Direct sales for Lands’ End fell more than 10% in the third quarter, due in part to warmer winter weather, “lack of product acceptance” and a pullback in promotions as the apparel retailer focused on higher-margin sales, CEO Federica Marchionni said.
Direct sales, which consist of online and catalog orders, fell 10.1% in the quarter ended Oct. 30 to $287.8 million from $320.3 million in fiscal Q3 2014. Through the first nine months of fiscal 2015, direct sales—the biggest segment for Lands’ End—declined 9.3% to $805.9 million from $888.9 million in the same period last year.
The retailer, No. 38 in the Internet Retailer 2015 Top 500 Guide, launched an updated shoppable digital catalog during the quarter. Though it’s still in the early stages, CEO Federica Marchionni told analysts last week “we are encouraged by the early response to our enhanced digital experience, as we continue to improve the way that consumer interact with Lands’ End brand online.”
Lands’ End also updated its website in August to highlight an improved merchandising assortment, a reconfigured site index and a streamlined checkout, she said, according to a Seeking Alpha transcript. “Overall, we are encouraged by the positive customer feedback we’re receiving to the upgrades we have made to our e-commerce business.”
Mobile traffic increased 42% year over year in the quarter, reflecting shifting consumer preference for mobile devices over desktops, and design and functionality improvements to the Lands’ End mobile site, Marchionni said.
As part of its holiday campaign, Lands’ End created a shoppable online gift guide and in November opened pop-up stores in New York and Boston to boost brand awareness and test new products. “The two pop-ups are modeled after the concept of a wintery ski chalet and are designed to be a fun-filled holiday shopping destination for the extended Lands’ End family,” Marchionni said.
The retailer will continue to focus on online sales because consumers, especially in the United States, tend to shop more online than its international shoppers, Marchionni said. Internationally, Lands’ End continues work to upgrade its international web platform, due to launch in 2016, she told analysts.
For the third quarter ended Oct. 30, Lands’ End reported:
- Retail sales of $46.6 million, down 11.7% from $52.8 million in fiscal Q3 2014.
- Net revenue of $344.4 million, down 7.7% from $373.1 million.
- Net income of $10.7 million, down 40.6% from $18.0 million.
For the first nine months of fiscal 2015 Lands’ End reported:
- Retail sales of $140.2 million, down 13.3% from $161.8 million in the year-ago period
- Net revenue of $946.2 million, down 9.9% from $1.05 billion.
- Net income of $19.9 million, down 51.1% from $40.7 million.