Lands' End Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
June 5, 2025

Key Takeaways

  • We delivered a record 51% gross margin rate, up 210 basis points year-over-year, and achieved a 12% improvement in adjusted EBITDA, driven by faster inventory turns and improved working capital.
  • We further enhanced supply chain resiliency by diversifying sourcing—accelerating production in the Western Hemisphere, reducing China exposure to less than 8% of purchases, and co-sourcing key franchises like Supima globally.
  • Our asset-light licensing business saw revenues jump over 60% year-over-year, with new agreements signed for travel accessories, men’s underwear, base layers, women’s intimates, hosiery and cold-weather accessories.
  • The B2B Outfitters segment met revenue and profit objectives, highlighted by a new uniform contract with Delta Airlines through 2027 and $13 million in annualized school uniform orders from a competitor exit.
  • Total quarterly revenue declined 9% and we reported a net loss of $8.3 million, while European e-commerce sales fell 28% as we reposition the brand at a more premium level.
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Earnings Conference Call
Lands' End Q1 2026
00:00 / 00:00

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Operator

Good day, everyone, and welcome to the Lands' End first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing Star one on your telephone keypad. You may withdraw yourself from the queue by pressing Star two. Please note this call may be recorded. I'll be standing by if you should need any assistance. It is now my pleasure to turn the program over to Tom Altholz.

Tom Altholz
Tom Altholz
Senior Director of Financial Planning and Analysis at Lands' End

Good morning, and thank you for joining the Lands' End earnings call for a discussion of our first quarter 2025 results, which we released this morning and can be found on our website, landsend.com. I'm Tom Altholz, Lands' End Senior Director of Financial Planning and Analysis, and I'm pleased to join you today with Andrew McLean, our Chief Executive Officer, and Bernie McCracken, our Chief Financial Officer. After the prepared remarks, we will conduct a question-and-answer session. Please also note that the information we're about to discuss includes forward-looking statements. Such statements involve risk and uncertainties. The company's actual results could differ materially from those discussed on this call. Factors that could contribute to such differences include but are not limited to those items noted and included in the company's SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

Tom Altholz
Tom Altholz
Senior Director of Financial Planning and Analysis at Lands' End

The forward-looking information that is provided by the company on this call represents the company's outlook as of today, and we do not undertake any obligation to update forward-looking statements made by us. Subsequent events and developments may cause the company's outlook to change. During this call, we will be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in the investor relations section of our website at landsend.com. With that, I will turn the call over to Andrew.

Andrew McLean
Andrew McLean
CEO at Lands' End

Thank you, Tom. Good morning, and thank you for joining us today. We continue to execute our proven customer-centric strategy through creative engagement, viral moments centered around the reimagining of our iconic tote, expansion of our brand through licensing, and, of course, fresh solutions-based product. In addition, the period was characterized by improvement in the resiliency of our supply chain to maintain our momentum throughout fiscal 2025. Most pleasing was the continued performance at the top and bottom of our P&L, with growth in GMV, which was low single digits positive when adjusted for prior year inventory sell-off, and a 12% improvement in our adjusted bottom line as we continued to flow through higher levels of incremental profitability, all accomplished on a faster inventory turn and with improved working capital.

Andrew McLean
Andrew McLean
CEO at Lands' End

As always, our focus remains on building our brand, maintaining discipline around promotional activity, and staying the course to develop a healthier long-term brand. This resulted in a record gross margin rate for the quarter, with our margin rate just shy of 51% and 210 basis points greater than last year. These are strong foundations upon which to build. We intentionally drove significant change in our supply chain as we accelerated production in the Western Hemisphere, giving us both speed and additional avenues to mitigate tariffs and provide resiliency. Less than 8% of our purchase order dollars last fiscal year were utilized on buys out of China, while our supply of key franchises, including our sector-leading American-grown Supima, are now co-sourced across the globe.

