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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended October 30, 2020

-OR-

Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to                      to                     .

Commission File Number: 001-09769

 

Lands’ End, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

36-2512786

 

 

 

(State or Other Jurisdiction of
Incorporation of Organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

1 Lands’ End Lane

Dodgeville, Wisconsin

 

53595

 

 

 

(Address of Principal Executive Offices)

 

(Zip Code)

(608) 935-9341

(Registrant’s Telephone Number Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

LE

 

The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      NO  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      NO  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.  

 

 

 

 

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES      NO  

As of December 1, 2020 the registrant had 32,607,757 shares of common stock, $0.01 par value, outstanding.

 

 


 

LANDS’ END, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED OCTOBER 30, 2020

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

 

PART I FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

1

 

 

 

 

 

Condensed Consolidated Statements of Operations

 

1

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Operations

 

2

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

3

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

4

 

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders' Equity

 

5

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

28

 

 

 

 

Item 4.

Controls and Procedures

 

29

 

 

 

 

 

PART II OTHER INFORMATION

 

30

 

 

 

 

Item 1.

Legal Proceedings

 

30

 

 

 

 

Item 1A.

Risk Factors

 

30

 

 

 

 

Item 6.

Exhibits

 

31

 

 

 

 

 

Signatures

 

32

 

 

 


Table of Contents

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

LANDS’ END, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

13 Weeks Ended

 

 

39 Weeks Ended

 

(in thousands, except per share data)

 

October 30,

2020

 

 

November 1,

2019

 

 

October 30,

2020

 

 

November 1, 2019

 

Net revenue

 

$

359,982

 

 

$

340,023

 

 

$

889,073

 

 

$

900,723

 

Cost of sales (excluding depreciation and amortization)

 

 

196,527

 

 

 

185,848

 

 

 

496,041

 

 

 

497,589

 

Gross profit

 

 

163,455

 

 

 

154,175

 

 

 

393,032

 

 

 

403,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

134,890

 

 

 

135,417

 

 

 

352,164

 

 

 

374,521

 

Depreciation and amortization

 

 

9,627

 

 

 

8,076

 

 

 

27,791

 

 

 

23,101

 

Other operating expense (income), net

 

 

255

 

 

 

(225

)

 

 

7,913

 

 

 

(99

)

Operating income

 

 

18,683

 

 

 

10,907

 

 

 

5,164

 

 

 

5,611

 

Interest expense

 

 

9,005

 

 

 

6,121

 

 

 

19,232

 

 

 

20,190

 

Other (income) expense, net

 

 

(250

)

 

 

(166

)

 

 

910

 

 

 

(1,640

)

Income (loss) before income taxes

 

 

9,928

 

 

 

4,952

 

 

 

(14,978

)

 

 

(12,939

)

Income tax expense (benefit)

 

 

2,752

 

 

 

1,346

 

 

 

(5,887

)

 

 

(6,713

)

NET INCOME (LOSS)

 

$

7,176

 

 

$

3,606

 

 

$

(9,091

)

 

$

(6,226

)

NET INCOME (LOSS) PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.22

 

 

$

0.11

 

 

$

(0.28

)

 

$

(0.19

)

Diluted:

 

$

0.22

 

 

$

0.11

 

 

$

(0.28

)

 

$

(0.19

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,605

 

 

 

32,371

 

 

 

32,551

 

 

 

32,333

 

Diluted weighted average common shares outstanding

 

 

33,248

 

 

 

32,398

 

 

 

32,551

 

 

 

32,333

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

1


Table of Contents

 

LANDS’ END, INC.

Condensed Consolidated Statements of Comprehensive Operations

(Unaudited)

 

 

 

13 Weeks Ended

 

 

39 Weeks Ended

 

(in thousands)

 

October 30, 2020

 

 

November 1, 2019

 

 

October 30, 2020

 

 

November 1, 2019

 

NET INCOME (LOSS)

 

$

7,176

 

 

$

3,606

 

 

$

(9,091

)

 

$

(6,226

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(794

)

 

 

2,290

 

 

 

(671

)

 

 

(178

)

COMPREHENSIVE INCOME (LOSS)

 

$

6,382

 

 

$

5,896

 

 

$

(9,762

)

 

$

(6,404

)

 

See accompanying Notes to Condensed Consolidated Financial Statements.

