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
|
¨
|
|
|
|
|
|
Emerging growth company
|
|
¨
|
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Page
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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
|
|
|
|
|
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|
|
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 6.
|
|
Exhibits
|
|
|
|
|
|
|
|
|
|
Signatures
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands, except per share data)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Net revenue
|
|
$
|
302,190
|
|
|
$
|
292,010
|
|
|
$
|
570,555
|
|
|
$
|
565,443
|
|
Cost of sales (excluding depreciation and amortization)
|
|
168,025
|
|
|
155,858
|
|
|
313,748
|
|
|
299,621
|
|
||||
Gross profit
|
|
134,165
|
|
|
136,152
|
|
|
256,807
|
|
|
265,822
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Selling and administrative
|
|
127,336
|
|
|
128,892
|
|
|
248,682
|
|
|
257,926
|
|
||||
Depreciation and amortization
|
|
6,175
|
|
|
4,488
|
|
|
12,683
|
|
|
8,624
|
|
||||
Other operating expense, net
|
|
480
|
|
|
60
|
|
|
1,988
|
|
|
46
|
|
||||
Operating income (loss)
|
|
174
|
|
|
2,712
|
|
|
(6,546
|
)
|
|
(774
|
)
|
||||
Interest expense
|
|
6,167
|
|
|
6,174
|
|
|
12,292
|
|
|
12,344
|
|
||||
Other income, net
|
|
(494
|
)
|
|
(528
|
)
|
|
(1,236
|
)
|
|
(981
|
)
|
||||
Loss before income taxes
|
|
(5,499
|
)
|
|
(2,934
|
)
|
|
(17,602
|
)
|
|
(12,137
|
)
|
||||
Income tax benefit
|
|
(1,619
|
)
|
|
(954
|
)
|
|
(5,883
|
)
|
|
(4,398
|
)
|
||||
NET LOSS
|
|
$
|
(3,880
|
)
|
|
$
|
(1,980
|
)
|
|
$
|
(11,719
|
)
|
|
$
|
(7,739
|
)
|
NET LOSS PER COMMON SHARE (Note 2)
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
$
|
(0.12
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.24
|
)
|
Diluted:
|
|
$
|
(0.12
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
|
32,079
|
|
|
32,024
|
|
|
32,054
|
|
|
32,013
|
|
||||
Diluted weighted average common shares outstanding
|
|
32,079
|
|
|
32,024
|
|
|
32,054
|
|
|
32,013
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
NET LOSS
|
|
$
|
(3,880
|
)
|
|
$
|
(1,980
|
)
|
|
$
|
(11,719
|
)
|
|
$
|
(7,739
|
)
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
|
622
|
|
|
(3,084
|
)
|
|
1,139
|
|
|
(769
|
)
|
||||
COMPREHENSIVE LOSS
|
|
$
|
(3,258
|
)
|
|
$
|
(5,064
|
)
|
|
$
|
(10,580
|
)
|
|
$
|
(8,508
|
)
|
(in thousands, except share data)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
January 27, 2017
|
||||||
ASSETS
|
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
176,955
|
|
|
$
|
210,736
|
|
|
$
|
213,108
|
|
Restricted cash
|
|
3,300
|
|
|
3,300
|
|
|
3,300
|
|
|||
Accounts receivable, net
|
|
24,632
|
|
|
29,287
|
|
|
39,284
|
|
|||
Inventories, net
|
|
370,470
|
|
|
354,739
|
|
|
325,314
|
|
|||
Prepaid expenses and other current assets
|
|
36,216
|
|
|
31,781
|
|
|
26,394
|
|
|||
Total current assets
|
|
611,573
|
|
|
629,843
|
|
|
607,400
|
|
|||
Property and equipment, net
|
|
126,825
|
|
|
112,682
|
|
|
122,836
|
|
|||
Goodwill
|
|
110,000
|
|
|
110,000
|
|
|
110,000
|
|
|||
Intangible asset, net
|
|
257,000
|
|
|
430,000
|
|
|
257,000
|
|
|||
Other assets
|
|
17,007
|
|
|
15,913
|
|
|
17,155
|
|
|||
TOTAL ASSETS
|
|
$
|
1,122,405
|
|
|
$
|
1,298,438
|
|
|
$
|
1,114,391
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
$
|
181,685
|
|
|
$
|
174,940
|
|
|
$
|
162,408
|
|
Other current liabilities
|
|
85,415
