Core Insights - Lands' End, Inc. reported a wider-than-expected loss in Q2 fiscal 2025, with revenues missing estimates and showing unfavorable year-over-year comparisons [1][2][3] Financial Performance - The company posted an adjusted loss of $0.06 per share, compared to the Zacks Consensus Estimate of a loss of $0.03 and an adjusted loss of $0.02 per share in the same quarter last year [2] - Net revenues were $294.1 million, falling short of the Zacks Consensus Estimate of $322 million and down 7.3% year-over-year [3] - U.S. Digital segment revenues were $255.3 million, a decrease of 5.6% year-over-year, while U.S. e-commerce revenues dropped 11.2% to $167.3 million [3] Revenue Breakdown - Outfitters' revenues increased by 5.1% to $66.4 million, driven by new customer acquisitions in the school uniform channel [4] - Third Party revenues rose 14.3% to $21.6 million, supported by curated product assortments in marketplaces like Amazon and Macy's [4] - Europe e-commerce revenues decreased by 14.8% to $19.6 million due to supply chain issues and macroeconomic conditions [5] - Licensing and Retail net revenues fell by 19.7% to $19.2 million, impacted by poor performance in U.S. company-operated stores [6] Margin Analysis - Gross profit declined by 5.6% year-over-year to $143.4 million, but gross margin improved by 90 basis points to 48.8% due to better promotional productivity [7] - Selling and administrative expenses as a percentage of net revenues increased to 44%, up from 42.7% in the previous year [7] Cash Flow and Debt - The company ended the quarter with cash and cash equivalents of $21.3 million and net long-term debt of $219.6 million [9] - Inventories at the end of the quarter were $301.8 million, with net cash provided from operations amounting to $469 million [9] Future Outlook - For Q3 fiscal 2025, Lands' End projects net revenues between $320 million and $350 million, with adjusted EBITDA expected in the range of $24 million to $28 million [13] - For the full fiscal year 2025, net revenues are anticipated to be between $1.33 billion and $1.40 billion, with adjusted EBITDA projected at $98 million to $107 million [14]

Group 1 - The article emphasizes a long-only investment strategy that evaluates companies from an operational and buy-and-hold perspective, focusing on long-term earnings power and competitive dynamics rather than market-driven price actions [1] - Quipus Capital's approach suggests that most investment calls will be holds, indicating a cautious stance in a bullish market, with only a small fraction of companies deemed suitable for buying at any given time [1] - Hold articles are intended to provide valuable information for future investors and introduce a healthy skepticism towards market optimism [1] Group 2 - The analyst discloses no current stock or derivative positions in the companies mentioned but may consider initiating a short position or purchasing put options within the next 72 hours [2] - The article reflects the author's personal opinions and is not influenced by compensation from any company mentioned, ensuring an independent viewpoint [2] - Seeking Alpha clarifies that past performance does not guarantee future results and that the views expressed may not represent the platform as a whole [3]

Core Insights - Lands' End, Inc. reported a disappointing earnings per share (EPS) of -$0.06, missing the estimated EPS of -$0.03, alongside revenues of approximately $294.1 million, which fell short of the expected $322.4 million [1][2] Financial Performance - The company's quarterly loss of $0.06 per share exceeded the Zacks Consensus Estimate of a $0.03 loss per share, marking a decline from the $0.02 per share loss reported in the same quarter the previous year [2] - Despite an increase in future guidance, investor confidence was not restored, leading to a downturn in the stock market following the announcement of its second-quarter financial results [2] Financial Ratios - The price-to-sales ratio stands at 0.32, indicating that the market value is about 32% of its total sales [3] - The enterprise value to sales ratio is 0.53, while the enterprise value to operating cash flow ratio is 12.62, reflecting how many times the operating cash flow can cover the enterprise value [3] Debt and Liquidity - The debt-to-equity ratio of 1.30 suggests a significant reliance on debt compared to equity, which may raise concerns regarding financial stability [4] - A current ratio of 1.86 indicates a satisfactory level of liquidity to cover short-term liabilities, providing some reassurance about the company's ability to meet immediate financial obligations [4]

Core Insights - The article discusses the earnings call insights compiled from various transcripts and content available on the Seeking Alpha website, emphasizing the limitations of AI-generated insights [1][1][1] Group 1 - The earnings call insights are based on transcripts and other content from Seeking Alpha, highlighting the reliance on AI tools for compilation [1] - There is a disclaimer regarding the accuracy, completeness, and timeliness of the insights, indicating that they have not been curated or reviewed by editors [1] - The insights are intended for informational purposes only and do not account for individual financial situations or objectives [1]

Company Performance - Lands' End reported a quarterly loss of $0.06 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.03, and compared to a loss of $0.02 per share a year ago, indicating a significant earnings surprise of -100.00% [1] - The company posted revenues of $294.08 million for the quarter ended July 2025, missing the Zacks Consensus Estimate by 8.78%, and down from $317.17 million in the same quarter last year [2] - Over the last four quarters, Lands' End has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Future Outlook - The sustainability of Lands' End's stock price movement will largely depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.10 on revenues of $326.11 million, and for the current fiscal year, it is $0.62 on revenues of $1.37 billion [7] - The estimate revisions trend for Lands' End was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Retail - Catalog Shopping industry, to which Lands' End belongs, is currently in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $294 million, a decrease of 7% compared to the same quarter last year [18] - Gross profit decreased by 6% year over year, with a gross margin of 49%, reflecting a 90 basis point improvement from the previous year [20] - Adjusted net loss was $1.9 million or $0.06 per share, with adjusted EBITDA of $14 million, representing an 18% year-over-year decrease [20][21] Business Line Performance Changes - B2B business showed strong growth, particularly in commercial uniforms and school uniforms, with revenue up high single digits [11][12] - B2C business saw a significant contribution from licensing and third-party marketplaces, with a 14% growth in the third-party marketplace business [18][12] - Revenue from the licensing business grew 19% year over year, indicating strong momentum [19] Market Performance Changes - U.S. e-commerce sales decreased by 11% compared to the previous year, primarily due to a slow start to the swim season [18] - European sales decreased by 15% year over year, attributed to supply chain challenges and macroeconomic pressures [19] - The company is optimistic about the European market's recovery, with new website launches and improved sales strategies [16][65] Company Strategy and Industry Competition - The company is focusing on a distributed commerce model to enhance customer engagement and reach [4][14] - There is a deliberate strategy to weatherproof product assortments, allowing the company to respond quickly to changing consumer preferences [7][10] - The company is exploring strategic alternatives to enhance its market position, although no further details were provided [25] Management's Comments on Operating Environment and Future Outlook - Management noted a noticeable increase in momentum across key product categories and channels, with confidence in the effectiveness of their strategies [4] - The company expects net revenue for the third quarter to be between $320 million to $350 million, with adjusted net income projected at $3 million to $7 million [22][23] - Management expressed optimism about the upcoming holiday season and the potential for growth in licensing and marketplaces [40][41] Other Important Information - The company has implemented measures to mitigate tariff impacts, with expectations of managing these challenges effectively for the remainder of fiscal 2025 [22][33] - Inventory at the end of the second quarter was $302 million, down 3% year over year, reflecting disciplined inventory management [21] Q&A Session Summary Question: What are the product category trends and pricing strategies? - Management highlighted a shift in customer shopping habits and the success of the Lands' End Essentials line, with a focus on targeted marketing and pricing strategies [27][28][30] Question: How is the licensing business expected to perform in the second half? - Licensing revenues increased by 36%, with expectations for further growth as new licenses are introduced and existing ones ramp up [40][41] Question: What is the outlook for the outerwear category? - Management indicated strong performance in outerwear, with new product innovations and positive customer feedback expected to drive sales [43][46] Question: How is the company addressing the European market challenges? - The company is focusing on a distributed commerce model in Europe, with new website launches and targeted marketing strategies to improve performance [61][65]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $294 million, a decrease of 7% compared to the same period last year [18] - Gross profit decreased by 6% year-over-year, with a gross margin of 49%, reflecting a 90 basis point improvement from the previous year [20] - Adjusted net loss was $1.9 million or $0.06 per share, with adjusted EBITDA of $14 million, representing an 18% year-over-year decrease [20][21] - Inventory at the end of the second quarter was $302 million, down 3% compared to last year [21] Business Line Performance Changes - B2B business showed strong growth, particularly in commercial uniforms and school uniforms, with revenue up high single digits [11][12] - B2C business saw a significant performance in licensing and third-party marketplaces, with the latter growing approximately 14% year-over-year [18][19] - Revenue from the licensing business grew 19% year-over-year, driven by increased brand visibility [19] Market Performance Changes - U.S. e-commerce sales decreased by 11% compared to the second quarter of 2024, primarily due to a slow start to the swim season [18] - European revenue decreased by 15% year-over-year, attributed to supply chain challenges and macroeconomic pressures [19] - The company is optimistic about the European market's recovery, with new website launches and improved sales strategies [16][65] Company Strategy and Industry Competition - The company is focusing on a distributed commerce model to enhance customer engagement and reach [4][5] - A shift towards an asset-light, low-capital intensity model is allowing for rapid deployment of new products [5][7] - The strategy includes weatherproofing the product assortment to meet changing consumer demands [10][32] Management's Comments on Operating Environment and Future Outlook - Management noted a noticeable increase in momentum across key product categories and channels [4] - The company is confident in mitigating tariff impacts through strategic sourcing and vendor management [8][33] - Guidance for the third quarter includes expected net revenue between $320 million and $350 million, with adjusted net income projected at $3 million to $7 million [22][23] Other Important Information - The board is exploring strategic alternatives, with no further comments provided at this time [25] - The company is leveraging AI-driven tools for personalized marketing and product recommendations [15][30] Q&A Session Summary Question: What are the product category trends driving the acceleration in momentum? - Management highlighted a shift in customer shopping habits and the success of the Lands' End Essentials line, which is attracting new customers [27][28] Question: Can you elaborate on the licensing business and its future potential? - Licensing revenues increased by 36%, with expectations for further growth in the back half of the year due to new licenses and holiday season opportunities [40][41] Question: What is the outlook for the European market? - Management expressed optimism about the European business turnaround, focusing on a distributed commerce model and new partnerships [61][64]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $294 million, a decrease of 7% compared to the same quarter last year, with GMV approximately flat year over year [16] - Adjusted net loss was $1.9 million or $0.06 per share, with adjusted EBITDA of $14 million, representing a year-over-year decrease of 18% [18] - Gross profit decreased by 6% year over year, while gross margin improved by approximately 90 basis points to 49% [18] Business Line Performance Changes - B2B business showed strong growth, particularly in commercial uniforms and school uniforms, with revenue from the school uniform channel increasing by high single digits [10][11] - B2C business saw a significant performance boost from licensing and third-party marketplaces, with the latter growing approximately 14% year over year [16][11] - Revenue from the licensing business grew 19% year over year, reflecting increased brand visibility and momentum [17] Market Performance Changes - U.S. e-commerce sales decreased by 11% compared to Q2 2024, primarily due to a slow start to the swim season [16] - European revenue decreased by 15% year over year, attributed to supply chain challenges and macroeconomic pressures, though early progress was noted [17][14] - The company is optimistic about the European market, with new website launches and a focus on distributed commerce strategies [14][63] Company Strategy and Industry Competition - The company is shifting towards an asset-light, low-capital intensity model to enhance customer engagement and optimize product offerings [5] - A focus on weatherproofing product assortments has allowed the company to respond quickly to changing consumer preferences [9] - The strategy includes leveraging AI for personalized marketing and product recommendations, enhancing customer experience across various channels [13][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum across key product categories