LE - Earnings call transcript Q4 2017

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Operator

Good morning, ladies and gentlemen, thank you for joining the Lands' End fourth quarter and fiscal 2017 financial results conference call. At this time, all participants are in a listen-only mode.

Following management's prepared remarks, we will host a question-and-answer session and our instructions will be given at that time. [Operator Instructions].

As a reminder, this conference call may be recorded for replay purposes. pleasure the my Mr. over now is to conference hand to It McCracken. Bernie Sir, you may begin.

Bernard McCracken

thank joining XXXX you earnings and LandsEnd.com. can morning Good for our on our released morning website quarter be we found call the fourth and which fiscal results, this and for End Lands'

a by On we After our session Griffith, Officer Chief question-and-answer Chief the and will will the Officer, Executive Chief Jerome today, from you Officer. we company's company's are and items Operating remarks, but prepared the forward-looking by forward-looking company in and XX-Q. conduct call and Financial our of hear our Jim us. with Gooch, covering filings, discuss also call. company's this from note to, and statements about analysts. change. materially to the that such Please information XX-K on on The SEC the includes involve company's outlook Subsequent not Form developments is statements differences to any included Factors do we're that the information our actual uncertainties. Such quarterly today differ update discussed made company's to provided not results could noted could forward-looking contribute annual including events the report The obligations statements. those risks that and as outlook Form include, cause those limited undertake may this on in call reports to represents and

earlier in comparable is copy A Investor measures. of GAAP referring directly a found non-GAAP Generally be we which These website measures of to Principles. at the During the accordance our of posted release our will earnings be measures can the LandsEnd.com. Relations non-GAAP prepared reconciliation to with section issued on are non-GAAP call, today, Accepted measure Accounting financial most not in

fiscal fiscal to the XX fourth weeks XXXX in fiscal and XX compared weeks to that had XXXX. weeks XX In had weeks fiscal of compared XX XXXX quarter in that note addition, XXXX

this XXrd call, the over of the purposes the week will the in refer and Jerome With to to turn call week. extra I management For as will quarterly that, discussions Griffith. both annual the

Jerome Griffith

for End strategies you, Overall, a Lands' following our quarters executed And us joining our as at year of you quarter Thank drive was quarter declines. we tremendous business. growth, of thank improved performance consecutive progress sales represented numerous Bernie. third XXXX fourth to The the XX of sales in consecutive everyone today.

volume brand roots, the Over file, the reconnecting by the delivering our key retail comps. positive in our driving and growing we course of to with buyer year, stabilized categories customer, core returning our

with market XXXX two our establishing more an effectively also by and will in organization. customer enable business putting create We had secured will contracts effective incremental that us as to major position strengthened We beyond. efficiently resonates our authentic our American in on improved and processes airlines, place strategy capitalizing an that which with Heritage, marketing and revenue operate

during stores. in We by retail November, momentum quarter the new driven business great the exceptional started We as into an head the fourth experienced we have We quarter, our and digital strong weekend Day growth revenue and our business behind the year. with standalone in cyber existing lapsed to record-setting new, the increases We delivered season. throughout across a terrific up Veterans' buyer strong double-digit see through week momentum and our continued holiday file customers. solid quarter, a growth with the

our pleased in to made back we quality positioned delivering as we come in have as continued executing Everything of we consistently always styles, has four trusted depend with to have focus on superb To us Heritage. reflect have and during and look billion spirit. in family we to remarkable in with with and upon American believe seen $X.X innovations that and early initiatives, strategic proposition have also with our as value key on developed our a our we look further We're targets, drove service which gift-giving. terms built one products focused creating remains digit foundation growth the been range. our centered product strength high providing committed EBITDA saw core the will to iconic To plan XXXX in that with and which categories, quarter. the to momentum and End is progress business. Product great getting well with items product, of focus our of We we revenue get home, the margins that customers knits expand customers' businesses in to financial continued Lands' our the know to our In the accelerated we five-year and growing they customers remain us that billion footwear customer on the we January, $X.X achieving outerwear we performance We for single long-term enhance to on to purpose, heart our comments our value do values including provide lives. providing core connect our with remain the enable there, achieve and known, quality, business the reiterate customer goals. as number as that encompassing and while accessories long-term

sport, starfish really expedition we chinos. we want and knit things do squall our each so categories merchandise well such that our key turtlenecks for few items decisions Ultimately, the within on around and category. to are includes can our on ensure essential streamlining we assortment. emphasis destination are a that pants, greater leveraging and items, and put our focusing and SKU This comprehensive key We drive to customer jackets, data as counts,

related communicate as compelling to so focus We customers. these and our we and categories, well on proposition and experience our customers' items their value will distinct consistently offering as that clearly our

a four purpose technically margins. points with pants product and knits and driven. – price swimwear, Technology higher are part allow of categories focus important an higher can major Our in – plays outerwear, and all

items other holiday earlier, outerwear outperformed and in over factors our selling with out the Flannel tops mentioned flannel apparel shirts were season. quarter. performed driving As fourth well. categories several in knit extremely also the franchise and items sleepwear categories Key the of these I

