Lands' End (LE) 27 Mar 242024 Q4 Earnings call transcript

Good day, and welcome to the Lands' End Fourth Quarter Earnings Conference Call. [Operator Instructions]

Please note today's call will be recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the call over to Bernie McCracken, Lands' End's Chief Financial Officer. Please go ahead.

this you discussion the and landsend.com. of results, we thank call End fiscal and be which a can for our released morning, for our Lands' joining earnings XXXX found Good on and website, morning fourth quarter Bernie Financial and to End's I'm McLean, our Chief with you today Andrew Lands' Chief McCracken, pleased I'm Officer, join Executive Officer.

information involve forward-looking we will company's could Please and that this the session. statements. The conduct also includes call. discuss statements question-and-answer remarks, we're a prepared actual to the differ risks those After uncertainties. materially Such about discussed note results from on

by on Factors to XX-K on reports provided the XX-Q. the to those such forward-looking the do undertake represents any and is obligation contribute and The to developments that and change. company's company's Form outlook that outlook forward-looking noted made Subsequent on call include, update we report company of today, included in could including may but Form limited cause items not filings, company's us. by quarterly are to not the SEC events information and differences annual this our as statements

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

call over I to the Andrew. With that, will turn

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

where End's performance creation continued profitability. generated and holiday positive across increased fourth full including in organization strategy. closing throughout fiscal execution the the momentum We fourth of XXXX year results year drove strong a quarter reflect out for season, and quarter, we the the delivered the value Lands' Our

end gross increase in and basis of gross Our expansion to continued range profit was of approximately deliver deliberate points. of QX high XX% more generate to EBITDA a in dollars, $XX and which in our XXX efforts resulted adjusted the guidance approximately million, profitable sales margin above

fourth be were quarter disciplined inventory in and what With improvement. holiday throughout year-over-year to during we able promotional the industry. prioritizing the QX of a significant consecutive nimble quarter, down is for newness period marked our inventory highly our XX% season,

ahead, we speed from inventory and our implementing on initiatives are focused improving we chain. further the Looking remain efficiency across our turn supply

new bringing align deepening we're the cohorts, evolvers, resolvers assortment business, customer and our activity. We're looking full price, for promotional on frequently our colors clearance the our doing while sales two are selling introducing best of they fabrics. and to freshness year items with brand solutions-oriented throughout less a behaviors. and the so shopping via with styles, As more levels our building across more assortment lower and key We're focus customer love

in the a was and solutions performance key our both driver Our of margin authority U.S. the fourth outerwear quarter, internationally. in strong in

heavy quarter, lighter investment materials. discussed towards As outerwear and fabrics in and reduced last we our moved

of jackets performed offering exceptionally Wanderweight Our packable well. middleweight

extend for offering buying ideal solution our we this are outerwear transitional layering, a weatherproofing the and As to using assortment season. outerwear

customers, Across increased particularly driving our from traffic is and digital creating more compelling working customer and new journeys, personal we're well. channels, and more existing engagement social which with media

features a demand taking across As significantly to facilitates and adjacencies. productive outfit-centric we're natural more that before, said we've approach inventory more our assortment

us, was had businesses. in outerwear Sweater tee another seasonal customer for Supima level brand, easy of tying or zip been of unique boyfriend bringing cohorts luxury heat supporting points. Launches strengths incorporating and tops comfort has helped sold layering wait a facilitate in a days, and USPs, bottoms in new of of program, sweater, for with chinos a new helped silhouettes, our products, for while like jeans have our lean our to solutions our back our deliver to hitting customer: X/X and that launches to or additional Don't striped for unrivaled drifter on success the to miss age- comfort our through customer Our all size-appropriate and trend message season, to our wonderful which with chino our of the migrating women's new fit and selling you'll pants and effectively discounts sales the jeans in that.

encouraging. and swim also Our solutions vacation performance across our was

introduce a customers It that of years, leading We year. is swim brand on textures, swim This products. our colors swimsuit for which in including across our go-to we successes swim products, and continue as in franchises fabrication. leveraging a is this of to are and authority our categories, building crossback franchise new year, including texture footprint XX maintain Tugless, plan a adding notable throughout well innovation, part existing newness strap our expanded brand full its the to responded the new to our America.

