DODGEVILLE, Wis., June 02, 2020 (GLOBE NEWSWIRE) Lands' End, Inc. (NASDAQ: LE) today announced preliminary financial results for the first quarter ended May 1, 2020 and commented on its business trends.  Finalization of the results is pending the completion of the Company’s quarterly procedures and preparation and filing of its Quarterly Report on Form 10-Q, which will require additional time this quarter due to COVID-19. 

First Quarter Fiscal 2020 Highlights:

• For the first quarter, net revenue decreased 17.3% to $217.0 million, compared to $262.4 million in the first quarter last year, due to decreased demand attributable to the COVID-19 pandemic.

_° Net revenue grew 11.1% in February 2020 compared to prior year, reflecting strong performances across all business units.
_° U.S. eCommerce net revenue declined 16.5% for the first quarter due to decreased demand as a result of the COVID-19 pandemic while International eCommerce net revenue remained approximately flat.
_° Company operated stores achieved comparable store sales growth of 14.2% in February before closing mid-March.
_° Outfitters successfully completed the remainder of the American Airlines uniform launch totaling $4.0 million revenue during the first quarter with the total launch approximating $44.0 million.  For the first quarter, Outfitters net revenue declined 26.2% driven by decreased demand due to the COVID-19 pandemic. 

• Gross margin decreased by approximately 230 basis points to 43.4% as compared to 45.7% in the first quarter last year primarily in response to additional promotional activity throughout the industry and additional inventory reserves.
   
• Selling and administrative expenses decreased $11.0 million to $105.8 million compared to $116.8 million in the first quarter last year driven by the reduction of operating expenses and structural costs.
   
• Net loss was $20.6 million or $(0.64) per diluted share, as compared to $6.8 million or $(0.21) per diluted share in the first quarter of fiscal 2019.
   
• Adjusted EBITDA⁽¹⁾ decreased to a loss of $11.6 million compared to positive $3.0 million in the first quarter of fiscal 2019.

COVID-19 Actions

• In response to the COVID-19 pandemic, the Company took decisive actions to protect the business, improve financial flexibility, preserve liquidity and continue to service customers, which included:

_° Reducing operating expenses and structural costs by enacting employee furloughs, and temporary tiered salary reductions for the executive team and corporate staff starting in the first quarter, and a reduction of approximately 10% of the Company’s corporate staff in the second quarter.
_° Implementing revised operating processes at the Company’s Wisconsin distribution centers in accordance with guidance from public health officials and government agencies.
_° Substantially reducing inventory receipts for Fall and Holiday 2020 to protect against potential consumer demand weakness.
_° Lowering capital expenditure plan to approximately $20.0 million from approximately $40.0 million for fiscal year 2020.
_° Increasing the size of its asset based lending facility to $200.0 million in March and drawing $75.0 million under the credit line in the first quarter to improve working capital and cash on hand.  At the conclusion of May, borrowings under the asset based lending facility had decreased to $50 million.

Jerome Griffith, Chief Executive Officer and President, stated, “While COVID-19 has created a complex environment on many fronts we believe that our business model provides the flexibility to mitigate many of the challenges this has created across the industry. Following strong trends early in the first quarter, we saw the impact of COVID-19 in mid-March. Beginning in mid-April, we were pleased to see a rebound in our global eCommerce channel, which accelerated to double digit growth in May.  We believe these trends demonstrate the resiliency of our business and we are no less optimistic about our future for several reasons.  First, we are a digitally driven company with approximately 80% of our business in direct-to-consumer eCommerce. Second, we provide key item basics at great value with great service, at a time when we are seeing growing demand for our offerings. Third, we have demonstrated the adeptness and agility to appropriately adjust our cost structure as we reset for the new normal.  And finally, we see opportunities to expand our customer base through more recent strategies, including the planned launch of Lands’ End on kohls.com and in 150 Kohl’s retail stores this coming fall. With our resilient e-commerce business and casual and value-oriented product assortment, combined with our lean operating structure and liquidity, we are positioned to capitalize on the opportunities ahead. While we expect the environment to remain difficult, we are excited about the future of Lands’ End.”

Balance Sheet and Cash Flow Highlights

Cash and cash equivalents were $59.1 million as of May 1, 2020, compared to $40.2 million as of May 3, 2019.

Net cash used in operations was $80.2 million for the 13 weeks ended May 1, 2020, compared to $36.3 million for the 13 weeks ended May 3, 2019.  

Inventories, net, was $383.2 million as of May 1, 2020, and $319.3 million as of May 3, 2019.

The Company had borrowings of $75.0 million and $116.3 million of availability under its asset-based senior secured credit facility at May 1, 2020 and other short-term debt of $384.1 million at May 1, 2020.

Outlook

Jim Gooch, Chief Operating Officer and Chief Financial Officer, stated, “While the pandemic had an adverse impact on our results in the quarter, we believe that our business model is resilient, particularly our eCommerce channel and we expect all our segments to recover, albeit at different rates. We remain optimistic about our future and will remain focused on preserving liquidity and maintaining agility as we continue to execute our strategies through this challenging environment. While we remain confident in our ability to achieve our long-term targets, which were on track prior to COVID-19, we now expect these objectives to be met later than we initially planned.”

The following outlook does not incorporate a potential second wave of COVID-19 or additional government-mandated closures.

For the second quarter of fiscal 2020 the Company expects:

• Net revenue to decline in the mid to high single digits as compared to the same period last year assuming:

_° High single digit growth year over year in its global eCommerce business.
_° Retail stores to reopen by the end of June; five new store openings by the end of July.
_° Decline in the Retail and Outfitters businesses.

• Gross margin pressure to continue into the second quarter due to aggressive promotional environment.
• SG&A expense as a percent of revenue to be in line with prior year.

For the second half of fiscal 2020 the Company expects:

• Net revenue recovery to continue through the back half of the year assuming:

_° Continued growth in global eCommerce business.
_° Retail sales to ramp up by the end of the year.
_° Slower recovery of its Outfitters business due to industry pressure on large national accounts, of which 60% have exposure to the travel industry, as well as its small and medium sized businesses; expects faster recovery of school uniform business as schools reopen.

• Gross margin to be less pressured than in the first half of the year.
• SG&A expense as a percent of revenue to be in line with prior year.

About Lands' End, Inc.

Lands' End, Inc. (NASDAQ:LE) is a leading uni-channel retailer of casual clothing, accessories, footwear and home products. We offer products online at www.landsend.com, on third party online marketplaces and through retail locations. We are a classic American lifestyle brand with a passion for quality, legendary service and real value, and seek to deliver timeless style for women, men, kids and the home.