LE - Earnings call transcript Q2 2021

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Operator

Thank you for standing by and welcome to the Lands' End second quarter 2021 earnings call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's call is being recorded. Instructions]. [Operator like call now McCracken, to hand CAO. to would over the Bernard I go Please ahead.

Bernard McCracken

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

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

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

Jerome Griffith

morning and us today discussion we announcement all quarter quarter on joining Bernie. results. our for raised thank outlook, everyone you XX July and Building you second across our our we metrics. where the Thank with Good year of full results extremely are second financial a pleased for

Lands' End quarter, quarter in the XX-year This delivered second history. highest revenue our

by both our well uniform compelling earlier to the global Our our our offering in our continued e-commerce as drive as business, meaningful marketing strategies the business, topline improvement. e-commerce accounts outfitters as business, and national driven global in Within and growth. digitally-led recovery product expected momentum was showed school our strength continued than businesses

driven of through data We e-commerce our are continuing focus, business are our a digitally-led capabilities to acquisition. an our important customer driver enhance and

During by second prior from second year our we and the the the quarter, X% from of XXXX. increased global quarter new XX% customers

same X% total from prior customer and the in expanded file from XX% XXXX. Our global year period the

have our supporting last customers year, retention with continued The within with rates has over customer new acquisition overall as shared and efficient file quarter, our perform are customers consistently similarly the you profitable even we new As pre-pandemic our behave customer XX% to first strategy. stores to reopened.

with ago. years as four first our We apparel, strategic you capabilities we three shared over pillars enhance profitably we in e-commerce the continue to sustainably expand and our global presence across

our progress the Our of customer is and strength by performance encouraging our demonstrated metrics. financial

digital capabilities. existing part, and enhance is, customers with both in we further continue by to marketing our new the driven implemented as performance initiatives have sustainable Our we our

social optimization. to marketing prioritizing increased business. have started paid paid our and builds presence further key Beginning initiatives marketing the digital-first quarter, programs, on few second brand our approach our as past vehicles, during our more we the engine it in marketing a by customer search to in last accelerated the and building This advanced we which our through spend as highly investment media optimization emphasize strengthen Over new we our quarters, our allowing social complements our us retain search existing media acquisition productive engine Both customers. and are quarter. as well in

you While through stages continued to products the our to with drive media this quarter. this the now social customers trends channel. to opportunity strong, remain in I we brand are new early paid in see will and provide some

which our of diversity closet brand of introduced our built marketing one continued. pre-pandemic offering remained around pillars. as capitalization our strong We campaigns the this in let's Our emphasized messaging, product get versatility well fit, our comfy message, trends our we focus quarter the as and as

in shorts, a board We During take such more more increase the and compared entire dresses. particular swimwear to the as category into swimwear customers growth family saw strength the as prior years. products saw swim extended quarter, a trend again, the vacations has versatile with significant to began skirts across later season

also our offering. responding remains year-round We customers strength sleepwear, knits to extended category are in woven saw Sleepwear as strong business. our a

on to will pandemic continue capitalization remain. to the trend We believe prior that we embarked the

as companies in-office, a priority aesthetic. hybrid to embrace a work-from-home more driving more wear approach, comfort casual As to expect we remain work

and attractively strong the woven both to are were this trend. from quarter, capitalization positioned khakis businesses, Our benefit which of

were sales year During e-commerce X% ago. U.S. second quarter, encouraging, from our increasing the

in Europe in increased a second performance strong XX% from the Our the quarter. prior year

better-than-expected our number outfitters the national in school driven by returned business uniforms Our continued accounts to to where nearly our levels. XXXX households business has and of performance recover,

partnership, encouraged brand and similar attributes to consumers expand we with Kohl's Our our highly by this to customer us base. performance our existing at exceeded to again our allowed expectations this which has quarter remain

distribution continue expansion opportunities. partnerships will examine and future to carefully We

of sales two higher withstood record business unprecedented which accelerated the call who are further turn quarter. in performance, will We Jim, that, what model, to stronger. proud we greater performing details provide achieved drive even growth. has with financial performance strong you proof a second is The during momentum these environment over is our in quarter, to past the reflected With our term will of us have model that operating and I positioning years on profitable now operating is our this our building long

