Lands' End Reports Q3 Revenue of $318.6M, Operating Income Recovery

Lands' End, Inc. reported a net revenue of $318.6 million for the third quarter ended November 1, 2024, a decrease of 1.9% from $324.7 million in the same period last year. The company achieved a gross profit of $161.1 million, reflecting a 5.6% increase from $152.6 million in the prior year, resulting in a gross margin of 50.6%, up from 47.0%. The operating income for the quarter was $9.3 million, a significant recovery from an operating loss of $101.3 million in the third quarter of 2023, primarily due to the absence of goodwill impairment charges that totaled $106.7 million in the previous year.

For the year-to-date period, Lands' End reported net revenue of $921.3 million, down 3.8% from $957.7 million in the same period last year. The decrease was attributed to the transition of certain product lines to licensing arrangements and the conclusion of a significant contract with Delta Air Lines. The company’s gross profit for the year-to-date period increased to $452.0 million, up 5.1% from $430.1 million, with a gross margin improvement to 49.1% from 44.9%. The year-to-date operating income was $14.0 million, compared to an operating loss of $85.6 million in the prior year.

In terms of strategic developments, Lands' End has been transitioning its kids and footwear product lines to a licensing model, which has impacted revenue figures but is expected to enhance profitability in the long run. The company has also focused on improving inventory management and reducing promotional activity, which contributed to higher gross margins. The restructuring efforts initiated in Fiscal 2023, which included a reduction of approximately 10% of corporate office positions, have continued to optimize operational efficiency.

Operationally, Lands' End reported a decrease in the number of U.S. Company Operated stores, from 26 on October 27, 2023, to 24 as of November 1, 2024. The company’s U.S. eCommerce segment generated $186.1 million in revenue for the third quarter, down 2.2% year-over-year, while the International eCommerce segment saw a 4.6% decline. However, the Third Party segment experienced a 6.3% increase in revenue, driven by licensing arrangements. The company’s total employee headcount has been adjusted as part of its restructuring efforts, although specific figures were not disclosed.

Looking ahead, Lands' End anticipates that its strategic initiatives, including the transition to licensing and improved inventory management, will position the company for better profitability despite ongoing macroeconomic challenges such as inflation and high interest rates. The company expects to maintain adequate liquidity through its cash reserves and the availability of its ABL Facility, which had an outstanding balance of $60 million as of November 1, 2024.