LE - Earnings call transcript Q1 2021

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Operator

Good day and thank you for standing by. Welcome to the Lands’ End First Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Bernie McCracken, Chief Accounting Officer. Please go ahead.

Bernie McCracken

Good morning and thank you for joining the Lands’ End earnings call for a discussion of our first quarter results, which we released this morning and can be found on our website, landsend.com.

you and from and James Officer. today, Chief Griffith, Chief call Officer Executive Gooch, the will Jerome hear our Financial On our President the a will After remarks, session. conduct prepared company’s question-and-answer we the also statements. information Please that we about includes to are forward-looking discuss note involve uncertainties. risks and statements Such call. actual differ this company’s those discussed materially The from results on could on quarterly Factors that those differences filings, noted on included and such our items company’s including are SEC and but could include, contribute Form annual XX-Q. Form report in reports to to not XX-K the limited forward-looking this information us. by do update outlook today that company The to is provided made we call as the by and not on obligation statements company’s undertake any represents the forward-looking of and may Subsequent company’s events outlook developments the cause to change. COVID-XX on an to could the pandemic its duration Of continues our alter and note, impact our outlook. materially this have business in respect,

in be measures measures. generally accordance call, to financial non-GAAP principles. this non-GAAP During our accounting earnings comparable directly in posted will accepted A referring is the will I which prepared are Relations with measures GAAP With to found the over Griffith. landsend.com. measures to earlier Jerome most we can issued call Investor at of the of of not reconciliation non-GAAP in copy section These A turn today. that, our release website be

Jerome Griffith

of Bernie. Good quarter first our results. discussion us joining a you, Thank for morning and for thank today you

led with financial ever product our digitally are far first global We key than to is results our metrics, business stronger strategies. continue marketing as execute performance our expectations. extremely pleased momentum e-commerce with exceeding and across we The our in quarter

unit across continued pillars product, infrastructure of four best-in-class global processes. well e-commerce continued growth Our as distribution strategic our underpinned by our channel and as foundation our and advancements is digital,

increased For from quarter, and of to $XX.X increased grew first million the e-commerce the year-over-year, $XX.X global million revenue adjusted XX% while quarter EBITDA XX% first XXXX.

of fiscal compared by million. Global XX%. XXXX, and first e-commerce quarter the was revenue XX% obviously $XX.X revenue to XXXX first performance While increased impacted grew increased quarter COVID-XX, the EBITDA adjusted

strength and XX% is continuing in demonstrate by digitally business and new global Through customers the results from quarter. momentum increased our that first the led our we Our in and data-driven as emerge pandemic. focus, the we began pre-COVID

global total XX% year. the customer file quarter first Our from by expanded the prior

led digitally marketing more product Our of achieve us than retention become with as brands. well XX%. more more customers These strategy time as over and our customer productive they enable shop our as to

efficiently who, successful social marketing metrics enhanced media years specifically several profitably profitable a focus, have average, done traffic we retention acquiring our primary great. digital we discussed past shift year. optimization within significant over have Importantly, you the in during drive digital grow the with With past to We our the business. strategy techniques customers the so These the we attribute paid marketing. have illustrate spending our the quarter. marketing, on apparel engine accelerated results past work global share we over use towards In that share. our these new market foundation become implemented are acquisition the X to grow e-commerce to first initiatives customer and within create to we far our years, earnings market The and the calls, search been

significant we primary social acquisition. new first End. driver the than and early our paid our paid strong our and Lands’ capabilities, initiatives to efficiently in continue customer the initiatives productive to quarter to Our analytics see was in in drive marketing stages marketing data digital Within strength other new opportunity more social of the customers was

during the an strong, quarter. first increasing were Our U.S. e-commerce XX% sales impressive

the as are growth the the the in XX% of like Europe, our initiatives benefit the the business which share brand to U.S. was our first in confidence we of in also we quarter from implemented in to opportunity and pleased market of performance in to furthers acceptance share to Beyond gains. strong front up The drove continue product. e-commerce strength with the Lands’ U.S., incredibly our drive what I’d to region us market in the a turn position. as this our advanced End strong now similar we playbook execute we

quarter global comfy to let’s continue remained get e-commerce led our customers business. our a priority comfort We emphasize and this messaging as our for casual

including Swimwear categories make this knits. to Our was on standout strongest swimwear, plans sleepwear performing customers began a versatility, comfort focused were quarter travel and as and again.

