What happened
Shares of Lands' End(NASDAQ: LE) are up 9.7% compared to where they closed last Friday, according to data provided by S&P Global Market Intelligence. While there was no company-specific news that would account for the jump in price, the clothing retailer did receive favorable coverage last weekend about Lands' End's plans to go after the Gen X demographic.
So what
An article on CNN, and a similar story a few days later on Business Insider, pointed out how Land's End had previously pursued millennials and Gen Z to "catastrophic" effect. The stories noted baby boomers are its most loyal customers and there was a demographic immediately behind them that tended to be underserved.
Image source: Getty Images.
"What you want to do as a retailer is to either have your customer base stay at the same age or bring in younger people," Lands' End CEO Jerome Griffith said at a recent ICR conference. Since chasing younger shoppers was unsuccessful, it chose to go in the other direction and attract customers who are largely identical to its existing demographic, but 10 years younger.
According to Griffith, Lands' End's core customer is a female "baby boomer, mid 50's, lives in the suburbs, works, is frugal, has a household income well over $100,000 a year, and has or had children at home."
In going after Gen Xers, Lands End expanded into new verticals, selling on Amazon and in Target and Kohl's.
Moreover, the customers the retailer was attracting on these platforms were new to Lands' End. Three-quarters of them had "either never shopped at Lands' End or are lapsed customers and haven't shopped at Lands' End for five years."
Now what
Although Lands' End's revenue declined 1.3% to $370 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) tumbled 44% in the third quarter, business from the new platforms it was on grew revenue 60% year over year. It appears the Gen X generation is responding.
The retailer offered up disappointing guidance for the rest of the year, as inflation, higher energy costs, and rising interest rates are taking a toll on consumers, but there seems to be some hope for Lands' End long term.
Its core baby boomer customer market is aging, so being able to replace it seems promising. But Lands' End is still a work in progress -- one the market hasn't looked upon too favorably, as the stock is down 58% over the past 12 months, and in pre-market trading today, the stock was down more than 8%, bringing it close to where it started the week.
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