Lands’ End(US:LE)2019-09-05 20:37Financial Performance - Lands' End reported a net revenue of $298.3 million for the 13 weeks ended August 2, 2019, a decrease of 3.4% compared to $307.9 million for the same period in 2018[90]. - For the 26 weeks ended August 2, 2019, net revenue was $560.7 million, a decline of 7.7% from $607.8 million in the same period in 2018[90]. - Net revenue for Q2 2019 was $298.3 million, a decrease of $9.7 million or 3.1% compared to Q2 2018[97]. - Year-to-date net revenue for 2019 was $560.7 million, a decrease of $47.1 million or 7.7% compared to the prior year[112]. Profitability - The gross profit margin for the second quarter of 2019 was 43.3%, down from 44.4% in the second quarter of 2018[90]. - Gross profit decreased by $7.7 million to $129.1 million in Q2 2019, with a gross margin of 43.3%, down from 44.4% in Q2 2018[102]. - The company experienced a net loss of $3.0 million in the second quarter of 2019, an improvement from a net loss of $5.3 million in the second quarter of 2018[92]. - Net loss for Q2 2019 was $3.0 million, with a diluted loss per share of $0.09, an improvement from a net loss of $5.3 million and diluted loss per share of $0.16 in Q2 2018[110]. - Adjusted EBITDA for the second quarter of 2019 was $6.8 million, representing 2.3% of net revenue, compared to $7.7 million or 2.5% in the second quarter of 2018[94]. - Adjusted EBITDA for Q2 2019 was $6.8 million, down from $7.7 million in Q2 2018[111]. - The company’s operating loss for the second quarter of 2019 was $561,000, compared to an operating income of $875,000 in the second quarter of 2018[90]. - Operating loss was $0.6 million in Q2 2019, compared to operating income of $0.9 million in Q2 2018[106]. Expenses - Selling and administrative expenses for the second quarter of 2019 were $122.3 million, accounting for 41.0% of net revenue, compared to 41.9% in the same period of 2018[90]. - Selling and administrative expenses decreased by $6.8 million to $122.3 million, representing 41.0% of total net revenue in Q2 2019[103]. - The company incurred interest expenses of $6.2 million in the second quarter of 2019, slightly down from $7.0 million in the same quarter of 2018[90]. Cash Flow and Investments - Net cash provided by operating activities decreased to $17.0 million in Year-to-Date 2019 from $24.8 million in Year-to-Date 2018, primarily due to collections of outstanding receivables from 2017[140]. - Net cash used in investing activities was $24.8 million for Year-to-Date 2019, compared to $22.2 million for Year-to-Date 2018, mainly for investments in information technology infrastructure and property[141]. - The company expects to invest approximately $40.0 million in capital expenditures for Fiscal 2019, focusing on strategic investments and infrastructure[142]. - Net cash used in financing activities was $103.3 million in Year-to-Date 2019, significantly higher than $3.1 million in Year-to-Date 2018, primarily due to a $100 million voluntary prepayment of the Term Loan Facility[143]. Operational Insights - The company has experienced seasonal fluctuations, generating an average of 35.1% of net revenue in the fourth fiscal quarter over the past three years[88]. - Lands' End operates in multiple channels, including U.S. eCommerce, Retail, Outfitters, Europe eCommerce, and Japan eCommerce, which are aggregated into one external reportable segment[83]. - eCommerce net revenue increased by $14.9 million or 7.3% to $218.7 million in Q2 2019, driven by higher demand and new customer acquisitions[98]. - Outfitters net revenue decreased by $7.4 million or 10.1% to $65.5 million in Q2 2019, impacted by the prior year's Delta Air Lines launch[99]. - Retail net revenue fell by $17.2 million or 54.8% to $14.2 million in Q2 2019, primarily due to a reduction in Lands' End Shops at Sears locations[100]. Financial Controls - The company has concluded that its disclosure controls and procedures are effective as of August 2, 2019[154]. - There have been no material changes in the company's internal controls over financial reporting during the Second Fiscal Quarter Ended August 2, 2019[155]. - The company does not enter into financial instruments for trading purposes or hedging and has not used any derivative financial instruments[151]. Debt and Borrowing - As of August 2, 2019, the company had $14.2 million of cash denominated in foreign currencies, mainly in British Pound Sterling, Euros, and Yen[151]. - Each one percentage point change in interest rates associated with the Term Loan Facility would result in a $3.9 million change in annual cash interest expenses[152]. - The ABL Facility allows for maximum borrowings of $175.0 million, with a letter of credit sub-limit of $70.0 million, and was undrawn as of August 2, 2019, except for $9.5 million in outstanding letters of credit[145].