Surging Consumer Lifts Lands' End

Tuesday brought more evidence that 2002 is turning out better than retail analysts and executives planned.

This time, catalog retailer

Lands' End

(LE) - Get Report

said that sales in the first eight weeks of its fiscal year were stronger than expected and that earnings would be higher than previously forecast. The stock, which has been on an upswing since last fall, jumped 5%.

The Lands' End forecast followed similarly rosy reports from

Jones Apparel

(JNY)

and footwear chains

Skechers

(SKX) - Get Report

and

Kenneth Cole

(KCP)

. All three companies recently raised earnings guidance.

"One thing that's surprising everyone out there is the strength of consumer spending," says Derek Leckow, an analyst at Barrington Research who covers Lands' End. "We are seeing a nice turnaround here."

Raising the Bar

Lands' End shares were up $2.33 at $49.36 Tuesday, after the company said sales for the quarter were up about 10% for the first eight weeks of the fiscal year, much higher than the 5% growth analysts were expecting. As a result, full-year earnings will likely exceed guidance the company gave in March of a high-single-digit to low-double-digit increase, Lands' End said. That prior guidance irked investors, as analysts had been projecting a 14% increase in earnings for the year, and the stock

cratered at the time.

Investors have been on something of a roller coaster lately with Lands' End: In November, the company reported that third-quarter earnings blew by estimates, sending shares soaring. But then in March, the company came up just shy of estimates for the fiscal fourth quarter and gave cautious guidance.

That may explain why Leckow, one of the few analysts to cover the company, wasn't rushing Tuesday to raise his rating, which stands at accumulate. "We'd like to see it continue into the second quarter" before going more bullish, he says.

Market Share

Still the Dodgeville, Wis.-based company, which sells casual wear through catalogs and over the Internet, has won plaudits for refocusing its merchandise on women's wear and traditional clothing such as chinos and sweaters. And it has consistently gained market share from competitors such as

Gap

(GPS) - Get Report

and

Eddie Bauer

, say analysts.

"This is a very conservative company, and they are getting market share from their competitors," says Barbara Wyckoff, who covers the company for Buckingham. "They are executing their strategy nicely." (She has an accumulate rating on the stock, but was reviewing that rating Tuesday morning. Her firm doesn't have an investment banking business.)

Also Tuesday, drugstore chain

CVS

(CVS) - Get Report

reported that strong sales in March would lead to slightly higher quarterly earnings. Other companies, such as apparel company

Abercrombie & Fitch

(ANF) - Get Report

, have also said that March sales were strong.

It hasn't been all good news, however. The Redbook Average, a broad gauge of same-store sales activity at general merchandise retailers published by Instinet, rose 3.3% in the final week of March, slightly below plan, Instinet reported Tuesday.

Investors will get a clearer view come Thursday, when most of the nation's retailers report March same-store sales, which measure activity in shops open at least a year and are closely watched by Wall Street.