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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 28, 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 November 28, 2022, the registrant had 33,002,242 shares of common stock, $0.01 par value, outstanding.

 

 


 

 

 

LANDS’ END, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED OCTOBER 28, 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

 

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 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

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 28,

2022

 

 

October 29,

2021

 

 

October 28,

2022

 

 

October 29, 2021

 

Net revenue

 

$

370,983

 

 

$

375,843

 

 

$

1,025,826

 

 

$

1,081,249

 

Cost of sales (excluding depreciation and amortization)

 

 

222,573

 

 

 

209,028

 

 

 

604,204

 

 

 

588,908

 

Gross profit

 

 

148,410

 

 

 

166,815

 

 

 

421,622

 

 

 

492,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

132,807

 

 

 

137,408

 

 

 

377,074

 

 

 

399,579

 

Depreciation and amortization

 

 

9,761

 

 

 

9,788

 

 

 

29,228

 

 

 

29,483

 

Other operating expense, net

 

 

3,096

 

 

 

140

 

 

 

3,135

 

 

 

583

 

Operating income

 

 

2,746

 

 

 

19,479

 

 

 

12,185

 

 

 

62,696

 

Interest expense

 

 

10,825

 

 

 

8,334

 

 

 

27,807

 

 

 

26,231

 

Other expense (income), net

 

 

230

 

 

 

(171

)

 

 

(97

)

 

 

(461

)

(Loss) income before income taxes

 

 

(8,309

)

 

 

11,316

 

 

 

(15,525

)

 

 

36,926

 

Income tax (benefit) expense

 

 

(3,627

)

 

 

3,917

 

 

 

(6,293

)

 

 

10,667

 

NET (LOSS) INCOME

 

$

(4,682

)

 

$

7,399

 

 

$

(9,232

)

 

$

26,259

 

NET (LOSS) INCOME PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

(0.14

)

 

$

0.22

 

 

$

(0.28

)

 

$

0.80

 

Diluted:

 

$

(0.14

)

 

$

0.22

 

 

$

(0.28

)

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

33,064

 

 

 

32,981

 

 

 

33,196

 

 

 

32,910

 

Diluted weighted average common shares outstanding

 

 

33,064

 

 

 

33,698

 

 

 

33,196

 

 

 

33,708

 

 

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 28, 2022

 

 

October 29, 2021

 

 

October 28, 2022

 

 

October 29, 2021

 

NET (LOSS) INCOME

 

$

(4,682

)

 

$

7,399

 

 

$

(9,232

)

 

$

26,259

 

Other comprehensive (loss) income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(1,947

)

 

 

(670

)

 

 

(5,884

)

 

 

(395

)

COMPREHENSIVE (LOSS) INCOME

 

$

(6,629

)

 

$

6,729

 

 

$

(15,116

)

 

$

25,864

 

 

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 28, 2022

 

 

October 29, 2021

 

 

January 28, 2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

28,829

 

 

$

37,926

 

 

$

34,301

 

Restricted cash

 

 

1,833

 

 

 

1,983

 

 

 

1,834

 

Accounts receivable, net

 

 

49,409

 

 

 

44,078

 

 

 

49,668

 

Inventories, net

 

 

564,856

 

 

 

479,793

 

 

 

384,241

 

Prepaid expenses and other current assets

 

 

47,205

 

 

 

41,418

 

 

 

36,905

 

Total current assets

 

 

692,132

 

 

 

605,198

 

 

 

506,949

 

Property and equipment, net

 

 

121,907

 

 

 

133,572

 

 

 

129,791

 

Operating lease right-of-use asset

 

 

31,441

 

 

 

32,782

 

 

 

31,492

 

Goodwill

 

 

106,700

 

 

 

106,700

 

 

 

106,700

 

Intangible asset

 

 

257,000

 

 

 

257,000

 

 

 

257,000

 

Other assets

 

 

3,786

 

 

 

4,512

 

 

 

4,702

 

TOTAL ASSETS

 

$

1,212,966

 

 

$

1,139,764

 

 

$

1,036,634

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

13,750

 

 

$

13,750

 

 

$

13,750

 

Accounts payable

 

 

228,863

 

 

 

184,569

 

 

 

145,802

 

Lease liability – current

 

 

5,808

 

 

 

5,609

 

 

 

5,617

 

Other current liabilities

 

 

111,872

 

 

 

142,828

 

 

 

146,263

 

Total current liabilities

 