Jim Gooch

Thank good morning. Jerome and you

pleased results progress Similar quarter make the we in QX XXXX our to significant we the last quarter, improvement business strategic very initiatives will to we across year. normalize environment. of select second continued strong our quarter are to the We difficult help in second with last for as saw in delivered make our great the despite of I comparisons to still

the the COVID-XX in business negatively quarter our you and last recovery April XXXX. second of recall, in As March of impacted year may with

at initial second July total grew high-end $XXX.X revised well our increased the compared XX% year, last XX For XXXX. as $XXX XX.X% quarter to of in to of the guidance to million million $XXX our you This above $XXX and $XXX was from revenue quarter of on million guidance to provided million the second of we and million.

and increased Our XX.X% global e-commerce the and led business increased our strength X.X% XXXX, X.X% in XX.X% XXXX from e-commerce was The remains from sales from by from strong. momentum business, which XXXX XXXX. U.S. as our

also to the quarter expanded Our due from growth prior year, international Europe. XX.X% in the X.X% the in business

supported Kohl's, the swimwear, during by to accounts growth improvement in through the that The driven including XXX driven were business. to school product. In our Revenue by business as particularly better-than-expected doors by and our sleepwear in number That's was compared This marketing categories, increased and message swimwear continue our by largely our Our quarter due for expanded quarter. travel our strength across national aided our increase strength our uniform and the faster-than-expected our increased performance to $XX.X of knits. a was outfitter and overall value key strategies swimwear offering additional $XX sales XX% our during million. results was in a million leisure third-party business, comfort year. to last we to recovery an increased

our national We hiring accounts continue demand demand. travel recovered travel are to -related as leisure started accelerated and accelerate meet this in airlines to seeing

return school pattern. seeing XXXX a roughly to more is we normal levels back uniform are as shopping business Our back-to-school a to

business to continue we we putting slower see the confident that a this While recovery, will the term. medium-sized forth small for over remain and are improvement drive businesses strategies long

retail business. to Moving our

$XX XXXX our were we a when stores largely delivered During of from million, quarter, the significant improvement closed. revenue

with supply chains and lower improvement conversion by improve our continue from same-store X% of we second XX.X%, a this we expansion enhanced increased e-commerce channel. and was challenged as our offsetting and continues higher the performance The U.S. well our continue surcharges, quarter margin basis was as strong. traffic a point promotional we led are leverage management. the expansion mix the they higher Gross to sales which costs as remained business shipping in from approximately data We quarter from in benefit XXXX. increased to pleased margin XXX see strategies of where global to quarter XXXX this Partially sales pricing overall from as to our inventory as third-party as remain analytics second

of percentage controls, sales, and by expense basis expense to offset The and which marketing down COVID-XX approximately XX.X%, sales prior-year from one-time due was reductions. partially SG&A related on to leverage improved improvement points a XX XXXX. higher continued As higher were digital

awareness sales higher like of highlight a to we Our quarter XXXX, marketing would our of approximately the points spend. second to as increased SG&A I basis XXX that percent importance spend compared digital despite quarters, initiative over have of term the few building towards our drive brand marketing digital and helping been to investing in the long our growth. past our this given

quarter for million income share to per Our or net income XXXX. performance million the $X.XX $XX.X net or compared strong of in of led to share $X.X per $X.XX

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

significantly XXXX. initial $XX.X For we was million, $XX.X the our EBITDA adjusted expectations delivered above both and million in the was which quarter,

