Earnings call transcript Q1 2023

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Operator

Good day, everyone, and welcome to today's Lands' End's First Quarter Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions]. It is now my pleasure to turn the conference over to Bernie McCracken, Interim Chief Financial Officer.

Bernie McCracken

Good morning, and thank you for joining the Lands' End earnings call for a discussion of our first quarter 2023 results. morning be this website, on released landsend.com. we and found can our which Interim and Executive Financial join Bernie Chief I'm McCracken, Officer, with McLean, you Andrew I'm our Chief Officer. today to pleased

we limited report will differences on the discussed could those Such differ this actual that about SEC statements After could the that and but risks we're in items reports prepared to, conduct call. XX-K not question-and-answer uncertainties. included contribute also information forward-looking session. to includes noted discuss those results quarterly include and materially a to involve from note Please filings, statements. are company's remarks, such Form including on Factors the and XX-Q. on company's our Form annual The

the by change. outlook company of events to us. provided is and on outlook call update by may the undertake that company's information and forward-looking cause forward-looking today, to any represents as Subsequent developments do company's we not obligation made this statements The the

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

turn over Andrew. to will call I the that, With

Andrew McLean

pleased well our of expectations generated revenues $XX.X of today. focus brand company-wide demonstrate you, the and our thank the value Thank us We adjusted End affinity, the for for I'm of of Lands' customer execution. and high the and with EBITDA of and the at our Bernie. our Good offerings, quarter, exceeding strength stellar morning, core $XXX guidance. results our million joining end deep first which you on million,

value shared I with strategic But I'll focus a I provide quarter and the and from initiatives want you we're continue seeing our first to our on first, our quarter progress commentary moment. to customers, that work more we for the employees, enhance to strong in last on do shareholders.

Lands' we and I are believe for creation, the stakeholders know, that customer products with that from well-positioned history. achieve our focus taking value customers value our ensuring high-quality partners our brand's page tremendous they to a you XX-year all opportunity we're As and for. are has our End to are we iconic ahead generate providing looking Beating and a

driving our our short is alongside months, natural our us have clear, business last MPD we tops, we category they're and Swimwear In be performing in progress cover-ups. we're a a and is tangible results. tells, top well. on And leading Swim and focus that the vacation adjacencies women's up prioritization renewed few we're Year-over-year, just products shared quarter like core that seeing of Swim for high a single the scores market customers that as in share. priority To show is business brand digits. our seeing of it swim and gainer its was the

outsized the in support that us leverage replicate us is targeted categories more other run we us steps to path our consumer customers insights swim template for newness. exciting can for and responding right-size to tailwinds pursuing enables taken gross file from this and in strategy which confidence are our What's and to that and and our cost inventory promotions categories by gives informed creation. looking broader as drive that we trends we margin customers our that are particular, well those in are believe We've value with our expansion bar vacation and

the marketplace. and functionality swim which items each where like categories is bringing with authority strategy other strategy this and bottoms innovation look and to of attributes at innovation, customers, how Lands' The in we and key more have our Underpinning engage innovation performance critically in innovation also in how we franchise are execute. our and back and product outerwear, how fit deeply End, we present better we have

for a is innovation key us. While value driver

legacy, do appreciated will so We by world. the and the with consistent country our across which XX-year is around customers

is At company. its a core, Lands' End solutions

them. and We the are customers' can prepare a We by associates. life’s providing can families, that strength, consumers uniquely many to business of for can in high-quality about knowing of businesses avenues they're and themselves, solve positioned plan our and the products where looking our anticipate for obsessing from better will continue deliver and position products to we we issues for, and we their execute that needs serve their are partners,

value believe there's leverage End create or enables to by an Lands' also in best a that strategy partners we opportunity to do can pursuing their strengths. do licensing bringing what own that We

significant authority margins. areas Lands' coupled we actively our balance royalties, considering last have Costco, and see of gains, asset-light significant others. from better and sheet the End in distribution, increased licenses we enables up incremental multichannel with and call, on model an to resources brand our we for profitability, free to are to solution-driven between brought focus and are that operating End us potential our The channel, category, utilize Since partner with asset-light products for to potential supply improvement us in on a this source visibility for value geographic a new Lands' drivers

On our our to work proprietary strong that the to about our we we and can call, we're it better provides to the last quarterly data leverage us use you doing file decision-making. buyer spoke inform

our we better rates with our to conduct We're flat of our customers. existing customer and continuing over buyer U.S. refine our expand active of can qualitative reviews time. in saw and needs quantitative our base strategy of customers data and strength to the quarter, rebuy the the cater stabilized that we and our to growth, For so file reach

already of the have learnings We've started out results. work seen and rolling this positive

customer the a reach that of in authority younger vacation an our can where and stories swim base more broaden and Instagram, weighing audience End on we're as recognizes marketing example, category. heavily For our the Lands' we

also marketing that our our greater process through efficiency to to as continues. to and better out further data enhance leverage strategy and continue our faster We'll We're working operations collaboration roll decision-making. additional to and improve updates

