L.L. Bean’s sales in the fiscal year ended in February fell 6.6% to approximately $1.4 million from $1.5 million. President and CEO Chris McCormick told employees, according to a company statement, that strong sales in January and February helped the company beat its profitability goals, and 5,000 employees are eligible for a 3% cash bonus.
“A few months ago the prospect of paying a bonus seemed remote, and we feel very fortunate to be in this position today,” wrote McCormick. “While we face many challenges ahead as the economy continues its slow recovery, we are optimistic about the future.”
McCormick said L.L. Bean finished Spring down 2% from budget, but the company was encouraged to see strength return to the business in September and enjoyed a record-setting October.
“We revised the holiday forecast in accord with this early Fall strength, only to see sales trend downward again in November and December – two of our most critical months of the year,” said McCormick. “Peak was disappointing, as consumers were lured by deep discounting in the retail industry. Given our conservative inventory position, we chose to be more selective in our promotions and did not sacrifice margins for volume. Our strategy paid off, as 2010 began with customers returning to L.L. Bean in search of value and quality, resulting in our best January and February in years. Strong full-price sales enabled us to regain a good amount of the ground wed lost in November and December.”
Looking to 2010, 2010 will be a “rebuilding and reinvesting year” for L.L. Bean. The company will invest in building its online presence, expanding the number of stores in China from 30 to 80 and attracting younger customers through its Signature brand, which launches on Monday, he said.
“The prolonged recession has altered the retail industry and consumer buying habits, most likely for the long term,” said McCormick. “We need to adapt to strengthen our business model and enhance our ability to gain market share. Some of these investments are already underway – Web channel growth, continued expansion in China, growing the customer file, and attracting younger customers to the Bean brand.”
He also noted that the L.L.Bean Signature line will launch in March.
Among the highlights of the year was that Internet sales surpassed catalog orders for the first time. Considerable upgrades were made to the Web to support this transition and make for a more positive shopping experience, McCormick said.
The company also opened its Dedham retail store, a stand-alone Home Store on the Freeport campus, a new Kids department in the Freeport flagship store, a new Data Center, and 41 stores in China. Freeport Village Station, including a new L.L.Bean Outlet, opened in May, one of the very few outdoor lifestyle malls to open in the country in 2009.
In addition, McCormick noted that L.L. Bean was named Top Retailer in Service by the National Retail Federation for the third consecutive year, and that L.L. Bean was named number one in customer service – across all service industries – by Bloomberg’s BusinessWeek. “Our customer service strength, the cornerstone of our business, remains alive and well even through these tough economic times,” McCormick said.
L.L. Bean saw a 7.8% drop in sales in 2008 as the economy stumbled, and it began 2009 by planning conservatively with inventory, cutting expenses and avoiding deep discounts. The company also reduced its work force by offering early retirement packages and laying off 100 workers.
