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Lands' End Plummets Almost 25% on Weak Sales Outlook

George Watson

Lands' End (LE Quote) warned Thursday that fourth-quarter sales would miss projections, sending the catalog retailer's stock plummeting.

In midmorning trading, Wall Street punished the company, which sells items like clothing, luggage and bedding through mail-order catalogs and outlet stores, pushing shares lower by 19 3/4, or 24%, to 63 9/16. (The stock closed down 24 13/16 to 58 1/2.)

The pullback makes for a reversal in Lands' End's recent fortunes: The stock had risen steadily from the mid-20s in January to a high of 83 1/2. Shares closed Wednesday at 83 5/16.

In reporting strong third-quarter earnings, Lands' End warned that fourth-quarter sales will be "somewhat down" from year-ago levels. Lands' End added that it will continue reducing the number of pages in its catalog, which likely will hurt sales through the first half of the year.

Net income for the third quarter soared to $8.8 million, or 28 cents a share, from $300,000, or 1 cent a share, in the year-earlier quarter. Analysts polled by First Call/Thomson Financial called for Lands' End to earn 25 cents a share. Sales rose to $326 million from $322.4 million in the comparable 1998 quarter.

Third-quarter net income for the Dodgeville, Wis.-based retailer included a foreign currency exchange gain of $400,000. Lands' End posted a $3.4 million after-tax loss in the year-earlier quarter, which the company attributed to the strengthening of the yen against the dollar.