[10-Q] Lands' End, Inc. Quarterly Earnings Report
Lands' End, Inc. (LE) 10-Q excerpts detail the companys financing, compensation and segment reporting policies rather than specific earnings amounts. The company maintains a $225.0 million committed revolving ABL Facility (reduced from $275.0 million) tied to a borrowing base of eligible inventory and receivables and subject to SOFR or a Base Rate plus an Applicable Borrowing Margin that varies with average outstanding borrowings. A Term Loan Facility bears Term Loan Adjusted SOFR (or alternative base rate) plus a margin based on net leverage, with stepped prepayment premiums through December 2027. Management discloses stock-based compensation practices for Deferred, Performance and Option Awards and a board-authorized 2024 Share Repurchase Program with $8.8 million capacity remaining as of August 1, 2025. The company is assessing ASU 2024-03 and discloses certain one-time items (restructuring, exit costs, impairments) that affected comparability.
Lands' End, Inc. (LE) - Estratti dal 10-Q che descrivono le politiche di finanziamento, retribuzione e rendicontazione per segmenti, senza riportare importi di utile specifici. La società mantiene una linea ABL revolving impegnata da 225,0 milioni di dollari (ridotta da 275,0 milioni), basata su una base di prestito costituita da rimanenze e crediti eleggibili e soggetta al SOFR o a un tasso base maggiorato di uno spread variabile in funzione dell'indebitamento medio. Un Term Loan applica il Term Loan Adjusted SOFR (o altro tasso base alternativo) più uno spread determinato dalla leva finanziaria netta, con penali di rimborso anticipate scaglionate fino a dicembre 2027. La direzione illustra le pratiche di remunerazione azionaria per premi differiti, basati sulla performance e opzioni, e un Programma di riacquisto azioni autorizzato dal consiglio per il 2024 con una capacità residua di 8,8 milioni di dollari al 1° agosto 2025. La società sta valutando l'impatto dell'ASU 2024-03 e segnala alcuni oneri una tantum (ristrutturazioni, costi di uscita, svalutazioni) che hanno inciso sulla comparabilità.
Lands' End, Inc. (LE) - Extractos del 10-Q que describen las políticas de financiamiento, compensación e información por segmentos, sin detallar montos específicos de ganancias. La compañía mantiene una línea ABL renovable comprometida de 225,0 millones de dólares (reducción desde 275,0 millones), basada en una base de préstamo constituida por inventarios y cuentas por cobrar elegibles y sujeta a SOFR o a una Tasa Base más un margen aplicable que varía según el promedio de endeudamiento. Un préstamo a plazo aplica el Term Loan Adjusted SOFR (o una tasa base alternativa) más un margen ligado al apalancamiento neto, con primas por prepago escalonadas hasta diciembre de 2027. La dirección detalla las prácticas de compensación en acciones para premios diferidos, por desempeño y opciones, y un Programa de Recompra de Acciones 2024 autorizado por la junta con 8,8 millones de dólares de capacidad restante al 1 de agosto de 2025. La empresa está evaluando la ASU 2024-03 y divulga ciertos gastos únicos (restructuraciones, costos de salida, deterioros) que afectaron la comparabilidad.
Lands' End, Inc. (LE) - 10-Q 발췌로, 특정 이익 금액이 아닌 자금 조달·보상·부문별 보고 정책을 설명합니다. 회사는 2억2,500만 달러(종전 2억7,500만 달러에서 축소)의 확약형 리볼빙 ABL 시설을 유지하고 있으며, 이는 적격 재고와 매출채권을 담보로 하는 차입 기준에 연동되고 SOFR 또는 기준금리에 평균 차입 잔액에 따라 변동하는 적용 차입 마진이 더해집니다. 터미널 론(상환대출)은 Term Loan Adjusted SOFR(또는 대체 기준금리)과 순레버리지에 따른 마진을 적용하며, 2027년 12월까지 단계별 선불 상환 페널티가 있습니다. 경영진은 이연·성과·옵션 상여에 대한 주식 보상 관행과 이사회가 승인한 2024년 자사주 매입 프로그램(2025년 8월 1일 기준 잔여 한도 880만 달러)을 공시합니다. 회사는 ASU 2024-03의 영향을 검토 중이며, 비교 가능성에 영향을 준 일회성 항목(구조조정, 퇴출비용, 손상처리)을 공개하고 있습니다.
Lands' End, Inc. (LE) - Extraits du 10-Q détaillant les politiques de financement, de rémunération et de reporting par segment, sans indiquer de montants de résultat précis. La société dispose d'une facilité ABL renouvelable engagée de 225,0 millions de dollars (réduite par rapport à 275,0 millions), adossée à une base d'emprunt composée d'inventaires et de créances éligibles et soumise au SOFR ou à un taux de base majoré d'une marge applicable variable selon l'encours moyen. Une facilité de prêt à terme applique le Term Loan Adjusted SOFR (ou un taux de base alternatif) plus une marge liée à l'effet de levier net, avec des primes de remboursement anticipé échelonnées jusqu'en décembre 2027. La direction détaille les pratiques de rémunération en actions pour les attributions différées, liées à la performance et d'options, ainsi qu'un programme de rachat d'actions 2024 autorisé par le conseil, avec une capacité restante de 8,8 millions de dollars au 1er août 2025. La société évalue l'impact de l'ASU 2024-03 et signale certains éléments exceptionnels (restructurations, coûts de sortie, dépréciations) ayant affecté la comparabilité.
Lands' End, Inc. (LE) - Auszüge aus dem 10-Q, die die Finanzierungs-, Vergütungs- und Segmentberichtspolitiken beschreiben, jedoch keine konkreten Gewinnbeträge nennen. Das Unternehmen unterhält eine zugesagte revolvierende ABL-Fazilität in Höhe von 225,0 Mio. USD (reduziert von 275,0 Mio.), die an eine Kreditgrundlage aus zulässigen Beständen und Forderungen gekoppelt ist und dem SOFR oder einem Basiszinssatz zuzüglich eines je nach durchschnittlicher Verschuldung variierenden Aufschlags unterliegt. Ein Term Loan wendet den Term Loan Adjusted SOFR (oder alternativ einen Basiszinssatz) zuzüglich eines nach Nettoverschuldung gestaffelten Aufschlags an; es gibt gestaffelte Vorfälligkeitsprämien bis Dezember 2027. Das Management legt die aktienbasierten Vergütungspraktiken für aufgeschobene, leistungsabhängige und Optionszuteilungen dar sowie ein vom Vorstand autorisiertes Aktienrückkaufprogramm 2024 mit verbleibender Kapazität von 8,8 Mio. USD per 1. August 2025. Das Unternehmen prüft ASU 2024-03 und gibt bestimmte einmalige Posten (Restrukturierungen, Ausstiegskosten, Wertminderungen) an, die die Vergleichbarkeit beeinflusst haben.
- $225.0 million committed ABL Facility remains available for working capital and liquidity, subject to borrowing base
- Board-authorized 2024 Share Repurchase Program is in place with up to $8.8 million remaining as of August 1, 2025
- Comprehensive disclosure of stock-based compensation practices (Deferred, Performance and Option Awards) and vesting/payout mechanics
- Company is assessing ASU 2024-03 and discloses intent to evaluate its impact on financial statement disclosures
- ABL commitments reduced from $275.0M to $225.0M, indicating lower available capacity tied to reduced inventory levels
- Term Loan pricing contains high leverage-sensitive margins (e.g., Term Loan Adjusted SOFR loans margin at 7.75% 6.25%+ depending on leverage bands)
- Prepayment premiums on Term Loan through 2027 (2.0% then stepping down to 0%) could limit refinancing flexibility and add cost
- Certain one-time charges noted (restructuring, exit costs, long-lived asset impairments) which affect period comparability
Insights
TL;DR: ABL capacity was trimmed and term loan pricing is leverage-sensitive, while share repurchase authority remains limited by loan covenants.
The filing highlights liquidity and capital structure mechanics: the ABL Facilitys aggregate commitments were reduced to $225.0 million and availability now depends on a borrowing base of eligible inventory and receivables, which ties liquidity directly to working capital levels. The ABL pricing switches between Term SOFR and a Base Rate with borrowing margins that increase if average outstanding borrowings exceed $95.0 million. The Term Loan carries an adjusted-SOFR or base-rate pricing grid tied to net leverage with relatively high margins (7.75% to 8.25% for SOFR loans depending on leverage bands), and staged prepayment premiums through 2027, which can affect refinancing flexibility. The 2024 repurchase program remains authorized but is constrained by Term Loan limits and only $8.8 million capacity remained as of August 1, 2025.
TL;DR: Stock-based plans use time and performance criteria; ASU 2024-03 adoption impact is under assessment.
Disclosure clarifies that Deferred Awards vest over service periods (generally three years) and are expensed ratably; Performance Awards depend on multi-year financial or event targets with potential 50% to 200% payouts at target achievement and require a three-year performance period; Option Awards use Black-Scholes and ten-year terms. The company notes it is evaluating ASU 2024-03, which would require additional expense disclosures for inventory purchases, compensation and depreciation by income statement line item, but no quantitative impact is provided.
Lands' End, Inc. (LE) - Estratti dal 10-Q che descrivono le politiche di finanziamento, retribuzione e rendicontazione per segmenti, senza riportare importi di utile specifici. La società mantiene una linea ABL revolving impegnata da 225,0 milioni di dollari (ridotta da 275,0 milioni), basata su una base di prestito costituita da rimanenze e crediti eleggibili e soggetta al SOFR o a un tasso base maggiorato di uno spread variabile in funzione dell'indebitamento medio. Un Term Loan applica il Term Loan Adjusted SOFR (o altro tasso base alternativo) più uno spread determinato dalla leva finanziaria netta, con penali di rimborso anticipate scaglionate fino a dicembre 2027. La direzione illustra le pratiche di remunerazione azionaria per premi differiti, basati sulla performance e opzioni, e un Programma di riacquisto azioni autorizzato dal consiglio per il 2024 con una capacità residua di 8,8 milioni di dollari al 1° agosto 2025. La società sta valutando l'impatto dell'ASU 2024-03 e segnala alcuni oneri una tantum (ristrutturazioni, costi di uscita, svalutazioni) che hanno inciso sulla comparabilità.
Lands' End, Inc. (LE) - Extractos del 10-Q que describen las políticas de financiamiento, compensación e información por segmentos, sin detallar montos específicos de ganancias. La compañía mantiene una línea ABL renovable comprometida de 225,0 millones de dólares (reducción desde 275,0 millones), basada en una base de préstamo constituida por inventarios y cuentas por cobrar elegibles y sujeta a SOFR o a una Tasa Base más un margen aplicable que varía según el promedio de endeudamiento. Un préstamo a plazo aplica el Term Loan Adjusted SOFR (o una tasa base alternativa) más un margen ligado al apalancamiento neto, con primas por prepago escalonadas hasta diciembre de 2027. La dirección detalla las prácticas de compensación en acciones para premios diferidos, por desempeño y opciones, y un Programa de Recompra de Acciones 2024 autorizado por la junta con 8,8 millones de dólares de capacidad restante al 1 de agosto de 2025. La empresa está evaluando la ASU 2024-03 y divulga ciertos gastos únicos (restructuraciones, costos de salida, deterioros) que afectaron la comparabilidad.
