Lands’ End Inc., which is shifting to a licensing model, reported a profit against a loss  in the second quarter as sales improved 2.7 percent. Results came in at the lower end of guidance and the retailer slightly lowered its full-year outlook for sales and operating profits.

Sales in the quarter of $302.0 million compared with guidance in the range of $290.0 million and $310.0 million. Adjusted earnings of 9 cents a share compared with earnings in the range of 6 cents to 16 cents.

In May, Lands’ End moved all of its brand intellectual property (IP) and existing licensing contracts into a 50/50 joint venture with brand management firm WHP Global. WHP Global paid $300 million for a 50 percent controlling stake in the joint venture and now guides the global licensing strategy and brand expansion into new product categories and international markets.

Company CEO Charlie Cole stated, “Since joining Lands’ End, I have been energized by what I see ahead for this iconic American company. What excites me most is the clear runway we have to utilize our stellar brand strength and deep customer loyalty to further strengthen our customer engagement, expand our digital capabilities, and more effectively reach and convert new customers. Our focus now is on excellence in execution to ensure we have the right infrastructure, technology, and customer acquisition capabilities in place as we head into the holiday season. I am confident we are well positioned, and I look forward to sharing more in the months ahead.”

Second Quarter Summary

Net revenue was $302.0 million for the second quarter of 2026, an increase of $7.9 million or 2.7 percent from $294.1 million during the second quarter of 2025.

  • U.S. Digital Segment net revenue was $268.9 million for the second quarter of 2026, an increase of $13.6 million or 5.3 percent from $255.3 million in the second quarter of 2025.
    • U.S. E-Commerce net revenue was $182.4 million for the second quarter of 2026, an increase of $15.1 million or 9.0 percent from $167.3 million in the second quarter of 2025. The increase was primarily driven by carryover shipments from the temporary disruption associated with the rollout of the new warehouse management system in the first quarter of 2026.
    • Outfitters net revenue was $69.3 million for the second quarter of 2026, an increase of $2.9 million or 4.4 percent from $66.4 million in the second quarter of 2025. The increase was driven by enterprise accounts which more than offset the impact of warehouse management system challenges affecting the processing of value-added service products in our school uniform business.
    • Third Party net revenue was $17.2 million, for the second quarter of 2026, a decrease of $4.4 million or 20.4 percent from $21.6 million during the second quarter of 2025. The decrease was primarily due to prioritizing profitable high-quality sales and brand quality over lower-value promotional volume.
  • Europe E-Commerce net revenue was $19.7 million for the second quarter of 2026, an increase of $0.1 million or 0.5 percent, from $19.6 million during the second quarter of 2025. The increase was primarily due to a strategic shift to a franchise-first assortment simplifying the business and improving product margins.

Gross profit was $157.0 million for the second quarter of 2026, an increase of $13.6 million or 9.5 percent from $143.4 million during the second quarter of 2025. Gross margin increased approximately 320 basis points to 52.0 percent in the second quarter of 2026, compared with 48.8 percent in the second quarter of 2025. The gross margin increase was primarily driven by the IEEPA tariff refunds, partially offset by the new royalty structure associated with the JV, and temporary costs associated with our new warehouse management system.

Selling and administrative expenses increased $5.9 million to $135.3 million or 44.8 percent of Net revenue in the second quarter of 2026, compared with $129.4 million or 44.0 percent of Net revenue in the second quarter of 2025. The approximately 80 basis point increase was driven by investment in digital marketing focused on new customer acquisition and operational inefficiencies from the temporary disruption of the new warehouse management system partially offset by leverage from higher net revenue.

Net income was $3.5 million and 11 cents per diluted share in the second quarter of 2026 compared to net loss of $3.7 million and 12 cents loss per diluted share in the second quarter of 2025.

Adjusted net income was $2.7 million and Adjusted diluted earnings per share was 9 cents in the second quarter of 2026, compared to Adjusted net loss of $1.1 million and Adjusted diluted loss per share of 4 cents in the second quarter of 2025.

Adjusted EBITDA was $11.3 million in the second quarter of 2026, a decrease of 25 percent compared to $15.1 million in the second quarter of 2025.

Balance Sheet and Cash Flow Highlights

  • Cash and cash equivalents were $16.1 million as of July 31, 2026, compared to $21.3 million as of August 1, 2025.
  • Inventories were $342.0 million as of July 31, 2026, and $301.8 million as of August 1, 2025, representing a 13 percent year over year increase. That increase primarily reflects inventory levels consistent with the company’s normal seasonal build and support its current revenue projections compared to the intentionally lean inventory position the company held a year ago amid tariff uncertainty.
  • Net cash used in operating activities was $86.5 million for the 26 weeks ended July 31, 2026, compared to net cash provided by operating activities of $0.5 million for the 26 weeks ended August 1, 2025. The increase in net cash used in operating activities was primarily due to the impact of the closing of the WHP Global transaction and the seasonal build of inventory to support the fall and holiday selling seasons.
  • As previously announced, the company used the majority of the $300 million in cash proceeds from the WHP Global transaction to fully repay its term loan.
  • As of July 31, 2026, the company had $60.0 million of borrowings outstanding and $89.3 million of availability under its ABL Facility, compared to $35.0 million of borrowings and $87.6 million of availability as of August 1, 2025.
  • During the second quarter of 2026, the company repurchased $10.5 million of the company’s common stock under the share repurchase program announced on April 1, 2026. As of July 31, 2026, additional purchases of up to $89.2 million could be made under the current program through March 31, 2029.

Outlook

Bernie McCracken, chief financial officer, stated, “We made meaningful progress during the second quarter, moving beyond the distribution center challenges that affected our operations earlier in the year. Our core U.S. eCommerce operations normalized during the quarter and Outfitters has now returned to normal operating levels. We also repurchased approximately 3 percent of our outstanding shares, reflecting our disciplined approach to capital allocation and our confidence in the long-term value of Lands’ End. Combined with our significantly reduced debt and interest expense, these developments provide a stronger foundation for executing through the holiday season and creating long-term value.”

The company’s guidance reflects current conditions, including tariffs at currently implemented rates and prevailing macroeconomic factors.

For the third quarter of fiscal 2026 the company expects:

  • Net revenue to be between $300.0 million and $330.0 million.
  • Net loss to be between $1.0 million and net income of $3.0 million and diluted loss per share to be between 3 cents and diluted earnings per share of 10 cents.
  • Adjusted net income to be between $2.0 million and $6.0 million and Adjusted diluted earnings per share to be between 7 cents and 20 cents.
  • Adjusted EBITDA in the range of $14.0 million to $18.0 million.

For fiscal 2026 the company now expects:

  • Net revenue to be between $1.30 billion and $1.35 billion (prior guidance: $1.30 billion and $1.40 billion).
  • Net income to be between $317.0 million and $325.0 million and diluted earnings per share to be between $10.87 and $11.14 (prior guidance: between $310.0 million and $320.0 million and diluted earnings per share to be between $10.02 and $10.34).
  • Adjusted net income to be between $13.0 million and $21.0 million and Adjusted diluted earnings per share to be between 44 cents and 72 cents. (Prior guidance: between $10.0 million and $20.0 million and Adjusted diluted earnings per share to be between 32 cents and 65 cents).
  • Adjusted EBITDA in the range of $62.0 million to $70.0 million (Prior guidance: in the range of $68.0 million to $78.0 million).

For the full year, the company’s guidance includes approximately $40.0 million of capital expenditures.

Image courtesy Lands’ End