Will things get better after being worse at Lands’ End?

Optimism, both inside and outside the company, ran high for Lands’ End last year after being spun off from Sears Holdings. But disappointing quarterly results in 2015 have some investors wondering if the once iconic brand can get its mojo back. Lands’ End CEO Federica Marchionni is positive it can.

Earlier this month, Lands’ End announced that net revenues fell 10 percent during the company’s second fiscal quarter. The company’s core direct business (online and catalog) saw sales fall 9.5 percent during the period while its retail business declined 12.9 percent. The most recent results followed a first quarter in which net revenues dropped 9.4 percent, direct decreased 8.2 percent, and retail fell 15.5 percent.

Back in June, Ms. Marchionni, who joined Lands’ End in February after serving as president of Dolce & Gabbana USA, said the next 12 to 18 months would be "an important transformational period" for the company as it pursued improvements including:

  • Upgrading product design and development;
  • Raising brand awareness;
  • Opening new distribution opportunities;
  • Enhancing its technology platform;
  • Strengthening operations.

Lands' End collection

Photos: Lands’ End

On a call with analysts earlier this month, Ms. Marchionni expressed confidence that steps being taken, including the hiring of new designers to work on the company’s Spring/Summer 2016 line, would not only find favor with core customers, but also "attract a new audience and expand the Lands’ End family."

Ms. Marchionni also spoke about improvements made to the company’s e-commerce site such as the addition of express checkout.

"Going forward, we are looking to increase the payment option providing gifting with purchase and develop a mobile application," she said (via SeekingAlpha). "We are looking to build a site architecture, redesign the product page and integrate social media logins onto the website to further drive traffic conversion and ultimately sustained growth."

BrainTrust

"Federica Marchionni knows what has to be done to turn the tides of Lands’ End. They are a good and recognizable brand. They need to ensure the customer experience is part of the value of doing business with them."

Shep Hyken

Chief Amazement Officer, Shepard Presentations, LLC


Discussion Questions

What do you see as the most critical challenges facing Lands’ End? Is the company on the right track under Federica Marchionni’s leadership?

Poll

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Cathy Hotka
Cathy Hotka
8 years ago

Lands’ End has a solid business, with outstanding customer service and high-quality products. Its challenges now include not only new technology, but also appealing to a younger crowd. It sounds like Ms. Marchionni has things well in hand.

Dick Seesel
Dick Seesel
8 years ago

Everything Ms. Marchionni laid out for investors will prove to be important steps in the company’s recovery. Being able to execute these strategies smoothly is critical, and in particular doing a “reverse omnichannel” by expanding Lands’ End’s physical footprint in a smart way as it unwinds the partnership with Sears.

But the proof is in the merchandise content: Can Lands’ End regain its relevance without becoming stale (on the one hand) or veering too far into near-luxury pricing and design? The recent troubles at J.Crew ought to be a sign of caution: Here’s what happens when a company with a strong brand strays too far from its merchandise-oriented point of view.

julie strandt
julie strandt
8 years ago

Lands’ End had a solid business. In the last five years, most of the employees that made Lands’ End great and understood the core beliefs have been fired or forced out. The leadership has been a revolving door for the last 10 years, all with the hope of leading the company back to the glory days. I don’t see how Ms. Marchionni can lead an historic turnaround only being on premise one week a month.

There are three critical challenges for Lands’ End: technology updates, employee morale and the balance of new to tenured employees. They have been fumbling with all three of these the last 10 years.

I hope that she can turn around this once-iconic brand.

Brian Kelly
Brian Kelly
8 years ago

When running Bill Clinton’s first campaign, Carville came up with the line “It’s the economy, stupid.”

Once, I heard that repurposed as, “It’s the goods, stupid.”

Despite technology advances, at the end of the funnel, it is the goods. The assortment must be relevant (and priced right) in order to drive a comp, or turnaround an out-of-date brand.

Right now, the primary challenge facing retailers: mass, anchors and specialists, is the goods. Whether J.Crew, Gap, Belk, Macy’s, Kohl’s or Abercrombie & Fitch. Omnichannel is all the rage, but getting her to buy another new blouse seems more on point.

To paraphrase Cracker’s “’cause, what the world needs now is another folk singer like I need a hole in my head” — “’cause what consumers needs now is another apparel retailer like they needs a hole in her head.”

Or as we like to say, retail ain’t for sissies.

Gordon Arnold
Gordon Arnold
8 years ago

The loss of business since the spin-off is at best an indication of business as usual for the company. As the market continues to stagnate, the routine efforts demonstrated in this turnaround will most likely fail. At the same time, we are seeing significant changes in geographical economic demographics as well as the rise in significance of up and coming new generations in the market.

The company has demonstrated their forward momentum is at best hampered by doing the right things the wrong way. In review, if the five points of interest that are included in today’s discussion the company appears to have only identified topical areas of concern needing direction and support. The company’s 9.5% drop in sales along with the other significant strategic losses plainly point to ineffective execution of these goals.

Was this because of a faulty plan or a course of action which is no longer viable in today’s market or some other core fault? We may never know and time is to valuable to the company to spend on a witch hunt.

What they need most is sales and putting what the consumer will buy in front of where they shop is what must take place soon. The focus needs to be on sales and then keeping sales as the only top priority. Whatever the company is doing as a means to strengthen the business, it is most likely not focusing on sales regardless of any point of view or retort to this fiscal report of their own making.

Kenneth Leung
Kenneth Leung
8 years ago

Product design and relevance to consumers. For clothing brands, if the consumers aren’t attracted to the goods, then supply chain and omnichannel don’t matter. Design clothes that appeal to the audience and make sure people know about it, and people will flock to buy it on whatever channel.

Shep Hyken
Shep Hyken
8 years ago

Federica Marchionni knows what has to be done to turn the tides of Lands’ End. They are a good and recognizable brand. They need to ensure the customer experience is part of the value of doing business with them. The technology upgrades will help. Product innovation that appeals to their consumers is of the utmost importance. And of course the customer service.

W. Frank Dell II, CMC
W. Frank Dell II, CMC
8 years ago

Apparel retailing is not as easy as it looks. Consumer tastes and needs change. Under Sears’s ownership, Lands’ End did not have a plan for the new competition in the market place. Lands’ End is no longer the only retailer offering high quality casual apparel. Likely their legendary high quality and superior customer service have been compromised. Additionally the line has been expanded beyond the core that built the company.

Social media and e-commerce are important, but these will not turn a company around. Product design, product quality and customer service are the way to success in apparel, not business suits.