Lands' End, Inc. (LE) - 10-Q 발췌로, 특정 이익 금액이 아닌 자금 조달·보상·부문별 보고 정책을 설명합니다. 회사는 2억2,500만 달러(종전 2억7,500만 달러에서 축소)의 확약형 리볼빙 ABL 시설을 유지하고 있으며, 이는 적격 재고와 매출채권을 담보로 하는 차입 기준에 연동되고 SOFR 또는 기준금리에 평균 차입 잔액에 따라 변동하는 적용 차입 마진이 더해집니다. 터미널 론(상환대출)은 Term Loan Adjusted SOFR(또는 대체 기준금리)과 순레버리지에 따른 마진을 적용하며, 2027년 12월까지 단계별 선불 상환 페널티가 있습니다. 경영진은 이연·성과·옵션 상여에 대한 주식 보상 관행과 이사회가 승인한 2024년 자사주 매입 프로그램(2025년 8월 1일 기준 잔여 한도 880만 달러)을 공시합니다. 회사는 ASU 2024-03의 영향을 검토 중이며, 비교 가능성에 영향을 준 일회성 항목(구조조정, 퇴출비용, 손상처리)을 공개하고 있습니다.
Lands' End, Inc. (LE) - Extraits du 10-Q détaillant les politiques de financement, de rémunération et de reporting par segment, sans indiquer de montants de résultat précis. La société dispose d'une facilité ABL renouvelable engagée de 225,0 millions de dollars (réduite par rapport à 275,0 millions), adossée à une base d'emprunt composée d'inventaires et de créances éligibles et soumise au SOFR ou à un taux de base majoré d'une marge applicable variable selon l'encours moyen. Une facilité de prêt à terme applique le Term Loan Adjusted SOFR (ou un taux de base alternatif) plus une marge liée à l'effet de levier net, avec des primes de remboursement anticipé échelonnées jusqu'en décembre 2027. La direction détaille les pratiques de rémunération en actions pour les attributions différées, liées à la performance et d'options, ainsi qu'un programme de rachat d'actions 2024 autorisé par le conseil, avec une capacité restante de 8,8 millions de dollars au 1er août 2025. La société évalue l'impact de l'ASU 2024-03 et signale certains éléments exceptionnels (restructurations, coûts de sortie, dépréciations) ayant affecté la comparabilité.
Lands' End, Inc. (LE) - Auszüge aus dem 10-Q, die die Finanzierungs-, Vergütungs- und Segmentberichtspolitiken beschreiben, jedoch keine konkreten Gewinnbeträge nennen. Das Unternehmen unterhält eine zugesagte revolvierende ABL-Fazilität in Höhe von 225,0 Mio. USD (reduziert von 275,0 Mio.), die an eine Kreditgrundlage aus zulässigen Beständen und Forderungen gekoppelt ist und dem SOFR oder einem Basiszinssatz zuzüglich eines je nach durchschnittlicher Verschuldung variierenden Aufschlags unterliegt. Ein Term Loan wendet den Term Loan Adjusted SOFR (oder alternativ einen Basiszinssatz) zuzüglich eines nach Nettoverschuldung gestaffelten Aufschlags an; es gibt gestaffelte Vorfälligkeitsprämien bis Dezember 2027. Das Management legt die aktienbasierten Vergütungspraktiken für aufgeschobene, leistungsabhängige und Optionszuteilungen dar sowie ein vom Vorstand autorisiertes Aktienrückkaufprogramm 2024 mit verbleibender Kapazität von 8,8 Mio. USD per 1. August 2025. Das Unternehmen prüft ASU 2024-03 und gibt bestimmte einmalige Posten (Restrukturierungen, Ausstiegskosten, Wertminderungen) an, die die Vergleichbarkeit beeinflusst haben.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
-OR-
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to .
Commission File Number:
(Exact name of registrant as specified in its charter)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
As of September 8, 2025, the registrant had
Table of Contents
LANDS’ END, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED AUGUST 1, 2025
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (Unaudited) |
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Condensed Consolidated Statements of Operations |
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Condensed Consolidated Statements of Comprehensive Operations |
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Condensed Consolidated Balance Sheets |
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Condensed Consolidated Statements of Cash Flows |
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Condensed Consolidated Statements of Changes in Stockholders’ Equity |
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Notes to Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
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Item 4. |
Controls and Procedures |
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PART II. OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
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Item 1A. |
Risk Factors |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 5. |
Other Information |
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Item 6. |
Exhibits |
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Signatures |
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Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LANDS’ END, INC.
Condensed Consolidated Statements of Operations
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Selling and administrative |
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Depreciation and amortization |
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Other operating expense, net |
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Operating income |
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Interest expense |
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Other (income), net |
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Loss before income taxes |
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Income tax benefit |
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NET LOSS |
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Loss per common share |
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Diluted |
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Weighted average common shares outstanding |
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Basic |
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Diluted |
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See accompanying Notes to Condensed Consolidated Financial Statements.
1
Table of Contents
LANDS’ END, INC.
Condensed Consolidated Statements of Comprehensive Operations
(Unaudited)
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13 Weeks Ended |
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26 Weeks Ended |
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(in thousands) |
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August 1, 2025 |
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August 2, 2024 |
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August 1, 2025 |
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NET LOSS |
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Other comprehensive (loss) income, net of tax |
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Foreign currency translation adjustments |
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COMPREHENSIVE LOSS |
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See accompanying Notes to Condensed Consolidated Financial Statements.
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Table of Contents
LANDS’ END, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
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August 1, 2025 |
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August 2, 2024 |
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January 31, |
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ASSETS |
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Current assets |
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Restricted cash |
|
|
|
|
|
|
|
|
|
|||
Accounts receivable, net |
|
|
|
|
|
|
|
|
|
|||
Inventories |
|
|
|
|
|
|
|
|
|
|||
Prepaid expenses |
|
|
|
|
|
|
|
|
|
|||
Other current assets |
|
|
|
|
|
|
|
|
|
|||
Total current assets |
|
|
|
|
|
|
|
|
|
|||
Property and equipment, net |
|
|
|
|
|
|
|
|
|
|||
Operating lease right-of-use asset |
|
|
|
|
|
|
|
|
|
|||
Intangible asset |
|
|
|
|
|
|
|
|
|
|||
Other assets |
|
|
|
|
|
|
|
|
|
|||
TOTAL ASSETS |
|
$ |
|
|
$ |
|
|
$ |
|
|||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|||
Current liabilities |
|
|
|
|
|
|
|
|
|
|||
Current portion of long-term debt |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Accounts payable |
|
|
|
|
|
|
|
|
|
|||
Lease liability – current |
|
|
|
|
|
|
|
|
|
|||
Accrued expenses and other current liabilities |
|
|
|
|
|
|
|
|
|
|||
Total current liabilities |
|
|
|
|
|
|
|
|
|
|||
Long-term borrowings under ABL Facility |
|
|
|
|
|
|
|
|
|
|||
Long-term debt, net |
|
|
|
|
|
|
|
|
|
|||
Lease liability – long-term |
|
|
|
|
|
|
|
|
|
|||
Deferred tax liabilities |
|
|
|
|
|
|
|
|
|
|||
Other liabilities |
|
|
|
|
|
|
|
|
|
|||
TOTAL LIABILITIES |
|
|
|
|
|
|
|
|
|
|||
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|||
Common stock, par value $ |
|
|
|
|
|
|
|
|
|
|||
Additional paid-in capital |
|
|
|
|
|
|
|
|
|
|||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
TOTAL STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
|
|
$ |
|
|
$ |
|
|||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Table of Contents
LANDS’ END, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
26 Weeks Ended |
|
|||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Loss on disposal of property and equipment |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
|
|
Long-lived asset impairment |
|
|
|
|
|
|
||
Other |
|
|
( |
) |
|
|
( |
) |
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
|
|
|
|
||
Inventories |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
||
Other operating assets |
|
|
( |
) |
|
|
( |
) |
Other operating liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Sales of property and equipment |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Proceeds from borrowings under ABL Facility |
|
|
|
|
|
|
||
Payments of borrowings under ABL Facility |
|
|
( |
) |
|
|
( |
) |
Payments on term loan |
|
|
( |
) |
|
|
( |
) |
Payments of debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Payments for taxes related to net share settlement of equity awards |
|
|
( |
) |
|
|
( |
) |
Purchases and retirement of common stock, including excise tax paid |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Effects of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
NET INCREASE IN CASH, CASH EQUIVALENTS AND |
|
|
|
|
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, |
|
|
|
|
|
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL CASH FLOW DATA |
|
|
|
|
|
|
||
Unpaid liability to acquire property and equipment |
|
$ |
|
|
$ |
|
||
Income taxes (refunded) paid |
|
$ |
( |
) |
|
$ |
|
|
Interest paid |
|
$ |
|
|
$ |
|
||
Operating lease right-of-use-assets obtained in exchange for lease liabilities |
|
$ |
|
|
$ |
|
||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Table of Contents
LANDS’ END, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
|
|
Common Stock Issued |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|||||||||
(in thousands) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
||||||
Balance at January 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Cumulative translation adjustment, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Vesting of restricted shares |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Common stock withheld related to net share |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Purchases and retirement of common stock, including excise taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at May 2, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Cumulative translation adjustment, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Vesting of restricted shares |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Common stock withheld related to net share |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Purchases and retirement of common stock, including excise taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at August 1, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
Common Stock Issued |
|
|
Additional |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|||||||||
(in thousands) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
||||||
Balance at February 2, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Cumulative translation adjustment, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Vesting of restricted shares |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Common stock withheld related to net share |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Purchases and retirement of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at May 3, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Cumulative translation adjustment, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Vesting of restricted shares |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Common stock withheld related to net share |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Purchases and retirement of common stock, including excise taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at August 2, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See accompanying Notes to Condensed Consolidated Financial Statements.
5
Table of Contents
LANDS’ END, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BACKGROUND AND BASIS OF PRESENTATION
Description of Business
Lands’ End, Inc. (“Lands’ End” or the “Company”) is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products and uniforms. Lands’ End offers products online at www.landsend.com, through third-party distribution channels, its own Company Operated stores and third-party license agreements. Lands’ End also offers products to businesses and schools, for their employees and students, through the Outfitters distribution channel. Lands’ End is a classic American lifestyle brand that creates solutions for life’s every journey. References to www.landsend.com do not constitute incorporation by reference of the information at www.landsend.com, and such information is not part of this Quarterly Report on Form 10-Q or any other filings with the SEC, unless otherwise explicitly stated.
Terms that are commonly used in the Company’s Notes to Condensed Consolidated Financial Statements are defined as follows:
6
Table of Contents
Basis of Presentation
The Condensed Consolidated Financial Statements include the accounts of Lands’ End, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated.
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. Dollar amounts are reported in thousands, except per share data, unless otherwise noted. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Lands’ End Annual Report on Form 10-K filed with the SEC on March 27, 2025.
Macroeconomic Challenges
Macroeconomic issues which impact consumer discretionary spending, such as realized inflation-based price increases and high interest rates have continued to have an impact on the Company’s business. Apparel purchases historically have been influenced by domestic and global economic conditions, which may negatively impact customer demand and may require higher levels of promotion in order to attract and retain customers. Additionally, the variable interest rates associated with the Company’s Debt Facilities are negatively affected by higher interest rate environments. Macroeconomic challenges may lead to increased cost of raw materials, packaging materials, labor, energy, fuel, debt and other inputs necessary for the production and distribution of the Company’s products. Ongoing uncertainty surrounding global trade policy, including the potential for increased tariffs on goods manufactured in key sourcing regions, could elevate product costs. The Company is monitoring these developments and is actively pursuing mitigation strategies, but escalating trade tensions may pressure margins and disrupt supply chain efficiency.
