0000799288false00007992882024-03-272024-03-27

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 5, 2024

 

 

LANDS’ END, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware			001-09769	36-2512786
(State or other jurisdiction of incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1 Lands’ End Lane
Dodgeville, Wisconsin				53595
(Address of principal executive offices)				(Zip Code)

 

Registrant’s telephone number, including area code: (608) 935-9341

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐
 

 

---

Item 2.02 Results of Operations and Financial Condition.

On June 5, 2024, Lands’ End, Inc. (the “Company”) announced its financial results for its first quarter ended May 3, 2024. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this Item 2.02, including Exhibit 99.1 hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number		Description
99.1		Press Release of Lands’ End, Inc. dated June 5, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			LANDS’ END, INC.
Date:	June 5, 2024	By:	/s/ Bernard McCracken
			Name: Bernard McCracken Title: Chief Financial Officer and Treasurer

 

---

Exhibit 99.1

 

 

 

Lands’ End Announces First Quarter 2024 Results

 

 

DODGEVILLE, Wis., June 5, 2024 (GLOBE NEWSWIRE) – Lands’ End, Inc. (NASDAQ: LE) today announced financial results for the first quarter ended May 3, 2024.

 

Andrew McLean, Chief Executive Officer, stated, “Our performance in the first quarter continued the considerable momentum we generated in 2023 and resulted in an increase in our Gross Merchandise Value, an increase in gross profit dollars and significant gross margin expansion. Our value creation strategy, centered around Lands’ End being the innovative, asset-light solutions-based brand that’s ready for life’s every journey, is yielding the operational and financial results we’re targeting and positioning us well to further build the brand and grow our loyal customer base.”

 

First Quarter Financial Highlights

 

 

---

 

 

 

 

 

First Quarter Business Highlights:

 

 

 

 

Balance Sheet and Cash Flow Highlights

 

Cash and cash equivalents were $27.4 million as of May 3, 2024, compared to $7.3 million as of April 28, 2023.

 

Inventories, net, was $288.6 million as of May 3, 2024, and $376.1 million as of April 28, 2023. The 23% decrease in inventory was driven by the actions the Company has taken to improve inventory efficiency by reducing inventory purchases and capitalizing on speed-to-market initiatives.

 

Net cash used in operating activities was $25.8 million for the first quarter of fiscal 2024, compared to $10.8 million for the first quarter of fiscal 2023. The $15.0 million increase in cash used in operating activities was primarily due to an increase in Net loss and changes in working capital.

 

As of May 3, 2024, the Company had $40.0 million of borrowings outstanding and $133.8 million of availability under its ABL Facility, compared to $100.0 million of borrowings and $136.1 million of availability as of April 28, 2023. Additionally, as of May 3, 2024, the Company had $256.8 million of term loan debt outstanding compared to $240.6 million outstanding as of April 28, 2023.

 

During the first quarter of fiscal 2024, the Company repurchased $1.0 million of the Company’s common stock under its share repurchase program announced on March 15, 2024. As of May 3, 2024, additional purchases of up to $24.0 million could be made under the program through March 31, 2026.

 

 

---

Outlook

 

Bernie McCracken, Chief Financial Officer, stated, “The Company’s continued focus on expanding profitability, including by better managing inventories, which were down 23% year-over-year, is continuing to generate favorable results which outperformed our guidance and setting a strong foundation for future growth. When excluding the impact of the conclusion of the Delta Air Lines contract in Q1 2023, the Company generated increases at the top and bottom line in the first quarter, with a 60+% improvement in Adjusted EBITDA.”

For the second quarter of fiscal 2024 the Company expects:

For fiscal 2024 the Company now expects:

 

 

 

---

 

Conference Call

 

The Company will host a conference call on Wednesday, June 5, 2024, at 8:30 a.m. ET to review its first quarter financial results and related matters. The call may be accessed through the Investor Relations section of the Company’s website at http://investors.landsend.com.

 

About Lands’ End, Inc.

 

Lands’ End, Inc. (NASDAQ:LE) is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products and uniforms. Lands’ End offers products online at www.landsend.com, through third-party distribution channels, our own Company Operated stores and third-party license agreements. Lands’ End also offers products to businesses and schools, for their employees and students, through the Outfitters distribution channel. Lands’ End is a classic American lifestyle brand that creates solutions for life’s every journey.