Our our we're solvers to our customers nimble demand, goal problem empowering for is and to operating lead that that value for tools, results creation team to processes and be our should information, and by doing differentiated improved the the value shareholders. our customers, enhanced which with provide

quarter we across the the saw revenue, guidance first the end year-over-year. quarter, during X% our of In continued back strong what Now strong our of to consumer resulting the in in a sales turning business. our in momentum at XXXX, with progress $XXX Building million to activity results. first quarter increase the fourth came on range in high quarter,

capitalized chain performance. supply margin we year-over-year and Importantly, improvements utilize cost more on strong in promotions, targeted resulted which

inventory. Regarding

as and We last are we have report that of normalized consistent to to with returned pleased the to QX, quarter. what make of continue progress we said end inventory levels

lean our pre-pandemic come we the margin As with opportunities. our will proprietary gross is to work supply, or be anticipated to below demand levels, inventory that end which expect and will better a largely continue data, to of into by that levels match down QX, our result of ability we at supporting informed by

factor, improved accept chains to We our that would Critical a inventory and supply vendor leveraging is is normalized not driving our focus to our return a freshness levels relationships. increasing on enough. terms,

of Our inventories much net stance we for expanding to programs to core on implemented is as the time handful strategy. go-forward reduce inventories, Already fall nine weeks a have market. vendor-managed from the holiday a removed to and with view as calendar that

core that with that products what swim surrounded knit essentials responding momentum is We've appropriate as hybrid women. other well in course, our to a seen are for woven our a the seasonally category men well as to, linen trends our are and sustaining. tire-like customers appear We, be taking tops casualization tops long-Sleeve and responding leading look and reference at that as also underlying good the customers theme of and we've vacation Now towards T-shirts exceptionally both life to. and

in that our well experience, Bottoms for and for bodes performed sales well. women tops. of both men And

Lastly, I in overall customers this the point, critical newness is as assortment. earlier, well mentioned to are responding a our

into forward, across categories. to units we throughout we offerings seasons are committed and As regularly injecting move our

Outfitters Turning the to business.

both consumer takes business. our I've As successful with of ahead. signed business opportunity for and plenty we a that own its as engine five-year this on is Airlines, before, Recently, to extension said which XXXX. acquisition customer American a potential a with agreement

we reflected guidance which we provided wrapped up in last As expected in detail quarter, during with nonrecurring revenue, call, resulting quarterly work the our shortly. Bernie Delta and on will some our we the

management we End brings and will in for In addition, the Jim Outfitters BXB will Timberland. over business. including years the the driving our of addition our leadership Cruise Choose XX team and have general joining and new a confident be in great Jim be expertise expanding business. a leader and as Jim June. focus Lands' continue hired to on sales O'Connor. Outfitters businesses. BXC He I'm we leadership

a digitally to store online venues across We are customers to business, variety department serving landsend.com of our Amazon a from native marketplaces.

of happen particular, performance pleased and online with As landsend.com. End a in our over purchases Lands' XX% with We're click.

us and a End to significant demonstrate which marketplaces to margins. our growth opportunity additional This directly direct we see partners, our strong customers newer Target addition, this provides not our our business from reach our most to recent and continues quarter. Lands' partners' engaging deliver business enables brand. and which Macy's, sell opportunity provide fulfilled launched Our through including valuable online in We warehouse with

our the mid-single-digit integral the the with continue for domestic to leverage about produced view Increasingly, which quarter. partners growth speak to and existing business growth digital increasingly and of platform we proven this this of an digital opportunities journey, consumer explore new part combines journey. as BXC We'll

I Lastly, business tapping than new bring. offer and the customer business, that and is to we distribution products the exploring U.S. opportunity point, grow license fees. our excited we value in earlier expose international our to opportunities geographies, as vantage for our partners, us various We're an earnings through demand including from about and a core is my online expansion, mentioned faster lifestyle

reacting business, are This levels on by demand the we success that ongoing approach of critical to region our have to in consumer key focus a Europe where the U.S. lower in includes much customers existing resulted has for we in with categories our authority profitability the the applying are addresses of flat and In us in linen cost approach disciplined year-on-year promotional positively. deep a Europe, newness which to development. combines platform particularly a and incorporating responding more growth control assortment gives and focus future This in on and been activity

the more on updates additional progress throughout our we've executed and the made of there's coming I'm our ahead, to in on way efforts we and work quarters. sharing strategic forward I proud quarter plans, the look the