performance BXC quarter. serving comprises verticals. consumers comprises to this QX, our to businesses, beginning we on business turn channels, our BXB I and of North more with come school performance about expect in consistent our evolution we the brand. American number More to of our in way the while change be uniforms next across and a Before to uniform international our various talk businesses,

consecutive promotions, XXX increase quarter business, sales an approach inventory a and to with driving third channel, management. quality margin year-over-year margin improved more targeted gross points of our Our basis to U.S. in due performance of great our eCommerce higher delivered largest BXC approximately

before, discussed we've and maximize to As demand. key events drive continue we holidays to

customers our by real Cyber to to on through season leveraged across our that natural category how broader This responding. throughout selling adapt aligns holiday in the performance our were outfit time Following adjacencies. we centric exploits record with our putting more of to Friday based taking data inventory the assortment approach a Monday strategy period, Black work

low solutions. partners improvement our revenues in that gross share profit to with like-minded XX%. in our our of dollars increasing found working a balanced towards handful business. customer-focused third-party Moving with vision coupled We success by over in resulted for single-digit continued approach a That

individual focus assortments on tiered well, new the Target believe engagement journey to we XXX amplifies our Our opportunity. is our product and exclusive the that marketplace swim customer the stores in both channels created between and delighted and performing

As the improve are behavior evolve, and our we speaking product own our seeing on the customer personalized positioning and place managing marketplaces, within channels we to value journeys.

to We which execute to streams strategy, capabilities. while on our continue core allowing income to licensing asset-light on continue adds our focus recurring us

on categories we and begin Costco, licensing from said call, last kids footwear. royalties in stores, we recent expect seeing primarily As for club our to XXXX our agreements

amplify and we and the where channel customer belief of have forward, want across entire white into to geographic shop shop, footprint. to can our increase product licenses a Moving that want space brand finding the reach the brand, existing they performance and they expansion when

our to business. Turning international

We business that and with our assortment has protecting continue we in is a of are pleased better Like lower management newness how levels on the in U.S., the to promotional and activity. firmly inventory performance margin Europe through stabilized. believe trending prioritize focus with

market new & satin needs customer our Li demand quickly including with more leveraging to basis Fung revenue profit and best in The like product unlock the respond were and down year-over-year expanded long in X,XXX deliver gilet our quality while testing in our innovation Europe and to XX% also ] was efforts X% vests. partners to pleased success our by to outerwear sourcing holiday festive that new during gross While were We're service. global over see customers speed [ assortment and early styles capabilities, to supplement in Europe. margin the business year-over-year. We skirts dollars gross with points increased goods, like including silhouettes like season, by

encouraging BXB bear the customer of fruit, Turning to our new resulting business. Outfitters began to and progress upward trend the business. for seeing saw We're our business. the nice as performance school in our the quarter to effort partnerships funnel continued We uniform deepen in new during launch an

service attitude, and us with coupled our can-do highly DNA, apart customer space. set recognizable this brand in Our

Over heard supported an way about receiving, through organizations make business rigorous Ultimately, it the to was our and uniforms prospective customers. closer this across new restructured their processes with decision-making to accomplished place relationships school feedback voice the with We to and we upon execution, the XXXX last ourselves and example, on on-point makers customer by it country. acted sales grade upon. decision year, we service that and A+ ensure from of took deepened crisp,

will We underlying into XXXX focus as business an continue this USP.

and Simultaneously, the and providing of to building future pleased our implementing restructured technology in to are a in with development generated, both high-performance teams robust sales book opportunities, business upside and we in and business support the recurring service being time are volume. Internally, business. leadership of pipeline initiatives

build for our on successes year, To we confident summarize ahead. made solutions our and in End extend and to of customers, be strategy to provider Lands' choice, enhanced to the the and on a continuing the put we'll by I'm value in great the over employees, able progress other our position quarter stakeholders tremendous long our term. years that shareholders as leadership drive

will performance our XXXX outlook. quarter as as our well Bernie discuss now fourth

