Lands' End NASDAQ: LE reported second-quarter fiscal 2026 revenue of $302 million, up 3% from a year earlier, as growth in U.S. e-commerce and the Outfitters business offset a decline in third-party marketplace sales. The company said its results reflected both recovery from earlier warehouse management system disruptions and continued investments in marketing, customer acquisition and digital capabilities.
Adjusted net income was $2.7 million, or $0.09 per share, while adjusted EBITDA totaled $11 million, down $4 million year over year. Gross profit increased $14 million, or 10%, and gross margin expanded about 320 basis points to 52%.
Chief Executive Officer Charlie Cole, who joined the company on July 13, said he sees opportunities to strengthen customer engagement, personalization and operational infrastructure as the retailer heads into its peak holiday season.
U.S. E-Commerce Recovers as Totes and Swim Drive Customer Acquisition
U.S. e-commerce sales rose 9% from the second quarter of fiscal 2025. Chief Financial Officer Bernie McCracken said the increase benefited from shipments that carried over from warehouse management system issues during the first quarter. On a year-to-date basis, excluding the completed catch-up effect, the U.S. e-commerce business was “flat or flattish,” McCracken said in response to an analyst question.
Cole said the company had resolved the warehouse management system issue in its core U.S. e-commerce operations and caught up on shipments by the end of the quarter. He said operations are now running at normal throughput levels, though the company continues to work through a backlog in other areas.
Product categories that performed well included women’s and men’s apparel, particularly knits, as well as bags. Cole said the company’s five-pocket tote was a meaningful contributor to growth and new customer acquisition. U.S. new-to-file customer counts increased by double digits, largely driven by totes and swim.
The U.S. swim business posted high-single-digit revenue growth in e-commerce during the quarter. Cole also cited positive early results in sleepwear, outerwear and Christmas stockings heading into the third and fourth quarters.
Marketing initiatives with TNT and Wawa, along with the company’s presence in Nantucket, helped Lands’ End reach younger audiences, according to Cole. He said the Wawa collaboration generated more than 2.6 billion impressions and sold out in hours. Traffic across social channels, including Instagram, increased more than 30% year over year.
Margin Improvement Offset by New Royalty Structure and Operations Costs
The company attributed its gross-margin expansion primarily to an IEEPA tariff refund. That benefit was partially offset by the new royalty structure associated with its joint venture with WHP Global and by increased costs tied to the warehouse management system rollout.
Selling, general and administrative expenses increased $6 million from a year earlier and rose about 80 basis points as a percentage of net revenue. Lands’ End said the increase reflected digital marketing investments and operational inefficiencies caused by temporary warehouse disruption.
Third-party marketplace revenue declined about 20% as the company emphasized higher-margin sales and brand integrity rather than lower-margin promotional volume. Despite the sales decline, McCracken said comparable gross margin in the marketplace business improved by more than 500 basis points year over year.
In Europe, sales increased 1% from a year earlier. The company said it shifted toward a franchise-first assortment, which simplified the business and improved product margins. Cole said the European business is focusing on profitability and less promotional selling while retaining some market-specific merchandising differences. Lands’ End also launched Amazon Germany in August.
Outfitters Growth Constrained by School Uniform Shipment Delays
Lands’ End Outfitters, the company’s business-to-business unit, increased sales about 4% from the prior-year quarter. Growth in enterprise accounts more than offset continuing warehouse management system challenges affecting value-added service products in the school uniform business.
School uniform shipments were delayed, leaving backlog levels significantly above the prior year and reducing revenue recognized during the quarter. Cole said the company is seeking to increase output capacity, improve production efficiency and prioritize shipments to address customer timing needs.
The enterprise segment was up more than 15% year to date, led by airline accounts. Cole said Delta Air Lines is conducting wear testing for its Distinctly Delta uniform collection, with more than 1,400 frontline employees participating. Feedback from the testing is expected to inform final refinements ahead of a planned second-half 2027 rollout.
Inventory, Capital Allocation and Outlook
Ending inventory was $342 million, up 13% from a year earlier. McCracken said inventory was closer to typical and planned levels after the company maintained an intentionally lean position a year earlier amid tariff uncertainty. He said the company expects inventory to remain within typical levels and highlighted a broader outerwear assortment for the holiday season, along with fleece and sweaters.
The company ended the quarter with $60 million in asset-based lending borrowings, compared with $35 million a year earlier. Lands’ End previously used most of the $300 million in cash proceeds from its WHP Global transaction to repay its term loan. During the quarter, it repurchased roughly 900,000 shares for approximately $11 million, leaving $89 million under its authorized repurchase program.
For the third quarter, Lands’ End expects revenue of $300 million to $330 million, adjusted net income of $2 million to $6 million, adjusted diluted earnings per share of $0.07 to $0.20, and adjusted EBITDA of $14 million to $18 million.
For fiscal 2026, the company forecast revenue of $1.3 billion to $1.35 billion, adjusted net income of $13 million to $21 million, adjusted diluted earnings per share of $0.44 to $0.72, and adjusted EBITDA of $62 million to $70 million. The outlook incorporates tariffs at currently implemented rates and approximately $40 million of capital expenditures.
Cole said the company intends to build greater personalization across e-commerce, marketing and customer retention using its customer data and AI-powered capabilities. “We are going to build an AI infrastructure that gives us an e-commerce platform that will rival the best in the industry,” he said.
About Lands' End (NASDAQ:LE)
Lands' End, Inc NASDAQ: LE is an American retailer specializing in casual apparel, accessories and home goods. Headquartered in Dodgeville, Wisconsin, the company sells its products through a combination of direct-to-consumer channels including e-commerce, catalogues and a network of outlet stores. Lands' End is known for its nautical-inspired designs, functional outerwear and commitment to quality fabrics.
Founded in 1963 by Gary Comer as a mail-order sailing supply business, Lands' End rapidly expanded its product offering beyond marine gear.
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