Lands' End: Sell-Off Following 4th Quarter Provides Exclusive Opportunity With 39% Upside
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Transcript of Lands' End: Sell-Off Following 4th Quarter Provides Exclusive Opportunity With 39% Upside
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Lands End Pitch (NASDAQ: LE)| Equity Analysis
Sell-Off Following 4th Quarter Provides Exclusive Opportunity for Undervalued Company with Growing Margins and a Variety of Growth Intentions (40% Upside) Parent Company Sears Overshadowing Lands Ends Image, Leading to Market Mispricing
Long Stock Pitch and Valuation
Jung-Yung Jonathan Chang | February 11, 2015
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Lands End Pitch (NASDAQ: LE)
Long Stock Pitch and Valuation
Table of Contents
I. INDUSTRY OVERVIEW 3
II. COMPANY OVERVIEW 7
III. FINANCIAL OVERVIEW.. 16
IV. APPENDIX.. 22
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Industry Overview | Consumer Retail and Products
Long Stock Pitch and Valuation
Lands End Pitch (NASDAQ: LE)
3
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Lands End Pitch (NASDAQ: LE)
Internet Expansion Boosting Apparel Retailer Sales
Industry Overview
4Sources: Bloomberg, John Buzolits & Poonam Goyal
Long Stock Pitch and Valuation
E-commerce now makes up 6.6% of US retail sales which is up from slightly less than 2% from a decade ago. Moving online allows
retailers to be able to access a larger consumer base and boost awareness of the products. It builds brand recognition and can help to
get rid of excess inventory. These sales have lead to a boost in apparel retailers sales.
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Lands End Pitch (NASDAQ: LE)
Global Oversupply of Cotton Leading to Decreased Pricing
Industry Overview
5Sources: Bloomberg, Capital IQ
Long Stock Pitch and Valuation
Cotton has decreased dramatically and have supported an increase in margins for apparel retailers. However, many other factors are
influencing retailers margins. For instance, online shopping requires retailers to take lower margins, Asias higher wages, and higher
ground shipping rates in the United States will all prove to be potential risks to consider for the whole industry.
0.5
0.55
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0.65
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0.75
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0.85
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0.95
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2/1/2014 4/3/2014 6/3/2014 8/3/2014 10/3/2014 12/3/2014 2/2/2015
ICE:TT (Cotton) Pricing
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Lands End Pitch (NASDAQ: LE)
E-Commerce Surge Resulting in Smaller Stores and More Closing
Industry Overview
6Sources: Bloomberg, John Buzolits & Poonam Goyal
Long Stock Pitch and Valuation
There has been a rise in competition and a surge in online shopping which have been forcing some smaller retailers to exit the
industry. Consolidation seems to be a fairly prominent factor in the industry. With less opportunity for growth, a focus on margins
may be important. American Eagle plans to close 150 stores in the next 3 years while Abercrombie & Fitch plans to close 60 in
coming years. Aeropostale and Express have similar plans.
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Company Overview | Lands End
Long Stock Pitch and Valuation
Lands End Pitch (NASDAQ: LE)
7
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Lands End Pitch (NASDAQ: LE)
Take care of the customer, take care of the employee, and the rest will take care of itself. Guiding Principle by Gary Comer, Founder
Company Overview
8Sources: Capital IQ, Company Website
Long Stock Pitch and Valuation
Lands End, Inc. operates as a multi-channel retailer primarily in the United States, Europe, and Asia. The company operates through
two segments, Direct and Retail. It offers mens, womens, and kids apparel, outerwear, and swimwear; specialty apparel; accessories;
footwear; and home products. The company sells its products through e-commerce Websites, direct mail catalogs, phone, or in-store
computer kiosks, as well as standalone and dedicated stores. Lands End, Inc. was founded in 1963 and is based in Dodgeville,
Wisconsin. Lands' End, Inc. operates independently of Sears Holdings Corporation as of April 04, 2014.
