Lands’ End(LE) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's analysis of financial condition and operations ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents Lands' End, Inc.'s unaudited condensed consolidated financial statements for the 13 weeks ended May 3, 2024, and April 28, 2023, including statements of operations, comprehensive operations, balance sheets, cash flows, and changes in stockholders' equity, along with detailed notes explaining accounting policies, debt, stock-based compensation, and revenue recognition Condensed Consolidated Statements of Operations This statement details the company's revenues, costs, and net loss for the 13-week periods ended May 3, 2024, and April 28, 2023 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric (in thousands, except per share data) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :------------------------------------------ | :------------------------- | :-------------------------- | | Net revenue | $285,471 | $309,558 | | Cost of sales | $146,491 | $171,621 | | Gross profit | $138,980 | $137,937 | | Selling and administrative | $127,401 | $118,514 | | Operating income | $2,233 | $9,920 | | Interest expense | $10,336 | $12,283 | | Loss before income taxes | $(8,015) | $(2,176) | | Income tax benefit | $(1,573) | $(524) | | NET LOSS | $(6,442) | $(1,652) | | Basic Net Loss Per Common Share | $(0.20) | $(0.05) | | Diluted Net Loss Per Common Share | $(0.20) | $(0.05) | - Net revenue decreased by $24.1 million (7.8%) from $309.6 million in Q1 2023 to $285.5 million in Q1 2024[11] - Gross profit increased slightly by $1.0 million (0.76%) from $137.9 million in Q1 2023 to $139.0 million in Q1 2024, despite lower revenue[11] - Operating income significantly decreased from $9.9 million in Q1 2023 to $2.2 million in Q1 2024, a 77.5% decline[11] - Net loss widened from $(1.7) million in Q1 2023 to $(6.4) million in Q1 2024[11] Condensed Consolidated Statements of Comprehensive Operations This statement presents net loss and other comprehensive income/loss components, leading to total comprehensive loss Condensed Consolidated Statements of Comprehensive Operations (in thousands) | Metric (in thousands) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :-------------------- | :------------------------- | :-------------------------- | | NET LOSS | $(6,442) | $(1,652) | | Foreign currency translation adjustments | $(513) | $81 | | COMPREHENSIVE LOSS | $(6,955) | $(1,571) | - Comprehensive loss increased from $(1.6) million in Q1 2023 to $(7.0) million in Q1 2024, primarily due to a larger net loss and negative foreign currency translation adjustments[13] Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | May 3, 2024 | April 28, 2023 | February 2, 2024 | | :-------------------- | :---------- | :------------- | :--------------- | | ASSETS | | | | | Cash and cash equivalents | $27,350 | $7,332 | $25,314 | | Inventories, net | $288,629 | $376,062 | $301,724 | | Total current assets | $405,021 | $470,045 | $410,260 | | Goodwill | — | $106,700 | — | | TOTAL ASSETS | $800,107 | $995,194 | $811,479 | | LIABILITIES | | | | | Total current liabilities | $219,096 | $217,596 | $259,918 | | Long-term borrowings under ABL Facility | $40,000 | $100,000 | — | | Long-term debt, net | $233,087 | $220,786 | $236,170 | | TOTAL LIABILITIES | $565,506 | $619,910 | $569,886 | | STOCKHOLDERS' EQUITY | | | | | TOTAL STOCKHOLDERS' EQUITY | $234,601 | $375,284 | $241,593 | - Cash and cash equivalents significantly increased to $27.4 million as of May 3, 2024, from $7.3 million as of April 28, 2023[16] - Inventories, net, decreased to $288.6 million as of May 3, 2024, from $376.1 million as of April 28, 2023, indicating improved inventory management[16] - Goodwill was eliminated as of May 3, 2024, down from $106.7 million as of April 28, 2023[16] - Total stockholders' equity decreased to $234.6 million as of May 3, 2024, from $375.3 million as of April 28, 2023[16] Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the period Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :-------------------- | :------------------------- | :-------------------------- | | Net cash used in operating activities | $(25,815) | $(10,755) | | Net cash used in investing activities | $(6,731) | $(12,384) | | Net cash provided by (used in) financing activities | $34,959 | $(8,418) | | NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | $2,549 | $(31,910) | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | $29,839 | $9,481 | - Net cash used in operating activities increased to $(25.8) million in Q1 2024 from $(10.8) million in Q1 2023, primarily due to increased net loss and changes in working