As we key to will look these focus on driving forward. categories continue we ahead,

Our trends family on such to as storied capitalize expertise positions pajamas. current matching us Christmas well

For year's the the tee strong mix-and-match spring preparing season, items spring their first we're particularly already tankini in are in category seen our performance and tank, the customers about excited the offering Franchise for volumes. outpace last continued the have vacations. like tugless and to this swim quarter as swimwear

cover-ups are miniskirts in items swim revenue. adding new addition, In and even more

the outfitters, We business. We we a recently forward for the for employees. airport have in develop working American about above-the-wing closely and Airlines these premium opportunities attendants. look including XX,XXX contract End service, product Turning customer to Lands' flight this team service and with customer American signed to Airlines we're with to excited design uniforms,

we second program provide the of launch began and to XXXX. October XXXX, ship anticipate uniforms, expect wing, we that between the quarter Weather call. above in innovative of We're Jim and partnership being on Channel. will through business very of Delta fourth is which showcase buzz end Delta with to the on fully can and bulk test a a employees pleased winter be delivery has this be detail in have We in both by offering Late now and late will line expect the air. quarter. our also out this of for This outerwear and jump believe the later and our the functional in the already brand the season to We to been more awareness. below during XXXX relationship we regularly their proven featured The the excellent generated rolled

Turning uniform potential to highly this acquisitions. on fragmented The both market business loyal schools their Lands' remain in and area uniform focused through our organically outfitters, and school are growing providers. to we End is

with attracting our also pursuing capabilities, that dual service consolidate quality, make us. opportunities we for superior and of exploring So, while strategies terms customer are on customers to sense new

enhance Second, focused sales. being drive a company and customer we're experience to the on digitally-driven

we a improve experience the with they instilled using to ensuring culture, time user and our test every data constantly our have effectively and We learn customer efficiently that brand. are interact

mentioned, industry these End. I US customer of which and during on the adapting is and personalized volume off we where devices. to times sales conversion promotional grew outperformed translated on perspective sales increase to see much faster the As our in were the mobile End cyber their shopping average from pleased We're to business. quarter, mobile we a we value offers retail year-over-year sales both leading our Throughout into marketing high performance transaction to business with our the for Lands' channels, both in pleased a record record The we extremely more demand improved conversion, smart from test order desktop Mobile growth. recorded Lands' profitable phone. online experienced strategies period, online week three continued than increase, where particularly double-digit and

ahead, look will and shopping path we phone LandsEnd.com continue that experience shopping external our as as As we to the we smart preferred search on-site this both optimize on for we is know device. elevate

it's we excellent our on search on clear customer what on detail search. phone gives superior improve is want. they product, The focus know and product XXXX these home phones by the they increasingly because smart also and experience. we As relevant and integration customers, End ensure pages, what shopping the product a team our remains Lands' tell focus, data, of there content number tight must of the products, get provide their smart in one our to focus product enhancing the us to the viewing We

grow digital our of terms our In priorities, we're to on focused buyers. continuing marketing

by over fourth file the increased XX%. digits with Our customers total new double in up quarter

the our Digital and will our in means efforts As continue pay become we personalization. we audience, testing off to to the use of fourth has a quarter. improve quickly increase began to personalization expand

our testing have time leaned equation promotions better value digital are to shoppers. improvements and our easy articulate We price into holiday our to and experience implementing clearly

distribution is focus both stores. strategy, customer our our and on drive data retail online in third leveraging Our to

End able before we or know see have and sure to buying. strategy that serve continue for continue exchange to to product return we way. and They to that also this like to in them be shop can implement we likes make We the a customer test stores, store want stores. We that to standalone in and merchandise touch Lands' our in to