0M
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3M
4M
5M
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Mar-20-2014 May-20-2014 Jul-20-2014 Sep-20-2014 Nov-20-2014 Jan-20-2015
Price - Volume Performance
Volume Stock Price
Beat 2Q earnings
estimates by 113%
Beat 3Q earnings
estimates by 40%
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Lands End Pitch (NASDAQ: LE)
Qualitative Company Core Competencies
9Sources: Company 10-K SEC Filing
Long Stock Pitch and Valuation
Large and Loyal Customer Base
Innovative and Timeless Products
Excellent Customer Service
Lands End has a strong belief in customer service. Its had a successful track of improving customer service experience. For
instance, they were the first apparel retailer to offer a toll-free number and e-commerce enabled website launched in 1995.
Furthermore they incorporated features such as online chat, personalization features, and unconditional return policy. From 2006,
2012 Lands End was recognized by National Retail Federation as one of the top retailers for customer service.
Lands End focuses on developing its existing and prospective households through use of advertising identification. Routine
updates and refining of customer lists before mailing of catalogs, emails allow monitoring of customer interests in a more
interactive manner. The customer list is targeted in a way as the demographic characteristics match desirable attributes that the
company is looking for. They are typically looking for the affluent, college-educated, professional and style-conscious women and
men. In 2013, the average annual household income of the customer was approximately $103,000 with ~44% of customers within
36-55 age group.
Modern and quality fabrics are used to construct new products that have timeless style and good fit. Lands believes that the typical
customer value quality and want to add classics to their wardrobe. It tries to balance a good mix of both new trends and classic
looks. Their in-house team manages product specifications to provide consistent merchandise. As a vertically integrated retailer, all
aspects of design, marketing and distribution is done in-house.
Company Overview
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Lands End Pitch (NASDAQ: LE)
Overview of Sears Holdings and Lands End Relationship
10Sources: Capital IQ, Company Website, Business Insider, WSJ
Long Stock Pitch and Valuation
Since spinning off from Sears Holdings Corporation (NASDAQ:SHLD) on April 4, 2014, Lands End (NASDAQ:LE) has been
facing skepticism on how it would operate, its debt levels, and a 48% ownership (which has now decreased to ~24%) by Sears CEO
Edward Lambert. Despite being one of the top performing divisions that Sears had, it has generally been thought of as a good move
for Lands End to separate itself from a suffering company that it had been a part of since being acquired in 2002. Lands End had
been one of the companys most profitable divisions, however Sears simply needed the cash to keep itself sustainable. In a
conversation between Mary Gilbert, an analyst with Imperial Capital LLC, and WSJ, she described Sears as getting rid of all the good
stuff and leaving bondholders with the underperforming assets in reference to Sears recent spinoff of Lands End.
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-40%
-20%
0%
20%
40%
60%
80%
Mar-20-2014 May-20-2014 Jul-20-2014 Sep-20-2014 Nov-20-2014 Jan-20-2015
Absolute Performance: LE vs. SHLD
Sears Holdings Corporation Lands' End, Inc.
Company Overview
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Lands End Pitch (NASDAQ: LE)
4Q Selloff of Lands End Stock Means its Now a Cheap Buy
11Sources: Company 10-K SEC Filing, Bloomberg, Capital IQ
Long Stock Pitch and Valuation
Post 4Q Selloff
By taking a look at the numbers, it makes little sense why Lands End is trading at such a significant discount to peers and intrinsic
valuation until the qualitative factors are analyzed further. Its association with Sears Holding and having Edward Lambert still
influencing the company has provided a negative stigma to the company as investors see it difficult for Lands End to be profitable
if Sears were to fully dissolve. These facts still overshadow the fact that the company has great numbers and sales growth
opportunities that are outlined by its management team. It did make a mistake in its winter fashion trend. The recent selloff where
Lands End saw its stock tumble from the price range of around $55 to $35 by no means seems justified. The trigger of the selloff
was a performance announcement by management that its fourth quarter sales and margins (4Q usually represent around a third
of the companys annual revenues) would be down. Considering the drop in the pricing, it could be assumed that the adjustment to
sales targets was 36% (drop from $55 to $35) less than expected. However, realistically, its net merchandise sales and service
revenues were around 4% lower than its 4Q results in 2013. Its gross margins actually slightly improved from around 43.9% up
from 43.7%. Its net income fell 20 - 26% but this is mostly attributed towards new interest expense as the company understandably
needed to take out debt after it spun-off from Sears. In the 3Q of 2013, the company had no debt at the time. Since the company
was already trading at a discount due to the negative view of the new found debt, it is astonishing how analyst expectations did not
already take into account the interest expense.
