Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lands' End Inc (LE, Financial) achieved its eighth consecutive quarter of gross margin expansion, with a 760 basis point improvement year-over-year.
- The company reported a 38% year-over-year increase in adjusted EBITDA for the fourth quarter, reaching $44 million.
- Lands' End Inc (LE) successfully expanded its licensing segment, creating a $150 million GMV business with strong gross margins.
- The company improved its inventory position by 12% year-over-year, allowing for better cost structure and increased product turnover.
- Lands' End Inc (LE) saw significant growth in its digital marketing efforts, doubling its Instagram following and successfully engaging younger customers through social media and pop-up events.
Negative Points
- Total revenue for the fourth quarter decreased by 14% compared to the previous year.
- The European E-commerce business underperformed, with a 22% year-over-year sales decline.
- The US E-commerce business saw a 19% decrease in sales compared to the fourth quarter of 2023.
- SG&A expenses as a percentage of sales increased by approximately 230 basis points due to revenue deleverage.
- The company's holiday promotional strategy did not resonate with a subset of its customer base, impacting sales.
Q & A Highlights
Q: Andrew, how do you frame the cadence of the year in terms of sales, especially with the growth from licensing and entry into Amazon? How do you see the US E-commerce business developing, and does pricing play a role given tariff headwinds?
A: Andrew McLean, CEO: February was strong due to colder weather, boosting outerwear sales. We focus on managing our assortment to adapt to market conditions. Our asset-light licensing business offers significant opportunities, creating a flywheel effect to attract new customers. Amazon and Nordstrom have been key channels, with Amazon focusing on a narrower assortment. Regarding tariffs, we are minimally exposed to China, and our guidance includes implemented tariffs. We are replacing cashmere with alternatives like Merino and cotton fibers.
Q: How do you plan to move younger customers attracted by the new straw tote bag into other segments? Also, how do you manage marketing for licensed products?
A: Andrew McLean, CEO: We have strict agreements with licensees to ensure product quality and brand representation. We sell licensed products on our website, allowing us to maintain quality control. For younger customers, swimwear is a key segment, and collaborations like Andie Swim help reach younger demographics. We also focus on outerwear and apparel to attract these customers.
Q: Can you provide a timeline for when licensed products like kids' items will be available in catalogs and wholesale?
A: Andrew McLean, CEO: Kids and shoes are already in the market. Home products will launch on Amazon in the back half of the year, and swimwear will be available in Kohl's and Target later this year. Other licensed products like men's underwear and women's intimates will launch in the back half of the year.
Q: How has the catalog evolved, and what is its role in attracting younger customers?
A: Andrew McLean, CEO: We produce 58 different catalogs annually, focusing on personalization and marketing rather than just channel distribution. We aim to tailor content to different customer segments, using catalogs as a marketing tool to drive engagement and sales.
Q: Why is GMV growth expected to accelerate after Q1?
A: Bernard McCracken, CFO: Last year, we liquidated shoe and kids' inventory, creating a non-comparable period. On a like-for-like basis, GMV growth will be consistent throughout the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