capital[18][148] - Net cash provided by financing activities significantly improved to $35.0 million in Q1 2024, compared to net cash used of $(8.4) million in Q1 2023, driven by ABL Facility borrowings[18][150] - The company reported a net increase in cash, cash equivalents, and restricted cash of $2.5 million in Q1 2024, a substantial improvement from a decrease of $(31.9) million in Q1 2023[18] Condensed Consolidated Statements of Changes in Stockholders' Equity This statement outlines changes in equity accounts, including net loss, stock-based compensation, and share repurchases Condensed Consolidated Statements of Changes in Stockholders' Equity (in thousands) | Metric (in thousands) | Balance at Feb 2, 2024 | Net Loss | Cumulative Translation Adjustment | Stock-based Compensation | Common Stock Withheld | Purchases & Retirement | Balance at May 3, 2024 | | :-------------------- | :--------------------- | :------- | :------------------------------ | :----------------------- | :-------------------- | :--------------------- | :--------------------- | | Total Stockholders' Equity | $241,593 | $(6,442) | $(513) | $1,226 | $(249) | $(1,014) | $234,601 | - Total stockholders' equity decreased from $241.6 million at February 2, 2024, to $234.6 million at May 3, 2024, primarily due to net loss and common stock repurchases[20] - The company recorded $1.2 million in stock-based compensation expense during the period[20] - Purchases and retirement of common stock amounted to $(1.0) million[20] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements NOTE 1. BACKGROUND AND BASIS OF PRESENTATION This note describes the company's business, operations, and the basis for preparing the financial statements - Lands' End, Inc. is a leading digital retailer of apparel, swimwear, outerwear, accessories, footwear, home products, and uniforms, offering products online, through third-party channels, Company Operated stores, and licensing agreements[22] - The company underwent a corporate restructuring in Q1 2024 and the second half of Fiscal 2023, eliminating approximately 10% of corporate positions, incurring $0.3 million in restructuring costs in Q1 2024[27] NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED This note outlines new accounting standards issued by the FASB that the company has not yet adopted - The FASB issued ASU 2023-07 (Segment Reporting) effective for fiscal years beginning after December 15, 2023, requiring disclosure of reportable segments' significant expenses and other items[28] - ASU 2023-09 (Improvements to Income Tax Disclosures) was issued, effective for annual periods beginning after December 15, 2024, requiring specific categories in rate reconciliation and disaggregation of income/tax expense between domestic and foreign[29] - ASU 2024-02 (Codification Improvements) was issued in March 2024, effective for annual reporting periods beginning after December 15, 2024, to simplify the Codification[30] NOTE 3. LOSS PER SHARE This note details the calculation of basic and diluted loss per common share for the reporting periods Loss Per Share (in thousands, except per share amounts) | Metric (in thousands, except per share amounts) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :---------------------------------------------- | :------------------------- | :-------------------------- | | Net loss | $(6,442) | $(1,652) | | Basic weighted average common shares outstanding | 31,439 | 32,443 | | Diluted weighted average common shares outstanding | 31,439 | 32,443 | | Basic Loss per share | $(0.20) | $(0.05) | | Diluted Loss per share | $(0.20) | $(0.05) | | Anti-dilutive shares excluded | 1,002 | 1,189 | - Diluted loss per common share increased to $(0.20) in Q1 2024 from $(0.05) in Q1 2023[32] - Stock awards were considered anti-dilutive due to the net loss, resulting in no dilutive impact on weighted average shares outstanding[32] NOTE 4. OTHER COMPREHENSIVE LOSS This note provides information on items of comprehensive loss that are not included in net income Other Comprehensive Loss (in thousands) | Metric (in thousands) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :-------------------- | :------------------------- | :-------------------------- | | Beginning balance: Accumulated other comprehensive loss | $(16,069) | $(17,022) | | Foreign currency translation adjustments | $(513) | $81 | | Ending balance: Accumulated other comprehensive loss | $(16,582) | $(16,941) | - Accumulated other comprehensive loss increased to $(16.6) million as of May 3, 2024, from $(16.0) million at the beginning of the period, primarily due to foreign currency translation adjustments of $(0.5) million[34] NOTE 5. DEBT This note