Lands’ End(LE) - 2025 Q3 - Quarterly Results

Lands' End Third Quarter 2024 Results Executive Summary Lands' End sustained positive momentum in Q3 2024 through higher quality sales, leading to gross margin growth and a significant increase in new customers - The company's deliberate efforts to drive higher quality sales resulted in growth in both gross margin and gross profit dollars[3] - New customer acquisition increased by 20% year-over-year in the third quarter and is up mid-teens year-to-date[3] - The Black Friday through Cyber Monday weekend met company expectations, showing strong customer engagement and balanced performance across channels[3] Third Quarter Financial Performance The company reported a slight revenue decrease to $318.6 million but improved profitability with a 360 basis point gross margin expansion and a significantly reduced net loss Revenue Analysis Net revenue slightly decreased to $318.6 million, but grew on an adjusted basis, with Third Party revenue increasing 6.3% and GMV showing low-double-digit growth Q3 2024 Net Revenue by Segment (in millions) | Segment | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Global eCommerce | $211.1 | $216.4 | -2.4% | | Outfitters | $73.4 | $74.3 | -1.2% | | Third Party | $25.5 | $24.0 | +6.3% | | Total Net Revenue | $318.6 | $324.7 | -1.9% | - Gross Merchandise Value (GMV) increased by a low-double-digit percentage compared to the third quarter of 2023[4] - Excluding the impact of transitioning kids and footwear products to licensing arrangements, Net revenue increased by low-single digits year-over-year[5] Profitability Analysis Gross profit rose 5.6% to $161.1 million with a 50.6% gross margin, while the net loss narrowed to $0.6 million from $112.4 million in the prior year Q3 2024 Profitability Metrics | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Gross Profit | $161.1M | $152.6M | | Gross Margin | 50.6% | 47.0% | | Net Loss | ($0.6M) | ($112.4M) | | Loss Per Share | ($0.02) | ($3.52) | | Adjusted Net Income | $1.8M | ($3.6M) | | Adjusted EBITDA | $20.3M | $17.3M | - The gross margin improvement was primarily driven by lower promotional activity, strength in product solutions, newness across channels, and improved supply chain costs[6] - The Q3 2023 Net loss included a non-cash goodwill impairment charge of $106.7 million[8] Third Quarter Business & Operational Highlights Key operational achievements included a 5.6% increase in gross profit, a 20% year-over-year inventory reduction, and a 20% rise in new customer acquisition - Achieved a 5.6% increase in gross profit and an approximately 360 basis point improvement in gross margin[10] - Reduced inventory by 20% year-over-year, marking the seventh consecutive quarter of improvement through better flow and productivity[10] - Global new customer acquisition increased by over 20% in the third quarter[10] Balance Sheet and Cash Flow The company held $30.4 million in cash, reduced net inventories by 20% to $335.9 million, and repurchased $4.0 million of its common stock Key Balance Sheet Items (as of Nov 1, 2024 vs Oct 27, 2023) | Item | Nov 1, 2024 | Oct 27, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $30.4M | $36.8M | | Inventories, net | $335.9M | $422.2M | | ABL Facility Borrowings | $60.0M | $110.0M | | Term Loan Debt | $250.3M | $233.8M | - Net cash used in operating activities was $12.2 million for the 39 weeks ended November 1, 2024, compared to cash provided of $36.7 million in the prior year period, driven by changes in working capital[12] - The company repurchased $4.0 million of its common stock during the third quarter under its share repurchase program[14] Financial Outlook The company projects Q4 net revenue of $440.0-$480.0 million and full-year net revenue of $1.36-$1.40 billion, with corresponding Adjusted EBITDA guidance Fourth Quarter Fiscal 2024 Guidance | Metric | Expected Range | | :--- | :--- | | Net Revenue | $440.0M - $480.0M | | Net Income | $18.0M - $21.0M | | Diluted EPS | $0.58 - $0.67 | | Adjusted EBITDA | $43.0M - $47.0M | Full Year Fiscal 2024 Guidance | Metric | Expected Range | | :--- | :--- | | Net Revenue | $1.36B - $1.40B | | Net Income | $6.0M - $9.0M | | Diluted EPS | $0.19 - $0.29 | | Adjusted EBITDA | $92.0M - $96.0M | | Capital Expenditures | Approx. $35.0M | Consolidated Financial Statements (Unaudited) This section presents the unaudited balance sheets, statements of operations, and cash flows, detailing the company's financial position and performance Condensed Consolidated Balance Sheets Total assets stood at $843.6 million as of November 1, 2024, with total liabilities at $619.9 million and stockholders' equity at $223.6 million Balance Sheet Summary (in thousands) | Account | Nov 1, 2024 | Oct 27, 2023 | | :--- | :--- | :--- | | Total Current Assets | $453,495 | $540,188 | | Total Assets | $843,571 | $947,562 | | Total Current Liabilities | $260,206 | $290,857 | | Total Liabilities | $619,928 | $696,657 | | Total Stockholders' Equity | $223,643 | $250,905 | Condensed Consolidated Statements of Operations The company reported a net loss of $0.6 million for the 13 weeks ended November 1, 2024, a significant improvement from a $112.4 million loss in the prior year Statement of Operations Summary (13 Weeks Ended, in thousands) | Account | Nov 1, 2024 | Oct 27, 2023 | | :--- | :--- | :--- | | Net Revenue | $318,628 | $324,735 | | Gross Profit | $161,145 | $152,593 | | Operating Income (Loss) | $9,287 | ($101,308) | | Net Loss | ($593) | ($112,394) | | Diluted Loss Per Share | ($0.02) | ($3.52) | Condensed Consolidated Statements of Cash Flows For the 39-week period, net cash used in operations was $12.2 million, a shift from $36.7 million provided in the prior year Cash Flow Summary (39 Weeks Ended, in thousands) | Activity | Nov 1, 2024 | Oct 27, 2023 | | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | ($12,212) | $36,667 | | Net Cash Used in Investing Activities | ($22,122) | ($28,535) | | Net Cash Provided by (Used in) Financing Activities | $39,394 | ($11,378) | | Net Increase (Decrease) in Cash | $5,023 | ($2,737) | Non-GAAP Financial Measures Reconciliation This section reconciles GAAP Net Loss to non-GAAP measures, showing an Adjusted Net Income of $1.8 million and Adjusted EBITDA of $20.3 million for Q3 2024 Reconciliation of Net Loss to Adjusted Net Income (Q3, in thousands) | Description | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net loss | ($593) | ($112,394) | | Goodwill and long-lived asset impairment | $1,012 | $106,700 | | Restructuring | $1,802 | $2,266 | | Other Adjustments & Tax Effects | ($436) | ($136) | | Adjusted Net Income (Loss) | $1,785 | ($3,564) | Reconciliation of Net Loss to Adjusted EBITDA (Q3, in thousands) | Description | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net loss | ($593) | ($112,394) | | Adjustments (Taxes, Interest, D&A, etc.) | $18,034 | $121,129 | | Goodwill and long-lived asset impairment | $1,012 | $106,700 | | Restructuring & Other | $1,817 | $2,289 | | Adjusted EBITDA | $20,269 | $17,276 |