Andrew McLean
Andrew McLean
CEO at Lands' End

By intentionally creating a diverse sourcing network and strong relationships with excellent vendors, we are increasingly positioned to remain agile in our sourcing decisions, helping to address headwinds from the impact of tariffs. Innovation is the key to our successful brand building. As I touched on last quarter, we're leveraging digital and experiential marketing strategies that build our cultural relevancy, drive traffic to our own channels, and translate to new customer conversion. We recently launched our Tote Girl Summer campaign, which features brand fans and influencers on social media and a series of pop-up shops across iconic summertime locations. The campaign introduces lovers of our iconic canvas Pocket Tote to a wider assortment of Lands' End apparel and swim products that fit their lifestyle as perfectly as our Pocket Tote.

Andrew McLean
Andrew McLean
CEO at Lands' End

We kicked off Memorial Day weekend with pop-up shops throughout the Hamptons, Jersey Shore, Charleston, and Nashville, and will host further coastal pop-ups, including the Nantucket Hotel, in June, July, and August. These viral moments, covered extensively on TikTok and Instagram, saw these one-of-a-kind totes changing hands after purchase. As a reminder, our Pocket Tote remains our number one item in driving new customer acquisition and consistently attracts customers from all age ranges, notably driving brand awareness with a younger Gen Z and millennial cohort. We also improved our customer experience in the first quarter through our focus on offering greater personalization, including the launch of a new AI-driven recommendation and outfitting engine that makes it easier for customers to personalize products. In addition, we improved our SMS marketing program capabilities, generating nearly 400,000 new subscribers in Q1.

Andrew McLean
Andrew McLean
CEO at Lands' End

Picking up on our customer, our willingness to protect the brand continued to yield results, with growth in new customers supplemented by increases in one-to-two-times buyers and our highest LTV, five-times buyers. Renewing our customer file, reaching a broader base of consumers, and leveraging our franchise products like swim and Supima remain priorities as we build long-term shareholder value. Turning to product, with a late Easter and colder weather pushing swim selling back, our Wonderweight and Squall outerwear franchises were key winners for us in the quarter, as were our wear-it-out items like our Anyweather Fleece and Barn Coats. Women's bottoms, knits, sweaters, and dresses also performed successfully. Once the swim season kicked into gear, we saw good engagement with our core franchises.

Andrew McLean
Andrew McLean
CEO at Lands' End

Tuggles, a 40-year-plus stalwart of the category, has expanded exponentially, building on the original one-piece silhouette to offer two-piece, cross-body dresses, rompers, and backless in a range of colors and prints. This continued focus on winning with market-leading franchises is a core brand platform that we are extending across channels and licenses to broaden distribution and create long-term shareholder value. Turning to the performance of our various businesses, beginning with our asset-light B2C activities, our asset-light licensing business had a strong first quarter and continues as a significant vehicle for growth of the Lands' End brand, with revenues up over 60% year-on-year. Within the channels, we saw success in both the clubs and traditional department stores as the brand continues to reach new customers and offers incredible price and value.

Andrew McLean
Andrew McLean
CEO at Lands' End

During the quarter, we completed the negotiation of additional licenses for travel accessories, men's underwear and base layer, and women's intimates. Our activity continues into the second quarter as we recently executed licenses for hosiery and cold-weather accessories. The skill sets that the company is developing around the licensing of its IP and its integration of leading channel and category experts to augment its core competencies in e-commerce continues to set it apart from competitors and offers Lands' End strategic options for significant future growth. Turning to our B2B outfitters business, I am pleased to note that B2B delivered our revenue and profit objectives for the quarter. We saw strong performance across our enterprise business, as well as growth in our school uniform business. We're pleased to launch a partnership with Delta Airlines in the second quarter to serve as their uniform provider through the end of 2027.

Andrew McLean
Andrew McLean
CEO at Lands' End

We're excited to be working with Delta again as we finalize the details of our collaboration together. Our school uniform business saw strong new customer growth in the quarter, with commitments in annualized new business of $13 million, driven from a focus on leveraging our strength as a sector leader to drive outreach across the country and supplemented by our competitor exiting the segment. As previously noted, we have the most domestic embroidery capabilities of any retailer in the U.S. We are continuing to win by leveraging the strength of our brand, our steadfast focus on quality, our market-leading embroidery and personalization capabilities, and our great customer service. Looking at our B2C business, domestically, we sharpened the customer proposition between LandsEnd.com and our third-party marketplaces using a proprietary AI tool to maximize rankings through application of product titles and descriptions.