and channels, indicating a positive outlook for Q3 [4][23] - The company is implementing measures to manage tariff impacts effectively, with expectations of mitigating near-term effects for the remainder of fiscal 2025 [21][33] - The board is exploring strategic alternatives, with updates to be provided when appropriate [24] Other Important Information - The company repurchased $2 million of shares under its $25 million share repurchase authorization, with $9 million remaining as of the end of the quarter [20] - Guidance for Q3 includes expected net revenue between $320 million to $350 million, with adjusted net income projected at $3 million to $7 million [21] Q&A Session Summary Question: What are the product category trends and pricing strategies? - Management noted strong performance across all categories, with a significant shift in customer shopping habits and a focus on targeted marketing strategies [26][30] Question: Can you elaborate on the licensing business and future opportunities? - Licensing revenues increased by 36%, with expectations for further growth in the back half of the year due to new licenses and holiday season opportunities [41][42] Question: What is the outlook for the European market? - The company is optimistic about the European business turnaround, focusing on distributed commerce and tailored product assortments for local markets [62][63]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Lands' End's unaudited condensed consolidated financial statements for Q2 and YTD 2025, covering operations, balance sheets, cash flows, equity, and detailed notes [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss for both the 13 and 26 weeks ended August 1, 2025, which worsened year-over-year for the 26-week period, despite a slight improvement in gross profit margins for the 13-week period Condensed Consolidated Statements of Operations (13 Weeks Ended, in thousands) | Metric | 13 Weeks Ended Aug 1, 2025 (in thousands) | 13 Weeks Ended Aug 2, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net revenue | $294,079 | $317,173 | | Gross profit | $143,418 | $151,885 | | Operating income | $3,983 | $2,486 | | Interest expense | $9,262 | $10,447 | | NET LOSS | $(3,667) | $(5,251) | | Loss per common share (Basic & Diluted) | $(0.12) | $(0.17) | Condensed Consolidated Statements of Operations (26 Weeks Ended, in thousands) | Metric | 26 Weeks Ended Aug 1, 2025 (in thousands) | 26 Weeks Ended Aug 2, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net revenue | $555,287 | $602,644 | | Gross profit | $276,144 | $290,865 | | Operating income | $1,613 | $4,719 | | Interest expense | $18,527 | $20,783 | | NET LOSS | $(11,929) | $(11,693) | | Loss per common share (Basic & Diluted) | $(0.39) | $(0.37) | [Condensed Consolidated Statements of Comprehensive Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Operations) The company reported a comprehensive loss for both the 13 and 26 weeks ended August 1, 2025, with foreign currency translation adjustments impacting the loss Condensed Consolidated Statements of Comprehensive Operations (13 Weeks Ended, in thousands) | Metric | 13 Weeks Ended Aug 1, 2025 (in thousands) | 13 Weeks Ended Aug 2, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | NET LOSS | $(3,667) | $(5,251) | | Foreign currency translation adjustments | $(565) | $299 | | COMPREHENSIVE LOSS | $(4,232) | $(4,952) | Condensed Consolidated Statements of Comprehensive Operations (26 Weeks Ended, in thousands) | Metric | 26 Weeks Ended Aug 1, 2025 (in thousands) | 26 Weeks Ended Aug 2, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | NET LOSS | $(11,929) | $(11,693) | | Foreign currency translation adjustments | $933 | $(214) | | COMPREHENSIVE LOSS | $(10,996) | $(11,907) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased year-over-year but increased compared to January 31, 2025, with current assets decreasing due to lower inventories and prepaid expenses, while total liabilities remained stable and stockholders' equity decreased Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | August 1, 2025 | August 2, 2024 | January 31, 2025 | | :------------------------------------ | :------------- | :------------- | :--------------- | | Total current assets | $405,062 | $414,764 | $370,480 | | Inventories | $301,797 | $312,014 | $265,132 | | Property and equipment, net | $117,205 | $106,758 | $115,618 | | Intangible asset | $257,000 | $257,000 | $257,000 | | TOTAL ASSETS | $800,641 | $802,516 | $765,481 | | Total current liabilities | $250,539 | $253,427 | $227,623 | | Long-term borrowings under ABL Facility | $35,000 | $20,000 | $— | | Long-term debt, net | $219,550 | $230,227 | $224,888 | | TOTAL LIABILITIES | $575,517 | $576,002 | $526,259 | | TOTAL STOCKHOLDERS' EQUITY | $225,124 | $226,514 | $239,222 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly decreased year-to-date 2025, while net cash used in investing activities and net cash provided by financing activities both increased Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 26 Weeks Ended Aug 1, 2025 | 26 Weeks Ended Aug 2, 2024 | | :------------------------------------ | :------------------------- | :------------------------- | | Net cash provided by operating activities | $469 | $4,909 | | Net cash used in investing activities | $(17,152) | $(11,450) | | Net cash provided by financing activities | $22,074 | $6,890 | | Net increase in cash, cash equivalents and restricted cash | $4,734 | $597 | | Cash, cash equivalents and restricted cash, end of period | $23,546 | $27,887 | - Purchases of property and equipment increased to **$17.2 million** in Year-to-Date 2025 from **$11.5 million** in Year-to-Date 2024[19](index=19&type=chunk) - Proceeds from borrowings under ABL Facility increased to **$68.0 million** in Year-to-Date 2025 from **$49.0 million** in Year-to-Date 2024[19](index=19&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity decreased from $239.2 million at January 31, 2025, to $225.1 million at August 1, 2025, primarily due to net losses and common stock repurchases Condensed Consolidated Statements of Changes in Stockholders' Equity (in thousands) | Metric (in thousands) | Balance at Jan 31, 2025 | Balance at Aug 1, 2025 | | :------------------------------------ | :---------------------- | :--------------------- | | Total Stockholders' Equity | $239,222 | $225,124 | | Net loss (26 weeks) | N/A | $(11,929) | | Purchases and retirement of common stock (26 weeks) | N/A | $(4,502) | | Stock-based compensation expense (26 weeks) | N/A | $2,250 | | Cumulative translation adjustment, net of tax (26 weeks) | N/A | $933 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover the company's business, accounting policies, loss per share, debt, equity, accrued liabilities, fair value, income taxes, commitments, segment reporting, and revenue recognition [NOTE 1. BACKGROUND AND BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201.