Andrew. Thank you,

for For conclusion in approximately X% XX% a when high XXXX points our Delta improved early adjusted in increase versus in the year Japan and fourth quarter, of the with business increased closure to end our range EBITDA a in a $XXX gross basis Gross of guidance. and end or the last profit a eCommerce margin dollars above year adjusting our This XXX at to XXXX. the the of total compared basis by came point and margin flat revenue at guidance our drove ago. EBITDA work XX% of of adjusted by XXXX million, improvement high efficiency XXX and compared decrease

XXXX, Japan X% adjusted was a million flat Global compared the in quarter for closure, $XX decrease eCommerce to a quarter, fourth revenue for of to approximately and year. Outfitters last fourth was U.S. the million, which flat the last fiscal fourth to million XXXX. decreased of in $XXX compared eCommerce year revenue XX% $X and the quarter Compared when of X%. eCommerce decrease generated Europe eCommerce was

revenue million quarter. was X% $X in Excluding down the the year-over-year the from Outfitters Delta, business in difference

quarter inventory fourth quarter. Revenue gross marketplace points improvement adjacent the XX% across was we the tailored in increased categories, in our over assortment, the of a also driven And online relatively result clearance in gross as of for the in assortment point by our our was X,XXX marketplaces, basis new outerwear XXXX. supply permits product approximately costs. sales the basis by fourth strong strategies. XXX third-party X% products and transitional margin improvement business by over fourth profit the improvement of by XX%. in Gross strength reduction increased across and margin The dollars from and Driven quarter margin chain

XX% adjusted guidance up fourth the range. which of was of We end quarter, year-over-year, slightly our delivered EBITDA in above $XX the million high

share. per $X.XX Our $X net quarter for loss or the was million

income million adjusted $X the share. Our for quarter $X.XX net was per or

initiative balance of into XXXX our to new we favorable terms December In Lands' and completed XXXX. The the well refinancing strategic Turning important December, refinancing successfully completion and was ahead the under which of a invest and continue its $XXX a in this term our loan step entered sheet. of loan company. more term provides to End's evolution in of trajectory with existing growth that can of in million matures us an in September maturity we

during Inventories fourth million end $XXX XX% ago, $XXX improvement a million quarter. compared of the the representing at to were quarter the a year

a consecutive improvement, was our result averaged reduction and the on our every As company purchases marked the we of reducing taken efficiency a quarter actions earlier, XXXX to inventory market by QX to speed quarter fourth and said of capitalizing of year. fiscal inventory XX% This improve has initiatives. Andrew

$XX XXXX XXXX. balance our profit our EBITDA Now continued expand to compared on high points slightly XXX highlights a $XX has across continued higher-quality approximately business of let year. and few in XXXX expansion efficiency, our Gross fiscal increased our million fiscal the end million, XX% the driven sheet results to fiscal touch These the fiscal efforts in for above was prioritize performance margins units. to margin back year. by of which reflect year sales year Adjusted the compared guidance significant primarily to XX% in to basis half the for me XXXX, for

drive To of return as demonstrate revenue able focusing revenue sales. approach success the continuing on to every versus We're of power and we for be lower revenue, to confident new $X.XX we our last primarily dollar year. of by an profitable versus additional to growth, on brought profit that we'll build our prioritize in quality

goodwill excludes net fiscal in decline impairment price the the significant other loss net the For market $X.XX a $X.XX had items. We and had million as to as of of $XXX capitalization year, $X our share due resulting per which of well million $XXX we per the an share. third million or or loss stock of adjusted quarter

of basis XXXX. SG&A quarter, fourth fourth the quarter the net In compared was of XXX increase of to revenue, points XX% an