I turn will to Bernie. that, With over it

Bernie McCracken

Thank Andrew. you,

revenue performance end of an at $XXX total increase mentioned, For million, the Andrew was the X% first range at year. quarter, compared as of our guidance high last to

sales driven business, U.S. categories. first largest the from X% which of represents promotions adjacent targeted Our e-commerce by within so our swim increase product segment, a and quarter of XXXX, go-to-market

Europe Andrew e-commerce continued Europe, in Our in demand consumer XX%, of reflecting business down lower quarter the was the levels as noted.

XXXX first was our quarter XXXX. Land’s first sales Japan, to Globally, decreased year-over-year sales adjusting conclusion $X.X XX% difference End e-commerce excluding were revenue April, revenue anticipated the with accounted by and closed revenue X%. contract was outfitters business year for the from Results inventory or which over from from Delta, for their End which X% the of the million million XXXX, last Land’s at of strong five-year outfitters when in quarter the year-over-year of X% $XX in of the in up lifted Delta

of We growth in driven third-party our continue revenue pleased as our XXXX, which compared X% increased with to the for to partners’ by marketplaces. online quarter first business, be

a to noted, expected selling quarter strength us, launched our important contribute the third-party the and Macy's partners. winning swim these As partnership inventory was future to category included that of for our in through We swim business. and

strength with in of we Moving margin the across to was X.X% as improvement quarter $XX driven quarter revenue travel costs. same-store XXXX. our point and in to the U.S. our XX%, first retail stores, approximately sales of leveraging from first XXXX. in supply vacation chain channels, our delivered as improvement a by increased improvements from Gross approximately margin owning XXX-basis million, increasing well the The

offset SG&A a marketing flat lower of by costs. spend, percentage employee-related approximately As higher sales, digital XX%, driven XXXX, to by was

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

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

exceeded which increased end $XX.X our of million, For the by quarter, XX% adjusted the to EBITDA expectations. higher

late of end inventory a the decrease of at in The was times inventories spring supply quarter year and and challenges. last to to to selling leverage sheet, closer ago. result due the balance the a summer the compared million to transit normalized inventory chain were we supply the $XXX chain at the Looking took receipts and actions XX% season $XXX million receive year to

operations to due $XXX cash was less the flow. improved last million inventory used in net Accordingly, year than

$XXX our had million Regarding quarter, $XXX which at first million $XXX last than lower was of loan million our outstanding, balance million, the end $XX ABL was debt, of our the term borrowings and year.

explore our to part subject and opportunities creation, As we to to are of to market value to conditions. debt committed refinance doing efforts shareholder our are enhance continuing so

the the company's $XX previously remaining of million million quarter, announced first repurchase $XX end quarter. as bringing of we’ve to of authorization the authorization, the During repurchased $X.X balance of share under the million shares worth the

quarter, $XXX million. second net expect to between be and revenue Turning the to $XXX we million

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

now We net the range billion $XX $X.XX are guidance expect our be Based on first EBITDA to and revenue full-year expect updating adjusted of results, $X.XX million of $XX we in billion. quarter our to strong to million.

to in to expect million to of loss per per range $X.X net be net a and earnings income the $X.XX $X.XX. loss of of We share income million net of share diluted of $X.X

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

Our guidance the expenditures. year full capital million $XX incorporates approximately for in

over turn to the that, With I back will call Andrew.

Andrew McLean

Bernie. you, Thank

strategy to to pursuing. history customer our brand. business in the first ensure to-date and strong product confidence actions Swim template, innovating give today End's engagement, internal strategy, we approach are true quarter aggressive, and growth our As With Lands’ us building staying we're as Vacation we’ll achievable you've to continue on and taking we're profitability our before, and and overtime, drive to improve and say me heard results the

key We also continue to make leadership are team. further ramping that hires, up our

than April. Vice a Jim Manager Hope President Stuart us joining in as as End joined transformation us with Nike digital, U.S. of is he advised on Senior Stuart of enjoyed to XX O'Connor retail, industry McKinsey SVP, addition at career a Outfitters; more where savvy from In Lands’ marketing experience. Lands’ leader and successful years End and clients initiatives. He joined E-commerce General omnichannel digitally and

to leader profitable team. With potential U.S. as business, the have we're part strong Stuart such strength our a direct growth our pleased and for as of

As we'll is and continue and for bring business, shareholders. updates about our our provide the we innovation strategy execute how to across delivering work employees our customers,

that, your we With look to questions. forward

Operator

take Telsey please like We'll your our from speak question line Telsey ask question, Instructions] Dana Dana once Dana [Operator ask Telsey question. you And open. to again, is your Please Group. first would if Advisory with now. your Telsey

line Your is open.

