x
|
Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
|
36-2512786
|
(State or Other Jurisdiction of
Incorporation of Organization) |
|
(I.R.S. Employer
Identification No.) |
|
|
|
1 Lands’ End Lane
Dodgeville, Wisconsin
|
|
53595
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Large accelerated filer
|
|
¨
|
Accelerated filer
|
x
|
|
|
|
|
|
Non-accelerated filer
|
|
¨
|
Smaller Reporting Company
|
¨
|
|
|
|
|
Page
|
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|
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|
|
PART I FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
|
Financial Statements (Unaudited)
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Comprehensive Operations
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
Notes to Condensed Consolidated Financial Statements
|
|
|
|
|
|
|
|
Item 2.
|
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
|
|
|
|
Item 3.
|
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
|
|
|
|
|
|
Item 4.
|
|
Controls and Procedures
|
|
|
|
|
|
|
|
|
|
PART II OTHER INFORMATION
|
|
|
|
|
|
|
|
Item 1.
|
|
Legal
Proceedings
|
|
|
|
|
|
|
|
Item 1A.
|
|
Risk Factors
|
|
|
|
|
|
|
|
Item 2.
|
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
|
|
|
|
|
Item 6.
|
|
Exhibits
|
|
|
|
|
|
|
|
|
|
Signatures
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands except per share data)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Net revenue
|
|
$
|
311,476
|
|
|
$
|
334,434
|
|
|
$
|
876,919
|
|
|
$
|
946,235
|
|
Cost of sales (excluding depreciation and amortization)
|
|
177,825
|
|
|
172,019
|
|
|
477,446
|
|
|
492,756
|
|
||||
Gross profit
|
|
133,651
|
|
|
162,415
|
|
|
399,473
|
|
|
453,479
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Selling and administrative
|
|
132,365
|
|
|
135,867
|
|
|
390,291
|
|
|
394,261
|
|
||||
Depreciation and amortization
|
|
4,795
|
|
|
4,260
|
|
|
13,419
|
|
|
12,874
|
|
||||
Other operating (income), net
|
|
(86
|
)
|
|
(1,009
|
)
|
|
(40
|
)
|
|
(3,366
|
)
|
||||
Operating (loss) income
|
|
(3,423
|
)
|
|
23,297
|
|
|
(4,197
|
)
|
|
49,710
|
|
||||
Interest expense
|
|
6,149
|
|
|
6,204
|
|
|
18,493
|
|
|
18,615
|
|
||||
Other (income) expense, net
|
|
(432
|
)
|
|
796
|
|
|
(1,413
|
)
|
|
(210
|
)
|
||||
(Loss) income before income taxes
|
|
(9,140
|
)
|
|
16,297
|
|
|
(21,277
|
)
|
|
31,305
|
|
||||
Income tax (benefit) expense
|
|
(1,918
|
)
|
|
5,572
|
|
|
(6,316
|
)
|
|
11,395
|
|
||||
NET (LOSS) INCOME
|
|
$
|
(7,222
|
)
|
|
$
|
10,725
|
|
|
$
|
(14,961
|
)
|
|
$
|
19,910
|
|
NET (LOSS) INCOME PER COMMON SHARE (Note 2)
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
$
|
(0.23
|
)
|
|
$
|
0.34
|
|
|
$
|
(0.47
|
)
|
|
$
|
0.62
|
|
Diluted:
|
|
$
|
(0.23
|
)
|
|
$
|
0.33
|
|
|
$
|
(0.47
|
)
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
|
32,029
|
|
|
31,991
|
|
|
32,018
|
|
|
31,975
|
|
||||
Diluted weighted average common shares outstanding
|
|
32,029
|
|
|
32,059
|
|
|
32,018
|
|
|