details the company's borrowing arrangements, including ABL and Term Loan Facilities, and related covenants Debt Facilities and Balances (in thousands) | Metric (in thousands) | May 3, 2024 | April 28, 2023 | February 2, 2024 | | :-------------------- | :---------- | :------------- | :--------------- | | ABL Facility limit | $275,000 | $275,000 | $275,000 | | Outstanding borrowings (ABL) | $40,000 | $100,000 | — | | ABL Facility borrowing availability | $133,816 | $136,084 | $167,241 | | Current Term Loan Facility | $256,750 | — | $260,000 | | Former Term Loan Facility | — | $240,625 | — | | Long-term debt, net | $233,087 | $220,786 | $236,170 | - The company's ABL Facility outstanding borrowings decreased to $40.0 million as of May 3, 2024, from $100.0 million as of April 28, 2023[36] - A new Current Term Loan Facility of $260.0 million was entered into on December 29, 2023, replacing the Former Term Loan Facility[37] - The Current Term Loan Facility matures on December 29, 2028, and amortizes at 1.25% per quarter, with variable interest rates based on Term Loan Adjusted SOFR or an alternative base rate plus an applicable margin[43][48] - As of May 3, 2024, the Company was in compliance with all financial covenants in its Debt Facilities[55] NOTE 6. STOCK-BASED COMPENSATION This note outlines stock-based awards, compensation expense, and unrecognized expense balances Stock-Based Compensation Expense (in thousands) | Metric (in thousands) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :-------------------- | :------------------------- | :-------------------------- | | Deferred awards | $922 | $979 | | Performance awards | $200 | — | | Option awards | $104 | $104 | | Total stock-based compensation expense | $1,226 | $1,083 | - Total stock-based compensation expense increased to $1.2 million in Q1 2024 from $1.1 million in Q1 2023[60] - Unrecognized stock-based compensation expense for unvested Deferred Awards was $8.0 million as of May 3, 2024, expected to be recognized over 2.3 years[61] - Unrecognized stock-based compensation expense for unvested Performance Awards was $4.4 million as of May 3, 2024, expected to be recognized over 2.5 years[62] - Unrecognized stock-based compensation expense for Option Awards was $0.6 million as of May 3, 2024, expected to be recognized over 1.6 years[63] NOTE 7. STOCKHOLDERS' EQUITY This note details changes in stockholders' equity, including share repurchase programs and their impact - The 2022 Share Repurchase Program expired on February 2, 2024[66] - A new 2024 Share Repurchase Program was authorized on March 15, 2024, allowing repurchases of up to $25.0 million of common stock through March 31, 2026[67] Share Repurchase Activity (Shares and $ in thousands) | Metric (Shares and $ in thousands) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :--------------------------------- | :------------------------- | :-------------------------- | | Number of shares repurchased | 85 | 430 | | Total cost | $1,013 | $3,772 | | Average per share cost | $11.88 | $8.77 | - As of May 3, 2024, $24.0 million remained available for purchases under the 2024 Share Repurchase Program[67] NOTE 8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES This note provides a breakdown of various accrued expenses and other short-term liabilities Accrued Expenses and Other Current Liabilities (in thousands) | Metric (in thousands) | May 3, 2024 | April 28, 2023 | February 2, 2024 | | :-------------------- | :---------- | :------------- | :--------------- | | Deferred gift card revenue | $35,119 | $34,222 | $35,604 | | Accrued employee compensation and benefits | $17,900 | $15,204 | $28,449 | | Reserve for sales returns and allowances | $16,886 | $17,755 | $21,560 | | Deferred revenue | $9,340 | $6,019 | $4,314 | | Total Accrued expenses and other current liabilities | $92,181 | $88,216 | $108,972 | - Total accrued expenses and other current liabilities increased to $92.2 million as of May 3, 2024, from $88.2 million as of April 28, 2023[69] - Deferred revenue significantly increased to $9.3 million as of May 3, 2024, from $4.3 million as of February 2, 2024[69] NOTE 9. FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS AND LIABILITIES This note describes the fair value hierarchy and measurement techniques for financial assets and liabilities - Cash and cash equivalents and restricted cash are valued at fair value based on Level 1 inputs[70] Long-Term Debt Fair Value (in thousands) | Metric (in thousands) | May 3, 2024 (Carrying Amount) | May 3, 2024 (Fair Value) | April 28, 2023 (Carrying Amount) | April 28, 2023 (Fair Value) | February 2, 2024 (Carrying Amount) | February 2, 2024 (Fair