LE - Earnings call transcript Q1 2022

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Operator

Good day, and welcome to the Land's End First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there’ll be a question-and-answer. [Operator instructions].

As a reminder, this call may be recorded. to Officer. call like McCracken, to now Accounting Chief would turn over the Bernie I

begin. may You

Bernie McCracken

Good morning, first you and for results, and thank we can a earnings Land's which our discussion call be End found of website, this our released quarter on XXXX for fiscal morning, joining LandsEnd.com. the

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

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

Jerome Griffith

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

team, and consumer structure was who and cost continue within EBITDA navigate gratitude conditions. supply changing up compared actively to our macro versus quarter as begin difficult in we our ongoing expressing by our the landscape, Revenue the agility fortitude the down period, achieve to the me Let to my adjusted By demonstrate challenges, managing XXXX. we but the X% this first expected for XX% XXXX, results during quarter. range challenging chain

impact We e-commerce direct pressures business. supply and macro our are consumer seeing chain global

long-term our of success However, we see continue with model, third-party we despite confident number the ongoing channels. supply in in Outfitters proven period. strong to styles flow our digitally-led new combined With challenging growth our of our across in and a of chain continue business, growth impacted quarter, to business, Touching executing topline the results, strategic factors potential colors. pillars performance of on strategic and our that the growth, impact including our business initiatives, proven our delays and distribution with remain the

decline in slowdown for impacted compared In file last Furthermore, to e-commerce These an in many quarter our on category. saw the apparel buyer fuel consumers. challenges in associated to the particularly food and addition, we inflation discretionary traffic, industrywide unprecedented spending led for in year.

these to loyal meet inventory we highly as the needs. flow of that normalizes our are we and Given confident headwinds macro base be ready average XX will with an years, customer subside, and will tenure their customers return

the model continue operating our we to strength what and to digitally-driven growth While control we navigate leverage of our pillars. strategic advance we can these headwinds,

or that seeing customer. and unit down. and In lifestyle, an to product, to move products digital, we're highlight made both will women's, channel these pillars, resonate progress demand can across closet with product, evolving fabrics Starting with with that growth I men's be our one including continues infrastructure. dressed up distribution, versatile our for Next, complement strategic assortment our

and office, the we workplaces, stretch to over we're We We the fabrications, and Chino, makes in Similarly, swimwear that cowl particularly we saw and favorable home with or versatility tunics social to strong pocket in gatherings. neck our the and our working With continued in during at pleased denim, performance transition at resonate seeing performance casual. offerings that the remain swimwear women's, into styles hybrid leggings demand five well, for business. response. lean comfort-based quarter, the as strength saw our other receive cross products that men's easily trend from from

addition, a out weather quarter, cooler. of strong as into the spring, months the was outerwear coming category remained early In winter during and

one let’s get emphasize to highlighting time our our of versatility while We at comfy with focus, product. messaging our closet continue the the same

As our adjust product to these assortment analytics leverage plan customers’ to needs to adapt our data to evolve, changes. we

catalog. to marketing, engagement continue we effectiveness to seen plan designed we to to we brand investments The Turning lean drive make refining awareness. customer our are and have and encouraging, and the search improving of results into

margin continue data-driven the overall becomes optimize strategies promotional our as competitive. Importantly, leverage we to to more environment

in engaged VaynerMedia that that long-term customer Vaynerchuk’s As last acquisition, a campaign brand agency past, exploration initiatives remain we Gary We quarter our accelerate focused to the driving mentioned and growth. on was marketing new underway. customer our

product own including into a out our in result across media, is we Lands’ approach desired catalog, head competitors. to The End world the develop brand and differentiate campaign As website. channels, social allow all and from will marketing us top-of-funnel more to our this elevate to brand our the a campaign with fall, showcase aspirational

we incredible launch board swimwear, to products, tankinis, most was on-air board and our saw Turning notably focus with our The exceeded to April initial successful third-party shorts, QVC in highly skorts. and our response was expectations. our an of partnerships, and category

