Lands’ End showed improvements on several fronts last quarter and through 2024, but revenues fell short of expectations, pulling the stock price down on Thursday.
On a bottom-line basis, the classic, all-American brand, which is currently on the selling block, went into the black, generating net income of $18.5 million, or 59 cents earnings per diluted share in the fourth quarter ended Jan. 31, 2025, compared to a net loss of $8.6 million, or 27 cents per diluted share, in the year-ago period.
Adjusted net income was $17.7 million, or 57 cents earnings per diluted share, compared to adjusted net income of $8 million or 25 cents, in the year-ago period.
Net revenues in the fourth quarter declined 14.2 percent to $441.7 million, compared to $514.85 million in the year-ago period. The company blamed the revenue decrease on the transition of the kids and footwear product lines to licensing arrangements and optimizing promotional activity to focus on “higher quality sales resulting in higher gross margins and increased gross profit.”
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Gross merchandise value decreased low-single digits compared to the fourth quarter of 2023. Excluding the 53rd week of fiscal 2023, GMV increased low-single digits. GMV is total order value of all Lands’ End branded merchandise sold to customers through business-to-consumer and business-to-business channels, as well as the retail value of the merchandise sold through third-party distribution channels.
For all of 2024, the company generated $1.36 billion in net revenues, down from $1.47 billion in 2023. Net income was $6.23 million, or 20 cents per diluted share, compared to a loss of $130,684, or $4.09 per diluted share, in the year before.
“Lands’ End had a strong finish to a year defined by continued positive momentum across the business,” Andrew McLean, chief executive officer, said in his statement Thursday. “We increased gross profit dollars, expanded gross margins and grew gross merchandise value each quarter of fiscal 2024, excluding the 53rd week, resulting in a return to profitability for the full year. Through our amazing products, robust product franchises and our evolved marketing approach, it’s clear that our strategic evolution, including considerable growth from licensing, is driving strong progress and expanding the reach of our brand. Looking ahead, we are focused on further enhancing our digital business and operations, continuing to leverage our compelling asset-light licensing business, and growing our market-leading Outfitters business, all while delivering solutions that are ready for life’s every journey.”
During a conference call with retail analysts and investors, McLean cited the “outstanding performance of our licensing segment. Licensing is fueling significant expansion of our brand reach, anchored on a capital efficient, low risk, high margin financial framework.”
Regarding reaching younger audiences, McLean said, “We doubled our following on Instagram year-over-year, finishing fiscal 2024 with nearly a quarter of a million followers. We continue to use this channel to reach younger customers who in turn have a high propensity to spend.”
Lands’ End had a “teaser launch” of its collaboration with Andie Swim, and launched a pop-up tote customization shop in Manhattan’s SoHo neighborhood. “This released audiences on TikTok and Instagram via bloggers and influencers with views running into the tens of millions,” McLean said. “It should come as no surprise that the tote bag was our number-one item in driving new customer acquisition during the fourth quarter.”
McLean said that two years ago, Lands’ End focused on key items, “Now we offer a full collection across numerous categories from apparel to home and enjoy bringing the customers something new and more solution-oriented on a regular basis.”
One negative was business in Europe, which did not meet the company’s expectations. However, Andy Haddon, which McLean characterized as “a seasoned international leader from Nike,” was recently recruited to focus on growing the international business through new markets and “refreshing the brand identity in our existing U.K. and German markets.”
Lands’ End’s sales results and cautious outlook did not inspire Wall Street, causing the stock to drop 11.2 percent to close at $10.16 on Thursday.
For the first quarter, the company expects net revenue to be between $260 million and $290 million, compared to $285.47 million generated in the first quarter of last year. GMV is seen flat to up low-single digits. A net loss of between $9 million and $6 million is seen compared to the net loss of $6.44 million, or $20 cents a share, in the year-ago period.
For all of 2025, the company expects net revenues between $1.33 billion and $1.45 billion, compared to the $1.36 billion generated in 2024. GMV is seen generating mid- to-high-single-digit growth, and net income between $8 million and $20 million, or diluted EPS between 25 cents and 64 cents. Adjusted EBITDA was in the range of $95 million to $107 million.
“Looking at 2025 and beyond, we are continuing to focus on generating improved cash flows, particularly from the prioritization of our licensing strategy and ongoing emphasis on more high-quality sales, which we expect will drive additional gross profit dollars and gross margin expansion over the long term,” Bernie McCracken, chief financial officer, said in a statement.
On March 7, the company disclosed it has begun a process to explore strategic alternatives, including a sale, merger or similar transaction to maximize shareholder value. “Lands’ End is a classic American lifestyle brand — and the company’s strategy and execution have delivered significant operational and financial improvements,” Josephine Linden, chair of the board, said in a statement that day. “While we remain confident in the company’s potential for future value creation, the board also believes that the market is undervaluing this great company and its upside potential.” The announcement boosted Lands’ End stock price 9 percent.
The decision by the board appears to be a response to pressure exerted by billionaire investor Edward “Eddie” Lampert, the majority shareholder, who last month sent a letter to the board advocating for a sale. Lampert owns approximately 17 million shares of the company, giving him a stake of more than 53.3 percent.
Lands’ End was bought by Sears in 2002, which was then merged with Kmart in a mega merger orchestrated by Lampert. But as the retail giant struggled, Lands’ End was spun off as a stand-alone company in 2014 while the combined Sears and Kmart went bankrupt in 2018 and virtually disappeared.
