Lands End LE Q1 2025 Earnings Call Transcript

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GMV Trend: GMV decreased by low single digits, but excluding transitioned, grew by low single digits year over year, led by timing of orders

ECommerce: Apximately flat sales and gross fit, despite strength in outerwear offset by slow swim sales early in the season

Strategic Alternatives Review: cess exploring options including a sale or merger remains, with no further at this time

SUMMARYLands' End, Inc. 60%) dered results marked by top-line contraction and bottom-line losses, with multiple initiatives underway to support stabilization and margin gains

Licensing expanded into new duct segments, and B2B outfitters growth was supported by significant new commitments in school uniforms

Management continued the strategic alternatives cess in pursuit of holder value

CEO McLean highlighted the "record gross margin rate" of 51% in Q1 FY2025 as a key driver supporting future growth plans

AI-driven personalization and expanded SMS marketing increased new customer acquisition and one-to-two-time customer repeat rates, signaling imvements in customer file quality

Management stated it "continues as a significant vehicle for growth," emphasizing both channel and duct white space expansion beyond replacement, specifically referencing the licensing

April’s recovery in marketplace performance was referenced as evidence that negative trends were moderating

Management indicated, "our annual guidance remains unchanged. " despite tariff risk and sourcing transitions

INDUSTRY GLOSSARYGMV (Gross Merchandise Value): The total dollar value of orders cessed through the company’s selling channels before returns, discounts, or allowances

Outfitters: The company's B2B segment, which vides uniforms and related apparel for corporate and educational clients

Third-Party Marketplace: Sales channels operated by external online retailers (e. , Amazon, Nordstrom, Macy's) where Lands' End, Inc

White space: Untapped market or duct where the company did not previously have a presence

Full Conference Call TranscriptTom Altholz: Good morning, and thank you for joining the Lands' End, Inc

I'm Tom Altholz, Lands' End, Inc. 's Senior Director, Financial Planning and Analysis

I'm pleased to join you today with Andrew McLean, our Chief Executive Officer, and Bernie McCracken, our Chief Financial Officer

After the prepared remarks, we will conduct a question and answer session

Please also note that the information we're to discuss includes forward-looking statements

Such statements involve risks and uncertainties

The company's actual results could differ materially from those discussed on this call

Factors that could contribute to such differences include, but are not limited to, those items noted and included in the company's SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q

The forward-looking information that is vided by the company on this call represents the company's outlook as of today, and we do not undertake any obligation to forward-looking statements made by us

Subsequent events and developments may cause the company's outlook to change

During this call, we will be referring to non-GAAP measures

These non-GAAP measures are not prepared in accordance with generally accepted accounting principles

Reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in the Investor Relations section of our website at landsend

With that, I will turn the call over to Andrew

Andrew McLean: Thank you, Tom

Good morning, and thank you for joining us today

We continue to execute our ven customer-centric strategy through creative engagement, viral moments centered around the reimagining of our iconic tote, expansion of our brand through licensing, and, of course, fresh solutions-based duct

As we continue to flow through higher levels of incremental fitability, all accomplished on a faster inventory turn and with imved working capital

As always, our focus remains on building our brand, maintaining discipline around motional activity, and staying the course to develop a healthier long-term brand

These are strong foundations upon which to build

We intentionally drove significant change in our supply chain as we accelerated duction in the Western Hemisphere, giving us both speed and additional avenues to mitigate tariffs and vide resiliency

By intentionally creating a diverse sourcing network and strong relationships with excellent vendors, we are increasingly positioned to remain agile in our sourcing decisions, helping to address headwinds from the impact of tariffs

Innovation is the key to our successful brand building

As I touched on last quarter, we're leveraging digital and experiential marketing strategies that build our cultural relevancy and drive traffic to our owned channel

We recently launched our Toad Girl Summer campaign, which features brand fans and influencers on social media and a series of pop-up shops across iconic summertime locations

The campaign introduces lovers of our iconic canvas pocket tote to a wider asment of Lands' End, Inc

Apparel and swim ducts that fit their lifestyle as perfectly as our pocket tote

We kicked off Memorial Day weekend with pop-up shops throughout the Hamptons, Jersey Shore, Charleston, and Nashville, and will host further coastal pop-ups, including the Nantucket Hotel, in June, July, and August

These viral moments covered extensively on TikTok and Instagram saw these one-of-a-kind totes changing hands after purchase

As a reminder, our pocket tote remains our number one item in driving new customer acquisition and consistently attracts customers from all age ranges, notably driving brand awareness with a younger Gen Z and millennial cohort

We also imved our customer experience in the first quarter through our focus on offering greater personalization, including the launch of a new AI-driven recommendation and outfitting engine that makes it easier for customers to personalize ducts

Picking up on our customer, our willingness to tect the brand continued to yield results, with growth in new customers supplemented by increases in one to two times buyers and our highest LTV five times buyers

Renewing our customer file, reaching a broader base of consumers, and leveraging our franchise ducts Slim and Supima remain priorities as we build long-term holder value

Turning to duct, with a late Easter and colder weather pushing swim selling back, our WonderWite and Squall outerwear franchises were key winners for us in the quarter, as were our wear-now items our Anywear fleece and barn coats

Women's bottoms, knits, sweaters, and dresses also performed successfully

Once the swim season kicked into gear, we saw good engagement with our core franchises

Tuggle, a 40-year-plus stalwart of the category, has expanded exponentially, building on the original one-piece silhouette to offer two-piece cross-body dresses, rompers, and backless in a range of colors and s

This continued focus on winning with market-leading franchises is a core brand platform that we are extending across channels and licenses to broaden distribution and create long-term holder value

Turning to the performance of our various es, beginning with our asset-light B2C activities

Our asset-light licensing had a strong first quarter and continues as a significant vehicle for growth of the Lands' End, Inc

Within the channels, we saw success in both the s and traditional department stores, as the brand continues to reach new customers and offers incredible price and value

During the quarter, we the negotiation of additional licenses for travel accessories, men's underwear and base layer, and women's intimates

Our activity continues into the second quarter as we recently executed licenses for hosiery and cold weather accessories

The skill sets that the company is around the licensing of its IP and its integration of leading channel and category experts to augment its core competencies in e-commerce continue to set it apart from competitors and offer Lands' End, Inc

Strategic options for significant future growth

Turning to our B2B outfitters, I am pleased to note that B2B dered our revenue and fit objectives for the quarter

We saw strong performance across our enterprise, as well as growth in our school uniform

We're excited to be working with Delta again as we finalize the details of our collaboration together

As previously noted, we have the most domestic embroidery capabilities of any retailer in the United States

We are continuing to win by leveraging the strength of our brand, our steadfast focus on quality, our market-leading embroidery and personalization capabilities, and our great customer service

Looking at our B2C, domestically, we sharpened the customer position between landsend

Com and our third-party marketplaces using a prietary AI tool to maximize rankings through the application of duct titles and descriptions

This has created significant growth across our Amazon, Macy's, and Nordstrom's marketplaces

For example, on Amazon, we obsess on ranking by focusing our efforts on our top 25 items, duct page optimization, Prime eligibility, and in-stock availability

By leading with these top performers, we can create algorithm-maximizing duct titles and descriptions that drive rankings complemented with solutions-driven imagery

We can achieve better margins, maintain efficient inventory levels, and turn faster