|
|
|
82,212
|
|
|
86,446
|
|
|||
Total current liabilities
|
|
267,100
|
|
|
257,152
|
|
|
248,854
|
|
|||
Long-term debt, net
|
|
488,146
|
|
|
491,941
|
|
|
490,043
|
|
|||
Long-term deferred tax liabilities
|
|
91,015
|
|
|
155,451
|
|
|
90,467
|
|
|||
Other liabilities
|
|
14,144
|
|
|
16,539
|
|
|
13,615
|
|
|||
TOTAL LIABILITIES
|
|
860,405
|
|
|
921,083
|
|
|
842,979
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
|
||||||
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||||||
Common stock, par value $0.01- authorized: 480,000,000 shares; issued and outstanding: 32,087,532, 32,029,359 and 32,029,359, respectively
|
|
320
|
|
|
320
|
|
|
320
|
|
|||
Additional paid-in capital
|
|
345,139
|
|
|
345,598
|
|
|
343,971
|
|
|||
Retained (deficit) earnings
|
|
(72,172
|
)
|
|
41,590
|
|
|
(60,453
|
)
|
|||
Accumulated other comprehensive loss
|
|
(11,287
|
)
|
|
(10,153
|
)
|
|
(12,426
|
)
|
|||
Total stockholders’ equity
|
|
262,000
|
|
|
377,355
|
|
|
271,412
|
|
|||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
1,122,405
|
|
|
$
|
1,298,438
|
|
|
$
|
1,114,391
|
|
|
|
26 Weeks Ended
|
||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
||||
Net loss
|
|
$
|
(11,719
|
)
|
|
$
|
(7,739
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
12,683
|
|
|
8,624
|
|
||
Amortization of debt issuance costs
|
|
856
|
|
|
856
|
|
||
Loss on disposal of property and equipment
|
|
62
|
|
|
46
|
|
||
Stock-based compensation
|
|
1,800
|
|
|
1,752
|
|
||
Deferred income taxes
|
|
(88
|
)
|
|
(1,387
|
)
|
||
Change in operating assets and liabilities:
|
|
|
|
|
||||
Inventories
|
|
(43,493
|
)
|
|
(25,983
|
)
|
||
Accounts payable
|
|
22,434
|
|
|
34,472
|
|
||
Other operating assets
|
|
5,603
|
|
|
(4,015
|
)
|
||
Other operating liabilities
|
|
(1,333
|
)
|
|
(4,552
|
)
|
||
Net cash (used in) provided by operating activities
|
|
(13,195
|
)
|
|
2,074
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
||||
Proceeds from sale of property and equipment
|
|
—
|
|
|
44
|
|
||
Purchases of property and equipment
|
|
(20,223
|
)
|
|
(18,017
|
)
|
||
Net cash used in investing activities
|
|
(20,223
|
)
|
|
(17,973
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
||||
Payments on term loan facility
|
|
(2,575
|
)
|
|
(2,575
|
)
|
||
Payments of employee withholding taxes on share-based compensation
|
|
(629
|
)
|
|
(396
|
)
|
||
Net cash used in financing activities
|
|
(3,204
|
)
|
|
(2,971
|
)
|
||
Effects of exchange rate changes on cash
|
|
469
|
|
|
1,238
|
|
||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
(36,153
|
)
|
|
(17,632
|
)
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
213,108
|
|
|
228,368
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
176,955
|
|
|
$
|
210,736
|
|
SUPPLEMENTAL CASH FLOW DATA
|
|
|
|
|
||||
Unpaid liability to acquire property and equipment
|
|
$
|
4,438
|
|
|
$
|
2,297
|
|
Income taxes paid, net of refunds
|
|
$
|
3,082
|
|
|
$
|
3,067
|
|
Interest paid
|
|
$
|
11,257
|
|
|
$
|
11,291
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands, except per share amounts)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Net loss
|
|
$
|
(3,880
|
)
|
|
$
|
(1,980
|
)
|
|
$
|
(11,719
|
)
|
|
$
|
(7,739
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
|
32,079
|
|
|
32,024
|
|
|
32,054
|
|
|
32,013
|
|
||||
Dilutive effect of stock awards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted weighted average shares outstanding