Value) | | :-------------------- | :---------------------------- | :----------------------- | :------------------------------- | :-------------------------- | :--------------------------------- | :-------------------------- | | Long-term debt, including current portion | $256,750 | $257,270 | $240,625 | $227,109 | $260,000 | $258,139 | - 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[71] NOTE 10. INCOME TAXES This note provides details on the company's income tax benefit and effective tax rate - The company recorded an income tax benefit at an effective tax rate of 19.6% for Q1 2024, compared to 24.1% for Q1 2023[73] - Variations from the U.S. federal statutory rate of 21% are due to state taxes, non-deductible expenses, and stock-based compensation adjustments[73] NOTE 11. COMMITMENTS AND CONTINGENCIES This note discusses the company's legal claims, proceedings, and potential financial impacts - Management believes the ultimate resolution of pending legal claims, proceedings, and investigations will not have a material adverse effect on results of operations, cash flows, or financial position[74] NOTE 12. SEGMENT REPORTING This note describes the company's operating segments and their aggregation into a single reportable segment - The company's operating segments include U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, and Retail, which are aggregated into one external reportable segment due to similar economic characteristics[75] Net Revenue by Distribution Channel (in thousands) | Distribution Channel | 13 Weeks Ended May 3, 2024 (Net Revenue) | % of Net Revenue (2024) | 13 Weeks Ended April 28, 2023 (Net Revenue) | % of Net Revenue (2023) | | :------------------- | :--------------------------------------- | :---------------------- | :------------------------------------------ | :---------------------- | | U.S. eCommerce | $170,532 | 59.7 % | $177,702 | 57.4 % | | International | $24,968 | 8.8 % | $25,392 | 8.2 % | | Outfitters | $42,677 | 15.0 % | $73,969 | 23.9 % | | Third Party | $37,454 | 13.1 % | $22,989 | 7.4 % | | Retail | $9,840 | 3.4 % | $9,506 | 3.1 % | | Total Net revenue | $285,471 | | $309,558 | | - Outfitters net revenue significantly decreased by $31.3 million (42.3%) due to the conclusion of the Delta Air Lines contract[78][114] - Third Party net revenue increased by $14.5 million (62.9%), driven by licensing arrangements and sales to a licensee for the Kids business transition[78][116] NOTE 13. REVENUE This note details revenue recognition policies, disaggregation of net revenue, and deferred revenue - Revenue is recognized when control of product passes to customers, net of promotions, sales returns, discounts, and other incentives[79] Net Revenue by Geographic Location (in thousands) | Geographic Location | 13 Weeks Ended May 3, 2024 (Net Revenue) | 13 Weeks Ended April 28, 2023 (Net Revenue) | | :------------------ | :--------------------------------------- | :------------------------------------------ | | United States | $257,507 | $280,404 | | Europe | $25,308 | $25,877 | | Other | $2,656 | $3,277 | | Total Net revenue | $285,471 | $309,558 | - Trademark royalty revenue and fulfillment fees from licensing agreements are included in Net revenue under the Third Party distribution channel[81] Deferred Revenue Activity (in thousands) | Metric (in thousands) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :-------------------- | :------------------------- | :-------------------------- | | Deferred revenue beginning of period | $4,314 | $7,484 | | Deferred revenue recognized in period | $(4,100) | $(7,270) | | Revenue deferred in period | $9,126 | $5,805 | | Deferred revenue end of period | $9,340 | $6,019 | - Gift card breakage, an estimate of unredeemed gift cards, is recorded within Net revenue[86] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Lands' End's financial condition and operational results for the first quarter of 2024 compared to 2023, including an executive overview, detailed analysis of revenue by distribution channel, gross profit, expenses, and non-GAAP financial measures. It also discusses liquidity, capital resources, and critical accounting policies Executive Overview This overview summarizes the company's business model, recent strategic actions, and key operational highlights - Lands' End is a digital retailer of apparel, home products, and uniforms, operating through U.S. eCommerce, International, Outfitters, Third Party, and Retail distribution channels[91][96] - The company eliminated approximately 10% of corporate positions in Q1 2024 and the second half of Fiscal 2023, incurring $0.3 million in restructuring costs in Q1 2024[94] - The business experiences seasonal fluctuations, with