Restructuring
The Company incurred restructuring charges, primarily severance and benefit costs, related to cost optimization of business operations and strategic initiatives. During Year-to-Date 2025, the Company incurred ongoing costs related to exploring strategic alternatives for the Company to maximize shareholder value and have included those costs as part of restructuring. Additionally, the Company reduced approximately
The following table summarizes the restructuring costs recognized in Other operating expense, net in the Condensed Consolidated Statement of Operations for the 13 and 26 weeks ended August 1, 2025 and August 2, 2024:
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||
Employee severance and benefit costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Strategic alternatives and other costs |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total restructuring |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
7
Table of Contents
The following table summarizes the accrued restructuring cost activity included in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets:
(in thousands) |
|
Employee Severance and Benefit Costs |
|
|
Strategic Alternatives and Other Costs |
|
|
Total Restructuring |
|
|||
Balance as of January 31, 2025 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Estimated costs payable in cash |
|
|
|
|
|
|
|
|
|
|||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign currency translation |
|
|
|
|
|
— |
|
|
|
|
||
Balance as of May 2, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Estimated costs payable in cash |
|
|
|
|
|
|
|
|
|
|||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign currency translation |
|
|
|
|
|
— |
|
|
|
|
||
Balance as of August 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In July 2025, the FASB issued Accounting Standards Update (ASU) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides targeted relief for entities estimating expected credit losses on short-term receivables and contract assets under Topic 606. The guidance allows entities to bypass the requirement to incorporate macroeconomic data into their forecasts when such data is not expected to materially affect the estimate. ASU 2025-05 is effective for the annual periods beginning after December 15, 2025. The Company is currently assessing the impact of ASU 2025-05 on the Company’s Condensed Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). Under ASU 2024-03, a public entity is required to disclose information about purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. ASU 2024-03 allows for early adoption and requires either prospective adoption to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the impact of ASU 2024-03 on the Company’s Condensed Consolidated Financial Statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which includes requirements that an entity disclose specific categories in the rate reconciliation table and provide additional information for reconciling items that are greater than five percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income rate. The standard also requires that entities disclose income (or loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) each disaggregated between domestic and foreign. ASU 2023-09 is effective for the annual periods beginning after December 15, 2024. The Company is currently assessing the impact of ASU 2023-09 on the Company’s Condensed Consolidated Financial Statement disclosures.
NOTE 3. LOSS PER SHARE
The numerator for both basic and diluted earnings (loss) per share is net income (loss) attributable to the Company. The denominator for basic earnings (loss) per share is based upon the number of weighted average shares of the Company’s common stock outstanding during the reporting periods. The denominator for diluted earnings (loss) per share is based upon the number of weighted average shares of the Company’s common stock and common stock equivalents outstanding during the reporting periods using the treasury stock method in accordance with ASC 260, Earnings Per Share. Potentially dilutive securities for the diluted earnings (loss) per share calculations consist of non-vested equity shares of common stock and in-the-money outstanding options where the current stock price exceeds the option strike price.
8
Table of Contents
The following table summarizes the components of basic and diluted loss per share:
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
(in thousands, except per share amounts) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive impact of stock awards |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Diluted weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Anti-dilutive shares excluded from diluted loss per common share calculation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock awards are considered anti-dilutive based on the application of the treasury stock method or in the event of a net loss.
NOTE 4. OTHER COMPREHENSIVE LOSS
Other comprehensive income (loss) encompasses all changes in equity other than those arising from transactions with stockholders and is comprised solely of foreign currency translation adjustments. The Company’s foreign subsidiaries use their foreign currency as their functional currency. Functional currency assets and liabilities are translated into U.S. Dollars using exchange rates in effect at the balance sheet date, and revenues and expenses are translated at average exchange rates during the period. Resulting translation gains and losses are reported in other comprehensive income (loss), until the substantial liquidation of a subsidiary, at which time accumulated translation gains or losses are reclassified into net income (loss).
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||
Beginning balance: Accumulated other comprehensive loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments (net of tax of $ |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Ending balance: Accumulated other comprehensive loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
NOTE 5. DEBT
ABL Facility
The Company’s $
9
Table of Contents
The following table summarizes the Company’s ABL Facility borrowing availability:
|
|
August 1, 2025 |
|
August 2, 2024 |
|
January 31, 2025 |
||||||||||||
(in thousands) |
|
Amount |
|
|
Interest Rate |
|
Amount |
|
|
Interest Rate |
|
Amount |
|
|
Interest Rate |
|||
ABL Facility limit |
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
|
|||
Borrowing Base |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Outstanding borrowings |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
||||
Outstanding letters of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
ABL Facility utilization at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
ABL Facility borrowing availability |
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
|
|||
Effective with the Fifth Amendment to the ABL Facility, dated March 28, 2025 (the “Fifth Amendment”), the
The ABL Facility fees include (i) commitment fees of
Long-Term Debt
The Term Loan Facility will mature on
10
Table of Contents
The Company’s long-term debt consisted of the following:
|
|
August 1, 2025 |
|
August 2, 2024 |
|
January 31, 2025 |
||||||||||||
(in thousands) |
|
Amount |
|
|
Interest Rate |
|
Amount |
|
|
Interest Rate |
|
Amount |
|
|
Interest Rate |
|||
Term Loan Facility |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||
Less: Current portion of long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Less: Unamortized debt issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Long-term debt, net |
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
|
|||
The interest rates per annum applicable to the loans under the Term Loan Facility are based on a fluctuating rate of interest equal to, at the Company’s election, either (1) Term Loan Adjusted SOFR loan (subject to a
The Term Loan Facility contains customary agency fees.
Debt Facilities
Guarantees; Security
All obligations under the Debt Facilities are unconditionally guaranteed by Lands’ End, Inc. and, subject to certain exceptions, each of its existing and future direct and indirect subsidiaries. The ABL Facility is secured by a first priority security interest in certain working capital of the borrowers and guarantors consisting primarily of accounts receivable and inventory. The Term Loan Facility is also secured by a second priority security interest in the same collateral, with certain exceptions.
The Term Loan Facility is also secured by a first priority security interest in certain property and assets, including certain fixed assets such as real estate, stock of subsidiaries and intellectual property, in each case, subject to certain exceptions. The ABL Facility is also secured by a second priority interest in the same collateral, with certain exceptions.
Representations and Warranties; Covenants
Subject to specified exceptions, the Debt Facilities contain various representations and warranties and restrictive covenants that, among other things, restrict Lands’ End, Inc.’s and its subsidiaries’ ability to incur indebtedness (including guarantees), grant liens, make investments, make dividends or distributions with respect to capital stock, make prepayments on other indebtedness, engage in mergers or change the nature of their business.
The Term Loan Facility contains financial covenants, including a quarterly maximum total leverage ratio test and a monthly minimum liquidity test.
Under the ABL Facility, if excess availability falls below the greater of
The Debt Facilities contain certain affirmative covenants, including reporting requirements such as delivery of financial statements, certificates and notices of certain events, maintaining insurance and providing additional guarantees and collateral in certain circumstances.
As of August 1, 2025, the Company was in compliance with its financial covenants in the Debt Facilities.
11
Table of Contents
Events of Default
The Debt Facilities include customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross defaults related to certain other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, material judgments and change of control.
NOTE 6. STOCK-BASED COMPENSATION
The Company expenses the fair value of all stock awards over their requisite service period, ensuring that the amount of cumulative stock-based compensation expense recognized at any date is at least equal to the portion of the grant-date fair value of the award that is vested at that date. The Company has elected to adjust stock-based compensation expense for an estimated forfeiture rate for those shares not expected to vest and to recognize stock-based compensation expense on a straight-line basis for awards that only have a service requirement with multiple vest dates.
The Company has granted the following types of stock awards to employees at management levels and above, each of which are granted under the Company’s stockholder approved stock plans, other than inducement grants outside of the Company’s stockholder approved stock plans in accordance with Nasdaq Listing Rule 5635(c)(4):
For Performance Awards granted in Fiscal 2025 with event criteria, the award vests at
The grant date fair value of the Performance Awards granted in Fiscal 2025 and Fiscal 2024 with financial performance criteria and event criteria, are based on the closing price of the Company’s common stock on the grant date. The grant date fair value for the Performance Awards granted in Fiscal 2025 and Fiscal 2024 with stock performance criteria are based on the Monte Carlo simulation model.
Stock-based compensation expense, including awards with market conditions, is recognized ratably over the related service period, reduced for estimated forfeitures of those awards not expected to vest due to employee turnover and adjusted based on the Company’s estimate of the percentage of the aggregate Target Shares expected to be earned. The Company accrues for Performance Awards on a
12
Table of Contents
The following table provides a summary of the Company’s stock-based compensation expense, which is included in Selling and administrative expense in the Condensed Consolidated Statements of Operations:
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||
Deferred awards |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Performance awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Option awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred Awards
The following table provides a summary of the Deferred Awards activity for the 26 weeks ended August 1, 2025:
|
|
Deferred Awards |
|
|||||
(in thousands, except per share amounts) |
|
Number of |
|
|
Weighted Average |
|
||
Unvested Deferred Awards as of January 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited or expired |
|
|
( |
) |
|
|
|
|
Unvested Deferred Awards as of August 1, 2025 |
|
|
|
|
$ |
|
||
Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $
Performance Awards
The following table provides a summary of the Performance Awards activity for the 26 weeks ended August 1, 2025:
|
|
Performance Awards |
|
|||||
(in thousands, except per share amounts) |
|
Number of |
|
|
Weighted Average |
|
||
Unvested Performance Awards as of January 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Change in estimate - performance |
|
|
( |
) |
|
|
|
|
Vested |
|
|
|
|
|
|
||
Forfeited or expired |
|
|
( |
) |
|
|
|
|
Unvested Performance Awards as of August 1, 2025 |
|
|
|
|
$ |
|
||
Total unrecognized stock-based compensation expense related to unvested Performance Awards was approximately $
Option Awards
The following table provides a summary of the Option Awards activity for the 26 weeks ended August 1, 2025:
13
Table of Contents
|
|
Option Awards |
|
|||||
(in thousands, except per share amounts) |
|
Number of |
|
|
Weighted Average |
|
||
Option Awards outstanding as of January 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Exercised |
|
|
|
|
|
|
||
Forfeited |
|
|
|
|
|
|
||
Expired |
|
|
|
|
|
|
||
Option Awards outstanding as of August 1, 2025 |
|
|
|
|
$ |
|
||
The following table provides a summary of information about the Option Awards vested and expected to vest during the contractual term, as well as Option Awards exercisable as of August 1, 2025:
(in thousands, except contractual life and exercise price amounts) |
|
Option Awards |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate Intrinsic Value |
|
||||
Option Awards vested and expected to vest |
|
|
|
|
|
|
|
$ |
|
|
$ |
- |
|
|||
Option Awards exercisable |
|
|
|
|
|
|
|
$ |
|
|
$ |
- |
|
|||
Total unrecognized stock-based compensation expense related to Option Awards expected to vest was approximately $
NOTE 7. STOCKHOLDERS’ EQUITY
Share Repurchase Program
On March 15, 2024, the Company announced that its Board of Directors authorized the Company to repurchase up to $
The following table summarizes the Company’s share repurchases for the 13 and 26 weeks ended August 1, 2025 and August 2, 2024:
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
(Shares and $ in thousands except average per share cost) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||
Number of shares repurchased |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Average per share cost (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company retired all shares that were repurchased through the 2024 Share Repurchase Program during the 26 weeks ended August 1, 2025 and August 2, 2024. In accordance with FASB ASC 505—Equity, the par value of the shares retired was charged against Common stock and the remaining purchase price, including any broker commissions and excise taxes paid, was either (i) allocated between Additional paid-in capital and Retained earnings, or (ii) charged directly against Additional paid-in capital. To the extent the shares are repurchased at a price less than that of initial issuance, or to the extent the Company does not have sufficient reserves in Retained earnings at the time of repurchase, the excess of the purchase price over par value is accounted for entirely as a deduction from Additional paid-in capital.
