10-Q
Q10000799288false--02-020.500000799288us-gaap:AdditionalPaidInCapitalMember2022-01-280000799288us-gaap:AdditionalPaidInCapitalMember2022-01-292022-04-290000799288us-gaap:FairValueMeasurementsNonrecurringMember2023-01-270000799288le:OtherGeographicalLocationMember2022-01-292022-04-290000799288le:ABLFacilityMember2023-01-270000799288le:FortressCreditCorpMemberle:TermLoanFacilityMember2020-09-090000799288us-gaap:RetainedEarningsMemberle:TwoThousandTwentyTwoShareRepurchaseProgramMember2023-01-282023-04-280000799288us-gaap:CommonStockMember2023-01-282023-04-2800007992882022-01-280000799288us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:SecuredDebtMemberle:ABLFacilityMember2023-05-112023-05-110000799288le:AccruedExpensesAndOtherCurrentLiabilitiesMember2023-04-280000799288le:BusinessOutfittersRevenueMember2023-01-282023-04-280000799288le:TermLoanFacilityMember2023-04-280000799288us-gaap:FairValueMeasurementsNonrecurringMember2022-04-290000799288us-gaap:CommonStockMember2023-04-280000799288le:TermLoanFacilityMemberle:FederalFundsRateMemberus-gaap:SecuredDebtMember2023-05-112023-05-110000799288us-gaap:SecuredDebtMemberle:ABLFacilityMemberus-gaap:BaseRateMember2023-05-122023-05-120000799288us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-280000799288us-gaap:SecuredDebtMemberle:AdjustedSecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberle:ABLFacilityMember2023-05-122023-05-120000799288us-gaap:CommonStockMember2023-01-2700007992882023-01-2700007992882022-04-290000799288us-gaap:SecuredDebtMemberle:ABLFacilityMemberus-gaap:BaseRateMember2023-05-112023-05-110000799288le:ABLFacilityMember2022-01-292022-04-290000799288us-gaap:OtherRestructuringMember2023-04-280000799288le:TwoThousandTwentyTwoShareRepurchaseProgramMember2022-06-280000799288le:ABLFacilityMember2023-01-282023-04-280000799288le:TermLoanFacilityMemberle:FederalFundsRateMemberus-gaap:SecuredDebtMember2023-01-282023-04-280000799288us-gaap:RetainedEarningsMember2023-01-270000799288us-gaap:EmployeeStockOptionMember2023-04-280000799288le:TimeVestingStockAwardsMember2023-01-282023-04-280000799288le:TimeVestingStockAwardsMember2023-04-280000799288us-gaap:PerformanceSharesMember2022-01-292022-04-290000799288us-gaap:PerformanceSharesMember2023-01-270000799288us-gaap:FacilityClosingMember2022-07-292023-01-270000799288us-gaap:PerformanceSharesMember2023-01-282023-04-280000799288le:AccruedExpensesAndOtherCurrentLiabilitiesMember2022-04-2900007992882022-01-292022-04-290000799288us-gaap:OtherRestructuringMember2023-01-270000799288us-gaap:OtherRestructuringMember2023-01-282023-04-280000799288le:USeCommerceMember2022-01-292022-04-290000799288us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-04-280000799288le:ThirdPartyMember2023-01-282023-04-280000799288us-gaap:AdditionalPaidInCapitalMember2023-04-280000799288us-gaap:RetainedEarningsMember2022-04-290000799288us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-04-290000799288us-gaap:CommonStockMember2022-01-280000799288us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-270000799288le:FortressCreditCorpMemberle:TermLoanFacilityMembersrt:MaximumMemberus-gaap:SecuredDebtMember2020-09-092020-09-090000799288le:OtherGeographicalLocationMember2023-01-282023-04-280000799288us-gaap:CommonStockMember2022-01-292022-04-290000799288le:TermLoanFacilityMember2023-01-270000799288le:TermLoanFacilityMember2020-09-092020-09-090000799288us-gaap:RetainedEarningsMember2022-01-292022-04-290000799288country:US2022-01-292022-04-290000799288us-gaap:SecuredDebtMemberle:ABLFacilityMemberle:OneMonthAdjustedSecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-05-122023-05-120000799288le:InternationalMember2023-01-282023-04-280000799288us-gaap:FacilityClosingMember2023-04-280000799288us-gaap:EmployeeSeveranceMember2023-04-2800007992882023-01-282023-04-280000799288le:ABLFacilityMember2022-04-290000799288us-gaap:SecuredDebtMemberle:ABLFacilityMember2023-04-280000799288srt:AsiaMember2023-01-282023-04-280000799288srt:MaximumMember2023-01-282023-04-280000799288le:ABLFacilityMember2022-01-292023-01-270000799288le:ABLFacilityMember2023-04-280000799288us-gaap:RetailMember2023-01-282023-04-280000799288srt:MinimumMember2023-01-282023-04-280000799288srt:MinimumMemberle:ABLFacilityMember2023-01-282023-04-280000799288us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-01-270000799288le:TwoThousandTwentyTwoShareRepurchaseProgramMember2022-06-282022-06-280000799288us-gaap:AdditionalPaidInCapitalMember2023-01-270000799288us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-292022-04-290000799288us-gaap:EmployeeStockOptionMember2023-01-282023-04-280000799288us-gaap:EmployeeSeveranceMember2023-01-282023-04-280000799288us-gaap:FacilityClosingMember2023-01-270000799288le:TermLoanFacilityMemberle:AdjustedLondonInterbankOfferedRateLIBORMemberus-gaap:SecuredDebtMember2023-05-112023-05-110000799288us-gaap:EmployeeSeveranceMember2023-01-270000799288us-gaap:LetterOfCreditMemberle:ABLFacilityMember2023-04-280000799288country:US2023-01-282023-04-280000799288us-gaap:SecuredDebtMemberle:ABLFacilityMember2023-01-282023-04-280000799288us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-04-280000799288srt:EuropeMember2023-01-282023-04-280000799288us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-282023-04-280000799288srt:MaximumMemberle:ABLFacilityMember2023-01-282023-04-280000799288le:TwoThousandTwentyTwoShareRepurchaseProgramMember2023-04-280000799288us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-04-290000799288le:TermLoanFacilityMemberle:AdjustedLondonInterbankOfferedRateLIBORMemberus-gaap:SecuredDebtMember2023-01-282023-04-280000799288le:AccruedExpensesAndOtherCurrentLiabilitiesMember2023-01-270000799288us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-01-270000799288le:JapanECommerceMember2022-01-292022-04-290000799288us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-04-280000799288le:TermLoanFacilityMember2020-09-090000799288le:USeCommerceMember2023-01-282023-04-280000799288le:TermLoanFacilityMemberle:AlternateBaseRateMemberus-gaap:SecuredDebtMember2023-01-282023-04-2800007992882022-07-292023-01-270000799288us-gaap:AdditionalPaidInCapitalMember2022-04-290000799288le:TermLoanFacilityMemberus-gaap:SecuredDebtMemberle:OneMonthLondonInterbankOfferedRateLIBORMember2023-05-112023-05-110000799288le:TermLoanFacilityMemberle:FederalFundsRateMemberus-gaap:SecuredDebtMember2023-05-122023-05-120000799288us-gaap:OtherRestructuringMember2022-07-292023-01-270000799288srt:EuropeMember2022-01-292022-04-290000799288le:TermLoanFacilityMemberus-gaap:SecuredDebtMemberle:OneMonthLondonInterbankOfferedRateLIBORMember2023-01-282023-04-280000799288us-gaap:FacilityClosingMember2023-01-282023-04-280000799288us-gaap:RetailMember2022-01-292022-04-290000799288us-gaap:AdditionalPaidInCapitalMember2023-01-282023-04-280000799288us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-01-270000799288us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-290000799288us-gaap:RetainedEarningsMember2023-01-282023-04-280000799288le:FortressCreditCorpMemberle:TermLoanFacilityMembersrt:MinimumMemberus-gaap:SecuredDebtMember2020-09-092020-09-090000799288us-gaap:FairValueMeasurementsNonrecurringMember2023-04-280000799288le:TimeVestingStockAwardsMember2023-01-270000799288srt:AsiaMember2022-01-292022-04-290000799288le:ThirdPartyMember2022-01-292022-04-290000799288us-gaap:RetainedEarningsMember2022-01-280000799288us-gaap:PerformanceSharesMember2023-04-280000799288le:BusinessOutfittersRevenueMember2022-01-292022-04-290000799288le:TermLoanFacilityMember2022-04-290000799288le:InternationalMember2022-01-292022-04-290000799288le:ShareRepurchaseProgramMember2023-01-282023-04-280000799288us-gaap:OtherOperatingIncomeExpenseMember2023-01-282023-04-280000799288us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-280000799288us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-04-290000799288us-gaap:RetainedEarningsMember2023-04-280000799288le:TimeVestingStockAwardsMember2022-01-292022-04-290000799288us-gaap:CommonStockMember2022-04-290000799288us-gaap:EmployeeSeveranceMember2022-07-292023-01-2700007992882023-05-260000799288le:TermLoanFacilityMembersrt:MinimumMemberus-gaap:SecuredDebtMember2023-01-282023-04-2800007992882023-04-28xbrli:pureiso4217:USDxbrli:sharesle:Channelxbrli:sharesle:Segmentiso4217:USD
Table of Contents