opportunities successful fall looking holiday a we for launch, Following season. the at are

the an by long-term our excited expanded for remain to we Kohl's offering expect swim doors We to the we category, with summer opportunity and XXX with are growth incremental offering within Kohl's. and increase addition, discussing year. specifically partnership, In next spring summer, swim our over pleased this are where

our now on Kohls.com. and we're XXX quarter, assortment full last mentioned As present offer doors in

track count doors XXX and on by on total in which this momentum XXXX. XXX doors remain fall, over also Kohl’s to will to in build our bring be We store

to simultaneously seeking continue existing additional We channels. partnership new build will opportunities in on partnerships, our while

As earnings to on XXXX, mentioned two we to to update in forward calls. future one new providing partnerships an we and quarter, last launch expect look

to due Outfitters national our quarter. business, in we Turning the our lines saw with particular performance, all improved business part across strength accounts. was during in growth This to

as accounts and trade well small events medium-sized continue Our as shows, performed in-person return. to such very

very demand school uniforms Lastly, during for quarter. strong was the

for continue leisure travel, demand Outfitters growth to in and schooling, drive in-person expect to We business. our company in-person events,

our that, were party advancements product. initiatives, the Jim. over the encompass in adjusted to technology strategic and our business We're did and I With experience. movement management in so our beat Turning agility leverage same miss to despite to our to implementation, operational efficiency infrastructure, time we first Outfitters quarter, Overall, at EBITDA of of deliver growth time, in turn enhance it will in in and the At also faced continue the our able the our management business with improve the team expectations, the product we a third much which across to while demonstrating model. our businesses. of in driving marketing to line reinvest focus not transportation given also executing where warehouse a in industry has system will multi-year challenges to customer been process we

Jim Gooch

achieved and to morning. line challenging in We're that despite topline impacted and you, our pleased macro Thank EBITDA incremental cost expectations, good have pressures. adjusted headwinds with our created

pillars, we growth confident well as we expect long-term the in the our in strategic our near-term, While these remain continue health of challenges to as business.

year, revenue last For compared decreased total the first $XXX as million. X% to to quarter,

expected, lost impacted in-stock continued sales. the items, transportation As which position quarter, in experience our certain delays in key resulting we to through negatively

to improvement $XX was or apparel within women's at continues XX% and from to increasing million for business sales Amazon, compared and to decreased e-commerce XX% our This last and XXXX. global swim XXXX. XX%, largely that, international third-party e-commerce from business be particularly strong Kohl's. decreased very at the year. strong, our Revenue increase $XX decreased by a Within Kohl's categories Our our XX% US performance driven business million,

addition, partner increased across In our three driven we're XX%, sales the with all even the pleased it's lines. our we in extremely April. US, on-air And strength in business In Outfitter business, with results. launch added by another though QVC early,

see in also in heading businesses the our medium-sized to national strength increased demonstrating the to uniforms, the show apparel. school are season. basket our very sizes small high our into continue seen demand accounts. demand as We seeing growth have the We're customized with need quarter, And pleased in-person we during back-to-school events strong to lastly, increased for to return

Moving to retail business. our

Gross supply sales our margin pressure increasing decreased of was quarter, During the XXXX. a with $X of same point quarter to costs of the of first revenue XXXX. incremental decline XXX-basis from million million, quarter first from the margin entirely result US first quarter X% the a approximately store to delivered performance in of in when chain an compared XXXX. approximately XX.X%, The $XX we

the have these in transportation we expect are contracted stabilization We That through of see to year. the remainder carriers to elevated some as costs said, encouraged honoring rates. remain now costs, begun

points a versus by XX.X%, on and XXX reduction sales. lower expense approximately As offset basis continued was SG&A basis driven marketing by sales de-leverage percentage of XXXX. of spend, decrease The lower partially a was controls point