Andrew McLean
Andrew McLean
CEO at Lands' End

This has created significant growth across our Amazon, Macy's, and Nordstrom marketplaces. For example, on Amazon, we obsess on ranking by focusing our efforts on our top 25 items, product page optimization, prime eligibility, and in-stock availability. By leading with these top performers, we can create algorithm-maximizing product titles and descriptions that drive search rankings, complemented with solutions-driven imagery. We can achieve better margins, maintain efficient inventory levels, and turn faster. With new leadership, Europe began to show green shoots of progress to become the highly solutions-oriented, highly engaged, elevated brand that we know that is capable of being. During the quarter, we relaunched both the German and U.K. websites, taking a different marketing and assortment approach to each, supported by specific and local influencer talent. That work continued into marketplaces where we launched on Next.com, our first true marketplace experience in Europe.

Andrew McLean
Andrew McLean
CEO at Lands' End

This work to develop nuanced, customer-focused touchpoints continues apace. In May, we relaunched a French catalog as a prelude to a full relaunch of a French-language website next month. In June, we will begin selling on Debenhams.com, again creating a path to specific customers with a specific experience. I'll now turn it over to Bernie to discuss our first quarter performance in more detail.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Thank you, Andrew. For the first quarter, total revenue performance came in at $261 million, a decrease of 9% compared to last year. When excluding the impact of transitioning the kids' and footwear inventory to licensees in the first quarter of 2024, total revenue decreased by 4% year-over-year. GMV decreased low single digits for the first quarter of 2025, primarily driven by timing of orders. When excluding the impact of transitioning the kids' and footwear inventory to licensees in the first quarter of 2024, GMV increased by low single digits year-over-year. We delivered adjusted EBITDA of $10 million in the first quarter, which came within our guidance. Gross profit decreased by 5% compared to last year. Gross margin was 51%, an approximately 210 basis point increase from the first quarter of 2024.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

The margin increase was driven by the impact of transitioning kids' and footwear inventory to licensees in the first quarter of fiscal 2024. Our U.S. e-commerce business saw approximately flat sales and gross profit compared to the first quarter of 2024 due to the continued strength in our outerwear product, offset by a slow start to seasonal swim assortment. Sales from Lands' End outfitters increased 1% from the first quarter of 2024. Sales from the business uniform channel were slightly up year-over-year, and sales from our school uniform channel were slightly down year-over-year, driven by timing of customer orders. In our third-party marketplace business, gross profit dollars decreased by 11% compared to the first quarter of 2024, as revenue decreased by 9% year-over-year. While performance was consistently positive in most marketplaces, the combined third-party business was negatively impacted by challenges in one marketplace. Overall, marketplaces saw marked improvement in April.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Our European e-commerce business sales decreased 28% year-over-year as new leadership used the quarter to relaunch as a more premium brand, eliminating lower-value inventory and positioning for marketplace expansion. Revenues from our licensing business increased by over 60% compared to the prior year. Licensing and our presence across our third-party marketplace partners continue to help the business diversify and reduce risk from any one individual partner. SG&A expenses decreased by $4 million year-over-year, driven by strong cost controls across the entire business. As a percentage of sales, SG&A was 47%, which was an increase of approximately 270 basis points compared to 2024, primarily driven by deleverage from lower revenues. For the first quarter, we had a net loss of $8.3 million, or 27 cents per share. We had an adjusted net loss of $5.4 million, or 18 cents per share, which were both within our guidance range.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Moving to our balance sheet, inventories at the end of the first quarter were $262 million compared to $289 million a year ago. The 9% decrease in our inventory position resulted from our supply chain team's ongoing efforts to drive efficiencies and maintain resiliency and diversification with respect to our sourcing capabilities. In terms of our debt, at the end of the first quarter, our term loan balance was $244 million, and our AVL had $40 million of borrowings outstanding, which was flat to the first quarter last year. During the first quarter, we repurchased $3 million worth of shares under our $25 million share repurchase authorization announced in March of last year, bringing the balance of the remaining authorization to $11 million as of the end of the quarter. Now, moving to guidance.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

For the full year, our guidance includes the impact of tariffs at 30% for China and approximately 10% for the rest of the world. We are implementing mitigation measures to effectively manage the tariff headwinds at these levels, and accordingly, our annual guidance remains unchanged as we continue to expect net revenue to be between $1.33 billion and $1.45 billion, while GMV is 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, and our adjusted EBITDA to be in the range of $95 million to $107 million. Our guidance for the full year incorporates approximately $25 million in capital expenditures. With that, I will turn the call back over to Andrew.

