Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended July 31, 2026
-OR-
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to .
Commission File Number: 001-09769
Lands’ End, Inc.
(Exact name of registrant as specified in its charter)
Delaware
36-2512786
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
5 Lands’ End Lane
Dodgeville, Wisconsin
53595
(Address of principal executive offices)
(Zip Code)
(608) 935-9341
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
LE
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of September 1, 2026, the registrant had 29,544,154 shares of common stock, $0.01 par value, outstanding.
LANDS’ END, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JULY 31, 2026
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
1
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Comprehensive Operations
2
Condensed Consolidated Balance Sheets
3
Condensed Consolidated Statements of Cash Flows
4
Condensed Consolidated Statements of Changes in Stockholders’ Equity
5
Notes to Condensed Consolidated Financial Statements
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
22
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
38
Item 4.
Controls and Procedures
39
PART II. OTHER INFORMATION
40
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
41
Item 5.
Other Information
Item 6.
Exhibits
42
Signatures
43
ITEM 1. FINANCIAL STATEMENTS
(Unaudited)
13 Weeks Ended
26 Weeks Ended
(in thousands, except per share data)
July 31, 2026
August 1, 2025
Net revenue
$
302,038
294,079
540,954
555,287
Cost of sales (exclusive of depreciation and amortization)
145,023
150,661
272,427
279,143
Gross profit
157,015
143,418
268,527
276,144
Selling and administrative
135,250
129,356
261,702
252,818
Depreciation and amortization
6,147
7,656
12,247
15,947
Equity method investment income
(4,243
)
—
(4,439
Other operating expense, net
11,674
2,423
34,938
5,766
Operating income (loss)
8,187
3,983
(35,921
1,613
Interest expense
1,021
9,262
6,535
18,527
Gain on WHP Transaction
(491,622
Loss on extinguishment of debt
9,172
Other income, net
(1,051
(3
(915
(14
Income (loss) before income taxes
8,217
(5,276
440,909
(16,900
Income tax expense (benefit)
4,766
(1,609
106,765
(4,971
NET INCOME (LOSS)
3,451
(3,667
334,144
(11,929
Earnings (loss) per common share
Basic
0.12
(0.12
11.12
(0.39
Diluted
0.11
10.96
Weighted average common shares outstanding
29,902
30,743
30,052
30,721
30,108
30,498
See accompanying Notes to Condensed Consolidated Financial Statements.
(in thousands)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
240
(565
188
933
COMPREHENSIVE INCOME (LOSS)
3,691
(4,232
334,332
(10,996
January 30,2026
ASSETS
Current assets
Cash and cash equivalents
16,113
21,255
17,694
Restricted cash
590
2,291
589
Accounts receivable, net
38,329
39,028
41,265
Inventories
342,040
301,797
268,803
Prepaid expenses
30,243
30,400
27,856
Other current assets
452
10,291
4,798
Total current assets
427,767
405,062
361,005
Property and equipment, net
128,576
117,205
115,701
Operating lease right-of-use asset
13,995
18,856
15,680
Equity method investment
377,589
Intangible asset
257,000
Asset held for sale
Other assets
1,639
2,518
1,680
TOTAL ASSETS
949,566
800,641
751,066
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt
13,000
Accounts payable
162,346
147,846
115,436
Lease liability – current
4,540
4,609
4,434
Accrued expenses and other current liabilities
103,985
85,084
91,068
Total current liabilities
270,871
250,539
223,938
Long-term borrowings under ABL Facility
60,000
35,000
Long-term debt, net
219,550
214,211
Lease liability – long-term
12,128
17,986
14,264
Deferred tax liabilities
109,339
50,319
52,392
Other liabilities
4,358
2,123
1,966
TOTAL LIABILITIES
456,696
575,517
506,771
STOCKHOLDERS’ EQUITY
Common stock, par value $0.01 authorized: 480,000 shares; issued and outstanding: 30,023, 30,517 and 30,575, respectively
301
306
Additional paid-in capital
338,876
346,841
349,429
Retained earnings (accumulated deficit)
170,095
(106,287
(88,850
Accumulated other comprehensive loss
(16,402
(15,736
(16,590
TOTAL STOCKHOLDERS’ EQUITY
492,870
225,124
244,295
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Amortization of debt issuance costs
424
1,391
Gain on disposal of property and equipment
(28
Distributions received from equity method investment
2,411
Stock-based compensation
2,867
2,250
Deferred income taxes
57,073
(1,182
Other
(346
(422
Change in operating assets and liabilities:
2,745
9,363
(73,930
(35,420
45,790
36,250
Other operating assets
3,387
(1,343
Other operating liabilities
13,624
(14,436
Net cash (used in) provided by operating activities
(86,481
469
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of property and equipment
11
Proceeds from WHP Transaction
300,000
Cash contribution to JV
(1,250
Purchases of property and equipment
(24,013
(17,163
Net cash provided by (used in) investing activities
274,780
(17,152
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings under ABL Facility
142,000
68,000
Payments of borrowings under ABL Facility
(82,000
(33,000
Payments on term loan
(234,000
(6,500
Payments on debt extinguishment
(2,437
Payments of debt issuance costs
(1,103
Proceeds from exercise of stock options
908
Payments for taxes related to net share settlement of equity awards
(4,313
(810
Purchases and retirement of common stock, including excise tax paid
(10,848
(4,513
Net cash (used in) provided by financing activities
(190,690
22,074
Effects of exchange rate changes on cash, cash equivalents and restricted cash
811
(657
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(1,580
4,734
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
18,283
18,812
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
16,703
23,546
SUPPLEMENTAL CASH FLOW DATA
Unpaid liability to acquire property and equipment
4,085
1,725
Income taxes paid (refunded)
25,988
(153
Interest paid
6,710
17,172
Operating lease right-of-use-assets obtained in exchange for lease liabilities
148
386
Retained
Accumulated
Additional
Earnings
Total
Common Stock Issued
Paid-in
(Accumulated
Comprehensive
Stockholders'
Shares
Amount
Capital
Deficit)
Loss
Equity
Balance at January 30, 2026
30,575
Net income
330,693
Deemed distribution to shareholders
(74,311
Cumulative translation adjustment, net of tax
(52
Stock-based compensation expense
3,241
Exercise of stock options
84
Vesting of restricted shares
430
Common stock withheld related to net share settlement of equity awards
(236
(3,378
Purchases and retirement of common stock, including excise taxes
(26
(270
(5
(275
Balance at May 1, 2026
30,827
309
349,927
167,527
(16,642
501,121
(374
179
(1
(73
(935
(910
(9
(9,741
(883
(10,633
Balance at July 31, 2026
30,023
AdditionalPaid-in
AccumulatedOtherComprehensive
TotalStockholders’
Deficit
Balance at January 31, 2025
30,843
349,940
(94,358
(16,669
239,222
Net loss
(8,262
1,498
920
125
(42
(450
(291
(2,785
(2,788
Balance at May 2, 2025
30,635
307
347,624
(102,620
(15,171
230,140
1,330
122
(41
(360
(199
(2
(1,752
(1,754
Balance at August 1, 2025
30,517
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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, and its own Company Operated stores. 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:
Basis of Presentation
The Condensed Consolidated Financial Statements include the accounts of Lands’ End, Inc. and its subsidiaries. The Company holds a 50% interest in the JV, which it accounts for under the equity method. 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 26, 2026.
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. 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. Moreover, uncertainty with respect to trade policy and tariffs, including increased tariffs applicable to countries where the Company’s vendors manufacture Lands’ End product, may result in an increase in the cost of the Company’s products.
In addition, conflict‑related disruptions in global energy markets and shipping lanes in 2026 have contributed to heightened volatility in crude oil and refined‑product prices and interruptions to certain maritime routes, which may result in higher freight and delivery costs, carrier surcharges, longer transit times, and inventory delays.
Tariff Refunds
The Company applies a loss recovery model in accordance with ASC Topic 410 to account for potential refunds of previously paid International Emergency Economic Powers Act (“IEEPA”) tariffs. Any refunds, when recognized, are reflected as a reduction of Inventories on the Condensed Consolidated Balance Sheet to the extent the related goods remain on hand, or as a reduction of Cost of sales in the Condensed Consolidated Statements of Operations for amounts related to goods already sold.
Restructuring and Other Costs
The Company has incurred restructuring and other charges related to cost optimization of business operations and exploring strategic alternatives. During the 13 and 26 weeks ended July 31, 2026 and August 1, 2025, the Company incurred ongoing costs related to exploring and completing strategic alternatives to maximize shareholder value and has included those costs as part of restructuring and other. This process culminated in the WHP Transaction. Additionally, during the 13 and 26 weeks ended July 31, 2026, the Company incurred charges associated with the transition of executive leadership, including severance and related costs, as the Company's strategic
7
priorities evolved. Additionally, during Year-to-Date 2025, 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 and other costs recognized in Other operating expense, net in the Condensed Consolidated Statements of Operations for the 13 and 26 weeks ended July 31, 2026 and August 1, 2025:
Employee severance and benefit costs
4,971
265
5,533
2,912
Strategic alternatives and other costs
6,706
2,169
29,434
2,854
Total restructuring and other
11,677
2,434
34,967
Included in Other liabilities in the Condensed Consolidated Balance Sheets are approximately $2.5 million of Employee severance and benefit costs as of July 31, 2026. Included in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets are approximately $1.2 million of Strategic alternatives and other costs and $2.2 million of Employee severance and benefit costs as of July 31, 2026 and approximately $2.6 million of Strategic alternatives and other costs and $0.6 million of Employee severance and benefit costs as of August 1, 2025.
NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In September 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software to current development practices, clarifies when to begin capitalizing costs and enhances disclosure requirements. This update is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing the impact of ASU 2025-06 on the Company’s Condensed Consolidated Financial Statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides targeted relief for entities estimating expected credit losses on short-term receivables and contract assets under Topic 606. The guidance allows entities to bypass the requirement to incorporate macroeconomic data into their forecasts when such data is not expected to materially affect the estimate. ASU 2025-05 is effective for the annual periods beginning after December 15, 2025. The Company is currently assessing the impact of ASU 2025-05 on the Company’s Condensed Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). Under ASU 2024-03, a public entity is required to disclose information about purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion for each income statement line item that contains those expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. ASU 2024-03 allows for early adoption and requires either prospective adoption to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the impact of ASU 2024-03 on the Company’s Condensed Consolidated Financial Statement disclosures.
NOTE 3. EARNINGS (LOSS) PER SHARE
The numerator for both basic and diluted earnings (loss) per share is net income (loss) attributable to the Company. The denominator for basic earnings (loss) per share is based upon the number of weighted average shares of the Company’s common stock outstanding during the reporting periods. The denominator for diluted earnings (loss) per share is based upon the number of weighted average shares of the Company’s common stock and common stock equivalents outstanding during the reporting periods using the treasury stock method in accordance with ASC 260, Earnings Per Share. Potentially dilutive securities for the diluted earnings (loss) per share calculations consist of non-vested equity shares of common stock and in-the-money outstanding options where the current stock price exceeds the option strike price.
8
The following table summarizes the components of basic and diluted earnings (loss) per share:
(in thousands, except per share amounts)
Basic weighted average common shares outstanding
Dilutive impact of stock awards
206
446
Diluted weighted average common shares outstanding
Earnings (loss) per share
Anti-dilutive shares excluded from diluted earnings (loss) per common share calculation
198
736
74
703
Stock awards are considered anti-dilutive based on the application of the treasury stock method or in the event of a net loss.
NOTE 4. OTHER COMPREHENSIVE LOSS
Other comprehensive income (loss) encompasses all changes in equity other than those arising from transactions with stockholders and is comprised solely of foreign currency translation adjustments. The Company’s foreign subsidiaries use their foreign currency as their functional currency. Functional currency assets and liabilities are translated into U.S. Dollars using exchange rates in effect at the balance sheet date, and revenues and expenses are translated at average exchange rates during the period. Resulting translation gains and losses are reported in other comprehensive income (loss), until the substantial liquidation of a subsidiary, at which time accumulated translation gains or losses are reclassified into net income (loss).
Beginning balance: Accumulated other comprehensive loss (net of tax of $4,423, $4,032, $4,234 and $4,234, respectively)
Other comprehensive (loss) income:
Foreign currency translation adjustments (net of tax of $(63), $151, $126 and $(51), respectively)
Ending balance: Accumulated other comprehensive loss (net of tax of $4,360, $4,183, $4,360 and $4,183, respectively)
No amounts were reclassified out of Accumulated other comprehensive loss during any of the periods presented.
NOTE 5. EQUITY METHOD INVESTMENT
The Company accounts for investments through which it exercises significant influence but does not have control over the investee under the equity method. Under the equity method, the Company recorded its investment in the investee on the balance sheet initially at cost, and subsequently adjusts the carrying amount based on its share of the investee's net income or loss. Distributions received from the investee are recognized as a reduction of the carrying amount of the investment. The distributions are classified using the cumulative-earnings approach. Under the cumulative-earnings approach, the distributions from an equity method investment are considered a return on investment and are recorded as operating cash inflows on the Consolidated Statement of Cash Flows. If cumulative distributions exceed cumulative earnings, the excess distributions are considered a return of investment and are recorded as investing cash inflows on the Consolidated Statement of Cash Flows. The Company's share of equity (income)/losses and other adjustments associated with these equity investments are included in Equity method investment income in the Condensed Consolidated Statements of Operations, and classified as a component of operating income (loss) since the equity method investee’s operations are considered
9
integral to the Company’s business. The carrying value for the Company's equity investment is reported in Equity method investment on the Condensed Consolidated Balance Sheets.
The following table is a summary of the Company’s Equity method investment:
% of Ownership
Balance Sheet Location
Balance
LE Topco, LLC
50.00%
Equity Method Investment
Equity Method Investment with WHP Global
On January 26, 2026, the Company entered into a Membership Interest Purchase Agreement (“MIPA”) with WH Topco, L.P., a Delaware limited partnership doing business as WHP Global. On April 1, 2026, the MIPA and related transactions were closed and funded (the “Closing”), pursuant to which, (i) the Company contributed all of its intellectual property and related assets associated with the “Lands’ End” brand, including all of the license agreements entered into in connection with Lands’ End’s licensing business (the “Contributed Assets”) to LE Topco, LLC (the “JV”) a newly formed Delaware limited liability company and wholly owned subsidiary and (ii) immediately thereafter, the Company sold a 50% controlling ownership stake in the JV to WHP Global for an aggregate purchase price of $300 million in cash, and contributed initial cash of $1.25 million to the JV.
In addition, WHP Global completed a tender offer for $100 million of Lands’ End shares at a price of $45.00 per share. As a result of the tender offer, WHP Global owns approximately 7.2% of Lands’ End outstanding shares of common stock.
At the Closing, the Company entered into a License Agreement, pursuant to which the JV granted a license to the Company to design, manufacture, sell and promote certain categories of products (including the types of products that the Company designed, manufactured and sold as of the date of the License Agreement) in certain channels and in certain jurisdictions, including the United States, Canada, the United Kingdom, Germany, Austria and France. The License Agreement is royalty-bearing and subject to a guaranteed minimum royalty (“GMR”) of $50,000,000 per year (calculated pro rata based on an amount of $50,000,000 for a twelve (12) month period for the first contract year) through the end of the contract year 11, will increase one percent per year for contract years 12-21, and will be $55,231,106 for each contract year thereafter, with different royalty rates due depending on the channel under which products are sold. The initial term of the License Agreement is 10 years following the conclusion of the first contract year, and the License Agreement automatically renews for up to 12 successive renewal terms of 7 years each, unless the Company provides notice of non-renewal at least 24 months prior to the end of the initial or applicable renewal term. The License Agreement is only terminable by the JV if the Company breaches its obligation to make its required guaranteed minimum payments, or to make undisputed royalty payments, in each case subject to an opportunity to cure such non-payment within a certain period of time. Additionally, pursuant to the WHP Transaction, in certain WHP Global monetization events, such as a qualifying public listing or majority sale, Lands’ End may have the right or obligation to exchange its interest in the JV for equity in WHP Global, at the same valuation multiple as the WHP Global monetization event.
Under the derecognition guidance from ASC 810, the Company derecognized the intellectual property assets at their carrying amount upon their contribution to the JV. In exchange for the Company's contribution of its intellectual property assets to the JV, WHP Global invested $300.0 million for a 50% stake in the JV. Separately, and as a closing condition, WHP Global completed a tender offer for $100 million of Lands’ End issued shares at a price of $45.00 per share. For accounting purposes, the difference between the purchase price paid by WHP Global in the tender offer and the trading price of the Company’s common stock on the day of the closing of the transaction in the amount of $74.3 million was treated as additional consideration for the sale of the 50% stake in the JV and a corresponding deemed distribution to shareholders. The Company did not receive or distribute this cash consideration.
The Company determined that the cash invested, along with the difference between the Company’s closing price of the common stock on the day of the closing of the transaction implied a fair value of the JV of $748.6 million. The carrying amount of the intellectual property assets was $257.0 million, previously classified as Asset Held for Sale as of January 30, 2026, resulting in a gain of $491.6 million included in Gain on WHP Transaction on the Condensed Consolidated Statements of Operations for the 26 weeks ended July 31, 2026.
Summary Financial Information for Equity Method Investment
Summarized financial information related to the Company’s equity method investment in the JV is reflected below:
10
July 31, 2026 (1)
Revenue
20,112
24,338
Operating expenses
1,447
1,887
Intangible asset amortization
10,180
13,573
Total operating expenses
11,627
15,460
Net earnings
8,485
8,878
Earnings attributable to the equity method investment
4,243
4,439
20,629
Non-current assets
735,166
Total assets
755,795
143
Total liabilities
NOTE 6. DEBT
ABL Facility
The Company’s $225.0 million committed revolving ABL Facility, as amended to date, includes a $35.0 million sublimit for letters of credit and is available for working capital and other general corporate liquidity needs. The amount available to borrow is the lesser of (1) the Aggregate Commitments of $225.0 million or (2) the Borrowing Base or Loan Cap which is calculated from Eligible Inventory, Trade Receivables and Credit Card Receivables, all foregoing capitalized terms not defined herein are as defined in the ABL Facility.
The following table summarizes the Company’s ABL Facility borrowing availability:
January 30, 2026
Interest Rate
ABL Facility limit
225,000
Borrowing Base
160,602
133,536
133,624
Outstanding borrowings
5.95%
5.86%
Outstanding letters of credit
11,293
10,911
10,978
ABL Facility utilization at end of period
71,293
45,911
ABL Facility borrowing availability
89,309
87,625
122,646
Effective with the Fifth Amendment to the ABL Facility, dated March 28, 2025 (the “Fifth Amendment”), a 0.10% adjustment to the SOFR benchmark interest rate was eliminated and the benchmark rates under the ABL Credit Agreement are, at the election of the Company, either: (1) Term SOFR (which is a forward looking term rate based on the secured overnight financing rate), or (2) a Base Rate (which is the greatest of (a) 0% per annum, (b) the federal funds rate plus 0.50%, (c) the one-month Term SOFR rate plus 1.00%, or (d) the Wells Fargo “prime rate”). The borrowing margin for SOFR Rate loans is (i) where the average daily total outstanding for the previous quarter is less than $95.0 million, 1.50%, and (ii) where the average daily total outstanding for the previous quarter is equal to or greater than $95.0 million, 1.75%. For Base Rate loans, the borrowing margin is (i) where the average daily total outstanding for the previous quarter is less than $95.0 million, 0.75%, and (ii) where the average daily total outstanding for the previous quarter is equal to or greater than $95.0 million, 1.00% (“Applicable Borrowing Margin”). The Applicable Borrowing Margin for all loans is based upon
the average daily total loans outstanding for the previous quarter. The Fifth Amendment reduced aggregate commitments from $275 million to $225 million, and reduced the letter of credit sublimit from $70 million to $35 million, in line with the Company’s lower inventory levels and expected letter of credit capacity, and had no material interest rate impact.
