SEC Filing | Lands' End, Inc.

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le-10q_20211029.htm

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.

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.

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.

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.

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		$