For to The the revenue was XXX or XX% full $XXX fiscal XXXX. driven of year, XX% SG&A compared increased to net deleverage higher of $XXX or basis revenues by in $XX personnels. net from increase lower point incentive-based million million million and revenue

of organizational reinvested in can We head of to savings determined single-digit term over additional think These corporate headcount. narrative us structure, requirements we a organization, teams the generating long changes in future. a combined to grow our in review organization the be we the of business. more agile strategies while in business our This a percent our our around set total the comprehensive high January. sourcing grow reduction, reflect reduction a the skills, constitute of that about After profitably earlier XX% that up count new approximately corporate changes reduction creating how flatter, would continue our to organizational executed in with cost and

of shares previous including repurchased, authorization, fiscal in fourth an $X During we the million we the million quarter. million. cash returned the XXXX, million shareholders X.X repurchased Under form approximately for X.X to $XX Board's aggregate of shares million in $XX

this has through repurchase million program $XX Directors announced month, authorized new As Board a share set of run March to XXXX. earlier the

Now moving to guidance.

continuing margin cash we and the to prioritize which to selling drive flows, We during sales are high-quality season. gross improved profit spring-summer continued and expansion expect

million of which impacted contract, positively the QX $XX by adjusted million over reminder, conclusion Delta XXXX $XX our revenue approximately included EBITDA. a in the and As

or be which all revenue low expected $XXX In growth. GMV, expect net we for middle value, the GMV, We million the channels retail million accounts through first businesses. to $XXX merchandise between growth quarter, to BXC is be believe BXB sold gross of as to single-digit and with and the important the of third-party comparable the value sold channels indicator of to of our an as customers well merchandise through performance merchandise

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

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

$X.XX For to year, be middle billion, expect we to revenue $X.XX net to GMV the of low full single-digit billion while expected growth. is

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

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

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

inventory As discussed, further maintain gross management bolster to inventory expand we us we have levels enable at to moving improved our expect and normalized to our forward. work margin

will I to With that, the call back over Andrew. turn

Bernie. Thanks,

success fourth Our financial performance throughout operating steady way position, which our the our improvements results profitable in for characterized and quarter sustainable, has and been growth. by the XXXX, demonstrate strategy continued of our paving

specifically number Lands' first a are like returning is the in Before I'd to delivered first we to This has End we open to innovation. of been touch we retailers. innovation. X-XXX of always the on floor the at forefront the one XXXX. Internet service, questions, were We and touchstone

business. in of product some wanted come business, applying sourcing tools are who And a sculpting new from patent a recently and I AI-driven that uniforms Innovation to alongside to anywhere the applied teams we WaveShaper, our highlight solution. to technology the swimsuit body can our

and apart that American End, continue Through constant the solutions Lands' competence, every journey. an iconic belief we life's set ready brand, customer-first and teams our to can these curiosity amplify for

I stakeholders long am create the ability for we to our As confident term. progress we on build to right value our XXXX team look and over beyond, strategy enable right the and to our the have to

look forward That your We questions. our concludes to prepared remarks.

Josh first Telsey question Herrity Group. with Advisory comes [Operator from Instructions] Our

better continues margin XXX driven of performance. the et It quarter, and to is up I how just response In full external that point supply follow assortment we here be freight, impressive. chain, fourth on as the much to and should think how in basis price more by gross improvement, to factors, cetera? wanted about much that assortment selling

think the you the the that, as about the think margin P&L margin shapes And the the well? I opportunities in we flowing as and guess, top the do perhaps of then 'XX, as that should year as progresses shaping and to see then the a we licensing through ahead? businesses And line about new what how year FY corollary gross how as

What was though, really from quarter, think you'll Josh, through first find the we down. the move you'll we -- in a margin of yes, is was supply about improvement I year, inbound the year talked gross freight. benefits, driven the chain came fourth mostly our our what margin find our of lot half that improved gross it product we've by discounting and way as

break you when down QX, about savings. less much chain So is supply it

we improvements make there. we year, focused that as we all chain, did, supply talked on We our can

we is some and in lower full-priced So benefit product XXX in product see of discounting our basis did points just predominantly, we more most by that newness did driven But promote. lower costs. and selling when products

that As forward, on really difference have far usually year that it the more done creating efficient work a all a in benefit as starts a because supply looking chain, of drive we is XXXX. to out,

see as sales product. driven lot to along for more a price newness will product can, full by full product going costs our forward, driving lower -- the those with you So efficiencies business hopefully, we and more support

down. that shoes businesses, as in As as to now to gross started can brand we've kids as And we why a show low growing. can the our guidance, the we revenues driven you that is our as licensing That mid-single digits it's single provide so by goes, KPI, which value licensing are far see is guided, merchandise overall is our digits. and

driving what year, And is higher higher are keep see every gross tried drive that's we've profit pounding to expect to as this we gross dollars. we profit on, quarter And to dollars.