The ABL Facility fees include (i) commitment fees of 0.20% or 0.30% based upon the average daily unused commitment (aggregate commitment less loans and letter of credit outstanding) under the ABL Facility for the preceding fiscal quarter, (ii) customary letter of credit fees and (iii) customary annual agent fees. The Fifth Amendment extended the maturity date of the ABL Facility to March 28, 2030. Under applicable accounting guidance, certain unamortized debt issuance costs originating from the ABL Facility are deferred and amortized over the extended term of the ABL Facility, and certain unamortized debt issuance costs have been written off. As of July 31, 2026, the Company had $60.0 million of borrowings outstanding under the ABL Facility.
Long-Term Debt
On April 1, 2026, the Company fully repaid the outstanding principal balance of $234.0 million under its Term Loan Facility, together with $0.9 million of accrued and unpaid interest, using proceeds from the WHP Transaction, and the Term Loan Facility terminated, including related guarantees. In connection with the repayment, the Company incurred a 1% prepayment premium of $2.3 million and wrote off the remaining unamortized deferred financing costs of $6.9 million. These items resulted in a $9.2 million loss on extinguishment of debt, which is reflected in the Condensed Consolidated Statement of Operations for the 26 weeks ended July 31, 2026.
The Company’s long-term debt consisted of the following:
Term Loan Facility
240,500
12.71%
234,000
12.04%
Less: Current portion of long-term debt
Less: Unamortized debt issuance costs
7,950
6,789
Debt Facilities
Guarantees; Security
All obligations under the Company’s ABL Facility are unconditionally guaranteed by Lands’ End, Inc. and, subject to certain exceptions, each of its existing and future direct and indirect subsidiaries.
The ABL Facility is secured by a first priority security interest in certain working capital assets of the borrowers and guarantors, primarily consisting of inventory and accounts receivable, subject to customary exceptions.
Prior to its repayment on April 1, 2026, the Company’s Term Loan Facility was secured by a second-priority security interest in such working capital assets and a first-priority security interest in certain other assets, including specified fixed assets. Upon repayment in full of the Term Loan Facility on April 1, 2026, all outstanding borrowings under the facility were extinguished and all related liens and guarantees were released.
Representations and Warranties; Covenants
Subject to specified exceptions, the ABL Facility contains customary representations and warranties and restrictive covenants that, among other things, limit Lands’ End, Inc. and its subsidiaries’ ability to incur indebtedness (including guarantees), grant liens, make investments, pay dividends or other distributions, prepay certain indebtedness, and engage in mergers or changes in the nature of their business.
Prior to its repayment on April 1, 2026, the Company’s Term Loan Facility contained financial covenants, including a quarterly maximum total leverage ratio and a monthly minimum liquidity requirement. Upon repayment in full of the Term Loan Facility on April 1, 2026, these covenants ceased to apply.
Under the ABL Facility, if excess availability falls below the greater of 10% of the Loan Cap amount or $12.0 million, the Company is required to comply with a minimum fixed charge coverage ratio of 1.0 to 1.0.
The ABL Facility also contains customary affirmative covenants, including reporting requirements such as delivery of periodic financial statements, compliance certificates and notices of certain events, as well as requirements to maintain insurance and, in certain circumstances, provide additional guarantees and collateral.
12
As of July 31, 2026, the Company was in compliance with all applicable covenants under the ABL Facility.
Events of Default
The ABL Facility includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross defaults related to any other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, material judgments and change of control.
NOTE 7. STOCK-BASED COMPENSATION
The Company expenses the fair value of all stock awards over their requisite service period, ensuring that the amount of cumulative stock-based compensation expense recognized at any date is at least equal to the portion of the grant-date fair value of the award that is vested at that date. The Company has elected to adjust stock-based compensation expense for an estimated forfeiture rate for those shares not expected to vest and to recognize stock-based compensation expense on a straight-line basis for awards that only have a service requirement with multiple vest dates.
The Company has granted the following types of stock awards to employees at management levels and above, each of which are granted under the Company’s stockholder approved stock plans, other than inducement grants outside of the Company’s stockholder approved stock plans in accordance with Nasdaq Listing Rule 5635(c)(4):
For the Performance Awards granted in Fiscal 2025 and Fiscal 2024 with stock performance criteria, the Target Shares earned can range from 0% to 100% based on the Company’s highest average per share common stock closing price, measured over any 20 consecutive trading-day period from and after the date of grant and during the three-consecutive fiscal years beginning with the fiscal year of the grant date.
During First Quarter 2026, the Company modified the Performance Awards granted in Fiscal 2025 with event criteria. The Company modified these awards such that 50% of the Performance Awards would vest upon the closing of the WHP Transaction, with an additional 25% vesting upon the one year anniversary of the closing of the event, and the final 25% upon December 31, 2027. The modification date fair value for the Performance Awards granted in 2025 with event criteria is based on the common stock closing price on the date of modification.
During Second Quarter 2026, the Company modified the Performance Awards granted in Fiscal 2025 with event criteria to the former CEO. The Company modified these awards such that 100% of the Performance Awards would vest on September 11, 2026. The modification date fair value for the Performance Awards granted in 2025 with event criteria to the former CEO is based on the common stock closing price on the date of modification.
The grant date fair value of the Performance Awards granted in Fiscal 2026 and Fiscal 2025 with financial performance criteria are based on the closing price of the Company’s common stock on the grant date. The grant date fair value of the Performance Awards granted in Fiscal 2025 with event criteria are based on the closing price of the Company’s common stock. The grant date fair value for the Performance Awards granted in Fiscal 2025 and Fiscal 2024 with stock performance criteria are based on the Monte Carlo simulation model.
13
The following table provides a summary of the Company’s stock-based compensation expense, which is included in Selling and administrative expense and Other operating expense, net in the Condensed Consolidated Statements of Operations:
Deferred awards
15
934
719
1,752
Performance awards
(405
292
2,132
290
Option awards
16
104
208
Total stock-based compensation expense
Stock-based compensation expense during the 13 and 26 weeks ended July 31, 2026 included $0.6 million and $3.5 million, respectively, of Performance Awards granted in 2025 with event criteria recorded in Other operating expense, net, and a stock-based compensation expense credit included $(0.9) million and $(0.6) million, respectively, recorded in Selling and administrative expense in the Condensed Consolidated Statements of Operations. During the 13 and 26 weeks ended August 1, 2025, all stock-based compensation expense was recorded in Selling and administrative expense in the Condensed Consolidated Statements of Operations.
Deferred Awards
The following table provides a summary of the Deferred Awards activity for the 26 weeks ended July 31, 2026:
Number ofShares
Weighted AverageGrant Date Fair Valueper Share
Unvested Deferred Awards as of January 30, 2026
659
10.51
Granted
427
11.86
Vested
(303
9.66
Forfeited or expired
(358
11.51
Unvested Deferred Awards as of July 31, 2026
425
11.56
Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $3.5 million as of July 31, 2026, which is expected to be recognized ratably over a weighted average period of 2.4 years. The total fair value of Deferred Awards vested during the 26 weeks ended July 31, 2026 and August 1, 2025 was $3.0 million and $3.0 million, respectively.
Performance Awards
The following table provides a summary of the Performance Awards activity for the 26 weeks ended July 31, 2026:
Unvested Performance Awards as of January 30, 2026
1,249
12.00
185
12.09
(306
13.29
(622
11.29
Unvested Performance Awards as of July 31, 2026
506
12.62
14
Total unrecognized stock-based compensation expense related to unvested Performance Awards was approximately $2.8 million as of July 31, 2026 which is expected to be recognized ratably over a weighted average period of 1.9 years. The total fair value of Performance Awards vested during the 26 weeks ended July 31, 2026 was $4.1 million. The modification date fair value of the Performance Awards granted in Fiscal 2025 with event criteria was estimated at $16.24 per share based on the common stock closing price on the date of modification. The fair value of the 133,984 Performance Awards with stock performance criteria granted during the 13 weeks ended May 2, 2025 was estimated at $7.81 per share on the grant date using a Monte Carlo simulation.
Option Awards
The following table provides a summary of the Option Awards activity for the 26 weeks ended July 31, 2026:
Option Awards outstanding as of January 30, 2026
133
14.93
166
11.43
Exercised
(84
10.81
Forfeited
Expired
Option Awards outstanding as of July 31, 2026
215
13.84
The following table provides a summary of information about the Option Awards vested as well as Option Awards exercisable, as of July 31, 2026:
(in thousands, except contractual life and exercise price amounts)
WeightedAverageRemaining Contractual Life (Years)
WeightedAverageExercise Price
Aggregate Intrinsic Value
Option Awards vested
7.73
98
Option Awards exercisable
49
0.19
22.00
-
Total unrecognized stock-based compensation expense related to Option Awards expected to vest was approximately $1.0 million as of July 31, 2026, which is expected to be recognized over a weighted average period of 3.0 years.
NOTE 8. STOCKHOLDERS’ EQUITY
Share Repurchase Program
On April 1, 2026, the Company announced that its Board of Directors authorized the Company to repurchase up to $100 million of the Company’s common stock through March 31, 2029 (the “2026 Share Repurchase Program”). Under the 2026 Share Repurchase Program, the Company may repurchase its common stock through open market purchases, in privately negotiated transactions, or by other means in accordance with federal securities laws, including Rule 10b-18 of the Exchange Act. The amount and timing of purchases were determined by the Company’s management depending upon market conditions and other factors and may be made pursuant to a Rule 10b5-1 trading plan. As of July 31, 2026, additional purchases of up to $89.2 million could be made under the 2026 Share Repurchase Program.
