Lands’ End feels climate change in its bottom line

“Unless a tree has borne blossoms in spring, you will vainly look for fruit on it in autumn.”

-Walter Scott

Soaring autumn temps have helped profits fall for Dodgeville-based apparel company Lands’ End, according to its third-quarter report.

Lands’ End and its parent company, Sears Holdings Corporation, which also owns the Kmart stores, experienced losses double those of the previous three-month period. The report, issued Thursday, cited “unusually warm weather” as a contributing factor to declines in sales of seasonal apparel at both Sears and Lands’ End.

In January of this year, Lands’ End laid off 30 employees from its Dodgeville headquarters. Thirty more were let go from the company’s overseas facilities.

Retail strategist Michael Dart of Kurt Salmon Associates was quoted in a WISNEWS.com article about the recent report, saying, “They have to do something to stem this… you do get to a tipping point.”

The man sounds like a climate scientist. Tipping point, indeed:

  • The National Oceanic and Atmospheric Administration reports that the planet has just come through the warmest decade, the warmest 12 months, the warmest six months, and the warmest April, May, and June on record.
  • Canadian researchers have shown that warmer seawater has reduced phytoplankton, the base of the marine food chain, by 40 percent since 1950.
  • Nine countries have so far set all-time temperature records in 2010, including Russia (111 degrees), Niger (118), Sudan (121), Saudi Arabia and Iraq (126 apiece), and Pakistan, which also set the new all-time Asia record in May: 129 degrees.

Add all this to the news at the beginning of this year that the decade we just came through was the warmest on record and it’s enough to make you want to park your parka — permanently. Or at least not buy a new one until you’re sure you are going to need it more than a couple days of every year. And that’s just what many people have done, according to Lands’ End and Sears.

Thickening up this stew of irony: the day before its parent company released the news that its losses have snowballed, Lands’ End put out a press release saying it was sending three lucky customers and their friends to Canada this winter. It’s all part of the company’s Real Adventure Winter Getaway Contest in which customers are invited to submit essays about the Lands’ End outerwear they would bring along on one of three winter trips to the Canadian north. Perhaps the company realizes that real winter adventures are becoming harder to come by in Wisconsin — and the U.S. — thanks to global warming. The Birkebeiner, the storied cross-country ski race that runs between Hayward and Cable, Wisconsin and draws competitors from all over the world, has been cancelled or shortened 3 times in the last 10 years due to warm or wet weather.

It’s not like Lands’ End and Sears don’t care about the environment. Both companies have taken significant steps to green their operations in recent years. Sears came in second among companies competing in the Environmental Protection Agency’s National Building Competition this year and received an ENERGY STAR rating of 83 (anything above 75 gets you recognized). In 2009 the company was the ENERGY STAR program’s Retailer of the Year.

The sustainability accomplishments and initiatives listed on the Lands’ End Web site are extensive and include reducing its catalog paper consumption by 50 percent between 2004 and 2008, increasing the amount of recycled and sustainably harvested fiber in their paper and packaging materials, placing community gardens on company property, and engineering paperless work stations at its call centers. The company claims over 1500 employees took action against global warming by participating in Earth Hour on March 28 of last year.

But the efforts of both companies seem like little more than window dressing compared with those of fellow retailer Kohl’s Department Stores, which has installed renewable energy systems at many of its stores and distribution centers around the country. In 2009 Kohl’s announced its intention to become the first retail chain to become carbon neutral by the end of this year. The Menominee Falls-based company is a true climate leader. That the company’s profits grew 16 percent in the nine-month period ending October 30 cannot be unrelated to its commitment to sustainability.

I hope this latest negative financial report from Sears and Lands’ End will underscore for executives at both companies the extent to which global warming can (and increasingly will) affect profitability, and that it will spur them to make a more thorough review of the environmental consequences of all operations and products, and take steps to greatly reduce those consequences. This should also be a wake-up call for business leaders around the country. Because the real bottom line is this: if we don’t change the way we do business — especially how we use energy to manufacture and distribute products — global warming and the economic disruption it will cause will ensure that we do very little business at all.

Photo by Rick Chamberlin

4 Comments

4 Comments

  1. It seems like this is yet another argument that protecting the environment and stopping (to the extent possible) global warming will spur job growth. It’s clear that doing the nothing we are right now is costing us jobs in economic times during which we can ill afford to lose any more jobs. Not to be overly political about it, but it’s too bad Wisconsin’s new senator gets all his news from television; this is a post that’s worth his breaking that tradition.

