Lands' End cuts full-year outlook after swinging to Q3 loss

US fashion and home decor retailer Lands' End has cut its guidance for the current year after falling into the red in the third quarter.

The company swung to a net loss of 4.7 million dollars in the three months to October 28 from a profit of 7.4 million dollars the prior year.

Gross margin decreased approximately 440 basis points to 40 percent as the company was impacted by increased transportation costs linked to global supply chain challenges and higher industry-wide promotional activity.

Revenue for the quarter fell slightly to 371 million dollars down from the 375.8 million dollars a year earlier - a 1.3 percent drop.

Commenting on the quarter in a statement, finance chief Jim Gooch said: “We took a concerted effort to improve our in-stock positions by increasing our lead times and receipting our Fall/Holiday inventory earlier.

“While this largely drove our 18 percent increase in inventories at the end of the third quarter, we are well positioned to meet our customers’ needs as we move through the holiday season. We expect inventory levels to normalize by the end of Spring/Summer 2023.”

Updated outlook

Based on its Q3 results, Lands’ End cut its full-year guidance.

It now expects net revenue of between 1.54 billion dollars and 1.56 billion dollars, down from its earlier guidance of between 1.6 billion dollars and 1.64 billion dollars.

The company expects a net loss of between 6 million dollars and 9 million dollars, compared to its previous guidance of a profit of between 16.5 million dollars and 23.5 million dollars.

Gooch commented: “We have revised our full year outlook to account for the uncertain macro environment. We anticipate that the fourth quarter will be highly promotional and we plan to remain competitive with our pricing to drive traffic through the holiday season.”