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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 29, 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 November 29, 2021, the registrant had 32,983,349 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 29, 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

 

 

39 Weeks Ended

 

(in thousands, except per share data)

 

October 29,

2021

 

 

October 30,

2020

 

 

October 29,

2021

 

 

October 30, 2020

 

Net revenue

 

$

375,843

 

 

$

359,982

 

 

$

1,081,249

 

 

$

889,073

 

Cost of sales (excluding depreciation and amortization)

 

 

209,028

 

 

 

196,527

 

 

 

588,908

 

 

 

496,041

 

Gross profit

 

 

166,815

 

 

 

163,455

 

 

 

492,341

 

 

 

393,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

137,408

 

 

 

134,890

 

 

 

399,579

 

 

 

352,164

 

Depreciation and amortization

 

 

9,788

 

 

 

9,627

 

 

 

29,483

 

 

 

27,791

 

Other operating expense, net

 

 

140

 

 

 

255

 

 

 

583

 

 

 

7,913

 

Operating income

 

 

19,479

 

 

 

18,683

 

 

 

62,696

 

 

 

5,164

 

Interest expense

 

 

8,334

 

 

 

9,005

 

 

 

26,231

 

 

 

19,232

 

Other (income) expense, net

 

 

(171

)

 

 

(250

)

 

 

(461

)

 

 

910

 

Income (loss) before income taxes

 

 

11,316

 

 

 

9,928

 

 

 

36,926

 

 

 

(14,978

)

Income tax expense (benefit)

 

 

3,917

 

 

 

2,752

 

 

 

10,667

 

 

 

(5,887

)

NET INCOME (LOSS)

 

$

7,399

 

 

$

7,176

 

 

$

26,259

 

 

$

(9,091

)

NET INCOME (LOSS) PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

0.22

 

 

$

0.22

 

 

$

0.80

 

 

$

(0.28

)

Diluted:

 

$

0.22

 

 

$

0.22

 

 

$

0.78

 

 

$

(0.28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,981

 

 

 

32,605

 

 

 

32,910

 

 

 

32,551

 

Diluted weighted average common shares outstanding

 

 

33,698

 

 

 

33,248

 

 

 

33,708

 

 

 

32,551

 

 

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 29, 2021

 

 

October 30, 2020

 

 

October 29, 2021

 

 

October 30, 2020

 

NET INCOME (LOSS)

 

$

7,399

 

 

$

7,176

 

 

$

26,259

 

 

$

(9,091

)

Other comprehensive (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(670

)

 

 

(794

)

 

 

(395

)

 

 

(671

)

COMPREHENSIVE INCOME (LOSS)

 

$

6,729

 

 

$

6,382

 

 

$

25,864

 

 

$

(9,762

)

 

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 29, 2021

 

 

October 30, 2020

 

 

January 29, 2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

37,926

 

 

$

56,137

 

 

$

33,933

 

Restricted cash

 

 

1,983

 

 

 

2,135

 

 

 

1,861

 

Accounts receivable, net

 

 

44,078

 

 

 

34,238

 

 

 

37,574

 

Inventories, net

 

 

479,793

 

 

 

499,759

 

 

 

382,106

 

Prepaid expenses and other current assets

 

 

41,418

 

 

 

52,731

 

 

 

40,356

 

Total current assets

 

 

605,198

 

 

 

645,000

 

 

 

495,830

 

Property and equipment, net

 

 

133,572

 

 

 

149,342

 

 

 

145,288

 

Operating lease right-of-use asset

 

 

32,782

 

 

 

36,699

 

 

 

35,475

 

Goodwill

 

 

106,700

 

 

 

106,700

 

 

 

106,700

 

Intangible asset, net

 

 

257,000

 

 

 

257,000

 

 

 

257,000

 

Other assets

 

 

4,512

 

 

 

5,413

 

 

 

5,215

 

TOTAL ASSETS

 

$

1,139,764

 

 

$

1,200,154

 

 

$

1,045,508

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

13,750

 

 

$

13,750

 

 

 

13,750

 

Accounts payable

 

 

184,569

 

 

 

174,061

 

 

 

134,007

 

Lease liability - current

 

 

5,609

 

 

 

5,359

 

 

 

5,183

 

Other current liabilities

 

 

142,828

 

 

 

147,903

 

 

 

161,982

 

Total current liabilities

 

 

346,756

 

 

 

341,073

 

 

 

314,922

 

Long-term borrowings on ABL Facility

 

 

70,000

 

 

 

155,000

 

 

 

25,000

 

Long-term debt, net

 

 

237,245

 

 

 

248,700

 

 

 

245,632

 

Lease liability - long-term

 

 

34,092

 

 

 

39,169

 

 

 

37,811

 

Deferred tax liabilities

 

 