Dana Telsey

you Can Hi. me, hear okay?

Andrew McLean

you hear fine. Yes, we can

Dana Telsey

confusing. Sorry about little a that. was It

congratulations So, the on nice progress.

initiative of As the are purview And you margins marketplace you greatest how inventory and that beyond see the seeing think vacation on through year, are that and how beyond apparel, the where the are you nicely, the summer? are also, you. the landscape? how expanding this the growth related during swim promotional remainder you do year going which the brought of the Secondly, see and you in on do the levels, seeing what in Thank you rest the there? from have, of

Andrew McLean

into product a we best Dana. the leading the a our a took you, do Talking market Thank defend then able earlier into and get able market to starting found through And to faster. mean, had share leading chain running and went and pull we to and faster ourselves market quarter we actually and is rather I coming to share we supply by being vacation. share took that being trends swim attack. with view and out, we is Okay. that by thing longer,

to data able prolongs market will half. were So, we've that the be a continue back to our to to where react been expect good now give the And used trends that something insight trends. We into to go. going us into we

that of purposes evolve swim and in we're July goes intents we our a -- Traditionally, up into we've business expect it. fourth summer what us. vacation to part We all Particularly the be of some saw now late June, for and wrapped with continue to to sales. is given timeframe. year-round in going swim continue a Where on quarter see to

outerwear will that. product the our us that with and to do for into about really intention and evolve strong share where a we done the what vacation So, we in strong the we've half feel back outerwear outerwear, year, of pick put largely with up is behind swim and we we'll have market position

having that is beyond solutions, vacation these expand expands seeing to and we're that. ownership able having having this we're What and

we've that the wide really call, which bottoms we nets seen been and lag, business, strong, lasting we're ownership for So, typically and called in like particularly are enduring our out trends, seeing on us.

it wasn't going of vacation a them inventory and can That the to the state able a us of lifestyle, that, It We staycation. cycle. We've vacation knit like be made denim we're could actively it's We part your solutions, about knew mind. in lean bottoms. early managed to into be about around walk can it's a our -- be dog. be for

evolving those in doing And back that what so, marketplace. categories it's really up have and we're like to authorities about

it opportunities. Lands' but all product consistency the And marketplaces journey, we the mid-single-digit That for together End in along Bernie digital view marketplace. see answer marketplace as we're a growth that and I I'll see And on was really part and our the domestic consumer along going when then we put very with on just of I'm with Amazon. journey. to as it said Lands' if I with the with at take look the question, inventory. next for End going us. I the let you where happy fulfill We're call,

actually like minute. So, strategies for actually my Macy's lost opportunities the the to Amazon. see stratify target the product I against a We against words against

more then would and with we we them I And customer think as then marketplace we're and from to the by from basics. Amazon, that there, the main on about So, offering to out certain bring landsend.com, it being for marketplace them profile a example, expand finding offering a the be build new able site.

business us side we customers. business and pick us and like margins the the to for the own. it's growth, End it's We're to the up just see the a that wholesale specifically about leverage Lands' becomes fulfill buying we it not the that I say it please would that leverages inventory versus a helps strategy strongest doors. And inventory. us single that of merchandising we It to feel for the and continue allows

inventory, to Turning Bernie?

Bernie McCracken

Yes. Andrew. Thanks,

So, to The of advantage quarters. flows us very team's our and that be going with to that. now taken able inventory, the XX% hard has the in stabilized inventories digits mid-double the the down inventory And year the keep aligned to for selling our inbound range get are of our for transportation on really we've worked we periods. on rest

the the newness, promotional and liquidate try and margin a will products, to in going lean other our found that -- industry are to and we the discount it are where to that know join higher Andrew a business to as promotional there strength to inventory. drive into as have rest go of is business, have promotional definitely And we in far still, as very where market that is We are is has we noted.

will inventory But feel and the be at levels for total normalized rest levels very of inventory about our the from a good year. standpoint, we

Andrew McLean

at keep would that of to fresh up were drive just we've bring that background. I season of one we we're and And determined higher. set think the that, a -- like add much to got want a down. and beginning a run of original at We and traditionally, to turn the the David, we inventory catalogers, it in let lot cataloging effect, as

it the starts get a season. little to towards So, the as get stale of you end

lot it inventory its better There's are in of advantages a fact, against to flow, it's progressively whole better in shots In for the bringing cash just and for it. to better for matching going the revenue. we're better Its freshness, and markdowns.

