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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 July 30, 2021

-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 August 27, 2021, the registrant had 32,981,027 shares of common stock, $0.01 par value, outstanding.

 

 


 

 

 

LANDS’ END, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED JULY 30, 2021

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

 

30

 

 

 

 

Item 4.

Controls and Procedures

 

31

 

 

 

 

 

PART II OTHER INFORMATION

 

32

 

 

 

 

Item 1.

Legal Proceedings

 

32

 

 

 

 

Item 1A.

Risk Factors

 

32

 

 

 

 

Item 6.

Exhibits

 

33

 

 

 

 

 

Signatures

 

34

 

 

 


Table of Contents

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

LANDS’ END, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

13 Weeks Ended

 

 

26 Weeks Ended

 

(in thousands, except per share data)

 

July 30,

2021

 

 

July 31,

2020

 

 

July 30,

2021

 

 

July 31, 2020

 

Net revenue

 

$

384,109

 

 

$

312,083

 

 

$

705,406

 

 

$

529,091

 

Cost of sales (excluding depreciation and amortization)

 

 

206,320

 

 

 

176,661

 

 

 

379,880

 

 

 

299,514

 

Gross profit

 

 

177,789

 

 

 

135,422

 

 

 

325,526

 

 

 

229,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

136,649

 

 

 

111,478

 

 

 

262,171

 

 

 

217,276

 

Depreciation and amortization

 

 

9,791

 

 

 

9,378

 

 

 

19,695

 

 

 

18,164

 

Other operating expense, net

 

 

 

 

 

3,373

 

 

 

443

 

 

 

7,656

 

Operating income (loss)

 

 

31,349

 

 

 

11,193

 

 

 

43,217

 

 

 

(13,519

)

Interest expense

 

 

8,837

 

 

 

4,916

 

 

 

17,897

 

 

 

10,227

 

Other (income) expense, net

 

 

(123

)

 

 

1,333

 

 

 

(290

)

 

 

1,160

 

Income (loss) before income taxes

 

 

22,635

 

 

 

4,944

 

 

 

25,610

 

 

 

(24,906

)

Income tax expense (benefit)

 

 

6,414

 

 

 

568

 

 

 

6,750

 

 

 

(8,639

)

NET INCOME (LOSS)

 

$

16,221

 

 

$

4,376

 

 

$

18,860

 

 

$

(16,267

)

NET INCOME (LOSS) PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.49

 

 

$

0.13

 

 

$

0.57

 

 

$

(0.50

)

Diluted:

 

$

0.48

 

 

$

0.13

 

 

$

0.56

 

 

$

(0.50

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,979

 

 

 

32,600

 

 

 

32,875

 

 

 

32,524

 

Diluted weighted average common shares outstanding

 

 

33,713

 

 

 

32,838

 

 

 

33,710

 

 

 

32,524

 

 

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

 

 

26 Weeks Ended

 

(in thousands)

 

July 30, 2021

 

 

July 31, 2020

 

 

July 30, 2021

 

 

July 31, 2020

 

NET INCOME (LOSS)

 

$

16,221

 

 

$

4,376

 

 

$

18,860

 

 

$

(16,267

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(36

)

 

 

1,382

 

 

 

275

 

 

 

123

 

COMPREHENSIVE INCOME (LOSS)

 

$

16,185

 

 

$

5,758

 

 

$

19,135

 

 

$

(16,144

)

 

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)

 

July 30, 2021

 

 

July 31, 2020

 

 

January 29, 2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

39,223

 

 

$

62,624

 

 

$

33,933

 

Restricted cash

 

 

2,102

 

 

 

1,843

 

 

 

1,861

 

Accounts receivable, net

 

 

30,203

 

 

 

24,367

 

 

 

37,574

 

Inventories, net

 

 

464,291

 

 

 

441,510

 

 

 

382,106

 

Prepaid expenses and other current assets

 

 

31,127

 

 

 

48,095

 

 

 

40,356

 

Total current assets

 

 

566,946

 

 

 

578,439

 

 

 

495,830

 

Property and equipment, net

 

 

136,714

 

 

 

153,003

 

 

 

145,288

 

Operating lease right-of-use asset

 

 

33,989

 

 

 

37,882

 

 

 

35,475

 

Goodwill

 

 

106,700

 

 

 

106,700

 

 

 

106,700

 

Intangible asset, net

 

 

257,000

 

 

 

257,000

 

 

 

257,000

 

Other assets

 

 

4,347

 

 

 

4,300

 

 

 

5,215

 

TOTAL ASSETS

 

$

1,105,696

 

 

$

1,137,324

 

 

$

1,045,508

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

13,750

 

 

$

 

 

 

13,750

 

Accounts payable

 

 

211,916

 

 

 

202,629

 

 

 

134,007

 

Lease liability - current

 

 

5,437

 

 

 

5,676

 

 

 

5,183

 

Other current liabilities

 

 

130,285

 

 

 

99,016

 

 

 

161,982

 

Total current liabilities

 

 

361,388

 

 

 

307,321

 

 

 

314,922

 

Long-term borrowings on ABL Facility

 

 

25,000

 

 

 

 

 

 

25,000

 

Long-term debt, net

 

 

240,020

 

 

 

381,909

 

 

 

245,632

 

Lease liability - long-term

 

 

35,912

 

 

 

40,588

 

 

 

37,811

 

