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Lands’ End stock slides over 20% on surprise quarterly loss, outlook cut

Lands' End (NASDAQ:LE) shares fell sharply on Thursday as both Q3 results and full-year forecasts fell well short of expectations.

The Wisconsin-based retailer reported a $0.14 loss per share for the quarter, surprising analysts that had anticipated $0.22 in earnings per share. Meanwhile, a 1.3% decline in revenue from the prior year quarter to $371M also came counter to the analyst expectation of growth to $383.36M.

“We took a concerted effort to improve our in-stock positions by increasing our lead times and receipting our Fall/Holiday inventory earlier,” CFO Jim Gooch explained. “While this largely drove our 18% increase in inventories at the end of the third quarter, we are well positioned to meet our customers’ needs as we move through the holiday season. We expect inventory levels to normalize by the end of Spring/Summer 2023.”

Driving the expected normalization, a “highly promotional” holiday shopping season is anticipated to drive sales. That environment, coupled with uncertainty on the macro situation into early 2023, prompted management to pare forecasts for the full-year.

The company now anticipates net revenue to be between $1.54B and $1.56B, down from the previous $1.6B to $1.64B guide. Additionally, a Q4 forecast for $0 to $0.09 in earnings per share came in significantly below the $0.66 expectation. As such, management expects a diluted loss per share between $0.27 and $0.18, dramatically reversing the prior guidance of between $0.49 and $0.70 in earnings per share. Analysts had anticipated $0.59 in earnings per share for the full year.

Shares fell over 20% in pre-market trading after the unexpected loss and projection of continued losses into the fiscal year-end.

Read more on the details of the quarter.