Turning further as On $XXX.X we third global expanding to facility reducing to our levels with inventory the strong million ago. business position. XX, liquidity of quarter compared the Inventories July strong has were debt we credit our million amended positioned the the The and rates, the ABL the at year a us sheet. duration head quarter. interest end our into $XXX.X enhancing healthy e-commerce continued balance sell-through of

reminder, flexibility our of and line As with term our debt million our in feel is very comfortable million ABL current in comprised $XXX our loan. the business. of a financial approximately $XXX structure We

outlook. Turning our to

remainder seeing strong year. we consumer demand, to the expect in are continue We the which through of momentum

performance in reflect to margin the the of of strong trends outlook expect performance in consumer our achieved maintaining to moderate our extremely raising half XXXX. we we despite margin in second the also of while fiscal back EBITDA said, That the are significant with better-than-expected industrywide as guidance quarter supply the pleased initiatives. the are to second adjusted the execution half demand. the result a our Therefore our we due gross have strategic chain, We challenges

we that expect as shipping headwinds Our outlook continue the chain in Vietnam, has well have the interruptions, These as for accounted visibility and shipping costs manufacturing to into. congestion throughout we higher XXXX. port which surcharges, currently and supply industrywide include particularly continued delays,

situation the monitoring closely head and proactively are inventory managing We XXXX. as our into we

quarter, For $XXX expect between we $XXX million third revenue million. the to and net be

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

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

maintaining full are second headwinds. we the the despite the For aforementioned to outlook year, half strong due demand trends, underlying our

see $X.XX outerwear our continue could We by if also would travel the recovery between $X.XX and back the global in strong to trends and half. We in our net e-commerce billion, your that our business business. momentum upside expect in be primarily to note business driven continue, revenue we to outfitters billion

range in our of $XXX that, $XX.X and earnings the We million adjusted income We the $X.XX to will raising per and to million With to now a $XX diluted over to million. be outlook $X.XX. turn $XXX expect million between of Jerome. be range EBITDA to call to back are net I share

Jerome Griffith

new of We quarter levels. online, shareholders distribution global consumer and demand significant profitable growth right, Based willing the in a online households believe Jim. implementing continue a U.S. pre-pandemic increased multidimensional accelerating total and more strategic strategy processes. investments comfort. We customers. opportunity are shop increase in to by consistently our We our which for product on remain a a attracting our pillars, long foundation, we XX% committed to Lands' term demographics pandemic who than pillars, market. sales now We our focusing which have addressable growth over of significant delivered ahead. our both shift with within permanent see shopping see and delivering brand Thanks digitally including on drove as these increasing and uni-channel to getting being of represents our we XXXX remain The XX% more e-commerce on for business, capitalize focused our on a infrastructure has our End company, awareness building second consumers growth to meaningfully resilient to more created enhancing opportunity our on these the and our strong driven behavior,

our such, important is acquisition marketing As customer where particularly an priority, in investment strategies initiatives are highly digital our efficient.

in are optimization. media We continue our we search strategies social to testing new will engine refine and

We we capabilities. profitability continue efficiency are as also and our spending enhance digital improving catalog our to

to product now our Turning assortment.

our We well-positioned are to let's activities. as aesthetic normal more driving leverage product our apparel more people market, comfy casual and get the the messaging return to particularly

We items fall. more our diversity and one on will focus we heading seasonal to the of colors, into transitional message continue introduce as closet fit and denim

will and we analytics important our Our leverage is capabilities. and assortment inform an we tool our enhance data to evolve product

exceed overall additional to we our quarter distribution to which doors, expanded Kohl's XXX our and We broader swimwear Kohl's assortment our this Our with continues partnership success. pleased expectations will carry an the fall. remain this with

resonating product offering. in both the Our Kohl's offering our and display we is able online, stores full to with are customer, where

quarter, by exceeded Reese the expectations. The founded the Witherspoon. James, of we our swimwear the our collection launched second with brand During Draper collection performance