32,042
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
NET (LOSS) INCOME
|
|
$
|
(7,222
|
)
|
|
$
|
10,725
|
|
|
$
|
(14,961
|
)
|
|
$
|
19,910
|
|
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
|
(2,183
|
)
|
|
260
|
|
|
(2,952
|
)
|
|
925
|
|
||||
COMPREHENSIVE (LOSS) INCOME
|
|
$
|
(9,405
|
)
|
|
$
|
10,985
|
|
|
$
|
(17,913
|
)
|
|
$
|
20,835
|
|
(in thousands, except share data)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
January 29, 2016
|
||||||
|
|
(unaudited)
|
|
(unaudited)
|
|
|
||||||
ASSETS
|
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
131,532
|
|
|
$
|
104,986
|
|
|
$
|
228,368
|
|
Restricted cash
|
|
3,300
|
|
|
3,300
|
|
|
3,300
|
|
|||
Accounts receivable, net
|
|
40,101
|
|
|
37,875
|
|
|
32,061
|
|
|||
Inventories, net
|
|
425,290
|
|
|
436,712
|
|
|
329,203
|
|
|||
Prepaid expenses and other current assets
|
|
40,942
|
|
|
40,833
|
|
|
23,618
|
|
|||
Total current assets
|
|
641,165
|
|
|
623,706
|
|
|
616,550
|
|
|||
Property and equipment, net
|
|
115,871
|
|
|
105,661
|
|
|
109,831
|
|
|||
Goodwill
|
|
110,000
|
|
|
110,000
|
|
|
110,000
|
|
|||
Intangible asset, net
|
|
430,000
|
|
|
528,300
|
|
|
430,000
|
|
|||
Other assets
|
|
16,142
|
|
|
14,352
|
|
|
15,145
|
|
|||
TOTAL ASSETS
|
|
$
|
1,313,178
|
|
|
$
|
1,382,019
|
|
|
$
|
1,281,526
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
$
|
180,608
|
|
|
$
|
151,429
|
|
|
$
|
146,097
|
|
Other current liabilities
|
|
101,093
|
|
|
107,596
|
|
|
83,992
|
|
|||
Total current liabilities
|
|
281,701
|
|
|
259,025
|
|
|
230,089
|
|
|||
Long-term debt, net
|
|
490,992
|
|
|
494,788
|
|
|
493,838
|
|
|||
Long-term deferred tax liabilities
|
|
158,048
|
|
|
184,926
|
|
|
157,252
|
|
|||
Other liabilities
|
|
16,766
|
|
|
16,390
|
|
|
15,838
|
|
|||
TOTAL LIABILITIES
|
|
947,507
|
|
|
955,129
|
|
|
897,017
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
|
||||||
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||||||
Common stock, par value $0.01- authorized: 480,000,000 shares; issued and outstanding: 32,029,359, 31,991,343 and 31,991,668, respectively
|
|
320
|
|
|
320
|
|
|
320
|
|
|||
Additional paid-in capital
|
|
343,319
|
|
|
344,156
|
|
|
344,244
|
|
|||
Retained earnings
|
|
34,368
|
|
|
88,787
|
|
|
49,329
|
|
|||
Accumulated other comprehensive loss
|
|
(12,336
|
)
|
|
(6,373
|
)
|
|
(9,384
|
)
|
|||
Total stockholders’ equity
|
|
365,671
|
|
|
426,890
|
|
|
384,509
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
1,313,178
|
|
|
$
|
1,382,019
|
|
|
$
|
1,281,526
|
|
|
|
39 Weeks Ended
|
||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
||||
Net (loss) income
|
|
$
|
(14,961
|
)
|
|
$
|
19,910
|
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
13,419
|
|
|
12,874
|
|
||
Product recall
|
|
(212
|
)
|
|
(3,371
|
)
|
||
Amortization of debt issuance costs
|
|
1,284
|
|
|
1,313
|
|
||
Loss on disposal of property and equipment
|
|
172
|
|
|
5
|
|
||
Stock-based compensation
|
|
1,578
|
|
|
2,307
|
|
||
Deferred income taxes
|
|
839
|
|
|
3,381
|
|
||
Change in operating assets and liabilities:
|
|
|
|
|
||||
Inventories
|
|
(99,997
|
)
|
|
(134,690
|
)
|
||
Accounts payable
|
|
40,186
|
|
|
20,078
|
|
||
Other operating assets
|
|
(25,100
|
)
|
|
(18,124
|
)
|
||
Other operating liabilities
|
|
15,537
|
|
|
1,523
|
|
||
Net cash used in operating activities
|
|
(67,255
|
)
|
|
(94,794
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
||||
Proceeds from sale of property and equipment
|
|
44
|
|
|
—
|
|
||
Purchases of property and equipment
|
|
(26,083
|
)
|
|
(18,117
|
)
|
||
Net cash used in investing activities
|
|
(26,039
|
)
|
|
(18,117
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
||||
Payments on term loan facility
|
|
(3,863
|
)
|
|
(3,863
|
)
|
||
Net cash used in financing activities
|
|
(3,863
|
)
|
|
(3,863
|
)
|
||
Effects of exchange rate changes on cash
|
|
321
|
|
|
306
|
|
||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
(96,836
|
)
|
|
(116,468
|
)
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
228,368
|
|
|
221,454
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
131,532
|
|
|
$
|
104,986
|
|
SUPPLEMENTAL CASH FLOW DATA
|
|
|
|
|
||||
Unpaid liability to acquire property and equipment
|
|
$
|
3,101
|
|
|
$
|
2,695
|
|
Income taxes paid, net of refund
|
|
$
|
3,220
|
|
|
$
|
19,714
|
|
Interest paid
|
|
$
|
16,892
|
|
|
$
|
17,037
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands, except per share amounts)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Net (loss) income
|
|
$
|
(7,222
|
)
|
|
$
|
10,725
|
|
|
$
|
(14,961
|
)
|
|
$
|
19,910
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
|
32,029
|
|
|
31,991
|
|
|
32,018
|
|
|
31,975
|
|
||||
Dilutive effect of stock awards
|
|
—
|
|
|
68
|
|
|
—
|
|
|
67
|
|
||||
Diluted weighted average shares outstanding
|
|
32,029
|
|
|
32,059
|
|
|
32,018
|
|
|
32,042
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share
|
|
$
|
(0.23
|
)
|
|
$
|
0.34
|
|
|
$
|
(0.47
|
)
|
|
$
|
0.62
|
|
Diluted (loss) earnings per share
|
|
$
|
(0.23
|
)
|
|
$
|
0.33
|
|
|
$
|
(0.47
|
)
|
|
$
|
0.62
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Beginning balance: Accumulated other comprehensive loss (net of tax of $5,467, $3,572, $5,053 and $3,931, respectively)
|
|
$
|
(10,153
|
)
|
|
$
|
(6,633
|
)
|
|
$
|
(9,384
|
)
|
|
$
|
(7,298
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments (net of tax (benefit) expense of $1,176, $(141), $1,590 and $(500), respectively)
|
|
(2,183
|
)
|
|
260
|
|
|
(2,952
|
)
|
|
925
|
|
||||
Ending balance: Accumulated other comprehensive loss (net of tax of $6,643, $3,431, $6,643 and $3,431, respectively)
|
|
$
|
(12,336
|
)
|
|
$
|
(6,373
|
)
|
|
$
|
(12,336
|
)
|
|
$
|
(6,373
|
)
|
|
|
October 28, 2016
|
|
October 30, 2015
|
|
January 29, 2016
|
|||||||||||||||
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|||||||||
Term Loan Facility, maturing April 4, 2021
|
|
$
|
502,125
|
|
|
4.25
|
%
|
|
$
|
507,275
|
|
|
4.25
|
%
|
|
$
|
505,988
|
|
|
4.25
|
%
|
ABL Facility, maturing April 4, 2019
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
|
|
502,125
|
|
|
|
|
507,275
|
|
|
|
|
505,988
|
|
|
|
||||||
Less: Current maturities in Other current liabilities, net
|
|
5,150
|
|
|
|
|
5,150
|
|
|
|
|
5,150
|
|
|
|
||||||
Less: Unamortized debt issuance costs
|
|
5,983
|
|
|
|
|
7,337
|
|
|
|
|
7,000
|
|
|
|
||||||
Long-term debt, net
|
|
$
|
490,992
|
|
|
|
|
$
|
494,788
|
|
|
|
|
$
|
493,838
|
|
|
|
|
|
October 28, 2016
|
|
October 30, 2015
|
|
January 29, 2016
|
||||||
ABL maximum borrowing
|
|
$
|
175,000
|
|
|
$
|
175,000
|
|
|
$
|
175,000
|
|
Outstanding Letters of Credit
|
|
13,845
|
|
|
18,523
|
|
|
24,311
|
|
|||
Borrowing availability under ABL
|
|
$
|
161,155
|
|
|
$
|
156,477
|
|
|
$
|
150,689
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Performance Awards
|
|
$
|
127
|
|
|
$
|
315
|
|
|
$
|
511
|
|
|
$
|
1,096
|
|
Deferred Awards
|
|
(301
|
)
|
|
471
|
|
|
1,067
|
|
|
1,211
|
|
||||
Total stock-based compensation (benefit) expense
|
|
$
|
(174
|
)
|
|
$
|
786
|
|
|
$
|
1,578
|
|
|
$
|
2,307
|
|
(in thousands, except per share amounts)
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Unvested Deferred Awards, as of January 29, 2016
|
|
175
|
|
|
$
|
30.87
|
|
Granted
|
|
225
|
|
|
24.39
|
|
|
Vested
|
|
(27
|
)
|
|
33.53
|
|
|
Forfeited
|
|
(132
|
)
|
|
30.25
|
|
|
Unvested Deferred Awards, as of October 28, 2016
|
|
241
|
|
|
24.91
|
|
(in thousands, except per share amounts)
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Unvested Performance Awards, as of January 29, 2016
|
|
109
|
|
|
$
|
26.81
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Vested
|
|
(30
|
)
|
|
27.84
|
|
|
Forfeited
|
|
(10
|
)
|
|
26.73
|
|
|
Unvested Performance Awards, as of October 28, 2016
|
|
69
|
|
|
26.38
|
|
|
|
October 28, 2016
|
|
October 30, 2015
|
|
January 29, 2016
|
||||||||||||||||||
(in thousands)
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
||||||||||||
Long-term debt, including short-term portion
|
|
$
|
502,125
|
|
|
$
|
386,636
|
|
|
$
|
507,275
|
|
|
$
|
473,668
|
|
|
$
|
505,988
|
|
|
$
|
418,073
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands, except for number of stores)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Rent, CAM and occupancy costs
|
|
$
|
6,165
|
|
|
$
|
6,167
|
|
|
$
|
18,707
|
|
|
$
|
19,049
|
|
Retail services, store labor
|
|
6,004
|
|
|
6,774
|
|
|
18,034
|
|
|
20,051
|
|
||||
Financial services and payment processing
|
|
573
|
|
|
627
|
|
|
1,963
|
|
|
1,876
|
|
||||
Supply chain costs
|
|
183
|
|
|
219
|
|
|
735
|
|
|
768
|
|
||||
Total expenses
|
|
$
|
12,925
|
|
|
$
|
13,787
|
|
|
$
|
39,439
|
|
|
$
|
41,744
|
|
Number of Lands’ End Shops at Sears at period end
|
|
219
|
|
|
227
|
|
|
219
|
|
|
227
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Sourcing
|
|
$
|
4,941
|
|
|
$
|
3,632
|
|
|
$
|
7,979
|
|
|
$
|
7,670
|
|
Shop Your Way
|
|
596
|
|
|
751
|
|
|
1,670
|
|
|
2,007
|
|
||||
Shared services
|
|
48
|
|
|
111
|
|
|
143
|
|
|
393
|
|
||||
Total expenses
|
|
$
|
5,585
|
|
|
$
|
4,494
|
|
|
$
|
9,792
|
|
|
$
|
10,070
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Call center services
|
|
$
|
492
|
|
|
$
|
674
|
|
|
$
|
1,459
|
|
|
$
|
1,343
|
|
Lands' End business outfitters revenue
|
|
333
|
|
|
323
|
|
|
1,307
|
|
|
1,043
|
|
||||
Credit card revenue
|
|
265
|
|
|
300
|
|
|
776
|
|
|
868
|
|
||||
Royalty income
|
|
56
|
|
|
60
|
|
|
182
|
|
|
183
|
|
||||
Gift card (expense)
|
|
(7
|
)
|
|
(5
|
)
|
|
(20
|
)
|
|
(16
|
)
|
||||
Total income
|
|
$
|
1,139
|
|
|
$
|
1,352
|
|
|
$
|
3,704
|
|
|
$
|
3,421
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
||||||||
Apparel
|
|
$
|
252,082
|
|
|
$
|
272,228
|
|
|
$
|
725,062
|
|
|
$
|
783,841
|
|
Non-apparel
|
|
37,854
|
|
|
40,708
|
|
|
95,021
|
|
|
106,536
|
|
||||
Service and other
|
|
21,540
|
|
|
21,498
|
|
|
56,836
|
|
|
55,858
|
|
||||
Total net revenue
|
|
$
|
311,476
|
|
|
$
|
334,434
|
|
|
$
|
876,919
|
|
|
$
|
946,235
|
|
•
|
The Direct segment sells products through the Company’s e-commerce websites and direct mail catalogs. Operating costs consist primarily of direct marketing costs (catalog and e-commerce marketing costs); order processing and shipping costs; direct labor and benefits costs and facility costs. Assets primarily include goodwill and trade name intangible assets, inventory, accounts receivable, prepaid expenses (deferred catalog costs), technology infrastructure, and property and equipment.
|
•
|
The Retail segment sells products and services through dedicated Lands’ End Shops at Sears across the United States, the Company’s stand-alone Lands’ End Inlet stores and international shop-in-shops. Operating costs consist primarily of labor and benefits costs; rent, CAM and occupancy costs; distribution costs; and in-store marketing costs. Assets primarily include retail inventory, fixtures and leasehold improvements.
|
•
|
Corporate overhead and other expenses include unallocated shared-service costs, which primarily consist of employee services and financial services, legal and corporate expenses. These expenses include labor and benefits costs, corporate headquarters occupancy costs and other administrative expenses. Assets include corporate headquarters and facilities, corporate cash and cash equivalents and deferred income taxes.
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
272,080
|
|
|
$
|
287,778
|
|
|
$
|
750,660
|
|
|
805,886
|
|
|
Retail
|
|
39,340
|
|
|
46,597
|
|
|
126,077
|
|
|
140,166
|
|
||||
Corporate / other
|
|
56
|
|
|
59
|
|
|
182
|
|
|
183
|
|
||||
Total net revenue
|
|
$
|
311,476
|
|
|
$
|
334,434
|
|
|
$
|
876,919
|
|
|
$
|
946,235
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
13,904
|
|
|
$
|
36,951
|
|
|
$
|
41,516
|
|
|
$
|
85,316
|
|
Retail
|
|
(3,583
|
)
|
|
(1,714
|
)
|
|
(7,063
|
)
|
|
(907
|
)
|
||||
Corporate / other
|
|
(9,035
|
)
|
|
(8,689
|
)
|
|
(25,271
|
)
|
|
(25,191
|
)
|
||||
Total adjusted EBITDA
|
|
$
|
1,286
|
|
|
$
|
26,548
|
|
|
$
|
9,182
|
|
|
$
|
59,218
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
4,027
|
|
|
$
|
3,385
|
|
|
$
|
11,097
|
|
|
$
|
10,280
|
|
Retail
|
|
408
|
|
|
510
|
|
|
1,233
|
|
|
1,506
|
|
||||
Corporate / other
|
|
360
|
|
|
365
|
|
|
1,089
|
|
|
1,088
|
|
||||
Total depreciation and amortization
|
|
$
|
4,795
|
|
|
$
|
4,260
|
|
|
$
|
13,419
|
|
|
$
|
12,874
|
|
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
January 29, 2016
|
||||||
Total Assets:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
1,073,975
|
|
|
$
|
1,166,991
|
|
|
$
|
953,502
|
|
Retail
|
|
78,373
|
|
|
79,492
|
|
|
69,321
|
|
|||
Corporate / other
|
|
160,830
|
|
|
135,536
|
|
|
258,703
|
|
|||
Total assets
|
|
$
|
1,313,178
|
|
|
$
|
1,382,019
|
|
|
$
|
1,281,526
|
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
(in thousands)
|
|
October 28, 2016
|
|
October 30, 2015
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
8,041
|
|
|
$
|
4,415
|
|
|
$
|
25,804
|
|
|
$
|
17,717
|
|
Retail
|
|
25
|
|
|
95
|
|
|
279
|
|
|
148
|
|
||||
Corporate / other
|
|
—
|
|
|
87
|
|
|
—
|
|
|
252
|
|
||||
Total capital expenditures
|
|
$
|
8,066
|
|
|
$
|
4,597
|
|
|
$
|
26,083
|
|
|
$
|
18,117
|
|
•
|
Executive overview.
This section provides a brief description of our business, accounting basis of presentation and a brief summary of our results of operations.
|
•
|
Discussion and analysis.
This section highlights items affecting the comparability of our financial results and provides an analysis of our segment results of operations for the
2016
and
2015
third
fiscal quarter and fiscal year to date periods.
|
•
|
Liquidity and capital resources.
This section provides an overview of our historical and anticipated cash and financing activities. We also review our historical sources and uses of cash in our operating, investing and financing activities.
|
•
|
Contractual Obligations and Off-Balance-Sheet Arrangements.
This section provides details of the Company's off-balance-sheet arrangements and contractual obligations for the next five years and thereafter.
|
•
|
Financial Instruments with Off-Balance-Sheet Risk.
This section discusses financial instruments of the Company that could have off-balance-sheet risk.
|
•
|
Application of critical accounting policies and estimates.
This section summarizes the accounting policies that we consider important to our financial condition and results of operations and which require significant judgment or estimates to be made in their application.
|
•
|
Recent accounting pronouncements.
This section summarizes recently issued accounting pronouncements and the impact or expected impact on the Company's financial statements.
|
|
|
13 Weeks Ended
|
||||||||||||
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||||
(in thousands)
|
|
$’s
|
|
% of
Net revenue |
|
$’s
|
|
% of