the and the we continued year to versatility family customer the with are in opportunity. broader category, across assortment. positive swimwear to entire at capitalize round product offering order on expanding in the our response Sleepwear home this Within performed outperform to to

knit Our lifestyle top continue a performing remains styles category to customers’ update we colors and our to our business as needs. meet

warm weather an colors our with fabrics As combined example, we seasonal build weather cold as transitional offering. we upon

what casual shift from more a believe a well permanent aesthetic. we Our is comfort product is to to benefit positioned

continue playing in began changes in We expect pandemic new many the home hybrid to to at the and office stay homework are work. we we customers at the from fully work move as And of a or start to will to of see reopens. even bigger here a the see where as role economy comfort that to

customers for strength businesses the in continued such, capitalize particularly casual are wardrobes our office. their and the attractively as woven wardrobe, positioned in on refresh As khakis the to preparation

with Lands’ pleased and exceeded to our both both Turning Amazon now attributes partnerships, have quarter, this with customer. the third-party at similar consumers we enabled which us our performance expand End to These are relationships to Kohl’s expectations. to our reach

our partnerships, this position been With period and operating model, in to look be flexible thoughtful continue we future other able we on we a will the distribution. side this and navigate stronger have foundation ourselves of unprecedented strong pandemic. targeted even to to As and

on proven last to speak shift behavior, discussion over following strategies advance I X to that, that long-term financial to confidence the performance. to will as I consumer are which of performance gives turn it capitalize we to us Jim’s drive on Jim. Our the will years continue our we over With growth profitable in well-positioned

James Gooch

good and morning. Jerome you, Thank

results pleased we very as delivered to data-driven are build strong continue on with the first our we We quarter initiatives. in the

Given the year, of COVID-XX select prepared to I in first our will improving to my comparisons last quarter normalize help remarks impact XXXX make our of trends.

For quarter, XXXX. XX% that’s the first total XX% $XXX.X and of an of from increase million, revenue XXXX from

underlying as Our in performance the compared the business demonstrates strength to our emerge continued XXXX levels we pandemic. from our

accelerating. from in we by XX% XX% increased impressive saw sales from and growth our also business strength driven was the we e-commerce as heading XXXX. XX% is of U.S. in global had e-commerce international business growth Europe, business and from XXXX pandemic momentum XXXX into The led the XX% our our by of XX%, in Our increasing

national of last faster locations. business, across the in school our assortment driven by including uniform in sleepwear by and a million, of key assortments. the for value million sales a key and number comfort compared of year. driven were sales. to that store swimwear, Revenue Our our $XX.X continue than primarily was our of improvement product This and third-party increase performance This knits. to strategies with to categories, a marketing better-than-expected results increased our XXX by message $XX.X was outfitters items our launch accounts on a strength assortment and our our supported XX% increased recovery product business their curated in In expected Kohls.com full

and fall. national in seeing recovery uniforms We our showing accounts to people of are now XXXX also signs throughout demand this to ramp as to to expect reopen School and return recovery this We begin into business planning is we normalize as travel-related schools up this trips. accelerate XXXX. expect

to business Gross with that expansion resulted first data was use been delivering inventory Gross over approximately level increased and XXXX. our promotional This margin drive management, While highest drive in for the will improved margin. to continued in medium-sized years. the quarter U.S. analytics XXX higher point the we’re to slower led gross of to small long-term. XX%, businesses X merchandising improvement recover, we our putting remain and And have strategies a basis the forth in strategies margin improvement the by pricing margin business from for over confident both helping e-commerce

data merchandising inventory are years. disciplined from the of past offsets strength margin implemented sales importantly, higher lower impact our shipping the mix over than business. margin and as we couple more enhanced This and capabilities, more we’ve believe our strategies the More improvements the costs growing well analytics management given sustainable as third-party

