Lands’ End, Inc. reported that its gross margins improved in the second quarter ended August 1, due to fewer promotions and the expansion of its licensing business. However, sales declined 7.3 percent, and the net loss on an adjusted basis in the period widened year-over-year.

Andrew McLean, chief executive officer, stated: “As we reflect on the past several months – including the second and into the third quarter – we’re seeing clear, encouraging momentum across our businesses. In our consumer business, tangible improvements in key product categories, channels, and customer engagement reinforce our confidence that our strategy of providing solutions for every customer journey is working. Further, our weatherproofed assortment and shift toward an asset-light, low-intensity model are enabling us to rapidly introduce new products that resonate with customers, drive high-quality sales, and deepen loyalty. In our Lands’ End Outfitters business, we continue to deliver differentiated value and are pleased to report a strong quarter with growth in both revenue and profitability.”

Second Quarter Financial Highlights
Gross Merchandise Value (GMV) was roughly flat when compared to the second quarter of 2024. GMV is the total order value of all Lands’ End-branded merchandise sold to customers through business-to-consumer and business-to-business channels, as well as the estimated retail value of the merchandise sold through third-party distribution channels.

Net revenue was $294.1 million for the second quarter of 2025, a decrease of $23.1 million or 7.3 percent from $317.2 million during the second quarter of 2024.

U.S. Digital Segment net revenue was $255.3 million for the second quarter of 2025, a decrease of $15.1 million or 5.6 percent from $270.4 million in the second quarter of 2024. U.S. E-commerce net revenue was $167.3 million, a decrease of $21.0 million or 11.2 percent from $188.3 million in the second quarter of 2024. The second quarter decrease reflected a slower start to the seasonal swim product.

Outfitters’ net revenue was $66.4 million for the second quarter of 2025, an increase of $3.2 million or 5.1 percent from $63.2 million in the second quarter of 2024. The school uniform channel experienced high single-digit growth primarily due to new customers acquired from a competitor exiting the business. Revenue from the business uniform channel increased year-over-year, driven by enterprise accounts.

Third-party net revenue was $21.6 million for the second quarter of 2025, representing a 14.3 percent increase from $18.9 million in the second quarter of 2024. The increase was primarily due to curated product assortments, which resulted in strength across marketplaces, primarily Amazon and Macy’s.

Europe’s eCommerce net revenue was $19.6 million for the second quarter of 2025, a decrease of $3.4 million, or 14.8 percent, from $23.0 million during the same quarter in 2024. The decrease was primarily due to inventory timing resulting from supply chain challenges and macroeconomic conditions, while continuing to increase distribution channels through several marketplace expansions.

Licensing and Retail net revenue was $19.2 million for the second quarter of 2025, a decrease of $4.7 million, or 19.7 percent, from $23.9 million during the second quarter of 2024. The revenue decreased due to the performance of U.S. company-operated stores, partially offset by a 19 percent increase in licensing revenue.

Gross profit was $143.4 million for the second quarter of 2025, a decrease of $8.5 million or 5.6 percent from $151.9 million during the second quarter of 2024. Gross margin increased approximately 90 basis points to 48.8 percent in the second quarter of 2025, compared with 47.9 percent in the second quarter of 2024. The gross margin improvement was primarily driven by improved promotional productivity and the expansion of the licensing business.

Selling and administrative expenses decreased $6.1 million to $129.4 million or 44.0 percent of net revenue in the second quarter of 2025, compared with $135.5 million or 42.7 percent of Net revenue in the second quarter of 2024. The approximately 130 basis points increase was primarily driven by deleverage from lower revenues.

Net loss was $3.7 million, or $0.12 loss per diluted share, compared to a net loss of $5.3 million, or $0.17 loss per diluted share, in the second quarter of 2024.

Adjusted net loss was $1.9 million and adjusted diluted loss per share was $0.06 in the second quarter of 2025, compared to adjusted net loss of $0.7 million and adjusted diluted loss per share of $0.02 in the second quarter of 2024.