|
|
32,079
|
|
|
32,024
|
|
|
32,054
|
|
|
32,013
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic loss per share
|
|
$
|
(0.12
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.24
|
)
|
Diluted loss per share
|
|
$
|
(0.12
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.24
|
)
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Beginning balance: Accumulated other comprehensive loss (net of tax of $6,189, $3,806, $6,691 and $5,053, respectively)
|
|
$
|
(11,909
|
)
|
|
$
|
(7,069
|
)
|
|
$
|
(12,426
|
)
|
|
$
|
(9,384
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments (net of tax expense (benefit) of $(135), $1,661, $(637) and $414, respectively)
|
|
622
|
|
|
(3,084
|
)
|
|
1,139
|
|
|
(769
|
)
|
||||
Ending balance: Accumulated other comprehensive loss (net of tax of $6,054, $5,467, $6,054 and $5,467, respectively)
|
|
$
|
(11,287
|
)
|
|
$
|
(10,153
|
)
|
|
$
|
(11,287
|
)
|
|
$
|
(10,153
|
)
|
|
|
July 28, 2017
|
|
July 29, 2016
|
|
January 27, 2017
|
|||||||||||||||
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|
Amount
|
|
Rate
|
|||||||||
Term Loan Facility, maturing April 4, 2021
|
|
$
|
498,263
|
|
|
4.48
|
%
|
|
$
|
503,412
|
|
|
4.25
|
%
|
|
$
|
500,838
|
|
|
4.25
|
%
|
ABL Facility, maturing April 4, 2019
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
|
|
498,263
|
|
|
|
|
503,412
|
|
|
|
|
500,838
|
|
|
|
||||||
Less: Current maturities in Other current liabilities, net
|
|
5,150
|
|
|
|
|
5,150
|
|
|
|
|
5,150
|
|
|
|
||||||
Less: Unamortized debt issuance costs - Term Loan Facility
|
|
4,967
|
|
|
|
|
6,321
|
|
|
|
|
5,645
|
|
|
|
||||||
Long-term debt, net
|
|
$
|
488,146
|
|
|
|
|
$
|
491,941
|
|
|
|
|
$
|
490,043
|
|
|
|
|
|
July 28, 2017
|
|
July 29, 2016
|
|
January 27, 2017
|
||||||
ABL maximum borrowing
|
|
$
|
175,000
|
|
|
$
|
175,000
|
|
|
$
|
175,000
|
|
Outstanding Letters of Credit
|
|
10,362
|
|
|
9,398
|
|
|
19,705
|
|
|||
Borrowing availability under ABL
|
|
$
|
164,638
|
|
|
$
|
165,602
|
|
|
$
|
155,295
|
|
i.
|
Time vesting stock awards ("Deferred Awards") which are in the form of restricted stock units which only require each recipient to complete a service period; Deferred Awards generally vest over three years or in full after a three year period. The fair value of Deferred Awards is based on the closing price of the Company's common stock on the grant date and is reduced for estimated forfeitures of those awards not expected to vest due to employee turnover.
|
ii.
|
Stock option awards ("Option Awards") which provide the recipient with the option to purchase a set number of shares at a stated exercise price over the term of the contract, which is 10 years for all Option Awards granted.
|
iii.
|
Performance-based stock awards ("Performance Awards") which are in the form of restricted stock units which have, in addition to a service requirement, performance criteria that must be achieved for the awards to be earned. Performance Awards have annual vesting, but due to the performance criteria, are not eligible for straight-line expensing. Therefore, Performance Awards are amortized using a graded expense process. Similar to the Deferred Awards, Performance Awards fair value is based on the closing price of the Company’s common stock on the grant date and the compensation expense is reduced for estimated forfeitures of those awards not expected to vest due to employee turnover.