the the are that we contract. of against QX, and completion challenge Delta course, of up Of

drive So dollars excluding Delta, the gross of we QX in the and will higher for profit year. rest

Cap will question next Eric Consumer Small with come from Research. Our Beder

a start talked little as opportunities we returns you potential marketplaces the to in previously marketplaces? of about the shift between bit there business; seeing What B, and there you A, different the about can are is are Could marketplaces. product you You talk terms margin? the segment? how other to add the how to now

Eric, a great it's question. It's Andrew.

we're our worth With marketplaces and as remembering, every inventory just it's Bernie, channels per single that site, dot-com the and noticed from have we and switch a for to call inventory. marketplaces, between single fulfill on the I able

a efficiency it. and having else's baked of someone lot inventory shipping there's into So be not distribution that's center contingent. We're there to the

and with We're the call. about opportunity. about And There's target one the opportunities We next to about at So look it's in we to partners And see marketplaces, -- specifically elevated in adding hoping few same grow there. business partners think talked a our I like-minded the we months. we've to I process of the Macy's about we're of at work the couple talk continuing got. on partners. touched time, with particularly

it's if on optimized know that it's courses, we I to those. think an assortment get I expression, want horses that's the don't American for but notion the each And for of

there's that on relationship, different marketplaces. different a and customer a different happens journey slightly of each slightly So customer those a there's point, price there's

in isolation. related price not So at it's we tend to we them and continue something And fine-tune. that just to point that's product-related, look it's

able We apply sophisticated that. to have tools we're fairly against some

We've can question, merchandise we that, of returns have how that with returns in put and a overall, the look we've our been them and we we never be there. business. the retailer way one Returns it Is say worked it. consequence of that. where But think rate don't partners higher in out we've we lowering returns past. the we I worked where to any there's mix certainly through it, terms continue are want of at to as had In through our the it that be? want to

journeys. to as continue want our to that important our this, brand we'll see it's use and customer something journey, from just I brand elevate as like if expand you an build marketplaces think journey walk or away to continue and our to we

whole performance, the thing add all over their for Eric, only nice our input the a that and I'd last margin is gross a margin to true generated the of raise marketplaces And company. year from total rates gross

little question. bit Actually, of a related

it. in as licensing about pieces that? themselves and talked product the on do controlling how you ship categories and you and So product through How licensing the how having mails warehouse inventory through flow goes other show How the your they expand it you does the to control here?

question. brand. great control With you have With it's that find mean partners. the I -- important like-minded to really you again, licensing, your

I with brand, get you rates, behind offers years if find experience in for a lot me, of you go out long term. think it's partner necessarily and best of not your best a that who the don't licensing necessarily the great the and

to who find is you have like-minded. So someone

brand arrangement The over months write to about get a ultimately, first first And and months your brand really and DNA, year XX the you baked of use in and the between control then you long, to that. an the X book a fully tends of be so build meshing partner.

So control standards. that the approval. for increasingly, ] of it's product. it a produce And the swim, then we tech assortments categories to [ our over then design partner it's specifically pack We rights and will our like with have

business. something something the look how run I But at for enduring. year. control lasting we me goes that, a term. builds you're how to slower XX-month on that and building So look hence it a because at That's and really, do lot tends as long long into start-up, way the it's it a it of it's it, And little it, first to right

that license. we'll for a execution that the two interesting aspects provide, licenses the the from shoes thing there'll more kids especially the And or technical be and to licenses, side,

going that will But going customers bags to we And also in Lands' sold and a wholesale same will boxes then be on. receive are that parties out product. put will our also. performing in be other to our the Our our that to they warehouses sales on royalty product they End third website those partners sell make then and to partners

should done should XXXX? be an incredible On b, the be inventories. we producing we into and levels a, what question. is Last How job of what inventory about, about inventories, amount ideal; thinking you've Right. thinking