 

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 April 28, 2023

-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 May 26, 2023, the registrant had 32,086,612 shares of common stock, $0.01 par value, outstanding.


Table of Contents

 

LANDS’ END, INC.

QUARTERLY REPORT ON FORM 10-Q

 

FOR THE PERIOD ENDED APRIL 28, 2023

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

 

26

 

 

 

 

Item 4.

Controls and Procedures

 

27

 

 

 

 

 

PART II. OTHER INFORMATION

 

28

 

 

 

 

Item 1.

Legal Proceedings

 

28

 

 

 

 

Item 1A.

Risk Factors

 

28

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

 

 

 

 

Item 5.

Other Information

 

28

 

 

 

 

Item 6.

Exhibits

 

29

 

 

 

 

 

 

Signatures

 

30

 

 


Table of Contents

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

LANDS’ END, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

13 Weeks Ended

 

(in thousands, except per share data)

 

April 28,
2023

 

 

April 29,
2022

 

Net revenue

 

$

309,558

 

 

$

303,665

 

Cost of sales (excluding depreciation and amortization)

 

 

171,621

 

 

 

174,490

 

Gross profit

 

 

137,937

 

 

 

129,175

 

 

 

 

 

 

 

Selling and administrative

 

 

118,514

 

 

 

115,693

 

Depreciation and amortization

 

 

9,301

 

 

 

9,584

 

Other operating expense, net

 

 

202

 

 

 

 

Operating income

 

 

9,920

 

 

 

3,898

 

Interest expense

 

 

12,283

 

 

 

8,169

 

Other income, net

 

 

(187

)

 

 

(161

)

Loss before income taxes

 

 

(2,176

)

 

 

(4,110

)

Income tax benefit

 

 

(524

)

 

 

(1,739

)

NET LOSS

 

$

(1,652

)

 

$

(2,371

)

NET LOSS PER COMMON SHARE

 

 

 

 

 

 

Basic:

 

$

(0.05

)

 

$

(0.07

)

Diluted:

 

$

(0.05

)

 

$

(0.07

)

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,443

 

 

 

33,163

 

Diluted weighted average common shares outstanding

 

 

32,443

 

 

 

33,163

 

 

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

 

(in thousands)

 

April 28, 2023

 

 

