Benefits Include Domestic & International Market Deployments, Improved Inventory Utilization, and Profit Margin Contributions; Company’s Fiscal Third Quarter to Relfect Impact of New IT/ERP System Installation
Lakeland Industries, Inc. (LAKE) (the “Company” or “Lakeland”), a leading global manufacturer of protective clothing for industry, healthcare and to first responders on the federal, state and local levels, today announced its comprehensive e-commerce strategy with the implementation of sales and distribution on Amazon.com (AMZN).
“Amazon.com represents an essential component to our long-term revenue growth strategy,” stated Christopher J. Ryan, President and Chief Executive Officer of Lakeland Industries. ”Our e-commerce strategy utilizes Amazon.com as the cornerstone of our cloud-based platform for online distribution. While we are presently experimenting to determine the ideal product mix, our efforts thus far confirm that this strategy serves as an ideal complement to our longstanding practices of sales and marketing on a business-to-business basis and through third-party distributors. We are in effect leveraging alternative distribution channels, principally with Amazon, for retail and small business customer sales.
“We believe our e-commerce strategy and Amazon distribution platform enables expansion into new and existing territories while improving the quality of our earnings to deliver sustainable long-term improvements in financial performance. Our e-commerce sales which have been smaller quantity orders are being pulled from our traditional product lines where we can gain leverage in inventory management. These efforts contribute to diversifying our revenue streams, penetrating and generating increased market share and presence in our core operating regions around the world, and capitalizing on our resources for improvements in long-term operational performance.”
As previously disclosed, Lakeland began distributing a limited set of products earlier this year on Amazon.com in the United States. This followed investments made by the Company last year for development of fulfillment capabilities for same day/next day delivery in connection with Amazon. The Company has made additional information technology investments to accommodate its e-commerce strategy as part of a complete global management information, enterprise resource planning and inventory system installation that began in 2017 and recently commenced.
The Company’s global IT infrastructure implementation uses the SAGE X3 platform to aid in the digital evolution of Lakeland by leveraging cloud technologies. With SAGE X3, Lakeland staff around the world will be able to increase efficiency by accelerating all core business processes with one business management solution and gain visibility across the business with real-time information which will assist in management decision-making. In addition to inventory and supply chain management enhancements, there will be simplified compliance and automated reporting as the system supports global laws and restrictions across currencies, regions and regulations when the system is fully implemented.
The implementation and inventory change-over in the USA for the new system took full effect toward the end of the Company’s fiscal 2019 second quarter ended July 31, 2018 and into the third quarter. For the second quarter financial results which will be announced on September 10, 2018, Lakeland expects to report revenue growth from the prior year period even though there were several days in which shipments were delayed and not recorded as sales. This delay as well as other related factors adversely impacted gross profits as a percentage of sales and operating profits as a percent of sales. In this regard, the Company incurred elevated expenses associated with the inventory and ERP transition.
With the completion of the USA portion of the Company’s global inventory and IT system installation, distribution on the Amazon platform will be rolled out by Lakeland in multiple subsidiaries during the fiscal year ending January 31, 2019. From a standing still position approximately 9 months ago, Lakeland has completed the investment in marketing and fulfillment capabilities for its US launch on Amazon. Twenty pages of Lakeland branded products have been populated on the Amazon website in the US. The Company launched Amazon distribution in Canada with a limited number of products during the fiscal second quarter ended July 31, 2018.
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