Lands’ End, Inc. (NASDAQ: LE) today announced financial results for
the fourth quarter and full year of the fiscal year ended February
2, 2024. The Company also provided the first quarter and full year
fiscal 2024 outlook.
Andrew McLean, Chief Executive Officer, stated, “I am proud of
the Lands’ End team’s focus and execution throughout fiscal 2023 as
we pursued our solutions-based strategy to introduce newness across
the product assortment, generated higher quality sales,
significantly enhanced our inventory position and improved our
profitability. As a result of these efforts, in the fourth quarter
we increased gross profit by 13.5%, improved gross margin by 550
basis points and reduced inventory 29% compared to last year.”
McLean continued, “We ended the fiscal year with a strengthened
balance sheet, supported by our recent term loan refinancing,
positioning us to continue investing in the strategic growth and
evolution of our iconic brand. We have entered fiscal 2024 with
strong momentum and I am confident that we will build on our
progress and drive meaningful value creation for Lands’ End’s
shareholders and other stakeholders over the long term.”
Fourth Quarter Financial Highlights
- For the fourth quarter, Net revenue decreased 2.8% to $514.9
million compared to $529.6 million in the fourth quarter of fiscal
2022.
- Global eCommerce Net revenue was $404.9 million, a decrease of
2.3% from $414.5 million in the fourth quarter of fiscal 2022.
Fourth quarter of fiscal 2022 included Lands’ End Japan Net revenue
of $7.2 million. Lands’ End Japan closed at the end of fiscal 2022.
Excluding Lands’ End Japan in the fourth quarter of fiscal 2022,
Global eCommerce net revenue decreased 0.6%.
- Compared to fourth quarter of fiscal 2022, U.S. eCommerce Net
revenue increased 0.1% largely driven by a concerted effort to
reduce promotional activity and improved inventory management
compared to the prior year resulting in higher margins with lower
clearance inventory sales.
- Compared to fourth quarter of fiscal 2022, which included the
results of Lands’ End Japan, International eCommerce Net revenue
decreased 20.2%.
- Compared to fourth quarter of fiscal 2022, Europe eCommerce Net
revenue decreased 6.2% primarily driven by assortment editing with
a focus on key categories, reduced clearance inventory sales and
continued macroeconomic challenges.
- Outfitters Net revenue was $53.7 million for fourth quarter of
fiscal 2023, a decrease of $6.8 million or 11.3% from $60.5 million
during the fourth quarter of fiscal 2022. The decrease was
primarily driven by the conclusion of the Delta Air Lines contract
in the first quarter of fiscal 2023. Excluding the $5.1 million
decrease in year-over-year revenue from the Delta Air Lines
business, Net revenue for the Outfitters business decreased 3.2%
mainly due to the timing of school uniform shipments compared to
prior year.
- Third Party Net revenue was $40.5 million, an increase of $1.3
million or 3.3% from $39.2 million in the fourth quarter of fiscal
2022, primarily attributed to the continued growth of online sales
through existing marketplaces.
- Gross profit was $195.4 million, an increase of $23.3 million
or 13.5% from $172.1 million during the fourth quarter of fiscal
2022. Gross margin increased approximately 550 basis points to
38.0%, compared to 32.5% in fourth quarter of fiscal 2022. The
Gross margin improvement was predominantly driven by new products
across the brand, strength in transitional outerwear and adjacent
product categories, reduction in sales of clearance inventory and
improvements in supply chain costs in the fourth quarter of fiscal
2023 compared to the prior year.
- Selling and administrative expenses increased $22.2 million to
$172.5 million or 33.5% of Net revenue, compared to $150.3 million
or 28.4% of Net revenue in fourth quarter of fiscal 2022. The
approximately 510 basis points increase was driven by higher
incentive related personnel costs, digital marketing spend and
external third party services to support strategic growth
initiatives.
- Net loss was $8.6 million, or $0.27 loss per diluted share
compared to Net loss of $3.3 million or $0.10 loss per diluted
share in the fourth quarter of fiscal 2022.
- Adjusted net income was $8.0 million, or $0.25 earnings per
diluted share compared to Adjusted net loss of $1.4 million or
$0.04 loss per diluted share in the fourth quarter of fiscal
2022.
- Adjusted EBITDA was $31.7 million in the fourth quarter of
fiscal 2023 compared to $24.2 million in the fourth quarter of
fiscal 2022.
Full Year Financial Highlights:
- For the fiscal year, net revenue decreased 5.3% to $1.47
million compared to $1.56 billion in fiscal 2022.
- Global eCommerce Net revenue was $1.0 billion, a decrease of
7.1% from $1.1 billion in fiscal 2022. Fiscal 2022 included Lands’
End Japan Net revenue of $32.7 million. Excluding Lands’ End Japan
in fiscal 2022, Global eCommerce Net revenue decreased 4.3%.
- Net revenue in US eCommerce decreased by 2.7% and Europe
eCommerce decreased by 15.7%, both primarily driven by promotional
productivity in key product solutions and adjacent product
categories with improved inventory management resulting in higher
margins with lower clearance inventory sales.
