WEBVTT - Lands’ End Sees 71% Increase in Customers

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<v Speaker 1>This is Bloomberg Business Week with Carol Masser and Bloomberg

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<v Speaker 1>Quick Takes Tim Stinovic on Bloomberg Radio. Well, not sure

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<v Speaker 1>if you notice, but you probably should have shares of

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<v Speaker 1>lands End. They are on a tear up more than

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<v Speaker 1>this year. The retailer reporting earnings this morning and beating

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<v Speaker 1>estimates from more on the quarter of the business and

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<v Speaker 1>the outlook. Let's bring in lands End CEO Jerome Griffith.

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<v Speaker 1>He joins us on the phone from Long Island, New York. Jerome,

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<v Speaker 1>nice to have you here on Bloomberg. How are you good, Carol?

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<v Speaker 1>How are you doing doing okay? Hanging in there after

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<v Speaker 1>what's been, as you know, a crazy year. Tell us

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<v Speaker 1>about the past year and the impact that the pandemic

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<v Speaker 1>has had had on you and your team and on

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<v Speaker 1>your business. Well, obviously about a year ago when we

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<v Speaker 1>went into lockdown, it was real shock for everyone, and

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<v Speaker 1>you know, we shut doors and and furlough folks and

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<v Speaker 1>took salary reductions very quickly, and we're able to try

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<v Speaker 1>and adapt to whatever the new normal was going to be.

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<v Speaker 1>Our demand went down in March last year, but very

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<v Speaker 1>quickly reb ounted in April and then went on a

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<v Speaker 1>tear for the rest of the year. You've seen a

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<v Speaker 1>lot more consumers shopping online, and uh, most of those

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<v Speaker 1>consumers have been coming from Gen xers and baby boomers

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<v Speaker 1>who have not been comfortable shopping online before, and since

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<v Speaker 1>our business is an e commerce business, we've been the

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<v Speaker 1>recipients of a big increase in demand and a big

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<v Speaker 1>increase in new customers. We're just this past quarter report

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<v Speaker 1>increase in new customer acquisition and retaining them over into actively.

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<v Speaker 1>So yeah, we've we've been seeing some some really good

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<v Speaker 1>numbers and I've got to say our troops have been

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<v Speaker 1>extremely resilient. The folks that work in our facilities in

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<v Speaker 1>Wisconsin have been just just great to work with and

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<v Speaker 1>we've seen some really great performance there. Everybody's been working

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<v Speaker 1>from home. We've been designing lines from home. We've been

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<v Speaker 1>using three D design, we've been using architectural boards or

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<v Speaker 1>designers can share ideas back and forth while working remotely.

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<v Speaker 1>And what we've actually found is we've done a really

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<v Speaker 1>good job. We've been extremely efficient. Um our folks are

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<v Speaker 1>very happy working remotely, and as we get ready to

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<v Speaker 1>return to the office in September, we're going to see

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<v Speaker 1>a pretty liberal hybrid work environment where people are being

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<v Speaker 1>just as creative, if not more creative, and coming up

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<v Speaker 1>with great new ideas for us to continue to move

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<v Speaker 1>the business forward. That is really fascinating because it's in

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<v Speaker 1>contrast to really what we're seeing in the financial community,

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<v Speaker 1>where there is it feels like a real big push

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<v Speaker 1>to get everybody back to the office. Does it mean, though,

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<v Speaker 1>to them that you guys might give up some real

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<v Speaker 1>estate space because you just won't need it. No, we

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<v Speaker 1>own all of our real estate in Wisconsin, so there's

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<v Speaker 1>no sense to give anything up. What we might do

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<v Speaker 1>is repurpose some of it. Uh, And we're thinking about that,

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<v Speaker 1>but no, generally, Uh, we'll have people coming back into

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<v Speaker 1>the office on on a hybrid schedule, and we may

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<v Speaker 1>move people from one building to another to make it

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<v Speaker 1>more efficient. But that would be about it. So when

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<v Speaker 1>you talk about repurpose, does that mean you might rent

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<v Speaker 1>it out to other folks? Um, we could. We haven't

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<v Speaker 1>made it that far yet. We're still in the thinking

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<v Speaker 1>stages right now. All right, So talk to me about

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<v Speaker 1>retail trends. You said that you guys had a lot

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<v Speaker 1>of new customers actually come on. What were people buying

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<v Speaker 1>during the pandemic, and what about those trends if they

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<v Speaker 1>were different from pre pandemic levels. Do you think stays

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<v Speaker 1>with us? Going into the pandemic, we had already had

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<v Speaker 1>a tagline for marketing purposes that said, let's get comfy.

