On September 5, 2024, Lands' End Inc (LE, Financial) released its 8-K filing for the second quarter of fiscal 2024, ending August 2, 2024. Lands' End Inc is a United States-based multi-channel retailer of casual clothing, accessories, and footwear, as well as home products. The company's operating segments include U.S. eCommerce, International, Outfitters, Third Party, and Retail, with the U.S. eCommerce segment generating the maximum revenue.
Performance Overview
For the second quarter of 2024, Lands' End Inc reported a net revenue of $317.2 million, a slight decrease from $323.3 million in the same quarter of fiscal 2023. This figure, however, surpassed the analyst estimate of $307.41 million. Despite the revenue decline, the company achieved a gross profit of $151.9 million, up 8.8% from $139.6 million in the previous year, driven by a 470 basis point improvement in gross margin to 47.9%.
Segment Performance
Global eCommerce net revenue was $211.3 million, down from $218.7 million in Q2 2023. U.S. eCommerce net revenue decreased by 3.9% to $188.3 million, primarily due to the transition of kids and footwear products to a license model, lower promotional activity, and improved inventory management. Excluding the impact of this transition, U.S. eCommerce revenue increased by mid-single digits year-over-year. International eCommerce net revenue saw a slight increase of 0.9%.
Outfitters net revenue was $63.2 million, a 7.1% decrease from $68.0 million in Q2 2023, while Third Party net revenue increased by 23.4% to $30.1 million, driven by licensing and wholesale arrangements.
Financial Achievements and Challenges
Despite the revenue decline, Lands' End Inc improved across all profitability measures compared to the second quarter of last year. The company achieved its sixth consecutive quarter of inventory improvement, with a 21% year-over-year reduction in inventory levels. However, selling and administrative expenses increased by $11.6 million to $135.5 million, driven by higher digital marketing spend, third-party professional services, and higher incentive-related personnel costs.
Andrew McLean, Chief Executive Officer, stated, “Our robust second quarter results continue to prove our solutions-based strategy is working. A focus on innovation across our business is evolving the Lands’ End brand and assortment, attracting new customers and further improving our supply chain and inventory position. These achievements highlight our dedication to driving growth and efficiency while delivering value to our customers and shareholders.”
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Revenue | $317.2 million | $323.3 million |
| Gross Profit | $151.9 million | $139.6 million |
| Gross Margin | 47.9% | 43.2% |
| Net Loss | $(5.3) million | $(8.0) million |
| Adjusted Net Loss | $(0.7) million | $(7.6) million |
| Adjusted EBITDA | $17.1 million | $15.8 million |
Balance Sheet and Cash Flow
As of August 2, 2024, Lands' End Inc had cash and cash equivalents of $25.6 million, compared to $26.6 million as of July 28, 2023. Inventories, net, stood at $312.0 million, down from $396.1 million in the previous year. The company reported net cash provided by operating activities of $4.9 million for the 26 weeks ended August 2, 2024, compared to $54.8 million for the same period in 2023.
Outlook
For the third quarter of fiscal 2024, Lands' End Inc expects net revenue to be between $300.0 million and $340.0 million, with gross merchandise value expected to grow by mid-to-high single digits. The company anticipates a net (loss) income between $(1.5) million and $1.5 million, and adjusted EBITDA in the range of $19.0 million to $23.0 million. For the full fiscal year 2024, the company projects net revenue between $1.35 billion and $1.43 billion, with adjusted EBITDA between $90.0 million and $98.0 million.
Bernie McCracken, Chief Financial Officer, stated, “We are pleased with our performance during the quarter, which resulted in Net revenue and Adjusted EBITDA at the high end of our guidance range and strong growth in Gross Merchandise Value. Additionally, our deliberate efforts to prioritize profitability and balance sheet efficiency is evidenced by a 9% increase in gross profit, driven by our sixth consecutive quarter of gross margin expansion.”
For more detailed financial information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Lands' End Inc for further details.
