Lands’ End, Inc. CEO Andrew McLean reported to the market that the company’s first quarter results reflect a business with “real underlying momentum.”

“Consumer traffic was up double digits, new customer acquisition improved, and our European business delivered strong double-digit revenue growth — confirmation that our solutions-based strategy is resonating with customers,” McLean said in the company’s earnings release for the period. “We experienced a temporary operational disruption tied to our U.S. distribution center upgrades, which caused a timing issue, and it is behind us. Additionally, we delivered year-over-year improvement in both adjusted net income and adjusted earnings per share.”

The company reported net revenue of $238.9 million for the fiscal first quarter of 2026, a 8.5 percent decrease from $261.2 million in the 2025 first quarter.

The decrease in revenue was reportedly driven primarily by the temporary disruption associated with the rollout of a new warehouse management system (WMS) and the deliberate pacing of shipments as the distribution centers ramped back to normal capacity. Excluding the impact of the temporary shipment disruption, the company estimated it would have delivered low-single-digit revenue growth in the quarter.

U.S. Digital Segment net revenue was $205.1 million for the first quarter, a decrease of 9.9 percent from $227.7 million in Q1 2025.

U.S. E-Commerce net revenue was $153.3 million in Q1, a decrease of 10.2 percent from $170.7 million in Q1 2025. The decrease was attributed to the rollout of the new WMS and the deliberate pacing of shipments as the company ramped up its distribution centers to normal capacity.

Outfitters net revenue was $38.5 million for the first quarter, a decrease of 10.3 percent from $42.9 million in Q1 2025. The decrease was reportedly driven by the new WMS issue. Customer orders from the business uniform channel remained strong, primarily driven by select enterprise accounts.

Third-party net revenue was $13.3 million in the first quarter, a 5.7 percent decrease from $14.1 million in the 2025 first quarter. The decrease was primarily due to a strategic focus on higher-margin, higher-quality sales, prioritizing brand integrity over lower-value, promotion-driven volume.

Europe E-Commerce net revenue was $20.5 million for the first quarter, an increase of 14.5 percent from $17.9 million during the 2025 first quarter. The increase was primarily due to a strategic shift to a franchise-first assortment, which simplified the business and improved inventory efficiency.

Profitability and Expenses
Gross profit was $111.5 million for the first quarter, a decrease of $21.2 million or 16.0 percent from $132.7 million during the 2025 first quarter. Gross margin decreased approximately 410 basis points to 46.7 percent in the first quarter from 50.8 percent in Q1 2025. The gross margin decrease was said to be primarily driven by the deleverage resulting from the temporary distribution center disruption, the new royalty structure associated with the WHP Global JV, and continued tariff headwinds.

Selling and administrative expenses increased $3.0 million to $126.5 million, or 53.0 percent of net revenue, in the first quarter of 2026, compared with $123.5 million, or 47.3 percent of net revenue, in Q1 2025. The approximately 570 basis point increase was driven by deleverage from lower net revenue and investment in digital marketing focused on new customer acquisition.

Net income was $330.7 million, or $10.56 earnings per diluted share, in the first quarter, compared to a net loss of $8.3 million, or a loss per diluted share of 27 cents in Q1 2025. The net income result was said to be primarily driven by the WHP Global transaction.

Adjusted net loss was $3.5 million and an Adjusted diluted loss per share was 11 cents in the first quarter, compared to an Adjusted net loss of $5.4 million and Adjusted diluted loss per share of 18 cents in Q1 2025.

Adjusted EBITDA was negative $6.2 million in the first quarter; a decrease of 165 percent compared to $9.5 million in Q1 2025.

Balance Sheet and Cash Flow Summary
Cash and cash equivalents were $23.1 million as of May 1, 2026, compared to $18.1 million as of May 2, 2025.

Inventories were $299.9 million as of May 1, 2026, compared to $262.4 million as of May 2, 2025, representing a 14 percent year-over-year increase. The increase was said to primarily reflect the timing effects of the distribution center ramp-up and the unmitigated impact of tariffs.

“As operations normalize and inventory flow improves, the company expects inventory levels to become better aligned with the Company’s revenue trajectory,” the company said in its earnings release.

Net cash used in operating activities was $74.2 million for the 13 weeks ended May 1, 2026, compared to net cash used in operating activities of $22.5 million for the 13 weeks ended May 2, 2025. The increase in net cash used in operating activities was primarily due to the impact of the WHP Global transaction closure and was partially offset by increased inventory related to the temporary distribution center disruption.

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 May 1, 2026, the company had $30.0 million of borrowings outstanding and $104.2 million of availability under its ABL Facility, compared to $40.0 million of borrowings and $86.8 million of availability as of May 2, 2025.

During the first quarter of 2026, the company repurchased $0.3 million of its common stock under the share repurchase program announced on April 1, 2026. As of May 1, 2026, additional purchases of up to $99.7 million could be made under the current program through March 31, 2029.

Outlook
Company CFO Bernie McCracken stated, “Our first quarter financials reflect three distinct factors: the temporary disruption from our distribution center upgrade, structural P&L changes following the WHP Global transaction, and continued tariff pressure. Absent the operational disruption, we estimate we would have delivered low-single-digit revenue growth. In Europe, where distribution was not affected, revenue grew 15 percent and gross margin expanded approximately 70 basis points — evidence of the underlying health of the business.”

McCracken continued, “The full repayment of our term loan has significantly strengthened our balance sheet and reduced our interest burden. Importantly, this step provides enhanced financial flexibility to capital allocation, including reinvestment in the business and returning capital to shareholders.”

The company’s guidance reportedly reflects current conditions, including tariffs at the rates currently in place and prevailing macroeconomic factors.

Fiscal Q2 Guidance
For the Second Quarter fiscal 2026, the company expects:

  • Net revenue to be between $290.0 million and $310.0 million.
  • Net loss to be between $5.0 million and $2.0 million and diluted loss per share to be between 16 cents and 6 cents.
  • Adjusted net income to be between $2.0 million and $5.0 million and Adjusted diluted earnings per share to be between 6 cents and 16 cents.
  • Adjusted EBITDA in the range of $11.0 million to $14.0 million.

Fiscal 2026 Guidance
For fiscal 2026, the company now expects:

  • Net revenue to be between $1.30 billion and $1.40 billion.
  • Net income to be 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 $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 $68.0 million to $78.0 million.

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

CEO McLean concluded, “Looking forward, the creation of the joint venture with WHP Global marked a genuine inflection point for Lands’ End and positions us to deliver outstanding shareholder value. Whether from the continued growth of our existing commercial operations, a much more favorable capital structure with no term-loan debt, the Board’s April authorization of a $100 million share repurchase program, the profit-share we’ll receive from the JV or the potential exchange of our JV stake into equity in WHP Global at the same multiple WHP receives in a qualifying monetization event, the opportunity in front of Lands’ End has never been clearer, and we are committed to building on our successes and focused on delivering on the potential in this great American company.”

Image courtesy Lands’ End, Inc.