With a forward P / E ratio of 14.5 x, Lands End is trading at more than a 50% discount to the mean of similar vertically
integrated brands and even more so compared to internet retail companies. At the moment, LE shares appear to be by no means
expensive; in fact, some would call it dirt cheap. For the majority of its time public since 2014, LE has traded fairly in line with its
comparables average daily multiple. With the recent selloff and Lands End and a spike in investor sentiment over some its peer
retail companies, it may be a very good opportunity to jump into Lands End before multiple expansion occurs. The market can
certainly be described as having overreacted to the performance update in the 4th quarter and will eventually correct itself in the
near future.
Company Overview
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Lands End Pitch (NASDAQ: LE)
4Q Selloff of Lands End Stock Means its Now a Cheap Buy
12Sources: Bloomberg
Long Stock Pitch and Valuation
Company Overview
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Lands End Pitch (NASDAQ: LE)
Overlooked Gross Margin Growth and Increasing Profitability
13Sources: Capital IQ
Long Stock Pitch and Valuation
In terms of its past 3 performance periods, revenue growth might not look the most attractive with a decline of 1.5% and then an
increase of 1.2%. Furthermore, there has been repetitive news excerpts describing Lands End recent store closures. However there
is always two sides to one argument. As a company going through a lot of restructuring following a spinoff from its parent company
in which it had been with for the past 12 years, it is doubtful that the company will immediately begin focusing on growth
opportunities and satisfying pessimistic investors. In reality, it has to restructure its company to meet a new set of objectives that has
been established by management. In fact, the upside to stagnant growth is that the company has begun to cut a large of their COGS
with a decrease by 3.3% followed by another decrease of 2.0%. This increase in profitability is a solid indicator that the company is it
good financial shape and could continue to increase its margins in the future.
52%
53%
54%
55%
56%
1,400
1,420
1,440
1,460
1,480
1,500
1,520
1,540
1,560
1,580
1,600
Feb 1 2013 Jan 31 2014 Oct 31 2014
Total Revenue COGS % Sales
Company Overview
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Lands End Pitch (NASDAQ: LE)
Change in CEO from Huber to Marchionni Reinventing Lands End Brand and Image
14Sources:
Long Stock Pitch and Valuation
The topic of historical stagnant growth leads well into the second point regarding the implementation of new CEO Federica
Marchionni who was with Italian luxury fashion designer powerhouse Dolce & Gabanna for most of the last 14 years in which she
was the president of the American division. As mentioned earlier, being part of Sears for such a long time has led to a damage of
Lands Ends brand image. The brand is set for a repositioning and Ma rchionni may be just the right person to lead the change (or
charge). The past CEO, Edgar Huber served his purpose in leading the company out of a mass restructuring change (leaving Sears)
and its good that Lands End has now decided to focus more so on improving its brand. It is also interesting to note that LE
received mixed customer reactions on its womens apparel particularly sweaters and knits indicating that some of LEs poor 4Q
results could be attributed to poor designs and trend alignment. Marchionni experience in working for high class brands such as
Ferrari, Samsung, Ericsson, and D&G will likely reinvigorate the brand and hopefully will have better judgment on fashion trends
such as sweaters or knits. Paula Rosenblum, an analyst working in Retail Systems Research described Marchionni as all about the
negotiations, she's all about opening channels, she's all about getting online being digitally astute. It's actually an interesting job for
her because if she can turn that brand around, it'll be a great story."
Edgar Huber Federica Marchionni
Business Insider, Journal Sentinel, Google Images, Huffington Post, Lands End Website
Company Overview
-
Lands End Pitch (NASDAQ: LE)
Segment Development and International Expansion
15Sources:
Long Stock Pitch and Valuation
In addition to managements plan in growing its Direct business segment through digital transformation and customization for each
of its consumers, LE is pursuing numerous growth strategies which management has outlined. The executive has acknowledged that
they neglected providing certain product offerings in the past and have expressed its interest in developing its footwear, handbags,
leather goods, and fashion accessory lines. In combination with Marchionnis influence, this will likely be beneficial in turning around
consumers perception of the brand to a classier image. They have also mentioned how they have experienced increasing productivity
in both its retail and Business Outfitter/School Uniform segments and that expanding on these parts of the company would be
likely. Its Business Outfitter division services tens of thousands of clients from major airlines to private schools across United States
and Canada. Finally, management has detailed how it is looking to take all of its operations on an international basis. Currently, it
operates in United States, Canada, Northern and Central Europe, and Japan. In addition to expanding its presence in these areas, it is
also looking to go to other areas of Europe (such as Switzerland, Russia, and Scandinavia) and Asia (particularly China). Its growth as
a trusted brand over the last 20 years and its capability to operate efficiently as a vertically integrated bran means it is well-positioned
to take its advantages and move abroad to pursue new growth opportunities.
