Buy to open the September 16, 2016 put on Lands End (LE) with a strike price of $17.50 at $.85 or lower. Symbol (LE160916P17.5)

Lands’ End reports second quarter earnings before the market open on September 1. This trade should be placed before that event.

Lands’ End has been unable to right its ship since its April 2014 IPO when it was spun off from Sears Holdings. Revenue peaked in 2012 at $1.7 billion and has stumbled to regain its footing. Revenue for fiscal 2016 (ending January 2016) declined 9% to $1.4 billion.

First quarter revenue followed suit, dropping another 8.6%.

Estimates look for second quarter revenue to decline only 4% to $292 million. This seems unlikely based on little traction with new product lines and missteps with color choice and pricing.

Retail sales, which occur through Sears stores will continue to shrink. On top of shriveling mall traffic Sears has suffered negative comps for several years.

The number of Sears stores that Lands’ End sells into dropped from 235 to 225 in the first quarter and will likely fall further with Sears’ recent announcement of more store closures.

Product margins, which dropped more than 100 basis points (one full percent) in the first quarter, are unlikely to improve with the company offering 40% in its critical back to school season.

Most concerning is Lands’ End huge mass of debt. Over $490 million of debt sits on its balance sheet and requires $23 million of interest payments annually. With operating income shrinking each year, the company’s buffer to generate positive earnings is eroding.