Lands’ End, Inc. reported fiscal first-quarter net revenue increased 1.9 percent to $309.6 million for the period ended April 28, compared to $303.7 million in the first quarter of fiscal 2022.

Global eCommerce net revenue was $203.1 million, a decrease of 7.3 percent from $219.1 million in the first quarter of fiscal 2022. Compared to the first quarter of fiscal 2022, U.S. eCommerce net revenue increased 1.6 percent and International eCommerce net revenue decreased 42.5 percent. The increase in U.S. eCommerce was primarily driven by the targeted promotions within swim and adjacent product categories. The decrease in International eCommerce was due to lower consumer demand in Europe and the closing of Lands’ End Japan at the end of fiscal 2022. First quarter of fiscal 2022 includes Lands’ End Japan net revenue of $8.5 million. Excluding Lands’ End Japan in the first quarter of fiscal 2022, Global eCommerce net revenue decreased 3.5 percent and International eCommerce decreased 28.8 percent.

Outfitters net revenue was $74.0 million, an increase of 37.1 percent from $54.0 million in the first quarter of fiscal 2022, primarily driven by inventory sales to Delta Air Lines in connection with the conclusion of their five-year contract. Excluding the $18.3 million difference in year-over-year revenue from the Delta Air Lines business, revenue for the Outfitters business increased by 3.7 percent.

Third-party net revenue was $23.0 million, an increase of 6.2 percent from $21.6 million in the first quarter of fiscal 2022, primarily attributed to growth in existing and new online marketplaces.

Retail net revenue was $9.5 million, an increase of 5.7 percent from $9.0 million in the first quarter of fiscal 2022. The U.S. Company Operated Stores experienced an increase of 9.5 percent in Same Store Sales compared to first quarter of fiscal 2022.

Gross margin increased approximately 210 basis points to 44.6 percent, compared to 42.5 percent in first quarter of fiscal 2022. The Gross margin improvement was primarily driven by leveraging the strength in the swim and vacation-related product categories across the channels as well as improvements in supply chain costs in the first quarter of fiscal 2023 compared to the prior year.

Selling and administrative expenses increased $2.8 million to $118.5 million, or 38.3 percent of net revenue, compared to $115.7 million, or 38.1 percent of net revenue in first quarter of fiscal 2022. The approximately 20 basis points increase was driven by lower digital marketing spend offset by higher employee-related expenses.

Net loss was $1.7 million, or a 5 cents loss per diluted share, in the quarter. This compares to net loss of $2.4 million, or a 7 cents loss per diluted share, in the first quarter of fiscal 2022.

Adjusted EBITDA increased by 41.3 percent, or $5.7 million, to $19.5 million compared to $13.8 million in the first quarter of fiscal 2022.

“Our team continued to successfully execute during the quarter and made strong progress against our strategic initiatives,” said company CEO Andrew McLean. “As a result, we delivered year-over-year revenue and earnings growth, led primarily by our leading swim business and its natural vacation adjacencies, which collectively contributed to our strong margin performance and our 41 percent increase in Adjusted EBITDA. We continue to roll out our strategic initiatives and expect that the learnings from each successive quarter will enable further refinements and long-term value for our shareholders and other stakeholders.”

Cash and cash equivalents were $7.3 million at quarter-end, compared to $22.0 million as of April 29, 2022.

Inventories, net, was $376.1 million as of April 28, and $436.9 million as of April 29, 2022. The decrease in inventory was driven by the actions the Company has taken to leverage normalized supply chain lead times to receive spring and summer inventory closer to the selling season and late receipts last year due to the supply chain challenges.

Net cash used in operations was $10.8 million for the 13 weeks ended April 28, 2023, compared to net cash used in operations of $122.4 million for the 13 weeks ended April 29, 2022. The $111.6 million decrease in cash used in operating activities was primarily due to the year-over-year changes in inventories.

As of April 28, 2023, the company had $100.0 million of borrowings outstanding and $136.1 million of availability under its ABL Facility, compared to $125.0 million of borrowings and $98.5 million of availability as of April 29, 2022. Additionally, as of April 28, 2023, the Company had $240.6 million of term loan debt outstanding compared to $254.4 million of term loan debt outstanding as of April 29, 2022.

In April, Lands’ End welcomed Stuart Hogue as SVP of U.S. e-commerce and Jim O’Connor will join the company in June as SVP/GM of Lands’ End Outfitters.

“Both Stuart and Jim are highly accomplished executives with skills and expertise that will be important as we continue our focus on executing against our business objectives,” offered McLean. “We look forward to their future contributions to Lands’ End.”

For the second quarter of fiscal 2023 the Lands’ End expects:

  • Net revenue to be between $320.0 million and $335.0 million;
  • Net loss to be between $4.5 million and $2.0 million and diluted loss per share to be between 14 cents and 6 cents; and
  • Adjusted EBITDA in the range of $15.0 million to $18.0 million.

For fiscal 2023 the company now expects:

  • Net revenue to be between $1.56 billion and $1.62 billion;
  • Net (loss) income to be between a loss of $4.5 million and income of $2.5 million, and diluted (loss) earnings per share to be between a per-share loss of 13 cents and a per-share profit of 8 cents;
  • Adjusted EBITDA in the range of $75.0 million to $84.0 million; and
  • Capital expenditures of approximately $35.0 million.

Photo courtesy Lands’ End