DODGEVILLE, Wis., Sept. 01, 2022 (GLOBE NEWSWIRE) Lands’ End, Inc. (NASDAQ: LE) today announced financial results for the second quarter ended July 29, 2022.

Jerome Griffith, Chief Executive Officer, stated, “We are very pleased with our performance this quarter, exceeding our revenue and profit expectations. Despite global supply chain and consumer challenges, our teams continue to successfully navigate these challenges. Our performance this quarter across our four strategic growth pillars – product, digital, uni-channel distribution, and infrastructure – gives us confidence in the long-term opportunity ahead.”

Second Quarter Financial Highlights:       

• For the second quarter, net revenue decreased 8.6% to $351.2 million compared to $384.1 million in the second quarter of fiscal 2021.
  • Global eCommerce net revenue decreased 16.0% for the second quarter. Net revenue in U.S. eCommerce decreased 14.4% and International eCommerce decreased 23.9%, both driven by delayed receipts of key products due to global supply chain and continued macroeconomic challenges.
  • Outfitters net revenue increased 7.7%, attributed to stronger demand within school uniform households and national accounts.
  • Third Party net revenue increased 42.9%, primarily attributed to growth in the Kohl’s online marketplace, and growth in other new and existing online marketplaces.
     
• Gross margin decreased approximately 530 basis points to 41.0%, compared to 46.3% in second quarter of fiscal 2021. The Gross margin decline was attributable to an incremental $11.7 million of transportation costs as a result of global supply chain challenges, in addition to increased promotional activity and margin mix from growth in our Third Party business.
   
• Selling and administrative expenses decreased $8.0 million to $128.6 million or 36.6% of net revenue, compared to $136.6 million or 35.6% of net revenue in second quarter of fiscal 2021. The approximately 100 basis points increase was driven by deleverage on lower sales partially offset by continued expense controls.
   
• Net loss was $2.2 million, or $0.07 loss per diluted share. This compares to Net income of $16.2 million or $0.48 earnings per diluted share in the second quarter of fiscal 2021.
   
• Adjusted EBITDA decreased to $15.8 million compared to $41.4 million in the second quarter of fiscal 2021.

Second Quarter Business Highlights:        

• The Company exceeded its profit expectations despite the ongoing global supply chain challenges, changing consumer landscape and difficult macroeconomic conditions.
• Continued to expand its Third Party business with a strong growth in existing and new online marketplaces.
• Outfitters business experienced strong demand across its school uniform households and national accounts.

Balance Sheet and Cash Flow Highlights

Cash and cash equivalents were $23.5 million as of July 29, 2022, compared to $39.2 million as of July 30, 2021.

Inventories, net, was $569.2 million as of July 29, 2022, and $464.3 million as of July 30, 2021.

Net cash used in operations was $117.5 million for the 26 weeks ended July 29, 2022, compared to net cash provided by operations of $30.5 million for the 26 weeks ended July 30, 2021. The increase in Net cash used in operations was primarily attributable to earlier receipts and in-transit shipments for fall and holiday inventory compared to prior years and increased transportation costs due to the global supply chain challenges.

As of July 29, 2022, the Company had $135.0 million of borrowings outstanding and $126.2 million of availability, based upon the loan cap calculated in the borrowing base under its asset-based senior secured credit facility, compared to $25.0 million of borrowings as of July 30, 2021. Additionally, as of July 29, 2022, the Company had $250.9 million of term loan debt outstanding compared to $264.7 million of term loan debt outstanding as of July 30, 2021.

During the second quarter, the Company repurchased $2.4 million of the Company’s common stock under its previously announced $50 million share repurchase program.

Outlook

Jim Gooch, President and Chief Financial Officer, stated, “We are pleased to have delivered profitability ahead of our expectations despite continued supply chain challenges and macroeconomic factors impacting our customer. Despite these ongoing industry-wide challenges, we remain confident in our digitally-led business model and our ability to execute on our strategic initiatives.”

For the third quarter of fiscal 2022 the Company expects:

• Net revenue to be between $375.0 million and $390.0 million.
• Net income to be between $1.0 million and $4.0 million and diluted earnings per share to be between $0.03 and $0.12.
• Adjusted EBITDA in the range of $20.0 million to $24.0 million.

This third quarter outlook assumes approximately $9.0 million of incremental transportation expenses due to the global supply chain challenges.

For fiscal 2022 the Company now expects:

• Net revenue to be between $1.60 billion and $1.64 billion.
• Net income to be between $16.5 million and $23.5 million, and diluted earnings per share to be between $0.49 and $0.70.
• Adjusted EBITDA in the range of $95.0 million to $105.0 million.
• Capital expenditures of approximately $37.0 million.

This full year outlook assumes approximately $35.0 million of incremental transportation expenses due to the global supply chain challenges and gross margin improvement in the second half of the year, as higher supply chain costs are lapped.

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, through our own Company Operated stores and through third-party distribution channels. We are a classic American lifestyle brand with a passion for quality, legendary service and real value. We seek to deliver timeless style for women, men, kids and the home.

-Financial Tables Follow-

LANDS’ END, INC.
Condensed Consolidated Balance Sheets
(Unaudited)

*Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2022.

LANDS’ END, INC.
Condensed Consolidated Statements of Operations
(Unaudited)