Sears in six as quarter forward put looking second the open hands will our continues the and year. Chicago our the four destiny to retail in course firmly to the own to plan We're locations. in over first close to location opening stores We the of our area of

will As plan next open to throughout our XX and we data our the analytics to our the over the year, locations Ultimately, XX for ensure to are customer open we years. that brand leverage ideal we base. stores and customer five locations

we where on strong locations Our and and convenience. brand recognition, areas have focusing real is estate team exploring opportunities high-traffic

enhancing third-party spend of now In we marketplaces. partnerships we're running third-party we and focused our addition, our on reallocate channel. as on test plan this marketing with Amazon We're some up to and

While pleased adjustments, response and Amazon it's still very early, marketing other strategic with on opportunities. and we'll learning maximize initial focus invest and third-party in making and necessary we're the

business enable Our is on which across final strategic to our building focus competencies our processes us will and the business. continue infrastructure, improving

management the will our in XXXX. order We single early to kick complete expect and implementation of XXXX ERP we off the in implementation system

diligently we personalization. we're efficiency, across I've includes well to built we a drive This and to decision-making us the of digital capitalize to business to in drive our product to will in as in have together, infrastructure. the drove for driving And financials over business we're improving we In committed processes of conclusion, performance it both enable set is our that at customer key to XXXX. with several retail a as systems IT, delivering customer to entire remain on strategic significant four and As online before, long-term and on over our Jim our to drive data to purpose I being will with goals We financial speed, organizations. XXXX, working well-positioned momentum enhancements business. great turn enterprise out efficiency initiatives working our With stores, our years. will and and excited team leveraging fiscal making forward to focused that, improvement about forward. we're Overall, value, mentioned and our our meet next analytics detail. further strong more the digitally-driven our organization, across ourselves. business to foundational In that enhance behind strategy results business continue the plan the our consistent path review This distribution

James Gooch

fourth we progress made with margin with Thank drove quarter, and good in and you, noted, gross expansion And continued profitability Jerome increases. in that business solid Jerome, we're which the morning. the growth strong as pleased the revenue

strong XXXX. note on ended the into well positioned heading year we and are Importantly, a

increased XX.X% to the exclude increasing last would year. the week and $XX.X retail and fourth X%. both since million the quarter, the sales last for have to our segment compared increased X.X% to direct quarter, grew growing XX.X% X.X% end XXrd X% $XXX.X revenue closures Sales For million revenue direct $XXX.X to decreased million. of million you After Sears in retail year, store total and $XXX.X the XX with

Supima and women's In terms key see men's outerwear, by quarter and continue towels Growth starfish, and to product, corduroy knitwear for specifically sheets. categories. chino, strong items our we down, iconic squall, the focus fleece of in with was our within flannel as we our strength response with led on bottom home in

helping momentum of was lapsed file with and in Delta in resulting recorded in double-digit the to the as our anticipate The enhanced Customers quarter. in outfitter buyers, as the value the segment for marketing in file see new the rates be XXXX. proposition quarter. strong to in assortment We first direct will throughout our well refined buyer expected of XX% in Approximately, also positive quarter efforts, the and the also growth drive to well are half responding of we overall fourth from remainder active, product strong launch growth continued benefited the and launch business. shipped conversion our

by sales standalone of increased our driven growth to stores retail Turning business, our XX%. in same-store X%,

continued impacted by compared fewer ended negatively We the to last locations year closings, segment at be shops with Sears As year. retail XXX XX expected, with our to Sears.

The Gross As in months, XXXX. locations with reductions January, we we've past in XX.X% the XX leases Sears discussed points of with increased of to remaining and reduced locations rent of and increased increased them remainder for and drive to renegotiated January terms enhancing gross of continued offers promotional the XX drove expired strategy. rationalizing that remaining previously, locations. next more productivity margin leases product to our our and compared leases and on point strong to basis for consumer XX the We over and expiring as enhance basis expire prior-year. actions pricing profit direct in business increase continues basis margin of improved our our $XXX.X promotional XXXX XX XX-month We XX.X%. XX January XX these segment million. points margin to our US the a exited XXX believe This result offers favorable XX focus our and to our a year-over-year gross

