
Gross profit 125,490 117,183 140,335 206,796 589,804
Selling, general and administrative
expenses 116,342 108,396 126,711 161,198 512,647
Non-recurring charge (credit) (1,323) (275) (176) 0 (1,774)
Income (loss) from operations 10,471 9,062 13,800 45,598 78,931
Total other income (expense) (139) (1,994) 90 (644) (2,687)
Income (loss) before income taxes 10,332 7,068 13,890 44,954 76,244
Income tax provision 3,823 2,615 5,139 16,633 28,210
Net income (loss) $ 6,509 $ 4,453 $ 8,751 $ 28,321 $ 48,034
LANDS' END, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
WITHOUT RECLASSIFICATIONS OF SHIPPING AND HANDLING REVENUE AND COSTS
FISCAL YEAR 2000
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr YTD
04/30/99 07/30/99 10/29/99 01/28/00 01/28/00
Net sales $289,609 $254,616 $325,970 $449,628 $1,319,823
Cost of sales 164,175 136,400 185,157 241,559 727,291
Gross profit 125,434 118,216 140,813 208,069 592,532
Selling, general and administrative
expenses 116,286 109,429 127,189 162,471 515,375
Non-recurring charge (credit) (1,323) (275) (176) 0 (1,774)
Income (loss) from operations 10,471 9,062 13,800 45,598 78,931
Total other income (expense) (139) (1,994) 90 (644) (2,687)
Income (loss) before income taxes 10,332 7,068 13,890 44,954 76,244
Income tax provision 3,823 2,615 5,139 16,633 28,210
Net income (loss) $ 6,509 $ 4,453 $ 8,751 $ 28,321 $ 48,034
Earnings per share data:
Basic earnings per share $ 0.22 $ 0.15 $ 0.29 $ 0.94 $ 1.60
Diluted earnings per share 0.21 0.14 0.28 0.92 1.56
Basic weighted average shares outstanding 30,007 30,057 30,125 30,149 30,085
Diluted weighted average shares outstanding 30,488 30,783 31,071 30,923 30,854
LANDS' END, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
WITH RECLASSIFICATIONS OF SHIPPING AND HANDLING REVENUE AND COSTS
FISCAL YEAR 1999
(Amounts in thousands, except per share data)
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. YTD
05/01/98 07/31/98 10/30/98 01/29/99 01/29/99
Net merchandise sales $268,587 $239,194 $322,422 $541,172 $1,371,375
Shipping and handling revenue 17,655 16,733 21,673 38,685 94,746
Total revenue 286,242 255,927 344,095 579,857 1,466,121
Cost of sales 143,847 123,716 177,160 309,938 754,661
Shipping and handling costs 19,298 18,213 20,390 37,467 95,368
Total cost of sales 163,145 141,929 197,550 347,405 850,029
Gross profit 123,097 113,998 146,545 232,452 616,092
Selling, general and administrative
expenses 114,640 113,314 135,799 180,071 543,824
Non-recurring charge 0 0 1,500 11,100 12,600
Income (loss) from operations 8,457 684 9,246 41,281 59,668
Total other income (expense) (191) (781) (8,695) (501) (10,168)
Income (loss) before income taxes 8,266 (97) 551 40,780 49,500
Income tax provision (benefit) 3,058 (36) 204 15,089 18,315
Net income (loss) $ 5,208 $ (61) $ 347 $ 25,691 $ 31,185
LANDS' END, INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
WITHOUT RECLASSIFICATIONS OF SHIPPING AND HANDLING REVENUE AND COSTS
FISCAL YEAR 1999
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr YTD
05/01/98 07/31/98 10/30/98 01/29/99 01/29/99
Net sales $268,587 $239,194 $322,422 $541,172 $1,371,375
Cost of sales 143,847 123,716 177,160 309,938 754,661
Gross profit 124,740 115,478 145,262 231,234 616,714
Selling, general and administrative
expenses 116,283 114,794 134,516 178,853 544,446
Non-recurring charge 0 0 1,500 11,100 12,600
Income (loss) from operations 8,457 684 9,246 41,281 59,668
Total other income (expense) (191) (781) (8,695) (501) (10,168)
Income (loss) before income taxes 8,266 (97) 551 40,780 49,500
Income tax provision (benefit) 3,058 (36) 204 15,089 18,315
Net income (loss) $ 5,208 $ (61) $ 347 $ 25,691 $ 31,185
Earnings per share data:
Basic earnings per share $ 0.17 $ 0.00 $ 0.01 $ 0.85 $ 1.02
Diluted earnings per share 0.17 0.00 0.01 0.84 1.01
Basic weighted average shares outstanding 30,950 30,504 30,239 30,207 30,471
Diluted weighted average shares outstanding 31,346 30,801 30,318 30,452 30,763