%20BACKGROUND%20AND%20BASIS%20OF%20PRESENTATION) Lands' End is a digital retailer facing macroeconomic challenges, and has incurred restructuring charges, including a 6% reduction in corporate office positions, to optimize operations - Lands' End, Inc. is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products, and uniforms, operating through online, third-party, company-operated stores, and Outfitters channels[23](index=23&type=chunk) - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP for interim financial information and with instructions to Form 10-Q, and should be read in conjunction with the Annual Report on Form 10-K filed on March 27, 2025[26](index=26&type=chunk) - Macroeconomic issues such as inflation and high interest rates continue to impact consumer discretionary spending, potentially leading to lower customer demand, higher promotion levels, increased costs for raw materials, labor, and debt, and supply chain disruptions due to trade policy uncertainty[27](index=27&type=chunk) - The Company incurred restructuring charges, primarily severance and benefit costs, related to cost optimization and strategic initiatives, including a reduction of approximately **6%** of its corporate office positions to align with evolving business needs and invest in key growth areas[28](index=28&type=chunk) Total Restructuring Costs (in thousands) | Period | August 1, 2025 | August 2, 2024 | | :------------------- | :------------- | :------------- | | 13 Weeks Ended | $2,434 | $2,338 | | 26 Weeks Ended | $5,766 | $2,680 | Accrued Restructuring Costs as of August 1, 2025 (in thousands) | Category | Amount | | :----------------------------- | :----- | | Employee Severance and Benefit Costs | $626 | | Strategic Alternatives and Other Costs | $2,596 | | **Total Restructuring** | **$3,222** | [NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED](index=11&type=section&id=NOTE%202.%20RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS%20NOT%20YET%20ADOPTED) The company is assessing the impact of three recently issued FASB Accounting Standards Updates (ASUs) on financial instruments, expense disaggregation, and income tax disclosures - ASU 2025-05, 'Financial Instruments—Credit Losses,' effective for annual periods beginning after December 15, 2025, provides targeted relief for estimating expected credit losses on short-term receivables[32](index=32&type=chunk) - ASU 2024-03, 'Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures,' effective for annual periods beginning after December 15, 2026, requires public entities to disclose information about purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion[33](index=33&type=chunk) - ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, requires specific categories in the rate reconciliation table and disaggregation of income/loss and tax expense/benefit between domestic and foreign[34](index=34&type=chunk) [NOTE 3. LOSS PER SHARE](index=11&type=section&id=NOTE%203.%20LOSS%20PER%20SHARE) The company reported basic and diluted loss per share of $(0.12) for the 13 weeks and $(0.39) for the 26 weeks ended August 1, 2025, with stock awards considered anti-dilutive Loss Per Share (13 Weeks Ended) | Metric | August 1, 2025 | August 2, 2024 | | :------------------------------------ | :------------- | :------------- | | Net loss (in thousands) | $(3,667) | $(5,251) | | Basic weighted average common shares outstanding (in thousands) | 30,743 | 31,376 | | Diluted weighted average common shares outstanding (in thousands) | 30,743 | 31,376 | | Basic Loss per share | $(0.12) | $(0.17) | | Diluted Loss per share | $(0.12) | $(0.17) | | Anti-dilutive shares excluded (in thousands) | 736 | 509 | Loss Per Share (26 Weeks Ended) | Metric | August 1, 2025 | August 2, 2024 | | :------------------------------------ | :------------- | :------------- | | Net loss (in thousands) | $(11,929) | $(11,693) | | Basic weighted average common shares outstanding (in thousands) | 30,721 | 31,407 | | Diluted weighted average common shares outstanding (in thousands) | 30,721 | 31,407 | | Basic Loss per share | $(0.39) | $(0.37) | | Diluted Loss per share | $(0.39) | $(0.37) | | Anti-dilutive shares excluded (in thousands) | 703 | 806 | - Stock awards were considered anti-dilutive based on the application of the treasury stock method or in the event of a net loss[36](index=36&type=chunk) [NOTE 4. OTHER COMPREHENSIVE LOSS](index=13&type=section&id=NOTE%204.%20OTHER%20COMPREHENSIVE%20LOSS) Other comprehensive loss is primarily driven by foreign currency translation adjustments, with no reclassifications out of Accumulated other comprehensive loss during the periods - Other comprehensive income (loss) encompasses all changes in equity other than those from transactions with stockholders and is solely comprised of foreign currency translation adjustments[37](index=37&type=chunk) Foreign Currency Translation Adjustments (net of tax, in thousands) | Period | August 1, 2025 | August 2, 2024 | | :------------------- | :------------- | :------------- | | 13 Weeks Ended | $(565) | $299 | | 26 Weeks Ended | $933 | $(214) | - No amounts were reclassified out of Accumulated other comprehensive loss during any of the periods presented[38](index=38&type=chunk) [NOTE 5. DEBT](index=13&type=section&id=NOTE%205.%20DEBT) The company's debt facilities include a $225.0 million ABL Facility and a Term Loan Facility, with $35.0 million outstanding under the ABL and $240.5 million under the Term Loan as of August 1, 2025, and the company was in compliance with all covenants - The ABL Facility is a **$225.0 million** committed revolving credit agreement, with a **$35.0 million** sublimit for letters of credit, available for working capital and general corporate liquidity needs[39](index=39&type=chunk) ABL Facility Summary (in thousands) | Metric | August 1, 2025 | August 2, 2024 | January 31, 2025 | | :----------------------------- | :------------- | :------------- | :--------------- | | ABL Facility limit | $225,000 | $275,000 | $275,000 | | Outstanding borrowings | $35,000 | $20,000 | $— | | Outstanding letters of credit | $10,911 | $8,101 | $10,888 | | ABL Facility borrowing availability | $87,625 | $117,519 | $129,314 | - The Fifth Amendment to the ABL Facility, dated March 28, 2025, reduced aggregate commitments from **$275 million** to **$225 million** and extended the maturity date to March 28, 2030 (or September 29, 2028 if the Term Loan Facility is not refinanced)[41](index=41&type=chunk)[42](index=42&type=chunk) Long-Term Debt Summary (in thousands) | Metric | August 1, 2025 | August 2, 2024 | January 31, 2025 | | :----------------------------- | :------------- | :------------- | :--------------- | | Term Loan Facility (Amount) | $240,500 | $253,500 | $247,000 | | Term Loan Facility (Interest Rate) | 12.71% | 13.70% | 12.66% | | Long-term debt, net | $219,550 | $230,227 | $224,888 | - The Term Loan Facility matures on December 29, 2028, and amortizes at **1.25%** per quarter, with mandatory prepayments based on the Company's Total Leverage Ratio and prepayment premiums for voluntary prepayments within certain periods[43](index=43&type=chunk) - All obligations under the Debt Facilities are unconditionally guaranteed by Lands' End, Inc. and its subsidiaries, secured by first and second priority security interests in working capital and certain fixed assets[46](index=46&type=chunk)[47](index=47&type=chunk) - The Debt Facilities contain various restrictive covenants, including financial covenants such as a quarterly maximum total leverage ratio test and a monthly minimum liquidity test for the Term Loan Facility, and a minimum fixed charge coverage ratio for the ABL Facility if excess availability falls below certain thresholds[48](index=48&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk) - As of August 1, 2025, the Company was in compliance with its financial covenants[51](index=51&type=chunk) [NOTE 6. STOCK-BASED COMPENSATION](index=17&type=section&id=NOTE%206.