14
Table of Contents
NOTE 8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
January 31, 2025 |
|
|||
Deferred gift card revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Accrued employee compensation and benefits |
|
|
|
|
|
|
|
|
|
|||
Reserve for sales returns and allowances |
|
|
|
|
|
|
|
|
|
|||
Deferred revenue |
|
|
|
|
|
|
|
|
|
|||
Accrued property, sales and other taxes |
|
|
|
|
|
|
|
|
|
|||
Accrued interest |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|||
Total Accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
NOTE 9. FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS AND LIABILITIES
Cash and cash equivalents and restricted cash is reflected on the Condensed Consolidated Balance Sheets at fair value based on Level 1 inputs. Cash and cash equivalents and restricted cash amounts are valued based upon statements received from financial institutions. The fair value of restricted cash was $
Carrying amounts and fair values of long-term debt, including current portion, in the Condensed Consolidated Balance Sheets are as follows:
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
January 31, 2025 |
|
|||||||||||||||
(in thousands) |
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
||||||
Long-term debt, including current portion |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The Company’s valuation of long-term debt, including current portion, at fair value is considered a Level 3 instrument under the fair value hierarchy. The Company’s valuation techniques include the Black-Derman-Toy (“BDT”) model as well as market inputs from management. The BDT modeling approach is particularly relevant given the Term Loan Facility’s features, including the optional redemption provision. There were
NOTE 10. INCOME TAXES
Provision for Income Taxes
At the end of each quarter, the Company estimates its effective income tax rate pursuant to ASC 740. The rate for the period consists of the tax rate expected to be applied for the full year to ordinary income adjusted for any discrete items recorded in the period.
The Company recorded a tax benefit at an overall effective tax rate of
On July 4, 2025 the One Big Beautiful Bill Act (H.R. 1)(“the OBBBA”) was signed into law. The OBBBA contains various changes to corporate taxation with varying effective dates, including (i) the reinstatement of
15
Table of Contents
to business interest deduction limitations, and (iii) taxation of foreign entities. The legislation did not have a material impact on the Company’s financial statements for the 13 and 26 weeks ended August 1, 2025.
NOTE 11. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is party to various claims, legal proceedings and investigations arising in the ordinary course of business. Some of these actions involve complex factual and legal issues and are subject to uncertainties. At this time, the Company is not able to either predict the outcome of these legal proceedings or reasonably estimate a potential range of loss with respect to the proceedings. While it is not feasible to predict the outcome of such pending claims, proceedings and investigations with certainty, management is of the opinion that their ultimate resolution should not have a material adverse effect on results of operations, cash flows or financial position taken as a whole.
NOTE 12. SEGMENT REPORTING
The Company identifies operating segments according to how business activities are managed and evaluated. Following internal organizational changes and realignment of distribution channel responsibilities in Fourth Quarter 2024, the Company’s operating segments consisted of: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail. Beginning Fourth Quarter 2024, the Wholesale business is included in Licensing and prior periods were recast to reflect the change in operating segments for comparability purposes.
The internal reporting of these operating segments is based, in part, on the reporting and review process used by the Company’s chief operating decision maker (“CODM”), its Chief Executive Officer.
The Company determined the U.S. eCommerce, Outfitters and Third Party operating segments share similar economic and other qualitative characteristics, and therefore the results of these operating segments are aggregated into the U.S. Digital segment. The Europe eCommerce, Licensing and Retail operating segments are not quantitatively significant to be separately reported.
The Company has determined its significant segment expense categories based on amounts regularly provided to the Company’s CODM to evaluate segment profitability and drive strategic decision making.
16
Table of Contents
|
|
13 Weeks Ended |
|
|
13 Weeks Ended |
|
||||||||
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||||||
(in thousands) |
|
Segment |
|
Total |
|
|
Segment |
|
Total |
|
||||
Net revenue |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
All other net revenue (1) |
|
|
|
|
|
|
|
|
|
|
||||
Total consolidated net revenue |
|
|
|
$ |
|
|
|
|
$ |
|
||||
Product cost of goods sold |
|
|
|
|
|
|
|
|
|
|
||||
Shipping cost of goods sold |
|
|
|
|
|
|
|
|
|
|
||||
Marketing costs |
|
|
|
|
|
|
|
|
|
|
||||
Variable personnel costs |
|
|
|
|
|
|
|
|
|
|
||||
Other segment expenses (2) |
|
|
|
|
|
|
|
|
|
|
||||
Segment variable profit |
|
$ |
|
|
|
|
$ |
|
|
|
||||
|
|
26 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||||||
(in thousands) |
|
Segment |
|
Total |
|
|
Segment |
|
Total |
|
||||
Net revenue |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
All other net revenue (1) |
|
|
|
|
|
|
|
|
|
|
||||
Total consolidated net revenue |
|
|
|
$ |
|
|
|
|
$ |
|
||||
Product cost of goods sold |
|
|
|
|
|
|
|
|
|
|
||||
Shipping cost of goods sold |
|
|
|
|
|
|
|
|
|
|
||||
Marketing costs |
|
|
|
|
|
|
|
|
|
|
||||
Variable personnel costs |
|
|
|
|
|
|
|
|
|
|
||||
Other segment expenses (2) |
|
|
|
|
|
|
|
|
|
|
||||
Segment variable profit |
|
$ |
|
|
|
|
$ |
|
|
|
||||
The reconciliation between segment variable profit to consolidated loss before income taxes is as follows:
|
|
13 Weeks Ended |
|
|
13 Weeks Ended |
|
||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||
Segment variable profit |
|
$ |
|
|
$ |
|
||
All other variable profit (1) |
|
|
|
|
|
|
||
Depreciation expense |
|
|
( |
) |
|
|
( |
) |
Unallocated corporate expenses (2) |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
( |
) |
|
|
( |
) |
Other income, net |
|
|
|
|
|
|
||
Loss before income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
26 Weeks Ended |
|
|
26 Weeks Ended |
|
||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||
Segment variable profit |
|
$ |
|
|
$ |
|
||
All other variable profit (1) |
|
|
|
|
|
|
||
Depreciation expense |
|
|
( |
) |
|
|
( |
) |
Unallocated corporate expenses (2) |
|
|
( |
) |
|
|
( |
) |
Interest expense |
|
|
( |
) |
|
|
( |
) |
Other income, net |
|
|
|
|
|
|
||
Loss before income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
17
Table of Contents
Net revenue is presented by distribution channel in the following tables:
|
|
13 Weeks Ended |
|
% of Net |
|
|
13 Weeks Ended |
|
% of Net |
|
||||
(in thousands) |
|
August 1, 2025 |
|
Revenue |
|
|
August 2, 2024 |
|
Revenue |
|
||||
Net revenue: |
|
|
|
|
|
|
|
|
|
|
||||
U.S. eCommerce |
|
$ |
|
|
% |
|
$ |
|
|
% |
||||
Outfitters |
|
|
|
|
% |
|
|
|
|
% |
||||
Third Party |
|
|
|
|
% |
|
|
|
|
% |
||||
Total U.S. Digital Segment Revenue |
|
|
|
|
|
|
|
|
|
|
||||
Europe eCommerce |
|
|
|
|
% |
|
|
|
|
% |
||||
Licensing and Retail |
|
|
|
|
% |
|
|
|
|
% |
||||
Total Net revenue |
|
$ |
|
|
|
|
$ |
|
|
|
||||
|
|
26 Weeks Ended |
|
% of Net |
|
|
26 Weeks Ended |
|
% of Net |
|
||||
(in thousands) |
|
August 1, 2025 |
|
Revenue |
|
|
August 2, 2024 |
|
Revenue |
|
||||
Net revenue: |
|
|
|
|
|
|
|
|
|
|
||||
U.S. eCommerce |
|
$ |
|
|
% |
|
$ |
|
|
% |
||||
Outfitters |
|
|
|
|
% |
|
|
|
|
% |
||||
Third Party |
|
|
|
|
% |
|
|
|
|
% |
||||
Total U.S. Digital Segment Revenue |
|
|
|
|
|
|
|
|
|
|
||||
Europe eCommerce |
|
|
|
|
% |
|
|
|
|
% |
||||
Licensing and Retail |
|
|
|
|
% |
|
|
|
|
% |
||||
Total Net revenue |
|
$ |
|
|
|
|
$ |
|
|
|
||||
NOTE 13. REVENUE
Net Revenue
Product Sales
Revenue includes sales of merchandise and delivery revenue related to merchandise sold. Substantially all of the Company’s revenue is recognized when control of product passes to customers, which for the U.S. eCommerce, Europe eCommerce, Outfitters and Third Party distribution channels is when the merchandise is received by the customer and for the Retail distribution channel is at the time of sale in the store. The Company recognizes revenue, including shipping and handling fees billed to customers, in the amount expected to be received when control of the Company’s products transfers to customers, and is presented net of various forms of promotions, which range from contractually fixed percentage price reductions to sales returns, discounts, and other incentives that may vary in amount. Variable amounts are estimated based on an analysis of historical experience and adjusted as better estimates become available.
The Company’s revenue is disaggregated by distribution channel and geographic location. Revenue by distribution channel is presented in Note 12, Segment Reporting. Revenue by geographic location was:
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||
Net revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Net revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
18
Table of Contents
Licensing Agreements
The Company generates royalty revenue from licensing the right to use its trademarks to third parties. The licensing agreements generally are exclusive to a product category, selling channel and/or geography, have terms in excess of one year, provide for annual guaranteed minimum royalties and, in most cases, include renewal options. In certain agreements, the licensee pays the Company a fulfillment fee for licensed product sold on the Company’s website and fulfilled from the Company’s distribution center. The trademark royalty revenue and fulfillment fee are included in Net revenue and reported in the Licensing distribution channel.
In exchange for providing these rights, the license agreements require the licensees to pay the Company a trademark royalty based on net sales as defined in the license agreements. The Company recognizes sales-based royalty revenue (i) when a contractually guaranteed minimum is not expected to be met, the minimum is recognized as revenue on a straight-line basis over the contractual period, or (ii) when the contractually guaranteed minimum is expected to be met, revenue is recognized when the related sales of the licensed product occurs. In certain licensing agreements, the Company agreed to provide marketing activities. The Company receives reimbursement for such services at cost. The amount of these reimbursements are recorded as a reduction of Selling and administrative expenses in the Condensed Consolidated Statements of Operations. The amount of these reimbursements was $
Contract Liabilities
Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in Net revenue in the Condensed Consolidated Statements of Operations.
