A Recovering Lands’ End Prepays Some Debt
In turnaround mode, the focus is on key items, operating as a digitally led company, leveraging uni-channel distribution and improving business processes.
By David Moin on April 30, 2019
Lands’ End Inc. says its business has stabilized and that it’s paying down debt.
On Tuesday, the Dodgeville, Wisc.-based company said it prepaid $100 million of its term loan facility, and that it has excess cash on hand. That leaves $389 million left on the loan, which matures April 4, 2021.
The prepayment of debt is expected to generate estimated interest savings of $3 million to $4 million on an annualized basis.
“Over the past two years our business has stabilized, and we’ve demonstrated the ability to achieve consistent revenue and profitability growth,” said Jim Gooch, executive vice president, chief operating officer and chief financial officer. “This progress gives us confidence in our strategy and the execution of our strategic initiatives. We believe that reducing our long-term debt through the partial prepayment of our term-loan facility will result in a meaningful reduction in interest expense and is in the best interest of our shareholders.”
In 2018, Lands’ End’s volume rose 3.2 percent to $1.45 billion compared with $1.41 billion the year before. Excluding the sales from the 53rd week and $48.7 million from closed Sears stores, revenues would have increased 9 percent in 2018.
Net income for 2018 was $11.6 million, compared to $28.2 million the year before, which included a tax benefit of $27.7 million primarily due to tax reform. However, adjusted earnings before interest, taxes, depreciation and amortization grew 20.9 percent to $70.5 million compared to $58.3 million in fiscal 2017.
Chief executive officer Jerome Griffith recently characterized 2018 as “another year of significant progress with strong fourth-quarter financial results” and said the four top priorities would be staying focused on key items, operating as a digitally led company, leveraging uni-channel distribution and improving business processes. “We’re maybe in the fourth or fifth inning,” of the turnaround, Griffith told WWD. “We’re halfway through where we need to be in getting our product right for our consumer. We are moving along pretty well there. We’re very key-item-driven — designing and buying toward this, and the marketing team is involved in maximizing this.”
He said the company is investing in search-engine optimization, price clarity and a warehouse enterprise system that will enable buy online, pick up in stores and buy online, ship to stores.
This year, Lands’ End should reach a milestone — no more shops inside Sears. There are only a few dozen left. Lands’ End in 2002 was bought by Sears Holdings Corp. and spun off as a public company in 2014. To help offset that revenue loss, Lands’ End continues to open company-owned stores. The company expects to be operating between 60 and 75 stores by the end of 2022. The brand is also increasing its presence on marketplaces, recently going live on walmart.com and continuing to sell on Amazon.