Lands' End Still Has Further to Go

Catalog retailer Lands' End (LE Quote) has had quite a run recently.

After reporting third-quarter results in early November that blew by estimates -- 41 cents a share compared with the Thomson Financial/First Call consensus of 18 cents -- shares rocketed up more than 50% to hit a new 52-week high of $53.38. Shares have since retreated a bit, and lately traded at $44.30.

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The Dodgeville, Wisc.-based company, which is one of the few retailers to boast a profitable Web unit, owes much of its success to its merchandise. Its high-quality chinos and sweaters are simply what customers want. While other retailers have been forced to slash prices to attract customers, Lands' End has done the opposite: Its liquidation sales were down $15 million in the third quarter compared with the year-ago period, while its full-priced U.S. consumer sales grew 16%.

In the aftermath of the anthrax scare, some had worried that consumers would be hesitant to order goods through the mail. In fact, an opposite scenario is more plausible: More Americans, holding off on travel during the holidays, will opt to send gifts to relatives. We'll see. Unlike most retailers, Lands' End does not release monthly sales figures, only quarterly ones.

The stock, meanwhile, trades around 18 times next fiscal year's estimated earnings, according to Barrington Research's figures, compared with a three- to five-year projected annual growth rate of 17%. Not terribly cheap, but not expensive, either (the company is not widely followed by Wall Street brokerages owing to its reputation -- which it has worked to rectify -- of being tight-lipped with the financial community. As the company's credibility with Wall Street rises, though, that alone could boost the stock).

Given all these positives and with its stock off almost 10 bucks from its recent 52-week high, Lands' End is definitely worth a look.