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||
Deferred revenue beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred revenue recognized in period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Revenue deferred in period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred revenue end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Revenue from gift cards is recognized when (i) the gift card is redeemed by the customer for merchandise, or (ii) as gift card breakage, an estimate of gift cards which will not be redeemed where the Company does not have a legal obligation to remit the value of the unredeemed gift cards to the relevant jurisdictions. Gift card breakage is recorded within Net revenue in the Condensed Consolidated Statements of Operations. Prior to their redemption, gift cards are recorded as a liability and included within Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. The liability is estimated based on expected breakage that considers historical patterns of redemption.
|
|
13 Weeks Ended |
|
|
26 Weeks Ended |
|
||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||
Balance as of beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Gift cards issued |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gift cards redeemed |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Gift card breakage |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance as of end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Refund Liabilities
Refund liabilities, primarily associated with product sales returns and retrospective volume rebates, represent variable consideration and are estimated and recorded as a reduction to Net revenue based on historical experience. Refund liabilities, primarily associated with estimated product returns, were $
19
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with the Condensed Consolidated Financial Statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Information” below, “Item 1A. Risk Factors” in our Annual Report filed on Form 10-K for the year ended January 31, 2025 and “Part II, Item 1A Risk Factors” of this Quarterly Report on Form 10-Q, for a discussion of the uncertainties, risks and assumptions associated with these statements.
As used in this Quarterly Report on Form 10-Q, references to the “Company”, “Lands’ End”, “we”, “us”, “our” and similar terms refer to Lands’ End, Inc. and its subsidiaries. Our fiscal year ends on the Friday preceding the Saturday closest to January 31. Other terms that are commonly used in this Quarterly Report on Form 10-Q are defined as follows:
20
Table of Contents
Executive Overview
Description of the Company
Lands’ End is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products and uniforms. We offer products online at www.landsend.com, through third-party distribution channels, our own Company Operated stores and third-party license agreements. We also offer products to businesses and schools, for their employees and students, through the Outfitters distribution channel. We are a classic American lifestyle brand that creates solutions for life’s every journey.
Lands’ End was founded in 1963 by Gary Comer and his partners to sell sailboat hardware and equipment by catalog. While our product focus has shifted significantly over the years, we have continued to adhere to our founder’s motto as one of our guiding principles: “Take care of the customer, take care of the employee and the rest will take care of itself.”
We identify our operating segments according to how our business activities are managed and evaluated. Following internal organizational changes and realignment of distribution channel responsibilities in Fourth Quarter 2024, our operating segments now consist of: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail.
We have determined that the U.S. eCommerce, Outfitters and Third Party operating segments share similar economic and other qualitative characteristics, and therefore, the results of these operating segments are aggregated into the U.S. Digital segment. The Europe eCommerce, Licensing and Retail operating segments are not quantitatively significant to be separately reported. See Note 12, Segment Reporting.
Distribution Channels
We identify six separate distribution channels for revenue reporting purposes:
Macroeconomic Challenges
Macroeconomic issues which impact consumer discretionary spending, such as realized inflation-based price increases and high interest rates, have continued to have an impact on our business. Apparel purchases historically have been influenced by domestic and global economic conditions, which may negatively impact customer demand and may require higher levels of promotion in order to attract and retain customers. Additionally, the variable interest rates associated with our Debt Facilities are negatively affected by higher interest rate environments. Macroeconomic challenges may lead to increased cost of raw materials, packaging materials, labor, energy, fuel, debt and other inputs necessary for the production and distribution of our products. Ongoing uncertainty surrounding global trade policy, including the potential for increased tariffs on goods manufactured in key sourcing regions, could elevate product costs. We are monitoring these developments and are actively pursuing mitigation strategies, but escalating trade tensions may pressure margins and disrupt supply chain efficiency.
Restructuring
We incurred restructuring charges, primarily severance and benefit costs, related to cost optimization of business operations and strategic initiatives. During Year-to-Date 2025, we reduced approximately 6% of our corporate office positions and incurred
21
Table of Contents
restructuring charges, primarily severance and benefit and other related costs. The reductions in the corporate office positions were made to better align with the evolving needs of the business and to invest in key growth areas. Additionally, we incurred ongoing costs related to exploring strategic alternatives to maximize shareholder value and have included those costs as part of restructuring.
We incurred $2.4 million and $2.3 million of restructuring costs during the Second Quarter 2025 and Second Quarter 2024, respectively. Restructuring costs of $5.8 million and $2.7 million were incurred Year-to-Date 2025 and Year-to-Date 2024, respectively.
As of August 1, 2025, approximately $3.2 million of restructuring costs incurred had yet to be paid and are included in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.
Basis of Presentation
The Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and include the accounts of Lands’ End, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated.
Seasonality
We experience seasonal fluctuations in our Net revenue and operating results and historically have realized a significant portion of our net revenue and earnings for the year during our fourth fiscal quarter. We generated approximately 34.0% of our net revenue in the fourth quarters of Fiscal 2024 and Fiscal 2023.
Working capital requirements typically increase during the second and third quarters of the fiscal year as inventory builds to support peak selling periods and, accordingly, working capital requirements typically decrease during the fourth quarter of the fiscal year as inventory is sold. Cash provided by operating activities is typically higher in the fourth quarter of the fiscal year due to reduced working capital requirements during that period.
Results of Operations
The following tables set forth, for the periods indicated, selected income statement data, both in dollars and as a percentage of Net revenue:
|
|
13 Weeks Ended |
|
|||||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||||||||
Net revenue |
|
$ |
294,079 |
|
|
|
100.0 |
% |
|
$ |
317,173 |
|
|
|
100.0 |
% |
Cost of sales (exclusive of depreciation and amortization) |
|
|
150,661 |
|
|
|
51.2 |
% |
|
|
165,288 |
|
|
|
52.1 |
% |
Gross profit |
|
|
143,418 |
|
|
|
48.8 |
% |
|
|
151,885 |
|
|
|
47.9 |
% |
Selling and administrative |
|
|
129,356 |
|
|
|
44.0 |
% |
|
|
135,510 |
|
|
|
42.7 |
% |
Depreciation and amortization |
|
|
7,656 |
|
|
|
2.6 |
% |
|
|
8,692 |
|
|
|
2.7 |
% |
Other operating expense, net |
|
|
2,423 |
|
|
|
0.8 |
% |
|
|
5,197 |
|
|
|
1.6 |
% |
Operating income |
|
|
3,983 |
|
|
|
1.4 |
% |
|
|
2,486 |
|
|
|
0.8 |
% |
Interest expense |
|
|
9,262 |
|
|
|
3.1 |
% |
|
|
10,447 |
|
|
|
3.3 |
% |
Other (income), net |
|
|
(3 |
) |
|
|
(0.0 |
)% |
|
|
(84 |
) |
|
|
(0.0 |
)% |
Loss before income taxes |
|
|
(5,276 |
) |
|
|
(1.8 |
)% |
|
|
(7,877 |
) |
|
|
(2.5 |
)% |
Income tax benefit |
|
|
(1,609 |
) |
|
|
(0.5 |
)% |
|
|
(2,626 |
) |
|
|
(0.8 |
)% |
NET LOSS |
|
$ |
(3,667 |
) |
|
|
(1.2 |
)% |
|
$ |
(5,251 |
) |
|
|
(1.7 |
)% |
22
Table of Contents
|
|
26 Weeks Ended |
|
|||||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||||||||
Net revenue |
|
$ |
555,287 |
|
|
|
100.0 |
% |
|
$ |
602,644 |
|
|
|
100.0 |
% |
Cost of sales (exclusive of depreciation and amortization) |
|
|
279,143 |
|
|
|
50.3 |
% |
|
|
311,779 |
|
|
|
51.7 |
% |
Gross profit |
|
|
276,144 |
|
|
|
49.7 |
% |
|
|
290,865 |
|
|
|
48.3 |
% |
Selling and administrative |
|
|
252,818 |
|
|
|
45.5 |
% |
|
|
262,911 |
|
|
|
43.6 |
% |
Depreciation and amortization |
|
|
15,947 |
|
|
|
2.9 |
% |
|
|
17,697 |
|
|
|
2.9 |
% |
Other operating expense, net |
|
|
5,766 |
|
|
|
1.0 |
% |
|
|
5,538 |
|
|
|
0.9 |
% |
Operating income |
|
|
1,613 |
|
|
|
0.3 |
% |
|
|
4,719 |
|
|
|
0.8 |
% |
Interest expense |
|
|
18,527 |
|
|
|
3.3 |
% |
|
|
20,783 |
|
|
|
3.4 |
% |
Other (income), net |
|
|
(14 |
) |
|
|
(0.0 |
)% |
|
|
(172 |
) |
|
|
(0.0 |
)% |
Loss before income taxes |
|
|
(16,900 |
) |
|
|
(3.0 |
)% |
|
|
(15,892 |
) |
|
|
(2.6 |
)% |
Income tax benefit |
|
|
(4,971 |
) |
|
|
(0.9 |
)% |
|
|
(4,199 |
) |
|
|
(0.7 |
)% |
NET LOSS |
|
$ |
(11,929 |
) |
|
|
(2.1 |
)% |
|
$ |
(11,693 |
) |
|
|
(1.9 |
)% |
Depreciation and amortization are not included in our cost of sales because we are a reseller of inventory and do not believe that including depreciation and amortization is meaningful. As a result, our gross margins may not be comparable to other entities that include depreciation and amortization related to the sale of their product in their gross margin measure.
Definitions, Reconciliations and Uses of Non-GAAP Financial Measures
In addition to our Net income (loss) determined in accordance with GAAP, for purposes of evaluating operating performance, we report the following non-GAAP measures: Adjusted net income (loss) and Adjusted EBITDA. Adjusted net income (loss) is also expressed on a diluted per share basis.
We believe presenting non-GAAP financial measures provides useful information to investors, allowing them to assess how the business performed excluding the effects of significant non-recurring or non-operational amounts. We believe the use of the non-GAAP financial measures facilitates comparing the results being reported against past and future results by eliminating amounts that we believe are not comparable between periods and assists investors in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with management’s own methods for evaluating business performance.
Our management uses Adjusted net income (loss) and Adjusted EBITDA to evaluate the operating performance of our business for comparable periods and to discuss our business with our Board of Directors, institutional investors and other market participants. Adjusted EBITDA is also used as the basis for a performance measure used in executive incentive compensation.
The methods we use to calculate our non-GAAP financial measures may differ significantly from methods other companies use to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. Adjusted net income (loss) and Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as these measures may exclude a number of important cash and non-cash recurring items.
Adjusted net income (loss) is defined as net income (loss) excluding significant non-recurring or non-operational items as set forth below. Adjusted net income (loss) is also presented on a diluted per share basis. While Adjusted net income (loss) is a non-GAAP measurement, management believes that it is an important indicator of operating performance and useful to investors.
23
Table of Contents
The following tables set forth, for the periods indicated, a reconciliation of Net loss to Adjusted net loss and Adjusted diluted
loss per share:
Unaudited |
|
13 Weeks Ended |
|
|||||
(in thousands, except per share amounts) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||
Net loss |
|
$ |
(3,667 |
) |
|
$ |
(5,251 |
) |
Corporate restructuring |
|
|
2,434 |
|
|
|
2,338 |
|
Long-lived asset impairment |
|
|
— |
|
|
|
2,805 |
|
Exit costs |
|
|
— |
|
|
|
687 |
|
Tax effects on adjustments (1) |
|
|
(619 |
) |
|
|
(1,297 |
) |
ADJUSTED NET LOSS |
|
$ |
(1,852 |
) |
|
$ |
(718 |
) |
ADJUSTED DILUTED LOSS PER SHARE |
|
$ |
(0.06 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
||
Diluted weighted average common shares outstanding |
|
|
30,743 |
|
|
|
31,376 |
|
Unaudited |
|
26 Weeks Ended |
|
|||||
(in thousands, except per share amounts) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||
Net loss |
|
$ |
(11,929 |
) |
|
$ |
(11,693 |
) |
Corporate restructuring |
|
|
5,766 |
|
|
|
2,680 |
|
Exit costs |
|
|
257 |
|
|
|
687 |
|
Long-lived asset impairment |
|
|
— |
|
|
|
2,805 |
|
Tax effects on adjustments (1) |
|
|
(1,365 |
) |
|
|
(1,384 |
) |
ADJUSTED NET LOSS |
|
$ |
(7,271 |
) |
|
$ |
(6,905 |
) |
ADJUSTED DILUTED LOSS PER SHARE |
|
$ |
(0.24 |
) |
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
||
Diluted weighted average common shares outstanding |
|
|
30,721 |
|
|
|
31,407 |
|
While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance, and is useful to investors, because EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax.