 

 

---

Forward-Looking Statements

 

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding the Company’s execution of its value creation strategy and the intended results of that strategy; the Company’s achievement of financial results that it is targeting; the Company’s belief that it is positioned well to further build the brand and grow its customer base; the Company’s focus on expanding profitability, including through better inventory management, and the expected impact of such focus on the Company’s results and serving to set a strong foundation for future growth; the Company’s outlook and expectations as to Net revenue, Gross Merchandise Value, Net income/loss, earnings/loss per share, Adjusted net income/loss, Adjusted earnings/loss per share and Adjusted EBITDA for the second quarter of fiscal 2024 and for the full year of fiscal 2024, and capital expenditures for fiscal 2024; and the potential for additional purchases under the Company’s share repurchase program. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: global supply chain challenges and their impact on inbound transportation costs and delays in receiving product; disruption in the Company’s supply chain, including with respect to its distribution centers, third-party manufacturing partners and logistics partners, caused by limits in freight capacity, increases in transportation costs, port congestion, other logistics constraints, and closure of certain manufacturing facilities and production lines due to public health crises and other global economic conditions; the impact of global economic conditions, including inflation, on consumer discretionary spending; the impact of public health crises on operations, customer demand and the Company’s supply chain, as well as its consolidated results of operation, financial position and cash flows; the Company may be unsuccessful in implementing its strategic initiatives, or its initiatives may not have their desired impact on its business; the Company’s ability to obtain additional financing on commercially acceptable terms or at all, including, the condition of the lending and debt markets; the Company’s ability to offer merchandise and services that customers want to purchase; changes in customer preference from the Company’s branded merchandise; the Company’s results may be materially impacted if tariffs on imports to the United States increase and it is unable to offset the increased costs from current or future tariffs through pricing negotiations with its vendor base, moving production out of countries impacted by the tariffs, passing through a portion of the cost increases to the customer, or other savings opportunities; customers’ use of the Company’s digital platform, including customer acceptance of its efforts to enhance its eCommerce websites, including the Outfitters website; customer response to the Company’s marketing efforts across all types of media; the Company’s maintenance of a robust customer list; the Company’s retail store strategy may be unsuccessful; the Company’s Third Party channel may not develop as planned or have its desired impact; the Company’s dependence on information technology; failure of information technology systems, including with respect to its eCommerce operations, or an inability to upgrade or adapt its systems; failure to adequately protect against cybersecurity threats or maintain the security and privacy of customer, employee or company information and the impact of cybersecurity events on the Company; fluctuations and increases in costs of raw materials as well as fluctuations in other production and distribution-related costs; impairment of the Company’s relationships with its vendors; the Company’s failure to compete effectively in the apparel industry; legal, regulatory, economic and political risks associated with international trade and those markets in which the Company conducts business and sources its merchandise; the Company’s failure to protect or preserve the image of its brands and its intellectual property rights; increases in postage, paper and printing costs; failure by third parties who provide the Company with services in connection with certain aspects of its business to perform their obligations; the Company’s failure to timely and effectively obtain shipments of products from its vendors and deliver merchandise to its customers; reliance on promotions and markdowns to encourage customer purchases; the Company’s failure to efficiently manage inventory levels; unseasonal or severe weather conditions; natural disasters, political crises or other catastrophic events; the adverse effect on the Company’s reputation if its independent vendors or licensees do not use ethical business practices or comply with contractual obligations, applicable laws and regulations; assessments for additional state taxes; incurrence of charges due to impairment of other intangible assets and long-lived assets; the impact on the Company’s business of adverse worldwide economic and market conditions, including inflation and other economic factors that negatively impact consumer spending on discretionary items; the stock repurchase program may not be executed to the full extent within its duration, due to business or market conditions or Company credit facility limitations; the ability of the Company’s principal stockholders to exert substantial influence over the Company; and other risks, uncertainties and factors discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2024. The Company intends the forward-looking statements to speak only as of the time made and does not undertake to update or revise them as more information becomes available, except as required by law.

 

 

---

CONTACTS

 

Lands’ End, Inc.

Bernard McCracken

Chief Financial Officer

(608) 935-4100

 

Investor Relations:

ICR, Inc.

Tom Filandro

(646) 277-1235

Tom.Filandro@icrinc.com

 

-Financial Tables Follow-
 

 

