This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Lands' End is No Bargain in Trading Debut

NEW YORK (The Deal) -- Lands' End  (LE) began trading on Monday, but not to cheers from investors, as the retailer's stock price closed down 3% at $29.55 per share, with the slide continuing Tuesday, as the outdoor apparel retailer's shares closed down another 7% at $27.34.

Market participants are likely to take notice that though adjusted Ebitda and net income for the Dodgeville, Wisc.-based company has increased, its sales are declining. In fiscal 2013 ended Jan. 31, Lands' End had about $1.56 billion in revenue, while in fiscal 2012 sales were nearly $1.59 billion, according to a regulatory filing. Net income, however, was nearly $79 million in fiscal 2013, while in fiscal 2012 it was almost $50 million. Meanwhile, adjusted Ebitda was about $150 million in fiscal 2013 and almost $108 million for the same period a year prior.

Its market cap of about $864 million, based on the nearly 32 million shares distributed to shareholders last Friday, April 4, by Sears Holdings (SHLD - Get Report), plus a $515 million term loan on the balance sheet used to pay a $500 million dividend to Sears, gives Lands' End an enterprise value of $1.38 billion.

That enterprise value is less than the roughly $1.8 billion Sears paid for Lands' End back in 2002, but it is about 9.2 times trailing adjusted Ebitda, hardly a discount for an apparel retailer with exposure to a declining department store chain.

Sears shares took a hit at the separation, falling 24% Monday to close at $38.10, on the notion that it had spun off its best performing asset. (Tuesday, it closed down again at $36.99 per share.) Sears no longer has a stake in the apparel company, but besides the dividend payment, it will begin collecting rent from Lands' End for the store-within-a-store formats it operates in some Sears' locations.

Investor fears mirror the concerns about Lands' End former parent, which has been struggling for some time with outdated stores and shrinking customer base.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
LE $35.94 -0.28%
SHLD $41.21 -3.00%
FB $83.44 0.29%
GOOG $553.32 0.23%
TSLA $192.27 0.89%

Markets

DOW 17,885.96 -90.35 -0.50%
S&P 500 2,081.93 -4.31 -0.21%
NASDAQ 4,935.4210 -12.02 -0.24%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs