Lands’ End, exceeding its expectations and driven in particular by strong e-commerce, swung into profitability in its first fiscal quarter ended April 30.
The all-American, classic-styled fashion brand reported net income of $2.6 million, or $0.08 a diluted share, compared to a net loss of $20.6 million, or $0.64 a diluted share, in the first quarter of fiscal 2020, and a net loss of $6.8 million, or $0.21 a diluted share, in the first quarter of fiscal 2019.
Adjusted earnings before interest, taxes, depreciation and amortization were $22.5 million in the first quarter of fiscal 2021, an increase of $34.1 million compared to a loss of $11.6 million in the first quarter of fiscal 2020 and an increase of $19.5 million compared to earnings of $3 million in the first quarter of fiscal 2019.
Last quarter, Lands’ End’s net revenue rose to $321.3 million, a 48.1 percent gain from $217 million in the first quarter of fiscal 2020, and a 22.4 percent gain from $262.4 million in the first quarter of fiscal 2019.
“We are extremely pleased with our first-quarter results, which exceeded our expectations and illustrate the sustained momentum in our business,” said Jerome Griffith, chief executive officer of the Dodgeville, Wisc.-based company. “Our global e-commerce business is stronger than ever as we continued to execute our digitally led product and marketing strategies while the recovery in Outfitters is occurring at a faster pace than we expected.
“We believe we have a strong foundation in place and an expanding total addressable market, and I am extremely excited for our significant opportunities that lie ahead.”
By division, global e-commerce net revenue was $260 million, an increase of 44.4 percent from $180 million in the year-ago quarter, and an increase of 25.5 percent from $207.2 million in the first quarter of fiscal 2019. Compared to the first quarter of last year, U.S. e-commerce increased 46.6 percent and international e-commerce grew 37 percent.
The Outfitters division, which supplies uniforms to schools, airlines and other companies, reported net revenue of $40.7 million last quarter, an increase of 27.9 percent from $31.8 million in the first quarter of fiscal 2020, and a decrease of 5.6 percent from $43.1 million in the first quarter of fiscal 2019. Compared to the first quarter last year, the increase was driven by stronger demand with travel-related national accounts and school uniform customers.
Third-party net revenue, which includes sales on third-party marketplaces and U.S. wholesale revenues, was $11.8 million in the first quarter compared to $1.5 million in the first quarter last year. The $10.3 million increase was attributed to the launch of Lands’ End product on Kohls.com and at 150 Kohl’s stores during the third quarter of 2020.
Gross margin was 46 percent, expanding about 260 basis points compared to 43.4 percent in the first quarter of fiscal 2020 and about 30 basis points compared to 45.7 percent in the first quarter of fiscal 2019. The gross margin increase was primarily due to merchandise margin expansion in U.S. e-commerce driven by improved 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.
“As we look ahead, we are very confident with our ability to execute our long-term growth strategies given the continued momentum in our global e-commerce business and faster-than-expected recovery in our Outfitters business,” said Jim Gooch, president and chief financial officer. “Using the strong foundation we have put in place, we will continue to use a data-driven approach as we focus on driving long-term profitable growth.”
For the second quarter of fiscal 2021 the company expects net revenue to be between $345 million and $355 million; net income between $1.5 million and $4 million, and diluted earnings per share to be between $0.05 and $0.12. Adjusted EBITDA is seen in the range of $20 million to $23 million.
For fiscal 2021 the company now expects net revenue to be between $1.61 billion and $1.65 billion; net income to be between $27.5 million and $34 million, and diluted earnings per share of between $0.84 and $1.04. Adjusted EBITDA is seen in the range of $114 million to $122 million.