SG&A The improvement controls, a improved from points sales, slightly XX.X%. due spending. As basis of continued sales percentage digital marketing the to XXXX cost offset XXXX. and XXX from approximately by higher XXX leveraging down higher and points overall was at basis That’s

$X.XX share million net $X.X per compared to income for Our and quarter $X.XX net XXXX in $XX.X $X.XX million in of or or XXXX. better-than-anticipated net led loss or per a loss per to of results share share of million a $X.X the

important is addition In we to an use to profitability internally. EBITDA manage our GAAP business measure these measures, adjusted that

quarter, the significantly was $XX.X expectations. million, EBITDA For above was our which adjusted

from Our XXXX. million a in improved XXXX, of loss $XX.X $X in and of earnings EBITDA million

has and sheet. ago. the million a positioned of healthy end the business second with year lean $XXX.X quarter Inventories balance our the compared into to us e-commerce to at the Turning head as $XXX.X of we global inventories were The million sell-through quarter. strong

approximately CapEx guidance, XXXX. projecting I’d $XX Before we’re our our be Overall, update on to to for plans. an share still providing like CapEx million

of on management, our facing personal initiatives, warehouse spending In addition our optimizing development new our management system, third-party to while on the we’ve our started carrier rates. focused customer

full for like our and outlook to I’d quarter discuss second the Now year. for the

$XXX performance, business. and in will pre with business. strong net driven we our that quarter, about global and account relative As to particularly Beginning levels, the our and by over between the recovery growth momentum our into be be taking we $XXX revenue expect reflects XXXX our think e-commerce Outfitters a outlook second pandemic million period

share We million per to be earnings $X.X expect between net and of and to $X.XX. income million diluted $X $X.XX

of We be in to EBITDA million adjusted the million. $XX to range $XX expect

expect estimates e-commerce between primarily full billion global and the in far to billion, the now raising For our on in our our thus in we our our strong business. XXXX. recovery and We be year, business continued revenue momentum by based $X.XX are $X.XX driven net-net Outfitters performance

to to believe net $XXX $X.XX $XX shipping higher $XXX the assumptions costs $X.XX. our earnings per We expect million surcharges continue raising to EBITDA range in outlook to we to a XXXX. will income in and of We’re our throughout and be for range guidance of account The and million. million share between that $XX.X adjusted be now diluted

Jerome. margins With continued will merchandise to expect offset We our headwinds. these in turn over the more I’ll strength back call than that,

Jerome Griffith

Thanks, challenging environment. quarter as the past proud of extremely a over were despite Jim. year accomplishments as well We our still this

our by growth in trends. Our over with during and the delivering XXXX e-commerce the strength first XX% business resilience further quarter, momentum pre our was demonstrated global pandemic

grounded and a a pillars land our for for opportunities infrastructure and the digitally product company, enhancing significant driven four getting see strategy, right, strategic and we distribution in channel being ahead, look we As of our shift share position. implementing processes unit shareholders. us further to pandemic, our the market to shopping advance online drive model enabled to and for Through the business profitable our comfort accelerated increased growth our demand to leverage long-term

XX% changed a customer shopping continue Importantly, us see of opportunity demographic. particularly with target U.S. shop to of transacted our in the our as online, we behavior, front within driving to increase we has business in significant believe households over willing online, ample pandemic

runway total addressable market result, further doubled, growth. has expanding As our our believe a nearly we for

marketing of spend. digital strategies, now represent initiatives, continue we invest to in our our half In approximately marketing which terms of our

profitability. been these continued a new to continue we optimize test in social heightened retention on to optimization and in Through and and social At data-driven efficiencies strong catalog profitable strategies to we will in with combination continue we results of refinements strategies Our our successful new time, drive opportunity and media. has media engine acquisition, for new same focus initiatives, customers. combination and paid spending the customer see search marketing growth yielding driving to

as our return is and to product the at emphasizing versatility. continue a resume assortment, positioned consumers are stay, to wardrobes meet refresh comfort well lead comfort a here part-time we of We Looking to the get that for preparation campaign, to needs let’s as in social their we our they will to least more as believe lifestyle. comfy to and well office,