Andrew McLean
Andrew McLean
CEO at Lands' End

Thank you, Bernie. As always, I want to thank all of the Lands' End employees for their dedication to building the brand and upholding our customer-centric strategy. Our commitment to delivering exceptional quality, service, and care to our customers is what continues to set us apart and help sustain our momentum. Finally, the process our board of directors initiated last quarter to explore strategic alternatives, including a sale, merger, or similar transaction involving the company to maximize shareholder value, remains ongoing. We will not be commenting further on it at this time, and we will provide an update once appropriate. With that, we look forward to your questions.

Operator

Thank you. At this time, if you would like to ask a question, please press Star one now on your telephone keypad. Again, to ask a question, that is Star one to enter the queue. We'll take our first question from Dana Telsey of Telsey Group. Your line is open.

Dana Telsey
Dana Telsey
CEO and Chief Research Officer at Telsey Advisory Group

Good morning. Good morning, everyone, and nice to see the progress. A couple of questions. Typically, you provide the upcoming quarter guidance. I did not see anything, I think, in the release this time. Any color you can give us on the complexion of the year and the cadence of what you are looking for? Within that, tariff impacts. Holistically, how are you thinking about it, both in terms of pricing and on inventory? I have one follow-up. Thank you.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Morning, Dana. As far as guidance goes, based on the near-term uncertainty with tariff rates, the company has provided annual guidance based on the current tariff rates, which we've talked about, which is the 10% baseline and the 30% for China, which comes to about an effective 12% rate for us in the back half. We have put a lot of work into a transformation process to build mitigation efforts against those raised tariffs and feel strongly that we have the right mitigations to offset those for the year.

Andrew McLean
Andrew McLean
CEO at Lands' End

Dana, just a bit of color on your tariff impacts question. I mean, you know me, you know the company. It's like we're not going to sit around and wait for a solve later in the year. We rolled up our sleeves, actually, towards the end of Q4 and started shifting heavily into Western Hemisphere. We were taking big programs, not the small programs. We took Supima, which is one of our biggest programs. In fact, it is our biggest program, and we moved that to Western Hemisphere, actually in process of co-sourcing that in Eastern Hemisphere as well so that we've got a lot of pacing to go after it, to move with it, and to be able to react to it. We are taking the pain of all those shifts way upfront.

Dana Telsey
Dana Telsey
CEO and Chief Research Officer at Telsey Advisory Group

Got it. Congratulations on the new Delta agreement. That is very encouraging. How is it different than the last agreement that you had, or is it? On the marketplaces business, what are you seeing there? It was encouraging to hear about Europe. What are your thoughts on the goals for Europe? Thank you.

Andrew McLean
Andrew McLean
CEO at Lands' End

Fair enough. Do you want to take Delta?

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Sure. The Delta arrangement is a two-and-a-half-year completion of a contract they signed with another vendor that we will complete that, and we're in discussions on what the future of that will be beyond that.

Andrew McLean
Andrew McLean
CEO at Lands' End

In terms of marketplaces, we feel really good about marketplaces. Nordstrom continues to be the fastest growth marketplace for us. Actually, it's really driven off the back of a very high AOV. It's the highest AOVs we've ever recorded as we just see a very premium customer come to the brand. We are excited about that. Amazon continues to grow for us along with Macy's. We saw progress on Target as well that we were happy with. I believe your question probably has some Kohl's embedded in it, and I do want to address that. We did have a tough quarter with Kohl's, but I actually feel very optimistic about it and the trends that we're seeing out of the business.

