Lands' End (LE) 5 Dec 232024 Q3 Earnings call transcript

Good day, everyone, and welcome to the Lands' End third quarter earnings conference call. [Operator Instructions] Please note today's call will be recorded, and I'll be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Bernie McCracken, Chief Financial Officer. Please go ahead.

Good morning, and thank you for joining the Lands' End earnings call for a discussion of our third quarter 2023 results which we released this morning and can be found on our website, landsend.com. will End today Officer, Chief with the remarks, Lands' to I'm Executive McCracken, session. prepared you question-and-answer join Andrew we Bernie Chief and Financial pleased Officer. After I'm a conduct McLean, our Please also about includes statements. forward-looking information to discuss that note the we're risks Such statements involve and uncertainties. filings, on items the differences actual are include, results discussed not materially our noted could in that including limited from differ company's call. Factors on SEC Form contribute and those and report but company's included reports The quarterly those XX-Q. to Form could this annual to such XX-K on The by forward-looking as this of provided events cause may us. Subsequent update undertake outlook the outlook call we and company to do not and change. developments information on that company's is today, any in company's made represents to statements the obligation by forward-looking

During non-GAAP we'll GAAP be generally non-GAAP today, These Andrew. directly is the to measures a call website will to found accordance non-GAAP accounting the landsend.com. most are financial Relations principles. A this Investor measures. with be With copy issued of in at of can reconciliation to accepted section turn earlier prepared call, release in referring measures measures not the which that, posted over of I our earnings in comparable our

and Thank us today. you, for you morning, Bernie. Good joining thank

our to excellence. With working to turn having as our to his our Before Officer, I than that continue confident to I'll served turn couldn't to lead performance. I more CFO be which with organization he pleased September with our like to QX Bernie I'm Chief continue and Financial more financial will that, appointment after announced QX Bernie on since I'd congratulate results, we January. in interim

drive our position, prioritize built and strong our quality dollars. momentum to further QX, Our incremental execution across margin to shareholders. We and inventory customers from our injected gross solutions-based were continue deliver results improved on to value gross to newness our profit assortment by strategy characterized improvement our our for of

strategy margin to end development guidance our improve above EBITDA solution-driven in more of of profit gross products and and million deliberate adjusted generated resulting high range. $XX Our expansion the our profitable sales, of

previously flows. our deliver larger with a lower rather executing occurring to no with of levels enhance we're to further moving improvement. cash and portion improve inventory I've our can increased deliberate than successive drive our higher-quality is sales strategy marked XXX and a of units a of or margin points reduction inventory quarter sales respectively. with prioritizing work As noted, clear gross of improvement, it's XX% position, working. QX our and basis so we simply margin promotions significant Paired this third strategy With

We're we increasing maintaining that while found our our advantage cohorts. flexibility [ to throughout lower, styles, a that ] year. our of taking geared targeted confident have are assortment customer more provide the with turns of fabrics frequently merchandise more inventory the lower winning refresh levels inventory continuously colors efficient and We formula, to new

are approach. exceptionally customers well this Our to responding

customers. transition we our We're cohorts, data As demographic in two to proprietary focus understand comes customer our zeroing from resolvers it behavioral last to our we which better our a when introduced shopping on to the behaviors. high-value leveraging in and key their evolvers focus quarter, call

ongoing their X trends classic year. revolvers. are their moment. an cohort They what largest a spend on second They as the generally and solutions-oriented are discovering current fits than potential an wearing as a As a value necessity, prefer our journey, and and have more style our are for growth. opportunity buying that primarily reminder, refining to styles and resolvers largest more times shop X of existing over base. Their dressers cohort quality Evolvers

them American our look more as journey of and identity assortment the more that compelling strategy. closely more we holistic how about provides products iconic the to and to more feel way changing centric Lands' that our We're cohorts sales significantly sell creating and think customer company, and feature and a outfit aligning shop. we're part way and key adjacencies. taking prioritizing End a go-to-market our strategy productive the approach solutions Designing present and a our and brand As assortment inventory facilitate across products. We're across our natural we categories more design, marketing