a significant portion of net revenue and earnings historically realized in the fourth fiscal quarter[96] Results of Operations This section analyzes the company's financial performance, including net revenue, gross profit, and operating expenses Key Financial Performance Metrics (in thousands) | Metric (in thousands) | 13 Weeks Ended May 3, 2024 | % of Net Revenue (2024) | 13 Weeks Ended April 28, 2023 | % of Net Revenue (2023) | | :-------------------- | :------------------------- | :---------------------- | :---------------------------- | :---------------------- | | Net revenue | $285,471 | 100.0 % | $309,558 | 100.0 % | | Gross profit | $138,980 | 48.7 % | $137,937 | 44.6 % | | Selling and administrative | $127,401 | 44.6 % | $118,514 | 38.3 % | | Operating income | $2,233 | 0.8 % | $9,920 | 3.2 % | | NET LOSS | $(6,442) | (2.3) % | $(1,652) | (0.5) % | - Gross margin increased by approximately 410 basis points to 48.7% in Q1 2024, up from 44.6% in Q1 2023, driven by product strength, lower promotions, and reduced clearance inventory[98][118] - Selling and administrative expenses increased by $8.9 million to $127.4 million, representing 44.6% of net revenue in Q1 2024, up from 38.3% in Q1 2023, due to deleveraging from lower revenues and higher digital marketing spend[98][119] Definitions, Reconciliations and Uses of Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures to their most comparable GAAP measures Adjusted Net Loss Reconciliation (in thousands, except per share amounts) | Metric (in thousands, except per share amounts) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :---------------------------------------------- | :------------------------- | :-------------------------- | | Net loss | $(6,442) | $(1,652) | | Corporate restructuring | $342 | — | | Lands' End Japan closure | — | $76 | | Tax effects on adjustments | $(87) | $(19) | | ADJUSTED NET LOSS | $(6,187) | $(1,595) | | ADJUSTED DILUTED NET LOSS PER SHARE | $(0.20) | $(0.05) | Adjusted EBITDA Reconciliation (in thousands) | Metric (in thousands) | 13 Weeks Ended May 3, 2024 | 13 Weeks Ended April 28, 2023 | | :-------------------- | :------------------------- | :-------------------------- | | Net loss | $(6,442) | $(1,652) | | Income tax benefit | $(1,573) | $(524) | | Interest expense | $10,336 | $12,283 | | Depreciation and amortization | $9,005 | $9,301 | | Corporate restructuring | $342 | — | | Lands' End Japan closure | — | $76 | | (Gain) loss on disposal of property and equipment | $(1) | $123 | | Adjusted EBITDA | $11,579 | $19,514 | - Adjusted EBITDA decreased to $11.6 million in Q1 2024 from $19.5 million in Q1 2023. Excluding the Delta Air Lines contract conclusion, Adjusted EBITDA increased by 68.1%[108][129] Discussion and Analysis This section provides a detailed analysis of key operational and financial trends impacting the company's performance - Gross Merchandise Value (GMV) increased low single digits compared to Q1 2023[110] - Net revenue decreased by 7.8% to $285.5 million. Excluding the Delta Air Lines contract conclusion, net revenue increased 1.0%[111] - U.S. eCommerce net revenue decreased by 4.0% due to lower promotional activity and improved inventory management[112] - Outfitters net revenue decreased by 42.3%, primarily due to the conclusion of the Delta Air Lines contract[114] - Third Party net revenue increased by 62.9%, driven by licensing arrangements and sales related to the Kids business transition[116] - Retail net revenue decreased by 3.5%, but U.S. Company Operated stores saw a 12.0% increase in Same Store Sales[117] - Interest expense decreased by $2.0 million to $10.3 million, driven by lower ABL Facility interest due to reduced average outstanding balances[123] - Net loss was $6.4 million, and diluted net loss per share was $0.20 in Q1 2024[126] Liquidity and Capital Resources This section discusses the company's ability to meet financial obligations, funding sources, and capital allocation plans - The company's primary liquidity needs are for working capital, capital expenditures, debt service, and general corporate purposes, funded by cash on hand, cash flows from operations, and the ABL Facility[130] - The ABL Facility had $40.0 million outstanding on May 3, 2024, with $8.1 million in outstanding letters of credit[131] - Net cash used in operating activities increased to $25.8 million in Q1 2024, up from $10.8 million in Q1 2023, due to increased net loss and working capital changes[148] - Net cash provided by financing activities was $35.0 million in Q1 2024, a $43.4 million increase from Q1 2023, primarily due to ABL Facility borrowings[150] - For Fiscal 2024, the company plans to invest approximately $30.0 million in capital expenditures, mainly for technology and infrastructure[149] Application of Critical Accounting Policies and Estimates This section describes critical accounting policies and estimates that could materially impact financial results - Critical accounting policies and estimates include revenue recognition, inventory valuation, goodwill and intangible asset impairment assessments, and income taxes[153] - There have been no significant changes in critical accounting policies or their application since February 2, 2024[154] Recent Accounting Pronouncements This section refers to disclosures regarding new accounting standards issued but not yet adopted - Information regarding recently issued accounting pronouncements not yet adopted is detailed in Note 2 of the Condensed Consolidated Financial Statements[155] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk This section outlines Lands' End's exposure to market risks, specifically foreign currency exchange risk and interest rate risk, detailing their potential impact on financial performance and the company's approach to managing these risks - Net revenue from the International distribution channel represented approximately 9% of total Net revenue in Q1 2024[159] - A 10% change in foreign currency exchange rates would result in an approximate $2.5 million change in Net revenue for Q1 2024[159] - Foreign currency translation losses, net, totaled approximately $0.5 million in Q1 2024[159] - The company is subject to interest rate risk from its variable-rate Current Term Loan Facility and ABL Facility[161] - Each one percentage point change in interest rates (above the 2.00% SOFR floor) on the Current Term Loan Facility would result in a $2.5 million change in annual cash interest expenses[161] - If the ABL Facility were fully drawn, each one percentage point change in interest rates would result in a $2.8 million change in annual cash interest expense[161] ITEM 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of May 3, 2024. No material changes to internal control over financial reporting were identified during the quarter - The company's disclosure controls and procedures were evaluated and deemed effective as of May 3, 2024[163] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended May 3, 2024[164] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits ITEM 1. LEGAL PROCEEDINGS Lands' End is involved in legal claims, with management expecting no material adverse effect on financials - The company is party to various claims, legal proceedings, and investigations arising in the ordinary course of business[167] - Management believes the ultimate resolution of these matters should not have a material adverse effect on results of operations, cash flows, or financial position[167] - There have been no material developments to legal proceedings disclosed in the Annual Report on Form 10-K for the year ended February 2, 2024[167] ITEM 1A. RISK FACTORS No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended February 2, 2024[168] ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section details share repurchase activities under the 2024 Share Repurchase Program Issuer Purchases of Equity Securities (Shares and $ in thousands) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :---------------- | :------------------------------- | :--------------------------- | | February 3 - March 1 | — | $— | | March 2 - April 5 | 29,344 | $11.39 | | April 6 - May 3 | 55,905 | $12.14 | | Total | 85,249 | $11.88 | - The company repurchased 85,249 shares of common stock at an average price of $11.88 per share during Q1 2024 under the 2024 Share Repurchase Program[170] - As of May 3, 2024, approximately $24.0 million of shares could yet be purchased under the 2024 Share Repurchase Program[170] - All repurchased shares were retired following purchase[170] ITEM 5. Other Information No Rule 10b5-1 trading plans were adopted or terminated by directors or executive officers during the quarter - No Rule 10b5-1 trading plans were adopted or terminated by directors or executive officers during the fiscal quarter ended May 3, 2024[171] ITEM 6. Exhibits This section lists all documents filed as exhibits, including corporate governance, certifications, and XBRL files - Exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), certifications (31.1, 31.2, 32.1), and XBRL taxonomy files (101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[172] Signatures The report is duly signed on behalf of Lands' End, Inc. by Bernard McCracken, Chief Financial Officer and Treasurer - The report was signed by Bernard McCracken, Chief Financial Officer and Treasurer, on June 5, 2024[176]