Andrew McLean
Andrew McLean
CEO at Lands' End

We had a reset with Kohl's and feel good about the direction we're seeing there and the selling we're getting, which is driven by actually also an increase in AOV. In terms of marketplaces in general, we feel very positive. Europe, I couldn't be more excited about. I actually think the opportunity for Lands' End International is amazing. We just used the opportunity of the challenges we had late last year to really lean in and say, "We want to create a halo for the U.S. brand." It's like we should be continually evolving this brand upwards, and it's like Europe is a great place to pick up on that cachet. We started to do a lot of work around customer segmentation as much as anything. We found that we can reach a customer from Debenhams to Next to the U.K. to Germany.

Andrew McLean
Andrew McLean
CEO at Lands' End

Also, we're looking at how we're really going to lean in to France now. We see that as a very fashion-forward market. We've always had sales to France, but we see that as a significant opportunity for us. We see more market expansion coming off the back of that. We're actually way more bullish on it than we necessarily were even three months ago.

Dana Telsey
Dana Telsey
CEO and Chief Research Officer at Telsey Advisory Group

Thank you.

Andrew McLean
Andrew McLean
CEO at Lands' End

Thanks, Dana.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Thanks, Dana.

Operator

We'll take our next question from Marni Shapiro of The Retail Tracker. Your line is open.

Marni Shapiro
Managing Partner at The Retail Tracker

Hey, guys. Congratulations on the improvements. Could you talk a little bit about, obviously, swim was a highlight in the quarter? I'm curious about some of your other segments, key segments like towels and things like that that you guys have focused on. Could you also just talk a little bit about the changes happening here? The site has been outstanding, really much more modern. Your storytelling, it feels more youthful. I guess, could you talk about what's happening behind the scenes? Even your fashion is really on trend, but not trendy. Could you kind of roll out what we could expect to see, especially with some big seasons coming up ahead with back to school and then winter with your outerwear business?

Andrew McLean
Andrew McLean
CEO at Lands' End

Right. Oh, then, Marnie. Marnie, you can just keep asking questions forever. It's great. I think that we wanted to be curious with our swim. We're the number one online brand for women over 40, and we felt we had the right, actually, and the opportunity to move the market. I think we built a team from design to merchandising to tech design to sourcing that could really start to react to that. We gave them the opportunity to be curious with the franchises. You take Tuggles, and Tuggles, I think everybody who knows Tuggles thinks about it as it does exactly what it says on the tin, but it always comes in black, and it always comes in the same silhouette. We just felt that there was such an opportunity to reach a wider consumer.

Andrew McLean
Andrew McLean
CEO at Lands' End

In that, we just started to get curious about what we were seeing around the world. Leveraging the comments that I was just making to Dana about Europe, we see so much trend coming out of places like France, and it's like there's no reason that, one, we shouldn't be servicing that, but there's another, which is that we should be starting to channel that. As we looked at turning Tuggles into swim dresses, it's like taking the back out of Tuggles, making it into a two-piece, and actually hitting some of the real trends about having a romper Tuggles. It's been really powerful. What we see is you heard the numbers about how our customer is responding. It's really our existing customer responds to the existing product, but we have a whole new customer responding to the new product.

Andrew McLean
Andrew McLean
CEO at Lands' End

We are really excited about the dynamics of the customer we're seeing coming into the brand. It's like they're less age-oriented, and they're more oriented towards the fit and style and aesthetic of Lands' End. That's a handwriting that we're trying to develop across the business. I've got Kim and Matt and team. That's on the creative side of the business, really leaning in and challenging us every day to think about a different customer, a different consumer, and how we're going to consistently reach them. We're not going to compromise on that. We see an opportunity to remake the brand. Towels. I'm going to talk about towels and totes. If you put a towel in the, you can put a towel in the totes.

Andrew McLean
Andrew McLean
CEO at Lands' End

I think what we've done is we've taken the tote, and we've opened it up to, I mean, we have Gen A, let alone Gen Z coming in and grabbing at the totes. It's our number one acquisition vehicle for new customers. You saw the work that we did with the collabs over Memorial Day. We're selling back to that because the tote opens you up to sell the swim, to sell the towel, to sell the swim dress. I think that's been incredibly powerful for us. The site, thank you for the site. We've done a lot with the site. We think we can do more with the site. What we're trying to do is open up the various channels to find different shoppers. I talked about being on next.com, or I talked about being on nordstrom.com.