Product Offerings Business Outfitter
10-K SEC Filing, Company Website
International Expansion
Company Overview
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Financial Overview | Lands End
Long Stock Pitch and Valuation
Lands End Pitch (NASDAQ: LE)
16
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Lands End Pitch (NASDAQ: LE)
$43.28
$44.26
$58.19
$41.15
$39.99
$32.79
$48.58
$47.70
$57.95
$56.65
$49.97
$65.13
$70.33
$50.48
$48.41
$37.59
$54.99
$48.87
$70.51
$57.86
$25 $35 $45 $55 $65 $75
DCF Multiples Method
DCF Gordon Growth Method
EV / Revenue 2015E (Overall)
EV / Revenue 2015E (Similar Metric)
EV / EBITDA 2015E (Overall)
EV / EBITDA 2015E (Similar Metrics)
P / E 2016E(Overall)
P / E 2016E(Similar Metrics)
P / E 2015E (Overall)
P / E 2015E (Similar Metrics)
Financial Overview
17Sources: Capital IQ, Craig - Hallum Equity Research Report
Long Stock Pitch and Valuation
Valuation Summary
Current Price:
35.46
Target Price:
49.42
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Lands End Pitch (NASDAQ: LE)
The first group of comparables were found using screening criteria that looked for apparel retail companies that had YoY growth of between -2% to 2% which is similar to Lands Ends 0.21% LTM growth. With Lands Ends EBIT margins ranging around 10%, companies with margins primarily between 5% and 15% were selected. To this comparables group, the industry group traded at a median 8.8 x LTM EV / EBITDA which was in line with Lands Ends multiples. However, considering Lands Ends previous trend of increasing margins, these multiples gave LE a higher implied valuation. Vertically integrated apparel brands were taken from recommended equity research reports and were companies that were similar more so in operations. However, there was a higher weighting in determination of target price on companies with similar metrics.
Financial Overview
18Sources: Capital IQ, Craig-Hallum Equity Research Report
Long Stock Pitch and Valuation
Public Company Comparables
($ in millions, except per share data)
( $ in mill ions, except rat ios) Market Enterprise EV / EBITDA FCF Dividend Price / Earnings EV / Revenue
Company Name Capitalization Value LTM FY1 FY2 Margin % Yield % LTM FY1 FY2 LTM FY1
Apparel Retail Companies with YoY Growth -2% to 2% and Similar EBIT Margins (Similar Metrics)
The Gap, Inc. $17,451 $17,877 6.8 x 7.0 x 6.7 x 7.1% 2.1% 14.6 x 14.7 x 13.6 x 1.1 x 1.1 x
Cabela's Incorporated 3,807 7,741 17.3 x 15.7 x 13.9 x - - 19.2 x 17.1 x 14.9 x 2.1 x 1.9 x
DSW Inc. 3,228 3,004 9.6 x 9.9 x 8.7 x 5.1% 2.0% 21.4 x 22.4 x 19.5 x 1.2 x 1.2 x