On March 15, 2024, the Company announced that its Board of Directors authorized the Company to repurchase up to $25.0 million of the Company’s common stock through March 31, 2026 (the “2024 Share Repurchase Program”). Under the 2024 Share Repurchase Program, the Company repurchased its common stock through open market purchases, in privately negotiated transactions, or by other means in accordance with federal securities laws, including Rule 10b-18 of the Exchange Act. The amount and timing of purchases were determined by the Company’s management depending upon market conditions and other factors and were also made from time to time pursuant to Rule 10b5-1 trading plans. The 2024 Share Repurchase Program expired on March 31, 2026.
The following table summarizes the Company’s share repurchases for the 13 and 26 weeks ended July 31, 2026 (under the 2026 Share Repurchase Program) and August 1, 2025 (under the 2024 Share Repurchase Program):
(Shares and $ in thousands except average per share cost)
Number of shares repurchased
910
199
936
490
Total cost
10,555
1,731
10,830
4,502
Average per share cost (1)
11.60
8.71
11.57
9.20
The Company retired all shares that were repurchased through the 2026 Share Repurchase Program and 2024 Share Repurchase Program during the 26 weeks ended July 31, 2026 and August 1, 2025, respectively. In accordance with FASB ASC 505—Equity, the par value of the shares retired was charged against Common stock and the remaining purchase price, including any broker commissions and excise taxes paid, was either (i) allocated between Additional paid-in capital and Retained earnings, or (ii) charged directly against Additional paid-in capital. To the extent the shares are repurchased at a price less than that of initial issuance, or to the extent the Company does not have sufficient reserves in Retained earnings at the time of repurchase, the excess of the purchase price over par value is accounted for entirely as a deduction from Additional paid-in capital.
NOTE 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:
Deferred gift card revenue
30,018
33,236
31,350
Accrued income taxes
20,398
Accrued employee compensation and benefits
13,974
16,692
28,706
Reserve for sales returns and allowances
12,037
13,669
14,096
Deferred revenue
9,625
8,822
3,019
Accrued royalty
5,296
Accrued property, sales and other taxes
4,915
6,174
5,319
Accrued interest
900
2,385
1,705
6,822
4,106
6,873
Total Accrued expenses and other current liabilities
NOTE 10. FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS AND LIABILITIES
Cash and cash equivalents and restricted cash is reflected on the Condensed Consolidated Balance Sheets at fair value based on Level 1 inputs. Cash and cash equivalents and restricted cash amounts are valued based upon statements received from financial institutions. The fair value of restricted cash was $0.6 million, $2.3 million and $0.6 million as of July 31, 2026, August 1, 2025 and January 30, 2026, respectively.
Carrying amounts and fair values of long-term debt, including current portion were as follows:
CarryingAmount
FairValue
Long-term debt, including current portion
240,980
235,780
The Company had no outstanding long-term debt as of July 31, 2026.
Prior to its repayment on April 1, 2026, the fair value of the Term Loan Facility was classified as a Level 3 measurement within the fair value hierarchy. The Company estimated fair value using a combination of valuation techniques, including a Black-Derman-Toy model and observable and unobservable market inputs, reflecting the instrument’s contractual terms, including its optional redemption features. There were no nonfinancial assets or nonfinancial liabilities recognized at fair value on a nonrecurring basis as of July 31, 2026, August 1, 2025 and January 30, 2026.
NOTE 11. INCOME TAXES
Provision for Income Taxes
At the end of each quarter, the Company estimates its effective income tax rate pursuant to ASC 740. The rate for the period consists of the tax rate expected to be applied for the full year to ordinary income adjusted for any discrete items recorded in the period.
The Company recorded a tax expense at an overall effective tax rate of 58.0% for the 13 weeks ended July 31, 2026 and a tax benefit at an overall rate of 30.5% for the 13 weeks ended August 1, 2025, respectively. The Company recorded a tax expense at an overall rate of 24.2% for the 26 weeks ended July 31, 2026 and a tax benefit at an overall rate of 29.4% for the 26 weeks ended August 1, 2025. The overall effective tax rate for the 13 and 26 weeks ended July 31, 2026, varies from the U.S. statutory rate of 21% as a result of state taxes, additional legal expenses recognized related to the WHP Transaction and other non-deductible expenses. The overall effective tax rate for the 13 and 26 weeks ended August 1, 2025, varies from the U.S. statutory rate of 21% as a result of state taxes and non-deductible expenses.
NOTE 12. COMMITMENTS AND CONTINGENCIES
The Company is party to various claims, legal proceedings and investigations arising in the ordinary course of business. Some of these actions involve complex factual and legal issues and are subject to uncertainties. At this time, the Company is not able to either predict the outcome of these legal proceedings or reasonably estimate a potential range of loss with respect to the proceedings. While it is not feasible to predict the outcome of such pending claims, proceedings and investigations with certainty, management is of the opinion that their ultimate resolution should not have a material adverse effect on results of operations, cash flows or financial positions taken as a whole.
NOTE 13. SEGMENT REPORTING
The Company identifies operating segments according to how business activities are managed and evaluated. The Company’s operating segments consisted of: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail.
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. 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. Variable profit is a non-GAAP financial measure, which management believes provides useful information to investors and to the CODM in order to assess segment performance. A reconciliation of variable profit to consolidated income (loss) before income taxes is set forth below.
17
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:
Segment
268,898
255,254
All other net revenue (1)
33,140
38,825
Total consolidated net revenue
Product cost of goods sold
110,620
100,484
Shipping cost of goods sold
34,888
33,096
Other cost of goods sold (2)
(19,020
(134
Marketing costs
46,008
43,283
Variable personnel costs
16,185
14,631
Other segment expenses (3)
8,816
7,204
Segment variable profit
71,401
56,690
474,021
483,006
66,933
72,281
187,146
184,085
64,370
60,799
(13,781
1,352
85,511
83,216
30,278
30,201
15,023
13,769
105,474
109,584
The reconciliation between segment variable profit to consolidated income (loss) before income taxes is as follows:
All other variable profit (1)
2,260
8,306
Depreciation expense
(6,147
(7,656
Unallocated corporate expenses (2)
(59,327
(53,357
(1,021
(9,262
1,051
18
7,238
14,151
(12,247
(15,947
(136,386
(106,175
491,622
(9,172
(6,535
(18,527
915
Net revenue is presented by distribution channel in the following tables:
% of Net
Net revenue:
U.S. eCommerce
182,400
60.4
%
167,268
56.9
Outfitters
69,318
23.0
66,424
22.6
Third Party
17,180
5.7
21,562
7.3
Total U.S. Digital Segment Revenue
Europe eCommerce
19,739
6.5
19,639
6.7
Licensing and Retail
13,401
4.4
19,186
Total Net revenue
335,739
62.1
338,016
60.9
107,811
19.9
109,346
19.7
30,471
5.6
35,644
6.4
40,266
7.5
37,490
26,667
4.9
34,791
6.3
19
NOTE 14. REVENUE
Net Revenue
Product Sales
Revenue includes sales of merchandise and delivery revenue related to merchandise sold. Substantially all of the Company’s revenue is recognized when control of product passes to customers, which for the U.S. eCommerce, Europe eCommerce, Outfitters and Third Party distribution channels is when the merchandise is received by the customer and for the Retail distribution channel is at the time of sale in the store. The Company recognizes revenue, including shipping and handling fees billed to customers, in the amount expected to be received when control of the Company’s products transfers to customers, and is presented net of various forms of promotions, which range from contractually fixed percentage price reductions to sales returns, discounts and other incentives that may vary in amount. Variable amounts are estimated based on an analysis of historical experience and adjusted as better estimates become available.
The Company’s revenue is disaggregated by distribution channel and geographic location. Revenue by distribution channel is presented in Note 13, Segment Reporting. Revenue by geographic location was:
United States
279,433
271,626
495,487
512,689
Europe
20,345
20,169
41,372
38,488
2,284
4,095
4,110
Licensing Agreements
The Company generates revenue from fulfillment services performed on behalf of third-parties for product sold on the Company’s website and fulfilled from the Company’s distribution center. Revenue is recognized over time as fulfillment services are rendered and is included in Net revenue and reported in the Licensing distribution channel. In certain agreements, the Company agreed to provide marketing activities. The Company receives reimbursement for such services at cost. The amount of these reimbursements are recorded as a reduction of Selling and administrative expenses in the Condensed Consolidated Statements of Operations. The amount of these reimbursements was $2.2 million and $4.2 million for the 13 and 26 weeks ended July 31, 2026, respectively, and $2.3 million and $3.9 million for the 13 and 26 weeks ended August 1, 2025, respectively.
Prior to the closing of the WHP Transaction, the Company also generated royalty revenue from licensing the right to use its trademarks to third parties and reported such revenue in the Licensing distribution channel. The license agreements required the licensees to pay the Company a trademark royalty based on net sales as defined in the license agreements. The Company recognized sales-based royalty revenue (i) when a contractually guaranteed minimum is not expected to be met, the minimum is recognized as revenue on a straight-line basis over the contractual period, or (ii) when the contractually guaranteed minimum is expected to be met, revenue is recognized when the related sales of the licensed product occurs.
Contract Liabilities
Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in Net revenue in the Condensed Consolidated Statements of Operations. The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer, reported in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets, and amounts
20
recognized through Net revenue for each period presented. The majority of deferred revenue as of July 31, 2026 is expected to be recognized in Net revenue in the fiscal quarter ending October 30, 2026, as products are delivered to customers.