- Outfitters Net revenue was $269.9 million for fiscal 2023, an
increase of $4.0 million or 1.5% from $265.9 million in fiscal
2022. The results include inventory sales to Delta Air Lines at the
conclusion of their five-year contract in the first quarter of
fiscal 2023.
- Third Party Net revenue was $111.8 million, a decrease of $7.2
million or 6.0% from $119.0 million in fiscal 2022, largely driven
by a decline in demand with one wholesale partner partially offset
by growth in online sales through other existing marketplaces.
- Gross profit was $625.5 million, an increase of $31.7 million
or 5.3% from $593.8 million during fiscal 2022. Gross margin
increased approximately 430 basis points to 42.5% of total Net
revenue in fiscal 2023, compared to 38.2% of total Net revenue in
fiscal 2022. The basis point improvement in Gross margin was
predominantly driven by leveraging the strength in product
solutions and newness across the channels, reduction in clearance
inventory and improvements in supply chain costs for Fiscal 2023
compared to the prior year.
- Selling and administrative expenses increased $22.8 million to
$550.2 million or 37.4% of Net revenue, compared to $527.4 million
or 33.9% of Net revenue in fiscal 2022. The 350 basis point
increase was driven by deleveraging from lower revenues and higher
incentive related personnel costs, partially offset by lower
digital marketing spend and continued cost controls.
- Net loss was $130.7 million, or $4.09 loss per diluted share
compared to Net loss of $12.5 million or $0.38 loss per diluted
share in fiscal 2022. Net loss in fiscal 2023 includes a
non-cash $106.7 million impairment of goodwill due to the decline
in the Company’s stock price and market capitalization and
additional significant events.
- Adjusted net loss was $4.8 million, or $0.15 loss per diluted
share compared to Adjusted net loss of $7.7 million or $0.23 loss
per diluted share in fiscal 2022.
- Adjusted EBITDA was $84.3 million compared to $70.5 million in
fiscal 2022.
Fourth Quarter Business Highlights:
- Delivered 13.5% year-over-year increase in gross profit, or 550
basis point improvement in Gross margin, driven by new products
across the brand, strength in transitional outerwear and adjacent
product categories, and improved inventory management.
- Achieved a 29.1% reduction in year-over-year inventory through
improved management.
- Increased financial flexibility through the execution of a new
$260 million term loan maturing in December 2028.
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents were $25.3 million as of February 2,
2024, compared to $39.6 million as of January 27, 2023.
Inventories, net, was $301.7 million as of February 2, 2024, and
$425.5 million as of January 27, 2023. The 29.1% decrease in
inventory was driven by the actions the Company has taken to
improve inventory efficiency by reducing inventory purchases and
capitalizing on speed-to-market initiatives.
Net cash provided by operations was $130.6 million for the 53
weeks ended February 2, 2024, compared to Net cash used in
operations of $36.4 million for the 52 weeks ended January 27,
2023. The $167.0 million increase in cash provided by operating
activities was primarily due to the year-over-year improvement in
inventory flow and productivity.
As of February 2, 2024, the Company had no borrowings
outstanding and $167.2 million of availability under its ABL
Facility, compared to $100.0 million of borrowings and $163.8
million of availability as of January 27, 2023. Additionally, as of
February 2, 2024, the Company had $260.0 million of term loan debt
outstanding compared to $244.1 million outstanding as of January
27, 2023.
During the fourth quarter of fiscal 2023, the Company
repurchased $2.1 million of the Company’s common stock under its
previously announced share repurchase program that expired on
February 2, 2024. On March 15, 2024, the Company announced that its
Board of Directors has authorized the repurchase of up to $25
million of the Company’s common stock through March 31, 2026.
Outlook
Bernie McCracken, Chief Financial Officer, stated, “We expect to
continue to prioritize high-quality sales and improved cash flows,
which we believe will enable Lands’ End to drive continued gross
profit and margin expansion. When comparing today’s outlook to the
prior year period, keep in mind that the first quarter of fiscal
2023 included the inventory sales from the conclusion of the Delta
Air Lines contract, positively impacting revenue by over $25
million and generating approximately $12 million in Adjusted
EBITDA.”
For the first quarter of fiscal 2024 the Company expects:
- Net revenue to be between $255.0 million and $285.0
million.
- Gross Merchandise Value, the amount paid by customers for
Lands’ End-branded product in all channels, expected to deliver low
to mid-single digits percentage growth.
- Net loss to be between $10.0 million and $8.0 million and
diluted loss per share to be between $0.32 and $0.25.
- Adjusted net loss to be between $9.5 million and $7.5 million
and Adjusted diluted loss per share to be between $0.30 and
$0.24.
- Adjusted EBITDA in the range of $9.0 million to $11.0
million.
For fiscal 2024 the Company expects:
- Net revenue to be between $1.33 billion and $1.45 billion.
- Gross Merchandise Value, the amount paid by customers for
Lands’ End-branded product in all channels, expected to deliver low
to mid-single digits percentage growth.