You our are digital the we marketing. showing in and this up of look and in website can how with see and feel

native more to with customers a continuing sales. improve to to experience and using our content drive we're more our this investors digitally site targeted new marketing relevant approach to engaging drive our our engagement company, cohorts. We're present As robust key alongside with with quality

and result, we we traffic continue repeat increased engagement have exposure, a nicely. to social with and media seen expect prospects from our media growing social As

new On innovation heels improve asset-light our identify recently made customer-facing to technology model. these drive will pivoting with who begun we've with to infrastructure to IT our work efforts the internal efficiency, of strategy our enhancements a processes. We we've strategic partners leader consistent to me roadmap and and our our spearhead leading enhance welcomed focus

driver outerwear both this performance the authority and bottoms drove quarter, We our Our in especially in in solutions was adjacencies, of a U.S. sweaters. and key sales key strong internationally.

categories our to and demand digits like were contributed key velvet in women's in styles double denim nearly new fabrics U.S. all new our strong business. corduroy, the in up Upmost colors For e-commerce performance. and

we in assortment, classic on and our more solution protected Our a will and Swim that continue able patent via years products confidence a the application. to trajectory categories. Solutions are our including [ one-piece and category which responding technologies, to we strong enhancement is contributing to that before, This the months of our performance with with product we to incredibly looking Swim layering control-based End finished our be remains in of develop. Building technology introduction we the includes freshness this the Lands' innovative creation space that have solutions a swim transitional ] shaping around of discussed the and forward centered building family topless for positively our ahead. spring the grow success are recommitment summer in theme outerwear us an upcoming which and on the to August, strong to customers gives consistently across

we've business, channel more offer of to largest delivered second approach margin they to necessarily the e-commerce solutions color promotions recent the our are fabrications, responding targeted in discounts need presentation value, we had quarter performance at direct-to-consumer U.S. due waiting improved Our customers and in with management. When our they great attractive relevant a our consecutive a level years. and inventory not and for

improved It customers efforts show broader events which key has our more maximize our continuing solidate demand responding to promotional strategy, margins. our is to targeted minimize in conviction also well. are markdowns led and drive strategy complements to categories with We our solutions-based to and

International business. our to Turning

As strong was improved delivered inventory by in basis management, were with [ line that points X,XXX approximately year-over-year. and in performance we in our business, our authorities outerwear transitional our driven newness by margin prioritizing ] of U.S. nicely our margins solutions. grew business. Gross with to U.S. Thanks Europe

from and I to continuing Costco call, we ramp licenses our all quarter, and footwear, our last Recently, a to royalty with on categories, focus the income During continue seeing X we licensing on executing entered mentioned existing we're capabilities. licensing continued up in us expect for under adds as XXXX. third kids agreement on into income to our strategy, allowing new guarantees for agreements our core activities streams, and begin we which

expanded expect forward, are licensing Moving build we a partners. to pipeline focus to robust on maintain continuing our potential and of

business great this fuel to we Turning acquisition critical profitably BXC performance businesses our see in grow business, achieves the the can. we serving it to clear, and confident customer our opportunity and efforts engine. are to and our enhance To the of Outfitters ] market ensure making share results we're stores headway the [ be

accounts. with the partnership of work American of Airlines our great Santander, with upcoming partnership of are launch business Our earn and our to the examples large

Healthcare America made through we quarter Similarly, will ] in frontline in addition, will launch first the Corporation ramp with a XXXX. Parallon we [ expanding in of relationships on new their and progress school the quarter X,XXX our large we're division. that in school business outfitting uniform employees partnership new with managers last XXXX up districts of In

