Lands’ End, Inc.

Lands’ End, Inc.

1 Lands’ End Lane
Dodgeville, Wisconsin 53595
U.S.A.
(608) 935-9341
Fax: (608) 935-4260

Public Company
Incorporated: 1963 as Lands’ End Yacht Stores
Employees: 6,500
Sales: $734 million
Stock Exchanges: New York
SICs: 5961 Catalog & Mail-Order Houses

Lands’ End, Inc. sells traditionally styled, casual clothing through its catalogue, which is known for its folksy, chatty style. The company’s emphasis on quality merchandise and customer service has made it a leader in the mail-order marketing field. Based in rural Wisconsin, Lands’ End has grown steadily since its inception as a seller of sailing equipment for racing boats.

Lands’ End got its start in 1963 when Gary Comer, a successful advertising copywriter with Young & Rubicam who had long pursued a love of sailing in his spare time, decided to pursue his long-standing dream of opening his own business. Comer quit his job of ten years, and, with $30,000 in initial funds, started a company that made sails and sold other marine hardware. The company set up shop in a storefront at 2317 North Elston Avenue, along the Chicago River in the city’s old tannery district.

In 1964, Comer produced a catalogue offering Lands’ End’s goods through the mail. The first booklet, entitled “The Racing Sailors’ Equipment Guide,” was black and white, had 84 pages, and featured a variety of technical-looking sailing implements on its cover. In a printer’s error, the company’s name was rendered “Lands’ End,” with the apostrophe in the wrong place, in the catalogue. Since Comer couldn’t afford to have the piece re-printed, he decided to simply change the name of the business to correspond with the brochure. Lands’ End began filling orders from its basement. The company shipped out orders the day they were received, and unconditionally guaranteed all that it sold.

In a subsequent catalogue, Comer put his copy-writing skills to work in an innovative, customer-friendly format. The text in the Lands’ End publications, rather than being dry, technical, and brief, had a casual, engaging, informative, and sympathetic air to it. Customers were put at ease reading it and came to feel that they had developed a personal relationship with the company that had produced the catalogue and the items that filled it. Comer is credited with originating the concept of the “magalogue,” in which pictured items for sale are surrounded and cushioned by appealing text and illustrations.

Lands’ End’s customers began to look to the company for more than just technical sailing gear, and many felt comfortable writing to the company to ask about purchasing foul weather gear and duffel bags. In response, Lands’ End added a small clothing section to the catalogue, featuring rainsuits, canvas luggage, shoes, sweaters, and some other clothing. The catalogue’s name was accordingly altered to, simply, the “Lands’ End Catalogue.” Items sold in the clothing portion of the catalogue soon became the company’s most profitable offerings.

Throughout the 1960s, Lands’ End continued to sell sailing equipment and related items through its catalogue. In 1970, Lands’ End’s mail order business had grown large enough to merit computerization of its inventory and sales operations. Lands’ End made its first foray into the world of manufacturing something other than sailing equipment in 1973, when the company began to make its own duffle bags. The next year, Lands’ End also began to market its own brand of rainsuit, a two-piece outfit worn by sailors in foul weather. In 1975, the company came out with its first all-color catalogue, which featured 30 pages of sailing equipment and 2 full pages of clothing. By the following year, the company had decided to shift its emphasis to the sale of clothing and canvas luggage, and the quotient of non-nautical equipment had risen to include 8 pages displaying duffel bags, and three pages of clothing, including a men’s chamois-cloth shirt.

In the spring of 1977, Lands’ End issued its first catalogue that paid serious attention to clothing, with 13 out of 40 pages dedicated to dry goods. In addition, Lands’ End introduced its own line of soft luggage, called Square Rigger. Following these innovations, sales for the year reached $3.6 million. After 1977, Lands’ End phased out the sailing equipment aspect of its operation altogether, retaining the rugged, reliable, and traditional nature that sailing implied, and applying it to a broader variety of clothing. In 1978, the company introduced its first button-down Oxford-cloth shirt, heralding the move to offerings of solid, conservative, basic clothing upon which it would build its future.

Lands’ End also began to shift its operations from its Chicago base to a small town in rural Wisconsin called Dodgeville. Comer chose this location for his growing enterprise because, as he noted in a piece of promotional literature, “I fell in love with the gently rolling hills and woods and cornfields and being able to see the changing seasons.” In addition to the intangible spiritual benefits of life on the land, the move enabled Lands’ End to ultimately locate the bulk of its operations in the middle of a cornfield in rural Wisconsin, an area in which costs were extremely low. The company began this shift when it moved its Chicago warehouse to an empty garage in Dodgeville in 1978.