%20STOCK-BASED%20COMPENSATION) The company grants Deferred Awards, Performance Awards, and Option Awards to employees, expensing their fair value over the requisite service period, with total stock-based compensation expense for the 26 weeks ended August 1, 2025, at $2.25 million - The Company expenses the fair value of all stock awards (Deferred, Performance, and Option Awards) over their requisite service period, adjusting for estimated forfeitures and recognizing expense on a straight-line basis for service-only awards[53](index=53&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) Total Stock-Based Compensation Expense (in thousands) | Award Type | 13 Weeks Ended Aug 1, 2025 | 13 Weeks Ended Aug 2, 2024 | 26 Weeks Ended Aug 1, 2025 | 26 Weeks Ended Aug 2, 2024 | | :----------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Deferred awards | $934 | $943 | $1,752 | $1,865 | | Performance awards | $292 | $385 | $290 | $585 | | Option awards | $104 | $104 | $208 | $208 | | **Total** | **$1,330** | **$1,432** | **$2,250** | **$2,658** | - Total unrecognized stock-based compensation expense for unvested Deferred Awards was approximately **$5.5 million** as of August 1, 2025, expected to be recognized over a weighted average period of **2.0 years**[59](index=59&type=chunk) - Total unrecognized stock-based compensation expense for unvested Performance Awards was approximately **$2.1 million** as of August 1, 2025, expected to be recognized over a weighted average period of **2.0 years**[60](index=60&type=chunk) - An additional **$3.6 million** for Performance Awards with event criteria is not recognized until the event is probable[60](index=60&type=chunk) - Total unrecognized stock-based compensation expense for Option Awards expected to vest was approximately **$0.1 million** as of August 1, 2025, expected to be recognized over a weighted average period of **0.3 years**[62](index=62&type=chunk) [NOTE 7. STOCKHOLDERS' EQUITY](index=21&type=section&id=NOTE%207.%20STOCKHOLDERS'%20EQUITY) The Board authorized a $25.0 million share repurchase program through March 31, 2026, with $8.8 million remaining available and $4.5 million in repurchases during the 26 weeks ended August 1, 2025 - On March 15, 2024, the Board of Directors authorized a **$25.0 million** share repurchase program (the "2024 Share Repurchase Program") through March 31, 2026[63](index=63&type=chunk) - As of August 1, 2025, an additional **$8.8 million** could be purchased under the 2024 Share Repurchase Program[63](index=63&type=chunk) Share Repurchases (in thousands, except per share cost) | Period | Number of Shares Repurchased | Total Cost | Average Per Share Cost | | :------------------- | :--------------------------- | :--------- | :--------------------- | | 13 Weeks Ended Aug 1, 2025 | 199 | $1,731 | $8.71 | | 13 Weeks Ended Aug 2, 2024 | 254 | $3,731 | $14.70 | | 26 Weeks Ended Aug 1, 2025 | 490 | $4,502 | $9.20 | | 26 Weeks Ended Aug 2, 2024 | 339 | $4,744 | $13.99 | - All repurchased shares were retired, with the par value charged against Common stock and the remaining purchase price allocated between Additional paid-in capital and Retained earnings, or directly against Additional paid-in capital[64](index=64&type=chunk) [NOTE 8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=23&type=section&id=NOTE%208.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses and other current liabilities totaled $85.1 million as of August 1, 2025, a decrease from prior periods, primarily comprising deferred gift card revenue, employee compensation, and sales return reserves Accrued Expenses and Other Current Liabilities (in thousands) | Category | August 1, 2025 | August 2, 2024 | January 31, 2025 | | :------------------------------------ | :------------- | :------------- | :--------------- | | Deferred gift card revenue | $33,236 | $34,179 | $34,746 | | Accrued employee compensation and benefits | $16,692 | $20,238 | $26,105 | | Reserve for sales returns and allowances | $13,669 | $14,907 | $15,156 | | Deferred revenue | $8,822 | $9,302 | $6,584 | | Accrued property, sales and other taxes | $6,174 | $7,412 | $6,338 | | Accrued interest | $2,385 | $685 | $2,662 | | Other | $4,106 | $4,467 | $7,145 | | **Total** | **$85,084** | **$91,190** | **$98,736** | [NOTE 9. FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS AND LIABILITIES](index=23&type=section&id=NOTE%209.%20FAIR%20VALUE%20MEASUREMENTS%20OF%20FINANCIAL%20ASSETS%20AND%20LIABILITIES) Cash and cash equivalents are reported at fair value using Level 1 inputs, while long-term debt is a Level 3 instrument, with a carrying amount of $240.5 million and fair value of $241.0 million as of August 1, 2025 - Cash and cash equivalents and restricted cash are reflected on the Condensed Consolidated Balance Sheets at fair value based on **Level 1 inputs**[67](index=67&type=chunk) Long-Term Debt (including current portion) Fair Value (in thousands) | Metric | August 1, 2025 | August 2, 2024 | January 31, 2025 | | :----------------------------- | :------------- | :------------- | :--------------- | | Carrying Amount | $240,500 | $253,500 | $247,000 | | Fair Value | $240,980 | $246,160 | $251,690 | - The valuation of long-term debt at fair value is considered a **Level 3 instrument**, utilizing the Black-Derman-Toy (BDT) model and market inputs from management, particularly relevant due to the Term Loan Facility's optional redemption provision[68](index=68&type=chunk) [NOTE 10. INCOME TAXES](index=23&type=section&id=NOTE%2010.%20INCOME%20TAXES) The company recorded an income tax benefit for both the 13 and 26 weeks ended August 1, 2025, with effective tax rates of 30.5% and 29.4% respectively, influenced by state taxes and non-deductible expenses Effective Income Tax Rate | Period | August 1, 2025 | August 2, 2024 | | :------------------- | :------------- | :------------- | | 13 Weeks Ended | 30.5% | 33.4% | | 26 Weeks Ended | 29.4% | 26.4% | - The effective tax rates vary from the U.S. statutory rate of **21%** primarily due to state taxes and non-deductible expenses[70](index=70&type=chunk) - The One Big Beautiful Bill Act (H.R. 1), signed into law on July 4, 2025, which includes changes to corporate taxation, did not have a material impact on the Company's financial statements for the 13 and 26 weeks ended August 1, 2025[71](index=71&type=chunk)[72](index=72&type=chunk) [NOTE 11. COMMITMENTS AND CONTINGENCIES](index=25&type=section&id=NOTE%2011.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in various legal proceedings, but management believes their ultimate resolution will not materially adversely affect financial results or position - The Company is party to various claims, legal proceedings and investigations arising in the ordinary course of business[73](index=73&type=chunk) - Management believes that the ultimate resolution of these pending claims, proceedings, and investigations should not have a **material adverse effect** on results of operations, cash flows, or financial position taken as a whole[73](index=73&type=chunk) [NOTE 12. SEGMENT REPORTING](index=25&type=section&id=NOTE%2012.