Chico's FAS Inc. 2,811 2,620 9.3 x 9.4 x 8.2 x 5.2% 1.6% 27.5 x 27.9 x 22.4 x 1.0 x 1.0 x
The Buckle, Inc. 2,399 2,191 7.6 x 7.6 x 7.4 x 13.1% 7.4% 14.7 x 14.7 x 14.3 x 1.9 x 1.9 x
ANN INC. 1,670 1,560 6.4 x 6.6 x 6.0 x 1.5% - 20.1 x 21.4 x 17.6 x 0.6 x 0.6 x
Brown Shoe Co. Inc. 1,281 1,456 8.8 x 8.1 x 7.5 x 0.5% 1.0% 18.7 x 17.4 x 15.0 x 0.6 x 0.6 x
Speedway Motorsports Inc. 968 1,272 8.9 x 9.1 x 8.8 x 12.8% 2.6% 23.2 x 24.8 x 21.6 x 2.6 x 2.6 x
Tilly's, Inc. 367 309 7.2 x 7.1 x 6.4 x 2.2% - 26.6 x 27.8 x 23.5 x 0.6 x 0.6 xWeyco Group Inc. (NasdaqGS:WEYS) 299.2 314.5 9.8 - - 0.027 0.027 17.5 16.74 14.47 1 1.02
Mean 9.1 x 8.9 x 8.1 x 5.9% 2.8% 20.7 x 20.9 x 18.0 x 1.3 x 1.3 x
Median 8.8 x 8.1 x 7.5 x 5.1% 2.1% 20.1 x 21.4 x 17.6 x 1.1 x 1.1 x
Vertically Integrated Apparel Brands
L Brands, Inc. $27,375 $31,613 13.8 x 13.5 x 12.4 x 10.1% 1.5% 28.9 x 27.5 x 24.4 x 2.8 x 2.8 x
Michael Kors Holdings Limited 14,277 13,327 9.7 x 9.5 x 8.4 x 9.4% - 18.9 x 16.5 x 14.8 x 3.2 x 3.0 x
PVH Corp. 8,605 11,997 9.9 x 10.0 x 9.8 x 8.6% 0.1% 17.0 x 14.3 x 13.2 x 1.5 x 1.5 x
Carter's, Inc. 4,395 4,847 12.1 x 11.6 x 10.3 x 2.1% 0.9% 24.8 x 21.4 x 18.3 x 1.7 x 1.7 x
Urban Outfitters Inc. 4,958 4,715 9.5 x 9.4 x 8.5 x 3.9% - 23.4 x 22.8 x 19.2 x 1.5 x 1.4 x
Kate Spade & Company 4,220 4,506 69.4 x 30.7 x 22.6 x 13.3% - - 106.9 x 55.9 x 3.1 x 4.0 x
Oxford Industries Inc. 903 1,045 8.7 x 8.6 x 7.7 x 4.5% 1.5% 18.2 x 18.8 x 16.5 x 1.1 x 1.1 x
Mean 19.0 x 13.3 x 11.4 x 7.4% 1.0% 21.9 x 32.6 x 23.2 x 2.1 x 2.2 x
Median 9.9 x 10.0 x 9.8 x 8.6% 1.2% 21.2 x 21.4 x 18.3 x 1.7 x 1.7 x
Lands' End, Inc. 1,102 1,509 8.8 x 9.3 x 9.5 x 11.9% - 12.8 x 14.5 x 16.0 x 1.0 x 1.0 x
Overall Mean 13.4 x 10.9 x 9.6 x 6.6% 2.1% 21.1 x 26.0 x 20.3 x 1.7 x 1.7 x
Overall Median 9.4 x 9.4 x 8.4 x 5.2% 1.6% 20.1 x 21.4 x 17.9 x 1.5 x 1.4 x
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Lands End Pitch (NASDAQ: LE)Financial Overview
19Sources: Capital IQ, Craig-Hallum Equity Research Report
Long Stock Pitch and Valuation
Discounted Cash Flow Analysis
($ in millions, except per share data)
Unlevered Free Cash Flow Calculation
Calendar Year Ending December 31, CAGR
2012A 2013P 2014P 2015E 2016E 2017E 2012-2014
Revenue: $1,585.9 $1,562.9 $1,581.2 1612.824 0 1645.0805 0 1677.9821 (0.1%)
Conservative Projections -2.0% $1,549.6 $1,518.6 $1,488.2
Base Projections 0.0% $1,581.2 $1,581.2 $1,581.2
Optimistic Projections 2.0% $1,612.8 $1,645.1 $1,678.0
EBIT $84.5 $126.7 $151.7 $177.4 $181.0 $184.6 34.0%