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Deferred Awards
|
|
$
|
1,015
|
|
|
$
|
889
|
|
|
$
|
1,436
|
|
|
$
|
1,368
|
|
Option Awards
|
|
185
|
|
|
—
|
|
|
276
|
|
|
—
|
|
||||
Performance Awards
|
|
21
|
|
|
150
|
|
|
88
|
|
|
384
|
|
||||
Total stock-based compensation expense
|
|
$
|
1,221
|
|
|
$
|
1,039
|
|
|
$
|
1,800
|
|
|
$
|
1,752
|
|
|
|
Deferred Awards
|
|
Option Awards
|
|
Performance Awards
|
|||||||||||||||
(in thousands, except per share amounts)
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value per Share
|
|||||||||
Outstanding as of January 27, 2017
|
|
252
|
|
|
$
|
24.42
|
|
|
—
|
|
|
$
|
—
|
|
|
69
|
|
|
$
|
26.38
|
|
Granted
|
|
395
|
|
|
21.99
|
|
|
343
|
|
|
8.73
|
|
|
—
|
|
|
—
|
|
|||
Vested
|
|
(47
|
)
|
|
25.20
|
|
|
—
|
|
|
—
|
|
|
(41
|
)
|
|
28.33
|
|
|||
Exercised
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Forfeited or expired
|
|
(55
|
)
|
|
25.04
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
23.47
|
|
|||
Outstanding as of July 28, 2017
|
|
545
|
|
|
22.47
|
|
|
343
|
|
|
8.73
|
|
|
—
|
|
|
—
|
|
|
|
July 28, 2017
|
|
July 29, 2016
|
|
January 27, 2017
|
||||||||||||||||||
(in thousands)
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
||||||||||||
Long-term debt, including short-term portion
|
|
$
|
498,263
|
|
|
$
|
418,541
|
|
|
$
|
503,412
|
|
|
$
|
395,178
|
|
|
$
|
500,838
|
|
|
$
|
379,385
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands, except for number of stores)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Rent, CAM and occupancy costs
|
|
$
|
5,597
|
|
|
$
|
6,237
|
|
|
$
|
11,506
|
|
|
$
|
12,543
|
|
Retail services, store labor
|
|
5,594
|
|
|
6,084
|
|
|
11,142
|
|
|
12,029
|
|
||||
Financial services and payment processing
|
|
676
|
|
|
671
|
|
|
1,148
|
|
|
1,390
|
|
||||
Supply chain costs
|
|
200
|
|
|
236
|
|
|
391
|
|
|
551
|
|
||||
Total expenses
|
|
$
|
12,067
|
|
|
$
|
13,228
|
|
|
$
|
24,187
|
|
|
$
|
26,513
|
|
Number of Lands’ End Shops at Sears at period end
|
|
204
|
|
|
224
|
|
|
204
|
|
|
224
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Sourcing
|
|
$
|
2,682
|
|
|
$
|
1,666
|
|
|
$
|
5,080
|
|
|
$
|
3,038
|
|
Shop Your Way
|
|
321
|
|
|
612
|
|
|
697
|
|
|
1,074
|
|
||||
Shared services
|
|
48
|
|
|
48
|
|
|
95
|
|
|
95
|
|
||||
Total expenses
|
|
$
|
3,051
|
|
|
$
|
2,326
|
|
|
$
|
5,872
|
|
|
$
|
4,207
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Lands' End Business Outfitters revenue
|
|
$
|
271
|
|
|
$
|
426
|
|
|
$
|
542
|
|
|
$
|
974
|
|
Credit card revenue
|
|
221
|
|
|
266
|
|
|
433
|
|
|
511
|
|
||||
Royalty income
|
|
86
|
|
|
94
|
|
|
114
|
|
|
126
|
|
||||
Gift card (expense)
|
|
(7
|
)
|
|
(6
|
)
|
|
(13
|
)
|
|
(13
|
)
|
||||
Total income
|
|
$
|
571
|
|
|
$
|
780
|
|
|
$
|
1,076
|
|
|
$
|
1,598
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
||||||||
Apparel
|
|
$
|
256,369
|
|
|
$
|
241,822
|
|
|
$
|
488,596
|
|
|
$
|
472,980
|
|
Non-apparel
|
|
30,416
|
|
|
30,517
|
|
|
54,548
|
|
|
57,167