Net revenue |
||||||
Net revenue
|
|
$
|
311,476
|
|
|
100.0
|
%
|
|
$
|
334,434
|
|
|
100.0
|
%
|
Cost of sales (excluding depreciation and amortization)
|
|
177,825
|
|
|
57.1
|
%
|
|
172,019
|
|
|
51.4
|
%
|
||
Gross profit
|
|
133,651
|
|
|
42.9
|
%
|
|
162,415
|
|
|
48.6
|
%
|
||
Selling and administrative
|
|
132,365
|
|
|
42.5
|
%
|
|
135,867
|
|
|
40.6
|
%
|
||
Depreciation and amortization
|
|
4,795
|
|
|
1.5
|
%
|
|
4,260
|
|
|
1.3
|
%
|
||
Other operating (income), net
|
|
(86
|
)
|
|
—
|
%
|
|
(1,009
|
)
|
|
(0.3
|
)%
|
||
Operating (loss) income
|
|
(3,423
|
)
|
|
(1.1
|
)%
|
|
23,297
|
|
|
7.0
|
%
|
||
Interest expense
|
|
6,149
|
|
|
2.0
|
%
|
|
6,204
|
|
|
1.9
|
%
|
||
Other (income) expense, net
|
|
(432
|
)
|
|
(0.1
|
)%
|
|
796
|
|
|
0.2
|
%
|
||
(Loss) income before income taxes
|
|
(9,140
|
)
|
|
(2.9
|
)%
|
|
16,297
|
|
|
4.9
|
%
|
||
Income tax (benefit) expense
|
|
(1,918
|
)
|
|
(0.6
|
)%
|
|
5,572
|
|
|
1.7
|
%
|
||
NET (LOSS) INCOME
|
|
$
|
(7,222
|
)
|
|
(2.3
|
)%
|
|
$
|
10,725
|
|
|
3.2
|
%
|
|
|
39 Weeks Ended
|
||||||||||||
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||||
(in thousands)
|
|
$’s
|
|
% of
Net revenue |
|
$’s
|
|
% of
Net revenue |
||||||
Net revenue
|
|
$
|
876,919
|
|
|
100.0
|
%
|
|
$
|
946,235
|
|
|
100.0
|
%
|
Cost of sales (excluding depreciation and amortization)
|
|
477,446
|
|
|
54.4
|
%
|
|
492,756
|
|
|
52.1
|
%
|
||
Gross profit
|
|
399,473
|
|
|
45.6
|
%
|
|
453,479
|
|
|
47.9
|
%
|
||
Selling and administrative
|
|
390,291
|
|
|
44.5
|
%
|
|
394,261
|
|
|
41.7
|
%
|
||
Depreciation and amortization
|
|
13,419
|
|
|
1.5
|
%
|
|
12,874
|
|
|
1.4
|
%
|
||
Other operating (income), net
|
|
(40
|
)
|
|
—
|
%
|
|
(3,366
|
)
|
|
(0.4
|
)%
|
||
Operating (loss) income
|
|
(4,197
|
)
|
|
(0.5
|
)%
|
|
49,710
|
|
|
5.3
|
%
|
||
Interest expense
|
|
18,493
|
|
|
2.1
|
%
|
|
18,615
|
|
|
2.0
|
%
|
||
Other (income) expense, net
|
|
(1,413
|
)
|
|
(0.2
|
)%
|
|
(210
|
)
|
|
—
|
%
|
||
(Loss) income before income taxes
|
|
(21,277
|
)
|
|
(2.4
|
)%
|
|
31,305
|
|
|
3.3
|
%
|
||
Income tax (benefit) expense
|
|
(6,316
|
)
|
|
(0.7
|
)%
|
|
11,395
|
|
|
1.2
|
%
|
||
NET (LOSS) INCOME
|
|
$
|
(14,961
|
)
|
|
(1.7
|
)%
|
|
$
|
19,910
|
|
|
2.1
|
%
|
•
|
EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax costs or benefits.
|
•
|
Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of results. We have adjusted our results for these items to make our statements more comparable and therefore more useful to investors as the items are not representative of our ongoing operations.
|
◦
|
We excluded a benefit related to the reversal of a portion of the product recall accrual recognized in Fiscal 2014 as this was an unusual event that affects the comparability of our financial results.
|
◦
|
We excluded the gain or loss on disposal of property and equipment as management considers the gains or losses on disposal of assets to result from investing decisions rather than ongoing operations.