EBITDA $107.6 $148.3 $171.7 $199.0 $202.6 $206.2 26.3%
Unlevered Free Cash Flow $30.2 $73.8 $6.9 $130.5 $132.7 $134.9
EBITDA Multiples Method
WACC 6.1%
Exit Multiple 9.5 x
2017E EBITDA $206.2
Terminal Value $1,958.7
Total Enterprise Value $1,993.4
Debt 512.4
Cash 105.6
Total Equity Value $1,586.6
Diluted Shares Outstanding 32.0
Fair Value Per Share $49.58
Current Price 35.46
Implied Upside 40%
Perpetuity Growth Method
WACC 6.1%
Perpetuity Growth Rate 0.00%
2017E UFCF $134.9
Terminal Value $2,209.45
Total Enterprise Value $2,203.3
Debt 512.4
Cash 105.6
Total Equity Value $1,796.5
Diluted Shares Outstanding 32.0
Fair Value Per Share $56.14
Current Price 35.46
Implied Upside 58%$39 $43 $47 $51
Bull Case
Bear Base
Base Case
Multiples Method
$40 $50 $60 $70
Bull Case
Bear Base
Base Case
Growth Method
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Lands End Pitch (NASDAQ: LE)Financial Overview
20Sources: Capital IQ, Craig-Hallum Equity Research Report
Long Stock Pitch and Valuation
Sensitivity Analysis
DCF Analysis: EBITDA Multiple Method
Total Enterprise Value Total Equity Value
Terminal EBITDA Multiple Terminal EBITDA Multiple
11.5x 12.0x 12.5x 11.5x 12.0x 12.5x
Discount 6.0% $2,008.1 $2,085.8 $2,163.5 Discount 6.0% $1,601.3 $1,679.0 $1,756.7
Rate 6.5% 1,981.0 2,057.6 2,134.2 Rate 6.5% 1,574.2 1,650.8 1,727.4
(WACC) 7.0% 1,954.4 2,029.9 2,105.4 (WACC) 7.0% 1,547.6 1,623.1 1,698.6
Implied Perpetuity Growth Rate Total Price Per Share
Terminal EBITDA Multiple Terminal EBITDA Multiple
11.5x 12.0x 12.5x 11.5x 12.0x 12.5x
Discount 6.0% 1.90% 2.06% 2.21% Discount 6.0% $50.04 $52.47 $54.90
Rate 6.5% 2.38% 2.54% 2.70% Rate 6.5% 49.19 51.59 53.98
(WACC) 7.0% 2.86% 3.02% 3.18% (WACC) 7.0% 48.36 50.72 53.08
DCF Analysis: Perpetuity Growth Method
Total Enterprise Value Total Equity Value
Terminal Perpetuity Growth Rate Terminal Perpetuity Growth Rate
1.75% 2.25% 2.75% 1.75% 2.25% 2.75%
Discount 6.0% $1,943.4 $2,183.4 $2,497.5 Discount 6.0% $1,536.6 $1,776.6 $2,090.7
Rate 6.5% 1,738.0 1,925.5 2,163.3 Rate 6.5% 1,331.2 1,518.7 1,756.5
(WACC) 7.0% 1,571.8 1,722.1 1,907.9 (WACC) 7.0% 1,165.0 1,315.3 1,501.1
Implied Terminal EBITDA Multiple Total Price Per Share
Terminal Perpetuity Growth Rate Terminal Perpetuity Growth Rate
1.75% 2.25% 2.75% 1.75% 2.25% 2.75%
Discount 6.0% 12.5x 14.3x 16.6x Discount 6.0% $48.02 $55.52 $65.34
Rate 6.5% 11.2x 12.6x 14.4x Rate 6.5% 41.60 47.46 54.89
(WACC) 7.0% 10.2x 11.3x 12.7x (WACC) 7.0% 36.41 41.10 46.91
(1) Assumes net debt of $406.8mm as of 5/16/08.
(2) Assumes outstanding diluted shares of 32.000 million.
