Lands' End, Inc. Q3 FY2025 earnings call

• The third quarter performance demonstrated the effectiveness of the strategy, with gross margin expansion, stronger customer engagement, and enhanced brand awareness, continuing the positive momentum from the second quarter.
• In B2B, securing a long-term partnership with Delta Airlines and the school uniform business growing over 20% during the back-to-school season.
• In B2C, third-party marketplace business growing 34%, U.S. Consumer business profitability increasing, outerwear leading the way, new customer increase, successful holiday strategy with customized products, European business showing early signs of improvement, collaborations with Harris Tweed and Lulu Guinness, optimizing supplier strategy, expanding TikTok shop, and Instagram followers growing.
• Key leadership appointments: Kim Mas promoted to President of U.S. Consumer and retains Chief Creative Officer role; John DiFalco promoted to President of Lands' End Outfitters.

In 2025, total revenue was $318,000,000, essentially flat year over year, while GMV increased by low single digits. The U.S. e-commerce business generated $180,000,000, a decrease of approximately 3% compared to 2024, mainly due to improved promotional productivity and enhanced inventory efficiency, resulting in over 100 basis points of gross margin expansion. The third-party marketplace business grew approximately 34%, with strong performance in Amazon and Macy's. Sales from Lands' End Outfitters increased approximately 7% from 2024, and school uniform channel sales grew over 20%. Sales in Europe decreased approximately 20% year over year. Revenue from the licensing business grew over 30% year over year. Gross profit increased by approximately 2% compared to last year, with gross margin in the third quarter nearly 52%, an approximately 120 basis point improvement from 2024. SG&A expenses decreased by $2,000,000 year over year, decreasing as a percentage of net revenue by approximately 60 basis points. The third quarter had an adjusted net income of $7,000,000 or $0.21 per share, and adjusted EBITDA of $26,000,000, a year-over-year increase of $6,000,000 or approximately 28%. Inventories at the end of the third quarter were $347,000,000, increasing only 3% compared to last year.

• For the fourth quarter, net revenue is expected to be between $460,000,000 to $490,000,000, GMV is expected to be mid to high single-digit growth, adjusted net income of $22,000,000 to $26,000,000, adjusted diluted earnings per share of $0.71 to $0.84, and adjusted EBITDA to be in the range of $49,000,000 to $54,000,000.
• For the full year, net revenue is expected to be between $1,330,000,000 to $1,360,000,000, GMV is expected to be low single-digit growth, adjusted net income of $21,000,000 to $25,000,000, adjusted diluted earnings per share of $0.68 to $0.81, and adjusted EBITDA to be in the range of $99,000,000 to $104,000,000. The guidance for the full year incorporates approximately $28,000,000 in capital expenditures.

Q: Dana Telsey of Telsey Group asked about revenue performance in different areas, promotional levels, and gross margin.

A: Andrew McLean and Bernie McCracken responded that North America business returned to growth, Europe business showed improvement in the fourth quarter, promo levels were well managed, and gross margin improved due to promotions and tariff management.

Q: Eric Beder of SCC Research inquired about licensing business update for 2026.

A: Bernie McCracken and Andrew McLean stated that licensing business would continue to grow, with shoes and kids businesses annualizing and new licenses kicking in, and licensing would have more impact on revenues and margins in 2026.

Q: Eric Beder asked about international front collaborations and their impact on the U.S.

A: Andrew McLean responded that collaborations in Europe create a brand halo that can be brought to the U.S., and more such collaborations would be seen, with international efforts creating valuation for the brand.

Q: Steve Silver of Argus Research asked about Amazon Marketplace penetration and 2026 category innovation.

A: Andrew McLean replied that Amazon Marketplace requires heavy lifting in marketing and supply chain, and the brand is positioned to drive growth through trend moments, with continued category innovation focused on solutions.