Lands’ End Slashes Value of Its Name by $170M to $180M

The sharpest cut at Lands’ End Inc., which is working to distance its operations from former corporate parent Sears Holdings Corp., came from the accountants in the fourth quarter.

The company said Thursday that its annual reckoning of its goodwill and “indefinite-lived intangible assets” led it to slash the value of the Lands’ End trade name by $170 million to $180 million.

That cuts the value of the name down to between $250 million and $260 million from $430 million a year ago, when the company cut the value of the name by $98.3 million in its books.

Investors sent the stock down 5.3 percent to $16.05 in morning trading.

Lands’ End said the noncash charge would not impact its “liquidity, cash flows, compliance with debt covenants or any future operations.”

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The charge, however, will lead the company to a net loss of between $92.8 million and $98.8 million, compared with losses of $39.5 million a year earlier.

Net revenues fell 3 percent in the quarter to $473.5 million, with a 2.5 percent decline in the company’s direct segment and a 6 percent drop in retail sales.

The retail decline was driven by a 3 percent drop in comparable sales and 11 fewer Lands’ End shops in the stores of Sears, which spun off the brand in April 2014.

The fourth quarter was a tough one for Lands’ End, along with many other retailers.

The company said its gross margin is slated to come in at 38.5 percent, down from 42 percent a year earlier “primarily due to the continued highly competitive and promotional retail environment.”

“We continue to see sequential improvement in our sales and gross margin performance, despite the ongoing headwinds in the retail environment,” said James Gooch, co-interim chief executive officer and chief financial officer. “We remained disciplined in controlling costs and managing inventory while taking important steps to better execute our business strategies and stabilize the business. While we still have a lot of work to do, we believe that we are on the right path to improve the business for the long term.”

The company is also writing down $2.3 million worth of aged Canvas by Lands’ End merchandise, a legacy of ousted ceo Federica Marchionni, who tried to bring new customers to the company by relaunching the brand and signing on Emma Roberts as its face.