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

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

EBITDA For $XX.X $XX.X XXXX. to the quarter, adjusted million million, compared was in

million, challenges. $XXX costs in million and at inventories increased chain $XXX ago, balance shipments, at to global the due Looking by the end sheet, driven to quarter transportation a compared transit supply of the were year the higher entirely

elevated avoid account of times, delays. the have expect to our That for and an position. from inventory second trying quarter the challenged next expect potential calendars seasonal remain for as couple to We we product extended we to said, remain our in-stock to longer the quarters, lead

our prepay at revenue levels, brings and between outstanding. update quarter, mind, months. debt of next ABL term shareholder million the couple the million for loan, anniversary $XXX will exploring loan that the the in net our million $XXX With could borrowings quarter, context second of $XXX refinancing was our million of value, the the debt. $XXX We've flexibility $XXX which at hit two-year drive that of expect fall to added term we'll options over be and to Regarding million. we you end begun and balance the This first

diluted We between expect $X million of loss $X.XX. to a and to be $X share per loss and million, net $X.XX

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

as of our updating also elevated full Our incorporates year million expense quarter a guidance for in costs. global approximately $XX We're incremental guidance. chain second the result shipping supply

the For now full expect to of revenue $X.XX billion. net $X.XX year, we billion

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

adjusted $XXX EBITDA range be million. a $XXX to expect We in of million to

shipping abate to the guidance global margin call approximately gross assumes guidance With back full begins I'll supply year second lap the over Our for said, in half, the in incorporates as expense. higher that costs. million incremental we chain pressure This turn to $XX Jerome.

Jerome Griffith

we our of the spite fundamentals In remain challenges are business of experiencing, strong. the macro

will the we our As strategy through same. remain continue XXXX,

strategic January We four of channel and our in our will businesses. across all our we leverage digital, distribution, unit product, long-term which confident outlook provided digitally-led remain several infrastructure, business We in growth, include the reasons. to of advance model for that pillars

for. the brand base. look We We customer loyal offer relationship with have heritage, a they right highly quality value strong

businesses to in committed support diversify in continue channels. that, remain infrastructure to our your both we questions growth our And With and long-term Outfitters will business. take We now reinvesting consumer finally, our to across we

Operator

[Operator instructions].

from Telsey Telsey comes with question Dana Advisory Group. first Our

Your line is open.

Dana Telsey

to an Wanted of two on perhaps discussion morning, Good Jim. get and couple things. - expanded a Jerome,

over Kohl's, few on debt like. It be, profile what First, the that how the look that the you about you're from? in the options had and margin categories working. that second has thinking doing? mean what is are and Are does what sounds months, like could how see opportunity could And has guide next received? that how do that price half. for product expanded Jerome, that you. taking to And that opportunities? potential improve gross and the third-party the coming then mentioned the lastly, in Thank you other you been Where

Jim Gooch

would position Dana. in probably maybe specifics those Maybe to Thanks as take plan all necessarily I and is what a process. more bit the you the our for this point, give on on debt, little one I'll questions. on Thanks, a aren't any the to first comment but

come well would and flexibility and then. into As all our we're I I beginning options, options we're September, certainly that all say of options a the will think everybody and well on And us plan waiting then. to until certainly are to at mentioned I at before point, better the debt, the we're - as do say that our refinancing hope I back this looking the to of certainly gives to months, the share I I all far not September, back hope what on table that position point. more would And process. that already that we’d as coming but possibly say but I before And any be specifics in at be be.

Jerome Griffith

Dana. And start Kohl’s, Thanks I'll off the with for question.

category, whether Swim an going was up. on year. what an is our is in or been third-party own what into actually very first which, quarter over And we're what this swim like. And the expansion seem category online been picks what as be the party into pleased road a everywhere, sellers overall else's pretty it's good seeing our though also website stores, website. our see we Kohl’s the that Third best on We've outstanding stores, of results marketplace outstanding store us. we for us has is business more go somebody we're seeing to with sellers is look for the that best down

one been margin expand into the business raw we're a standpoint, been exceeded shopping QVC other in increases. that how is web. pleased we've what the underway seeing From this the everybody's we're next. on increases back with been But any margin, is, raw price product that. pretty it's the month, gross managing is, like well the year, and offering to expectations launch less great opportunities, other. handling for materials of We've And haven't So, we're then really was the a people we've us, performing this which also what from past pushback What We're on seeing well. we're and with price. relatively looking helping results with expecting from the the part seen on going look very for increases, what there. we increased we're materials, major good consumers well