Deferred revenue beginning of period
10,216
5,049
6,584
Deferred revenue recognized in period
(10,043
(4,834
(2,876
(6,370
Revenue deferred in period
9,452
8,607
9,482
8,608
Deferred revenue end of period
Revenue from gift cards is recognized when (i) the gift card is redeemed by the customer for merchandise, or (ii) as gift card breakage, an estimate of gift cards which will not be redeemed where the Company does not have a legal obligation to remit the value of the unredeemed gift cards to the relevant jurisdictions. Gift card breakage is recorded within Net revenue in the Condensed Consolidated Statements of Operations. Prior to their redemption, gift cards are recorded as a liability and included within Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards:
Balance as of beginning of period
30,807
33,364
34,746
Gift cards issued
14,546
15,693
28,363
30,305
Gift cards redeemed
(12,271
(10,785
(23,451
(26,095
Gift card breakage
(3,064
(5,036
(6,244
(5,720
Balance as of end of period
Refund Liabilities
Refund liabilities, primarily associated with product sales returns and retrospective volume rebates, represent variable consideration and are estimated and recorded as a reduction to Net revenue based on historical experience. Refund liabilities, primarily associated with estimated product returns, were $12.0 million, $13.7 million and $14.1 million as of July 31, 2026, August 1, 2025 and January 30, 2026, respectively, and reported in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.
NOTE 15. RELATED PARTY TRANSACTIONS
Majority Shareholder
During the 13 and 26 weeks ended July 31, 2026 the Company paid legal fees of $3.5 million on behalf of the Company's majority shareholder, Edward S. Lampert and related funds, incurred in connection with the negotiation of the transactions (the “Transactions”) by and among the Company, Lands’ End Direct Merchants, Inc., a wholly owned subsidiary of the Company, WH Borrower, LLC, WHP Topco, L.P. and LEWHP LLC, a wholly owned indirect subsidiary of WHP Topco and the related joint venture which closed on April 1, 2026. This payment was reviewed and approved by the Audit Committee of the Company's Board of Directors. As the fees were incurred in connection with, and for the benefit of, the joint venture transaction, these amounts have been recorded in Other operating expense, net in the Company's Condensed Consolidated Statement of Operations for the 13 and 26 weeks ended July 31, 2026.
Joint Venture
LE Topco, LLC, the Company's joint venture formed with WHP Global, is considered a related party. During the 13 and 26 weeks ended July 31, 2026, Equity method investment income attributable to the JV was $4.2 million and $4.4 million, respectively. During the 13 and 26 weeks ended July 31, 2026, Royalty expense attributable to the JV was $15.4 million and $18.9 million, respectively. The Company received distributions of $2.4 million during the 13 and 26 weeks ended July 31, 2026. As of July 31, 2026, the Company had related party payables to the JV of $5.3 million recorded in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets.
21
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with the Condensed Consolidated Financial Statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Information” below, “Item 1A. Risk Factors” in our Annual Report filed on Form 10-K for the year ended January 30, 2026 and “Part II, Item 1A Risk Factors” of this Quarterly Report on Form 10-Q, for a discussion of the uncertainties, risks and assumptions associated with these statements.
As used in this Quarterly Report on Form 10-Q, references to the “Company”, “Lands’ End”, “we”, “us”, “our” and similar terms refer to Lands’ End, Inc. and its subsidiaries. Our fiscal year ends on the Friday preceding the Saturday closest to January 31. Other terms that are commonly used in this Quarterly Report on Form 10-Q are defined as follows:
Executive Overview
Description of the Company
Lands’ End is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products and uniforms. We offer products online at www.landsend.com, through third-party distribution channels and our own Company Operated stores. We also offer products to businesses and schools, for their employees and students, through the Outfitters distribution channel. We are a classic American lifestyle brand that creates solutions for life’s every journey.
Lands’ End was founded in 1963 by Gary Comer and his partners to sell sailboat hardware and equipment by catalog. While our product focus has shifted significantly over the years, we have continued to adhere to our founder’s motto as one of our guiding principles: “Take care of the customer, take care of the employee and the rest will take care of itself.”
We identify our operating segments according to how our business activities are managed and evaluated. Our operating segments consist of: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail.
We have determined that 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. See Note 13, Segment Reporting.
Distribution Channels
We identify six separate distribution channels for revenue reporting purposes:
WHP Transaction
On January 26, 2026, we entered into a Membership Interest Purchase Agreement (“MIPA”) with WH Topco, L.P., a Delaware limited partnership doing business as WHP Global. On April 1, 2026, the MIPA and related transactions were closed and funded (the “Closing”), pursuant to which, (i) we contributed all of our intellectual property and related assets associated with the “Lands’ End” brand, including all of the license agreements entered into in connection with our licensing business (the “Contributed Assets”) to LE Topco, LLC (the “JV”) a newly formed Delaware limited liability company and wholly owned subsidiary and (ii) immediately thereafter,
23
we sold a 50% controlling ownership stake in the JV to WHP Global for an aggregate purchase price of $300 million in cash, and contributed initial cash of $1.25 million to the JV.
In addition, on April 1, 2026, WHP Global completed a tender offer for $100 million of our shares at a price of $45.00 per share. As a result of the tender offer, WHP Global owns approximately 7.2% of our outstanding shares of common stock and is now considered a related party.
At the Closing, we entered into a License Agreement, pursuant to which the JV granted a license to us to design, manufacture, sell and promote certain categories of products (including the types of products that we designed, manufactured and sold as of the date of the License Agreement) in certain channels and in certain jurisdictions, including the United States, Canada, the United Kingdom, Germany, Austria and France. The License Agreement is royalty-bearing and subject to a guaranteed minimum royalty (“GMR”) of $50,000,000 per year (calculated pro rata based on an amount of $50,000,000 for a twelve (12) month period for the first contract year) through the end of the contract year 11, will increase one percent per year for contract years 12-21, and will be $55,231,106 for each contract year thereafter, with different royalty rates due depending on the channel under which products are sold. The initial term of the License Agreement is 10 years following the conclusion of the first contract year, and the License Agreement automatically renews for up to 12 successive renewal terms of 7 years each, unless we provide notice of non-renewal at least 24 months prior to the end of the initial or applicable renewal term. The License Agreement is only terminable by the JV if we breach our obligation to make our required guaranteed minimum payments, or to make undisputed royalty payments, in each case subject to an opportunity to cure such non-payment within a certain period of time. Additionally, in certain WHP Global monetization events, such as a qualifying public listing or majority sale, we may have the right or obligation to exchange our interest in the JV for equity in WHP Global, at the same valuation multiple as the WHP Global monetization event.
We determined that the cash invested, along with the difference between our closing price of the common stock on the day of the closing of the transaction implied a fair value of the JV of $748.6 million. The carrying amount of the intellectual property assets was $257.0 million, previously classified as Asset Held for Sale as of January 30, 2026, resulting in a gain of $491.6 million included in Gain on WHP Transaction on the Condensed Consolidated Statements of Operations.
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 our 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. 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 our products. Moreover, uncertainty with respect to trade policy and tariffs, including increased tariffs applicable to countries where our vendors manufacture Lands’ End product, may result in an increase in the cost of our products.
We apply a loss recovery model in accordance with ASC Topic 410 to account for potential refunds of previously paid International Emergency Economic Powers Act (“IEEPA”) tariffs. Any refunds, when recognized, are reflected as a reduction of Inventories on the Condensed Consolidated Balance Sheet to the extent the related goods remain on hand, or as a reduction of Cost of sales in the Condensed Consolidated Statements of Operations for amounts related to goods already sold.
We have incurred restructuring and other charges related to cost optimization of business operations and exploring strategic alternatives. During the 13 and 26 weeks ended July 31, 2026 and August 1, 2025, we incurred ongoing costs related to exploring and completing strategic alternatives to maximize shareholder value and have included those costs as part of restructuring and other. This process culminated in the WHP Transaction. Additionally, during the 13 and 26 weeks ended July 31, 2026, we incurred charges associated with the transition of executive leadership, including severance and related costs, as our strategic priorities evolved. Additionally, during Year-to-Date 2025, we reduced approximately 6% of our 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.
24
We incurred $11.7 million and $2.4 million of restructuring and other costs during the Second Quarter 2026 and Second Quarter 2025, respectively. Restructuring and other costs of $35.0 million and $5.8 million were incurred Year-to-Date 2026 and Year-to-Date 2025, respectively.
As of July 31, 2026, approximately $2.5 million and $3.4 million of restructuring and other costs incurred had yet to be paid and are included in Other liabilities and Accrued expenses and other current liabilities, respectively, in the Condensed Consolidated Balance Sheets.
The Condensed Consolidated Financial Statements include the accounts of Lands’ End, Inc. and its subsidiaries. We hold a 50% interest in the JV, which we account for under the equity method. All intercompany transactions and balances have been eliminated.
Seasonality
We experience seasonal fluctuations in our Net revenue and operating results and historically have realized a significant portion of our net revenue and earnings for the year during our fourth fiscal quarter. We generated approximately 34.0% of our net revenue in the fourth quarters of Fiscal 2025 and Fiscal 2024.
Working capital requirements typically increase during the second and third quarters of the fiscal year as inventory builds to support peak selling periods and, accordingly, working capital requirements typically decrease during the fourth quarter of the fiscal year as inventory is sold. Cash provided by operating activities is typically higher in the fourth quarter of the fiscal year due to reduced working capital requirements during that period.
Results of Operations
The following tables set forth, for the periods indicated, selected income statement data, both in dollars and as a percentage of Net revenue:
100.0
48.0
51.2
52.0
48.8
44.8
44.0
2.0
2.6
(1.4
)%
3.9
0.8
Operating income
2.7
1.4
0.3
3.1
(0.3
(0.0
(1.8
1.6
(0.5
1.1
(1.2
25
50.4
50.3
49.6
49.7
48.4
45.5
2.3
2.9
(0.8
1.0
Operating (loss) income
(6.6
1.2
3.3
(90.9
1.7
(0.2
81.5
(3.0
(0.9
61.8
(2.1
Depreciation and amortization are not included in our cost of sales because we are a reseller of inventory and do not believe that including depreciation and amortization is meaningful. As a result, our gross margins may not be comparable to other entities that include depreciation and amortization related to the sale of their product in their gross margin measure.