Lands’ End’s operations were also shifting in another significant way during this time, as the company moved from filling orders by mail to filling orders by phone. Lands’ End had brought its first toll-free 800-number on line, and operators were standing by to take customer calls by the middle of 1978. With this shift, Lands’ End incorporated another point of contact with the customer into its operation, and the company stressed politeness and customer service in its operators, a continuation of the message it strove to portray in its catalogue. Calls were answered within a ring and a half, and operators were permitted to chat with customers for as long as it took to make a sale.

Lands’ End further transferred operations to Dodgeville in 1979, when it opened an office in a pre-existing strip mall, while it broke ground for an office building and an accompanying 33,000-square-foot warehouse in a Dodgeville industrial park. In the following year, the company moved into its new space on “Lands’ End Lane.” By this time, the clothing section of its catalogue had grown further, and Lands’ End’s 800-number service had been expanded to accommodate customers 24 hours a day. Interested in gaining more control over the quality of the clothes it sold, the company began to recruit employees who were knowledgeable about fabric and the manufacture of clothing.

In addition to its new facilities in Dodgeville, Lands’ End also opened an outlet store in Chicago, just one block from its original location, to sell the goods that made up excess inventory if catalogue sales of a particular item were not as brisk as expected. Further physical expansion took place the following year, in 1981, when Lands’ End began work on a 40,000-square-foot addition to its warehouse in Wisconsin. The company also broke ground on a plant to manufacture its own line of soft luggage in West Union, Iowa.

To further support its burgeoning sales and reputation, Lands’ End embarked on a national advertising campaign in 1981. The purpose of this effort was to make customers aware of the Lands’ End business philosophy, and associate its name with service, value, and quality. The company used the expression “direct merchant” to describe its relationship, as a manufacturer and distributor, with the customer.

In the next year, Lands’ End followed up this effort with a significant investment in computerization, as the company introduced on-line customer sales and ordering to speed up processes. Efficient use of computers was a keystone of Lands’ End’s program for success, and soon computer systems enabled operators to provide customers with a wealth of information at the touch of a finger.

In addition, Lands’ End continued to expand its warehouse facilities as it started construction on an additional 126,000-square-foot warehouse across the street from its original Dodgeville facilities. Moving into this facility in 1983 required the unloading of 8,000 boxes of goods so that the company’s new automated sorting system could be made operational. By this time, a nationwide boom in mail-order shopping was beginning to take off, and Lands’ End saw its sales and earnings start to grow.

In an effort to exploit Americans’ increasing willingness to shop by phone using their credit cards, Lands’ End introduced a line of fancier clothing for men and women in 1983, under the name Charter Club. Instead of cotton and wool, these products were manufactured from Italian silks and other luxury fabrics. This line soon had its own catalogue of offerings.

In 1984, Lands’ End passed another landmark on the way to becoming a full-fledged manufacturer when its logo was registered as a U.S. trademark. By the following year, demand for Lands’ End goods had increased to the point where the company was able to begin issuing monthly as opposed to seasonal catalogues. In addition, Lands’ End broke ground on yet another warehouse addition.

In 1986, Lands’ End discontinued its Charter Club line of dressier clothing, despite the fact that it was profitable, in an effort to maintain the company’s culture and focus on solid, traditional, no-nonsense clothes. “When they started shooting photographs of models in London, I said, ‘That’s it, enough,’” Comer later told Fortune. His conception of the company was more straightforward, he explained. “I picked things that I liked, and over the years people interested in the same sorts of things gathered around,” he said, explaining Lands’ End’s growth.

By 1986, growth had brought Lands’ End profits of more than $14 million on sales topping $200 million. At that point, after several years of phenomenal advances, the company sold stock to the public for the first time, offering 1.4 million shares at $30 a piece. In the following year, shares of Lands’ End began to be traded on the New York Stock Exchange, as the company racked up earnings of about $15 million.

