Dive Brief:
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Lands’ End on Thursday reported that Q4 net revenue fell 4.6% year over year to $529.6 million, with global e-commerce down 6.1% to $414.5 million.
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Comps at company-operated stores declined 3.9%, according to a company press release. Third-party net revenue — which incudes sales on third-party marketplaces plus U.S. wholesale — rose 8% to $39.2 million.
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Inventories were up 10.7%, largely due to supply chain issues. Gross margin declined about 340 basis points to 32.5%. The brand swung to a $3.3 million loss in the fourth quarter from $7.1 million in net income the previous year, and also swung to a loss for the year.
Dive Insight:
Marketplaces, and in particular the marketplace run by Kohl’s, gave Lands’ End a rare lift in the fourth quarter.
The brand said that the 8% revenue boost in its third-party sales “was largely driven by sales growth in the Kohl’s marketplace and existing and new online marketplaces.”
For the full year, third-party net revenue rose 37.5% to $119 million, also primarily thanks to sales growth in marketplaces, including Kohl’s and recent additions like Target, the company said in its release.
Then-outgoing CEO Jerome Griffith in January noted the customer acquisition potential of this online sales model, saying, “These new customers come in through these marketplaces: 75% of them either never shopped at Lands’ End or are lapsed customers and haven’t shopped at Lands’ End for five years.”
On Thursday, current Lands’ End CEO Andrew McLean said that the company is “pleased with our third party online partnerships including Kohl’s, Target, Walmart and Amazon,” and that Lands’ End will also launch with Macy’s marketplace by the end of the second quarter.
Amazon has long leveraged the marketplace structure to bolster revenues and profits in its retail business, to the point where 60% of the goods sold through its site now come from third-party vendors. But in recent years legacy retailers have also jumped on the bandwagon. Walmart, Target, Kohl’s, Macy’s and other traditional players all now run marketplaces, and many plan to grow them.
Newly arrived Kohl’s CEO Tom Kingsbury earlier this month said that expanding the company’s third-party marketplace will be key to stoking online sales.
For the current year, executives said they expect margins to expand as costs decline and merchandising improves. The brand is focusing on its best-performing swim and outerwear categories, in a merchandising revamp led by Chief Transformation Officer Angie Rieger and Senior Vice President of Product and Merchandising Kym Maas, who both arrived in January.