Dana Telsey

… Got it. And then

Jim Gooch

incremental the second another first Yes. that's you anticipating too, to We the the for will the benefit to add half the numbers, a bit, seeing that into we of a majority And little back maybe be Dana, we're normalization of full that from gave freight this built the some perspective. have and the freight what for charge and quarter, year.

quarter get we higher of when to into going quarter, back against the comparables much up So, rate. into half of the a be third and the we're fourth freight

So, benefit also gross the in us that give margin. some should

Dana Telsey

Got about to you're the Thank top-of-funnel see do when it. and that And to that, the marketing to traffic begin traffic initiating, think driving on you your web, do driving we how then you. web?

Jerome Griffith

and opportunity part been be to the And what top-of-funnel. the up a biggest newer coming is of couple at we particularly opportunities really looking bottom-of-funnel, years. in done lot not customers course And we've top-of-funnel do the But bringing think over brand. see QX - for really back have when Our we expectation seeing of year. job, in think good we've should more start QX. SEO. you'll got really is that with to you'll I We've some and That's of really that a we last the in results of this marketing the other

us, to think and see. it So, be should going I worthwhile it's exciting to for be

Dana Telsey

Thank you.

Operator

Capital. question with Alex comes Fuhrman next Our from Craig-Hallum

Your line is open.

Alex Fuhrman

lot that guidance, the for of not of Thanks headwinds. given question, recently, companies congratulations hitting EBITDA your on guys. my and QX doing Hey taking a all

with what and people read are people into and hear sense, ask are and mean, and shifting from here. seeing sales I back swim. pulling certainly e-commerce spending makes you that down. certainly generalities It So, that is there you're what of and strong others in there, being have given to more else have slowdown been kind about on? back the kind probably seeing that, in What what we the everyone demand in pulling services categories quarter are from strength experiences on. Wanted the a consumers of seems been

Jerome Griffith

and pretty people those a home. looking in price, against fuel. and that I but there and would money a lot the money From focusing comfortable really out up commodities a still an people apparel ago, category been great really right working they've of think no standpoint, that's apparel. seem clothing were now from be to hurt home is there us, stimulus and definitely on, board. one particularly two I to Alex, was couple work looking being Where and their at for are I spending say, up There's for much - all of across quarters year driven of food being mean,

seeing. think we're what So, for waiting looks the generally that's I us. to what like future And you're see

Alex Fuhrman

about years, And couple variable the but drop first kind that's can the across imagine it guys category supply most Jerome. margin good managing mean, markdowns, sudden helpful, done your costs board the job seen time outlook? That's biggest demand swimwear. of at I for prices Great. in a you is is the over really And here. gross of just I and then markdowns ask chain this here probably really risk a we've I past have and the sounds is like would

talk for the markdowns into of category hear good So, expectations to and is going little your you that about here? baked bit, kind But what's what guidance that well. a can are

Jim Gooch

of of more coming than receipts showing our about improve been freight in-stocks season. remember Or that up choppy into can us Yes. pull chain the the a try inventory, we're That so increase flow Actually, inventory quality choppy. inventory, is getting overall even the added higher result good is forward has entire excess we because supply costs end in that's of forward about been these either to has about to and trying so the out we it inventory. feel capitalized inventory of though pretty the as to as inventory going many

driving So, the inventory up value. that's also

So, good inventory shape. added into our we don't because of significant that have markdowns built pretty forecast a is in amount

Alex Fuhrman

really helpful. Thanks, That's Great. Jim.

Operator

Thank you. Everyone, and Thank That you now the have our today's include great a concludes This call. question-and-answer conference program joining day. you disconnect. session. does for

Lands' End (LE) 2 Jun 222022 Q1 Earnings call transcript