Yes.

our I key faster here we're than in today. drive do think But of really improve at looking we this and shorten we want a takes do us terms. we be to number, the inventory faster supply years it couple do chain can the to and that newness in higher of less later length products we that an so comes time decisions make to have that from and to more can have ideal receive turn our we turn for so able assortment is to And be carry in and full ability a replenishment. our

we So in going but that are year. some inventories next over yet, take newness the continue our to turn and business and reduce will drive definitely more to time

to a out. Yes. it lot caught but test European attention -- I to use incredibly business they've know the we I our concepts it. back you call, We're using in would if open-minded And Eric, don't this. your to draw been

of goods. the One out much looked buying in was tested we can I from into mix. And my we market again, speed concepts the background, how at have experience was really area goods, we put market the last year

that of it assortment. it you the you that holes years. goods, to [ where it, lean that And fill as you to in fill you and the that own in take doesn't market going an you allows own to else. do of but But allows put that's guaranteed is somewhere what ] to you we're leave underlying piece [ it product, the open ] it future open, test gross later And to that, out margin go do delivers, the buy you to you of. And can buying business can your in or start want And in in speed gives might something find and you your more can the season. IP terms label of necessarily be in

bring that terms incredibly we market We're an powerful market, U.S. And our moment. the meshing on what we in starting be to bring their that are that that element when our in to at journey and will bear and business. bring do expectations we customers of that against to to

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

GMV. you're the categories? Congratulations just in so for I increase with as expecting over on wondering if guys less those other time about licensing low the I thinking what far Or mid-single-digit and a year. accomplished bit to XXXX accelerate channels full this ask about you year of everything for to was your Is could and well, years a business that have little as more see should categories start future more in your perhaps or in footwear consistent licensees to those explore in kids? outlook

one, review family to want great be and to Alex. accelerate covers billion as that, into retail. invested stepped obviously an stepped let's We is American into that can't going as variety We're we in mean, it in we at everything iconic $X.X $X.X I are on be We brand company, -- a licenses. it why return asset-light it's a we driver We're capital. and billion. good of

that that doing those really the them took going the we women's concentrate in into licensing, we them best-ats partner get we've see and with ourselves that And was out. wanted not able envisioned, those. going outerwear that, has there our swim business this by This us -- efforts solutions and men's. lean on to and our accelerate in out doing and to we pressure build allows to were way really and shoes our I'm bandwidth want who the to kids build and to always is We to experienced by we word and to the off

creating brand our advantage an then that to website. of customers added circularity the back on that they their I we our this expand point won't conservatively year, those the that's tremendous we're underpins opportunity, because between distribution growth a on is the creates manifestation channel, of of but think has relatively this, just whole driving also we a throughout be There website. But wholesale. will our that physical room and see be a part which journey And licensee starting to and wholesale see licenses

So a lot opportunity of there. in

talk really in just other your That's look And I little the footwear children? about license would then imagine beyond bit you helpful, what and categories like can business club might be across channel? Andrew. Great. a that

tends behind we're the that channel lot club going a mean with to I in just I Yes. club you is like sounds really very interested the tightly. reach but And club We're the the customer traditional you we're controlling there's think it. much the everything. in much well, And in reaching see be channel. about It's younger tends in and customer talk club, us the that mobile. in there to upwardly skew be place here, really very it the a like actually, has X be -- I and tends Gen customer want evolver a to channels millennial resolver, and our it's who bit much and get customer and a that's items who customer they to that to we them as they very great a getting get be. And few older very know behind to an heavily, a

changes accelerates business we deep narrow we that channels. a So way drive new control, reach can of customers in that having really think all assortment that a with clubs the but the continually our by we and

thank Fourth We End you Call. participation. will This today's your Lands' Quarter conclude Conference for Earnings

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