Lands' End Takes Closer Look At Customer Base

Lands’ End has long been a workhorse for American women, a reliable source of everything from swimsuits to parkas to kids’ school uniforms. And while that’s not likely to change, chief executive officer Andrew McLean says the company is shifting its marketing approach, using a customer lens that moves beyond age and Zip code.

McLean, who became CEO last year, spoke recently at the ICR Conference, webcast for investors. “What struck me when I first joined the company was that we talked a lot about demographics, and we were saying we had a 57-year-old customer who'd been with us 18 years and that she was a coastal grandmother.”

That’s true, he said. “But that’s just the mean. There’s a bell curve, and we could see four or five interesting groups beyond that.”

For now, Lands’ End has divided them into two camps. “The vast majority of them are Resolvers, customers who have been with a brand a long time,” he said. They’re loyalists who shop for the same items and replenish them when they wear out. And they are women who are solution-oriented and interested in classics. “They engender so many positive qualities,” he said.

But the company also sees opportunities with a group it calls Evolvers. They are younger, a little more affluent, and interested in the brand’s story and ethos. “And they just want a little more fashion and to be a little more on trend.”

As a result, he said, the company’s new merchant team is using data to serve customers better.

Another recent change has been a new outerwear focus, offering more transitional products as winters get warmer. “Outerwear has been one of our strengths, and we’re in the Top Five in market share,” he says, “even if we don’t brag about it. It’s arguably even more important to us than our swim business, where we have a leading market share.”

In Lands’ End’s most recent quarter, sales fell 12.5% to $324.7 million, compared to $371 million in the third quarter of fiscal 2022. The retailer posted a net loss of $112.4 million for that quarter, compared to a loss of $4.7 million in the prior year's comparable period.

The quarter was impacted by intense inventory reduction moves, less promotional activity and the closure of Lands’ End Japan, all aimed at generating more profitable sales. And improvements in its profit margins exceeded expectations.

By channel, ecommerce results dipped 13%, while revenue in its Outfitters division, which sells uniforms, dropped 8%. The company also saw a sharp decrease of 22% in third-party sales, attributed primarily to the soft performance of Lands’ End goods at Kohl’s.

McLean told the conference audience that the company’s B2B offers continue to be an essential way to differentiate itself from competitors. He also said that to sharpen the company’s focus, it has begun to outsource some product categories and is moving toward licensing, including kids and shoes.

Earlier this week, the company, which already sells products at Target, announced a new exclusive swimwear line.

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