Definitions, Reconciliations and Uses of Non-GAAP Financial Measures
In addition to our Net income (loss) determined in accordance with GAAP, for purposes of evaluating operating performance, we report the following non-GAAP measures: Adjusted net income (loss) and Adjusted EBITDA. Adjusted net income (loss) is also expressed on a diluted per share basis.
We believe presenting non-GAAP financial measures provides useful information to investors, allowing them to assess how the business performed excluding the effects of significant non-recurring or non-operational amounts. We believe the use of the non-GAAP financial measures facilitates comparing the results being reported against past and future results by eliminating amounts that we believe are not comparable between periods and assists investors in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with management’s own methods for evaluating business performance.
Our management uses Adjusted net income (loss) and Adjusted EBITDA to evaluate the operating performance of our business for comparable periods and to discuss our business with our Board of Directors, institutional investors and other market participants. Adjusted EBITDA is also used as the basis for a performance measure used in executive incentive compensation.
The methods we use to calculate our non-GAAP financial measures may differ significantly from methods other companies use to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. Adjusted net income (loss) and Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as these measures may exclude a number of important cash and non-cash recurring items.
Adjusted net income (loss) is defined as net income (loss) excluding significant non-recurring or non-operational items as set forth below. Adjusted net income (loss) is also presented on a diluted per share basis. While Adjusted net income (loss) is a non-GAAP measurement, management believes that it is an important indicator of operating performance and useful to investors.
26
The following tables set forth, for the periods indicated, a reconciliation of Net income (loss) to Adjusted net income (loss) and Adjusted diluted earnings (loss) per share:
Unaudited
Corporate restructuring and other
Unmitigated tariff costs (1)
5,100
1,000
JV intangible asset amortization
5,090
Unmitigated tariff recovery
(24,900
Tax effects on adjustments (2)
2,261
(873
ADJUSTED NET INCOME (LOSS)
2,679
(1,106
ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE
0.09
(0.04
27
11,900
6,787
Exit costs
257
118,721
(1,619
ADJUSTED NET LOSS
(831
(6,525
ADJUSTED DILUTED LOSS PER SHARE
(0.03
(0.21
While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance, and is useful to investors, because EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax.
28
The following tables set forth, for the periods indicated, selected income statement data, both in dollars and as a percentage of Net revenue and a reconciliation of Net income (loss) to Adjusted EBITDA:
(8.2
(11
Adjusted EBITDA
11,298
3.7
15,062
5.1
2.2
0.2
1.3
(4.6
0.0
5,052
0.9
24,583
In assessing the operational performance of our business, we consider a variety of financial measures. We operate in six separate distribution channels for revenue reporting purposes: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail. A key measure in the evaluation of our business is revenue performance by distribution channel as well as consolidated Gross margin. We manage and assess the performance of each of our operating segments using variable profit, which is defined as Net revenue minus cost of sales and variable selling expenses. This segment measure excludes fixed personnel costs, incentive compensation, office occupancy, information technology, professional fees and depreciation and amortization. See Note 13, Segment Reporting for more information regarding variable profit, which is a non-GAAP measure, as well as a reconciliation of variable profit to Income (loss) before income taxes.
We use Net revenue to evaluate revenue performance for the U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Retail and Licensing distribution channels.
29
Discussion and Analysis
Second Quarter 2026 compared with Second Quarter 2025
Net revenue was $302.0 million for the Second Quarter of 2026, an increase of $7.9 million or 2.7%, from $294.1 million during the Second Quarter of 2025.
U.S. Digital Segment Net revenue was $268.9 million for the Second Quarter of 2026, an increase of $13.6 million or 5.3% from $255.3 million in the Second Quarter of 2025.
U.S. eCommerce Net revenue was $182.4 million for the Second Quarter of 2026, an increase of $15.1 million or 9.0%, from $167.3 million during the Second Quarter of 2025. The increase was primarily driven by carryover shipments from the temporary disruption associated with the rollout of the new warehouse management system in the First Quarter of 2026.
Outfitters Net revenue was $69.3 million for the Second Quarter of 2026, an increase of $2.9 million or 4.4%, from $66.4 million during the Second Quarter of 2025. The increase was driven by enterprise accounts which more than offset the impact of warehouse management system challenges affecting the processing of value-added service products in our school uniform business.
Third Party Net revenue was $17.2 million for the Second Quarter of 2026, a decrease of $4.4 million or 20.4%, from $21.6 million during the Second Quarter of 2025. The decrease was primarily due to prioritizing profitable high-quality sales and brand quality over lower-value promotional volume.
Europe eCommerce Net revenue was $19.7 million for the Second Quarter of 2026, an increase of $0.1 million or 0.5%, from $19.6 million during the Second Quarter of 2025. The increase was primarily due to a strategic shift to a franchise-first assortment simplifying the business and improving product margins.
Gross Profit
Gross profit was $157.0 million for the Second Quarter of 2026, an increase of $13.6 million or 9.5% from $143.4 million during the Second Quarter of 2025. Gross margin increased approximately 320 basis points to 52.0% in the Second Quarter of 2026, compared with 48.8% in the Second Quarter of 2025. The gross margin increase was primarily driven by the IEEPA tariff refund, partially offset by the new royalty structure associated with the JV and temporary costs associated with our new warehouse management system.
Selling and Administrative Expenses
Selling and administrative expenses increased $5.9 million to $135.3 million or 44.8% of Net revenue in the Second Quarter of 2026 compared with $129.4 million or 44.0% of Net revenue in the Second Quarter of 2025. The approximately 80 basis point increase was driven by investment in digital marketing focused on new customer acquisition and operational inefficiencies from the temporary disruption of the new warehouse management system partially offset by leverage from higher net revenue.
Depreciation and Amortization
Depreciation and amortization expense decreased $1.6 million to $6.1 million in the Second Quarter of 2026 compared with $7.7 million in the Second Quarter of 2025. The decrease in depreciation and amortization is primarily driven by lower software depreciation as a result of major software projects becoming fully depreciated.
Equity Method Investment Income
Equity method investment income was $4.2 million in the Second Quarter of 2026 compared to none in the Second Quarter of 2025 as a result of the WHP Transaction.
Other Operating Expense
Other operating expense, net was $11.7 million in the Second Quarter of 2026 compared to $2.4 million in the Second Quarter of 2025. The increase was primarily driven by restructuring and other costs incurred. See Note 1, Background and Basis of Presentation.
30
Operating Income
As a result of the above factors, Operating income was $8.2 million in the Second Quarter of 2026 compared to $4.0 million in the Second Quarter of 2025.
Interest Expense
Interest expense was $1.0 million in the Second Quarter of 2026 compared to $9.3 million in the Second Quarter of 2025. The $8.3 million decrease was primarily driven by, as previously announced, using a portion of the cash proceeds from the WHP Transaction to fully repay the term loan in the First Quarter of 2026.
Other Income
Other income was $1.1 million in the Second Quarter of 2026 compared to insignificant other income in the Second Quarter of 2025.
Income Tax Expense (Benefit)
We recorded an income tax expense at an overall effective rate of 58.0% for the Second Quarter 2026 and a tax benefit at an overall effective tax rate of 30.5% for Second Quarter 2025, respectively. The overall effective tax rate for the 13 weeks ended July 31, 2026 varies from the U.S. federal statutory rate of 21% as a result of state taxes, additional legal expense recognized related to the WHP Transaction and other non-deductible expenses. The overall effective tax rate for the 13 weeks ended August 1, 2025 varies from the U.S. federal statutory rate of 21% as a result of state taxes, and non-deductible expenses.
Net Income (Loss)
As a result of the above factors, Net income was $3.5 million and diluted earnings per share was $0.11 in the Second Quarter of 2026 compared with Net loss of $3.7 million and diluted loss per share was $0.12 in the Second Quarter of 2025.
Adjusted Net Income (Loss)
Adjusted net income was $2.7 million and Adjusted diluted earnings per share was $0.09 in the Second Quarter of 2026 compared to Adjusted net loss of $1.1 million and Adjusted diluted loss per share of $0.04 in the Second Quarter of 2025.
Adjusted EBITDA was $11.3 million in Second Quarter 2026, a decrease of 25.2%, compared to $15.1 million in Second Quarter 2025.
U.S. Digital Segment Results of Operations
Variable Profit
U.S. Digital Segment variable profit was $71.4 million in the Second Quarter of 2026, an increase of $14.7 million compared to $56.7 million in the Second Quarter of 2025. U.S. Digital Segment variable profit was 26.6% of U.S. Digital Segment revenue in the Second Quarter of 2026, which is an increase of 440 basis points compared to 22.2% of U.S. Digital Segment revenue in the Second Quarter of 2025. The increase in variable profit as a percentage of U.S. Digital Segment revenue was driven by the net impact of the IEEPA Tariff Refund partially offset by investment in digital marketing, temporary operational inefficiencies from the disruption of the new warehouse management system, the new royalty structure associated with the JV and continued tariff headwinds.
Product cost of goods sold was $110.6 million or 41.1% of U.S. Digital Segment revenue in the Second Quarter of 2026 compared to $100.5 million or 39.4% of U.S. Digital Segment revenue in the Second Quarter of 2025. Shipping cost of goods sold was $34.9 million or 13.0% of U.S. Digital Segment revenue in the Second Quarter of 2026 compared to $33.1 million or 13.0% of U.S. Digital Segment revenue in the Second Quarter of 2025. The change in Product and Shipping cost of goods sold as a percentage of U.S. Digital Segment revenue was due to product assortment and channel mix and temporary operational inefficiencies related to the new warehouse management system. Marketing expenses were $46.0 million or 17.1% of U.S. Digital Segment revenue in the Second Quarter of 2026 compared to $43.3 million or 17.0% of U.S. Digital Segment revenue in the Second Quarter of 2025. The increase in
31
Marketing expenses as a percentage of U.S. Digital Segment revenue was primarily due to the investment in digital marketing focused on new customer acquisition.