scan sizing their phone by see driving technology existing having to body it planned a capture tool BXB BXC believe it technology exploring the security, exchanges. This into as additional select partners their business school had and and BXB reorganizing and experience. We're with roll our plans revamping market are business XX-years a is and We the BXB and XX% ] We business, greater also an over returns and key integrated our to positioned a schools in actively for driving drive we consumer with development to building who the [ opportunities. to market capture share. We're on customers expected applications schools, process rate, to to share. a well and business with hired introduction reduction among XX% focused in we personal This enterprise of and we're out business fitted broadly. integrate a customer such accuracy outfitters structure both purchase to satisfaction privacy pipeline a allows continue during of with our achieved our with reach the get division as season, takes to efficiency our our this and steps across mid-market rate and out satisfactory our [indiscernible] with of organizational taking consideration more Outfitters information of pipeline innovation of new expand which recently leader experience, provided ways

customer infrastructure process unique generation improve portfolio customer to needs We marketing and focus create customer team customers. with enable our business existing regional or more working to hyper-focus enable a data-driven effectively segment journeys and of will also engage communication, ] technology implementing to restructured Salesforce our from at teams sales partners also with to lead our from each on a better management group. We're [ automation a that and and defined stronger prospective outreach

turn quality third-party margin, marketplaces. to sales, our with inventory a successful marketplace our the deliberate focus were into Target of women well Macy's, a improving on and saw better outerwear approach driving the tailor thanks with Amazon across of business, better of to results in and quality productive nice and took each the demand, to consistently to with freshness. The we lead assortment these demand we each categories and Moving performing swim improvement gross

customers. to iconic quarter as our available swimwear very to now as our category leading partnering excited Target be third have product doors exclusive will Target at new launched Lands' XXXX. The season includes by underway, select November beginning an holiday nearly to End our XXX women early the of doors for well and rollout and prints fabrics, Target performance collection swim with We're colors, warm outlook. fourth swim including XX discuss in excesses. Bernie pieces collection to the weather January new XX With make our total quarter

that we before Following holiday we've in season so the share taking what discussion, far questions. will your seen

Thank you, Andrew.

quarter, For decrease our the the closed revenue adjusting million, when slightly third accounted year total of came million in revenue or difference business year from compared guidance quarter last range in $XX last in excluding XX.X% a the revenue X% below which and year-over-year in for and our to of $X e-commerce Delta. Japan of third XXXX for $XXX performance at million

X% on As up which guidance dollars Fundamental million, solely our gross Andrew conscious these results noted, efficiency we of range. our end and the focus markets. balance versus delivered and to which to improved adjusted decision on exceeded high profit profitability has EBITDA is $XX of revenue, sheet year-over-year,

the XXX margin in approximately in supply from transitional improvements Gross primarily brand, clearance costs. XXXX. sales was an in across driven adjacent categories, and third margin new the basis products chain point was quarter by The product of outerwear and inventory improvement the in strength quarter and improvement third reduction XX% of

While cost improved pleased we on management. we supply were our inventory savings improvements and cost are additional seasonal reductions margin chain focused product with gross driving and

inventory XX% promotions End saw Europe e-commerce our reflecting But third products driven the especially were third challenges. business management. Sales solutions, While of gross XXXX, Japan. Sales to within XX% macroeconomic business sales when or of down XXXX. the increase the and by e-commerce quarter brand our dollars our for Lands' new decreased quarter categories, by adjusted our of profit of effort an in X% year decrease compared increased by driven year-over-year, in promotional dollars to XX% key we from U.S. a Globally, from across improved generated profit e-commerce in reduce and last X% outerwear gross concerted quarter XX%, effectiveness continued management. down X% from improved the were Outfitters again, sales inventory

our midsized and growth uniform timing in national high deliveries $X single-digit due in chain Delta, the third at Kohl's, disruptions revenue weaker was Target. the related in Excluding more driven X%, accounts driven performance by quarter. Revenue primarily to strong was second compared the Macy's down primarily performance prior difference quarter million by Outfitters to year-over-year school customers from to back-to-school by our business shifts both offset to year, for offset XX% year, from the the supply business last at by down partially than and third-party

Macy's, very SG&A strong partnership this in increased Our last with expenses to apparel. year, sales $X launched performing which and well, swim by driven million is women's year. compared

