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Bull of the Day: Lands' End (LE) - Bull of the Day


Lands' End, Inc. (NASDAQ: LE) celebrated its first quarter spun-off from Sears Holdings by beating the Zacks Consensus Estimate by 117%. This Zacks Rank #1 (Strong Buy) is cashing in on its strong catalog brand even as investors are being cautious.

Lands' End is a Wisconsin-based retailer that was formerly owned by Sears. Founded in 1963 as a catalog for yachtsmen, the company now offers clothing, accessories, and footwear for men, women and children through catalogs, its online web site, and in retail stores primarily located in Sears and some standalone Lands' End Inlet stores.

It is especially well known for its winter apparel and footwear.

Big Beat in the Second Quarter

On Sep 10, Lands' End reported its first earnings results since it went IPO in March of this year.

It easily beat the Zacks Consensus Estimate, reporting $0.37 compared to the Consensus of just $0.17.

Sales rose 5.4% to $347.2 million from the second quarter of last year. The Direct segment, which includes catalog and online sales, rose 7.1% to $292.6 million. That's the company's largest segment.

Its retail sales declined 2.9% to $54.6 million even though same store sales increased 2.8%. This was the result of fewer Lands' End retail spaces within Sears and Sears own particular troubles.

Gross margin, a key metric for retailers, rose 310 basis points to 48.5% year over year.

The customer is responding to the product. Being attached to Sears appears to be hurting, not helping, sales.

Estimates Rise

When a company reports earnings for the first time, the analysts never really know what to expect. There is usually a lot of tinkering with estimates afterwards.

That appears to be the case with Lands' End as well.

1 estimate has moved higher since the report for Fiscal 2014, pushing the Zacks Consensus sup to $2.52 from $2.29.

The analysts are also bullish on Fiscal 2015 with 1 estimate moving higher for that year as well within the last month. The 2015 Zacks Consensus Estimate has risen to $2.60 from $2.48.

Shares Soar on Earnings Beat

Investors loved the big beat in the company's first quarter out of the gate. They pushed the shares up to a new high.

But despite the quick move higher by the shares, they're not excessively priced.

Lands' End has a forward P/E of just 16.6 which is just below the average of the S&P 500 of 17.

Lands' End is also in a top ranked industry, the retail- catalog industry. It ranks #1 out of 265 Zacks Rank Industries.

For investors looking for a retailer with a strong brand and online presence, Lands End is one to keep on your short list.

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Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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