Adjusted EBITDA was $14.1 million in the second quarter of 2025, compared to $17.1 million in the second quarter of 2024.

Balance Sheet and Cash Flow Highlights
Cash and cash equivalents were $21.3 million as of August 1, 2025, compared to $25.6 million as of August 2, 2024.

Inventories were $301.8 million as of August 1, 2025, and $312.0 million as of August 2, 2024, representing a 3 percent year-over-year decline. This reduction reflects the company’s tighter control over purchasing and accelerated speed-to-market initiatives. These actions enhanced inventory efficiency and positioned the company to navigate external pressures, including the impacts of tariffs.

Net cash provided by operating activities was $0.5 million for the 26 weeks ended August 1, 2025, compared to net cash provided by operating activities of $4.9 million for the 26 weeks ended August 2, 2024. The decrease in net cash provided by operating activities was primarily due to the decrease in adjusted EBITDA.

As of August 1, 2025, the company had $35.0 million of borrowings outstanding and $87.6 million of availability under its ABL Facility, compared to $20.0 million of borrowings and $117.5 million of availability as of August 2, 2024. Additionally, as of August 1, 2025, the company had $240.5 million of term loan debt outstanding compared to $253.5 million outstanding as of August 2, 2024.

During the second quarter of 2025, the company repurchased $1.7 million of its common stock under its share repurchase program announced on March 15, 2024. As of August 1, 2025, additional purchases of up to $8.8 million could be made under the program through March 31, 2026.

Strategic Alternatives Process
On March 7, 2025, the company announced that its Board of Directors had initiated a process to explore strategic alternatives, including a sale, merger, or similar transaction involving the company, with the goal of maximizing shareholder value. This process remains ongoing. No assurances can be given as to the outcome or timing of the Board’s process. The company does not intend to make any further public comment regarding the process until it determines that disclosure is appropriate.

Outlook
Bernie McCracken, chief financial officer, stated, “We were pleased with several key bright spots in the second quarter, including a gross margin increase of approximately 90 basis points, which highlights the strength of our approach and the results of our ongoing operational and financial discipline. Building on the work we have done over the last several years to evolve our supply chain, we are actively implementing mitigation measures designed to effectively manage anticipated tariff headwinds for the remainder of fiscal 2025. As such, our guidance reflects the expected impact of tariffs at current levels.”

For the third quarter of fiscal 2025, the company expects:

  • Net revenue to be between $320.0 million and $350.0 million.
  • Gross Merchandise Value to deliver mid- to high-single-digit growth.
  • Net income to be between $2.0 million and $6.0 million, and diluted earnings per share to be between $0.07 and $0.19.
  • Adjusted net income to be between $3.0 million and $7.0 million and adjusted diluted earnings per share to be between $0.10 and $0.22.
  • Adjusted EBITDA in the range of $24.0 million to $28.0 million.

For fiscal 2025, the company expects:

  • Net revenue is expected to be between $1.33 billion and $1.40 billion ($1.33 billion and $1.45 billion under previous guidance).
  • Gross Merchandise Value is expected to deliver low- to mid-single-digit growth. (mid-to high-single-digit percentage growth under its previous guidance).
  • Net income to be between $12.0 million and $20.0 million, and diluted earnings per share to be between $0.39 and $0.65. Previous guidance had called for reported EPS to be between $0.25 and $0.64.
  • Adjusted net income is expected to be between $19.0 million and $27.0 million and adjusted diluted earnings per share are expected to be between $0.62 and $0.88. Previous guidance had called for adjusted EPS between $0.48 and $0.86.
  • Adjusted EBITDA in the range of $98.0 million to $107.0 million. Previous guidance had called for between $95.0 million to $107.0 million.
  • For the full year, the company’s guidance includes approximately $25.0 million of capital expenditures.

Image courtesy Lands’ End