Add Lands’ End (LE)CEO Jerome Griffith to the list of people not banking on Sears’ future.
The clothing maker, best known for its kids’ uniforms and outdoor clothing, plans to open as many as 60 of its own stores in the next five years, up from a current count of about 14 globally, to reduce its reliance on Sears (SHLD), its one-time sister company whose sales are in free fall.
As of now, Lands’ End has shops at 180 Sears stores, down from 227 two years ago, and Griffith is not holding his breath for things to get better there,
“It’s our expectation that our Sears business at a point in time will go away and that we’ll be talking directly to the consumer through our own stores,” Griffith said on Monday at the ICR investor conference. Online sales and direct sales represent the lion’s share of Lands’ End total revenue but retail remains a key source of business.
Sears Holdings (SHLD), which bought Lands’ End in 2002 for about $2 billion and then spun it off in 2014 as part of the bid to raise much needed cash, last week announced the closing of 103 Sears and Kmart stores, and last year admitted in its annual report that many had doubts about its future viability. Comparable sales declines have grown worse of late.
The trickle-down effect on Lands’ End has been brutal: revenues fell in each of its last five full fiscal years though Wall Street expects sales to tick up slightly to $1.36 billion in the fiscal year ending later this months. And Griffith laid out his plan for Lands’ End to get up to between $1.8 billion and $2 billion within five years.
Before becoming part of Sears, a deal that at the time promised to vastly expand Lands’ End distribution, the company was innovative. “That kind of went away during the ownership of Sears,” he said but noted Lands’ End can be a pioneer again. He touted its recent partnership with the Weather Channel, whose meteorologists are clad in Lands’ End gear, as well as a new contract with Delta (DAL) to which it is providing uniforms.
Griffith, who took the reins last year after his predecessor’s attempts to take Lands’ End more upscale bombed, makes it clear the company will takes it fate in its own hands.
“We will not be relying on Sears in the future for growth fur us,” he said. “We’ll be relying on ourselves.”