April 29, 2022

 

NET LOSS

 

$

(1,652

)

 

$

(2,371

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

81

 

 

 

(3,094

)

COMPREHENSIVE LOSS

 

$

(1,571

)

 

$

(5,465

)

 

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)

 

April 28, 2023

 

 

April 29, 2022

 

 

January 27, 2023

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,332

 

 

$

22,027

 

 

$

39,557

 

Restricted cash

 

 

2,149

 

 

 

2,145

 

 

 

1,834

 

Accounts receivable, net

 

 

38,759

 

 

 

52,134

 

 

 

44,928

 

Inventories, net

 

 

376,062

 

 

 

436,859

 

 

 

425,513

 

Prepaid expenses and other current assets

 

 

45,743

 

 

 

39,197

 

 

 

44,894

 

Total current assets

 

 

470,045

 

 

 

552,362

 

 

 

556,726

 

Property and equipment, net

 

 

126,397

 

 

 

127,430

 

 

 

127,638

 

Operating lease right-of-use asset

 

 

31,878

 

 

 

33,332

 

 

 

30,325

 

Goodwill

 

 

106,700

 

 

 

106,700

 

 

 

106,700

 

Intangible asset

 

 

257,000

 

 

 

257,000

 

 

 

257,000

 

Other assets

 

 

3,174

 

 

 

4,740

 

 

 

3,759

 

TOTAL ASSETS

 

$

995,194

 

 

$

1,081,564

 

 

$

1,082,148

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

13,750

 

 

$

13,750

 

 

$

13,750

 

Accounts payable

 

 

110,097

 

 

 

130,955

 

 

 

171,557

 

Lease liability – current

 

 

5,533

 

 

 

5,557

 

 

 

5,414

 

Accrued expenses and other current liabilities

 

 

88,216

 

 

 

90,777

 

 

 

106,756

 

Total current liabilities

 

 

217,596

 

 

 

241,039

 

 

 

297,477

 

Long-term borrowings under ABL Facility

 

 

100,000

 

 

 

125,000

 

 

 

100,000

 

Long-term debt, net

 

 

220,786

 

 

 

231,703

 

 

 

223,506

 

Lease liability – long-term

 

 

32,335

 

 

 

34,855

 

 

 

31,095

 

Deferred tax liabilities

 

 

45,863

 

 

 

45,612

 

 

 

45,953

 

Other liabilities

 

 

3,330

 

 

 

4,950

 

 

 

3,365

 

TOTAL LIABILITIES

 

 

619,910

 

 

 

683,159

 

 

 

701,396

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01 authorized: 480,000 shares;
   issued and outstanding:
32,460, 33,413 and 32,626, respectively

 

 

325

 

 

 

334

 

 

 

326

 

Additional paid-in capital

 

 

362,285

 

 

 

371,583

 

 

 

366,181

 

Retained earnings

 

 

29,615

 

 

 

42,224

 

 

 

31,267

 

Accumulated other comprehensive loss

 

 

(16,941

)

 

 

(15,736

)

 

 

(17,022

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

375,284

 

 

 

398,405

 

 

 

380,752

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

995,194

 

 

$

1,081,564

 

 

$

1,082,148

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

3


Table of Contents

 

 

LANDS’ END, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

13 Weeks Ended

 

(in thousands)

 

April 28, 2023

 

 

April 29, 2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(1,652

)

 

$

(2,371

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

9,301

 

 

 

9,584

 

Amortization of debt issuance costs

 

 

815

 

 

 

765

 

Loss on disposal of property and equipment

 

 

123

 

 

 

 

Stock-based compensation

 

 

1,083

 

 

 

1,484

 

Deferred income taxes

 

 

(112

)

 

 

244

 

Other

 

 

(193

)

 

 

(232

)

Change in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

6,244

 

 

 

(2,824

)

Inventories, net

 

 

49,604

 

 

 

(56,320

)

Accounts payable

 

 

(57,050

)

