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LE

LANDS' END, INC. (LE)·Q2 2025 Earnings Summary

Executive Summary

  • Net revenue declined 7.3% year over year to $294.1M, but gross margin expanded ~90 bps to 48.8% on improved promotional productivity and licensing, narrowing GAAP net loss to $3.7M (-$0.12 EPS); Adjusted EBITDA was $14.1M (down from $17.1M YoY) .
  • Sequentially, revenue rose vs Q1 ($261.2M → $294.1M) and Adjusted EBITDA improved ($9.5M → $14.1M), though gross margin moderated from Q1’s 50.8% to 48.8% amid initial tariff headwinds and a slow start to swim .
  • Guidance updated: FY25 net revenue range narrowed to $1.33–$1.40B (from $1.33–$1.45B), while EPS ranges were raised (GAAP $0.39–$0.65; Adj. $0.62–$0.88); Q3 guide implies sequential acceleration with revenue $320–$350M and Adjusted EBITDA $24–$28M .
  • Strategic alternatives process remains ongoing, a potential stock-reaction catalyst; management emphasized momentum in B2C marketplaces/licensing and B2B Outfitters, with AI-driven personalization and social commerce as emerging growth drivers .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded ~90 bps YoY to 48.8% on improved promotional productivity and licensing expansion; CEO: “we’re seeing clear, encouraging momentum… drive high-quality sales, and deepen loyalty” .
  • Outfitters delivered revenue growth (+5.1% YoY to $66.4M); school uniforms up high-single digits on customer wins; enterprise accounts strengthened .
  • Third party marketplaces grew +14.3% YoY to $21.6M (Amazon, Macy’s) and licensing revenue increased ~19%; “record-setting Prime Week on Amazon” and new “Lands’ End Essentials” line launched .

What Went Wrong

  • Total net revenue fell 7.3% YoY to $294.1M; U.S. eCommerce down 11.2% YoY to $167.3M on a slow seasonal swim start (later recovered into August/Labor Day) .
  • Europe eCommerce declined 14.8% YoY to $19.6M due to inventory timing, supply chain challenges, and macro pressures; margin progress partially offset by deleverage (SG&A +130 bps as % of revenue) .
  • Adjusted EBITDA fell to $14.1M from $17.1M YoY, pressured by initial tariff headwinds and Europe softness despite gains in marketplaces, licensing, and Outfitters .

Financial Results

Sequential Trends (Q4 FY2024 → Q1 FY2025 → Q2 FY2025)

MetricQ4 FY2024Q1 FY2025Q2 FY2025
Net Revenue ($USD Millions)$441.663 $261.208 $294.079
Diluted EPS ($USD)$0.59 $(0.27) $(0.12)
Gross Margin (%)45.6% 50.8% 48.8%
Operating Income ($USD Millions)$36.951 $(2.370) $3.983
Operating Margin (%)8.4% (0.9%) 1.4%
Adjusted Diluted EPS ($USD)$0.57 $(0.18) $(0.06)
Adjusted EBITDA ($USD Millions)$43.689 $9.521 $14.062

Q2 FY2025 vs Q2 FY2024

MetricQ2 FY2024Q2 FY2025
GMV YoY—≈ flat
Net Revenue ($USD Millions)$317.173 $294.079
Gross Profit ($USD Millions)$151.885 $143.418
Gross Margin (%)47.9% 48.8%
GAAP Net Loss ($USD Millions)$(5.251) $(3.667)
Diluted EPS ($USD)$(0.17) $(0.12)
Adjusted Net Loss ($USD Millions)$(0.718) $(1.852)
Adjusted Diluted EPS ($USD)$(0.02) $(0.06)
Adjusted EBITDA ($USD Millions)$17.061 $14.062

Segment Breakdown (Q2 FY2025 vs Q2 FY2024)

SegmentQ2 FY2024 ($M)Q2 FY2025 ($M)YoY Change
U.S. Digital Segment Net Revenue$270.4 $255.3 (5.6%)
U.S. eCommerce Net Revenue$188.3 $167.3 (11.2%)
Outfitters Net Revenue$63.2 $66.4 +5.1%
Third Party Net Revenue$18.9 $21.6 +14.3%
Europe eCommerce Net Revenue$23.0 $19.6 (14.8%)
Licensing & Retail Net Revenue$23.9 $19.2 (19.7%)

KPIs and Balance Sheet

KPIQ2 FY2024Q2 FY2025
Cash & Cash Equivalents ($M)$25.648 $21.255
Inventories ($M)$312.014 $301.797
Inventory YoY Change—(3%)
Net Cash from Operating Activities (YTD, $M)$4.909 (26 wks) $0.469 (26 wks)
ABL Borrowings ($M)$20.0 $35.0
ABL Availability ($M)$117.5 $87.6
Term Loan Debt ($M)$253.5 $240.5
Share Repurchases ($M)—$1.7 in Q2; $8.8 remaining authorization

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY2025$1.33B–$1.45B $1.33B–$1.40B Lowered top-end
GMV GrowthFY2025Mid-to-high single digits Low-to-mid single digits Lowered
GAAP Net IncomeFY2025$8M–$20M $12M–$20M Raised lower bound
GAAP EPSFY2025$0.25–$0.64 $0.39–$0.65 Raised lower bound
Adjusted Net IncomeFY2025$15M–$27M $19M–$27M Raised lower bound
Adjusted Diluted EPSFY2025$0.48–$0.86 $0.62–$0.88 Raised lower bound
Adjusted EBITDAFY2025$95M–$107M $98M–$107M Raised lower bound
CapexFY2025~$25M ~$25M Maintained
Net RevenueQ3 FY2025N/A$320M–$350M New
Adjusted EBITDAQ3 FY2025N/A$24M–$28M New
GAAP Net Income / EPSQ3 FY2025N/A$2M–$6M; $0.07–$0.19 New
Adjusted Net Income / EPSQ3 FY2025N/A$3M–$7M; $0.10–$0.22 New