Andrew McLean
Andrew McLean
CEO at Lands' End

I think that we find different customers there. I would point you to some of the work we're doing in Europe. You should take a look at landsend.co.uk and the .de site as well to get some perspective of how we're not even so much regionalizing, but personalizing to those markets is becoming key to us because I've always believed it's about the individual customer and the experience they're having. The more we can personalize that, the better. Fashion and trends that's coming up. We drop our June catalog next week. I'm really curious to see what you think about it, and I'd love to talk to you about it. I'm going to leave it at that.

Marni Shapiro
Managing Partner at The Retail Tracker

By the way, I just popped on to the U.K. site, and it's so different. It feels like a European site, not an American site, which is a good thing. Can I just ask you one quick follow-up? You're getting a lot of new people in on totes. Are you able to transition them into other products? I guess, where do they move from totes? Where's the next place? Do they go to towels, or is it swim, or is it dresses? I'm curious what the path looks like for that customer.

Andrew McLean
Andrew McLean
CEO at Lands' End

Yeah, it's a great question. We talk about this a lot. The big pivot point, it covers swim and dresses. They go to swim dresses. If you look at our swim dresses, a lot of women pick up our swim dresses, and they wear them as regular dresses. That whole trend that's out there right now of beach to bar, pool to dinner is really calling for having the ability to not have to go to your room and change. What we're seeing is a real growth in that swim dress trend. Actually, swim dresses outperform regular dresses. Now, I don't want to do regular dresses a disservice. They continue to be strong, and we've seen some really strong trends in there. Where the customer goes, where we're seeing a lot of action is on that swim dress.

Andrew McLean
Andrew McLean
CEO at Lands' End

It's so of a moment, and I think it's a franchise we can further build on going into particularly next year.

Marni Shapiro
Managing Partner at The Retail Tracker

Fantastic. Thank you so much. Best of luck for summer.

Andrew McLean
Andrew McLean
CEO at Lands' End

Hey, thank you.

Operator

We'll take our next question from Eric Beder of SCC Research. Your line is open.

Eric Beder
CEO and Senior Research Analyst at SCC Research

Good morning. I want to talk a little bit about licensing here. Part of the kind of doing the apples-to-apples piece is that you licensing and this year are somewhat of a replacement for categories you already have. Are we now entering the part where licensing, where we're seeing incremental categories that will start to add to the total revenue because they're not really replacing something that's already out there? I guess I'd love to get an update on how you are happy on how you feel about the footwear and the kids' licenses in terms of helping drive business both online and with your partners.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Hey, Eric. Good to have you on. I'll start with just the strategy side of it, and I'll let Andrew move to the feelings about the current categories. You are correct in that, as you noticed, that we added a few new licenses in our announcement today that were repeats from Q4 that we have signed. Those are white space, so those will be purely incremental and start to build the brand and get us to additional channels that we're very excited about. As you'll realize, that licensing just started in Q1 last year. Each quarter, we'll be building the historical license that we signed. They'll continue to grow quarter to quarter. Andrew, you want to talk about footwear and shoes? I mean, and.

Andrew McLean
Andrew McLean
CEO at Lands' End

I mean, the other color in there, Eric, is the reach that we get by being in other channels. Being in the clubs and being in wholesale is absolutely huge for us. I do not want to diminish the opportunity there of how far we can go. I think the adjunct to that coming out of the conversation we just had about Europe is that this opens us up globally as well to significant opportunity to push the brand into new markets. On top of everything Bernie said, I just want to make sure that is not getting lost in the mists of it. Specific to kids and shoes, kids came out of the gate strong. We have been really happy with the transition we made. Kids was an emotional one for Lands' End because it has always been in the kids' business.

Andrew McLean
Andrew McLean
CEO at Lands' End

Inside a vertical retailer, that's something that almost every one of my employees wanted to hang on to. I felt that we needed to concentrate on our best set because we're not a $10 billion company. Not yet. Give us a couple of years. It was, who do you lean in and work with? We found what we believe are the best partner out there. They've done a great job. We see tremendous sales on our own website from kids. It's not just discounted sales, or it's not just add-on sales. It's customers coming and buying at or near full price, and they're specifically buying for kids.

