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Category: Stock Market and Lands' End
Date: 17 March 2020 Stock Price: $4.95 We take a look at the 4th quarter 2019 earnings report of Lands' End a multi-channel retailer of casual clothing, accessories and footwear. The group's stock has struggled over the last 5 years. Is there any hope of a turn around?
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About Lands' End
Lands' End, Inc. is a leading multi-channel retailer of casual clothing, accessories, footwear and home products. We offer products online at www.landsend.com, international websites, on third party online marketplaces, and through retail locations.
We are a classic American lifestyle brand with a passion for quality, legendary service and real value, and we seek to deliver timeless style for men, women, kids and the home. Lands’ End was founded more than 50 years ago in Chicago by Gary Comer and his partners to sell sailboat hardware and equipment by catalog. While our product focus has shifted significantly over the years, we have continued to adhere to our founder’s motto as one of our guiding principles: “Take care of the customer, take care of the employee and the rest will take care of itself."
We are a classic American lifestyle brand with a passion for quality, legendary service and real value, and we seek to deliver timeless style for men, women, kids and the home. Lands’ End was founded more than 50 years ago in Chicago by Gary Comer and his partners to sell sailboat hardware and equipment by catalog. While our product focus has shifted significantly over the years, we have continued to adhere to our founder’s motto as one of our guiding principles: “Take care of the customer, take care of the employee and the rest will take care of itself."
Overview of Lands' End 4th quarter 2019 earnings report
Data below refers to the latest quarters data unless specified otherwise:
- Total Revenue: $549.478 million (up from $502.252 million for the same quarter of the previous year)
- Revenue increased by 9.4% over the last 12 months
- Cost of sales: $330.720 million (up from $306.949 million for the same quarter of the previous year)
- Cost of sales increased by 7.74% over the last 12 months
- Margin gains for Lands' End as their total revenues increased at a faster rate than their cost of sales
- Net earnings: $25.516 million (up from a profit of $16.211 million for the same quarter of the previous year)
- Diluted earnings per share: $0.78 (up from $0.50 for the same quarter of the previous year)
- PE ratio of Lands' End: 8.25
- Diluted number of shares in issue: 32.508 million (up from 32.291 million for the same quarter of the previous year)
- Cash and cash equivalents: $77.148 million
- Cash and cash equivalents per share: $2.37
- Cash and cash equivalents makes up 47.9% of Lands' End market capital
- Cash and cash equivalents makes up 6.9% of Lands' End total assets
- Total stockholders equity in Lands' End : $348.382 million
- Stockholders equity per share: $10.71
- Lands' End is trading at 0.46 times its stockholders equity per share, which is within the expected range of between 2 and 4 times that most firms tend to trade at
- The price to book value of the S&P 500 is currently at 3.34 (Read more about the S&P 500 here)
Lands' End management commentary on their 4th quarter 2019 earnings report
DODGEVILLE, Wis., March 17, 2020 (GLOBE NEWSWIRE) -- Lands' End, Inc. (NASDAQ: LE) today announced financial results for the 13-week fourth quarter and 52-week fiscal year ended January 31, 2020, compared to the 13-week fourth quarter and 52-week fiscal year ended February 1, 2019.
Jerome Griffith, Chief Executive Officer and President, stated, “First and foremost, we are closely monitoring the Coronavirus situation and our thoughts are with all of those affected. In regard to Fiscal 2019, it was an incredible year both in terms of financial performance and strategic accomplishments. We delivered strong revenue and Adjusted EBITDA growth for the fourth quarter and the year, illustrating our continued progress across our core growth strategies. We also successfully completed the American Airlines’ uniform launch to over 50,000 employees in early March. We are pleased to share that we have announced a new partnership with Kohl’s to distribute Lands’ End through Kohls.com and to 150 retail doors, starting in Fall 2020, providing a meaningful opportunity to expand brand awareness and drive incremental sales. Looking ahead, as we navigate through this challenging environment, we remain focused on continuing the execution of our key strategies.”
Jerome Griffith, Chief Executive Officer and President, stated, “First and foremost, we are closely monitoring the Coronavirus situation and our thoughts are with all of those affected. In regard to Fiscal 2019, it was an incredible year both in terms of financial performance and strategic accomplishments. We delivered strong revenue and Adjusted EBITDA growth for the fourth quarter and the year, illustrating our continued progress across our core growth strategies. We also successfully completed the American Airlines’ uniform launch to over 50,000 employees in early March. We are pleased to share that we have announced a new partnership with Kohl’s to distribute Lands’ End through Kohls.com and to 150 retail doors, starting in Fall 2020, providing a meaningful opportunity to expand brand awareness and drive incremental sales. Looking ahead, as we navigate through this challenging environment, we remain focused on continuing the execution of our key strategies.”
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents were $77.1 million as of January 31, 2020, compared to $193.4 million as of February 1, 2019. The reduction was primarily due to the $100.0 million voluntary prepayment of the term loan in the First Quarter 2019. Net cash provided by operations was $27.3 million for the 52 weeks ended January 31, 2020, compared $48.2 million for the 52 weeks ended February 1, 2019. The decrease was a direct result of the timing of the American Airlines launch.
Inventory was $375.7 million as of January 31, 2020, and $321.9 million as of February 1, 2019. The increase was primarily driven by the launch of the American Airlines business. The Company had $151.7 million of availability under its asset-based senior secured credit facility and had $378.7 million of Long-term debt, net as of January 31, 2020.