---

LANDS’ END, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except per share data)		May 3, 2024				April 28, 2023				February 2, 2024*
ASSETS
Current assets
Cash and cash equivalents		$	27,350			$	7,332			$	25,314
Restricted cash			2,489				2,149				1,976
Accounts receivable, net			34,664				38,759				35,295
Inventories, net			288,629				376,062				301,724
Prepaid expenses and other current assets			51,889				45,743				45,951
Total current assets			405,021				470,045				410,260
Property and equipment, net			113,286				126,397				118,033
Operating lease right-of-use asset			22,286				31,878				23,438
Goodwill			—				106,700				—
Intangible asset			257,000				257,000				257,000
Other assets			2,514				3,174				2,748
TOTAL ASSETS		$	800,107			$	995,194			$	811,479
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt		$	13,000			$	13,750			$	13,000
Accounts payable			108,287				110,097				131,922
Lease liability – current			5,628				5,533				6,024
Accrued expenses and other current liabilities			92,181				88,216				108,972
Total current liabilities			219,096				217,596				259,918
Long-term borrowings under ABL Facility			40,000				100,000				—
Long-term debt, net			233,087				220,786				236,170
Lease liability – long-term			21,873				32,335				22,952
Deferred tax liabilities			48,620				45,863				48,020
Other liabilities			2,830				3,330				2,826
TOTAL LIABILITIES			565,506				619,910				569,886
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Common stock, par value $0.01 authorized: 480,000 shares;    issued and outstanding: 31,407, 32,460 and 31,433, respectively			314				325				315
Additional paid-in capital			356,871				362,285				356,764
(Accumulated deficit) Retained earnings			(106,002	)			29,615				(99,417	)
Accumulated other comprehensive loss			(16,582	)			(16,941	)			(16,069	)
TOTAL STOCKHOLDERS’ EQUITY			234,601				375,284				241,593
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	800,107			$	995,194			$	811,479

 

* Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2024.

---

LANDS’ END, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

		13 Weeks Ended
(in thousands, except per share data)		May 3, 2024				April 28, 2023
Net revenue		$	285,471			$	309,558
Cost of sales (exclusive of depreciation and amortization)			146,491				171,621
Gross profit			138,980				137,937
Selling and administrative			127,401				118,514
Depreciation and amortization			9,005				9,301
Other operating expense, net			341				202
Operating income			2,233				9,920
Interest expense			10,336				12,283
Other (income), net			(88	)			(187	)
Loss before income taxes			(8,015	)			(2,176	)
Income tax benefit			(1,573	)			(524	)
NET LOSS		$	(6,442	)		$	(1,652	)
NET LOSS PER COMMON SHARE
Basic:		$	(0.20	)		$	(0.05	)
Diluted:		$	(0.20	)		$	(0.05	)
Basic weighted average common shares outstanding			31,439				32,443
Diluted weighted average common shares outstanding			31,439				32,443

 

 

 

 

---

Definitions, Reconciliations and Uses of Non-GAAP Financial Measures

 

In addition to our Net income (loss) determined in accordance with GAAP, for purposes of evaluating operating performance, we report the following non-GAAP measures: Adjusted net income (loss) and Adjusted EBITDA. Adjusted net income (loss) is also expressed on a diluted per share basis.

We believe presenting non-GAAP financial measures provides useful information to investors, allowing them to assess how the business performed excluding the effects of significant non-recurring or non-operational amounts. We believe the use of the non-GAAP financial measures facilitates comparing the results being reported against past and future results by eliminating amounts that we believe are not comparable between periods and assists investors in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with management’s own methods for evaluating business performance.

Our management uses Adjusted net income (loss) and Adjusted EBITDA to evaluate the operating performance of our business for comparable periods and to discuss our business with our Board of Directors, institutional investors and other market participants. Adjusted EBITDA is also used as the basis for a performance measure used in executive incentive compensation.

The methods we use to calculate our non-GAAP financial measures may differ significantly from methods other companies use to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. Adjusted net income (loss) and Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as these measures may exclude a number of important cash and non-cash recurring items.

Adjusted net income (loss) is defined as net income (loss) excluding significant non-recurring or non-operational items as set forth below. Adjusted net income (loss) is also presented on a diluted per share basis. While Adjusted net income (loss) is a non-GAAP measurement, management believes that it is an important indicator of operating performance and useful to investors.

 

 

The following table sets forth, for the periods indicated, a reconciliation of Net loss to Adjusted net loss and Adjusted diluted net loss per share:

 

Unaudited		13 Weeks Ended
(in thousands, except per share amounts)		May 3, 2024				April 28, 2023
Net loss		$	(6,442	)		$	(1,652	)
Corporate restructuring			342				—
Lands’ End Japan closure			—				76
Tax effects on adjustments (1)			(87	)			(19	)
ADJUSTED NET LOSS		$	(6,187	)		$	(1,595	)
ADJUSTED DILUTED NET LOSS PER SHARE		$	(0.20	)		$	(0.05	)
Diluted weighted average common shares outstanding			31,439				32,443

 

(1) The tax impact of adjustments is calculated at the applicable U.S. and non-U.S. Federal and State statutory rates.

