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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 29, 2022

-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 29, 2022, the registrant had 33,114,563 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 29, 2022

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

 

16

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

27

 

 

 

 

Item 4.

Controls and Procedures

 

28

 

 

 

 

 

PART II. OTHER INFORMATION

 

29

 

 

 

 

Item 1.

Legal Proceedings

 

29

 

 

 

 

Item 1A.

Risk Factors

 

29

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

29

 

 

 

 

Item 6.

Exhibits

 

30

 

 

 

 

 

Signatures

 

31

 

 

 


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 29,

2022

 

 

July 30,

2021

 

 

July 29,

2022

 

 

July 30, 2021

 

Net revenue

 

$

351,178

 

 

$

384,109

 

 

$

654,843

 

 

$

705,406

 

Cost of sales (excluding depreciation and amortization)

 

 

207,141

 

 

 

206,320

 

 

 

381,631

 

 

 

379,880

 

Gross profit

 

 

144,037

 

 

 

177,789

 

 

 

273,212

 

 

 

325,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

128,573

 

 

 

136,649

 

 

 

244,267

 

 

 

262,171

 

Depreciation and amortization

 

 

9,883

 

 

 

9,791

 

 

 

19,467

 

 

 

19,695

 

Other operating expense, net

 

 

39

 

 

 

 

 

 

39

 

 

 

443

 

Operating income

 

 

5,542

 

 

 

31,349

 

 

 

9,439

 

 

 

43,217

 

Interest expense

 

 

8,813

 

 

 

8,837

 

 

 

16,982

 

 

 

17,897

 

Other (income), net

 

 

(166

)

 

 

(123

)

 

 

(328

)

 

 

(290

)

(Loss) income before income taxes

 

 

(3,105

)

 

 

22,635

 

 

 

(7,215

)

 

 

25,610

 

Income tax (benefit) expense

 

 

(926

)

 

 

6,414

 

 

 

(2,665

)

 

 

6,750

 

NET (LOSS) INCOME

 

$

(2,179

)

 

$

16,221

 

 

$

(4,550

)

 

$

18,860

 

NET (LOSS) INCOME PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

(0.07

)

 

$

0.49

 

 

$

(0.14

)

 

$

0.57

 

Diluted:

 

$

(0.07

)

 

$

0.48

 

 

$

(0.14

)

 

$

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

33,361

 

 

 

32,979

 

 

 

33,262

 

 

 

32,875

 

Diluted weighted average common shares outstanding

 

 

33,361

 

 

 

33,713

 

 

 

33,262

 

 

 

33,710

 

 

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 29, 2022

 

 

July 30, 2021

 

 

July 29, 2022

 

 

July 30, 2021

 

NET (LOSS) INCOME

 

$

(2,179

)

 

$

16,221

 

 

$

(4,550

)

 

$

18,860

 

Other comprehensive (loss) income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(843

)

 

 

(36

)

 

 

(3,937

)

 

 

275

 

COMPREHENSIVE (LOSS) INCOME

 

$

(3,022

)

 

$

16,185

 

 

$

(8,487

)

 

$

19,135

 

 

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 29, 2022

 

 

July 30, 2021

 

 

January 28, 2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

23,505

 

 

$

39,223

 

 

$

34,301

 

Restricted cash

 

 

2,091

 

 

 

2,102

 

 

 

1,834

 

Accounts receivable, net

 

 

40,917

 

 

 

30,203

 

 

 

49,668

 

Inventories, net

 

 

569,174

 

 

 

464,291

 

 

 

384,241

 

Prepaid expenses and other current assets

 

 

39,267

 

 

 

31,127

 

 

 

36,905

 

Total current assets

 

 

674,954

 

 

 

566,946

 

 

 

506,949

 

Property and equipment, net

 

 

124,626

 

 

 

136,714

 

 

 

129,791

 

Operating lease right-of-use asset

 

 

32,115

 

 

 

33,989

 

 

 

31,492

 

Goodwill

 

 

106,700

 

 

 

106,700

 

 

 

106,700

 

Intangible asset

 

 

257,000

 

 

 

257,000

 

 

 

257,000

 

Other assets

 

 

3,760

 

 

 

4,347

 

 

 

4,702

 

TOTAL ASSETS

 

$

1,199,155

 

 

$

1,105,696

 

 

$

1,036,634

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

13,750

 

 

$

13,750

 

 

$

13,750

 

Accounts payable

 

 

236,015

 

 

 

211,916

 

 

 

145,802

 

Lease liability – current

 

 

6,720

 

 

 

5,437

 

 

 

5,617

 

Other current liabilities

 

 

101,015

 

 

 

130,285

 

 

 

146,263

 

Total current liabilities

 

 

357,500

 

 

 

361,388

 

 

 

311,432

 

Long-term borrowings under ABL Facility

 

 

135,000

 

 

 

25,000

 

 

 

 