- Net income to be between $1.0 million and $10.0 million and
diluted earnings per share to be between $0.03 and $0.32.
- Adjusted net income to be between $3.0 million and $12.0
million and Adjusted diluted earnings per share to be between $0.10
and $0.38.
- Adjusted EBITDA in the range of $84 million to $96
million.
- Capital expenditures of approximately $30.0 million.
Conference Call
The Company will host a conference call on Wednesday, March 27,
2024, at 8:30 a.m. ET to review its fourth quarter and full year
financial results and related matters. The call may be accessed
through the Investor Relations section of the Company’s website at
http://investors.landsend.com.
About Lands’ End, Inc.
Lands’ End, Inc. (NASDAQ:LE) is a leading digital retailer
of solution-based apparel, swimwear, outerwear,
accessories, footwear, home products and uniforms. We offer
products online at www.landsend.com, through third-party
distribution channels and our own Company Operated stores. We
also offer products to businesses and schools, for their employees
and students, through the Outfitters distribution channel. We are a
classic American lifestyle brand that creates solutions for life’s
every journey.
Forward-Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties, including statements regarding the
Company’s belief that it is positioned to and will continue to
invest in the strategic growth and the evolution of its brand; the
Company’s belief that it has strong momentum entering fiscal 2024;
the Company’s confidence that it will build on its progress and
drive meaningful value creation for Lands’ End’s shareholders and
other stakeholders over the long term; the Company’s expectation to
continue to prioritize high-quality sales and improved cash flows,
and its belief that these actions will enable the Company to drive
continued gross profit and margin expansion; the Company’s outlook
and expectations as to Net revenue, Gross Merchandise Value, Net
income/loss, earnings/loss per share, Adjusted net income/loss,
Adjusted earnings/loss per share and Adjusted EBITDA for the first
quarter of fiscal 2024 and for the full year of fiscal 2024, and
capital expenditures for fiscal 2024; and the potential for
additional purchases under the Company’s share repurchase program.
The following important factors and uncertainties, among others,
could cause actual results to differ materially from those
described in these forward-looking statements: global supply chain
challenges and their impact on inbound transportation costs and
delays in receiving product; disruption in the Company’s supply
chain, including with respect to its distribution centers,
third-party manufacturing partners and logistics partners, caused
by limits in freight capacity, increases in transportation costs,
port congestion, other logistics constraints, and closure of
certain manufacturing facilities and production lines due to public
health crises and other global economic conditions; the impact of
global economic conditions, including inflation, on consumer
discretionary spending; the impact of public health crises on
operations, customer demand and the Company’s supply chain, as well
as its consolidated results of operation, financial position and
cash flows; the Company may be unsuccessful in implementing its
strategic initiatives, or its initiatives may not have their
desired impact on its business; the Company’s ability to obtain
additional financing on commercially acceptable terms or at all,
including, the condition of the lending and debt markets; the
Company’s ability to offer merchandise and services that customers
want to purchase; changes in customer preference from the Company’s
branded merchandise; the Company’s results may be materially
impacted if tariffs on imports to the United States increase and it
is unable to offset the increased costs from current or future
tariffs through pricing negotiations with its vendor base, moving
production out of countries impacted by the tariffs, passing
through a portion of the cost increases to the customer, or other
savings opportunities; customers’ use of the Company’s digital
platform, including customer acceptance of its efforts to enhance
its eCommerce websites, including the Outfitters website; customer
response to the Company’s marketing efforts across all types of
media; the Company’s maintenance of a robust customer list; the
Company’s retail store strategy may be unsuccessful; the Company’s
Third Party channel may not develop as planned or have its desired
impact; the Company’s dependence on information technology; failure
of information technology systems, including with respect to its
eCommerce operations, or an inability to upgrade or adapt its
systems; failure to adequately protect against cybersecurity
threats or maintain the security and privacy of customer, employee
or company information and the impact of cybersecurity events on
the Company; fluctuations and increases in costs of raw materials
as well as fluctuations in other production and
distribution-related costs; impairment of the Company’s
relationships with its vendors; the Company’s failure to compete
effectively in the apparel industry; legal, regulatory, economic
and political risks associated with international trade and those
markets in which the Company conducts business and sources its
merchandise; the Company’s failure to protect or preserve the image
of its brands and its intellectual property rights; increases in
postage, paper and printing costs; failure by third parties who
provide the Company with services in connection with certain
aspects of its business to perform their obligations; the Company’s
failure to timely and effectively obtain shipments of products from
its vendors and deliver merchandise to its customers; reliance on
promotions and markdowns to encourage customer purchases; the
Company’s failure to efficiently manage inventory levels;
unseasonal or severe weather conditions; natural disasters,
political crises or other catastrophic events; the adverse effect
on the Company’s reputation if its independent vendors or licensees
do not use ethical business practices or comply with applicable
laws and regulations; assessments for additional state taxes;
incurrence of charges due to impairment of goodwill, other
intangible assets and long-lived assets; the impact on the
Company’s business of adverse worldwide economic and market
conditions, including inflation and other economic factors that
negatively impact consumer spending on discretionary items; the
stock repurchase program may not be executed to the full extent
within its duration, due to business or market conditions or
Company credit facility limitations; the ability of the Company’s
principal stockholders to exert substantial influence over the
Company; and other risks, uncertainties and factors discussed in
the “Risk Factors” section of the Company’s Annual Report on Form
10-K for the fiscal year ended January 27, 2023. The Company
intends the forward-looking statements to speak only as of the time
made and does not undertake to update or revise them as more
information becomes available, except as required by law.