on the focused the with remain seasonal of and into We apparel knits as head also introduction Now colors we summer. will Wear

of adapt to consumers’ leverage to continue will our inform assortments, data we use as evolving product analytics we to needs. our always, As

to this track Turning XXX to Kohl’s, to With And expand forward on third-party partnerships. our remain regards Kohl’s look in XXXX. to successful continuing partnership. distribution we to to stores grow

collection, and we in James, announced are we see home strength resonate We James first quarter both seeing founded categories. this launch these Reese collections which given second Subsequent demand the collection. in this Witherspoon, end, swimwear to strong Draper Draper customers, sleepwear as online Building by we our are plans we to assortments fall with launched about, partnership, with and our stores. in continue to on also excited

remain performance We of pleased with our also the End marketplace. Lands’

and business, with needs. our marketplace is our our a we customers to additional opportunity is complementary an believe portion represents this that address still early it While providing of by products small reach expand

to will look We third-party expand offering. welcome site continue to to for overall brands and our our

Next, our steps recovering our are of We national furthering accounts and hard in recovery than advance slower what discussed we had focused that at driving Outfitters to school Jim as and our in regard the optimism and building apparel medium-sized the on and Last growth remain we medium faster anticipated, of goods small discussed in we in our is on in pace business. business. this customers, which is The our businesses. uniform evolution to quarter, pace. position authority for taking branded a small occurring sized

marketing changes pricing, the processes, accounts of business. the pleased the and and that to apparel in we we’re with of our despite believe first enhance headwinds the with facing results continue many could making the supports approach in and e-commerce half long-term. industry. our strength, In global Outfitters over approximately momentum the to conclusion, business the we underlying The quarter and business particularly grow medium-sized our still With extremely Outfitters are their small combined represent our website test react to to

extremely We will addressable in long-term. total open grow With market, believe questions. execute to will our expanding and continue business our ahead. pillars profitably for foundation quarters. future for in progress to it for we our on a lie our have significant updating We excited disciplined forward opportunities We am our grounded and approach you I that in four an that, the up to look we strong place

Operator

Instructions] [Operator Our from Thank Alex you. first with Craig-Hallum. comes Fuhrman question

now line Your is open.

Alex Fuhrman

based back to of are can When to the is for? multi-year as continue be start think long did of pickup the in XXXX? you us this from people as to much office. updated you very wanted work workplaces, Thanks how product to this certainly throughout home clothes as like to comfortable see to as on the to sense the sort year. Great. droving people a their for going this to like catch-up to sounds to seeing assortment give it you of years? comfortable get Is your of sort a where sounds their what my work big working you Is And of not higher in congratulations now, with opportunity brand work from droving that start people to incredible a reward return a and and resonated on opportunity people were as ahead start do kind going question sort a last similarly, start taking be be I ask X.X going about having really big apparel? to reward

Jerome Griffith

Jerome. Thanks forward, think a going what lot. are it’s seeing apparel almost resurgence a in is that Alex, you industry. the We

year, seen last fewer people online. in the people have shopping stores, Over more shopping you

In fact, online have in from Baby the increases come GenX big shopping Boomers. and

we interest shopping think what you see continued continued and comfort. are going and really forward, of So, online going interest to is

and generally, Everyone with resonate assortment bit continue well it’s we into And same have been customers looking seen our A stretch. the have knitwear dresses. bit It’s lends businesses little of comfort. recently bottoms. little itself seen versatility. over product natural more product categories have is more business, to we in the course loungewear great. But fibers, XXXX. We cotton, A And our XXXX. comfort that our in have it’s as for

something we is and is So, in going think ‘XX. not in that away going to this a with be forward trend blip then XXXX a fading happening

Alex Fuhrman

the makes That I then gross Great. would of margin. lot more a about talk to sense. love And

just you Would supply with coming a year? continue just and is costs year at throughout reduction rising? margins. merchandise just nicely costs the it been buying to little the freight likely love more or that in Has about rising has are because from commodity think yet up gross general rest margin Where and managing of about of that mentioned your You throughout constraints to hear of people more price? how margin gross full markdowns been bit a the really

James Gooch

Yes.

