Transition to Net trips some retailers
Shifting business to the Internet is proving difficult for a growing number of retailers.
In the latest example, Lands' End shares plummeted nearly 30 percent today after the clothing retailer said fourth-quarter sales may be "somewhat down" compared with last year as it switches more business to the Internet from its catalog.
The surprising shortfall is another example of the pain encountered by companies as they shift from more traditional retailing to the Internet. Coffee retailer Starbucks suffered a similar fate earlier this year, although it has rebounded. Last month, Levi's said it would back off Net sales after the holidays, declaring it was more costly than expected.
"As previously announced, page circulation is being reduced by about 20 percent in the last half of fiscal 2000 to eliminate unprofitable mailings and manage the transition from print to e-commerce," Lands' End said in a statement. "As a result, the company anticipates that sales in the fourth quarter may be somewhat down compared to the prior year."
Lands' End said net income for the quarter ended October 29 totaled $8.8 million, compared with $300,000 for the like quarter a year ago. Sales rose 1 percent to $326 million for the comparable periods.
Third-quarter Internet sales rose about two and a half times from those in the same quarter last year, continuing a trend for all of this year, the company said.
"The company plans to reduce page circulation in the primary monthly catalogs by 5 percent to 10 percent through the first half of next year. In fiscal 2001, Lands' End plans to increase capital spending to the $40-$50 million range, primarily investing in the company's information technology infrastructure," Lands' End said.