CONTACTS
Lands’ End, Inc.Bernard McCrackenChief Financial Officer(608)
935-4100
Investor Relations:ICR, Inc.Tom Filandro(646)
277-1235Tom.Filandro@icrinc.com
-Financial Tables Follow-
|
LANDS’ END, INC. |
Consolidated Balance Sheets |
(Unaudited) |
|
(in thousands except per share
data) |
|
February 2, 2024 |
|
|
January 27, 2023 |
|
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
25,314 |
|
|
$ |
39,557 |
|
Restricted cash |
|
|
1,976 |
|
|
|
1,834 |
|
Accounts receivable, net |
|
|
35,295 |
|
|
|
44,928 |
|
Inventories, net |
|
|
301,724 |
|
|
|
425,513 |
|
Prepaid expenses and other current assets |
|
|
45,951 |
|
|
|
44,894 |
|
Total current assets |
|
|
410,260 |
|
|
|
556,726 |
|
Property and equipment,
net |
|
|
118,033 |
|
|
|
127,638 |
|
Operating lease right-of-use
asset |
|
|
23,438 |
|
|
|
30,325 |
|
Goodwill |
|
|
— |
|
|
|
106,700 |
|
Intangible asset, net |
|
|
257,000 |
|
|
|
257,000 |
|
Other assets |
|
|
2,748 |
|
|
|
3,759 |
|
TOTAL ASSETS |
|
$ |
811,479 |
|
|
$ |
1,082,148 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
13,000 |
|
|
$ |
13,750 |
|
Accounts payable |
|
|
131,922 |
|
|
|
171,557 |
|
Lease liability – current |
|
|
6,024 |
|
|
|
5,414 |
|
Accrued expenses and other current liabilities |
|
|
108,972 |
|
|
|
106,756 |
|
Total current liabilities |
|
|
259,918 |
|
|
|
297,477 |
|
Long-term borrowings on ABL
Facility |
|
|
— |
|
|
|
100,000 |
|
Long-term debt, net |
|
|
236,170 |
|
|
|
223,506 |
|
Lease liability –
long-term |
|
|
22,952 |
|
|
|
31,095 |
|
Deferred tax liabilities |
|
|
48,020 |
|
|
|
45,953 |
|
Other liabilities |
|
|
2,826 |
|
|
|
3,365 |
|
TOTAL LIABILITIES |
|
|
569,886 |
|
|
|
701,396 |
|
Commitments and
contingencies |
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
Common stock, par value $0.01 – authorized: 480,000 shares;
issued and outstanding: 31,433 and 32,626, respectively |
|
|
315 |
|
|
|
326 |
|
Additional paid-in capital |
|
|
356,764 |
|
|
|
366,181 |
|
(Accumulated deficit) Retained earnings |
|
|
(99,417 |
) |
|
|
31,267 |
|
Accumulated other comprehensive loss |
|
|
(16,069 |
) |
|
|
(17,022 |
) |
TOTAL STOCKHOLDERS’ EQUITY |
|
|
241,593 |
|
|
|
380,752 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
811,479 |
|
|
$ |
1,082,148 |
|
LANDS’ END, INC. |
Consolidated Statements of Operations |
(Unaudited) |
|
|
|
14 Weeks Ended |
|
|
13 Weeks Ended |
|
|
53 Weeks Ended |
|
|
52 Weeks Ended |
|
(in thousands except per share
data) |
|
February 2, 2024 |
|
|
January 27, 2023 |
|
|
February 2, 2024 |
|
|
January 27, 2023 |
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
514,853 |
|
|
$ |
529,603 |
|
|
$ |
1,472,508 |
|
|
$ |
1,555,429 |
|
Cost of sales (excluding
depreciation and amortization) |
|
|
319,452 |
|
|
|
357,459 |
|
|
|
846,981 |
|
|
|
961,663 |
|
Gross
profit |
|
|
195,401 |
|
|
|
172,144 |
|
|
|
625,527 |
|
|
|
593,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
administrative |
|
|
172,550 |
|
|
|
150,300 |
|
|
|
550,211 |
|
|
|
527,374 |
|
Depreciation and
amortization |
|
|
10,026 |
|
|
|
9,513 |
|
|
|
38,465 |
|
|
|
38,741 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
106,700 |
|
|
|
— |
|
Other operating expense
(income), net |
|
|
4,750 |
|
|
|
(209 |
) |
|
|
7,666 |
|
|
|
2,926 |
|
Total costs and expenses |
|
|
187,326 |
|
|
|
159,604 |
|
|
|
703,042 |
|
|
|
569,041 |
|
Operating income (loss) |
|
|
8,075 |
|
|
|
12,540 |
|
|
|
(77,515 |
) |
|
|
24,725 |
|
Interest expense |
|
|
12,307 |
|
|
|
11,961 |
|
|
|
48,291 |
|
|
|
39,768 |
|
Loss on extinguishment of
debt |
|
|
6,666 |
|
|
|
— |
|
|
|
6,666 |
|
|
|
— |
|
Other income, net |
|
|
(167 |
) |
|
|
(267 |
) |
|
|
(655 |
) |
|
|
(364 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income
taxes |
|
|
(10,731 |
) |
|
|
846 |
|
|
|
(131,817 |
) |
|
|
(14,679 |
) |
Income tax (benefit)
expense |
|
|
(2,111 |
) |
|
|
4,144 |
|
|
|
(1,133 |
) |
|
|
(2,149 |
) |
NET LOSS |
|
$ |
(8,620 |
) |
|
$ |
(3,298 |
) |
|
$ |
(130,684 |
) |
|
$ |
(12,530 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON
SHARE ATTRIBUTABLE TO
STOCKHOLDERS |
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
$ |
(0.27 |
) |
|
$ |
(0.10 |
) |
|
$ |
(4.09 |
) |
|
$ |
(0.38 |
) |
Diluted: |
|
$ |
(0.27 |
) |
|
$ |
(0.10 |
) |
|
$ |
(4.09 |
) |
|
$ |
(0.38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common
shares outstanding |
|
|
31,495 |
|
|
|
32,844 |
|
|
|
31,970 |
|
|
|
33,108 |
|
Diluted weighted average
common shares outstanding |
|
|
31,495 |
|
|
|
32,844 |
|
|
|
31,970 |
|
|
|
33,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Definitions, Reconciliations and Uses of
Non-GAAP Financial Measures
In addition to our Net income (loss) determined
in accordance with GAAP, for purposes of evaluating operating
performance, we report the following non-GAAP measures: Adjusted
net income (loss) and Adjusted EBITDA. Adjusted net income (loss)
is also expressed on a diluted per share basis.
The Company believes presenting non-GAAP
financial measures provides useful information to investors,
allowing them to assess how the business performed excluding the
effects of non-recurring or non-operational amounts. The Company
believes the use of the non-GAAP financial measures facilitates
comparing the results being reported against past and future
results by eliminating amounts that it believes are not comparable
between periods and assists investors in evaluating the
effectiveness of the Company’s operations and underlying business
trends in a manner that is consistent with management’s own methods
for evaluating business performance.
Our management uses Adjusted net income (loss)
and Adjusted EBITDA to evaluate the operating performance of our
business for comparable periods and to discuss our business with
our Board of Directors, institutional investors and other market
participants. Adjusted EBITDA is also used as the basis for a
performance measure used in executive incentive compensation.
The methods we use to calculate our non-GAAP
financial measures may differ significantly from methods other
companies use to compute similar measures. As a result, any
non-GAAP financial measures presented herein may not be comparable
to similar measures provided by other companies. Adjusted net
income (loss) and Adjusted EBITDA should not be used by investors
or other third parties as the sole basis for formulating investment
decisions as these measures may exclude a number of important cash
and non-cash recurring items.
Adjusted net income (loss) is defined as net
income (loss) excluding other significant items as set forth below.
Adjusted net income (loss) is also presented on a diluted per share
basis. While Adjusted net income (loss) is a non-GAAP measurement,
management believes that it is an important indicator of operating
performance and useful to investors. Other significant items, while
periodically affecting our results, may vary significantly from
period to period and have a disproportionate effect in a given
period, which affects comparability of results and are described
below:
- For the 53 weeks ended February 2,
2024 and 13 weeks and 52 weeks ended January 27, 2023, we excluded
the impacts of the non-cash write down of goodwill and certain
long-lived assets.
- For the 14 weeks and 53 weeks ended
February 2, 2024, we excluded the charges to exit the kids and
footwear lines of business, including inventory excess and
obsolescence reserves, inventory discounts and operational costs,
in conjunction with our licensing arrangements commencing in Fiscal
2024.
- For the 14 weeks and 53 weeks ended
February 2, 2024, we excluded severance and related costs
associated with a reduction in corporate positions, including
positions in our Hong Kong sourcing office.
- For the 14 weeks and 53 weeks ended
February 2, 2024, we excluded the loss on extinguishment of
debt.
- For the 14 and 53 weeks ended
February 2, 2024 and the 13 and 52 weeks ended January 27, 2023, we
excluded the net operating income (loss) from liquidation and
closing costs for Lands’ End Japan closure.