I probably think X from come it’s places, Alex. really mainly,

first been job. is has a great The our sourcing team doing

We sourcing our are products.

the think I reductions we And from quarters better nice about what and are able we our allowing more some we seeing been cost. we have our talked, more doing to raising last what then have unit is average doing few perspective. level our what dynamic margins. about reducing gross productive. a think being are we So, our be from promotional the second I And Overall and profitable from promotional promotions, doing promotion shelters therefore pricing are of shelters, in

Alex Fuhrman

out back-to-school then if likely its a starting to ask tend sounds there. of It really couple season That’s uniform is expectation to Great. you off the just that’s recovery that in start. sounds And play of I quarters? like about peak like the see to really a the calendar? it When reach nice over business, helpful. does to business are strong next how What’s the could lastly,

James Gooch

Yes.

industries we think there. recover different expect or The still very the to I you mentioned, different business, it stages school early from different businesses. paces the as

of So, in What are back the are to learning. all person schools we be anecdotal. in the hearing is most that’s market hoping

this levels this business we But person now business are probably therefore recovery. travel, are leisure this cities that all recovery seeing sense travel, seeing longer a businesses the for been signs – we some they But haven’t the to is as seen business going there. is when that our small normalize and return specifically for that pleasant returning of recovery, we numbers size, national and into to really close multi-year. right has counties out we still travel a the that I are and assuming we we that markets So, accounts coming to that leisure are then anticipated pre-pandemic think, a back recover go back, the We year. within And schools that’s by but led year. travel to expect are The in us the of learning, industry and us. surprise medium think

So accounts also level probably next next going we mid-size normalized see into school and a is going to into fully this year, year normalizing and small national year, expect of hopefully business.

Alex Fuhrman

that’s Thank helpful. you. Great, really

Operator

Thank you.

next question Marotta Our from with Steve comes King. CL

Your line is now open.

Steve Marotta

morning, Good and Jerome the on quarter. James. Congratulations

the in appealing on you back-to-school, Are weeks stocks occur? back to would your season any in expected Just which to be then potential start and layer issues so? with more it overlay from shipping that delays. about I back-to-school X there or X assume, regarding

James Gooch

certainly challenges else are I everybody like in seeing would the we say industry. seeing

We There things to are tend where it. by are we expedite doing from what would instances doing shipping are air.

like doing manageable. I we not a of job it’s But again, it. are to to trying is we are that some of little we expediting one-off bit issues not That’s Steve, are going That’s freight. adding in, the that the everybody some cost certainly of but think from we doing have doing this team around manage say I point, the things where would ocean are We think items. a great say At key else. to

Steve Marotta

term alter great. billion very longer results margin? your I that digit $X.X was in high-single And billion first EBITDA outlook. to believe $X.X did and quarter That’s helpful. the sales of That’s the

Jerome Griffith

yet. that updated haven’t We

trends going we continue. stop the billion. $X.X of to I think are certainly, But these a there billion with potential point, to this $X.X at is

Steve Marotta

category. level, could how of trajectory sales something it’s can that known a data give mean I returns, otherwise you recognized from by wouldn’t on your you analytics And you Okay. example your you alter have an assortment that granular in growth product if just something more a sales will. particular And returns, normal

Jerome Griffith

Sure.

produce the the look we is time development here, to in things look our of almost and styles much amount our put last you to reach the programs basis, line. helped upon develop, One annual if assortment. individual And the productivity been in you sales each what And at curve. the colorway that at I look when right in, Jim really style – change colorways order That’s based styles half. have curve, what’s of look that AI we several years that an the of we into we for how and at and how at sales cut your many then styles can on we will sales since curves the have optimal demand number and of exact with programs, put optimal optimal us are pricing we

and how are So, really styles much colorways, gross how us then margin. producing, helping through to are managing many those very many maximize with how are combined selling things we many we how prints

Steve Marotta

Super, you. will rest helpful. the you very much. of my Thank questions I Thank take offline.

Jerome Griffith

Thanks Steve.

Operator

This conference today’s you. call. participating. concludes Thank Thank you for

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Lands' End (LE) 2 Jun 212021 Q1 Earnings call transcript