24
Table of Contents
The following tables set forth, for the periods indicated, selected income statement data, both in dollars and as a percentage of Net revenue and a reconciliation of Net loss to Adjusted EBITDA:
Unaudited |
|
13 Weeks Ended |
|
|||||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||||||||
Net loss |
|
$ |
(3,667 |
) |
|
|
(1.2 |
)% |
|
$ |
(5,251 |
) |
|
|
(1.7 |
)% |
Income tax benefit |
|
|
(1,609 |
) |
|
|
(0.5 |
)% |
|
|
(2,626 |
) |
|
|
(0.8 |
)% |
Interest expense |
|
|
9,262 |
|
|
|
3.1 |
% |
|
|
10,447 |
|
|
|
3.3 |
% |
Other (income), net |
|
|
(3 |
) |
|
|
(0.0 |
)% |
|
|
(84 |
) |
|
|
(0.0 |
)% |
Operating income |
|
|
3,983 |
|
|
|
1.4 |
% |
|
|
2,486 |
|
|
|
0.8 |
% |
Depreciation and amortization |
|
|
7,656 |
|
|
|
2.6 |
% |
|
|
8,692 |
|
|
|
2.7 |
% |
Corporate restructuring |
|
|
2,434 |
|
|
|
0.8 |
% |
|
|
2,338 |
|
|
|
0.7 |
% |
Exit costs |
|
|
— |
|
|
|
— |
% |
|
|
687 |
|
|
|
0.1 |
% |
Long-lived asset impairment |
|
|
— |
|
|
|
— |
% |
|
|
2,805 |
|
|
|
0.9 |
% |
(Gain) loss on disposal of property and equipment |
|
|
(11 |
) |
|
|
(0.0 |
)% |
|
|
53 |
|
|
|
0.0 |
% |
Adjusted EBITDA |
|
$ |
14,062 |
|
|
|
4.8 |
% |
|
$ |
17,061 |
|
|
|
5.4 |
% |
Unaudited |
|
26 Weeks Ended |
|
|||||||||||||
(in thousands) |
|
August 1, 2025 |
|
|
August 2, 2024 |
|
||||||||||
Net loss |
|
$ |
(11,929 |
) |
|
|
(2.1 |
)% |
|
$ |
(11,693 |
) |
|
|
(1.9 |
)% |
Income tax benefit |
|
|
(4,971 |
) |
|
|
(0.9 |
)% |
|
|
(4,199 |
) |
|
|
(0.7 |
)% |
Interest expense |
|
|
18,527 |
|
|
|
3.3 |
% |
|
|
20,783 |
|
|
|
3.4 |
% |
Other (income), net |
|
|
(14 |
) |
|
|
(0.0 |
)% |
|
|
(172 |
) |
|
|
(0.0 |
)% |
Operating income |
|
|
1,613 |
|
|
|
0.3 |
% |
|
|
4,719 |
|
|
|
0.8 |
% |
Depreciation and amortization |
|
|
15,947 |
|
|
|
2.9 |
% |
|
|
17,697 |
|
|
|
2.9 |
% |
Corporate restructuring |
|
|
5,766 |
|
|
|
1.0 |
% |
|
|
2,680 |
|
|
|
0.4 |
% |
Exit costs |
|
|
257 |
|
|
|
0.0 |
% |
|
|
687 |
|
|
|
— |
% |
Long-lived asset impairment |
|
|
— |
|
|
|
— |
% |
|
|
2,805 |
|
|
|
0.5 |
% |
Loss on disposal of property and equipment |
|
|
— |
|
|
|
— |
|
|
|
52 |
|
|
|
0.0 |
% |
Adjusted EBITDA |
|
$ |
23,583 |
|
|
|
4.2 |
% |
|
$ |
28,640 |
|
|
|
4.8 |
% |
In assessing the operational performance of our business, we consider a variety of financial measures. We operate in six separate distribution channels for revenue reporting purposes: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail. A key measure in the evaluation of our business is revenue performance by distribution channel as well as consolidated Gross margin. We manage and assess the performance of each of our operating segments using variable profit, which is defined as Net revenue minus cost of sales and variable selling expenses. This segment measure excludes fixed personnel costs, incentive compensation, office occupancy, information technology, professional fees and depreciation and amortization. See Note 12, Segment Reporting for more information regarding variable profit, which is a non-GAAP measure, as well as a reconciliation of variable profit to Income (loss) before income taxes.
We use Net revenue to evaluate revenue performance for the U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Retail and Licensing distribution channels. We use GMV, which equals total order value of all Lands’ End branded merchandise sold to customers through business-to-consumer and business-to-business channels, as well as the estimated retail value of the merchandise sold through third party distribution channels, as an important indicator of the performance of the comparable growth of the total brand.
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Discussion and Analysis
Second Quarter 2025 compared with Second Quarter 2024
Gross Merchandise Value
Gross Merchandise Value (“GMV”) was approximately flat when compared to Second Quarter 2024.
Net Revenue
Net revenue was $294.1 million for the Second Quarter of 2025, a decrease of $23.1 million or 7.3%, from $317.2 million during the Second Quarter of 2024.
U.S. Digital Segment Net revenue was $255.3 million for the Second Quarter of 2025, a decrease of $15.1 million or 5.6% from $270.4 million in the Second Quarter of 2024.
U.S. eCommerce Net revenue was $167.3 million for the Second Quarter of 2025, a decrease of $21.0 million or 11.2%, from $188.3 million during the Second Quarter of 2024. The Second Quarter of 2025 decrease reflected a slower start to the seasonal swim product.
Outfitters Net revenue was $66.4 million for the Second Quarter of 2025, an increase of $3.2 million or 5.1%, from $63.2 million during the Second Quarter of 2024. The school uniform channel increased high single digits primarily due to new customers acquired from a competitor exiting the business. Revenue from the business uniform channel was up year-over-year driven by our enterprise accounts.
Third Party Net revenue was $21.6 million for the Second Quarter of 2025, an increase of $2.7 million or 14.3%, from $18.9 million during the Second Quarter of 2024. The increase was primarily due to curated product assortments which resulted in strength across marketplaces.
Europe eCommerce Net revenue was $19.6 million for the Second Quarter of 2025, a decrease of $3.4 million or 14.8%, from $23.0 million during the Second Quarter of 2024. The decrease was primarily due to inventory timing from supply chain challenges and macroeconomic conditions while continuing to increase distribution channels with several marketplace expansions.
Licensing and Retail Net revenue was $19.2 million for the Second Quarter of 2025, a decrease of $4.7 million or 19.7%, from $23.9 million during the Second Quarter of 2024. The revenue decreased due to the performance of U.S. Company Operated stores partially offset by licensing revenues increasing approximately 19%.
Gross Profit
Gross profit was $143.4 million for the Second Quarter of 2025, a decrease of $8.5 million or 5.6% from $151.9 million during the Second Quarter of 2024. Gross margin increased approximately 90 basis points to 48.8% in the Second Quarter of 2025, compared with 47.9% in the Second Quarter of 2024. The gross margin improvement was primarily driven by improved promotional productivity and the expansion of the licensing business.
Selling and Administrative Expenses
Selling and administrative expenses decreased $6.1 million to $129.4 million or 44.0% of Net revenue in the Second Quarter of 2025 compared with $135.5 million or 42.7% of Net revenue in the Second Quarter of 2024. The approximately 130 basis points increase was primarily driven by deleverage from lower revenues.
Depreciation and Amortization
Depreciation and amortization expense decreased $1.0 million to $7.7 million in the Second Quarter of 2025 compared with $8.7 million in the Second Quarter of 2024. The decrease in depreciation and amortization is primarily driven by lower software depreciation as a result of major software projects becoming fully depreciated.
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Other Operating Expense
Other operating expense, net was $2.4 million in the Second Quarter of 2025 compared to $5.2 million in the Second Quarter of 2024. The decrease was primarily driven by restructuring costs incurred. See Note 1, Background and Basis of Presentation.
Operating Income
As a result of the above factors, Operating income was $4.0 million in the Second Quarter of 2025 compared to $2.5 million in the Second Quarter of 2024.
Interest Expense
Interest expense was $9.3 million in the Second Quarter of 2025 compared to $10.4 million in the Second Quarter of 2024. The $1.1 million decrease was primarily driven by lower ABL Facility interest related to lower average outstanding balances and lower applicable interest rates under the Term Loan Facility.
Other Expense (Income)
Other income was insignificant in the Second Quarter of 2025 compared to $0.1 million in the Second Quarter of 2024.
Income Tax (Benefit) Expense
We recorded an income tax benefit at an overall effective rate of 30.5% and 33.4% for the Second Quarter of 2025 and Second Quarter of 2024, respectively. The overall effective tax rate for the 13 weeks ended August 1, 2025 varies from the U.S. federal statutory rate of 21% as a result of state taxes, and non-deductible expenses. The overall effective tax rate for the 13 weeks ended August 2, 2024 varies from the U.S. federal statutory rate of 21% as a result of state taxes, non-deductible expenses, and the impact of stock-based compensation.
Net Income (Loss)
As a result of the above factors, Net loss was $3.7 million and diluted loss per share was $0.12 in the Second Quarter of 2025 compared with Net loss of $5.3 million and diluted loss per share was $0.17 in the Second Quarter of 2024.
Adjusted Net Income (Loss)
Adjusted net loss was $1.9 million and Adjusted diluted loss per share was $0.06 in the Second Quarter of 2025 compared to Adjusted net loss of $0.7 million and Adjusted diluted loss per share of $0.02 in the Second Quarter of 2024.
Adjusted EBITDA
As a result of the above factors, Adjusted EBITDA was $14.1 million in Second Quarter 2025 and $17.1 million in Second Quarter 2024, respectively.
U.S. Digital Segment Results of Operations
Variable Profit
U.S. Digital Segment variable profit was $56.7 million in the Second Quarter of 2025, a decrease of $6.1 million compared to $62.8 million in the Second Quarter of 2024. U.S. Digital Segment variable profit was 22.2% of Net revenue in the Second Quarter of 2025, which is a decrease of 100 basis points compared to 23.2% of Net revenue in the Second Quarter of 2024. The decrease in variable profit as a percentage of Net revenue was driven by deleverage from lower revenues and channel mix partially offset by product solutions and newness across the assortment, improvements in supply chain costs and cost controls across the entire business.
Product cost of goods sold was $100.5 million or 39.4% of U.S. Digital Segment revenue in the Second Quarter of 2025 compared to $105.7 million or 39.1% of U.S. Digital Segment revenue in the Second Quarter of 2024. Shipping cost of goods sold was $33.0 million or 12.9% of U.S. Digital Segment revenue in the Second Quarter of 2025 compared to $34.8 million or 12.9% of U.S. Digital Segment revenue in the Second Quarter of 2024. The increase in Product and Shipping costs of goods sold as a percentage of U.S. Digital Segment revenue was primarily due to product assortment mix partially offset by improvements in supply chain costs.