|
|
||||
Service and other
|
|
15,405
|
|
|
19,671
|
|
|
27,411
|
|
|
35,296
|
|
||||
Total net revenue
|
|
$
|
302,190
|
|
|
$
|
292,010
|
|
|
$
|
570,555
|
|
|
$
|
565,443
|
|
•
|
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 and the Company’s stand-alone Lands’ End stores. 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
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
259,938
|
|
|
$
|
246,395
|
|
|
$
|
488,228
|
|
|
$
|
478,580
|
|
Retail
|
|
42,166
|
|
|
45,521
|
|
|
82,213
|
|
|
86,737
|
|
||||
Corporate / other
|
|
86
|
|
|
94
|
|
|
114
|
|
|
126
|
|
||||
Total net revenue
|
|
$
|
302,190
|
|
|
$
|
292,010
|
|
|
$
|
570,555
|
|
|
$
|
565,443
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
13,080
|
|
|
$
|
14,780
|
|
|
$
|
24,918
|
|
|
$
|
27,612
|
|
Retail
|
|
1,773
|
|
|
450
|
|
|
(1,402
|
)
|
|
(3,480
|
)
|
||||
Corporate / other
|
|
(8,024
|
)
|
|
(7,970
|
)
|
|
(15,391
|
)
|
|
(16,236
|
)
|
||||
Total adjusted EBITDA
|
|
$
|
6,829
|
|
|
$
|
7,260
|
|
|
$
|
8,125
|
|
|
$
|
7,896
|
|
Loss on disposal of property and equipment
|
|
—
|
|
|
60
|
|
|
62
|
|
|
46
|
|
||||
Transfer of corporate functions
|
|
480
|
|
|
—
|
|
|
1,926
|
|
|
—
|
|
||||
Depreciation and amortization
|
|
6,175
|
|
|
4,488
|
|
|
12,683
|
|
|
8,624
|
|
||||
Operating income (loss)
|
|
$
|
174
|
|
|
$
|
2,712
|
|
|
$
|
(6,546
|
)
|
|
$
|
(774
|
)
|
Interest expense
|
|
6,167
|
|
|
6,174
|
|
|
12,292
|
|
|
12,344
|
|
||||
Other income, net
|
|
(494
|
)
|
|
(528
|
)
|
|
(1,236
|
)
|
|
(981
|
)
|
||||
Income tax benefit
|
|
(1,619
|
)
|
|
(954
|
)
|
|
(5,883
|
)
|
|
(4,398
|
)
|
||||
NET LOSS
|
|
$
|
(3,880
|
)
|
|
$
|
(1,980
|
)
|
|
$
|
(11,719
|
)
|
|
$
|
(7,739
|
)
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
5,489
|
|
|
$
|
3,720
|
|
|
$
|
11,267
|
|
|
$
|
7,070
|
|
Retail
|
|
353
|
|
|
406
|
|
|
707
|
|
|
825
|
|
||||
Corporate / other
|
|
333
|
|
|
362
|
|
|
709
|
|
|
729
|
|
||||
Total depreciation and amortization
|
|
$
|
6,175
|
|
|
$
|
4,488
|
|
|
$
|
12,683
|
|
|
$
|
8,624
|
|
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
January 27, 2017
|
||||||
Total Assets:
|
|
|
|
|
|
|
||||||
Direct
|
|
$
|
846,313
|
|
|
$
|
980,173
|
|
|
$
|
805,201
|
|
Retail
|
|
73,953
|
|
|
78,011
|
|
|
69,792
|
|
|||
Corporate / other
|
|
202,139
|
|
|
240,254
|
|
|
239,398
|
|
|||
Total assets
|
|
$
|
1,122,405
|
|
|
$
|
1,298,438
|
|
|
$
|
1,114,391
|
|
|
|
13 Weeks Ended
|
|
26 Weeks Ended
|
||||||||||||
(in thousands)
|
|
July 28, 2017
|
|
July 29, 2016
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||
Capital expenditures:
|
|
|
|
|
|
|
|
|
||||||||
Direct
|
|
$
|
8,832
|
|
|
$
|
7,461
|
|
|
$
|
20,213
|
|
|
$
|
17,763
|
|
Retail
|
|
9
|
|
|
71
|
|
|
10
|
|
|
254
|
|
||||
Corporate / other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total capital expenditures
|
|
$
|
8,841
|
|
|
$
|
7,532
|
|
|
$
|
20,223
|
|
|
$
|
18,017
|
|
•
|
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
Second Quarter 2017
and
Second Quarter 2016
.
