Release Date: June 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lands' End Inc (LE, Financial) reported a record gross margin rate for the quarter, reaching just shy of 51%, which is a 210 basis point increase from the previous year.
- The company successfully diversified its supply chain, reducing reliance on China to less than 8% of purchase order dollars, enhancing resiliency against tariffs.
- Lands' End Inc (LE) saw a 60% year-over-year increase in revenues from its licensing business, indicating strong growth potential in this area.
- The B2B Outfitters business met revenue and profit objectives, with strong performance in both enterprise and school uniform segments.
- The company improved its customer experience by launching a new AI-driven recommendation engine and expanding its SMS marketing program, adding nearly 400,000 new subscribers in Q1.
Negative Points
- Total revenue for the first quarter decreased by 9% compared to the previous year, with a 4% decrease when excluding the impact of transitioning inventory to licensees.
- Gross profit decreased by 5% year-over-year, despite the increase in gross margin rate.
- The European e-commerce business saw a significant 28% decrease in sales year-over-year as the company repositioned itself as a more premium brand.
- SG&A expenses increased as a percentage of sales by approximately 270 basis points due to deleverage from lower revenues.
- The company reported a net loss of $8.3 million or $0.27 per share for the first quarter, with an adjusted net loss of $5.4 million or $0.18 per share.
Q & A Highlights
Q: Can you provide guidance for the upcoming quarter and discuss the impact of tariffs on pricing and inventory?
A: Bernard Mccracken, CFO: Due to uncertainty with tariff rates, we provided annual guidance based on current tariffs, which are 10% baseline and 30% for China. We've implemented mitigation measures to manage these tariffs effectively. Andrew Mclean, CEO: We've shifted production to the Western Hemisphere to mitigate tariff impacts, taking proactive steps to adjust our supply chain.
Q: How does the new Delta Airlines agreement differ from the previous one, and what are your goals for the European market?
A: Bernard Mccracken, CFO: The Delta agreement is a 2.5-year completion of a contract with another vendor, and we're discussing future opportunities. Andrew Mclean, CEO: We're optimistic about marketplaces, with Nordstrom's showing the fastest growth. In Europe, we're excited about opportunities, particularly in France, and are focusing on customer segmentation and market expansion.
Q: Can you discuss the performance of key segments like swimwear and the changes on your website?
A: Andrew Mclean, CEO: Swimwear was a highlight, and we've modernized our site to improve storytelling and user experience. We're focusing on trend-driven products like swim dresses, which are popular for their versatility. The site enhancements aim to personalize customer experiences and attract a broader audience.
Q: How is the licensing strategy evolving, and what is the impact on revenue?
A: Bernard Mccracken, CFO: We're adding new licenses in white space categories, which will be incremental to revenue. Licensing started in Q1 last year, and we're seeing growth each quarter. Andrew Mclean, CEO: Licensing expands our reach globally and into new markets, enhancing brand visibility and sales.
Q: Has there been any hesitancy in the B2B Outfitters business due to macroeconomic conditions?
A: Andrew Mclean, CEO: Surprisingly, we haven't seen hesitancy. Business remains consistent, reflecting strong engagement with the market and enterprise business strength. We're optimistic about continued performance in this segment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