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Marketing expenses were $43.3 million or 17.0% of U.S. Digital Segment revenue in the Second Quarter of 2025 compared to $41.9 million or 15.5% of U.S. Digital Segment revenue in the Second Quarter of 2024. The increase in Marketing expenses was primarily due to higher digital spend focused on new customer acquisition.
Year-to-Date 2025 compared with Year-to-Date 2024
Gross Merchandise Value
Gross Merchandise Value (“GMV”) decreased low-single digits compared to Year-to-Date 2024. Excluding the $12.7 million impact of transitioning kids and footwear inventory to licensees during First Quarter 2024, GMV increased by low-single digits.
Net Revenue
Net revenue was $555.3 million for Year-to-Date 2025, a decrease of $47.3 million or 7.8%, from $602.6 million during Year-to-Date 2024. Excluding the impact of transitioning kids and footwear inventory to licensees, Net revenue decreased by 5.8%.
U.S. Digital Segment Net revenue was $483.0 million for Year-to-Date 2025, a decrease of $16.1 million or 3.2% from $499.1 million in Year-to-Date 2024.
U.S. eCommerce Net revenue was $338.0 million for Year-to-Date 2025, a decrease of $20.9 million or 5.8%, from $358.9 million during Year-to-Date 2024. Year-to-Date 2025 reflected continued strength in our weather proofed Outerwear and transitional key items offset by a slower start to the seasonal swim product.
Outfitters Net revenue was $109.3 million for Year-to-Date 2025, an increase of $3.5 million or 3.3%, from $105.8 million during Year-to-Date 2024. The business uniform channel increased year-over-year primarily due to strength in enterprise accounts. The school uniform channel increased primarily due to new customers acquired from a competitor exiting the business.
Third Party Net revenue was $35.6 million for Year-to-Date 2025, an increase of $1.2 million or 3.5%, from $34.4 million during Year-to-Date 2024. The increase was primarily due to curated product assortments which resulted in strength across marketplaces.
Europe eCommerce Net revenue was $37.5 million for Year-to-Date 2025, a decrease of $10.4 million or 21.7%, from $47.9 million during Year-to-Date 2024. The decrease was primarily due to new leadership using the first half to relaunch as a more premium brand while continuing to increase distribution channels with several marketplace expansions.
Licensing and Retail Net revenue was $34.8 million for Year-to-Date 2025, a decrease of $20.8 million or 37.4%, from $55.6 million during Year-to-Date 2024. The decrease was primarily driven by the impact of transitioning kids and footwear inventory to licensees in the First Quarter of 2024 and the performance of U.S. Company Operated stores partially offset by licensing revenue increasing approximately 36%.
Gross Profit
Gross profit was $276.1 million for Year-to-Date 2025, a decrease of $14.8 million or 5.1% from $290.9 million during Year-to-Date 2024. Gross margin increased approximately 140 basis points to 49.7% in Year-to-Date 2025, compared with 48.3% in Year-to-Date 2024. The gross margin improvement was primarily driven by improved promotional productivity and the expansion of the licensing business.
Selling and Administrative Expenses
Selling and administrative expenses decreased $10.1 million to $252.8 million or 45.5% of Net revenue in Year-to-Date 2025 compared with $262.9 million or 43.6% of Net revenue in Year-to-Date 2024. The approximately 190 basis points increase was primarily driven by deleverage from lower revenues.
Depreciation and Amortization
Depreciation and amortization expense decreased $1.8 million to $15.9 million in Year-to-Date 2025 compared with $17.7 million in Year-to-Date 2024. The decrease in depreciation and amortization is primarily driven by lower software depreciation as a result of major software projects becoming fully depreciated.
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Other Operating Expense
Other operating expense, net was $5.8 million in Year-to-Date 2025 compared to $5.5 million in Year-to-Date 2024. The increase was primarily driven by restructuring costs incurred. See Note 1, Background and Basis of Presentation.
Operating Income
As a result of the above factors, Operating income was $1.6 million in Year-to-Date 2025 compared to $4.7 million in Year-to-Date 2024.
Interest Expense
Interest expense was $18.5 million in Year-to-Date 2025 compared to $20.8 million in Year-to-Date 2024. The $2.3 million decrease was primarily driven by lower ABL Facility interest related to lower average outstanding balances and lower applicable interest rates under the Term Loan Facility.
Other Expense (Income)
Other income was insignificant in Year-to-Date 2025 compared to $0.2 million in Year-to-Date 2024.
Income Tax (Benefit) Expense
We recorded an income tax benefit at an overall effective rate of 29.4% and 26.4% for the Year-to-date 2025 and Year-to-date 2024, respectively. The overall effective tax rate for the 26 weeks ended August 1, 2025 varies from the U.S. federal statutory rate of 21% as a result of state taxes, and non-deductible expenses. The overall effective tax rate for the 26 weeks ended August 2, 2024 varies from the U.S. federal statutory rate of 21% as a result of state taxes, non-deductible expenses, and the impact of stock-based compensation.
Net Income (Loss)
As a result of the above factors, Net loss was $11.9 million and diluted loss per share was $0.39 in Year-to-Date 2025 compared with Net loss of $11.7 million and diluted loss per share was $0.37 in Year-to-Date 2024.
Adjusted Net Income (Loss)
Adjusted net loss was $7.3 million and Adjusted diluted loss per share was $0.24 in Year-to-Date 2025 compared to Adjusted net loss of $6.9 million and Adjusted diluted loss per share of $0.22 in Year-to-Date 2024.
Adjusted EBITDA
As a result of the above factors, Adjusted EBITDA was $23.6 million in Year-to-Date 2025 and $28.6 million in Year-to-Date 2024, respectively.
U.S. Digital Segment Results of Operations
Variable Profit
U.S. Digital Segment variable profit was $109.6 million in Year-to-Date 2025, a decrease of $8.1 million compared to $117.7 million in Year-to-Date 2024. U.S. Digital Segment variable profit was 22.7% of Net revenue in Year-to-Date 2025, which is a decrease of 20 basis points compared to 23.6% of Net revenue in Year-to-Date 2024. The decrease in variable profit as a percentage of Net revenue was driven by deleverage from lower revenues and channel mix partially offset by product solutions and newness across the assortment, improvements in supply chain costs and cost controls across the entire business.
Product cost of goods sold was $184.1 million or 38.1% of U.S. Digital Segment revenue in Year-to-Date 2025 compared to $185.5 million or 37.2% of U.S. Digital Segment revenue in Year-to-Date 2024. Shipping cost of goods sold was $62.2 million or 12.9% of U.S. Digital Segment revenue in Year-to-Date 2025 compared to $68.0 million or 13.6% of U.S. Digital Segment revenue in Year-to-Date 2024. The increase in Product and Shipping cost of goods sold as a percentage of U.S. Digital Segment revenue was primarily
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due to product assortment mix partially offset by improvements in supply chain costs. Marketing expenses were $83.2 million or 17.2% of U.S. Digital Segment revenue in Year-to-Date 2025 compared to $81.0 million or 16.2% of U.S. Digital Segment revenue in Year-to-Date 2024. The increase in Marketing expenses was primarily due to higher digital spend focused on new customer acquisition.
Liquidity and Capital Resources
Liquidity
Our primary need for liquidity is to fund working capital requirements of our business, which are inventory purchases, payments on debt, capital expenditures and for general corporate purposes. Our cash and cash equivalents and the ABL Facility serve as sources of liquidity for short-term working capital needs and general corporate purposes. The ABL Facility had a balance outstanding of $35.0 million on August 1, 2025, other than letters of credit. Cash generated from our net revenue and profitability, and to a lesser extent our changes in working capital, are driven by the seasonality of our business, with a significant amount of net revenue and operating cash flows generally occurring in the fourth fiscal quarter of each year. We expect that our cash on hand and cash flows from operations, along with revolving on the ABL Facility, will be adequate to meet our capital requirements and operational needs for at least the next 12 months.
ABL Facility
Our $225.0 million committed revolving ABL Facility, as amended to date, includes a $35.0 million sublimit for letters of credit and is available for working capital and other general corporate liquidity needs. The amount available to borrow is the lesser of (1) the Aggregate Commitments of $225.0 million (“ABL Facility Limit”) or (2) the Borrowing Base or Loan Cap which is calculated from Eligible Inventory, Trade Receivables and Credit Card Receivables, all foregoing capitalized terms not defined herein are as defined in the ABL Facility. The balance outstanding on August 1, 2025 and August 2, 2024 was $35.0 million and $20.0 million, respectively. The balance of outstanding letters of credit was $10.9 million and $8.1 million on August 1, 2025 and August 2, 2024, respectively. The borrowing availability under the ABL Facility was $87.6 million and $117.5 million as of August 1, 2025 and August 2, 2024, respectively.
Effective with the Fifth Amendment to the ABL Facility, dated March 28, 2025 (the “Fifth Amendment”), the 0.10% adjustment to the SOFR benchmark interest rate was eliminated and the benchmark rates under the ABL Credit Agreement are, at our election, either: (1) Term SOFR (which is a forward looking term rate based on the secured overnight financing rate), or (2) a Base Rate (which is the greatest of (a) 0% per annum, (b) the federal funds rate plus 0.50%, (c) the one-month Term SOFR rate plus 1.00%, or (d) the Wells Fargo “prime rate”). The borrowing margin for SOFR Rate loans is (i) where the average daily total outstanding for the previous quarter is less than $95.0 million, 1.50%, and (ii) where the average daily total outstanding for the previous quarter is equal to or greater than $95.0 million, 1.75%. For Base Rate loans, the borrowing margin is (i) where the average daily total outstanding for the previous quarter is less than $95.0 million, 0.75%, and (ii) where the average daily total outstanding for the previous quarter is equal to or greater than $95.0 million, 1.00% (“Applicable Borrowing Margin”). The Applicable Borrowing Margin for all loans is based upon the average daily total loans outstanding for the previous quarter. The Fifth Amendment had no material interest rate impact.
The ABL Facility fees include (i) commitment fees of 0.20% or 0.30% based upon the average daily unused commitment (aggregate commitment less loans and letter of credit outstanding) under the ABL Facility for the preceding fiscal quarter, (ii) customary letter of credit fees and (iii) customary annual agent fees. The Fifth Amendment extended the maturity date of the ABL Facility to the earlier of (a) March 28, 2030 and (b) September 29, 2028 if, on or prior to such date, the Term Loan Facility has not been refinanced, extended or repaid in full in accordance with the terms thereof and not replaced with other indebtedness. Under applicable accounting guidance, certain unamortized debt issuance costs originating from the ABL Facility are deferred and amortized over the extended term of the ABL Facility, and certain unamortized debt issuance costs have been written off. As of August 1, 2025, we had $35.0 million borrowings outstanding under the ABL Facility.
Long-Term Debt
The Term Loan Facility will mature on December 29, 2028, and amortizes at a rate equal to 1.25% per quarter. Depending upon our Total Leverage Ratio, as defined in the Term Loan Facility, mandatory prepayments in an amount equal to a percentage of the our excess cash flows in each fiscal year, ranging from 0% to 75% are required. The Term Loan Facility also has typical prepayment requirements for the proceeds of certain asset sales, casualty events and extraordinary receipts. Voluntary prepayment and certain mandatory prepayments made (i) between December 30, 2024 and December 29, 2025 would result in a prepayment premium equal to 2% of the principal amount of the loan prepaid, (ii) between December 30, 2025 and December 29, 2026, would result in a prepayment premium equal to 1% of the principal amount of the loan prepaid, (iii) between December 30, 2026 and December 29, 2027, would
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result in a prepayment premium equal to 0.5% of the principal amount of the loan prepaid and (iv) thereafter no prepayment premium is due.