47,325

 

 

 

65,800

 

 

 

47,346

 

Other liabilities

 

 

5,834

 

 

 

5,487

 

 

 

5,094

 

TOTAL LIABILITIES

 

 

741,252

 

 

 

855,229

 

 

 

675,805

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

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

   issued and outstanding: 32,983, 32,608 and 32,614, respectively

 

 

330

 

 

 

326

 

 

 

326

 

Additional paid-in capital

 

 

372,313

 

 

 

366,959

 

 

 

369,372

 

Retained earnings (accumulated deficit)

 

 

37,485

 

 

 

(8,701

)

 

 

11,226

 

Accumulated other comprehensive (loss)

 

 

(11,616

)

 

 

(13,659

)

 

 

(11,221

)

TOTAL STOCKHOLDERS' EQUITY

 

 

398,512

 

 

 

344,925

 

 

 

369,703

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,139,764

 

 

$

1,200,154

 

 

$

1,045,508

 

 

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 29, 2021

 

 

October 30, 2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income (loss)

 

$

26,259

 

 

$

(9,091

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

29,483

 

 

 

27,791

 

Amortization of debt issuance costs

 

 

2,358

 

 

 

2,291

 

Loss on disposal of property and equipment

 

 

583

 

 

 

994

 

Stock-based compensation

 

 

8,043

 

 

 

6,743

 

Deferred income taxes

 

 

80

 

 

 

7,979

 

Goodwill impairment

 

 

 

 

 

3,300

 

Other

 

 

(1,097

)

 

 

326

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(7,219

)

 

 

17,289

 

Inventories, net

 

 

(98,391

)

 

 

(123,811

)

Accounts payable

 

 

51,152

 

 

 

20,104

 

Other operating assets

 

 

95

 

 

 

(16,151

)

Other operating liabilities

 

 

(17,700

)

 

 

36,172

 

Net cash used in operating activities

 

 

(6,354

)

 

 

(26,064

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(18,739

)

 

 

(25,638

)

Net cash used in investing activities

 

 

(18,739

)

 

 

(25,638

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from borrowings under ABL Facility

 

 

140,000

 

 

 

230,000

 

Payments of borrowings under ABL Facility

 

 

(95,000

)

 

 

(75,000

)

Proceeds from issuance of long term debt, net

 

 

 

 

 

266,750

 

Principal payments on long-term debt, net

 

 

(10,313

)

 

 

(385,388

)

Payments for taxes related to net share settlement of equity awards

 

 

(5,098

)

 

 

(438

)

Payment of debt-issuance costs

 

 

(1,161

)

 

 

(5,080

)

Net cash provided by financing activities

 

 

28,428

 

 

 

30,844

 

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

 

 

780

 

 

 

(167

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND

      RESTRICTED CASH

 

 

4,115

 

 

 

(21,025

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH,

      BEGINNING OF PERIOD

 

 

35,794

 

 

 

79,297

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

39,909

 

 

$

58,272

 

SUPPLEMENTAL CASH FLOW DATA

 

 

 

 

 

 

 

 

Unpaid liability to acquire property and equipment

 

$

2,836

 

 

$

2,620

 

Income taxes paid, net of refunds

 

$

23,570

 

 

$

257

 

Interest paid

 

$

23,972

 

 

$

11,334

 

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

 

$

1,161

 

 

$

3,525

 

 

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

 

 

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

)

 

 

 

 

 

 

 

 

 

Common stock withheld related to net share

      settlement of equity awards

 

 

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock withheld related to net share

      settlement of equity awards

 

 

(3

)

 

 

 

 

 

(71

)

 

 

 

 

 

 

 

 

(71

)

Balance at July 30, 2021

 

 

32,981

 

 

$

330

 

 

$

370,353

 

 

$

30,086

 

 

$

(10,946

)

 

$

389,823

 

Net income

 

 

 

 

 

 

 

 

 

 

 

7,399

 

 

 

 

 

 

7,399

 

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(670

)

 

 

(670

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,974

 

 

 

 

 

 

 

 

 

1,974

 

Vesting of restricted shares

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock withheld related to net share

      settlement of equity awards

 

 

(1

)

 

 

 

 

 

(14

)

 

 

 

 

 

 

 

 

(14

)

Balance at October 29, 2021

 

 

32,983

 

 

$

330

 

 

$

372,313

 

 

$

37,485

 

 

$

(11,616

)

 

$

398,512

 

 

 

 

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

)

 

 

 

 

 

 

 

 

 

Common stock withheld related to net share

      settlement of equity awards

 

 

(61

)

 

 

 

 

 

(410

)

 

 

 

 

 

 

 

 

(410

)

Balance at May 1, 2020

 

 

32,596

 

 

$

326

 

 

$

362,072

 

 

$