Jim Gooch, Chief Operating Officer and Chief Financial Officer, stated, “Looking ahead, we will build on the strategies that enabled us to deliver a successful fiscal 2019. As it pertains to the Coronavirus pandemic, we announced that we have closed our 26 U.S Company Operated stores through March 29th. We have adjusted our business operations to provide customers our full eCommerce and customer service experience, while ensuring the safety of our employees. However, we have seen a negative impact on customer demand over the past week, as expected, given the concerns related to the Coronavirus. Based on the macro uncertainty and rapidly changing business environment in the U.S., we will not be issuing guidance for fiscal 2020 at this time.”
Cash and cash equivalents were $77.1 million as of January 31, 2020, compared to $193.4 million as of February 1, 2019. The reduction was primarily due to the $100.0 million voluntary prepayment of the term loan in the First Quarter 2019. Net cash provided by operations was $27.3 million for the 52 weeks ended January 31, 2020, compared $48.2 million for the 52 weeks ended February 1, 2019. The decrease was a direct result of the timing of the American Airlines launch.
Inventory was $375.7 million as of January 31, 2020, and $321.9 million as of February 1, 2019. The increase was primarily driven by the launch of the American Airlines business. The Company had $151.7 million of availability under its asset-based senior secured credit facility and had $378.7 million of Long-term debt, net as of January 31, 2020.
Jim Gooch, Chief Operating Officer and Chief Financial Officer, stated, “Looking ahead, we will build on the strategies that enabled us to deliver a successful fiscal 2019. As it pertains to the Coronavirus pandemic, we announced that we have closed our 26 U.S Company Operated stores through March 29th. We have adjusted our business operations to provide customers our full eCommerce and customer service experience, while ensuring the safety of our employees. However, we have seen a negative impact on customer demand over the past week, as expected, given the concerns related to the Coronavirus. Based on the macro uncertainty and rapidly changing business environment in the U.S., we will not be issuing guidance for fiscal 2020 at this time.”
Lands' End (NASDAQ: LE) stock price history
The image below, obtained from Google shows Lands' End stock chart for the last 5 years. It's been a horrible time for Lands' End stockholders over the last 5 years. 5 years ago the stock of Lands' End was trading at around $35.30 and its currently trading at $4.95. Thats a 1oss of -86% suffered by Lands' end stockholders over the last 5 years.
The stock of Lands' End is trading at very close to its 52 week low of $4.50 and far away from its 52 week high of $19.25 which to us is a clear indication that the short term sentiment and momentum of Lands' End stock very negative at this point in time. The stock has suffered a significant decline in recent weeks, as has most in the global market sell off triggered by Coronavirus fears. Read more about the recent market sell off's here.
The stock of Lands' End is trading at very close to its 52 week low of $4.50 and far away from its 52 week high of $19.25 which to us is a clear indication that the short term sentiment and momentum of Lands' End stock very negative at this point in time. The stock has suffered a significant decline in recent weeks, as has most in the global market sell off triggered by Coronavirus fears. Read more about the recent market sell off's here.
Recent coverage of Lands' End
The extract below discusses the latest regarding Lands' End as obtained from TheStreet.com
Even as COVID-19 upends the retail landscape, some merchants are continuing to build long-term sales potential while confronting the immediate effects of the pandemic. Apparel retailer Kohl's (NYSE: KSS) announced Monday that it's struck up a new partnership with venerable casual clothing manufacturer Lands' End (NASDAQ: LE).
According to a company press release, Kohl's intends to offer Lands' End's "entire assortment of women's, men's, kids, and home merchandise" on its website by the fall of 2020. Lands' End will fulfill and ship all orders coming through the site. Kohl's will also begin selling seasonal Lands' End merchandise in 150 of its stores by the fall.
Read the full article here
Even as COVID-19 upends the retail landscape, some merchants are continuing to build long-term sales potential while confronting the immediate effects of the pandemic. Apparel retailer Kohl's (NYSE: KSS) announced Monday that it's struck up a new partnership with venerable casual clothing manufacturer Lands' End (NASDAQ: LE).
According to a company press release, Kohl's intends to offer Lands' End's "entire assortment of women's, men's, kids, and home merchandise" on its website by the fall of 2020. Lands' End will fulfill and ship all orders coming through the site. Kohl's will also begin selling seasonal Lands' End merchandise in 150 of its stores by the fall.
Read the full article here
Lands' End (NASDAQ: LE) latest stock valuation
So what do we value Lands' End stock at based on their 4th quarter 2019 earnings report? Based on Lands' End 4th quarter 2019 earnings report our valuation model provides a target (full value) price for Lands' End stock at $12.30
We therefore believe the stock of Lands' End is undervalued at its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $12,30. A good entry point into Lands' End would therefore be at $11.10 or below. We expect the stock of Lands' End to tick up in coming weeks and months until it reaches levels closer to our target price (full value price), once all the market madness regarding the Coronavirus fades away.
We therefore believe the stock of Lands' End is undervalued at its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $12,30. A good entry point into Lands' End would therefore be at $11.10 or below. We expect the stock of Lands' End to tick up in coming weeks and months until it reaches levels closer to our target price (full value price), once all the market madness regarding the Coronavirus fades away.
Next earnings release of Lands' End
It is expected that Lands' End will release their 1st quarter 2020 earnings report in late June 2020