The following tables set forth, for the periods
indicated, a reconciliation of Net loss to Adjusted net income
(loss) and Adjusted diluted Net earnings (loss) per share:
Unaudited
|
|
14 Weeks Ended |
|
|
13 Weeks Ended |
|
(in
thousands, except per share amounts) |
|
February 2, 2024 |
|
|
January 27, 2023 |
|
Net loss |
|
|
(8,620 |
) |
|
|
(3,298 |
) |
Goodwill and long-lived asset
impairment |
|
|
— |
|
|
|
348 |
|
Exit costs |
|
|
9,279 |
|
|
|
— |
|
Corporate restructuring |
|
|
4,649 |
|
|
|
— |
|
Loss on extinguishment of
debt |
|
|
6,666 |
|
|
|
— |
|
Lands' End Japan closure |
|
|
(338 |
) |
|
|
2,275 |
|
Tax effects on
adjustments |
|
|
(3,634 |
) |
|
|
(746 |
) |
ADJUSTED NET INCOME
(LOSS) |
|
$ |
8,002 |
|
|
$ |
(1,421 |
) |
ADJUSTED DILUTED NET
EARNINGS (LOSS) PER SHARE |
|
$ |
0.25 |
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
Diluted weighted average
common shares outstanding |
|
|
31,653 |
|
|
|
32,844 |
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
53 Weeks Ended |
|
|
52 Weeks Ended |
|
(in
thousands, except per share amounts) |
|
February 2, 2024 |
|
|
January 27, 2023 |
|
Net loss |
|
|
(130,684 |
) |
|
|
(12,530 |
) |
Goodwill and long-lived asset
impairment |
|
|
106,700 |
|
|
|
468 |
|
Exit costs |
|
|
9,279 |
|
|
|
— |
|
Corporate restructuring |
|
|
7,305 |
|
|
|
— |
|
Loss on extinguishment of
debt |
|
|
6,666 |
|
|
|
— |
|
Lands' End Japan closure |
|
|
(215 |
) |
|
|
6,133 |
|
Tax effects on
adjustments |
|
|
(3,834 |
) |
|
|
(1,723 |
) |
ADJUSTED NET
LOSS |
|
$ |
(4,783 |
) |
|
$ |
(7,652 |
) |
ADJUSTED DILUTED NET
LOSS PER SHARE |
|
$ |
(0.15 |
) |
|
$ |
(0.23 |
) |
|
|
|
|
|
|
|
Diluted weighted average
common shares outstanding |
|
|
31,970 |
|
|
|
33,108 |
|
|
|
|
|
|
|
|
|
|
While Adjusted EBITDA is a non-GAAP measurement,
management believes that it is an important indicator of operating
performance, and useful to investors, because:
- EBITDA excludes the effects of
financings, investing activities and tax structure by eliminating
the effects of interest, depreciation and income tax.
- Other significant items, while
periodically affecting our results, may vary significantly from
period to period and have a disproportionate effect in a given
period, which affects comparability of results and are described
below:
- For the 53 weeks ended February 2,
2024 and 13 weeks and 52 weeks ended January 27, 2023, we excluded
the impacts of the non-cash write down of goodwill and certain
long-lived assets.
- For the 14 weeks and 53 weeks ended
February 2, 2024, we excluded the charges to exit the kids and
footwear lines of business, including inventory excess and
obsolescence reserves, inventory discounts and operational costs,
in conjunction with our licensing arrangements commencing in Fiscal
2024.
- For the 14 weeks and 53 weeks ended
February 2, 2024, we excluded severance and related costs
associated with a reduction in corporate positions, including
positions in our Hong Kong sourcing office.
- For the 14 and 53 weeks ended
February 2, 2024 and the 13 and 52 weeks ended January 27, 2023, we
excluded the net operating income (loss) from liquidation and
closing costs for Lands’ End Japan closure.
- For the 14 and 53 weeks ended
February 2, 2024 and the 13 and 52 weeks ended January 27, 2023, we
excluded the respective net gain or loss on disposal of property
and equipment.
- For the 14 and 53 weeks ended
February 2, 2024 and the 13 and 52 weeks ended January 27, 2023, we
excluded the amortization of transaction related costs associated
with the Third Party distribution channel.