Earnings Call Themes & Trends

TopicQ4 FY2024 (Mar)Q1 FY2025 (Jun)Q2 FY2025 (Sep)Trend
AI/Technology initiatives—Introduced proprietary AI tool to optimize marketplace discovery; record AOVs at Nordstrom AI-driven recommendation/outfitting engine; expanded AI agents and segmented campaigns Expanding AI usage across channels
Supply chain & tariffsOutlook incorporated tariffs Tariff baseline assumptions (10% most countries; China ~30%) and mitigation plans Initial tariff headwinds; mitigation measures; guidance includes tariffs at current levels Proactive mitigation; embedded in guidance
Product performanceSwimwear/outerwear drove margin in FY24 Outerwear strength; swim slower start Swim slow start then strong August/Labor Day; tote franchise expansion; jeans selling at full price Weatherproofing strategy gaining traction
Marketplaces & licensingLicensing contribution up FY24 Licensing up >60% in Q1; added new licenses Marketplaces +14% YoY; licensing +19% YoY; Amazon Essentials launch Scaling asset-light channels
Outfitters pipeline—Delta Air Lines partnership begins Q2 School uniforms high-single digit growth; enterprise contracts extended; Delta win referenced Strengthening B2B franchise
Regional (Europe)—Repositioned brand; marketplace expansion (Next, Debenhams); plan France relaunch Launched French site; elevated UK/DE; opened Amazon, Debenhams, Next; early outperformance Rebuild underway with distributed commerce
Social commerce——Instagram followers +100% YoY; social traffic +19% (60% in Jun/Jul); “Tote Girl Summer” activations Accelerating social-driven acquisition
Strategic alternatives—Board initiated process (Mar 7) Process ongoing; no further comment Ongoing potential catalyst

Management Commentary

  • CEO Andrew McLean: “We’re seeing clear, encouraging momentum across our businesses… weatherproofed assortment and shift toward an asset-light, low-intensity model… drive high-quality sales, and deepen loyalty” .
  • CFO Bernie McCracken: “Gross margin increase of approximately 90 basis points… actively implementing mitigation measures designed to effectively manage anticipated tariff headwinds… guidance reflects the expected impact of tariffs at current levels” .
  • CEO on marketplaces/licensing: “Marketplaces are relatively low [lift], capital light… record-setting Prime Week on Amazon… launched the Lands’ End Essentials line” .
  • CEO on B2B: “Our school uniform business had another strong quarter… enterprise accounts… highest growth in contract duration… since the company’s spin out” .
  • CEO on AI: “Deployment of our new AI-driven recommendation and outfitting engine… expanding communications with AI agents” .

Q&A Highlights

  • Categories, promotions, and tariffs: Management noted channel-specific pricing strategies, margin strength with more full-price selling, and tariff burden shared across vendors/internal changes with minimal pass-through to customers .
  • Licensing flow/back-half setup: Licensing revenue up 36% YTD (per 10-Q), with acceleration expected as existing licensees ramp and new ones onboard; “sky’s the limit” on license scope .
  • Outerwear trajectory: Deepening existing franchises (e.g., Squall) with strong early customer reviews; focus on PDPs tailored to channel/customer .
  • Outfitters pipeline: Enterprise contract momentum (Delta Air Lines cited); push into healthcare as an adjacent category while preserving focus on winning targeted sectors .
  • Europe timeline: Distributed commerce model replication with marketplaces and premium collaborations; UK turning; focus on German resolver via catalog .

Estimates Context

  • S&P Global consensus estimates for Q2 FY2025 revenue/EPS and for near-term periods were unavailable at the time of analysis due to data access limits. As a result, explicit beat/miss vs consensus cannot be determined here. Values retrieved from S&P Global were unavailable at this time.

Key Takeaways for Investors

  • Sequential improvement: Revenue and Adjusted EBITDA increased vs Q1, and gross margin remains structurally higher YoY despite tariff and seasonal swim timing headwinds .
  • Mix shift to asset-light: Marketplaces and licensing are scaling, diversifying demand with lower capital needs, supporting margin quality and customer acquisition across channels .
  • B2B strength: Outfitters grew revenue, with school uniforms and enterprise accounts driving gains and contract duration rising—underpinning back-half visibility .
  • Tariff mitigation embedded: Management implemented sourcing/vendor strategies to offset current tariff levels; guidance explicitly incorporates tariff assumptions .
  • Europe is a rebuild with upside: Distributed commerce and premium repositioning underway; early marketplace outperformance may narrow declines into the back half .
  • Strategic alternatives process ongoing: Potential corporate action remains a catalyst; company will update when appropriate .
  • Near-term setup: Q3 guide implies sequential acceleration (revenue $320–$350M, Adj. EBITDA $24–$28M); holiday merchandising and weatherproofed assortment positioned for momentum .

Financial Appendix (Source Documents)

  • Q2 FY2025 8-K 2.02: financials, segments, balance sheet, cash flow, guidance .
  • Q2 FY2025 earnings call transcript: strategy, AI, marketplaces, Outfitters, Europe, Q&A .
  • Q1 FY2025 press release: prior quarter financials, segment trends, tariff baseline, guidance .
  • Q4 FY2024 press release: baseline margins, segment mix, FY trends .