|
•
|
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
|
||||||||||||
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||||
(in thousands)
|
|
$’s
|
|
% of
Net revenue |
|
$’s
|
|
% of
Net revenue |
||||||
Net revenue
|
|
$
|
302,190
|
|
|
100.0
|
%
|
|
$
|
292,010
|
|
|
100.0
|
%
|
Cost of sales (excluding depreciation and amortization)
|
|
168,025
|
|
|
55.6
|
%
|
|
155,858
|
|
|
53.4
|
%
|
||
Gross profit
|
|
134,165
|
|
|
44.4
|
%
|
|
136,152
|
|
|
46.6
|
%
|
||
Selling and administrative
|
|
127,336
|
|
|
42.1
|
%
|
|
128,892
|
|
|
44.1
|
%
|
||
Depreciation and amortization
|
|
6,175
|
|
|
2.0
|
%
|
|
4,488
|
|
|
1.5
|
%
|
||
Other operating expense, net
|
|
480
|
|
|
0.2
|
%
|
|
60
|
|
|
—
|
%
|
||
Operating income
|
|
174
|
|
|
0.1
|
%
|
|
2,712
|
|
|
0.9
|
%
|
||
Interest expense
|
|
6,167
|
|
|
2.0
|
%
|
|
6,174
|
|
|
2.1
|
%
|
||
Other income, net
|
|
(494
|
)
|
|
(0.2
|
)%
|
|
(528
|
)
|
|
(0.2
|
)%
|
||
Loss before income taxes
|
|
(5,499
|
)
|
|
(1.8
|
)%
|
|
(2,934
|
)
|
|
(1.0
|
)%
|
||
Income tax benefit
|
|
(1,619
|
)
|
|
(0.5
|
)%
|
|
(954
|
)
|
|
(0.3
|
)%
|
||
NET LOSS
|
|
$
|
(3,880
|
)
|
|
(1.3
|
)%
|
|
$
|
(1,980
|
)
|
|
(0.7
|
)%
|
|
|
26 Weeks Ended
|
||||||||||||
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||||
(in thousands)
|
|
$’s
|
|
% of
Net revenue |
|
$’s
|
|
% of Net revenue
|
||||||
Net revenue
|
|
$
|
570,555
|
|
|
100.0
|
%
|
|
$
|
565,443
|
|
|
100.0
|
%
|
Cost of sales (excluding depreciation and amortization)
|
|
313,748
|
|
|
55.0
|
%
|
|
299,621
|
|
|
53.0
|
%
|
||
Gross profit
|
|
256,807
|
|
|
45.0
|
%
|
|
265,822
|
|
|
47.0
|
%
|
||
Selling and administrative
|
|
248,682
|
|
|
43.6
|
%
|
|
257,926
|
|
|
45.6
|
%
|
||
Depreciation and amortization
|
|
12,683
|
|
|
2.2
|
%
|
|
8,624
|
|
|
1.5
|
%
|
||
Other operating expense, net
|
|
1,988
|
|
|
0.3
|
%
|
|
46
|
|
|
—
|
%
|
||
Operating loss
|
|
(6,546
|
)
|
|
(1.1
|
)%
|
|
(774
|
)
|
|
(0.1
|
)%
|
||
Interest expense
|
|
12,292
|
|
|
2.2
|
%
|
|
12,344
|
|
|
2.2
|
%
|
||
Other income, net
|
|
(1,236
|
)
|
|
(0.2
|
)%
|
|
(981
|
)
|
|
(0.2
|
)%
|
||
Loss before income taxes
|
|
(17,602
|
)
|
|
(3.1
|
)%
|
|
(12,137
|
)
|
|
(2.1
|
)%
|
||
Income tax benefit
|
|
(5,883
|
)
|
|
(1.0
|
)%
|
|
(4,398
|
)
|
|
(0.8
|
)%
|
||
NET LOSS
|
|
$
|
(11,719
|
)
|
|
(2.1
|
)%
|
|
$
|
(7,739
|
)
|
|
(1.4
|
)%
|
•
|
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.
|
◦
|
Transfer of corporate functions - severance associated with a transition of certain corporate activities from our New York office to our Dodgeville headquarters.
|
◦
|
Gain or loss on the sale of property and equipment - management considers the gains or losses on disposal of assets to result from investing decisions rather than ongoing operations.