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<v Speaker 1>The most important thing to our consumer is comfort and

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<v Speaker 1>fit and fabric. And while that was performing extremely well

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<v Speaker 1>going into the pandemic, as we went through the pandemic,

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<v Speaker 1>the the requests were Knitwear Lounge, where Sleepware, Home Bedding,

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<v Speaker 1>Bathhouse really went through the roof. I would say the

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<v Speaker 1>only thing that was more of an anomaly for us

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<v Speaker 1>was the quick increase in home. But generally people come

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<v Speaker 1>to us for comfortable clothing. We are known as a

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<v Speaker 1>very casual brand, and we've seen the demand not only

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<v Speaker 1>continue to increase through the pandemic, but as we're coming

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<v Speaker 1>out of it, it continues to stay very strong. We

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<v Speaker 1>think that as people return to the office, you know,

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<v Speaker 1>the newfound comfort world, they're not gonna want to give

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<v Speaker 1>it up. We found that our employees don't want to

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<v Speaker 1>give up the freedom that they have and they don't

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<v Speaker 1>want to give up the comfort, and this is what

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<v Speaker 1>we're hearing from from our customers. As well. Yeah, that's

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<v Speaker 1>kind of interesting. UM, but I agree, I see it

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<v Speaker 1>even in colleagues who come back. I mean, I walk

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<v Speaker 1>into para genes. I don't know that I used to

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<v Speaker 1>do that, even if I change at work into kind

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<v Speaker 1>of on air clothes. It's just our mindset has changed,

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<v Speaker 1>and I think about what I really need. Uh. What

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<v Speaker 1>about the supply chain? How did that work throughout the pandemic,

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<v Speaker 1>or how has what happened during the pandemic maybe changed

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<v Speaker 1>how you want to do it going forward. Well, I

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<v Speaker 1>think from our manufacturer standpoint, they've done an amazingly good job.

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<v Speaker 1>People have have pivoted very quickly with either gearing up

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<v Speaker 1>or gearing down production. And some of them had a

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<v Speaker 1>hard time with with COVID. Some people had to close

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<v Speaker 1>their plants because of heavy COVID cases. But generally they've

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<v Speaker 1>been able to manage it relatively well. Where we've seen

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<v Speaker 1>problems is really getting goods into the country. The pork

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<v Speaker 1>congestion has just been really terrible on the West coast,

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<v Speaker 1>and that tends to add literally weeks to the supply chain.

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<v Speaker 1>In addition to that, you've seen increases in pricing uh

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<v Speaker 1>coming into the US, and then from your hubs getting

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<v Speaker 1>deliveries to consumers. That's also been been increasing in price.

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<v Speaker 1>And probably the scariest thing that's that's been happening is

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<v Speaker 1>a lack of labor market. Um. People are happy to

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<v Speaker 1>stay home and collect unemployment versus going out and getting

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<v Speaker 1>a job in a pretty hot economy. Let me get

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<v Speaker 1>back to lands En CEO Jerome Griffith, still with us

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<v Speaker 1>on the phone from Long Island. The company reporting earnings

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<v Speaker 1>earlier today, beating estimates, raising uh, their outlook for the

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<v Speaker 1>next fiscal year, and uh, just talking about the business

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<v Speaker 1>in killer. The stock has been on quite a run,

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<v Speaker 1>up thirty seven in the past nine days. Hey, Jeroan,

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<v Speaker 1>one thing I did want to ask you and Charlie

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<v Speaker 1>Pellett just talked about a m C. We have been

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<v Speaker 1>all obsessed a little bit with these meme stocks that

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<v Speaker 1>have been on a tear. Your stock has had quite

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<v Speaker 1>a run in the last nine days. As I said,

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<v Speaker 1>almost up about fort here. I was reading some things

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<v Speaker 1>that some are speculating that Land's End stock is getting

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<v Speaker 1>caught up in the meme stock trading. What do you

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<v Speaker 1>say to that? Because the stock was up sevent yesterday

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<v Speaker 1>before earnings and it was hard to make sense of why. Um,

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<v Speaker 1>what are your thoughts on this? And I'm curious if

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<v Speaker 1>you're getting questions about this. We have a smaller float,

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<v Speaker 1>so you'll see when it comes to announcement times around

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<v Speaker 1>the quarters, you'll see some pretty volatile swings in and

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<v Speaker 1>out of the announcement date. But generally, no, I wouldn't

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<v Speaker 1>think that we're a meme stock at this point in time. Okay,

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<v Speaker 1>So not worried about getting caught up in the craziness

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<v Speaker 1>of it. I'm not worried about it now. Okay, So

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<v Speaker 1>let's talk a little bit more about the business because

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<v Speaker 1>there's a lot of stuff that it's interesting going on.