Andrew McLean
Andrew McLean
CEO at Lands' End

What a great adjunct that is for our school uniform business, which we're seeing a lot of growth from as well, where we put the two side by side, and it's like you've got good symbiosis. I want to put a plug in for Backpack Day, which is coming up. That's going to be huge for us. Again, it's something we work with our partner on. Their ability to actually increase the penetration of Lands' End kids out into the other channels and to a wider population, again, I just can't diminish that. That is extremely powerful for us. Shoes is going to be slower. The newness works really well for us. I think we were slow because we tried to reinvent. Sorry, we tried to go with what the original shoes were. I was going to say silhouettes, but that doesn't work for shoes.

Andrew McLean
Andrew McLean
CEO at Lands' End

We really took the original assortment, and we kept that. We have turned that on its head now. We have started to go to much more newness, and we have been more aggressive about that. We are seeing a lot. We are seeing that work a lot. It works back to swim. I am sort of picking up on Marnie's question, which is, again, we will see her wear the slides. She is going to wear the whole uniform from the beach, the whole uniform from the pool to go to dinner. I think that gives us a lot of hope. We are seeing actually the clubs start to get interested in shoes now as well. I like that because that puts us in front of hundreds of millions of people.

Eric Beder
CEO and Senior Research Analyst at SCC Research

Yeah. We've been seeing that in the catalogs with the shoes becoming much more wider in terms of styles and trends here going forward. In terms of B2B, you have the Delta contract coming up. Could you remind us historically how these kind of contracts launch? If I remember correctly, there's a big bump initially, and then they have a nice flow afterwards. What should we be thinking about in terms of back to school? I know that the competitor disappeared. When do you think that's going to be fully manifested, and we're going to see that in terms of the flow here this year also?

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Yeah, Eric. As far as Delta goes, it isn't necessarily the beginning or end of a contract that there's large flows. It's when they decide to launch a new product line. Our current agreement with Delta does not have a near-term new launch of product. They're working on that themselves. This will be just the normal run rate that we experienced with them historically.

Eric Beder
CEO and Senior Research Analyst at SCC Research

Okay. In terms of back to school.

Bernie McCracken
Bernie McCracken
CFO at Lands' End

Then school uniforms. We're excited about the volume that we added. Andrew noted in his comments that there's $13 million of new customer schools that we have added over the last six months as one of our competitors exited the industry. We are back to schools tends to start in June for us and then play out through September. We're excited for the effects on Q2 of that new added business.

Andrew McLean
Andrew McLean
CEO at Lands' End

One of the things that we like about this year, and it's just worth noting because I know it's a lot of implications for all back to schools, is we're seeing back to school line up very closely with 2024's back to school. It should be relatively calm is the way we're viewing it.

Eric Beder
CEO and Senior Research Analyst at SCC Research

Last question. You mentioned in your release about swim. I agree as the product has materially improved. Do you believe that's just because of some ways and timing of the weather and some of the pieces? I know it's been colder year over year in certain areas. How should we be thinking about that? Thank you.

Andrew McLean
Andrew McLean
CEO at Lands' End

No, Eric. We improved it ourselves. I keep telling you this. It's just like we make great product, and it's connecting with the customer. That continues to be big for us. Now, I'm being slightly facetious. It definitely was a chilled start. It was cold and wet, and it was interesting that for the first month of the quarter, we were actually outselling swim with outerwear, which has never happened to us before. We saw that business pick up and get on its trend. I think we'll continue to see it get on its trend. Our view is that with the product that we've got and the reach that it's getting, there is opportunity for us. I do want to put in a plug for the Lands' End teams who've really worked hard to put this collection together. I think it's a splendid collection.

Eric Beder
CEO and Senior Research Analyst at SCC Research

Great. Good luck for the rest of the year.

Andrew McLean
Andrew McLean
CEO at Lands' End

Thanks, Eric.

Operator

We will move next to Steve Silver of Argus Research. Your line is open.

