Lands' End, Inc. Q2 FY2026 earnings call

• New CEO Charlie Cole emphasized leveraging the brand's loyal customer base and data foundation to drive growth through digital transformation.
• Strategic focus on personalization and AI-driven customer experiences across e-commerce, marketing, and B2B channels.
• Strong product momentum in women’s/men’s apparel, particularly men’s, and accessories like the five-pocket tote which drove new customer acquisition.
• Successful brand collaborations with TNT and Wawa generated significant social media engagement and sold out inventory quickly.
• Warehouse Management System (WMS) implementation caused operational disruptions in Q1 and early Q2, impacting value-added service processing for school uniforms; operations have since normalized but backlog remains.
• Europe business pivoted to focus on profitability and core franchises rather than trend-led fashion, resulting in improved margins.
• New partnership with Delta Airlines for employee uniforms is in the wear-testing phase ahead of a 2027 rollout.
• Intellectual Property joint venture with WHP Global amended licensing agreements expected to generate over $150 million in long-term guaranteed royalty value.

Total revenue was $302 million, a 3% increase year-over-year. The U.S. e-commerce segment grew 9%, driven by a catch-up effect from Q1 warehouse issues and strong performance in swim and totes. The third-party marketplace business declined approximately 20% as the company prioritized high-margin sales over volume, though like-for-like gross margin improved by over 500 basis points. Lands' End Outfitters (B2B) revenue increased 4%, supported by enterprise account growth that offset delays in school uniform shipments due to warehouse management system challenges. European revenue increased 1%, reflecting a strategic shift toward franchise-first assortments that improved product margins despite flat top-line growth.

• Q3 FY2026 Net Revenue: $300 million to $330 million.
• Q3 FY2026 Adjusted Net Income: $2 million to $6 million ($0.07 to $0.20 EPS).
• Q3 FY2026 Adjusted EBITDA: $14 million to $18 million.
• Full Year FY2026 Net Revenue: $1.3 billion to $1.35 billion (maintained/upwardly revised from previous outlooks given tariff mitigation).
• Full Year FY2026 Adjusted Net Income: $13 million to $21 million ($0.44 to $0.72 EPS).
• Full Year FY2026 Adjusted EBITDA: $62 million to $70 million.
• Guidance incorporates current implemented tariff rates and approximately $40 million in capital expenditures.

• Operational risks associated with the new Warehouse Management System (WMS), specifically regarding the processing of value-added services and shipment timing for school uniforms.
• Tariff uncertainties and headwinds affecting cost structures and inventory planning.
• Execution risk in integrating new technology infrastructure and AI capabilities without disrupting existing customer experiences.
• Dependency on successful execution of international expansion strategies, particularly in Europe where market nuances vary.

Q: Dana Telsey asked about the CEO's long-term vision and the status of the warehouse management system (WMS) disruptions.

A: Charlie Cole outlined a strategy to build an AI engine at the center of the customer experience to personalize interactions across e-commerce, Europe, and Outfitters based on purchase history, weather, and geography. Regarding WMS, he confirmed operations are running at normal throughput levels, though some backlog remains. He noted that further efficiency gains from software solutions will not impact guidance until next year, and no further Q3/Q4 guidance adjustments are expected for WMS except for Outfitters catch-up.

Q: Eric Better inquired about the strategic direction of the international business and the timeline for new WHP licenses.

A: Charlie Cole stated the international focus is on delivering Land's End's core value proposition of durability and heritage, with slight merchandising nuances for local trends. Bernie McCracken added that Europe has shifted toward higher-margin franchise products. On WHP, McCracken indicated that current guidance reflects existing royalties, implying new license contributions may be phased or already partially accounted for, without specifying exact future kick-in dates beyond the remainder of the year.

Q: Michael Kopinski sought details on Lands' End Outfitters' growth potential and underlying U.S. e-commerce trends excluding Q1 catch-up.

A: Charlie Cole expressed bullishness on the Outfitters business, citing strong enterprise growth (e.g., Delta Airlines) and opportunities to improve customer experience through better messaging and commerce tools. Bernie McCracken clarified that U.S. e-commerce growth is essentially flat year-to-date once the Q1 distribution catch-up is excluded, indicating that the 9% Q2 growth was largely driven by recovering delayed orders rather than organic demand surge.

Q: Michael Kopinski asked about inventory positioning for the holiday season.

A: Bernie McCracken explained that inventory levels are normalized compared to the lean position held last year due to tariff uncertainty. For the back half of the year, the company is leaning into a broader outerwear assortment, emphasizing 'owning the weather' through layering pieces like fleece and sweaters, not just heavy down coats, to capitalize on seasonal transitions.