%20SEGMENT%20REPORTING) Lands' End operates through U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing, and Retail segments, with U.S. Digital aggregating U.S. eCommerce, Outfitters, and Third Party, and segment performance assessed by variable profit - Lands' End's operating segments consist of U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing, and Retail, following internal organizational changes in Fourth Quarter 2024[74](index=74&type=chunk) - The U.S. eCommerce, Outfitters, and Third Party operating segments are aggregated into the **U.S. Digital segment** due to similar economic and qualitative characteristics[76](index=76&type=chunk) - Segment performance is assessed based on **variable profit**, defined as net revenue minus cost of sales and variable selling expenses, which is a non-GAAP financial measure[75](index=75&type=chunk) U.S. Digital Segment Net Revenue (in thousands) | Period | August 1, 2025 | August 2, 2024 | | :------------------- | :------------- | :------------- | | 13 Weeks Ended | $255,254 | $270,361 | | 26 Weeks Ended | $483,006 | $499,089 | U.S. Digital Segment Variable Profit (in thousands) | Period | August 1, 2025 | August 2, 2024 | | :------------------- | :------------- | :------------- | | 13 Weeks Ended | $56,690 | $62,810 | | 26 Weeks Ended | $109,584 | $117,686 | Net Revenue by Distribution Channel (13 Weeks Ended, in thousands) | Channel | August 1, 2025 | % of Net Revenue | August 2, 2024 | % of Net Revenue | | :----------------------------- | :------------- | :--------------- | :------------- | :--------------- | | U.S. eCommerce | $167,268 | 56.9% | $188,336 | 59.4% | | Outfitters | $66,424 | 22.6% | $63,159 | 19.9% | | Third Party | $21,562 | 7.3% | $18,866 | 6.0% | | Europe eCommerce | $19,639 | 6.7% | $22,950 | 7.2% | | Licensing and Retail | $19,186 | 6.5% | $23,862 | 7.5% | | **Total Net Revenue** | **$294,079** | | **$317,173** | | Net Revenue by Distribution Channel (26 Weeks Ended, in thousands) | Channel | August 1, 2025 | % of Net Revenue | August 2, 2024 | % of Net Revenue | | :----------------------------- | :------------- | :--------------- | :------------- | :--------------- | | U.S. eCommerce | $338,016 | 60.9% | $358,868 | 59.5% | | Outfitters | $109,346 | 19.7% | $105,836 | 17.6% | | Third Party | $35,644 | 6.4% | $34,385 | 5.7% | | Europe eCommerce | $37,490 | 6.7% | $47,918 | 8.0% | | Licensing and Retail | $34,791 | 6.3% | $55,637 | 9.2% | | **Total Net Revenue** | **$555,287** | | **$602,644** | | [NOTE 13. REVENUE](index=28&type=section&id=NOTE%2013.%20REVENUE) Revenue is recognized when control of merchandise passes to customers, net of promotions and estimated returns, and includes royalty revenue from licensing trademarks, with contract liabilities recognized upon delivery or redemption - Revenue includes sales of merchandise and delivery revenue, recognized when control of product passes to customers (upon receipt for most channels, at sale for retail), and is presented net of promotions, sales returns, discounts, and other incentives[80](index=80&type=chunk) Net Revenue by Geographic Location (in thousands) | Region | 13 Weeks Ended Aug 1, 2025 | 13 Weeks Ended Aug 2, 2024 | 26 Weeks Ended Aug 1, 2025 | 26 Weeks Ended Aug 2, 2024 | | :------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | United States | $271,626 | $291,041 | $512,689 | $548,548 | | Europe | $20,169 | $23,330 | $38,488 | $48,638 | | Other | $2,284 | $2,802 | $4,110 | $5,458 | | **Total Net Revenue** | **$294,079** | **$317,173** | **$555,287** | **$602,644** | - The Company generates royalty revenue from licensing its trademarks to third parties, with revenue recognized based on contractually guaranteed minimums or when related sales occur[82](index=82&type=chunk)[83](index=83&type=chunk) Deferred Revenue Activity (in thousands) | Metric | 13 Weeks Ended Aug 1, 2025 | 13 Weeks Ended Aug 2, 2024 | 26 Weeks Ended Aug 1, 2025 | 26 Weeks Ended Aug 2, 2024 | | :------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Deferred revenue beginning of period | $5,049 | $9,340 | $6,584 | $4,314 | | Deferred revenue recognized in period | $(4,834) | $(9,125) | $(6,370) | $(4,100) | | Revenue deferred in period | $8,607 | $9,087 | $8,608 | $9,088 | | Deferred revenue end of period | $8,822 | $9,302 | $8,822 | $9,302 | Gift Card Liability Activity (in thousands) | Metric | 13 Weeks Ended Aug 1, 2025 | 13 Weeks Ended Aug 2, 2024 | 26 Weeks Ended Aug 1, 2025 | 26 Weeks Ended Aug 2, 2024 | | :------------------------------------ | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Balance as of beginning of period | $33,364 | $35,119 | $34,746 | $35,604 | | Gift cards issued | $15,693 | $14,562 | $30,305 | $29,617 | | Gift cards redeemed | $(10,785) | $(14,019) | $(26,095) | $(28,212) | | Gift card breakage | $(5,036) | $(1,483) | $(5,720) | $(2,830) | | Balance as of end of period | $33,236 | $34,179 | $33,236 | $34,179 | - Refund liabilities, primarily for product sales returns, were **$13.7 million** as of August 1, 2025, estimated based on historical experience and recorded as a reduction to Net revenue[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance and condition, detailing decreased net revenue and increased net loss year-to-date, channel performance, gross profit, operating expenses, liquidity, macroeconomic challenges, and restructuring efforts, with non-GAAP reconciliations [Executive Overview](index=33&type=section&id=Executive%20Overview) Lands' End is a digital retailer operating through six channels, facing macroeconomic challenges and undertaking restructuring initiatives, including a 6% reduction in corporate office positions, incurring $5.8 million in restructuring costs year-to-date 2025 - Lands' End is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products and uniforms, operating through online, third-party, company-operated stores, and Outfitters channels[89](index=89&type=chunk) - The company's operating segments are U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing, and Retail, with U.S. eCommerce, Outfitters, and Third Party aggregated into the **U.S. Digital segment**[90](index=90&type=chunk)[91](index=91&type=chunk) - Macroeconomic issues, including inflation and high interest rates, continue to negatively impact consumer discretionary spending, potentially leading to lower customer demand, increased promotional activity, and higher costs for raw materials, labor, and debt[92](index=92&type=chunk) - The company incurred restructuring charges, primarily severance and benefit costs, related to cost optimization and strategic initiatives, including a **6% reduction** in corporate office positions[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Restructuring costs were **$2.4 million** for Q2 2025 and **$5.8 million** for Year-to-Date 2025[95](index=95&type=chunk) - The company experiences seasonal fluctuations, with a significant portion of net revenue and earnings historically realized in the **fourth fiscal quarter**, and working capital requirements typically increasing in Q2 and Q3[97](index=97&type=chunk)[98](index=98&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section details the company's operating results, showing decreased net revenue and varied profitability for both the second quarter and year-to-date periods, alongside changes in gross margin and adjusted EBITDA Selected Income Statement Data (13 Weeks Ended, in thousands) | Metric | August 1, 2025 | % of Net Revenue | August 2, 2024 | % of Net Revenue | | :------------------------------------ | :------------- | :--------------- | :------------- | :--------------- | | Net revenue | $294,079 | 100.0% | $317,173 | 100.0% | | Gross profit | $143,418 | 48.8% | $151,885 | 47.9% | | Selling and administrative | $129,356 | 44.0% | $135,510 | 42.7% | | Operating income | $3,983 | 1.4% | $2,486 | 0.8% | | Interest expense | $9,262 | 3.1% | $10,447 | 3.3% | | Loss before income taxes | $(5,276) | (1.8)% | $(7,877) | (2.5)% | | NET LOSS | $(3,667) | (1.2)% | $(5,251) | (1.7)% | Selected Income Statement Data (26 Weeks Ended, in thousands) | Metric | August 1, 2025 | % of Net Revenue | August 2, 2024 | % of Net Revenue | | :------------------------------------ | :------------- | :--------------- | :------------- | :--------------- | | Net revenue | $555,287 | 100.0% | $602,644 | 100.0% | | Gross profit | $276,144 | 49.7% | $290,865 | 48.3% | | Selling and administrative | $252,818 | 45.5% | $262,911 | 43.6% | | Operating income | $1,613 | 0.3% | $4,719 | 0.8% | | Interest expense | $18,527 | 3.3% | $20,783 | 3.4% | | Loss before income taxes | $(16,900) | (3.0)% | $(15,892) | (2.6)% | | NET LOSS | $(11,929) | (2.1)% | $(11,693) | (1.9)% | Adjusted Net Loss and Diluted Loss Per Share (13 Weeks Ended, in thousands, except per share amounts) | Metric | 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 | $(619) | $(1,297) | | **ADJUSTED NET LOSS** | **$(1,852)** | **$(718)** | | **ADJUSTED DILUTED LOSS PER SHARE** | **$(0.06)** | **$(0.02)** | Adjusted Net Loss and Diluted Loss Per Share (26 Weeks Ended, in thousands, except per share amounts) | Metric | 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 | $(1,365) | $(1,384) | | **ADJUSTED NET LOSS** | **$(7,271)** | **$(6,905)** | | **ADJUSTED DILUTED LOSS PER SHARE** | **$(0.24)** | **$(0.22)** | Adjusted EBITDA (13 Weeks Ended, in thousands) | Metric | August 1, 2025 | August 2, 2024 | | :------------------------------------ | :------------- | :------------- | | Net loss | $(3,667) | $(5,251) | | Income tax benefit | $(1,609) | $(2,626) | | Interest expense | $9,262 | $10,447 | | Depreciation and amortization | $7,656 | $8,692 | | Corporate restructuring | $2,434 | $2,338 | | Exit costs | $— | $687 | | Long-lived asset impairment | $— | $2,805 | | (Gain) loss on disposal of property and equipment | $(11) | $53 | | **Adjusted EBITDA** | **$14,062** | **$17,061** | Adjusted EBITDA (26 Weeks Ended, in thousands) | Metric | August 1, 2025 | August 2, 2024 | | :------------------------------------ | :------------- | :------------- | | Net loss | $(11,929) | $(11,693) | | Income tax benefit | $(4,971) | $(4,199) | | Interest expense | $18,527 | $20,783 | | Depreciation and amortization | $15,947 | $17,697 | | Corporate restructuring | $5,766 | $2,680 | | Exit costs | $257 | $687 | | Long-lived asset impairment | $— | $2,805 | | Loss on disposal of property and equipment | $— | $52 | | **Adjusted EBITDA** | **$23,583** | **$28,640** | [Second Quarter 2025 compared with Second Quarter 2024](index=41&type=section&id=Second%20Quarter%202025%20compared%20with%20Second%20Quarter%202024) Q2 2025 net revenue decreased by **7.3%** to **$294.1 million**, with mixed channel performance, while gross margin improved by **90 basis points** to **48.8%**, leading to increased operating income and an improved net loss - Gross Merchandise Value (GMV) was approximately **flat** compared to Second Quarter 2024[110](index=110&type=chunk) - Net revenue decreased by **$23.1 million (7.3%)** to **$294.1 million** in Q2 2025 from **$317.2 million** in Q2 2024[111](index=111&type=chunk) Net Revenue by Channel (Q2, in millions) | Channel | Q2 2025 | Q2 2024 | Change (%) | | :------------------- | :------ | :------ | :--------- | | U.S. eCommerce | $167.3 | $188.3 | -11.2% | | Outfitters | $66.4 | $63.2 | +5.1% | | Third Party | $21.6 | $18.9 | +14.3% | | Europe eCommerce | $19.6 | $23.0 | -14.8% | | Licensing and Retail | $19.2 | $23.9 | -19.7% | - Gross profit decreased by **$8.5 million (5.6%)** to **$143.4 million**, but gross margin increased by **90 basis points** to **48.8%** in Q2 2025, driven by improved promotional productivity and licensing business expansion[117](index=117&type=chunk) - Operating income increased to **$4.0 million** in Q2 2025 from **$2.5 million** in Q2 2024[121](index=121&type=chunk) - Net loss improved to **$3.7 million** in Q2 2025 from **$5.3 million** in Q2 2024, with diluted loss per share improving from **$(0.17)** to **$(0.12)**[125](index=125&type=chunk) - Adjusted EBITDA decreased to **$14.1 million** in Q2 2025 from **$17.1 million** in Q2 2024[127](index=127&type=chunk) [Year-to-Date 2025 compared with Year-to-Date 2024](index=45&type=section&id=Year-to-Date%202025%20compared%20with%20Year-to-Date%202024) Year-to-Date 2025 net revenue decreased by **7.8%** to **$555.3 million**, or 5.8% excluding licensing impact, with U.S. eCommerce down 5.8%, while Outfitters and Third Party channels increased, and gross margin improved by **140 basis points** to **49.7%**, resulting in decreased operating income and a slightly worsened net loss - Gross Merchandise Value (GMV) decreased low-single digits, but increased low-single digits excluding the **$12.7 million** impact of transitioning kids and footwear inventory to licensees in Q1 2024[131](index=131&type=chunk) - Net revenue decreased by **$47.3 million (7.8%)** to **$555.3 million** for Year-to-Date 2025, or **5.8%** excluding the impact of transitioning kids and footwear inventory to licensees[132](index=132&type=chunk) Net Revenue by Channel (YTD, in millions) | Channel | YTD 2025 | YTD 2024 | Change (%) | | :------------------- | :------- | :------- | :--------- | | U.S. eCommerce | $338.0 | $358.9 | -5.8% | | Outfitters | $109.3 | $105.8 | +3.3% | | Third Party | $35.6 | $34.4 | +3.5% | | Europe eCommerce | $37.5 | $47.9 | -21.7% | | Licensing and Retail | $34.8 | $55.6 | -37.4% | - Gross profit decreased by **$14.8 million (5.1%)** to **$276.1 million**, but gross margin increased by **140 basis points** to **49.7%** for Year-to-Date 2025, driven by improved promotional productivity and licensing business expansion[138](index=138&type=chunk) - Operating income decreased to **$1.6 million** in Year-to-Date 2025 from **$4.7 million** in Year-to-Date 2024[142](index=142&type=chunk) - Net loss slightly worsened to **$11.9 million** in Year-to-Date 2025 from **$11.7 million** in Year-to-Date 2024, with diluted loss per share increasing from **$(0.37)** to **$(0.39)**[146](index=146&type=chunk) - Adjusted EBITDA decreased to **$23.6 million** in Year-to-Date 2025 from **$28.6 million** in Year-to-Date 2024[148](index=148&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily used for working capital, debt payments, and capital expenditures, funded by cash on hand, cash flows from operations, and the ABL Facility, with $25.0 million planned for capital expenditures in Fiscal 2025 - Primary liquidity needs are for working capital, debt payments, capital expenditures, and general corporate purposes, funded by cash on hand, cash flows from operations, and the ABL Facility[152](index=152&type=chunk) - As of August 1, 2025, the ABL Facility had **$35.0 million** outstanding borrowings and **$87.6 million** in borrowing availability[153](index=153&type=chunk) - Net cash provided