As continue business. to taking a be we XXXX points native controls. We're XXX percentage evolve primarily was to higher to sales, deleverage revenues which points offset incentive-based SG&A from basis personnel compared to costs. continued due of our look SG&A savings cost Partially XX%, drive continuing basis ways XXX of lower basis improve increase as to of we'll marketing points for and digitally and an to approximately action lower and due a was to XXX by

During million per million or took the decline loss $X.XX resulting of net $X capitalization, to our million or compared price $X.XX a of which to goodwill XXXX. in share $XXX to quarter, a per impairment we of loss for third and net a market quarter $XXX the the of share led stock due the

Excluding the million was $X.XX per or our adjusted net non-cash impairment, loss share. goodwill $X

the [indiscernible] purchases the result balance ago. third of improve in end Inventories inventory to by at inventory operations XX% provided and due reducing primarily million the compared than Year-to-date by taken $XXX million a to Moving inventory on capitalizing initiatives. to productivity. speed-to-market inventory a quarter was efficiency $XXX sheet. cash to improvement last $XXX were our our net million A improved year year of position has actions this year, was company the

outstanding In to refinance to was borrowings third million term quarter on last our to year. continuing by Despite and terms interest the borrowings committed doing elevated the of we $XXX end outstanding ABL of driven million loan balance expense lower market which had our favorable million to so third was to our of have opportunities quarter, conditions. lower rates. We're $XXX million subject continue our debt, $XXX $XX the higher market debt the and ABL, explore than are at

authorization the quarter. $XX the repurchased quarter, we of announced million million the balance under the $XX as the During end company's authorization, million third shares of $X previously worth repurchase remaining bringing share the to of of

Now moving to our holiday building the million we and $XXX prioritize be during net discussion, on and continuing prior to high-quality profit between margin expect to we gross fourth cash and million. are improved season. In expect $XXX sales guidance, quarter, which flows, to we drive the expansion revenue continued

income diluted be We between to and million and to expect $X.XX adjusted million net adjusted share per $X $XX of $X.XX. earnings

the account billion our $X.XX normalized approach. Based [$XX.X we're We $XX.X third million fourth guidance, and $X.XX billion. net range (sic) adjusted of to million, takes quarter in year updating to compensation full now to expect revenue on EBITDA results expect into of and which be impacts million] related our guidance $XXX.X quarter to SG&A

net diluted of income to million. $X to of a the to An per $X.XX share $X million loss loss We be of adjusted $X.XX. range expect adjusted in net

We to of in $XX to $XX expect EBITDA be range adjusted million. million a

Our capital guidance expenditures. approximately incorporates for in the million full year $XX

will further to inventory forward. And our we to the over levels to As normalized turn that, enable improved our us with management, back expand maintain work at inventory and moving margin have Andrew. bolster will discussed, call gross I

you, Thank Bernie.

further into balance promotions week. This headed than are brand our increased profit to Friday progress year fiscal weekend, Black like on traffic our gross see of year. with holiday inventory traffic through wrap better introduced the stronger through supporting promotions are retailers, our ramp with over began we season, November and the Cyber higher the sales, up we earlier sales as Like our the as holiday Before retailers, holiday focus position we other briefly channels we dollars touch significantly engaging and approach our enhanced Friday we I'd improved across across customers up, to end year. Like and this trends. of other our on higher-quality Black to

to versus increased holiday both promotions strategy continue those dollars remain margin gross in driving our we scale periods of rate. committed to and back However, prior and

be demand with customer of and classical to our competitive about pricing how remain holiday will segments our file the we different throughout smart season. We drive target the

cautious ahead given Black However, week's the beyond could business we remain shipping later weekend the and catalogues. which between additional and Christmas, push Friday some and our

achieve shopping confident are winning mentioned of our faster-moving and productive the found I inventory. more formula we sales focusing that by earlier, customers' As to on better we behavior a have understanding

team with working, has pleased made. Our the our am customer-centric strategy progress is I as

