Lands’ End wields the ax

Mar 01, 1999 10:30 PM  By

On Jan. 12, Lands’ End president/CEO David Dyer announced a restructuring plan in which the $1.24 billion cataloger would eliminate 94 of its 888 salaried positions. “While our sales have increased 35% over the past four years,” Dyer said in a statement, “the staff has grown 58%.”

Some 30 of those positions will be zapped through attrition, with 60 layoffs expected, says spokeswoman Charlotte LaComb. Lands’ End is also closing its $12 million Willis & Geiger apparel title in late summer, after sales from the spring-summer book wind down. Lands’ End had put the title up for sale in September 1998 “because it didn’t meet growth expectations,” LaComb says. “Although some companies were interested in it, we didn’t find a suitable buyer.”

The restructuring in effect merged units from the company’s various titles, including the core catalog of casual apparel and spin-offs Beyond Buttondowns (men’s careerwear) and Coming Home (domestics). Following the news, Lands’ End’s stock jumped $2, to close at just above $27 a share on Jan. 12.

The cataloger’s third-quarter profit plunged to $347,000 from $8.2 million in ’97. And although sales for the eight-week holiday period rose 8.5%, to $412 million, the rise resulted from increased mailings and price discounts. These in turn led to a 28% drop in net income, to $25.1 million.

With the restructuring, “Dave Dyer wants to signal that he’s clearly in charge and that there’s a new era,” says Ken Gassman, senior vice president of Richmond, VA-based investment firm Davenport & Co. Dyer was appointed in late October when the board forced out president/CEO Mike Smith.

The biggest problem at Lands’ End, according to Gassman, is the core catalog. “It’s showing no significant sales gains. Customers have different needs today than they had in the ’80s and early ’90s,” he adds, noting that consumers also have more options for buying casual apparel than they used to.