What happened
Shares of Lands' End(NASDAQ: LE) fell 15% on Thursday after the clothing and home decor retailer cut its sales and profit forecast.
So what
Lands' End's net revenue decreased by 8.6% year over year to $351.2 million in its fiscal second quarter, which ended on July 29. The decline was due mainly to a 16% drop in e-commerce sales, which were dented by supply chain disruptions.
The retailer's third-party business was a bright spot. Lands' End is selling more of its products on online marketplaces operated by Kohl's and other partners. Its third-party net revenue, in turn, surged 42.9% in Q2.
Lands' End's Outfitters business also delivered a solid performance, boosted by heightened demand for school uniforms and gear for employees. Sales in this segment rose 7.7%.
Still, Lands' End's gross margin declined by roughly 5.3 percentage points to 41%, largely due to higher transportation costs and promotional activity. That contributed to the company posting a net loss of $2.2 million, or $0.07 per share, compared to net income of $16.2 million, or $0.48 per share, in the year-ago quarter.
Now what
Lands' End expects supply chain challenges to continue to weigh on its results in the coming quarters. Management now projects full-year net income of $16.5 million to $23.5 million, or 0.49 and $0.70 per share, in fiscal 2022. That's down from a prior forecast of $20 million to $29 million, or $0.60 and $0.88 per share.
Looking further ahead, Chief Financial Officer Jim Gooch said Lands' End's growth strategy remains on track. "Despite these ongoing industrywide challenges, we remain confident in our digitally led business model and our ability to execute on our strategic initiatives," Gooch said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