 

 

(15,331

)

Other operating assets

 

 

(335

)

 

 

(2,862

)

Other operating liabilities

 

 

(18,583

)

 

 

(54,547

)

Net cash used in operating activities

 

 

(10,755

)

 

 

(122,410

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Purchases of property and equipment

 

 

(12,384

)

 

 

(6,965

)

Net cash used in investing activities

 

 

(12,384

)

 

 

(6,965

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from borrowings under ABL Facility

 

 

83,000

 

 

 

126,000

 

Payments of borrowings under ABL Facility

 

 

(83,000

)

 

 

(1,000

)

Payments on term loan

 

 

(3,438

)

 

 

(3,438

)

Payments for taxes related to net share settlement of equity awards

 

 

(1,199

)

 

 

(4,310

)

Purchases and retirement of common stock

 

 

(3,781

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(8,418

)

 

 

117,252

 

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

 

 

(353

)

 

 

160

 

NET DECREASE IN CASH, CASH EQUIVALENTS AND
      RESTRICTED CASH

 

 

(31,910

)

 

 

(11,963

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH,
      BEGINNING OF PERIOD

 

 

41,391

 

 

 

36,135

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

9,481

 

 

$

24,172

 

SUPPLEMENTAL CASH FLOW DATA

 

 

 

 

 

 

Unpaid liability to acquire property and equipment

 

$

5,738

 

 

$

3,433

 

Income taxes paid, net of refunds

 

$

1,315

 

 

$

16

 

Interest paid

 

$

13,164

 

 

$

7,127

 

Operating lease right-of-use-assets obtained in exchange for lease liabilities

 

$

2,539

 

 

$

3,722

 

 

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 27, 2023

 

 

32,626

 

 

$

326

 

 

$

366,181

 

 

$

31,267

 

 

$

(17,022

)

 

$

380,752

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,652

)

 

 

 

 

 

(1,652

)

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

81

 

 

 

81

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,083

 

 

 

 

 

 

 

 

 

1,083

 

Vesting of restricted shares

 

 

408

 

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

Common stock withheld related to net share
      settlement of equity awards

 

 

(144

)

 

 

 

 

 

(1,199

)

 

 

 

 

 

 

 

 

(1,199

)

Purchases and retirement of common stock

 

 

(430

)

 

 

(4

)

 

 

(3,777

)

 

 

 

 

 

 

 

 

(3,781

)

Balance at April 28, 2023

 

 

32,460

 

 

$

325

 

 

$

362,285

 

 

$

29,615

 

 

$

(16,941

)

 

$

375,284

 

 

 

 

 

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

 

 

 

 

 

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 digital retailer of casual clothing, swimwear, outerwear, accessories, footwear, home products and uniform solutions. Lands’ End offers products online at www.landsend.com, through Company Operated stores and through third-party distribution channels. 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 the home. Lands’ End also offers products to businesses and schools, for their employees and students, through the Outfitters distribution channel. References to www.landsend.com do not constitute incorporation by reference of the information at www.landsend.com, and such information is not part of this Quarterly Report on Form 10-Q or any other filings with the SEC, unless otherwise explicitly stated.

 

Terms that are commonly used in the Company’s Notes to Condensed Consolidated Financial Statements are defined as follows:

 

ABL Facility – Asset-based senior secured credit agreement, providing for a revolving facility, dated as of November 16, 2017, with Wells Fargo Bank, N.A. and certain other lenders, as amended to date

 

Adjusted EBITDA – Net income (loss) appearing on the Condensed Consolidated Statements of Operations net of Income tax expense/(benefit), Interest expense, Depreciation and amortization and certain significant items

 

ASC – Financial Accounting Standards Board Accounting Standards Codification, which serves as the source for authoritative GAAP, as supplemented by rules and interpretive releases by the SEC which are also sources of authoritative GAAP for SEC registrants

 

Company Operated stores – Lands’ End retail stores in the Retail distribution channel