 

---

While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance, and is useful to investors, because EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax.

 

 

 

 

 

 

The following table sets forth, for the periods indicated, selected income statement data, both in dollars and as a percentage of Net revenue and a reconciliation of Net loss to Adjusted EBITDA:

 

Unaudited		13 Weeks Ended
(in thousands)		May 3, 2024								April 28, 2023
Net loss		$	(6,442	)			(2.3	)%		$	(1,652	)			(0.5	)%
Income tax benefit			(1,573	)			(0.6	)%			(524	)			(0.2	)%
Other (income), net			(88	)			(0.0	)%			(187	)			(0.1	)%
Interest expense			10,336				3.6	%			12,283				4.0	%
Operating income			2,233				0.8	%			9,920				3.2	%
Depreciation and amortization			9,005				3.2	%			9,301				3.0	%
Corporate restructuring			342				0.1	%			—				—	%
Lands’ End Japan closure			—				—	%			76				0.0	%
(Gain) loss on disposal of property and equipment			(1	)			(0.0	)%			123				0.0	%
Other			—				—	%			94				0.0	%
Adjusted EBITDA		$	11,579				4.1	%		$	19,514				6.3	%

 

 

 

---

 

Second Quarter Fiscal 2024 Guidance Adjusted EBITDA					13 Weeks Ended
(in millions)					August 2, 2024
Net loss					$	(8.5	)	—	$	(6.0	)
Depreciation, interest, other income, taxes and other significant items						22.5		—		23.0
Adjusted EBITDA					$	14.0		—	$	17.0

 

Second Quarter Fiscal 2024 Guidance Adjusted Net Loss and Adjusted Diluted Loss per Share					13 Weeks Ended
(in millions)					August 2, 2024
Net loss					$	(8.5	)	—	$	(6.0	)
Restructuring and other significant items						4.0		—		4.0
Adjusted net loss					$	(4.5	)	—	$	(2.0	)
Adjusted diluted loss per share					$	(0.14	)	—	$	(0.06	)

 

Fiscal 2024 Guidance Adjusted EBITDA					52 Weeks Ended
(in millions)					January 31, 2025
Net income					$	2.5		—	$	10.0
Depreciation, interest, other income, taxes and other significant items						85.5		—		87.0
Adjusted EBITDA					$	88.0		—	$	97.0

 

Fiscal 2024 Guidance Adjusted Net Income and Adjusted Diluted Earnings per Share					52 Weeks Ended
(in millions)					January 31, 2025
Net income					$	2.5		—	$	10.0
Restructuring and other significant items						3.0		—		3.0
Adjusted net income					$	5.5		—	$	13.0
Adjusted diluted earnings per share					$	0.18		—	$	0.41

 

 

 

 

 

 

---

 

LANDS’ END, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

		13 Weeks Ended
(in thousands)		May 3, 2024				April 28, 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(6,442	)		$	(1,652	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			9,005				9,301
Amortization of debt issuance costs			667				815
(Gain)/loss on disposal of property and equipment			(1	)			123
Stock-based compensation			1,226				1,083
Deferred income taxes			398				(112	)
Other			(199	)			(193	)
Change in operating assets and liabilities:
Accounts receivable, net			553				6,244
Inventories, net			12,762				49,604
Accounts payable			(21,257	)			(57,050	)
Other operating assets			(5,989	)			(335	)
Other operating liabilities			(16,538	)			(18,583	)
Net cash used in operating activities			(25,815	)			(10,755	)
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of property and equipment			5				—
Purchases of property and equipment			(6,736	)			(12,384	)
Net cash used in investing activities			(6,731	)			(12,384	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under ABL Facility			49,000				83,000
Payments of borrowings under ABL Facility			(9,000	)			(83,000	)
Payments on term loan			(3,250	)			(3,438	)
Payments of debt issuance costs			(528	)			—
Payments for taxes related to net share settlement of equity awards			(249	)			(1,199	)
Purchases and retirement of common stock			(1,014	)			(3,781	)
Net cash provided by (used in) financing activities			34,959				(8,418	)
Effects of exchange rate changes on cash, cash equivalents and restricted cash			136				(353	)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND       RESTRICTED CASH			2,549				(31,910	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH,       BEGINNING OF PERIOD			27,290				41,391
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD		$	29,839			$	9,481
SUPPLEMENTAL CASH FLOW DATA
Unpaid liability to acquire property and equipment		$	1,480			$	5,738
Income taxes paid		$	340			$	1,315
Interest paid		$	10,983			$	13,164
Operating lease right-of-use-assets obtained in exchange for lease liabilities		$	—			$	2,539

 

---