Long-term debt, net

 

 

228,948

 

 

 

240,020

 

 

 

234,474

 

Lease liability – long-term

 

 

32,333

 

 

 

35,912

 

 

 

32,731

 

Deferred tax liabilities

 

 

45,516

 

 

 

47,469

 

 

 

46,191

 

Other liabilities

 

 

4,913

 

 

 

6,084

 

 

 

5,110

 

TOTAL LIABILITIES

 

 

804,210

 

 

 

715,873

 

 

 

629,938

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

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

   issued and outstanding: 33,202, 32,981 and 32,985, respectively

 

 

332

 

 

 

330

 

 

 

330

 

Additional paid-in capital

 

 

371,245

 

 

 

370,353

 

 

 

374,413

 

Retained earnings

 

 

39,947

 

 

 

30,086

 

 

 

44,595

 

Accumulated other comprehensive (loss)

 

 

(16,579

)

 

 

(10,946

)

 

 

(12,642

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

394,945

 

 

 

389,823

 

 

 

406,696

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,199,155

 

 

$

1,105,696

 

 

$

1,036,634

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

3


Table of Contents

 

LANDS’ END, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

26 Weeks Ended

 

(in thousands)

 

July 29, 2022

 

 

July 30, 2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(4,550

)

 

$

18,860

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

19,467

 

 

 

19,695

 

Amortization of debt issuance costs

 

 

1,546

 

 

 

1,597

 

Loss on disposal of property and equipment

 

 

39

 

 

 

443

 

Stock-based compensation

 

 

3,403

 

 

 

6,069

 

Deferred income taxes

 

 

372

 

 

 

46

 

Other

 

 

(374

)

 

 

194

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

8,292

 

 

 

7,071

 

Inventories, net

 

 

(190,885

)

 

 

(81,971

)

Accounts payable

 

 

91,370

 

 

 

78,376

 

Other operating assets

 

 

(2,105

)

 

 

10,615

 

Other operating liabilities

 

 

(44,100

)

 

 

(30,470

)

Net cash (used in) provided by operating activities

 

 

(117,525

)

 

 

30,525

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Sales of property and equipment

 

 

87

 

 

 

 

Purchases of property and equipment

 

 

(14,863

)

 

 

(11,961

)

Net cash used in investing activities

 

 

(14,776

)

 

 

(11,961

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from borrowings under ABL Facility

 

 

141,000

 

 

 

75,000

 

Payments of borrowings under ABL Facility

 

 

(6,000

)

 

 

(75,000

)

Payments on term loan

 

 

(6,875

)

 

 

(6,875

)

Payments for taxes related to net share settlement of equity awards

 

 

(4,310

)

 

 

(5,084

)

Purchases and retirement of common stock

 

 

(2,357

)

 

 

 

Payment of debt-issuance costs

 

 

 

 

 

(932

)

Net cash provided by (used in) financing activities

 

 

121,458

 

 

 

(12,891

)

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

 

 

304

 

 

 

(142

)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND

      RESTRICTED CASH

 

 

(10,539

)

 

 

5,531

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH,

      BEGINNING OF PERIOD

 

 

36,135

 

 

 

35,794

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

25,596

 

 

$

41,325

 

SUPPLEMENTAL CASH FLOW DATA

 

 

 

 

 

 

 

 

Unpaid liability to acquire property and equipment

 

$

2,914

 

 

$

2,726

 

Income taxes paid, net of refunds

 

$

4,013

 

 

$

18,338

 

Interest paid

 

$

16,661

 

 

$

16,306

 

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

 

$

3,902

 

 

$

1,161

 

 

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 28, 2022

 

 

32,985

 

 

$

330

 

 

$

374,413

 

 

$

44,595

 

 

$

(12,642

)

 

$

406,696

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,371

)

 

 

 

 

 

(2,371

)

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,094

)

 

 

(3,094

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,484

 

 

 

 

 

 

 

 

 

1,484

 

Vesting of restricted shares

 

 

660

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Common stock withheld related to net share

      settlement of equity awards

 

 

(232

)

 

 

 

 

 

(4,310

)

 

 

 

 

 

 

 

 

(4,310

)

Balance at April 29, 2022

 

 

33,413

 

 

$

334

 

 

$

371,583

 

 

$

42,224

 

 

$

(15,736

)

 

$

398,405

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,179

)

 

 

 

 

 

(2,179

)

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(843

)

 

 

(843

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,919

 

 

 

 

 

 

 

 

 

1,919

 

Vesting of restricted shares

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases and retirement of common stock

 

 

(212

)

 

 

(2

)

 

 

(2,257

)

 

 

(98

)

 

 

 

 

 

(2,357

)

Balance at July 29, 2022

 

 

33,202

 

 

$

332

 

 

$

371,245

 

 

$

39,947

 

 

$

(16,579

)

 

$

394,945

 

 

 

 

 

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

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.