10-Q
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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 July 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 .

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 or 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 28, 2023, the registrant had 31,926,226 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 JULY 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

 

18

 

 

 

 

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 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

33

 

 

 

 

Item 5.

Other Information

 

33

 

 

 

 

Item 6.

Exhibits

 

34

 

 

 

 

 

 

Signatures

 

35

 

 


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 28,
2023

 

 

July 29,
2022

 

 

July 28,
2023

 

 

July 29, 2022

 

Net revenue

 

$

323,363

 

 

$

351,178

 

 

$

632,921

 

 

$

654,843

 

Cost of sales (excluding depreciation and amortization)

 

 

183,766

 

 

 

207,141

 

 

 

355,387

 

 

 

381,631

 

Gross profit

 

 

139,597

 

 

 

144,037

 

 

 

277,534

 

 

 

273,212

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

123,866

 

 

 

128,573

 

 

 

242,380

 

 

 

244,267

 

Depreciation and amortization

 

 

9,543

 

 

 

9,883

 

 

 

18,844

 

 

 

19,467

 

Other operating expense, net

 

 

390

 

 

 

39

 

 

 

592

 

 

 

39

 

Operating income

 

 

5,798

 

 

 

5,542

 

 

 

15,718

 

 

 

9,439

 

Interest expense

 

 

12,024

 

 

 

8,813

 

 

 

24,307

 

 

 

16,982

 

Other income, net

 

 

(169

)

 

 

(166

)

 

 

(356

)

 

 

(328

)

Loss before income taxes

 

 

(6,057

)

 

 

(3,105

)

 

 

(8,233

)

 

 

(7,215

)

Income tax expense (benefit)

 

 

1,961

 

 

 

(926

)

 

 

1,437

 

 

 

(2,665

)

NET LOSS

 

$

(8,018

)

 

$

(2,179

)

 

$

(9,670

)

 

$

(4,550

)

NET LOSS PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

$

(0.25

)

 

$

(0.07

)

 

$

(0.30

)

 

$

(0.14

)

Diluted:

 

$

(0.25

)

 

$

(0.07

)

 

$

(0.30

)

 

$

(0.14

)

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

32,117

 

 

 

33,361

 

 

 

32,280

 

 

 

33,262

 

Diluted weighted average common shares outstanding

 

 

32,117

 

 

 

33,361

 

 

 

32,280

 

 

 

33,262

 

 

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 28, 2023

 

 

July 29, 2022

 

 

July 28, 2023

 

 

July 29, 2022

 

NET LOSS

 

$

(8,018

)

 

$

(2,179

)

 

$

(9,670

)

 

$

(4,550

)

Other comprehensive income (loss), net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

700

 

 

 

(843

)

 

 

781

 

 

 

(3,937

)

COMPREHENSIVE LOSS

 

$

(7,318

)

 

$

(3,022

)

 

$

(8,889

)

 

$

(8,487

)

 

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 28, 2023

 

 

July 29, 2022

 

 

January 27, 2023*

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

26,610

 

 

$

23,505

 

 

$

39,557

 

Restricted cash

 

 

1,833

 

 

 

2,091

 

 

 

1,834

 

Accounts receivable, net

 

 

25,095

 

 

 

40,917

 

 

 

44,928

 

Inventories, net

 

 

396,087

 

 

 

569,174

 

 

 

425,513

 

Prepaid expenses and other current assets

 

 

43,195

 

 

 

39,267

 

 

 

44,894

 

Total current assets

 

 

492,820

 

 

 

674,954

 

 

 

556,726

 

Property and equipment, net

 

 

125,325

 

 

 

124,626

 

 

 

127,638

 

Operating lease right-of-use asset

 

 

29,685

 

 

 

32,115

 

 

 

30,325

 

Goodwill

 

 

106,700

 

 

 

106,700

 

 

 

106,700

 

Intangible asset

 

 

257,000

 

 

 

257,000

 

 

 

257,000

 

Other assets

 

 

2,949

 

 

 

3,760

 

 

 

3,759

 

TOTAL ASSETS

 

$

1,014,479

 

 

$

1,199,155

 

 

$

1,082,148

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

13,750

 

 

$

13,750

 

 

$

13,750

 

Accounts payable

 

 

156,342

 

 

 

236,015

 

 

 

171,557

 

Lease liability – current

 

 

5,643

 

 

 

6,720

 

 

 

5,414

 

Accrued expenses and other current liabilities

 