Deferred tax liabilities

 

 

47,469

 

 

 

65,619

 

 

 

47,346

 

Other liabilities

 

 

6,084

 

 

 

5,530

 

 

 

5,094

 

TOTAL LIABILITIES

 

 

715,873

 

 

 

800,967

 

 

 

675,805

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

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

   issued and outstanding: 32,981, 32,604 and 32,614, respectively

 

 

330

 

 

 

326

 

 

 

326

 

Additional paid-in capital

 

 

370,353

 

 

 

364,773

 

 

 

369,372

 

Retained earnings (accumulated deficit)

 

 

30,086

 

 

 

(15,877

)

 

 

11,226

 

Accumulated other comprehensive loss

 

 

(10,946

)

 

 

(12,865

)

 

 

(11,221

)

TOTAL STOCKHOLDERS' EQUITY

 

 

389,823

 

 

 

336,357

 

 

 

369,703

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,105,696

 

 

$

1,137,324

 

 

$

1,045,508

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

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Table of Contents

 

LANDS’ END, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

26 Weeks Ended

 

(in thousands)

 

July 30, 2021

 

 

July 31, 2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income (loss)

 

$

18,860

 

 

$

(16,267

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

19,695

 

 

 

18,164

 

Amortization of debt issuance costs

 

 

1,597

 

 

 

858

 

Loss on property and equipment

 

 

443

 

 

 

887

 

Stock-based compensation

 

 

6,069

 

 

 

4,542

 

Deferred income taxes

 

 

46

 

 

 

7,936

 

Goodwill impairment

 

 

 

 

 

3,300

 

Other

 

 

194

 

 

 

1,115

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

7,071

 

 

 

26,966

 

Inventories

 

 

(81,971

)

 

 

(65,553

)

Accounts payable

 

 

78,376

 

 

 

48,858

 

Other operating assets

 

 

10,615

 

 

 

(11,361

)

Other operating liabilities

 

 

(30,470

)

 

 

(11,461

)

Net cash provided by operating activities

 

 

30,525

 

 

 

7,984

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(11,961

)

 

 

(19,758

)

Net cash used in investing activities

 

 

(11,961

)

 

 

(19,758

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from borrowings under ABL Facility

 

 

75,000

 

 

 

75,000

 

Payments of borrowings under ABL Facility

 

 

(75,000

)

 

 

(75,000

)

Principal payments on long-term debt, net

 

 

(6,875

)

 

 

(2,575

)

Payments of employee withholding taxes on share-based compensation

 

 

(5,084

)

 

 

(423

)

Payment of debt-issuance costs

 

 

(932

)

 

 

 

Net cash used in financing activities

 

 

(12,891

)

 

 

(2,998

)

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

 

 

(142

)

 

 

(58

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

5,531

 

 

 

(14,830

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH,

      BEGINNING OF PERIOD

 

 

35,794

 

 

 

79,297

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

41,325

 

 

$

64,467

 

SUPPLEMENTAL CASH FLOW DATA

 

 

 

 

 

 

 

 

Unpaid liability to acquire property and equipment

 

$

2,726

 

 

$

2,303

 

Income taxes paid, net of refunds

 

$

18,338

 

 

$

(47

)

Interest paid

 

$

16,306

 

 

$

9,087

 

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

 

$

1,161

 

 

$

3,525

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

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Table of Contents

 

LANDS' END, INC.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

 

 

Common Stock Issued

 

 

Additional

Paid-in

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

(in thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity

 

Balance at January 29, 2021

 

 

32,614

 

 

$

326

 

 

$

369,372

 

 

$

11,226

 

 

$

(11,221

)

 

$

369,703

 

Net income

 

 

 

 

 

 

 

 

 

 

 

2,639

 

 

 

 

 

 

2,639

 

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

311

 

 

 

311

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,513

 

 

 

 

 

 

 

 

 

2,513

 

Vesting of restricted shares

 

 

553

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Restricted stock shares surrendered for taxes

 

 

(190

)

 

 

 

 

 

(5,013

)

 

 

 

 

 

 

 

 

(5,013

)

Balance at April 30, 2021

 

 

32,977

 

 

$

330

 

 

$

366,868

 

 

$

13,865

 

 

$

(10,910

)

 

$

370,153

 

Net income

 

 

 

 

 

 

 

 

 

 

 

16,221

 

 

 

 

 

 

16,221

 

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36

)

 

 

(36

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,556

 

 

 

 

 

 

 

 

 

3,556

 

Vesting of restricted shares

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock shares surrendered for taxes

 

 

(3

)

 

 

 

 

 

(71

)

 

 

 

 

 

 

 

 

(71

)

Balance at July 30, 2021

 

 

32,981

 

 

$

330

 

 

$

370,353

 

 

$

30,086

 

 

$

(10,946

)

 

$

389,823

 

 

 

 

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

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

5


Table of Contents

 

LANDS’ END, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1. BACKGROUND AND BASIS OF PRESENTATION

 

Description of Business

 

Lands' End, Inc. ("Lands' End" or the "Company") is a leading uni-channel retailer of casual clothing, accessories, footwear and home products. Lands’ End offers products online at www.landsend.com, on third-party online marketplaces and through its own Company Operated stores, as well as third-party retail locations. Lands’ End is a classic American lifestyle brand with a passion for quality, legendary service and real value and seeks to deliver timeless style for women, men, kids and home.