The interest rates per annum applicable to the loans under the Term Loan Facility are based on a fluctuating rate of interest equal to, at our election, either (1) Term Loan Adjusted SOFR loan (subject to a 2% floor) plus an applicable margin, or (2) an alternative base rate loan plus an applicable margin. The applicable margin is based on our net leverage and will be, (i) for Term Loan Adjusted SOFR loans, 8.25% per annum if the total leverage ratio is greater than or equal to 2.75:1.00, 8.00% per annum if the total leverage ratio is less than 2.75:1.00 but greater than or equal to 2.25:1.00, and 7.75% per annum if the total leverage ratio is less than 2.25:1.00 and (ii) for base rate loans, 7.25% per annum if the total leverage ratio is greater than or equal to 2.75:1.00, 7.00% per annum if the total leverage ratio is less than 2.75:1.00 but greater than or equal to 2.25:1.00, and 6.75% per annum if the total leverage ratio is less than 2.25:1.00. In each case, the net leverage is determined as of the last day of each applicable measurement period.
The Term Loan Facility contains customary agency fees.
Debt Facilities
Guarantees; Security
All obligations under the Debt Facilities are unconditionally guaranteed by Lands’ End, Inc. and, subject to certain exceptions, each of its existing and future direct and indirect subsidiaries. The ABL Facility is secured by a first priority security interest in certain working capital of the borrowers and guarantors consisting primarily of accounts receivable and inventory. The Term Loan Facility is also secured by a second priority security interest in the same collateral, with certain exceptions.
The Term Loan Facility is also secured by a first priority security interest in certain property and assets, including certain fixed assets such as real estate, stock of subsidiaries and intellectual property, in each case, subject to certain exceptions. The ABL Facility is also secured by a second priority interest in the same collateral, with certain exceptions.
Representations and Warranties; Covenants
Subject to specified exceptions, the Debt Facilities contain various representations and warranties and restrictive covenants that, among other things, restrict Lands’ End, Inc.’s and its subsidiaries’ ability to incur indebtedness (including guarantees), grant liens, make investments, make dividends or distributions with respect to capital stock, make prepayments on other indebtedness, engage in mergers or change the nature of their business.
The Term Loan Facility contains financial covenants, including a quarterly maximum total leverage ratio test and a monthly minimum liquidity test.
Under the ABL Facility, if excess availability falls below the greater of 10% of the Loan Cap amount or $12.0 million, we will be required to comply with a minimum fixed charge coverage ratio of 1.0 to 1.0.
The Debt Facilities contain certain affirmative covenants, including reporting requirements such as delivery of financial statements, certificates and notices of certain events, maintaining insurance and providing additional guarantees and collateral in certain circumstances.
As of August 1, 2025, we were in compliance with the financial covenants in the Debt Facilities.
Events of Default
The Debt Facilities include customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross defaults related to certain other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, material judgments and change of control.
Cash Flows and Capital Expenditures
Cash Flows from Operating Activities
Net cash provided by operating activities was $0.5 million during Year-to-Date 2025 compared to $4.9 million during Year-to-Date 2024. The decrease in net cash provided by operating activities was primarily due to the decrease in adjusted EBITDA.
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Cash Flows from Investing Activities
Net cash used in investing activities was $17.2 million and $11.5 million during Year-to-Date 2025 and Year-to-Date 2024, respectively. Cash used in investing activities for both periods was primarily used for investments to update our digital information technology infrastructure.
For Fiscal 2025, we plan to invest approximately $25.0 million in capital expenditures for strategic investments and infrastructure, primarily in technology and general corporate needs.
Cash Flows from Financing Activities
Net cash provided by financing activities was $22.1 million during Year-to-Date 2025, compared to $6.9 million during Year-to-Date 2024. The increase in net cash provided by financing activities is primarily due to an increase in borrowings under our ABL Facility in the Second Quarter 2025 as compared to the prior year.
Contractual Obligations and Off-Balance-Sheet Arrangements
There have been no material changes to our contractual obligations and off-balance-sheet arrangements as discussed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.
Financial Instruments with Off-Balance-Sheet Risk
The ABL Facility is available for working capital and other general corporate liquidity needs. The balance outstanding on August 1, 2025 and August 2, 2024 was $35.0 million and $20.0 million, respectively. The balance of outstanding letters of credit was $10.9 million and $8.1 million on August 1, 2025 and August 2, 2024, respectively.
Application of Critical Accounting Policies and Estimates
We believe that the assumptions and estimates associated with revenue, inventory valuation, indefinite-lived intangible asset impairment assessments and income taxes have the greatest potential impact on our financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
For a complete discussion of our critical accounting policies, please refer to our Annual Report on Form 10-K for the year ended January 31, 2025. There have been no significant changes in our critical accounting policies or their application since January 31, 2025.
Recent Accounting Pronouncements
See Part I, Item 1, Note 2, Recently Issued Accounting Pronouncements Not Yet Adopted, of the Condensed Consolidated Financial Statements (unaudited) included in this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document contains forward-looking statements. Forward-looking statements reflect our current views with respect to, among other things, future events and performance. These statements may discuss, among other things, our GMV, variable profit, net sales, gross margin, operating expenses, operating income, net income, adjusted net income, adjusted EBITDA, cash flow, financial condition, financings, impairments, expenditures, growth, strategies, plans, achievements, dividends, capital structure, organizational structure, future store openings, market opportunities and general market and industry conditions. We generally identify forward-looking statements by words such as “anticipate,” “estimate,” “expect,” “intend,” “project,” “plan,” “predict,” “believe,” “seek,” “continue,” “outlook,” “may,” “might,” “will,” “should,” “can have,” “likely,” “targeting” or the negative version of these words or comparable words. Forward-looking statements are based on beliefs and assumptions made by management using currently available information. These statements are only predictions and are not guarantees of future performance, actions or events. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management’s underlying beliefs and assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. These risks and uncertainties include those risks, uncertainties and factors discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 and “Part II, Item 1A Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended May 2, 2025. Forward-looking statements speak only as of the date on which they are made. We expressly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable securities laws and regulations.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
The Company’s international subsidiaries operate with functional currencies other than the U.S. dollar. Since the Company’s Condensed Consolidated Financial Statements are presented in U.S. dollars, the Company must translate all components of these financial statements from the functional currencies into U.S. dollars at exchange rates in effect during or at the end of the reporting period. Net revenue generated from the Europe eCommerce distribution channel represented approximately 7% of our total Net revenue during the Year-to-Date 2025. The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of net revenue, expenses, assets and liabilities. Assuming a 10% change in foreign currency exchange rates, our Net revenue for Year-to-Date 2025 would have increased or decreased by approximately $3.7 million. Translation gains or losses, which are recorded in other comprehensive income or loss, result from translation of the assets and liabilities of our international subsidiaries into U.S. dollars. Foreign currency translation income, net, for Year-to-Date 2025 totaled approximately $0.9 million related to our international subsidiaries in United Kingdom and Germany. Additionally, the Company has foreign currency denominated intercompany receivables and payables that when settled result in a transaction gain or loss. A 10% change in foreign currency exchanges rates would not result in a significant transaction gain or loss in earnings. The Company does not utilize financial instruments for trading purposes or hedging and has not used any derivative financial instruments to limit foreign currency exchange rate exposures. The Company does not consider our foreign earnings to be permanently reinvested.
As of August 1, 2025, the Company had $6.5 million of cash and cash equivalents denominated in foreign currency, principally in euro, British pound sterling and Hong Kong dollar.
Interest Rate Risk
The Company is subject to interest rate risk with the Term Loan Facility and the ABL Facility, as both require the Company to pay interest on outstanding borrowings at variable rates. Each one percentage point change in interest rates (above the 2.00% SOFR floor) associated with the Term Loan Facility would result in a $2.4 million change in our annual cash interest expenses. Assuming our ABL Facility was fully drawn to a principal amount equal to $225.0 million, each one percentage point change in interest rates would result in a $2.3 million change in our annual cash interest expense.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on their evaluation for the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of August 1, 2025, the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) are effective.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal controls over financial reporting identified in connection with the evaluation required by Rules 13a-15 under the Exchange Act during the most recently completed fiscal quarter ended August 1, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is party to various claims, legal proceedings and investigations arising in the ordinary course of business. Some of these actions involve complex factual and legal issues and are subject to uncertainties. At this time, the Company is not able to either predict the outcome of these legal proceedings or reasonably estimate a potential range of loss with respect to the proceedings. While it is not feasible to predict the outcome of pending claims, proceedings and investigations with certainty, management is of the opinion that their ultimate resolution should not have a material adverse effect on our results of operations, cash flows or financial position taken as a whole. There have been no material developments to the legal proceedings disclosed in Part I, Item 3 of the Company’s Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC on March 27, 2025.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended January 31, 2025, filed with the SEC on March 27, 2025, and as disclosed on the Company’s Quarterly Report on Form 10-Q for the quarter ended May 2, 2025, filed with the SEC on June 5, 2025.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table presents a month-to-month summary of information with respect to purchases of common stock made during Second Quarter 2025 pursuant to the 2024 Share Repurchase Program announced on March 15, 2024:
Period |
|
Total Number of Shares Purchased (1) |
|
|
Average Price Paid per Share (2) |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3) |
|
|
Approximate Dollar Value (in thousands) of Shares that May Yet Be Purchased Under the Plans or Programs (3) |
|
||||
May 3 - May 30 |
|
|
168,751 |
|
|
$ |
8.78 |
|
|
|
168,751 |
|
|
$ |
9,098 |
|
May 31 - July 4 |
|
|
30,000 |
|
|
$ |
8.33 |
|
|
|
30,000 |
|
|
$ |
8,848 |
|
July 5 - August 1 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
8,848 |
|
Total |
|
|
198,751 |
|
|
$ |
8.71 |
|
|
|
198,751 |
|
|
|
|
|
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the fiscal quarter ended August 1, 2025, none of the Company’s directors or executive officers
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ITEM 6. EXHIBITS
The following documents are filed as exhibits to this report:
Exhibit Number |
|
Exhibit Description |
|
|
|
3.1 |
|
Amended and Restated Certificate of Incorporation of Lands’ End, Inc. (incorporated by reference to Exhibit 3.1 of the Annual Report on Form 10-K filed by Lands’ End, Inc. on March 24, 2022 (File No. 001-09769)). |
|
|
|
3.2 |
|
Second Amended and Restated Bylaws of Lands’ End, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Lands’ End, Inc. on September 23, 2024 (File No. 001-09769)). |
|
|
|
31.1 |
|
Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.* |
|
|
|
31.2 |
|
Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.* |
|
|
|
32.1 |
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document* |
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Document* |
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document* |
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document*
|
104 |
|
Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)* |
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Lands’ End, Inc.
(Registrant)
By: |
/s/ Bernard McCracken |
|
Name: |
Bernard McCracken |
|
Title: |
Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
|
Date: September 9, 2025
39
FAQ
What is the size of Lands' End's ABL Facility and has it changed (LE)?
How much repurchase capacity remains under Lands' End's 2024 Share Repurchase Program (LE)?
How is Lands' Ends Term Loan interest rate determined?
What are the key stock-based compensation plan features disclosed by Lands' End (LE)?
Is Lands' End adopting ASU 2024-03 and what will it change?
Are there any recent non-recurring items that affected results?