 

360,293

 

 

 

346,756

 

 

 

311,432

 

Long-term borrowings under ABL Facility

 

 

160,000

 

 

 

70,000

 

 

 

 

Long-term debt, net

 

 

226,227

 

 

 

237,245

 

 

 

234,474

 

Lease liability – long-term

 

 

32,033

 

 

 

34,092

 

 

 

32,731

 

Deferred tax liabilities

 

 

45,087

 

 

 

47,325

 

 

 

46,191

 

Other liabilities

 

 

3,758

 

 

 

5,834

 

 

 

5,110

 

TOTAL LIABILITIES

 

 

827,398

 

 

 

741,252

 

 

 

629,938

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

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

   issued and outstanding: 33,001, 32,983 and 32,985, respectively

 

 

330

 

 

 

330

 

 

 

330

 

Additional paid-in capital

 

 

369,198

 

 

 

372,313

 

 

 

374,413

 

Retained earnings

 

 

34,566

 

 

 

37,485

 

 

 

44,595

 

Accumulated other comprehensive (loss)

 

 

(18,526

)

 

 

(11,616

)

 

 

(12,642

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

385,568

 

 

 

398,512

 

 

 

406,696

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,212,966

 

 

$

1,139,764

 

 

$

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)

 

 

 

39 Weeks Ended

 

(in thousands)

 

October 28, 2022

 

 

October 29, 2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(9,232

)

 

$

26,259

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

29,228

 

 

 

29,483

 

Amortization of debt issuance costs

 

 

2,361

 

 

 

2,358

 

Loss on disposal of property and equipment

 

 

39

 

 

 

583

 

Stock-based compensation

 

 

3,537

 

 

 

8,043

 

Deferred income taxes

 

 

460

 

 

 

80

 

Long-lived asset impairment

 

 

120

 

 

 

 

Other

 

 

(744

)

 

 

(1,097

)

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(1,246

)

 

 

(7,219

)

Inventories, net

 

 

(188,899

)

 

 

(98,391

)

Accounts payable

 

 

82,057

 

 

 

51,152

 

Other operating assets

 

 

(10,604

)

 

 

95

 

Other operating liabilities

 

 

(33,072

)

 

 

(17,700

)

Net cash used in operating activities

 

 

(125,995

)

 

 

(6,354

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Sales of property and equipment

 

 

88

 

 

 

 

Purchases of property and equipment

 

 

(20,544

)

 

 

(18,739

)

Net cash used in investing activities

 

 

(20,456

)

 

 

(18,739

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from borrowings under ABL Facility

 

 

222,000

 

 

 

140,000

 

Payments of borrowings under ABL Facility

 

 

(62,000

)

 

 

(95,000

)

Payments on term loan

 

 

(10,313

)

 

 

(10,313

)

Payments for taxes related to net share settlement of equity awards

 

 

(4,315

)

 

 

(5,098

)

Purchases and retirement of common stock

 

 

(5,234

)

 

 

 

Payment of debt issuance costs

 

 

 

 

 

(1,161

)

Net cash provided by financing activities

 

 

140,138

 

 

 

28,428

 

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

 

 

840

 

 

 

780

 

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND

      RESTRICTED CASH

 

 

(5,473

)

 

 

4,115

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH,

      BEGINNING OF PERIOD

 

 

36,135

 

 

 

35,794

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

30,662

 

 

$

39,909

 

SUPPLEMENTAL CASH FLOW DATA

 

 

 

 

 

 

 

 

Unpaid liability to acquire property and equipment

 

$

4,922

 

 

$

2,836

 

Income taxes paid, net of refunds

 

$

4,146

 

 

$

23,570

 

Interest paid

 

$

26,170

 

 

$

23,972

 

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

 

$

4,223

 

 

$

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

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(4,682

)

 

 

 

 

 

(4,682

)

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,947

)

 

 

(1,947

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

134

 

 

 

 

 

 

 

 

 

134

 

Vesting of restricted shares

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock withheld related to net share

      settlement of equity awards

 

 

(1

)

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

(5

)

Purchases and retirement of common stock

 

 

(204

)

 

 

(2

)

 

 

(2,176

)

 

 

(699

)

 

 

 

 

 

 

(2,877

)

Balance at October 28, 2022

 

 

33,001

 

 

$

330

 

 

$

369,198

 

 

$

34,566

 

 

$

(18,526

)

 

$

385,568

 

 

 

 

 

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