However, this partially outfitter as Delta business, decline our launch. our of by a result the was mainly offset margin in gross

margin last sales resulting to the XXXX. from and XX.X%, compared gross with and, segment, mainly the $XX.X price businesses to mix, reminder, gross therefore, to administrative carries full expense increased million. a decreased expect lower margin million a we impact increased our $XXX.X relative selling business Selling see negative year. to Delta a As margin the our exposure other continue retail gross promotional this and to of half rate to first in In

expected, by driven accrual, the Delta to incentive launch, week was the all additional XXrd spend, marketing partially As offset continued expenses and this by increased mainly expense higher reductions. related

the million. more As we productive. quarter the a the fiscal basis as is increased the earlier our to we of Delta expenses XXXX. increases quarter XXXX. be corresponding where year. the the reduce This program incentive approved in ERP finally, would note in targets in last of million payout resulted to will And million in Please recognize reflects to in equate the while by to fourth Despite implementation. by launch $X compared an quarter Depreciation business, In of able an prior were operating payout with bonus from our this by improved largely XXXX versus begin the sales for was $X for XXXX, costs into million Also to shifted targeted the to an $XXX.X fourth asset expenses between of million during multiple costs in year a $X.X accrual multiyear the call, in due above-mentioned $X.X did and million in payout The net increased no in the end $X incentive in go-live million business incentive XXrd discussed income to of which related revenue additional of not to fiscal depreciation. would spend very additional our Operating marketing we involve quarter million that meeting still XXX%, we were the stated we $X the until additional the we $XX.X due dates week points. impacted percent XX these of quarter. performance, fourth year payouts million in dollars quarter. $X loss quarter, XX%

rate last which quarter, tax Cuts incurred million. XX.X% effective was Our benefit fourth-quarter in US Act, Tax $XX.X company a the year's Jobs and Due the to a negative the quarter. tax compares $XXX.X% to of in

for adjusting and trade share impairment to per New of from our name. year, after reform year, this million corporate $X.XX million was which income of or Finally, tax the headquarters York for last functions the per the $X.XX to adjusted was compared adjusted share, $XX.X the or $XX net transfer

adjusted to manage of EBITDA In we measures our is the addition that GAAP we profitability internally. that business measure an above, outlined important use

$XX.X adjusted That's year. million was quarter, $X.X last a million. the million $XX.X For compared to EBITDA increase

XX.X% a was $X.XX billion in million compares the year including Fiscal $X.XX net share was XXXX. of based the reflects For tax billion, recent income negative of million $XX.X $X.XX from on effective rate to share, a the to XXXX. again XXXX million $X.XX reform. or fiscal or $XX.X fiscal XXXX, fiscal tax for This net per is which That X,XXX% $XXX.X year to which compared XXXX, revenue an in loss week. compares net negative a per XXrd

to we next As approximately expect we rate XX% tax for year. ahead, look be our

fiscal $X.XX million net per year. million share. the was or last $X.X For net negative year $XX.X $XX.X Adjusted income a million compared of fiscal to last year $X.X XXXX, to loss EBITDA was million $X.XX compared per adjusted share for XXXX or

million, balance a was the up the quarter reductions. last at $X sheet. take smaller year. million last our Delta the at was the Inventory end million look cash partially by let's increase driven by $XXX.X year. end $XXX.X of the offset new was at was Now, Total entirely compared compared million to This $XXX.X which to business, of quarter

We continue $XXX to be quarterly in technology inventory pleased and of the implementation of ERP with inventory million And year of the we're approximately principal position the expect in for to to time call $XX up in with this finally, both looking million an the spend million million compared the XXXX other with that to to and we investments. Net questions. health long-term to overall improving terms our quantity and quality. are decreased open $XXX.X excellent last reduction debt we'll at entering associated our that, payments. we With ahead, $XX be CapEx majority the information XXXX

Operator

[Operator Capital. the Fuhrman you, Alex line with Instructions] come Craig-Hallum Thank will sir. from question first our And of

line open. Your now is

Alex Fuhrman

as look of if Or Lands' Do to for? been has bigger a how taking categories also? or well doing you congratulations that the could the comment XXXX as the about what to the lot seasonal you in see basics you nice key my about becoming been of mentioned Great, you as of certainly as the well? question. Will quarter. kind like to that of saw evolution has And the sounds business historically in those a well to season, relative piece that much I some how Can I spring that. think key talk a End very well very of It XXXX, just basics the of hear the interested did on did are items. known on you quarter. your outerwear wanted trending? ask more more swimwear some thank performance we you be for And

Jerome Griffith

at things pretty right to the say, Lands' no board was Good it managing in we're emails. Yeah, Knitwear marketing great. more whether whether area, for be comes be the And when End. well how taken across morning, X on it's online, stance search Alex. are doing it was it how much show aggressively, months, problem. We've our or a you're extremely track to X basics great. us. outerwear let's last, Sure, our we basics basics our Every

see bottoms spring. that for the into Our trend great were holiday And we continuing season.

