LANDS' END, INC. Q4 FY2024 earnings call

• Successful execution of strategy led to low single-digit GMV growth in Q4, sixth consecutive quarter of gross profit growth (+3% YOY), eighth consecutive quarter of gross margin expansion (~760 basis points YOY). Full-year 2024 had mid single-digit GMV growth, net revenue $1.36 billion, gross margin 48% (550 basis points improvement from 2023).
• Inventory optimized with 12% year-over-year improvement in year-end inventory position, allowing double-digit increase in turns.
• Marketing shifted to balanced/innovative approach, doubled Instagram following in FY2024, launched pop-up tote customization shop in NYC, and plans beach pop-ups this summer.
• Technology focus: completed reskin of consumer and B2B websites, deployed Wear It With AI tool and enhanced True Fit sizing tool for personalization, working on redesigning paid search and SEO with AI.
• Licensing business is asset-light, growing ~50% YOY, with clubs business performing well, home licensees launching on Amazon, and new partners for hosiery, etc.
• B2B Outfitters met revenue and profit objectives, with progress in Uniforms business pipeline, including supplying aviation customer and school uniform growth.

For the fourth quarter, total revenue was $442 million, a decrease of 14% compared to the prior year. Excluding the impact of the 53rd week and product transitions, total revenues decreased mid-single digits. U.S. E-commerce sales decreased 19% year-over-year, excluding 53rd week and kids/footwear, it was mid-single digit decrease. Lands' End Outfitters sales were down 2% adjusting for 53rd week. Business uniform channel declined due to program timing, partially offset by school uniform growth. Third-party revenue decreased 2% adjusting for 53rd week, with declines in existing marketplaces offset by new relationships. Licensing and retail combined grew revenue over 50% year-over-year. European E-commerce sales decreased 22% year-over-year but gross margin grew ~310 basis points. Inventories at quarter end were $265 million vs $302 million prior year, a 12% improvement.

• Q1 2025: Net revenue between $260 million and $290 million, GMV expected to be flat to low single-digit growth. Adjusted net loss $7 million to $4 million, adjusted diluted loss per share $0.22 to $0.13. Adjusted EBITDA $9 million to $12 million.
• Full-year 2025: Net revenue $1.33 billion to $1.45 billion, GMV mid-to-high single-digit growth. Adjusted net income $15 million to $27 million, adjusted diluted earnings per share $0.48 to $0.86. Adjusted EBITDA $95 million to $107 million. Guidance incorporates ~$30 million in capital expenditures and impact of already implemented global tariffs.

• Board of Directors initiated a process to explore strategic alternatives, including sale, merger, etc., to maximize shareholder value (review ongoing).
• Consumer health and tariffs impacting product composition, e.g., less Cashmere in lineup replaced by Merino/cotton from other markets.

Q: Dana Telsey with Telsey Group asked about sales cadence, U.S. E-commerce growth, and pricing.

A: Andrew McLean discussed February performance driven by weatherproof outerwear/fleece, asset-light licensing business creating flywheel effect, growth on Amazon/Nordstrom, and product management to navigate headwinds. Bernie McCracken added tariffs impact with less than 8% of buy in China.

Q: Marni Shapiro with Retail Tracker asked about moving younger customers into other segments and licensing guardrails.

A: Andrew McLean said strict guardrails on licensing with approval over product, manufacturing, and sales location, swimwear as next move to convert younger customers, and catalog pivoted to marketing device with personalization.

Q: Eric Beder with SCC Research asked about licensed product flow and catalog response.

A: Andrew McLean said kids and shoes already in market, home licensees launching on Amazon back half of year, new licenses for hosiery, etc., and catalog pivoted to marketing device with personalization, using fold out postcards instead of long books.

Q: Alex Fuhrman with Craig-Hallum asked about GMV growth difference and holiday customers.

A: Bernard McCracken explained variance due to liquidating shoe and kids inventory last year. Andrew McLean said they love all customers, will address them with specific marketing, and use product entry points to widen aperture from sale customers to lifestyle customers.