 

100,632

 

 

 

101,015

 

 

 

106,756

 

Total current liabilities

 

 

276,367

 

 

 

357,500

 

 

 

297,477

 

Long-term borrowings under ABL Facility

 

 

70,000

 

 

 

135,000

 

 

 

100,000

 

Long-term debt, net

 

 

218,022

 

 

 

228,948

 

 

 

223,506

 

Lease liability – long-term

 

 

29,973

 

 

 

32,333

 

 

 

31,095

 

Deferred tax liabilities

 

 

51,066

 

 

 

45,516

 

 

 

45,953

 

Other liabilities

 

 

3,283

 

 

 

4,913

 

 

 

3,365

 

TOTAL LIABILITIES

 

 

648,711

 

 

 

804,210

 

 

 

701,396

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01 authorized: 480,000 shares;
   issued and outstanding:
32,087, 33,202 and 32,626, respectively

 

 

321

 

 

 

332

 

 

 

326

 

Additional paid-in capital

 

 

360,091

 

 

 

371,245

 

 

 

366,181

 

Retained earnings

 

 

21,597

 

 

 

39,947

 

 

 

31,267

 

Accumulated other comprehensive loss

 

 

(16,241

)

 

 

(16,579

)

 

 

(17,022

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

365,768

 

 

 

394,945

 

 

 

380,752

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,014,479

 

 

$

1,199,155

 

 

$

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)

 

 

 

26 Weeks Ended

 

(in thousands)

 

July 28, 2023

 

 

July 29, 2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(9,670

)

 

$

(4,550

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

18,844

 

 

 

19,467

 

Amortization of debt issuance costs

 

 

1,634

 

 

 

1,546

 

Loss on disposal of property and equipment

 

 

100

 

 

 

39

 

Stock-based compensation

 

 

1,893

 

 

 

3,403

 

Deferred income taxes

 

 

4,905

 

 

 

372

 

Other

 

 

(255

)

 

 

(374

)

Change in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

19,861

 

 

 

8,292

 

Inventories, net

 

 

30,427

 

 

 

(190,885

)

Accounts payable

 

 

(8,988

)

 

 

91,370

 

Other operating assets

 

 

2,354

 

 

 

(2,105

)

Other operating liabilities

 

 

(6,278

)

 

 

(44,100

)

Net cash provided by (used in) operating activities

 

 

54,827

 

 

 

(117,525

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Sales of property and equipment

 

 

 

 

 

87

 

Purchases of property and equipment

 

 

(22,862

)

 

 

(14,863

)

Net cash used in investing activities

 

 

(22,862

)

 

 

(14,776

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from borrowings under ABL Facility

 

 

118,000

 

 

 

141,000

 

Payments of borrowings under ABL Facility

 

 

(148,000

)

 

 

(6,000

)

Payments on term loan

 

 

(6,875

)

 

 

(6,875

)

Payments of debt issuance costs

 

 

(45

)

 

 

 

Payments for taxes related to net share settlement of equity awards

 

 

(1,199

)

 

 

(4,310

)

Purchases and retirement of common stock

 

 

(6,789

)

 

 

(2,357

)

Net cash (used in) provided by financing activities

 

 

(44,908

)

 

 

121,458

 

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

 

 

(5

)

 

 

304

 

NET DECREASE IN CASH, CASH EQUIVALENTS AND
      RESTRICTED CASH

 

 

(12,948

)

 

 

(10,539

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH,
      BEGINNING OF PERIOD

 

 

41,391

 

 

 

36,135

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

 

$

28,443

 

 

$

25,596

 

SUPPLEMENTAL CASH FLOW DATA

 

 

 

 

 

 

Unpaid liability to acquire property and equipment

 

$

3,551

 

 

$

2,914

 

Income taxes paid (refunded)

 

$

(298

)

 

$

4,013

 

Interest paid

 

$

22,138

 

 

$

16,661

 

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

 

$

1,542

 

 

$

3,902

 

 

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

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,018

)

 

 

 

 

 

(8,018

)

Cumulative translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

700

 

 

 

700

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

810

 

 

 

 

 

 

 

 

 

810

 

Vesting of restricted shares

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases and retirement of common stock

 

 

(375

)

 

 

(4

)

 

 

(3,004

)

 

 

 

 

 

 

 

 

(3,008

)

Balance at July 28, 2023

 

 

32,087

 

 

$

321

 

 

$

360,091