Also in 1987, in response to customer requests, Lands’ End introduced a line of children’s clothing. Within a year it had yielded sales of almost $15 million. By 1988, Lands’ End had built up a loyal core of catalogue shoppers. The company shipped nine million booklets a month, full of homey straight talk about classic casual clothing, for a total of 80 million pieces mailed a year. To take the orders generated by this promotional literature, Lands’ End also spent heavily on technology to improve its customer service, adding new sorting, packaging, and sewing equipment (for alterations). In addition, the company broke ground on an additional phone center in a town about 30 miles from Dodgeville, Cross Plains, Wisconsin. With this facility, Lands’ End planned to add 100 new employees to its payroll.

At the end of the year, the company also opened a small retail outlet in Dodgeville to sell its clothes. Although Lands’ End had no intention of branching out from the mail order business into conventional retail, the company had discovered that people felt so at home with the places and people depicted in the Lands’ End catalogue that they frequently got in their cars and drove to Dodgeville on vacation to see the place for themselves. After customers began wandering into Lands’ End’s corporate offices looking to buy turtlenecks and sweatshirts, the company opened a small store to serve them.

After a blockbuster year in 1988, Lands’ End’s revenues had nearly doubled in the time since its first stock offering, rising to $456 million for the fiscal year ending in January, 1989. Two months later, however, the company was forced to announce its sharpest drop in earnings ever. Although sales had continued to grow, costs had grown at a much steeper rate. Confident that sales would continue strongly after 1988, the company had amassed a large inventory of merchandise. When sales slowed, it was forced to send out a large number of additional catalogues in an attempt to win new customers. This campaign proved to be extremely costly, adding about $2 million to the company’s promotional budget. This cost promised to rise further as the post office implemented a 17 percent hike in third class mailing rates.

In addition, Lands’ End found itself hurt by the stodgy reputation of its merchandise, as competition in the catalogue sales field heated up. In particular, the company lost ground to Eddie Bauer, a marketer of rugged outdoor gear. Lands’ End needed to update and freshen its offerings without alienating old customers who appreciated the company’s solid, traditional goods.

Lands’ End’s outdated offerings continued to damage its profitability throughout the start of 1990, and the company posted a two-thirds drop in profits in the first quarter of that year. Concerned that Lands’ End and its rival L.L. Bean might have grown so large that they had glutted the market for their type of merchandise, industry watchers predicted further declines at the company. In response to its falling profits, Lands’ End began to increase the amount of new merchandise that it offered in its catalogue. Whereas the previous two years’ catalogues had featured first eight and then 11.5 percent new items, 1990 issues had 15 percent and 18 percent new products. Among the additions were sunglasses, children’s swimsuits, and clothing and bedding for infants.

In May, the company began to market “Mom Packs,” combinations of merchandise packed together to be presented as Mother’s Day gifts. In addition, Lands’ End introduced three new specialty catalogues: Buttondowns and Beyond, which featured tailored clothing for men; Coming Home with Lands’ End, with products for the bed and bath; and in August, 1990, a separate catalogue just for children called Kids.

In the following year, Lands’ End began its first attempt to expand its market beyond the borders of the United States. In typical company style, Lands’ End invited its customers to participate in this new push by asking them to send in the names of their relatives who lived overseas. Then, Lands’ End began to mail a catalogue to possible customers in the United Kingdom.

By March, 1992, the company’s efforts to improve profitability had started to pay off, as Lands’ End reported a one-third rise in profits for the quarter. Overall, earnings over the last year had nearly doubled, to reach $28.7 million. Building on this strength, the company continued its physical expansion, opening a third phone center in Reedsburg, Wisconsin, which brought to 1,000 the number of operators Lands’ End employed. In addition, Land’s End launched a print advertising campaign, in addition to the promotional materials contained in its catalogue. At the end of 1992, the company reported continued financial strength, earning profits of $33.5 million. The company continued its move into foreign markets, opening a phone center and distribution facility in the United Kingdom in the fall of 1993. With its strong reputation for quality and its steady course of business growth, Lands’ End appeared to be charted for further smooth sailing in calm seas.

Principle Subsidiaries: Lands’ End (United Kingdom); The Territory Ahead.

Further Reading

Berg, Eric N., “Standout in the Land of Catalogues,” New York Times, December 8, 1988.

Bremner, Brian, “Lands’ End Looks a Bit Frayed at the Edges,” Business Week, March 19, 1990.

Caminiti, Susan, “A Mail-Order Romance: Lands’ End Courts Unseen Customers,” Fortune, March 13, 1989.

Schwadel, Francine, “Lands’ End Stumbles as Fashion Shifts Away from Retailer’s Traditional Fare,” Wall Street Journal, April 27, 1990.

—Elizabeth Rourke