Steve Silver
Steve Silver
Senior Equity Research Analyst at Argus Research

Thanks, operator, and thanks for taking my questions. My first question is really about the outfitters business in general, particularly on the enterprise side. Just curious as to whether there's been any implied hesitancy across the pipeline for outfitters given all the macroeconomic noise that we're dealing with every day. I'm just curious as to whether it's really business as usual in terms of enterprise prospects moving forward with these kind of discussions or if any companies that you're talking to are getting a little bit more in a wait-and-see mode given everything that's going on in the macro environment.

Andrew McLean
Andrew McLean
CEO at Lands' End

The answer is, a little surprisingly, no. We went through the cycles with everyone else, yourself included, which was, "Oh, there's going to be a bump because everyone's going to pull forward to get ahead of tariffs." Then there's going to be a dip because everyone's got ahead of tariffs. Then there's going to be a slowdown. We saw none of that. We saw very consistent business. I think that's a testament to how our teams engage with the market. I think it's also a testament to the strength in the enterprise businesses out there that we're continuing to see that consistency from them. Right now, today, I feel pretty good about that business. It's showing consistent strength that, again, like you, I probably wasn't necessarily expecting was going to come through.

Steve Silver
Steve Silver
Senior Equity Research Analyst at Argus Research

Great. And one more, if I may. You mentioned in your prepared remarks about increasing the customer file through SMS subscriptions and the like. I'm curious as to how that maybe compares just in context to previous campaigns where the customer file was expanded and just in terms of maybe how many of those new subscribers showed stickiness and not unsubscribing once they've taken advantage of the product that brought them into the system in the first place. Just trying to get some context in terms of the stickiness of some of these new customer ads.

Andrew McLean
Andrew McLean
CEO at Lands' End

Yeah. The number we called out—that's a great question, actually. The number we called out that I think you would key on in the script is that one to two X customer because that's exactly, I think, where you're going. That answers that question. You can paid search, the very sort of traditional method will get you that one-time customer. Where you really get them in is making them a two-time customer. We saw significant growth in that. I think that's a testament to how we've chosen to market and the brand that we're choosing to market, which is we're not trying to sell so much on discounting. We're trying to stand behind the quality of our product, the fashion of our product, and the experience that you have coming to Lands' End.

Andrew McLean
Andrew McLean
CEO at Lands' End

We were really excited to see the one-time customer become a two-time customer at the rate they did and help build our LTV relative to the cost of acquisition. I think there's a sort of subpart to this question which is worth covering, which is we're doing less paid search than we were. We're doing more in channels where I think we can have a fuller expression of the brand. For example, in social, we do a lot on Insta now. It's not out of the question that we will ourselves be on TikTok. We are certainly on TikTok through our influencers. I think it's about reaching customers more individually or through cohorts that they follow. I mean, I think the whole Park collab that we do, and we continue to collab with Park, has been really powerful for us in reaching a whole new customer.

Andrew McLean
Andrew McLean
CEO at Lands' End

I hope that answers your question. I think the other thing I'd throw in there, actually, is we're starting to look more and more about using AI agents to market to customers. We see a lot of search now, whether you're on Safari or whether you're in Google, you're getting an answer offered to you from an AI agent. More of our marketing is starting to go against that. While it's a very small base, it has tremendous growth associated with that. We see that as the sky's the limit as we use and deploy more AI-based tools in the business.

Steve Silver
Steve Silver
Senior Equity Research Analyst at Argus Research

Great. I appreciate all the color.

Andrew McLean
Andrew McLean
CEO at Lands' End

Thanks, Steve. See you.

Operator

This does conclude our question and answer session as well as the Lands' End first quarter 2025 earnings call. You may now disconnect your lines. Everyone, have a great day.

Executives
    • Tom Altholz
      Tom Altholz
      Senior Director of Financial Planning and Analysis
    • Bernie McCracken
      Bernie McCracken
      CFO
    • Andrew McLean
      Andrew McLean
      CEO
Analysts
    • Dana Telsey
      CEO and Chief Research Officer at Telsey Advisory Group
    • Steve Silver
      Senior Equity Research Analyst at Argus Research
    • Marni Shapiro
      Managing Partner at The Retail Tracker
    • Eric Beder
      CEO and Senior Research Analyst at SCC Research
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