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Background and Basis of Presentation | 6 Months Ended
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Aug. 01, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Background and Basis of Presentation | NOTE 1. BACKGROUND AND BASIS OF PRESENTATION Description of Business Lands’ End, Inc. (“Lands’ End” or the “Company”) is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products and uniforms. Lands’ End offers products online at www.landsend.com, through third-party distribution channels, its own Company Operated stores and third-party license agreements. Lands’ End also offers products to businesses and schools, for their employees and students, through the Outfitters distribution channel. Lands’ End is a classic American lifestyle brand that creates solutions for life’s every journey. References to www.landsend.com do not constitute incorporation by reference of the information at www.landsend.com, and such information is not part of this Quarterly Report on Form 10-Q or any other filings with the SEC, unless otherwise explicitly stated. Terms that are commonly used in the Company’s Notes to Condensed Consolidated Financial Statements are defined as follows: • ABL Facility – Asset-based senior secured credit agreement, providing for a revolving facility, dated as of November 16, 2017, with Wells Fargo Bank, N.A. and certain other lenders, as amended to date • ASC – Financial Accounting Standards Board Accounting Standards Codification, which serves as the source for authoritative GAAP, as supplemented by rules and interpretive releases by the SEC which are also sources of authoritative GAAP for SEC registrants • Company Operated stores – Lands’ End retail stores in the Retail distribution channel • Debt Facilities – Collectively, the Term Loan Facility and ABL Facility • Deferred Awards – Time vesting stock awards • FASB – Financial Accounting Standards Board • Fiscal 2025 – The 52 weeks ending January 30, 2026 • Fiscal 2024 – The 52 weeks ended January 31, 2025 • GAAP – Accounting principles generally accepted in the United States • Option Awards – Stock option awards • Performance Awards – Performance-based stock awards • SEC – United States Securities and Exchange Commission • SOFR – Secured Overnight Funding Rate • Target Shares – Number of restricted stock units awarded to a recipient which reflects the number of shares to be delivered based on achievement of target performance goals • Term Loan Adjusted SOFR – SOFR plus adjustments of either (a) 0.11448% for a one-month interest period, (b) 0.26161% for a three-month interest period, or (c) 0.42826% for a six-month interest period • Term Loan Facility – Term loan credit agreement, dated as of December 29, 2023, among the Company, Blue Torch Capital, as Administrative Agent and Collateral Agent, and the lenders party thereto • Year-to-Date 2025 – The 26 weeks ended August 1, 2025 Basis of Presentation The Condensed Consolidated Financial Statements include the accounts of Lands’ End, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. Dollar amounts are reported in thousands, except per share data, unless otherwise noted. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Lands’ End Annual Report on Form 10-K filed with the SEC on March 27, 2025. Macroeconomic Challenges Macroeconomic issues which impact consumer discretionary spending, such as realized inflation-based price increases and high interest rates have continued to have an impact on the Company’s business. Apparel purchases historically have been influenced by domestic and global economic conditions, which may negatively impact customer demand and may require higher levels of promotion in order to attract and retain customers. Additionally, the variable interest rates associated with the Company’s Debt Facilities are negatively affected by higher interest rate environments. Macroeconomic challenges may lead to increased cost of raw materials, packaging materials, labor, energy, fuel, debt and other inputs necessary for the production and distribution of the Company’s products. Ongoing uncertainty surrounding global trade policy, including the potential for increased tariffs on goods manufactured in key sourcing regions, could elevate product costs. The Company is monitoring these developments and is actively pursuing mitigation strategies, but escalating trade tensions may pressure margins and disrupt supply chain efficiency. Restructuring The Company incurred restructuring charges, primarily severance and benefit costs, related to cost optimization of business operations and strategic initiatives. During Year-to-Date 2025, the Company incurred ongoing costs related to exploring strategic alternatives for the Company to maximize shareholder value and have included those costs as part of restructuring. Additionally, the Company reduced approximately 6% of its corporate office positions and incurred restructuring charges, primarily severance and benefit and other related costs. The reductions in the corporate office positions were made to better align with the evolving needs of the business and to invest in key growth areas. The following table summarizes the restructuring costs recognized in Other operating expense, net in the Condensed Consolidated Statement of Operations for the 13 and 26 weeks ended August 1, 2025 and August 2, 2024:
|  | 13 Weeks Ended |  |  | 26 Weeks Ended |
(in thousands) |  | August 1, 2025 |  |  | August 2, 2024 |  |  | August 1, 2025 |  |  | August 2, 2024 |
Employee severance and benefit costs |  | $ | 265 |  |  | $ | 2,338 |  |  | $ | 2,912 |  |  | $ | 2,680 |
Strategic alternatives and other costs |  |  | 2,169 |  |  |  | — |  |  |  | 2,854 |  |  |  | — |
Total restructuring |  | $ | 2,434 |  |  | $ | 2,338 |  |  | $ | 5,766 |  |  | $ | 2,680 |
The following table summarizes the accrued restructuring cost activity included in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets:
(in thousands) |  | Employee Severance and Benefit Costs |  |  | Strategic Alternatives and Other Costs |  |  | Total Restructuring |
Balance as of January 31, 2025 |  | $ | 2,004 |  |  | $ | — |  |  | $ | 2,004 |
Estimated costs payable in cash |  |  | 2,647 |  |  |  | 685 |  |  |  | 3,332 |
Cash payments |  |  | (2,914 | ) |  |  | (30 | ) |  |  | (2,944 | )
Foreign currency translation |  |  | 53 |  |  |  | — |  |  |  | 53 |
Balance as of May 2, 2025 |  | $ | 1,790 |  |  | $ | 655 |  |  | $ | 2,445 |
Estimated costs payable in cash |  |  | 265 |  |  |  | 2,169 |  |  |  | 2,434 |
Cash payments |  |  | (1,435 | ) |  |  | (228 | ) |  |  | (1,663 | )
Foreign currency translation |  |  | 6 |  |  |  | — |  |  |  | 6 |
Balance as of August 1, 2025 |  | $ | 626 |  |  | $ | 2,596 |  |  | $ | 3,222 |

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