Lands’ End’s on Thursday reported its first quarterly sales increase in three years but its shares dropped more than 12% as its loss widened.
The apparel retailer’s second-quarter results were an early test for new CEO James Griffith, who, after taking over from Federica Marchionni in March, killed her signature initiative, the “Canvas by Lands’ End” line of pricier clothing aimed at younger customers.
While net revenue rose 3.5% to $302.2 million and same-store sales were up 3.8%, Lands’ End’s net loss widened to $3.88 million, or 12 cents per share, from a loss of $1.98 million, or 6 cents per share, for the same period last year.
Analysts had expected the company would lose 9 cents per share on revenue of $293.0 million.
“We are pleased with the continued progress that we made during the second quarter, as we once again drove positive results across a number of key metrics,” Griffith said in a news release. “Performance in our U.S. consumer business improved, with double digit increases in our U.S. e-commerce sales, growth in our customer files and positive same-store sales in our retail segment.”
But after spiking 19% in pre-market trading, Lands’ End shares fell 12.3% in the regular session, closing at $12.15.
As the Milwaukee Journal Sentinel reports, Lands’ End “appears to be returning to its traditionalist roots” under Griffith, who has quickly erased Marchionni’s legacy by halting production of “Canvas by Lands’ End” and reducing the firm’s presence in New York City.
“Griffith, meanwhile, has spoken of strengthening Lands’ End’s technology and online retailing efforts, getting new clothing designs produced more quickly, and opening more physical stores,” the Journal Sentinel said.
For the second quarter, revenue from Lands’ End’s catalog and online business, which makes up the bulk of its sales, rose 5.5% while sales from brick-and-mortar stores drop by 7.4%, mainly because of fewer Lands’ End shops within Sears stores.
“Overall, we are pleased with the progress that we continue to make in the business, and believe that we remain well-positioned to drive growth over the long term,” Griffith said.