Lands' End: A Victim Of Sears' Serial Retail Abuse

In 2002, Lands' End , then a successful and profitable direct to consumer catalog and nascent internet retailer, was purchased by Sears Roebuck & Co. for the princely sum of almost $2 billion. That’s when Lands' End first became a battered and abused retailer, and that abuse hasn’t let up. Federica Marchionni, who exited as CEO of Lands' End's on Monday, follows a long line of hapless leaders appointed by Sears Holdings  who have failed to manage this brand.

Alan Lacy, Sears’ then CEO, overpaid for the business, having been led to believe that another bidder for the company was waiting in the wings. The reality was that the sole other Lands' End bidder had long ago dropped out. But the real crime Lacy & Co. committed wasn’t overpaying for Lands' End, it was acquiring a business that they had no earthly idea what to do with. Their strategy to merely pile Lands' End merchandise, assorted and regularly priced for catalog selling, into hundreds of Sears Roebuck’s promotionally driven brick and mortar stores, was an abject failure. Catalog assortments, in and of themselves, don’t work well in physical stores. They never have. They are typically far too narrowly defined, basic, and color roll driven. They also are not prepped and packaged to be sold in a physical store. And no one then had even remotely figured out how to protect Lands' End’s core business from the brand dilution it faced when it became associated with Sears.

But then Lacy & Co. were merely exhibiting the overarching incompetence that led them, among a whole host of other transgressions, to train wreck Sears itself, culminating in the catastrophic agreement to merge with Eddie Lampert’s newly acquired Kmart.  (Disclosure: I am a former Sears executive, having served as CMO and president of softlines, and chairman and CEO of Sears Canada, before Lampert took control of the company.)

Lands' End’s travails were unfortunately just beginning under the serial asset stripper Lampert’s reign. Like Sears and Kmart, investment in human and cash capital at Lands' End were not part of Lampert’s operating plan. The brand, also like Sears and Kmart, has exhibited consistent decline in performance , albeit, with brief periods of alleged success driven solely by cost cutting and asset sales.

And then, in 2013, Lands' End was spun off from Sears Holdings as an IPO. Rescue or ruin you may ask? Unfortunately, the company, which did re-acquire its own stock symbol, did not acquire a new owner. Lampert, personally, now Lands' End’s principal shareholder, once again saw no reason to install anyone with any reasonable experience or authority to run the company. And so the abuse went on. This time at the hands of a European luxury brand executive who incomprehensibly attempted to do what Ron Johnson tried to do at JC Penney , notably, wandering away from the brand's legacy customer. We all know how well that turned out.

You don’t convert a mid-priced moderately styled and conservative heartland brand into a European inspired fashion house. You don’t inject the fashion attitude of Bruce Weber and the social conscience of Gloria Steinem into a mainstream brand like Lands' End without running a real risk of brand abuse. And brand abuse is what once again has occurred. All this while the company’s new CEO, along with a cadre of fashionistas, led this Dodgeville, Wisconsin-based organization, from an ivory tower in New York City. The continuing decline in the company’s performance speaks for itself.

So Federica Marchionni, is out and the celebration that no doubt has been taking place at L.L. Bean and other Lands' End competitors continues. It’s not that L.L. Bean holds any enthusiasm for another retailer’s failures.  Rather, they continue to have a roadmap for their own ongoing success. Will Lands' End’s travails as an abused brand continue? Unfortunately for the company, there doesn’t appear to be any end in sight.