The following tables set forth, for the periods
indicated, selected income statement data, both in dollars and as a
percentage of Net revenue and a reconciliation of Net loss to
Adjusted EBITDA:
|
|
14 Weeks Ended |
|
|
13 Weeks Ended |
|
|
|
February 2, 2024 |
|
|
January 27, 2023 |
|
(in thousands) |
|
$ʼs |
|
|
% of Net Sales |
|
|
$ʼs |
|
|
% of Net Sales |
|
Net loss |
|
$ |
(8,620 |
) |
|
|
(1.7 |
)% |
|
$ |
(3,298 |
) |
|
|
(0.6 |
)% |
Income tax (benefit)
expense |
|
|
(2,111 |
) |
|
|
(0.4 |
)% |
|
|
4,144 |
|
|
|
0.8 |
% |
Interest expense |
|
|
12,307 |
|
|
|
2.4 |
% |
|
|
11,961 |
|
|
|
2.3 |
% |
Loss of extinguishment of
debt |
|
|
6,666 |
|
|
|
1.3 |
% |
|
|
— |
|
|
|
— |
% |
Other income, net |
|
|
(167 |
) |
|
|
(0.0 |
)% |
|
|
(267 |
) |
|
|
(0.1 |
)% |
Operating income |
|
|
8,075 |
|
|
|
1.6 |
% |
|
|
12,540 |
|
|
|
2.4 |
% |
Depreciation and
amortization |
|
|
10,026 |
|
|
|
1.9 |
% |
|
|
9,513 |
|
|
|
1.8 |
% |
Goodwill and long-lived asset
impairment |
|
|
— |
|
|
|
— |
% |
|
|
348 |
|
|
|
0.1 |
% |
Exit costs |
|
|
9,279 |
|
|
|
1.8 |
% |
|
|
— |
|
|
|
— |
% |
Corporate restructuring |
|
|
4,649 |
|
|
|
0.9 |
% |
|
|
— |
|
|
|
— |
% |
LE-Japan closure |
|
|
(338 |
) |
|
|
(0.1 |
)% |
|
|
2,275 |
|
|
|
0.4 |
% |
Gain on disposal of property
and equipment |
|
|
(7 |
) |
|
|
(0.0 |
)% |
|
|
(569 |
) |
|
|
(0.1 |
)% |
Other |
|
|
— |
|
|
|
— |
% |
|
|
94 |
|
|
|
0.0 |
% |
Adjusted EBITDA |
|
$ |
31,684 |
|
|
|
6.2 |
% |
|
$ |
24,201 |
|
|
|
4.6 |
% |
|
|
53 Weeks Ended |
|
|
52 Weeks Ended |
|
|
|
February 2, 2024 |
|
|
January 27, 2023 |
|
(in thousands) |
|
$ʼs |
|
|
% of Net Sales |
|
|
$ʼs |
|
|
% of Net Sales |
|
Net loss |
|
$ |
(130,684 |
) |
|
|
(8.9 |
)% |
|
$ |
(12,530 |
) |
|
|
(0.8 |
)% |
Income tax (benefit) |
|
|
(1,133 |
) |
|
|
(0.1 |
)% |
|
|
(2,149 |
) |
|
|
(0.1 |
)% |
Interest expense |
|
|
48,291 |
|
|
|
3.3 |
% |
|
|
39,768 |
|
|
|
2.6 |
% |
Loss on extinguishment of
debt |
|
|
6,666 |
|
|
|
0.5 |
% |
|
|
— |
|
|
|
— |
% |
Other income, net |
|
|
(655 |
) |
|
|
(0.0 |
)% |
|
|
(364 |
) |
|
|
(0.0 |
)% |
Operating (loss) income |
|
|
(77,515 |
) |
|
|
(5.3 |
)% |
|
|
24,725 |
|
|
|
1.6 |
% |
Depreciation and
amortization |
|
|
38,465 |
|
|
|
2.6 |
% |
|
|
38,741 |
|
|
|
2.5 |
% |
Goodwill and long-lived asset
impairment |
|
|
106,700 |
|
|
|
7.2 |
% |
|
|
468 |
|
|
|
0.0 |
% |
Exit costs |
|
|
9,279 |
|
|
|
0.6 |
% |
|
|
— |
|
|
|
— |
% |
Corporate restructuring |
|
|
7,305 |
|
|
|
0.5 |
% |
|
|
— |
|
|
|
— |
% |
LE-Japan closure |
|
|
(215 |
) |
|
|
(0.0 |
)% |
|
|
6,133 |
|
|
|
0.4 |
% |
Loss (gain) on disposal of
property and equipment |
|
|
93 |
|
|
|
0.0 |
% |
|
|
(530 |
) |
|
|
(0.0 |
)% |
Other |
|
|
189 |
|
|
|
0.0 |
% |
|
|
960 |
|
|
|
0.1 |
% |
Adjusted EBITDA |
|
$ |
84,301 |
|
|
|
5.7 |
% |
|
$ |
70,497 |
|
|
|
4.5 |
% |
First Quarter Fiscal
2024 Guidance Adjusted EBITDA |
|
13 Weeks Ended |
|
(in millions) |
|
May 3, 2024 |
|
Net loss |
|
$ |
(10.0 |
) |
- |
$ |
(8.0 |
) |
Depreciation, interest, other
income, taxes and other significant items |
|
|
19.0 |
|
- |
|
19.0 |
|
Adjusted
EBITDA |
|
$ |
9.0 |
|
- |
$ |
11.0 |
|
First Quarter Fiscal
2024 Guidance Adjusted Net Loss and Adjusted Diluted Loss per
Share |
|
13 Weeks Ended |
|
(in millions) |
|
May 3, 2024 |
|
Net loss |
|
$ |
(10.0 |
) |
- |
$ |
(8.0 |
) |
Restructuring and other
significant items |
|
|
0.5 |
|
- |
|
0.5 |
|
Adjusted net
loss |
|
$ |
(9.5 |
) |
- |
$ |
(7.5 |
) |
|
|
|
|
|
|
|
|
|
Adjusted diluted loss per
share |
|
$ |
(0.30 |
) |
- |
$ |
(0.24 |
) |
Fiscal 2024 Guidance
Adjusted EBITDA |
|
52 Weeks Ended |
|
(in millions) |
|
January 31, 2025 |
