Land’s End sales Q3 sales decline but gross profit improves
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Merchandise sales and services, net in the retail segment decreased 11.5 percent to 52.8 million dollars driven by a decrease in the number of Lands' End Shops at Sears and a decrease in same store sales. Same store sales in the retail segment decreased 3.1 percent. On October 31, 2014, the company operated 242 Lands' End Shops at Sears, 14 global Lands' End Inlet stores and five newly opened international shop-in-shops compared to 275 Lands' End Shops at Sears and 16 global Lands' End Inlets on November 1, 2013.
Commenting on the results, Edgar Huber, Lands' End's President and Chief Executive Officer, stated, “We delivered another quarter of strong operating margin increases driven by a better assortment of product, a more targeted promotional strategy and disciplined expense controls. Profitable growth and price integrity are critical components of the Lands' End's brand strategy and this represents the sixth consecutive quarter in which we have delivered better than 20 percent growth in operating income.”
Gross profit increased 5.1 percent to 183.3 million and gross margin increased 370 basis points to 49.1 percent in the third quarter of 2014 compared with 174.5 million dollars and 45.4 percent, respectively, last year. The increase in gross margin was driven by increases in both the direct and retail segments. Gross margin in the direct segment increased 260 basis points to 49.8 percent and gross margin in the retail segment increased 910 basis points to 45.1 percent.
Operating income increased 50.8 percent to 35.1 million dollars from 23.3 million dollars in the third quarter of 2013. Net income increased 26 percent to 18 million dollars and diluted earnings per share increased 24.4 percent to 0.56 dollars in the third quarter of 2014. Adjusted EBITDA increased 39.9 percent to 39.9 million dollars.