2


Table of Contents

 

LANDS’ END, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except per share data)

 

October 30, 2020

 

 

November 1, 2019

 

 

January 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

56,137

 

 

$

15,859

 

 

$

77,148

 

Restricted cash

 

 

2,135

 

 

 

1,830

 

 

 

2,149

 

Accounts receivable, net

 

 

34,238

 

 

 

38,125

 

 

 

50,953

 

Inventories, net

 

 

499,759

 

 

 

499,855

 

 

 

375,670

 

Prepaid expenses and other current assets

 

 

52,731

 

 

 

47,538

 

 

 

39,458

 

Total current assets

 

 

645,000

 

 

 

603,207

 

 

 

545,378

 

Property and equipment, net

 

 

149,342

 

 

 

155,051

 

 

 

157,665

 

Operating lease right-of-use asset

 

 

36,699

 

 

 

31,380

 

 

 

38,665

 

Goodwill

 

 

106,700

 

 

 

110,000

 

 

 

110,000

 

Intangible asset, net

 

 

257,000

 

 

 

257,000

 

 

 

257,000

 

Other assets

 

 

5,413

 

 

 

5,204

 

 

 

4,921

 

TOTAL ASSETS

 

$

1,200,154

 

 

$

1,161,842

 

 

$

1,113,629

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current borrowings on ABL Facility

 

$

 

 

$

80,000

 

 

$

 

Short-term portion of long-term debt

 

 

13,750

 

 

 

5,150

 

 

 

5,150

 

Accounts payable

 

 

174,061

 

 

 

174,312

 

 

 

158,436

 

Lease liability - current

 

 

5,359

 

 

 

6,344

 

 

 

5,864

 

Other current liabilities

 

 

147,903

 

 

 

103,396

 

 

 

114,116

 

Total current liabilities

 

 

341,073

 

 

 

369,202

 

 

 

283,566

 

Long-term borrowings on ABL Facility

 

 

155,000

 

 

 

 

 

 

 

Long-term debt, net

 

 

248,700

 

 

 

379,606

 

 

 

378,657

 

Lease liability - long-term

 

 

39,169

 

 

 

30,971

 

 

 

39,841

 

Deferred tax liabilities

 

 

65,800

 

 

 

56,109

 

 

 

57,651

 

Other liabilities

 

 

5,487

 

 

 

5,469

 

 

 

5,532

 

TOTAL LIABILITIES

 

 

855,229

 

 

 

841,357

 

 

 

765,247

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01 authorized: 480,000 shares;

   issued and outstanding: 32,608, 32,373 and 32,382, respectively

 

 

326

 

 

 

324

 

 

 

324

 

Additional paid-in capital

 

 

366,959

 

 

 

358,648

 

 

 

360,656

 

(Accumulated deficit) Retained earnings

 

 

(8,701

)

 

 

(25,126

)

 

 

390

 

Accumulated other comprehensive loss

 

 

(13,659

)

 

 

(13,361

)

 

 

(12,988

)

TOTAL STOCKHOLDERS' EQUITY

 

 

344,925

 

 

 

320,485

 

 

 

348,382

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,200,154

 

 

$

1,161,842

 

 

$

1,113,629

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

3


Table of Contents

 

LANDS’ END, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

39 Weeks Ended

 

(in thousands)

 

October 30, 2020

 

 

November 1, 2019

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss

 

$

(9,091

)

 

$

(6,226

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

27,791

 

 

 

23,101

 

Amortization of debt issuance costs

 

 

2,291

 

 

 

1,293

 

Loss (gain) on property and equipment

 

 

994

 

 

 

(99

)

Stock-based compensation

 

 

6,743

 

 

 

6,632

 

Deferred income taxes

 

 

7,979

 

 

 

(1,899

)

Goodwill impairment

 

 

3,300

 

 

 

 

Other

 

 

326

 

 

 

1,837

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Inventories

 

 

(123,811

)

 

 

(178,016

)

Accounts payable

 

 

20,104

 

 

 

50,173

 

Other operating assets

 

 

1,138

 

 

 

(14,755

)

Other operating liabilities

 

 

36,172

 

 

 

(6,992

)

Net cash used in operating activities

 

 