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<v Speaker 1>First of all, one thing I want to ask you. You

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<v Speaker 1>You mentioned uniforms before. That's a big business. I bought

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<v Speaker 1>uniforms for you for my daughter, uh for school. Um,

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<v Speaker 1>I'm assuming that business did it stop completely or fall

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<v Speaker 1>off a lot in the past year, and it fell

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<v Speaker 1>off pretty pretty far. A couple of parts of the

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<v Speaker 1>business were tough. Obviously, the school part of the business

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<v Speaker 1>was very difficult. And then in our national accounts, we

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<v Speaker 1>have an inordinately large relationship with the travel industry, so

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<v Speaker 1>we do Davis rented cars, Hampton Ins, Delta Airlines, American

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<v Speaker 1>Airlines and and that was challenge. But what we've seen

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<v Speaker 1>coming into the back part of is a much faster

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<v Speaker 1>than expected recovery. Uh. The area that's still challenged in

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<v Speaker 1>the uniform business is really the small medium sized businesses

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<v Speaker 1>and that's going to be dependent upon the economy as

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<v Speaker 1>we run through to come back. But is it getting

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<v Speaker 1>back to or close to pre pandemic levels from what

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<v Speaker 1>you're seeing accounts, Yeah, yeah, it is. We think that

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<v Speaker 1>the schools and this will be back to pretty much

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<v Speaker 1>normal by by this year, and then the national account

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<v Speaker 1>business depending on the back part of the year. But

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<v Speaker 1>we see that going much faster than what we had anticipated.

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<v Speaker 1>So talk to me about this third party marketplace for

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<v Speaker 1>sellers um interesting and is this a way go ahead.

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<v Speaker 1>We brought the technology in last year and formally launched

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<v Speaker 1>the marketplace in the fourth quarter of It performed very

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<v Speaker 1>well for us over the holiday season, and what we've

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<v Speaker 1>done has gone out to many other brands in areas

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<v Speaker 1>that produced product that we really don't make. So we're

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<v Speaker 1>looking at additional home products like furniture and home whears,

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<v Speaker 1>things like that, additional shoes, and then accessories, jewelry, scent,

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<v Speaker 1>beauty and bring margin. That's higher margin business. Right. Well,

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<v Speaker 1>it's a good margin business for us. And what's great,

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<v Speaker 1>it's a low risk because we take the information put

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<v Speaker 1>it all up on our website, but then manufacturers are

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<v Speaker 1>dropping drop shipping for us going directly to the consumers.

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<v Speaker 1>So it gives the consumer when they come onto our

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<v Speaker 1>website a much broader range of products the shop that

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<v Speaker 1>they're looking for, and it's really de risking it for us. Jerome,

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<v Speaker 1>how big a business could that be for you, guys,

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<v Speaker 1>especially if you don't have the overhead of the distribution

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<v Speaker 1>like Amazon does. How big of a business could it

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<v Speaker 1>ultimately be for you? It could be tens to hundreds

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<v Speaker 1>of millions. But we're still in the in the point

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<v Speaker 1>right now where we're sizing it. We're bringing on many

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<v Speaker 1>more brands as we speak. We expect to be well

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<v Speaker 1>over sixty brands by the time that we get to

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<v Speaker 1>holiday this year, and continuing to grow that and scale

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<v Speaker 1>it over the course of the next few years. Hey,

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<v Speaker 1>one last thing, partnerships Draper James reads Witherspoon. How important

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<v Speaker 1>is that to um kind of you know, keeping the

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<v Speaker 1>brand relevant if you will. Just great for the buzz,

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<v Speaker 1>and what better than that is it's been great for

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<v Speaker 1>the bottom line. We've been really pleased with the results

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<v Speaker 1>that we saw last year and then again this spring.

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<v Speaker 1>In fact, we're expanding our partnership with them in the

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<v Speaker 1>back part of the year with the home furnishings and sleepwear. Yeah,

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<v Speaker 1>and we've got some other exciting news coming down the pike,

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<v Speaker 1>which we'll be able to talk about in the quarter

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<v Speaker 1>or two. So we're working on some other fun stuff. Well,

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<v Speaker 1>promise me you'll come back, because I'd love you. Guys

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<v Speaker 1>have your hands with so many different things and it's

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<v Speaker 1>just a great snapshot of what's going on. So I

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<v Speaker 1>hope you'll come back and talk to us about that news. Okay, Hey,

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<v Speaker 1>be well, I really appreciate it. Jerome Griffith, he's the

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<v Speaker 1>land End CEO, joining us on the phone from Long Island.

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<v Speaker 1>As I mentioned, uh, the company has really been making

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<v Speaker 1>some changes. I talked about this third party marketplace that

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<v Speaker 1>they are putting out. They talked about that earlier this year.

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<v Speaker 1>In the stock as I mentioned, up almost in the

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<v Speaker 1>past nine days alone, up about forty percent so far

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<v Speaker 1>this year,