this success this that our discuss we launch would Lands' of excited for Given on to collections our sleepwear track now I home like the also are collaboration, continued marketplace. End fall. and are

in performance we opportunity and pleased represents While early remain we with term. longer stages, it the our are

brands. and beyond for appropriate customers we that Our third-party through us our products solutions looking these to addresses are delivering are complementary business needs

to to that share offering continue brand third-parties work our expand our messaging we marketplace with our enhance as and will overall assortment. aesthetic We

in shopping business We normal are school accounts our levels in to outfitters nearing Sales our and our improvement seeing more and encouragingly to back-to-school are business. Turning saw return meaningful a a uniform national XXXX uniform we patterns. school business.

our our of sized recovery. expect to outlook, with remain both seeing trends and accounts small in are We strong. medium accounts Consistent pace slower a

small the against We discussed to advance and continuing for to branded make in medium businesses. are sized and our apparel the have position as progress steps goods we authority hard

website improve The marketing We record well extremely as business, our pleased have in the quarter and we still challenging streamline our pricing. In begun processes are environment, performance. enhance our despite our our conclusion, to with momentum as and is second revenue enabled e-commerce emerge stages past the model, business. strategic grounded proof in our of this resilient further stronger, implemented us of of initiatives pre-COVID to the from initial accelerating our pandemic underlying we strength operating The over global momentum. the three years our

we creating business you We our We disciplined focus continue through on term With long With growth addressable profitable to are strategic on growth that, to manage the very total updating for our expanded look questions. we an foundation, market, value. we and excited open future. our of proven shareholder progress. will call as for pillars forward

Operator

[Operator Instructions].

with We have Fuhrman Craig-Hallum question a from Alex Capital.

Your open. line is

Alex Fuhrman

with you full question Great. Hi. strong raise taking are ask and able Obviously, very what to seeing year about and costs a you are here? my it congratulations to wanted like I shipping the your sounds guidance. for quarter. much Thanks on delays

Christmas? are clearly products result those any expecting for? you I place customers And of the offsetting to starting key would you taking than the delivered you to have be days more as hoped orders what see like orders guess get importantly, where being are But their for So a you longer canceled had get ahead holiday strategies season to might of costs. in

Jerome Griffith

challenges board. probably higher part year-and-a-half-year. year, take have across seeing have a that, been first Yes, for can these moving I been costs challenges the really Yes. the of we Alex. the last The

to at strong especially in performance, and point, I have in last these quarters, our the you those if of a We I your look expecting And job In offsetting delays been teams to are great of similar our those. couple at continue doing as our trying get out a front to of rate. chain. points supply think over at to-date, have various our we had, guidance, said,

to of We the expecting orders having the continue. expedite in back with costs shipping continue to associated And some back consumer are expecting costs we demand half. the associated are strong with are higher to

Our said, Vietnam biggest have and specifically certainly difficulty right the on a doing but challenges in been the if challenge we now, happens will where And just job, we we further teams good are where getting I there's actual product. some anything be having down. going seeing highlighted shut are like factories

Alex Fuhrman

to really here? along hire, going that for update helpful. Do kind workers That's that that how you just the you those labor season? some you Great. the you you already? are then process you workers of And you seasonal typically Are have with holiday an commitment have can a think that about in confident far give of are the need us you lot as

Jerome Griffith

teams in get great Again, certainly of funding front are trying a It's Wisconsin challenge. in that. month. out The to of the doing federal a job stopping is this

to would be into are hoping still from But going we that. we where to think for So season. want Christmas. say, slightly it's are this would a behind we we get I pickup manageable

Alex Fuhrman

Okay. That's quarter. again congratulations really really much helpful. strong and on Thanks the very

Jerome Griffith

Thank you.

Operator

That Everyone, session. and thank Ladies day. This may for concludes a Q&A gentlemen, does program great and participating our the today's conclude you in disconnect. have now you conference.

Lands' End (LE) 2 Sep 212021 Q2 Earnings call transcript