(26,064

)

 

 

(124,951

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(25,638

)

 

 

(28,487

)

Net cash used in investing activities

 

 

(25,638

)

 

 

(28,487

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from borrowing under ABL Facility

 

 

230,000

 

 

 

95,000

 

Payments of borrowings under ABL Facility

 

 

(75,000

)

 

 

(15,000

)

Proceeds from issuance of Term Loan Credit Agreement

 

 

266,750

 

 

 

 

Payments of Term Loan Facility

 

 

(385,388

)

 

 

(103,863

)

Payment of debt issuance costs

 

 

(5,080

)

 

 

 

Payments of employee withholding taxes on share-based compensation

 

 

(438

)

 

 

(713

)

Net cash provided by (used in) financing activities

 

 

30,844

 

 

 

(24,576

)

Effects of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(167

)

 

 

350

 

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(21,025

)

 

 

(177,664

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH,

      BEGINNING OF PERIOD

 

 

79,297

 

 

 

195,353

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

58,272

 

 

$

17,689

 

SUPPLEMENTAL CASH FLOW DATA

 

 

 

 

 

 

 

 

Unpaid liability to acquire property and equipment

 

$

2,620

 

 

$

5,494

 

Income taxes paid, net of refunds

 

$

257

 

 

$

3,225

 

Interest paid

 

$

11,334

 

 

$

18,455

 

Lease liabilities arising from obtaining Operating lease right-of-use assets

 

$

3,525

 

 

$

12,083

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

4


Table of Contents

 

LANDS' END, INC.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

 

 

 

 

Common Stock Issued

 

 

Additional

Paid-in

 

 

Retained Earnings/ (Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

(in thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

Loss

 

 

Equity

 

Balance at January 31, 2020

 

 

32,382

 

 

$

324

 

 

$

360,656

 

 

$

390

 

 

$

(12,988

)

 

$

348,382

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(20,643

)

 

 

 

 

 

(20,643

)

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,259

)

 

 

(1,259

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,828

 

 

 

 

 

 

 

 

 

1,828

 

Vesting of restricted shares

 

 

275

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

Restricted stock shares surrendered for taxes

 

 

(61

)

 

 

 

 

 

(410

)

 

 

 

 

 

 

 

 

(410

)

Balance at May 1, 2020

 

 

32,596

 

 

$

326

 

 

$

362,072

 

 

$

(20,253

)

 

$

(14,247

)

 

$

327,898

 

Net income

 

 

 

 

 

 

 

 

 

 

 

4,376

 

 

 

 

 

 

4,376

 

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,382

 

 

 

1,382

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,714

 

 

 

 

 

 

 

 

 

2,714

 

Vesting of restricted shares

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock shares surrendered for taxes

 

 

(2

)

 

 

 

 

 

(13

)

 

 

 

 

 

 

 

 

(13

)

Balance at July 31, 2020

 

 

32,604

 

 

$

326

 

 

$

364,773

 

 

$

(15,877

)

 

$

(12,865

)

 

$

336,357

 

Net income

 

 

 

 

 

 

 

 

 

 

 

7,176

 

 

 

 

 

 

7,176

 

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(794

)

 

 

(794

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,201

 

 

 

 

 

 

 

 

 

2,201

 

Vesting of restricted shares

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock shares surrendered for taxes

 

 

(1

)

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

(15

)

Balance at October 30, 2020

 

 

32,608

 

 

$

326

 

 

$

366,959

 

 

$

(8,701

)

 

$

(13,659

)

 

$

344,925

 

 

 

 

Common Stock Issued

 

 

Additional

Paid-in

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

(in thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at February 1, 2019

 

 

32,220

 

 

$

320

 

 

$

352,733

 

 

$

(17,159

)

 

$

(13,183

)

 

$

322,711

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(6,818

)

 

 

 

 

 

(6,818

)

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(234

)

 

 

(234

)

Change in accounting principle related to lease

   accounting, net of tax

 

 

 

 

 

 

 

 

 

 

 

(1,741

)

 

 

 

 

 

(1,741

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,974

 

 

 

 

 

 

 

 

 

1,974

 

Vesting of restricted shares

 

 

185

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Restricted stock shares surrendered for taxes

 

 

(42

)

 

 

 

 

 

(