Outerwear Strong, Swim Slow: Lands' End Navigates Q1, Seeks Sale Options

Lands' End, Inc. LE shares are trading higher after the company reported first-quarter fiscal year 2025 earnings.

Here’s a breakdown of the results:

• Net revenue was $261.2 million, missing the analyst consensus of $272.6 million.
• Gross Merchandise Value (GMV) rose by a low-single-digit percentage in the first quarter (excluding a $12.7 million impact from shifting kids and footwear inventory to licensees).
• Including this transition, GMV saw a slight Y/Y decline, while like-for-like GMV increased in the quarter by low single digits.
• Adjusted loss per share was 18 cents which came in line with the consensus.
• US eCommerce Net revenue was $170.7 million, broadly flat year over year (Y/Y) in the quarter as strong Outerwear product performance was offset by a slower start to the seasonal swim assortment.
• Outfitters net revenue was $42.9 million, an increase of 0.5% Y/Y. Third-party net revenue was $14.1 million, a decrease of 9.0% Y/Y in the quarter.
• Gross profit decreased 4.5% year over year to $132.7 million, with gross margin rising by around 210 basis points year over year to 50.8%. The gross margin improved mainly due to transitioning kids’ and footwear inventory to licensees in the first quarter of 2024.

Buyback: In the first quarter, the company bought back $2.8  million worth of its common stock under the share repurchase program announced on March 15, 2024.

As of May 2, the program allows for up to $10.6 million in additional stock repurchases through March 31, 2026. Cash and cash equivalents totaled $18.1 million.

Outlook: Lands' End reaffirmed its FY25 guidance. It projects adjusted EPS between 48 cents and 86 cents, compared to the 70 cents consensus estimate.

The company, currently up for sale, maintains its sales outlook of $1.33 billion to $1.45 billion versus $1.38 billion estimate.

CFO Bernie McCracken said the company developed plans to “mitigate” tariff headwinds.

‘This outlook assumes a baseline tariff of approximately 10% in all countries except China, McCraken explained. China accounts for less than 8% of the company’s product cost in 2024, where Lands’ End assumes a 30% tariff.

Price Action: LE shares are up 7.46% at $8.50 during Thursday’s premarket session.

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