  2. Thank you for the compliment, Sarah. I think following the example of Kohl’s could spur job growth for companies like Lands End, but perhaps not within those companies, at least not initially. Investing in renewable energy systems and other kinds of energy conservation would create jobs in those industries, to be sure (and in the communities where Sears and Lands’ End operate, which would help those communities, which in turn could give LE and Sears a larger, more stable and secure workforce). It might also give stores like LE an edge over the competition, you know, to talk up how much they care, etc, etc. And of course companies like LE would see long-term savings from the energy they save.

    What might really drive things on the revenue side is doing things like: giving mail-order customers an estimate of how much greenhouse gas would be emitted using the various shipping methods they can choose from, and/or publishing information about how big an environmental impact (a simple 1-10 scale would be sufficient, but it would be best if an independent organization rated products for all retailers) the products themselves had in their manufacture and transportation to the company’s distribution center. A customer might be more inclined to choose the Canadian made, V-neck sweater knit from domestic wool over the one made from New Zealand wool in Cambodia, even though the domestic one cost a few dollars extra, because the customer liked the fact that the carbon footprint was a fraction of what the other sweater’s was. And I think many customers would be glad to be given the choice. Even Kohl’s hasn’t gone this far.

  3. True, Lands’ End could benefit by “making a more thorough review of the environmental consequences of all their operations and products.” And these guys are no dummies; virtually no part of their business escapes scrutiny and micro-analysis. But unless they change some basic business assumptions and practices, they can’t avoid being a blight on the planet.

    First, they deal in fabric, most of which is cotton. Approximately 25% of all pesticides in the world are applied to cotton. (More scary statistics here: http://www.ecochoices.com/1/cotton_statistics.html.) So the raw materials of their products have a big negative impact on the environment.

    Second, like most large companies, they are committed to constant growth. This means finding new customers for their products, creating new products, or selling more products to their existing customers. One of my assignments, when I worked there (1992-2002) was to fly to New York to interview and photograph a customer who owned 33 Lands’ End turtlenecks, one in each available color. She was featured in the catalog as a sort of “hero of the people.”

    Overconsumption is encouraged in several ways. Lands’ End knows from experience that the more often customers receive a catalog, the more they will buy, even though many customers complain about the waste of resources. During my tenure, most customers received 12 catalogs a year, not counting specialty catalogs targeted toward men only, women only, kids only, and home furnishings. The challenge was to make each catalog seem new, with “new” products, new colors, new features. Much of this newness was created with little relation to perceived need, but simply to spur sales. Last year’s swimsuit or parka might be perfectly functional, but it didn’t have the improved zipper, the new colors, or the decorative stitching, so it had to be replaced.

    Celebrating a new season was a standard way to make a catalog seem new: “New spring fashions! Cool out in these breezy summer duds! Etc. Christmas was good for two successive catalogs. Swimsuits carried one spring edition. And winter outerwear was an annual feature of the October catalog (mailed in mid to late September). Winter duds, more than any other category, depend on appropriate weather to appeal to customers.

    Even ten year ago, Lands’ End merchants were struggling with warmer autumns coming up against cold-weather sales pitches. Customers, trained by the fast response of the internet, were beginning to buy “closer to need,” instead of purchasing weeks or months ahead of anticipated use. If it wasn’t cold outside, people weren’t ordering the down vests. Lands’ End’s website can adjust somewhat for the vagaries of weather, but it also tries to coordinate its promotions with the catalog.

    When “seasonal” weather waits too long to arrive, a warehouse full of goods goes unsold. And they can’t simply be tucked away and trotted out next year, because “new and improved” versions” are already in the making. The industry has moved on.

    If customers saw clothing as utility rather than fashion items, and if they bought what they needed rather than what they have been trained to desire, then Lands’ End could develop a more static line of high quality functional clothing, and send out maybe four catalogs a year. Think of the savings in pesticides, cotton, catalog paper, printing and postage, designers’ and developers’ salaries, fuel and tires for delivery trucks, on and on.

    But that’s not Lands’ End’s business model. Yet.

  4. Your points, especially the ones about the commitment to constant growth (as Edward Abbey famously said, it’s the ideology of the cancer cell) and planned obsolecence (sp?) are well expressed and well taken, John.

    I was surprised to learn that LE merchants have been struggling with the impact of warmer autumns on their sales for a decade. Then again, 1998 was the warmest year on record worldwide (this year is on track to beat it, as you probably know).

    Although I don’t necessarily think it’s a healthy thing to fan the flames of competition between countries (or companies), this clip of outgoing Republican Representative Bob Inglis warning his fellow Republicans recently about the economic consequences of climate change — and the moral obligation we have to listen to the overwhelming number of “doctors” — is the kind of thing our corporate (and congressional) leaders need to hear from their own: http://green.blogs.nytimes.com/2010/11/19/a-warning-about-climate-change-from-a-departing-republican/