 

Debt Facilities – Collectively, the Term Loan Facility and ABL Facility

 

Deferred Awards – Time vesting stock awards

 

EPS – Earnings per share

 

FASB – Financial Accounting Standards Board

 

Fiscal 2022 – The 52 weeks ended January 27, 2023

 

GAAP – Accounting principles generally accepted in the United States

 

LIBOR – London inter-bank offered rate

 

Option Awards – Stock option awards

 

Performance Awards – Performance-based stock awards

 

SEC – United States Securities and Exchange Commission

 

SOFR – Secured Overnight Funding Rate

 

Target Shares – Number of restricted stock units awarded to a recipient which reflects the number of shares to be delivered based on achievement of target performance goals

 

Term Loan Facility – Term loan credit agreement, dated as of September 9, 2020, among the Company, Fortress Credit Corp., as Administrative Agent and Collateral Agent, and the lenders party thereto

6


Table of Contents

 

 

 

Third Quarter 2022 – The 13 weeks ended October 28, 2022

 

Basis of Presentation

 

The Condensed Consolidated Financial Statements include the accounts of Lands’ End, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated.

 

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. Dollar amounts are reported in thousands, except per share data, unless otherwise noted. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Lands’ End Annual Report on Form 10-K filed with the SEC on April 10, 2023.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

 

In March 2020, the FASB issued ASU 2020-04, Reference Reform Rate (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) to provide temporary optional expedients and exceptions to the contract modifications, hedge relationships and other transactions affected by reference rate reform if certain criteria are met. This ASU, which was effective upon issuance and modified by ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of Sunset Date of Topic 848, may be applied through December 31, 2024, is applicable to all contracts and hedging relationships that reference the London Interbank Offered Rate or any other reference rate expected to be discontinued. The guidance in ASU 2020-04 may be implemented over time as reference rate reform activities occur. The Company is currently evaluating the potential effects of this ASU, however, does not expect reference rate reform to have a material effect on its consolidated financial statements as the Company’s current Debt Facilities provide for the replacement of LIBOR with an alternative benchmark rate should LIBOR become unavailable.

NOTE 3. EARNINGS (LOSS) PER SHARE

 

The numerator for both basic and diluted EPS is net income (loss). The denominator for basic EPS is based upon the number of weighted average shares of Lands’ End common stock outstanding during the reporting periods. The denominator for diluted EPS is based upon the number of weighted average shares of Lands’ End common stock and common stock equivalents outstanding during the reporting periods using the treasury stock method in accordance with GAAP. Potentially dilutive securities for the diluted EPS calculations consist of non-vested equity shares of common stock and in-the-money outstanding options where the current stock price exceeds the option strike price.

 

The following table summarizes the components of basic and diluted EPS:

 

 

 

13 Weeks Ended

 

(in thousands, except per share amounts)

 

April 28, 2023

 

 

April 29, 2022

 

Net loss

 

$

(1,652

)

 

$

(2,371

)

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,443

 

 

 

33,163

 

Dilutive effect of stock awards

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

 

32,443

 

 

 

33,163

 

 

 

 

 

 

 

Basic loss per share

 

$

(0.05

)

 

$

(0.07

)

Diluted loss per share

 

$

(0.05

)

 

$

(0.07

)

 

Stock awards are considered anti-dilutive based on the application of the treasury stock method or in the event of a net loss. Anti-dilutive shares excluded from the diluted weighted average shares outstanding were 1,188,876 and 1,427,987 in the 13 weeks ended April 28, 2023 and April 29, 2022, respectively.

7


Table of Contents

 

 

NOTE 4. OTHER COMPREHENSIVE INCOME (LOSS)

 

Other comprehensive income (loss) encompasses all changes in equity other than those arising from transactions with stockholders and is comprised solely of foreign currency translation adjustments.

 

 

 

13 Weeks Ended

 

(in thousands)

 

April 28, 2023

 

 

April 29, 2022

 <