|
|
|
13 Weeks Ended
|
||||||||||||
|
|
July 28, 2017
|
|
July 29, 2016
|
||||||||||
(in thousands)
|
|
$’s
|
|
% of
Net revenue |
|
$’s
|
|
% of
Net revenue |
||||||
Net loss
|
|
$
|
(3,880
|
)
|
|
(1.3
|
)%
|
|
$
|
(1,980
|
)
|
|
(0.7
|
)%
|
Income tax benefit
|
|
(1,619
|
)
|
|
(0.5
|
)%
|
|
(954
|
)
|
|
(0.3
|
)%
|
||
Other income, net
|
|
(494
|
)
|
|
(0.2
|
)%
|
|
(528
|
)
|
|
(0.2
|
)%
|
||
Interest expense
|
|
6,167
|
|
|
2.0
|
%
|
|
6,174
|
|
|
2.1
|
%
|
||
Operating income
|
|
174
|
|
|
0.1
|
%
|
|
2,712
|
|
|
0.9
|
%
|
||
Depreciation and amortization
|
|
6,175
|
|
|
2.0
|
%
|
|
4,488
|
|
|
1.5
|
%
|
||
Transfer of corporate functions
|
|
480
|
|
|
0.2
|
%
|
|
—
|
|
|
—
|
%
|
||
Loss on disposal of property and equipment
|
|
—
|
|
|
—
|
%
|
|
60
|
|
|
—
|
%
|
||
Adjusted EBITDA
|
|
$
|
6,829
|
|
|
2.3
|
%
|
|
$
|
7,260
|
|
|
2.5
|
%
|
|
|
26 Weeks Ended
|
||||||||||||
|
|
July 28, 2017
|
|
|
July 29, 2016
|
|
||||||||
(in thousands)
|
|
$’s
|
|
% of
Net revenue |
|
$’s
|
|
% of
Net revenue |
||||||
Net loss
|
|
$
|
(11,719
|
)
|
|
(2.1
|
)%
|
|
$
|
(7,739
|
)
|
|
(1.4
|
)%
|
Income tax benefit
|
|
(5,883
|
)
|
|
(1.0
|
)%
|
|
(4,398
|
)
|
|
(0.8
|
)%
|
||
Other income, net
|
|
(1,236
|
)
|
|
(0.2
|
)%
|
|
(981
|
)
|
|
(0.2
|
)%
|
||
Interest expense
|
|
12,292
|
|
|
2.2
|
%
|
|
12,344
|
|
|
2.2
|
%
|
||
Operating loss
|
|
(6,546
|
)
|
|
(1.1
|
)%
|
|
(774
|
)
|
|
(0.1
|
)%
|
||
Depreciation and amortization
|
|
12,683
|
|
|
2.2
|
%
|
|
8,624
|
|
|
1.5
|
%
|
||
Transfer of corporate functions
|
|
1,926
|
|
|
0.3
|
%
|
|
—
|
|
|
—
|
%
|
||
Loss on disposal of property and equipment
|
|
62
|
|
|
—
|
%
|
|
46
|
|
|
—
|
%
|
||
Adjusted EBITDA
|
|
$
|
8,125
|
|
|
1.4
|
%
|
|
$
|
7,896
|
|
|
1.4
|
%
|
•
|
Increased use of cash to pay down accounts payable due to higher payables entering the current year, and
|
•
|
Increased inventory build due to more timely receipts in the current year.
|
By:
|
/s/ James F. Gooch
|
|
James F. Gooch
|
|
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
Name of Grantee:
|
|
|
|
(the “
Grantee
”)
|
|
No. of Restricted Stock Units:
|
|
|
|
|
|
Issuance Date:
|
|
|
|
(the “
Issuance Date
”)
|
Date of Vesting
|
|
Percent Vested
|
|
|
|
|
|
|
|
|
|
COMPANY
|
||
LANDS’ END, INC.
|
||
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
Title:
|
|
||
GRANTEE
|
||
|
|
|
|
|
Name:
|
Name of Grantee:
|
|
(the "
Grantee
")
|
No. of Nonqualified
|
|
|
Stock Options:
|
|
|
|
|
|
Per Share Exercise Price of
|
|
|
Nonqualified Stock Options
|
|
|
|
|
|
Grant Date:
|
|
(the "
Grant Date
")
|
Vesting Date
|
Percentage of
|
|
Option Vested
|
|
%
|
(d)
|
Termination
.
|
5.
|
Taxes
.
|
19.
|
Miscellaneous
.
|
COMPANY
|
LANDS' END, INC.
|
By: ________________________________
|
Name:
|
Title:
|
|
GRANTEE
|
By: ________________________________
|
Name:
|
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.
|
August 31, 2017
|
|
/s/ Jerome S. Griffith
|
Jerome S. Griffith
|
|
Chief Executive Officer and President
(Principal Executive 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.
|
August 31, 2017
|
|
/s/ James F. Gooch
|
James F. Gooch
|
|
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer
(Principal Financial 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.
|
|
August 31, 2017
|
|
/s/ Jerome S. Griffith
|
Jerome S. Griffith
|
Chief Executive Officer and President
(Principal Executive Officer) |
|
August 31, 2017
|
|
/s/ James F. Gooch
|
James F. Gooch
|
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer
(Principal Financial Officer) |