the to revenue that as reflected you'll run business well margins But better us, way. it And for we're able matched in come will materially as to through forward, keep we profile. inventory the see that move you'll it turns in see and as

Dana Telsey

Got it. just And follow-up. one

the do adjusted better-than-expected EBITDA that uptick the levers? With of unpack main the side? side, that Thank driver the that How margin the gross you. in guidance, the from prior SG&A is we terms on of

Bernie McCracken

you coming Dana, average continued driven most and Yes, down in our margin. the times. product cost from And in we unit of our by cost that. drive are through, timing costs right industry, and our our improvement lower as Andrew it's gross our also at have the we're as And improvements have from to in, heard benefiting -- costs and see tailwinds lower of transportation those see we real and ability our it said, in

Andrew McLean

we higher turn Yes. looks it I a last on the as our one from mean less of year opportunities at speed Dana we're program cost. inventory sitting like

considerable And period take for so, that some that we forward a see we time. tailwind of as can

Dana Telsey

Thank you.

Operator

take Craig-Hallum we'll with Group. Alex next question our Fuhrman And Capital from

Alex Fuhrman

Nice on to to Congratulations here. the with start you. nice really year a speak

seeing Let's month start talking lot year. demand last didn't just a to that like about. been lot a from sound seeing soften But guidance see, strong about Dana level with you're other maybe to doesn't for Obviously, the it here. or A over the just high whole have really retailers a of ask leave two?

costs last basket customer really of there that anything for your has that? be would since noticed as have of she of it here you just Is kind the kind terms update? acquisition or steady maybe indicative size lately goes customer of in Or been

Andrew McLean

you're key choppy. best lot about target our going channels of it's we know site. -- I you a to for across reach more I them. to like from how position the thinking Macy's a imagine, we're customers our to It's more and and steady. a how watcher to and mean, we're think Amazon various different, just day Every overall, as it's been is Alex, pretty But can mean, I little landsend.com

in our channels. that better And as how our out I those we're company working customers address a to job doing think

So, able lift And for place to that we don't with we've acquire to reaching in that know you site younger example, and XX% a if and business, noticed, getting the number do that's new become we're of swim we're followers off shoppable I we're Instagram. consumer made our seen viable about much a the Instagram. Instagram via but customers. a

And shown I one called because and probably that's just change that the example probably as to an most the it's easiest it's track.

being we about we're So, silos within where basis the channels digital pull thoughtful about we one levers we as differently. the that that of enterprise more operate a and series them viewing than think rather

When we're we business. all the differently, leverage between that amplify it able are connected actually think Amazon dots about across get and the them to and

you're get about So, that to through rest Dana of running it with I everything that, talked through. along some gives the And think more year. the coming of we we as us seeing

Alex Fuhrman

area. ago more we've Okay. of you seen might I CEOs in feel That's really give that's looking us never the how helpful. progressed talks interesting And insight that those off thought license? efforts about to categories Can really what several licensing. and you something ground, be kind the I like some then have bit that into little Andrew, a commentary was got it

Andrew McLean

it's sure, yes, a So, question. good

of our resource a eggs of our that. basket. that. family we're it's always across important We've spreading $X.X of categories got us, putting At maintain variety all this going lot as with been that to It's For in stay stance billion, we a We've we're we can't geographies. one very been and lot a that retailer. be heritage, a

proud allows an take us, that know categories for apart to licensing that like show to to of. And opportunity view in that and bottoms or still completely where it or swim behind otherwise light channels position resource a really really And we competitive we at geographies up we things or be in really, it the remain able we like way or ourselves set wouldn't same were can outerwear. us time, we as

to in the that geographies take support look possibly the categories to we Middle places it's about or I ourselves. there's lesser capture. then or it's can the sales and We're dollar to to. And to So, going get partners couldn't to demand that invest for our from necessarily that the ourselves non-core would really want haven't go categories conversations We of and in got and channels, we say Latin more there East. we growth our the expertise next but you, like be we business. to business have into that We geographically the in recognize America into don't digital there, where

And in us. that partner helps so, having place really

you margins us to And a build It face. the of expansion it's can constraints organically the for build opportunity really on just math again, some it. I mean, great -- sort we demand and our than do quicker could we up given and of much

Alex Fuhrman

And start again. Thanks helpful. again the really That's on congratulations Okay. great to year. the

Andrew McLean

Appreciated. you. Thank

Operator

And your there are no more questions at participation. this for time. Thank you That concludes today's teleconference.

now disconnect. You may

Lands' End (LE) 1 Jun 232023 Q1 Earnings call transcript