|
Net income |
|
$ |
1.0 |
|
- |
$ |
10.0 |
|
Depreciation, interest, other
income, taxes and other significant items |
|
|
83.0 |
|
- |
|
86.0 |
|
Adjusted
EBITDA |
|
$ |
84.0 |
|
- |
$ |
96.0 |
|
Fiscal 2024 Guidance
Adjusted Net Income and Adjusted Diluted Earnings per
Share |
|
52 Weeks Ended |
|
(in millions) |
|
January 31, 2025 |
|
Net income |
|
$ |
1.0 |
|
- |
$ |
10.0 |
|
Restructuring and other
significant items |
|
|
2.0 |
|
- |
|
2.0 |
|
Adjusted net
income |
|
$ |
3.0 |
|
- |
$ |
12.0 |
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per
share |
|
$ |
0.10 |
|
- |
$ |
0.38 |
|
LANDS’ END, INC. |
Consolidated Statements of Cash Flows |
(Unaudited) |
|
|
|
52 weeks ended |
|
(in thousands) |
|
2023 |
|
|
2022 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
|
|
Net loss |
|
$ |
(130,684 |
) |
|
$ |
(12,530 |
) |
Adjustments to reconcile net
loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
38,465 |
|
|
|
38,741 |
|
Amortization of debt issuance costs |
|
|
2,716 |
|
|
|
3,176 |
|
Loss (gain) on disposal of property and equipment |
|
|
93 |
|
|
|
(530 |
) |
Stock-based compensation |
|
|
3,827 |
|
|
|
3,753 |
|
Deferred income taxes |
|
|
1,813 |
|
|
|
927 |
|
Goodwill and long-lived asset impairment |
|
|
106,700 |
|
|
|
468 |
|
Loss on extinguishment of debt |
|
|
6,666 |
|
|
|
— |
|
Other |
|
|
(1,335 |
) |
|
|
(775 |
) |
Change in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable, net |
|
|
9,861 |
|
|
|
4,503 |
|
Inventories, net |
|
|
124,459 |
|
|
|
(45,873 |
) |
Accounts payable |
|
|
(33,047 |
) |
|
|
19,938 |
|
Other operating assets |
|
|
(447 |
) |
|
|
(8,105 |
) |
Other operating liabilities |
|
|
1,478 |
|
|
|
(40,060 |
) |
Net cash provided by (used in) operating activities |
|
|
130,565 |
|
|
|
(36,367 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
|
|
Sales of property and equipment |
|
|
7 |
|
|
|
1,967 |
|
Purchases of property and equipment |
|
|
(34,916 |
) |
|
|
(31,806 |
) |
Net cash used in investing activities |
|
|
(34,909 |
) |
|
|
(29,839 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
|
|
Proceeds from borrowings under ABL Facility |
|
|
172,000 |
|
|
|
264,000 |
|
Payments of borrowings under ABL Facility |
|
|
(272,000 |
) |
|
|
(164,000 |
) |
Proceeds from issuance on long-term debt, net of discount |
|
|
252,200 |
|
|
|
— |
|
Payments on term loan |
|
|
(244,063 |
) |
|
|
(13,750 |
) |
Payments of debt extinguishment costs |
|
|
(2,338 |
) |
|
|
— |
|
Payment of debt issuance costs |
|
|
(2,735 |
) |
|
|
— |
|
Payments for taxes related to net share settlement of equity
awards |
|
|
(1,269 |
) |
|
|
(4,324 |
) |
Purchases and retirement of common stock |
|
|
(11,902 |
) |
|
|
(8,463 |
) |
Net cash (used in) provided by financing activities |
|
|
(110,107 |
) |
|
|
73,463 |
|
Effects of exchange rate
changes on cash, cash equivalents and restricted cash |
|
|
350 |
|
|
|
(2,001 |
) |
NET (DECREASE)
INCREASE IN CASH, CASH EQUIVALENTS AND
RESTRICTED CASH |
|
|
(14,101 |
) |
|
|
5,256 |
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH, BEGINNING OF
YEAR |
|
|
41,391 |
|
|
|
36,135 |
|
CASH, CASH EQUIVALENTS
AND RESTRICTED CASH, END OF
YEAR |
|
$ |
27,290 |
|
|
$ |
41,391 |
|
SUPPLEMENTAL CASH FLOW
DATA |
|
|
|
|
|
|
Unpaid liability to acquire property and equipment |
|
$ |
3,853 |
|
|
$ |
9,998 |
|
Income taxes paid, net of refunds |
|
$ |
1,108 |
|
|
$ |
4,763 |
|
Interest paid |
|
$ |
48,099 |
|
|
$ |
34,485 |
|
Operating lease right-of-use-assets (reversal) obtained in exchange
for lease liabilities |
|
$ |
(2,236 |
) |
|
$ |
4,440 |
|
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