some polo made our reacting in shirts think stretch men's business. minor and I upgrades introduced outerwear We've items. grow of Functionality we've customers into that continues men's basic bottoms. changes on and some are to to our

to helps slightly customers down with very forward. the to seasonal profitability that's work It us In on cut and fact, and that SKUs be down in seems I in products something continue the well on going we inventory, basics help expand to resonating think, cut really for which long also run with is, well us also. to going

Alex Fuhrman

initial of to End a think Can partnership? through major American sounds much partnership, partner. expect as QX much your business and of that I of how well? That's said about biggest us the really Airlines to had, uniforms, about we did sense And you as give and is past that's in you Delta partnerships we as scale the recent one QX become is then, that of well? how you've hit? the see be the sell-in the you've Lands' ship should some come QX going that Great. American uniforms think to And when Airlines that And the a Will like outfitters of for we expected of really sense us your Delta versus give a just in can to in it Thanks. business left of for the helpful. some some kind then, questions

James Gooch

year. of fourth remarks, said as think in through in come the I the The of in of last team of February remaining launch this came I XX% the in in launch prepared XX% my May So, quarter year. will

will a We bit that little the in new down hires From date. for then a and next in we'll business time, normalized basis May just with months really on more a get the XX have slow XXXX. uniform

be said will wing. that our be account. only was to have be Delta going largest the mind will that in – We American keep above only that

anticipate business. as below the Delta and don't we wing both being quite that since So, we above large as have the

Alex Fuhrman

very that. Okay, digit much very your the helpful. thinking how you a just much sense for of SG&A leverage then, longer-term And getting us Thank expect that's would of margin, give EBITDA margin lastly, do about that can versus of high-single of expenses? you to a of target you come from gross some

James Gooch

We Far leverage SG&A environment more margin. anticipate away. than from promotional gross going from don't this

So, we'd the getting of digits, with anticipate margin from high-single improvement and coming being gross flatter growth leverage of that topline. more to

Alex Fuhrman

that's Okay, much. very Thank great. you

Operator

Thank with & Marotta our will Associates. Steven King you. next CL from come And line the question of

Your line open. now is

Steven Marotta

and months. the believe Jerome Can count Jerome, quantify to you to over next you in expect XX were, in improve XXXX? you them the mentioned XX just what morning, Good in and of efficiencies be the I the Jim. XXXX SKUs SKU decline what is one to ways say,

Jerome Griffith

the depends looking double-digit in On which business, forward next over or times more counts women's, going opportunity continue just positions we goods more know that there's reduce areas because it. in is count SKU we're happen better continue There's on concentrating month-by-month on continue average, less we just so there. than other SKU product. I to be to honestly. the areas we thinking In like piece And have going when think to to It quite the we running to few taking we're expand There a lead quarters. for about a what's basics it. basis. on will going looking We're area year-on-year. to like we're home, will reduce certain

just KPI. it's the to of really So, where that maximize we're looking one areas

Steven Marotta

And you actually which question, touched chain on is efficiencies. my second supply

had Can you year? much to reduce that coming process the in times. lead would delivery a in materially and shrink how Your product are talk bit about you goal development that you the to expect little to been where

Jerome Griffith

called for which for We fall True North, project days. delivery the early what's is still It's name Yeah. XXXX our implemented period. that

our take even holiday in were of just quarters to to two doing somewhere haven't And between our looking times for XX%. really for now. writing and four we process kick XX% what going in. think I orders for lead we're We is written Well, right holiday. by XXXX orders it's that to And reduce between the and

Steven Marotta

much the swimwear is in of you and second first sales as a percent And could how us please quarter. remind

James Gooch

think don't exact but said in that that's largest percentage, we I given we've both our have category quarters.

Steven Marotta

be my And how And do some help the is, would question rethink much new of and you allocation you into the cash and so, could Okay. uses? cash does last law tax overseas have repatriated? if that what be

James Gooch

It's amount. large exact that don't it's as number. But have that might discuss I not a later. significant not be as it can probably We with others.

a major at We are at as opportunity. looking that, but we that don't look

Steven Marotta

in year, the following rate that XX% The in it's would again expect quick tax follow-up. current XX% coming guidance perpetuity? Or based year? on the you fiscal laws, for the to Actually, tax decline in going to one the

James Gooch

expect in information forward. we have that putting We're With further. the XX% reduce wouldn't current it we right any at going now, to

Steven Marotta

much. you very Thank Appreciate Great. Perfect. it.

Operator

you. have thank concludes for today's on this question-and-answer session and for And conference. our you you gentlemen, a now may today. We Ladies participation Thank wonderful disconnect. your Everybody, day.

Lands' End (LE) 22 Mar 182017 Q4 Earnings call transcript