Lands’ End Inc., citing improved products and e-commerce investments, reported net income in the second quarter rose to $16.2 million, or $0.48 a diluted share, compared to net income of $4.4 million, or $0.13 a share, in the year-ago quarter.
Adjusted earnings before interest, taxes, depreciation and amortization were $41.4 million in the quarter ended July 30, an increase of $17.5 million compared to $23.9 million in the year-ago quarter.
“We are very pleased with our performance this quarter, delivering record second quarter revenue and strength across all of our financial metrics,” Jerome Griffith, chief executive officer of the Dodgeville, Wisc.-based all-American, classic brand, said in a statement Thursday. “Our improved product assortment and increased digital marketing spend drove the strength in our global e-commerce business. With our strategic pillars of growth and an expanded addressable market, we remain very optimistic about the long term potential of our business.”
In the last quarter, net revenue rose 23.1 percent to $384.1 million, from $312.1 million in the year-ago quarter of fiscal 2020. Revenues last quarter rose 28.8 percent from the $298.3 million in the second quarter of fiscal 2019.
Lands’ End’s global e-commerce net revenue was $285.4 million last quarter, an increase of 7.7 percent from $265.1 million in the second quarter of fiscal 2020 and an increase of 32.5 percent from $215.5 million in the second quarter of fiscal 2019.
Compared to the second quarter of last year, U.S. e-commerce increased 7.6 percent and International e-commerce grew 8.2 percent.
The Outfitters division, driven by stronger demand within the company’s travel-related national accounts and school uniform customers, saw net revenue rise 75.4 percent to $65.6 million, from $37.4 million in the second quarter of fiscal 2020. The division’s revenues were relatively flat compared to the second quarter of fiscal 2019.
Third party net revenue, which includes sales on third-party marketplaces and U.S. wholesale revenues, was $19.1 million in the second quarter compared to $5.1 million in the second quarter last year. The $14 million increase was attributed to the launch of Lands’ End product on Kohls.com and at 150 Kohl’s stores in third quarter of 2020.
Gross margin was 46.3 percent, expanding about 290 basis points compared to 43.4 percent in the second quarter of fiscal 2020. “The gross margin increase was primarily due to merchandise margin expansion in the U.S. e-commerce channel driven by enhanced promotional strategies and continued use of analytics, offset by increased shipping costs and surcharges as well as higher sales mix from the lower-margin third party channel,” the company said in its statement Thursday.
On July 29, the company amended its asset-based senior secured credit facility with its lending organizations to extend the debt duration and reduce applicable interest rates.
As of July 30, Lands’ End had $25 million of borrowings, $233.3 million of availability under its asset-based senior secured credit facility, and $264.7 million in debt from a term loan.
“We delivered strong results in the second quarter as we continued to make great progress across our strategic initiatives despite the still difficult environment,” added Jim Gooch, president and chief financial officer. “We are seeing strong momentum in consumer demand, which we expect to continue through the remainder of the year, and are extremely pleased with the margin performance we’ve achieved as a result of the execution of our strategic initiatives. That said, due to the significant industry-wide challenges in the supply chain, we expect our gross margin trends to moderate in the back half of fiscal 2021. Therefore, we are raising our adjusted EBITDA guidance to reflect the better-than-expected performance in the second quarter and maintaining our second half outlook despite strong consumer demand.”
For the third quarter of fiscal 2021 the company now expects:
- Net revenue between $390 million and $405 million.
- Net income between $6.5 million and $9.0 million, and diluted earnings per share between $0.19 and $0.27.
- Adjusted EBITDA in the range of $27 million to $30 million.
For fiscal 2021 the company now expects:
- Net revenue between $1.67 billion and $1.71 billion.
- Net income between $45.5 million and $51 million, and diluted earnings per share to be between $1.35 and $1.51.
- Adjusted EBITDA in the range of $136 million to $143 million.