Year-to-Date 2026 compared with Year-to-Date 2025
Net revenue was $541.0 million for Year-to-Date 2026, a decrease of $14.3 million or 2.6%, from $555.3 million during Year-to-Date 2025.
U.S. Digital Segment Net revenue was $474.0 million for Year-to-Date 2026, a decrease of $9.0 million or 1.9% from $483.0 million in Year-to-Date 2025.
U.S. eCommerce Net revenue was $335.7 million for Year-to-Date 2026, a decrease of $2.3 million or 0.7%, from $338.0 million during Year-to-Date 2025. The decrease was driven by select summer franchises and the temporary disruption associated with the rollout of the new warehouse management system.
Outfitters Net revenue was $107.8 million for Year-to-Date 2026, a decrease of $1.5 million or 1.4%, from $109.3 million during Year-to-Date 2025. Strong customer orders from select enterprise and school uniform accounts were more than offset by the disruption of value-added service products with the new warehouse management system.
Third Party Net revenue was $30.5 million for Year-to-Date 2026, a decrease of $5.1 million or 14.3%, from $35.6 million during Year-to-Date 2025. The decrease was primarily due to prioritizing profitable high-quality sales and brand quality over lower-value promotional volume.
Europe eCommerce Net revenue was $40.3 million for Year-to-Date 2026, an increase of $2.8 million or 7.5%, from $37.5 million during Year-to-Date 2025. The increase was primarily due to a strategic shift to a franchise-first assortment simplifying the business and improving product margins.
Gross profit was $268.5 million for Year-to-Date 2026, a decrease of $7.6 million or 2.8% from $276.1 million during Year-to-Date 2025. Gross margin was approximately flat at 49.6% in Year-to-Date 2026, compared with 49.7% in Year-to-Date 2025. Gross margin was approximately flat as the IEEPA tariff refund was offset by the new royalty structure associated with the JV and temporary costs associated with our new warehouse management system.
Selling and administrative expenses increased $8.9 million to $261.7 million or 48.4% of Net revenue in Year-to-Date 2026 compared with $252.8 million or 45.5% of Net revenue in Year-to-Date 2025. The approximately 290 basis point increase was driven by temporary operational inefficiencies from the distribution center disruption, investment in digital marketing focused on new customer acquisition and deleverage from lower Net revenue.
Depreciation and amortization expense decreased $3.7 million to $12.2 million in Year-to-Date 2026 compared with $15.9 million in Year-to-Date 2025. The decrease in depreciation and amortization is primarily driven by lower software depreciation as a result of major software projects becoming fully depreciated.
Equity method investment income was $4.4 million in Year-to-Date 2026 compared to none in Year-to-Date 2025 as a result of the WHP Transaction.
32
Other operating expense, net was $34.9 million in Year-to-Date 2026 compared to $5.8 million in Year-to-Date 2025. The increase was primarily driven by restructuring and other costs incurred. See Note 1, Background and Basis of Presentation.
Operating (Loss) Income
As a result of the above factors, Operating loss was $35.9 million in Year-to-Date 2026 compared to Operating income of $1.6 million in Year-to-Date 2025.
Interest expense was $6.5 million in Year-to-Date 2026 compared to $18.5 million in Year-to-Date 2025. The $12.0 million decrease was primarily driven by, as previously announced, using a portion of the cash proceeds from the WHP Transaction to fully repay the term loan in the First Quarter of 2026.
Gain on transaction with WHP was $491.6 million in Year-to-Date 2026 compared to none in Year-to-Date 2025.
Loss on Extinguishment of Debt
Loss on extinguishment of debt was $9.2 million in Year-to-Date 2026 compared to none in Year-to-Date 2025.
Other income was $0.9 million in Year-to-Date 2026 compared to insignificant other income in Year-to-Date 2025.
Income Tax (Benefit) Expense
We recorded an income tax expense at an overall effective rate of 24.2% for the Year-to-date 2026 and a tax benefit at an overall effective tax rate of 29.4% for the Year-to-date 2025, respectively. The overall effective tax rate for the 26 weeks ended July 31, 2026 and August 1, 2025 vary from the U.S. federal statutory rate of 21% as a result of state taxes, and non-deductible expenses.
As a result of the above factors, Net income was $334.1 million and diluted earnings per share was $10.96 in Year-to-Date 2026 compared with Net loss of $11.9 million and diluted loss per share of $0.39 in Year-to-Date 2025.
Adjusted net loss was $0.8 million and Adjusted diluted loss per share was $0.03 in Year-to-Date 2026 compared to Adjusted net loss of $6.5 million and Adjusted diluted loss per share of $0.21 in Year-to-Date 2025.
Adjusted EBITDA was $5.1 million in Year-to-Date 2026, a decrease of 79.3%, compared to $24.6 million in Year-to-Date 2025.
U.S. Digital Segment variable profit was $105.5 million in Year-to-Date 2026, a decrease of $4.1 million compared to $109.6 million in Year-to-Date 2025. U.S. Digital Segment variable profit was 22.3% of U.S. Digital Segment revenue in Year-to-Date 2026, which is a decrease of 40 basis points compared to 22.7% of U.S. Digital Segment revenue in Year-to-Date 2025. The decrease in variable profit as a percentage of U.S. Digital Segment revenue was driven by temporary operational inefficiencies from the disruption
33
of the new warehouse management system, the new royalty structure associated with the JV and continued tariff headwinds partially offset by the impact of the IEEPA tariff refund.
Product cost of goods sold was $187.1 million or 39.5% of U.S. Digital Segment revenue in Year-to-Date 2026 compared to $184.1 million or 38.1% of U.S. Digital Segment revenue in Year-to-Date 2025. Shipping cost of goods sold was $64.4 million or 13.6% of U.S. Digital Segment revenue in Year-to-Date 2026 compared to $60.8 million or 12.6% of U.S. Digital Segment revenue in Year-to-Date 2025. The change in Product and Shipping cost of goods sold as a percentage of U.S. Digital Segment revenue was primarily due to product assortment mix and the temporary disruption associated with the rollout of the new warehouse management system. Marketing expenses were $85.5 million or 18.0% of U.S. Digital Segment revenue in Year-to-Date 2026 compared to $83.2 million or 17.2% of U.S. Digital Segment revenue in Year-to-Date 2025. The increase in Marketing expenses as a percentage of U.S. Digital Segment revenue was primarily due to investment in digital marketing focused on new customer acquisition.
Liquidity and Capital Resources
Liquidity
Our primary need for liquidity is to fund working capital requirements of our business, which are inventory purchases, payments on debt, capital expenditures and for general corporate purposes. Our cash and cash equivalents and the ABL Facility serve as sources of liquidity for short-term working capital needs and general corporate purposes. The ABL Facility had a balance outstanding of $60.0 million on July 31, 2026, other than letters of credit. Cash generated from our net revenue and profitability, and to a lesser extent our changes in working capital, are driven by the seasonality of our business, with a significant amount of net revenue and operating cash flows generally occurring in the fourth fiscal quarter of each year. We expect that our cash on hand and cash flows from operations, along with revolving on the ABL Facility, will be adequate to meet our capital requirements and operational needs for at least the next 12 months.
Our $225.0 million committed revolving ABL Facility, as amended to date, includes a $35.0 million sublimit for letters of credit and is available for working capital and other general corporate liquidity needs. The amount available to borrow is the lesser of (1) the Aggregate Commitments of $225.0 million or (2) the Borrowing Base or Loan Cap which is calculated from Eligible Inventory, Trade Receivables and Credit Card Receivables, all foregoing capitalized terms not defined herein are as defined in the ABL Facility. The balance outstanding on July 31, 2026 and August 1, 2025 was $60.0 million and $35.0 million, respectively. The balance of outstanding letters of credit was $11.3 million and $10.9 million on July 31, 2026 and August 1, 2025, respectively. The borrowing availability under the ABL Facility was $89.3 million and $87.6 million as of July 31, 2026 and August 1, 2025, respectively.
Effective with the Fifth Amendment to the ABL Facility, dated March 28, 2025 (the “Fifth Amendment”), a 0.10% adjustment to the SOFR benchmark interest rate was eliminated and the benchmark rates under the ABL Credit Agreement are, at our election, either: (1) Term SOFR (which is a forward looking term rate based on the secured overnight financing rate), or (2) a Base Rate (which is the greatest of (a) 0% per annum, (b) the federal funds rate plus 0.50%, (c) the one-month Term SOFR rate plus 1.00%, or (d) the Wells Fargo “prime rate”). The borrowing margin for SOFR Rate loans is (i) where the average daily total outstanding for the previous quarter is less than $95.0 million, 1.50%, and (ii) where the average daily total outstanding for the previous quarter is equal to or greater than $95.0 million, 1.75%. For Base Rate loans, the borrowing margin is (i) where the average daily total outstanding for the previous quarter is less than $95.0 million, 0.75%, and (ii) where the average daily total outstanding for the previous quarter is equal to or greater than $95.0 million, 1.00% (“Applicable Borrowing Margin”). The Applicable Borrowing Margin for all loans is based upon the average daily total loans outstanding for the previous quarter. The Fifth Amendment had no material interest rate impact.
The ABL Facility fees include (i) commitment fees of 0.20% or 0.30% based upon the average daily unused commitment (aggregate commitment less loans and letter of credit outstanding) under the ABL Facility for the preceding fiscal quarter, (ii) customary letter of credit fees and (iii) customary annual agent fees. The Fifth Amendment extended the maturity date of the ABL Facility to March 28, 2030. Under applicable accounting guidance, certain unamortized debt issuance costs originating from the ABL Facility are deferred and amortized over the extended term of the ABL Facility, and certain unamortized debt issuance costs have been written off. As of July 31, 2026, we had $60.0 million of borrowings outstanding under the ABL Facility.