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Lands End Pitch (NASDAQ: LE)Financial Overview
21Sources: Capital IQ, Craig-Hallum Equity Research Report
Long Stock Pitch and Valuation
Recommendation:Buy Lands End at Market Price
39.4% Implied Return
-
Appendix
Long Stock Pitch and Valuation
Lands End Pitch (NASDAQ: LE)
22
-
Lands End Pitch (NASDAQ: LE)Appendix
23Sources: Capital IQ
Long Stock Pitch and Valuation
Historical Income Statement
Income Statement
For the Fiscal Period Ending 12 months
Feb-01-2002
12 months
Jan-28-2011
12 months
Jan-27-2012
12 months
Feb-01-2013
12 months
Jan-31-2014
LTM
12 months
Oct-31-2014
Currency USD USD USD USD USD USD
Revenue 1,569.1 1,655.6 1,725.6 1,585.9 1,562.9 1,581.2
Other Revenue - - - - - -
Total Revenue 1,569.1 1,655.6 1,725.6 1,585.9 1,562.9 1,581.2
Gross Profit 688.8 822.0 766.0 704.1 710.3 745.3
Selling General & Admin Exp. 575.7 615.5 621.0 596.4 561.9 573.6
R & D Exp. - - - - - -
Depreciation & Amort. - 22.0 22.7 23.1 21.6 20.0
Other Operating Expense/(Income) - 0.0 0.5 0.1 0.1 0.1
Other Operating Exp., Total 575.7 637.4 644.2 619.6 583.6 593.6
Operating Income 113.2 184.5 121.8 84.5 126.7 151.7
Interest Expense (1.4) - - - - (14.3)
Interest and Invest. Income 1.5 - - - - -
Net Interest Exp. 0.2 - - - - (14.3)
Currency Exchange Gains (Loss) (1.7) - - - - -
Other Non-Operating Inc. (Exp.) (3.7) 0.0 0.1 0.1 0.1 0.8
EBT Excl. Unusual Items 107.9 184.6 121.9 84.5 126.8 138.2
Restructuring Charges - - - (2.5) - -
Impairment of Goodwill - - - - - -
Legal Settlements - 9.1 - - 1.6 2.3
Other Unusual Items - - - - - -
EBT Incl. Unusual Items 107.9 193.6 121.9 82.1 128.4 140.5
Income Tax Expense 41.0 72.4 45.7 32.2 49.5 53.8
Earnings from Cont. Ops. 66.9 121.3 76.2 49.8 78.8 86.6
Earnings of Discontinued Ops. - - - - - -
Extraord. Item & Account. Change - - - - - -
Net Income to Company 66.9 121.3 76.2 49.8 78.8 86.6
Minority Int. in Earnings - - - - - -
Net Income 66.9 121.3 76.2 49.8 78.8 86.6
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Lands End Pitch (NASDAQ: LE)Appendix
24Sources: Capital IQ
Long Stock Pitch and Valuation
Historical Balance SheetBalance Sheet
Balance Sheet as of:
Feb-01-2002 Jan-28-2011 Jan-27-2012 Feb-01-2013 Jan-31-2014 Oct-31-2014
Currency USD USD USD USD USD USD
ASSETS
Cash And Equivalents 122.1 - 15.6 28.3 22.4 105.6
Total Cash & ST Investments 122.1 - 15.6 28.3 22.4 105.6
Accounts Receivable 13.3 - 33.1 27.1 33.6 39.5
Total Receivables 13.3 - 33.1 27.1 33.6 39.5
Inventory 227.2 - 395.6 378.5 369.9 403.9
Prepaid Exp. 24.1 - 28.4 7.4 6.4 40.4
Deferred Tax Assets, Curr. 15.9 - - - - -
Restricted Cash - - 3.4 3.3 3.3 3.3
Other Current Assets - - - 18.6 15.6 -
Total Current Assets 402.6 - 476.1 463.2 451.2 592.6
Gross Property, Plant & Equipment 344.2 - 238.0 250.9 258.8 -
Accumulated Depreciation (150.3) - (123.0) (141.2) (157.7) -
Net Property, Plant & Equipment 193.9 - 115.0 109.7 101.1 99.1
Goodwill - - 110.0 110.0 110.0 110.0
Other Intangibles - - 536.6 534.0 531.3 529.4
Other Long-Term Assets 2.7 - 1.2 0.8 0.6 22.9
Total Assets 599.1 - 1,238.9 1,217.7 1,194.3 1,354.0
