Lower catalog costs and a decline in spending on television advertising have helped Land’s End exceed Wall Street expectations by reporting a second quarter profit that reversed a year-ago loss.
Results were also helped by higher sales of women’s clothing in the catalog and Internet retailer’s core business.
Lands’ End, known for its preppie-style casual apparel, said its second-quarter sales rose 4% to $285.8 million from $275.6 million a year ago. Net income in the quarter ended July 27 was $3 million, compared with a loss of $1.9 million, one year ago.
Sales in the company’s clothing catalogs rose 6% from a year earlier to $160 million. Revenues in the specialty segment, which include the home furnishing and children’s business, were flat at $72 million, while international sales fell 7% to $31 million.
Moving forward, Lands’ End said it still expects fiscal 2002 sales to increase in single digits on a percentage basis, while earnings per share are forecast to grow 20%. The retailer also cautioned that its “optimism is somewhat guarded” due to uncertainty over the U.S. economy.
“I am pleased with our top-line sales performance, especially in light of the tough economic environment,” David Dyer, the company’s CEO, said in a statement. “These continued sales improvements reflect the strong customer acceptance of our reinvigorated product in our core businesses.”
Selling, general and administrative expenses were $119.7 million, or 41.9% of total revenue, compared with $124.0 million, or 45%, a year earlier. The reduction in expenses was due to the lower catalog costs and the decline in TV ad expenditures.
Gross profit for the second quarter was $124.9 million, or 43.7% of total revenue, compared with $121.3 million, or 44% of total revenue, in the same quarter last year. Margins were hurt by an inventory charge of $750,000 compared with a year-ago inventory credit of $1.5 million.
The company’s stock has risen 48% since Jan. 2, outperforming the Standard & Poor’s 500 Index, which is down 6% on the year.