As strengths we're across strong operational our the we through continue finish positioned to questions. efficiencies We improve remarks. your prepared look business, concludes to to well year. That our to forward play and the

question take first from [Operator Advisory Group. Dana Telsey our Instructions] Telsey We'll with

what time the [ are especially ], period, are planning? seeing, of is Black it's the going you in in or how hood progress normalized continuation inventories, Nice think, quarter. going I forward? the inventory planning The promotions XX% be, AUC you back the terms on the down then second freight of categories, rate on you the of the opportunity you're AURs? And it's on the whether -- the the what what How third of outerwear, to do are on on Where seeing XX% gross scaling then see now you terms under see in you on are should margin for level in that focus, margins, down And the the see forward? that seeing are quarter, what it's profitability. post to the Friday nice how lower margin whether

turns. an opportunity pulling more the back, a So that working and harder increase leading where function turns to mean, X speed see a the looking, inventory kind we're we're to but into of move to of supply putting our business you're it obviously, I X between as and question chain. gets turn the continue it's in and into business opportunity the that see with that we

AUR it month, Cyber really us a year, of into this So probably experienced a your -- the successful consistently just and of through more of I've We freshness, And really the weeks after End twice script. to more the in month Cyber us month that to else. a in than to about the career. different we've one history holiday after month will after come well. We the October lot for in noticed emphasize start to than lot, last for it's tends that business that holiday more having to October opportunity October. to that's period. in is Monday. in And buying maintain it's back traditional my us talk August, as going We talked into Monday. all talked it's the [ model kick be more getting to us be everything want with and holiday off the is Lands' about And and related of bigger ] than early, do going really shopping of increase in and I more and in I've the point will did average couple itself year. We comments give things back speed a about catalog our and even versus give and retails. I'm going to opportunity that scaling turns to show up promotions scaled next Black Friday promotions. and November

new to that's there. So starting in Friday saw with consistent really October, you Black that begin in our what's holiday, what and is market

we've and were lot terms In were a offers traditionally seeing promotion, of level falling overall of of box done. they consistently, the of falling that they

like comps. rather sort of XX% where going up You would where don't are all offer off. problems on it's been the QX, categories the double-digit posting in there. We noted I out And of XX%, I'd and at about saw seen were as particularly Friday just all seen different we the gross XX%, up it outerwear. changes margin newness when journey, them acceptance was worried? we a those going that they fair be say Coming we started up we we've came of women's are us took it But that's and comps direction and made as year call last something categories. we We at. approached in Answering that seen sort [indiscernible] -- see needle the to to really to much pulled the or in successful terms on the needed customer with discounting we felt of we've in Black We that were some Or how We We've were discount year, clearly Monday, our through categories. question taking your continue. some to very to products we Are that. not them in our in would I gifting take given. And be we too Cyber for it that worried?

In it's getting addition that, not political and are happen they warmer a to Winters statement. later.

So brought we had in changed and the of the the the for of really that product fabrics we early weighting holiday. part

certainly actually even less it So tell for here best in I But about margin X fits with us outerwear, a it that behind the successful. we price really Midwest We with today as weeks, we It point and gave first that. the sit other been it's climate but the you snow. the where programs. program that's X, a [indiscernible] got was very at will in a in heavy brought

and In We've it's been of down, new addition heavier jacket. new price into us. to and a sort a we brought for very a it's introduced pack in but pull [indiscernible] middleweight successful that, point outerwear Wanderweight entry program

performance good Home pleased men's ] discounting very remember very how Home were performed. [ women's showed products clearly, alongside year. last performed, with like ride. actually that heavily. how in for pleased categories the I along has even we actually, We ] very we And outerwear that So [ we brought and with has this saw

