Lands' End Q2 Loss Wider Than Expected, Digital Revenues Down 5.6%

Lands' End, Inc. LE reported a wider-than-expected loss in second-quarter fiscal 2025. Revenues also missed the Zacks Consensus Estimate, while both metrics compared unfavorably on a year-over-year basis.

In the past six months, shares of this Zacks Rank #3 (Hold) company have gained 34.7% compared with the industry’s growth of 32%.

LE's Q2 Details

Lands' End posted an adjusted loss of six cents a share, wider than the Zacks Consensus Estimate of a loss of three cents. In the year-ago quarter, the company had reported an adjusted loss of two cents per share.

The company generated net revenues of $294.1 million that lagged the Zacks Consensus Estimate of $322 million. The top line also fell 7.3% year over year. U.S. Digital segment net revenues came in at $255.3 million, down 5.6% year over year. The U.S. e-commerce revenues were $167.3 million, indicating a decline of 11.2% from the year-earlier quarter, indicating a slow start to the seasonal swim product.

Lands' End, Inc. Price, Consensus and EPS Surprise

Lands' End, Inc. price-consensus-eps-surprise-chart | Lands' End, Inc. Quote

Outfitters’ revenues were $66.4 million, up 5.1% from the second quarter of 2024. The school uniform channel rose high single digits, mainly owing to the new customers acquired from a competitor’s exit from the business. Revenues from the business uniform channel increased year over year, backed by the enterprise accounts. Third Party revenues were $21.6 million, up 14.3% year over year, mainly on curated product assortments resulting in strength across marketplaces, particularly Amazon and Macy’s.

Europe e-commerce revenues were $19.6 million in the reported quarter of 2025, down 14.8%, mainly owing to the inventory timing from supply-chain issues and macroeconomic conditions alongside increasing distribution channels with multiple marketplace expansions.

Licensing and Retail net revenues were $19.2 million for the second quarter of 2025, showing a decline of 19.7% from the second quarter of 2024. Soft performance of U.S. company-operated stores led to the decline, partly offset by licensing revenues up nearly 19%.

An Insight Into LE's Margins

Gross profit dropped 5.6% year over year to $143.4 million. However, the gross margin expanded 90 basis points (bps) to 48.8%. Gross margin was driven by better promotional productivity and the expanded licensing business.

Selling and administrative expenses, as a percentage of net revenues, were 44%, up 130 bps from 42.7% recorded in the second quarter of 2024, thanks to lower revenues.

Adjusted EBITDA was $14.1 million in the second quarter of 2025, down from $17.1 million in the year-ago quarter.

LE's Financial Details

Lands' End ended the quarter with cash and cash equivalents of $21.3 million, net long-term debt of $219.6 million and total stockholders’ equity of $225.1 million. Further, inventories at the end of the quarter were $301.8 million.

At the end of the reported quarter, net cash provided from operations amounted to $469 million. For fiscal 2025, the company expects capital expenditures worth approximately $25 million.

As of Aug. 1, 2025, it had $35 million of outstanding borrowings and $87.6 million in availability under its ABL facility. The company had $240.5 million of term loan debt facility as of Aug. 1, 2025.

During the reported quarter, the company bought back $1.7 million of its common stock under the share repurchase program announced on March 15, 2024. As of Aug. 1, 2025, additional purchases of nearly $8.8 million could be made through March 31, 2026.

On March 7, 2025, the company’s board initiated a process to explore strategic options such as sale, merger or similar transaction to boost shareholder value. LE does not intend to make any further public comment with respect to the process until it determines that disclosure is suitable.

What's Ahead for Lands' End?

For third-quarter fiscal 2025, the company projects net revenues of $320-$350 million. In the year-ago quarter, the company posted revenues of $319 million. Gross Merchandise Value is likely to generate mid to high single-digit growth. Further, adjusted EBITDA is envisioned in the band of $24-$28 million. The company forecasts adjusted earnings in the range of 10-22 cents per share. In the prior-year quarter, the company reported earnings of six cents per share.

For fiscal 2025, management expects net revenues in the range of $1.33-$1.40 billion compared with $1.36 billion delivered last fiscal year. Gross Merchandise Value is likely to deliver low to mid-single digit growth. Further, adjusted EBITDA is projected in the range of $98-$107 million. Earnings per share (EPS) are expected to come in the band of 62-88 cents compared with 40 cents in the last fiscal year.

Key Stocks in Retail

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The Zacks Consensus Estimate for Genesco’s current fiscal-year EPS and sales indicates growth of 66% and 1.7%, respectively, from the year-ago period’s reported figures.

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The Zacks Consensus Estimate for BIRD’s current financial-year EPS indicates growth of 18.3% from the year-ago figure. 

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This article originally published on Zacks Investment Research (zacks.com).

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