LIABILITIES
Accounts Payable 83.4 - 105.8 106.7 115.4 157.7
Accrued Exp. 51.7 - 15.4 13.4 13.8 -
Short-term Borrowings 16.2 - - - - -
Curr. Port. of LT Debt - - - - - 5.2
Curr. Income Taxes Payable 25.0 - - - - -
Unearned Revenue, Current - - 38.3 40.5 44.8 -
Def. Tax Liability, Curr. - - 0.3 7.3 4.0 2.9
Other Current Liabilities 9.4 - 30.3 25.8 25.4 116.8
Total Current Liabilities 185.6 - 190.1 193.7 203.4 282.4
Long-Term Debt - - - - - 507.3
Pension & Other Post-Retire. Benefits - - 1.8 - - -
Def. Tax Liability, Non-Curr. 12.8 - 201.5 196.6 195.5 172.9
Other Non-Current Liabilities - - 1.6 4.2 3.1 17.4
Total Liabilities 198.4 - 395.1 394.5 402.0 980.1
Common Stock 0.4 - 845.4 826.4 794.3 0.3
Additional Paid In Capital 48.0 - - - - 342.1
Retained Earnings 556.0 - - - - 35.8
Treasury Stock (206.9) - - - - -
Comprehensive Inc. and Other 3.3 - (1.5) (3.2) (2.0) (4.3)
Total Common Equity 400.7 - 843.8 823.2 792.3 373.9
Total Equity 400.7 - 843.8 823.2 792.3 373.9
Total Liabilities And Equity 599.1 - 1,238.9 1,217.7 1,194.3 1,354.0
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Lands End Pitch (NASDAQ: LE)Appendix
25Sources: Capital IQ
Long Stock Pitch and Valuation
Historical Cash Flow StatementCash Flow
For the Fiscal Period Ending 12 months
Feb-01-2002
12 months
Jan-28-2011
12 months
Jan-27-2012
12 months
Feb-01-2013
12 months
Jan-31-2014
LTM
12 months
Oct-31-2014
Currency USD USD USD USD USD USD
Net Income 66.9 121.3 76.2 49.8 78.8 86.6
Depreciation & Amort. 26.9 19.3 20.1 20.5 19.0 17.3
Amort. of Goodwill and Intangibles - 2.6 2.6 2.6 2.6 2.6
Depreciation & Amort., Total 26.9 22.0 22.7 23.1 21.6 20.0
Other Amortization - - - - - 1.1
(Gain) Loss From Sale Of Assets 2.4 0.0 0.5 0.1 0.1 0.1
Stock-Based Compensation 0.1 - - - - 2.0
Tax Benefit from Stock Options 7.7 - - - - -
Other Operating Activities (8.8) 3.5 (1.3) 3.1 (5.0) (0.6)
Change in Acc. Receivable 6.5 - - - - -
Change In Inventories (39.0) 17.3 (72.1) 14.7 10.0 58.7
Change in Acc. Payable (12.8) 0.1 (11.0) 1.4 9.1 24.1
Change in Inc. Taxes 11.7 - - - - -
Change in Other Net Operating Assets 11.9 (21.3) (0.6) 4.0 0.2 19.5
Cash from Ops. 73.5 142.8 14.5 96.2 114.9 211.4
Capital Expenditure (40.5) (19.0) (15.1) (15.0) (9.9) (17.4)
Sale of Property, Plant, and Equipment - - - 0.0 0.0 0.0
Other Investing Activities - (0.1) 0.1 0.1 - -
Cash from Investing (40.5) (19.1) (15.0) (14.9) (9.9) (17.4)
Short Term Debt Issued - - - - - -
Long-Term Debt Issued - - - - - -
Total Debt Issued - - - - - 515.0
Short Term Debt Repaid (0.8) - - - - -
Long-Term Debt Repaid - - - - - -
Total Debt Repaid (0.8) - - - - (2.6)
Issuance of Common Stock 26.9 - - - - 6.0
Repurchase of Common Stock (12.4) - - - - -
Common Dividends Paid - (117.3) (5.3) (68.8) (110.9) (110.9)
Total Dividends Paid - (117.3) (5.3) (68.8) (110.9) (110.9)
Special Dividend Paid - - - - - -
Other Financing Activities - - - - - (511.4)
Cash from Financing 13.7 (117.3) (5.3) (68.8) (110.9) (103.9)
Foreign Exchange Rate Adj. - (0.4) 0.4 0.1 0.0 (0.9)
Net Change in Cash 46.7 6.0 (5.4) 12.6 (5.8) 89.2