Towel, the we a part it, demand Last that think lot our was of to actually rates. on we $XX as the of waiting we margin benefit Supima AUC a We've I lot conversation. that to one-off for still day. QX discount mean from and pent-up needed it. towels a actually work real ] gained [ to that. Then of about haven't We that cost come There do we us. of in sold towards got is gains The the lower the did of the were average

in and If -- arrangement organization was to the our lean fund. and with move sourcing full changes to year. make little effect chain, you of we off remember, a [ the that to we we next supply of and do even our won't so of made the event, ] the That really speed QX given inventory turns back

come So most we the margin like women's we still to terms from we've think women's is that continued the is and the upside where best in AUC. And with of progress. started seen discounting,

licensing Lands' we As to able momentum will benefit arrangements benefit as received We at reducing inventories. And I since the a this the have have get done. story was then, to be story And inventory that believe as moment a license have there this Dana, it of have we you will a also kids, -- continue see also then And I End margin I'll we inventories our you we well. of can also our announced such what as that will categories, announcement for saw to great took product. the that that be as pre-pandemic that committed other re-elevation -- a guide levels absolutely levels. And perspective is our that expand a the use over timing [indiscernible] just really thinking the in with in we'll the levels with it. will and future our really it's to to number of stayed pretty Dana, for add consistently you we and

it. Got

from come Capital next Craig-Hallum will Group. Our question Fuhrman with Alex

the business, on And I'm back continue be next sales? big over pull of you revenue, to activity this a on you over pull leg prioritizing to business more nice the focus those that million EBITDA as more you $XXX there as areas there add or start be billion promotions think from to then clearance identify clearly, of necessarily to want profitability results in some EBITDA grow the Could here. another presumably the more unprofitable revenue on? couple you revenue base revenue? Can out on is some you you other looking is licensing increase without years, of growing producing down grow as licensing? how high-margin back can So like much current revenue $X.X curious room a

that focused in that better not I'm we get of in some what when we a is able product think sitting be clearance for at will of on about on, a do able important selling to be But the tended us that's strategy we'll topline, of better sales. a we we Alex. you've strategies drive have ] authority as we'll clearance to net reduce Yes, profit. don't products, been not than from of our sure A to that I When without really licensing, arrangement [ drive income past. our meetings. the number yes, one talk out a lot licensing the we're

a we of to $X.X expect think million billion company. drive you I to that So definitely hit in EBITDA up ] [ $XXX revenue be on able

have like mean Alex, That's there's lowest reeducated. decile what's And that, to right is look the brand. [ as we the point committed love happening the out, a probably have we and that the are the further saying we deciles customer our most brand, they it's ] one [ we averaged have they customers, now. ] where I customer

we're they like want, the cohorts in that and and moving used fair to looks customers would and quarter X the of that start generically psychographic to be years. built will wait them you stay go get it. We're QX, at to We're they discount new why key the like little use going we going at market uniquely talk to they think they're part revolver how them is throwaway been won't going some in internal They to it script, believe we to fit End what not like is identified and talk attributes the them, so we're they're sell bit going part our respond We're our a the know on resolvers new customers company option XX, to simple thoughtful it our we're Cyber at with and for XX cohorts which versus they End just have ourselves what we've evolvers, what more of not to brands. comments it's now are was will like, customer to put Lands' out we're in the that and such same towards and and and customers, and a platform, the much more we we've basket moving stand XX, be model inclined then the more Friday how You it's of to we really solution -- we model we're it's decile there. they -- I finding we from repositioning customers how of what Monday to it come our like media. We that. And that fourth them, customers are uses about to in attract We're know product. what buy Lands' most to that around spend some and much buy I for struggling less and social a -- What customers -- we've on the find that. buy all they in see, Black and traditionally what sorry, to we discussions price is then looks are product go that the doing product and thinking they'll their drive or but discount. shifting say seeing based why we that they the who from which that and

declaring about And and just doing commitments fairly to we right we're the So work this dollars. getting EBITDA understand ultimately, that. to isn't the earnings are team are that We drive focused we're the from getting and here going deliver This it's on like hard comps share. margin commitment you're victory. rate per gross getting is now, management so in me, you're we from

every be casual in needle Friday, day, evaluating that constantly January. Cyber Tuesday that Black or we're that So Monday threading just and a

again I on helpful. results. your appreciate really third quarter insights, That's strong the congratulations and Okay.

Thank you, Alex.

Thank you. call. Lands' conclude Quarter End Third does today's This Earnings

day. disconnect and this all wonderful have at may a time, You