by operating activities decreased to **$0.5 million** during Year-to-Date 2025 from **$4.9 million** in Year-to-Date 2024, primarily due to a decrease in adjusted EBITDA[168](index=168&type=chunk) - Net cash used in investing activities increased to **$17.2 million** during Year-to-Date 2025 from **$11.5 million** in Year-to-Date 2024, primarily for investments in digital information technology infrastructure[169](index=169&type=chunk) - Net cash provided by financing activities increased to **$22.1 million** during Year-to-Date 2025 from **$6.9 million** in Year-to-Date 2024, primarily due to increased borrowings under the ABL Facility[170](index=170&type=chunk) - For Fiscal 2025, the company plans to invest approximately **$25.0 million** in capital expenditures for strategic investments and infrastructure, primarily in technology and general corporate needs[169](index=169&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to foreign currency exchange risk, primarily from its Europe eCommerce channel, and interest rate risk due to variable rates on its Term Loan Facility and ABL Facility - The Company's international subsidiaries operate with functional currencies other than the U.S. dollar, exposing it to foreign currency exchange risk, particularly from the Europe eCommerce distribution channel (**7%** of Year-to-Date 2025 Net revenue)[179](index=179&type=chunk) - A **10% change** in foreign currency exchange rates would have increased or decreased Net revenue for Year-to-Date 2025 by approximately **$3.7 million**[179](index=179&type=chunk) - The Company is subject to interest rate risk with its Term Loan Facility and ABL Facility, which have variable interest rates[181](index=181&type=chunk) - Each **one percentage point change** in interest rates (above the **2.00% SOFR floor**) on the Term Loan Facility would result in a **$2.4 million** change in annual cash interest expenses[181](index=181&type=chunk) - Assuming the ABL Facility was fully drawn to **$225.0 million**, each **one percentage point change** in interest rates would result in a **$2.3 million** change in annual cash interest expense[181](index=181&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) As of August 1, 2025, management concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - As of August 1, 2025, the Company's disclosure controls and procedures were evaluated by management, with the participation of the CEO and CFO, and concluded to be **effective**[183](index=183&type=chunk) - There have been **no material changes** in the Company's internal controls over financial reporting during the fiscal quarter ended August 1, 2025[184](index=184&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, but management believes their ultimate resolution will not have a material adverse effect on the company's financial position - The Company is party to various claims, legal proceedings and investigations arising in the ordinary course of business[186](index=186&type=chunk) - Management is of the opinion that the ultimate resolution of these proceedings should not have a **material adverse effect** on the company's results of operations, cash flows, or financial position[186](index=186&type=chunk) - There have been **no material developments** to the legal proceedings disclosed in the Company's Annual Report on Form 10-K for the year ended January 31, 2025[186](index=186&type=chunk) [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended January 31, 2025, or its Quarterly Report on Form 10-Q for the quarter ended May 2, 2025 - 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, and its Quarterly Report on Form 10-Q for the quarter ended May 2, 2025[187](index=187&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased **198,751 shares** for **$1.73 million** under its 2024 Share Repurchase Program, with **$8.8 million** remaining available Issuer Purchases of Equity Securities (Second Quarter 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :------------------- | :------------------------------- | :--------------------------- | | May 3 - May 30 | 168,751 | $8.78 | | May 31 - July 4 | 30,000 | $8.33 | | July 5 - August 1 | — | $— | | **Total** | **198,751** | **$8.71** | - As of August 1, 2025, approximately **$8.8 million** remained available for repurchase under the 2024 Share Repurchase Program, which authorizes repurchases up to **$25.0 million** through March 31, 2026[189](index=189&type=chunk) - All shares of common stock repurchased during the period were retired[189](index=189&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) None of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fiscal quarter ended August 1, 2025 - None of the Company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fiscal quarter ended August 1, 2025[190](index=190&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and certifications from the Principal Executive Officer and Principal Financial Officer - Exhibits filed include the Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws, Certifications of Principal Executive Officer and Principal Financial Officer (Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL Taxonomy Extension documents[191](index=191&type=chunk) [Signatures](index=60&type=section&id=Signatures) The report is duly signed on behalf of Lands' End, Inc. by Bernard McCracken, Chief Financial Officer and Treasurer, on September 9, 2025 - The report is signed by Bernard McCracken, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) of Lands' End, Inc. on September 9, 2025[195](index=195&type=chunk)

Financial Performance - Land's End Inc reported second-quarter net revenue of $294.1 million, down 7.3% year-over-year, missing the Street consensus estimate of $322.4 million [1] - The company reported an adjusted loss of six cents per share, which also missed the Street consensus estimate of a loss of three cents per share [2] - U.S. Digital net revenue was $255.3 million in the second quarter, down 5.6% year-over-year, attributed to a slow start in seasonal swim products [6] Strategic Initiatives - CEO Andrew McLean stated that the transition to an asset-light model is helping to introduce new products, drive higher sales, and improve customer loyalty [2] - The company is exploring a sale or merger to maximize shareholder value, with the process ongoing [3] Future Guidance - The company expects third-quarter sales to be between $320 million and $350 million, compared to a Street estimate of $326.1 million [3] - Full-year sales guidance was raised to a new range of $1.33 billion to $1.45 billion, with the Street estimate currently at $1.37 billion [4] - Full-year earnings per share guidance was also raised to a new range of 62 cents to 88 cents per share, versus a Street estimate of 70 cents per share [4] Revenue Breakdown - Third-party net revenue increased by 14.3% year-over-year to $21.6 million in the second quarter, driven by strong curated product assortments for Amazon and Macy's [6] - Europe e-commerce net revenue was $19.6 million in the second quarter, down 14.8% year-over-year [6] - Licensing and Retail net revenue decreased by 19.7% to $19.2 million in the second quarter, although licensing revenue was up 19% year-over-year [6] Market Reaction - Land's End stock fell 4.86% to $13.50 in after-hours trading, within a 52-week trading range of $7.65 to $19.88 [5]