|
|
|
13 Weeks Ended
|
||||||||||||
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||||
(in thousands)
|
|
$’s
|
|
% of
Net revenue |
|
$’s
|
|
% of
Net revenue |
||||||
Net (loss) income
|
|
$
|
(7,222
|
)
|
|
(2.3
|
)%
|
|
$
|
10,725
|
|
|
3.2
|
%
|
Income tax (benefit) expense
|
|
(1,918
|
)
|
|
(0.6
|
)%
|
|
5,572
|
|
|
1.7
|
%
|
||
Other (income) expense, net
|
|
(432
|
)
|
|
(0.1
|
)%
|
|
796
|
|
|
0.2
|
%
|
||
Interest expense
|
|
6,149
|
|
|
2.0
|
%
|
|
6,204
|
|
|
1.9
|
%
|
||
Operating (loss) income
|
|
(3,423
|
)
|
|
(1.1
|
)%
|
|
23,297
|
|
|
7.0
|
%
|
||
Depreciation and amortization
|
|
4,795
|
|
|
1.5
|
%
|
|
4,260
|
|
|
1.3
|
%
|
||
Product recall
|
|
(212
|
)
|
|
(0.1
|
)%
|
|
(1,007
|
)
|
|
(0.3
|
)%
|
||
Loss (gain) on disposal of property and equipment
|
|
126
|
|
|
—
|
%
|
|
(2
|
)
|
|
—
|
%
|
||
Adjusted EBITDA
|
|
$
|
1,286
|
|
|
0.4
|
%
|
|
$
|
26,548
|
|
|
7.9
|
%
|
|
|
39 Weeks Ended
|
||||||||||||
|
|
October 28, 2016
|
|
October 30, 2015
|
||||||||||
(in thousands)
|
|
$’s
|
|
% of
Net revenue |
|
$’s
|
|
% of
Net revenue |
||||||
Net (loss) income
|
|
$
|
(14,961
|
)
|
|
(1.7
|
)%
|
|
$
|
19,910
|
|
|
2.1
|
%
|
Income tax (benefit) expense
|
|
(6,316
|
)
|
|
(0.7
|
)%
|
|
11,395
|
|
|
1.2
|
%
|
||
Other (income) expense, net
|
|
(1,413
|
)
|
|
(0.2
|
)%
|
|
(210
|
)
|
|
—
|
%
|
||
Interest expense
|
|
18,493
|
|
|
2.1
|
%
|
|
18,615
|
|
|
2.0
|
%
|
||
Operating (loss) income
|
|
(4,197
|
)
|
|
(0.5
|
)%
|
|
49,710
|
|
|
5.3
|
%
|
||
Depreciation and amortization
|
|
13,419
|
|
|
1.5
|
%
|
|
12,874
|
|
|
1.4
|
%
|
||
Product recall
|
|
(212
|
)
|
|
—
|
%
|
|
(3,371
|
)
|
|
(0.4
|
)%
|
||
Loss on disposal of property and equipment
|
|
172
|
|
|
—
|
%
|
|
5
|
|
|
—
|
%
|
||
Adjusted EBITDA
|
|
$
|
9,182
|
|
|
1.0
|
%
|
|
$
|
59,218
|
|
|
6.3
|
%
|
•
|
Lower inventories as the Company has worked diligently to manage inventory levels,
|
•
|
Higher accounts payable due to the timing of inventory receipts in the current quarter, and
|
•
|
Lower revenues, which drove a decrease in net (loss) income before non-cash items.
|
By:
|
/s/ James F. Gooch
|
|
James F. Gooch
|
|
Co-Interim Chief Executive Officer and Executive Vice President, Chief Financial Officer, Chief Operating Officer and Treasurer
(Co-Principal Executive Officer and Principal Financial Officer)
|
1.
|
Compensation
|
2.
|
Health Care Programs
|
3.
|
Merchandise Discounts and Annual Allowance
|
4.
|
Expense Reimbursement
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Lands’ End, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: December 1, 2016
|
|
/s/ James F. Gooch
|
James F. Gooch
|
|
Co-Interim Chief Executive Officer and Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer
(Co-Principal Executive Officer and Principal Financial Officer)
|
|
Lands’ End, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Lands’ End, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: December 1, 2016
|
|
/s/ Joeseph M. Boitano
|
Joseph M. Boitano
|
|
Co-Interim Chief Executive Officer and Executive Vice President, and Chief Merchandising and Design Officer
(Co-Principal Executive Officer) |
|
Lands’ End, Inc.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
December 1, 2016
|
|
/s/ James F. Gooch
|
James F. Gooch
|
Co-Interim Chief Executive Officer and Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer
(Co-Principal Executive Officer and Principal Financial Officer)
|
|
December 1, 2016
|
|
/s/ Joseph M. Boitano
|
Joseph M. Boitano
|
Co-Interim Chief Executive Officer and Executive Vice President, and Chief Merchandising and Design Officer
(Co-Principal Executive Officer) |