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Segment Reporting
 3 Months Ended
May 02, 2025
Segment Reporting [Abstract]  
Segment Reporting

NOTE 12. SEGMENT REPORTING

 

The Company identifies operating segments according to how business activities are managed and evaluated. Following internal organizational changes and realignment of distribution channel responsibilities in Fourth Quarter 2024, the Company’s operating segments consisted of: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail. Beginning Fourth Quarter 2024, the Wholesale business is included in Licensing and prior periods were recast to reflect the change in operating segments for comparability purposes.

 

•
U.S. eCommerce offers products through the Company’s eCommerce website.

 

•
Europe eCommerce offers products primarily direct to consumers located in Europe through eCommerce international websites as well as third-party marketplace websites.

 

•
Outfitters sells uniform and logo apparel to businesses and their employees, as well as to student households through school relationships, located primarily in the U.S.

 

•
Third Party sells products direct to consumers through third-party marketplace websites.

 

•
Licensing earns royalties on the use of Lands’ End trademark and any fulfillment fees for fulfillment services provided by the Company.

•
Retail sells products through the Company Operated stores, located in the U.S.

The internal reporting of these operating segments is based, in part, on the reporting and review process used by the Company’s chief operating decision maker (“CODM”), its Chief Executive Officer. The CODM assesses segment performance based on variable profit, which is defined as net revenue minus cost of sales and variable selling expenses to evaluate segment profitability and make decisions about resource allocations. The Company’s CODM monitors actual segment variable profit results relative to operating plan and forecast to assess the performance of the business and allocate resources. The CODM does not utilize segment asset information to evaluate performance and make resource allocation decisions, and thus such disclosures are not provided.

The Company determined the U.S. eCommerce, Outfitters and Third Party operating segments share similar economic and other qualitative characteristics, and therefore the results of these operating segments are aggregated into the U.S. Digital segment. The Europe eCommerce, Licensing and Retail operating segments are not quantitatively significant to be separately reported.

The Company has determined its significant segment expense categories based on amounts regularly provided to the Company’s CODM to evaluate segment profitability and drive strategic decision making. The following presents U.S. Digital segment sales and expenses:

 

 

13 Weeks Ended

 

 

13 Weeks Ended

 

 

 

May 2, 2025

 

 

May 3, 2024

 

(in thousands)

 

Segment

 

Total

 

 

Segment

 

Total

 

Net revenue

 

$

227,752

 

 

227,752

 

 

 

228,727

 

 

228,727

 

All other net revenue (1)

 

 

 

 

33,456

 

 

 

 

 

56,744

 

Total consolidated net revenue

 

 

 

$

261,208

 

 

 

 

$

285,471

 

Product cost of goods sold

 

 

83,601

 

 

 

 

 

79,788

 

 

 

Shipping cost of goods sold

 

 

29,189

 

 

 

 

 

33,324

 

 

 

Marketing costs

 

 

39,933

 

 

 

 

 

39,102

 

 

 

Variable personnel costs

 

 

15,570

 

 

 

 

 

16,044

 

 

 

Other segment expenses (2)

 

 

6,565

 

 

 

 

 

5,684

 

 

 

Segment variable profit

 

$

52,894

 

 

 

 

$

54,785

 

 

 

 

(1)
All other net revenue is from Europe eCommerce, Licensing and Retail that does not meet the quantitative thresholds
(2)
Other segment expenses include credit card fees, customer service, webhosting, supplies and other miscellaneous expenses

The reconciliation between segment variable profit to consolidated loss before income taxes is as follows:

 

 

 

13 Weeks Ended

 

 

13 Weeks Ended

 

(in thousands)

 

May 2, 2025

 

 

May 3, 2024

 

Segment variable profit

 

$

52,894

 

 

$

54,875

 

All other variable profit (1)

 

 

5,844

 

 

 

10,326

 

Depreciation expense

 

 

(8,291

)

 

 

(9,005

)

Unallocated corporate expenses (2)

 

 

(52,817

)

 

 

(53,963

)

Interest expense

 

 

(9,265

)

 

 

(10,336

)

Other income, net

 

 

11

 

 

 

88

 

Loss before income taxes

 

$

(11,624

)

 

$

(8,015

)

 

(1)
All other variable profit is from Europe eCommerce, Licensing and Retail that does not meet the quantitative thresholds
(2)
Unallocated corporate expenses include fixed personnel costs, incentive compensation, office occupancy, information technology and professional fees

 

 

Net revenue is presented by distribution channel in the following tables:

 

 

 

13 Weeks Ended

 

% of Net

 

 

13 Weeks Ended

 

% of Net

 

(in thousands)

 

May 2, 2025

 

Revenue

 

 

May 3, 2024

 

Revenue

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

U.S. eCommerce

 

$

170,747

 

 

65.4

%

 

$

170,532

 

 

59.7

%

Outfitters

 

 

42,923

 

 

16.4

%

 

 

42,677

 

 

15.0

%

Third Party

 

 

14,082

 

 

5.4

%

 

 

15,518

 

 

5.4

%

Total U.S. Digital Segment Revenue

 

 

227,752

 

 

 

 

 

228,727

 

 

 

Europe eCommerce

 

 

17,851

 

 

6.8

%

 

 

24,968

 

 

8.8

%

Licensing and Retail

 

 

15,605

 

 

6.0

%

 

 

31,776

 

 

11.1

%

Total Net revenue

 

$

261,208

 

 

 

 

$

285,471