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Why Lands’ End is betting on its new Kohl’s partnership to refuel growth

June 3, 2020, 2:00 PM UTC

For years, the bulk of Lands’ End’s physical retail presence consisted of its shops within Sears stores. Soon, the apparel brand’s outside brick-and-mortar partner will instead be longtime Sears rival Kohl’s.

Starting in the fall, Kohl’s will sell a limited Lands’ End assortment of 300 items at shop-in-shops at 150 of its stores—it will sell all Lands’ End products online—a move aimed at rebuilding what had once been a large brick-and-mortar business for Lands’ End.

Lands’ End, best known for its casual clothes, kids’ uniforms, and outdoor apparel, was bought in 2002 by Sears, which had hoped at the time to improve the drab clothing offerings at a retailer better known for tools and appliances. But Sears’ inexorable decline and poorly kept stores damaged the brand, and in 2014, Lands’ End was spun off as a separate company.

By 2019, Lands’ End was no longer sold at any Sears stores, marking the end of what had been a $300 million business only a few years before. Enter Kohl’s, a fellow Wisconsin company and a struggling but still very viable department store, looking to bolster its own assortment.

“What makes Kohl’s a great idea is the same thing that made Sears not a great idea: The consumer at Sears didn’t share the same demographics as ours,” Lands’ End CEO Jerome Griffith tells Fortune.

Sears apparel rarely went beyond inexpensive basics (with rare exceptions, such as its ill-fated Kardashian Kollection a few years ago), and its shoppers rarely overlapped with those of Lands’ End.

To be sure, Kohl’s is struggling too, but not nearly to the same extent, or at least not before the COVID-19 outbreak decimated its business in March. But Kohl’s, whose net sales fell 1.5% last year, has succeeded in building up a sizable business in activewear—lining up Under Armour a few years ago—a move that helped it attract many shoppers Lands’ End also covets.

Kohl’s joins Amazon as an outside retailer selling Lands’ End merchandise. In 2016, Lands’ End took the plunge many brands still hesitate to take, but one Griffith says is still paying off. “The relationship is based on new-customer acquisition: 75% of people who buy Lands’ End on Amazon have never shopped us before or haven’t in a long time,” he says.

In 2019, Lands’ End retail sales fell by more than half to $59 million and made up only 4% of its total $1.45 billion in sales, largely because of the Sears closings. (About 75% of sales come from its own stores and website, and another 16% from the sale of uniforms for corporations such as American Airlines as well as school uniforms, businesses Griffith wants to further build up.)

Two years ago, a few months after he took the reins, Griffith laid out a plan to have 60 stores by 2023. It currently has only 26, and the company is suspending new store openings after launching the five locations it had already planned for this year until it’s clearer what the long-lasting impact of COVID-19 will be on physical retail.

“People are going to be gun-shy about going out to stores for a while,” says Griffith.

So Lands’ End is even more reliant on e-commerce and is looking to boost sales another way starting soon: using its website for the first time to sell outside brands’ merchandise in categories complementary to its own, notably in home goods. That is no slam dunk given the panoply of choices customers already have, especially for clothing.

Despite the big challenges retail apparel is facing, Griffith thinks Lands’ End can thrive in this tough environment. In its first quarter, the company’s net revenue decreased 17.3% to $217 million, a sharp drop, but not so terrible when one considers nationwide apparel store sales were down 89% between February and April.

“As more people work from home and are encouraged to work from home, people will be buying different product, cozy stuff which is right up our alley, and buying it online, which is also up our alley,” he says.

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