LANDS' END, INC. Q1 FY2025 earnings call

• Executing customer-centric strategy through creative engagement, viral moments, brand expansion via licensing, and fresh product. - Supply chain resiliency improved, with less than 8% of purchase order dollars from China last fiscal year, and key franchises co-sourced globally. - Record gross margin rate for the quarter, just shy of 51% and 210 basis points greater than last year. - Launched Toad Girl Summer campaign with pop-up shops and social media presence. - Improved customer experience through AI-driven recommendation engine and SMS marketing program with nearly 400,000 new subscribers. - Product performance: Outerwear like WonderWite and Squall, swim products like Tuggle with expanded assortment, and success in various apparel categories. - Asset-light licensing business as significant growth vehicle, with new licenses negotiated for travel accessories, men's underwear, etc. - B2B outfitters business saw success in enterprise and school uniform, with partnership with Delta Airlines and new customer growth in school uniform.

Asset-light B2C activities: Asset-light licensing business had strong first quarter with revenues up over 60% year on year. B2B outfitters business: B2B delivered revenue and profit objectives for the quarter, with strong performance across enterprise business and growth in school uniform business. B2C business: U.S. e-commerce business saw approximately flat sales and gross profit due to outerwear strength offset by slow swim start; European e-commerce business sales increased 28% year on year; Third-party marketplace business had gross profit dollars decrease by 11% year on year but market improvement in April; Licensing business revenues up over 60% year on year.

• Total revenue expected to be between $1.33 to $1.45 billion. - GMV expected to be mid to high single-digit growth. - Adjusted net income of $15 million to $27 million and adjusted diluted earnings per share of $0.48 to $0.86. - Adjusted EBITDA to be in the range of $95 million to $107 million. - Annual guidance incorporates approximately $25 million in capital expenditures. - Guidance based on current tariff rates (10% baseline and 30% for China), with mitigation measures in place to manage tariff headwinds.

• Board of directors initiated process to explore strategic alternatives including sale, merger, etc. to maximize shareholder value, ongoing but no further comment at this time.

Q: Typically, provide second quarter upcoming quarter guidance, color on year's complexion and cadence, tariff impacts on pricing and inventory?

A: Based on near-term uncertainty with tariff rates, annual guidance provided based on current rates, with 10% baseline and 30% for China, effective 12% rate in back half, and strong mitigation efforts in place.

Q: Congratulations on Delta agreement, difference from last, thoughts on Europe goals?

A: Delta arrangement is two and a half year contract completion, in discussions for future; marketplaces like Nordstrom's growing with high AOV, positive on Amazon, Macy's, etc.; very excited about Europe, seeing opportunity to create halo for US brand, working on segmentation and market expansion in Europe.

Q: Talk about swim segments, site changes, transition of tote customers?

A: Swim dress trend outperforming regular dresses, site work to find different shoppers, tote is number one acquisition vehicle, customers move from tote to swim dresses.

Q: Licensing strategy, footwear and kids' licenses, B2B Delta contract, back to school?

A: Licensing has white space for incremental growth, kids and shoes licenses doing well, B2B Delta contract has normal run rate, back to school lineup calm.

Q: Outfitters business prospects, customer file stickiness?

A: Outfitters business has consistent strength despite macro noise; one to two x customers showing growth, less paid search, more in brand-expressive channels, using AI agents for marketing.