All obligations under our ABL Facility are unconditionally guaranteed by Lands’ End, Inc. and, subject to certain exceptions, each of its existing and future direct and indirect subsidiaries.
34
Under the ABL Facility, if excess availability falls below the greater of 10% of the Loan Cap amount or $12.0 million, we are required to comply with a minimum fixed charge coverage ratio of 1.0 to 1.0.
As of July 31, 2026, we were in compliance with all applicable covenants under the ABL Facility.
Cash Flows and Capital Expenditures
Cash Flows from Operating Activities
Net cash used in operating activities was $86.5 million during Year-to-Date 2026 compared to Net cash provided by operating activities of $0.5 million during Year-to-Date 2025. The increase in net cash used in operating activities was primarily due to the impact of the closing of the WHP Transaction and the seasonal build of inventory to support the fall and holiday selling seasons.
Cash Flows from Investing Activities
Net cash provided by investing activities was $274.8 million Year-to-Date 2026 compared to Net cash used in investing activities of $17.2 million during Year-to-Date 2025. The increase in net cash provided by investing activities was primarily due to the proceeds from the closing of the WHP Transaction.
For Fiscal 2026, we plan to invest approximately $40.0 million in capital expenditures for strategic investments and infrastructure, primarily in technology and general corporate needs.
Cash Flows from Financing Activities
Net cash used in financing activities was $190.7 million during Year-to-Date 2026, compared to Net cash provided by financing activities of $22.1 million during Year-to-Date 2025. The increase in net cash used in financing activities is primarily due to using the majority of the $300 million in cash proceeds from the WHP Transaction to fully repay the term loan.
Contractual Obligations and Off-Balance-Sheet Arrangements
During the First Quarter of 2026, the Company repaid in full the outstanding balance of the Term Loan Facility. Additionally, the Company has guaranteed minimum royalty ("GMR") payment obligations of $50.0 million per year through Fiscal 2036. Except for this repayment and the GMR obligations, there have been no other material changes to our contractual obligations and off-balance-sheet arrangements as discussed in our Annual Report on Form 10-K for the fiscal year ended January 30, 2026.
Financial Instruments with Off-Balance-Sheet Risk
The ABL Facility is available for working capital and other general corporate liquidity needs. The balance outstanding on July 31, 2026 and August 1, 2025 was $60.0 million and $35.0 million, respectively. The balance of outstanding letters of credit was $11.3 million and $10.9 million on July 31, 2026 and August 1, 2025, respectively.
35
Application of Critical Accounting Policies and Estimates
We believe that the assumptions and estimates associated with revenue, inventory valuation, indefinite-lived intangible asset impairment assessments and income taxes have the greatest potential impact on our financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
For a complete discussion of our critical accounting policies, please refer to our Annual Report on Form 10-K for the year ended January 30, 2026. There have been no significant changes in our critical accounting policies or their application since January 30, 2026.
Recent Accounting Pronouncements
See Part I, Item 1, Note 2, Recently Issued Accounting Pronouncements Not Yet Adopted, of the Condensed Consolidated Financial Statements (unaudited) included in this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements.
36
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document contains forward-looking statements. Forward-looking statements reflect our current views with respect to, among other things, future events and performance. These statements may discuss, among other things, our variable profit, net sales, gross margin, operating expenses, operating income, net income, adjusted net income, adjusted EBITDA, cash flow, financial condition, financings, impairments, expenditures, growth, strategies, plans, achievements, dividends, capital structure, organizational structure, future store openings, market opportunities, the impact and potential benefits of the WHP Transaction and general market and industry conditions. We generally identify forward-looking statements by words such as “anticipate,” “estimate,” “expect,” “intend,” “project,” “plan,” “predict,” “believe,” “seek,” “continue,” “outlook,” “may,” “might,” “will,” “should,” “can have,” “likely,” “targeting” or the negative version of these words or comparable words. Forward-looking statements are based on beliefs and assumptions made by management using currently available information. These statements are only predictions and are not guarantees of future performance, actions or events. Also, from time to time we may discuss or present hypothetical or illustrative valuations of our interest in the JV in the event of certain circumstances occurring. There can be no assurance that such valuations will be realized or such events will occur. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management’s underlying beliefs and assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. These risks and uncertainties include those risks, uncertainties and factors discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended January 30, 2026 and “Part II, Item 1A Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended May 1, 2026. Forward-looking statements speak only as of the date on which they are made. We expressly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable securities laws and regulations.
37
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
The Company’s international subsidiaries operate with functional currencies other than the U.S. dollar. Since the Company’s Condensed Consolidated Financial Statements are presented in U.S. dollars, the Company must translate all components of these financial statements from the functional currencies into U.S. dollars at exchange rates in effect during or at the end of the reporting period. Net revenue generated from the Europe eCommerce distribution channel represented approximately 7% of our total Net revenue during the Year-to-Date 2026. The fluctuation in the value of the U.S. dollar against other currencies affects the reported amounts of net revenue, expenses, assets and liabilities. Assuming a 10% change in foreign currency exchange rates, our Net revenue for Year-to-Date 2026 would have increased or decreased by approximately $4.0 million. Translation gains or losses, which are recorded in other comprehensive income or loss, result from translation of the assets and liabilities of our international subsidiaries into U.S. dollars. Foreign currency translation income, net, for Year-to-Date 2026 totaled approximately $0.2 million related to our international subsidiaries in United Kingdom and Germany. Additionally, the Company has foreign currency denominated intercompany receivables and payables that when settled result in a transaction gain or loss. A 10% change in foreign currency exchange rates would not result in a significant transaction gain or loss in earnings. The Company does not utilize financial instruments for trading purposes or hedging and has not used any derivative financial instruments to limit foreign currency exchange rate exposures. The Company does not consider our foreign earnings to be permanently reinvested.
As of July 31, 2026, the Company had $4.4 million of cash and cash equivalents denominated in foreign currency, principally in Hong Kong dollar, British pound sterling and euro.
Interest Rate Risk
The Company is subject to interest rate risk with the ABL Facility, as it requires the Company to pay interest on outstanding borrowings at variable rates. Assuming our ABL Facility was fully drawn to a principal amount equal to $225.0 million, each one percentage point change in interest rates would result in a $2.3 million change in our annual cash interest expense.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on their evaluation for the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of July 31, 2026, the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) are effective.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal controls over financial reporting identified in connection with the evaluation required by Rules 13a-15 under the Exchange Act during the most recently completed fiscal quarter ended July 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 1. LEGAL PROCEEDINGS
The Company is party to various claims, legal proceedings and investigations arising in the ordinary course of business. Some of these actions involve complex factual and legal issues and are subject to uncertainties. At this time, the Company is not able to either predict the outcome of these legal proceedings or reasonably estimate a potential range of loss with respect to the proceedings. While it is not feasible to predict the outcome of pending claims, proceedings and investigations with certainty, management is of the opinion that their ultimate resolution should not have a material adverse effect on our results of operations, cash flows or financial position taken as a whole. There have been no material developments to the legal proceedings disclosed in Part I, Item 3 of the Company’s Annual Report on Form 10-K for the year ended January 30, 2026, filed with the SEC on March 26, 2026, and as disclosed on and modified by the Company’s Quarterly Report on Form 10-Q for the quarter ended May 1, 2026, filed with the SEC on June 9, 2026.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended January 30, 2026, filed with the SEC on March 26, 2026, and as disclosed on and modified by the Company’s Quarterly Report on Form 10-Q for the quarter ended May 1, 2026, filed with the SEC on June 9, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table presents a month-to-month summary of information with respect to purchases of common stock made during Second Quarter 2026 pursuant to the 2026 Share Repurchase Program announced on April 1, 2026:
Period
Total Number of Shares Purchased (1)
Average Price Paid per Share (2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)
Approximate Dollar Value (in thousands) of Shares that May Yet Be Purchased Under the Plans or Programs (3)
May 2 - May 29
89,757
11.14
98,725
May 30 - July 3
53,175
11.33
98,123
July 4 - July 31
767,321
11.67
89,170
910,253
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the fiscal quarter ended July 31, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
ITEM 6. EXHIBITS
The following documents are filed as exhibits to this report:
Exhibit Number
Exhibit Description
Amended and Restated Certificate of Incorporation of Lands’ End, Inc. (incorporated by reference to Exhibit 3.1 of the Annual Report on Form 10-K filed by Lands’ End, Inc. on March 24, 2022 (File No. 001-09769)).
3.2
Second Amended and Restated Bylaws of Lands’ End, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Lands’ End, Inc. on September 23, 2024 (File No. 001-09769)).
10.1
Letter from Lands’ End, Inc. to Andrew J. McLean relating to transition from role as Chief Executive Officer, dated
June 29, 2026.*‡
10.2
Letter from Lands’ End, Inc. to Charlie Cole relating to employment, dated June 29, 2026. *‡
10.3
Executive Severance Agreement by and between Lands’ End, Inc. and Charlie Cole, dated June 29, 2026.*‡
10.4
Sign-On Nonqualified Stock Option Agreement dated July 13, 2026, by and between Lands’ End, Inc. and Charlie Cole (incorporated by reference to Exhibit 4.4 to the Form S-8 filed by Lands’ End, Inc. on July 14, 2026 (File No. 333-297437)).‡
10.5
Sign-On Restricted Stock Unit Agreement dated July 13, 2026, by and between Lands’ End, Inc. and Charlie Cole (incorporated by reference to Exhibit 4.5 to the Form S-8 filed by Lands’ End, Inc. on July 14, 2026 (File No. 333-297437)).‡
31.1
Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.*
31.2
Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.*
32.1
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
Inline XBRL Taxonomy Extension Definition Document*
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document*
Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)*
* Filed herewith.
** Furnished herewith.
‡ Indicates management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
By:
/s/ Bernard McCracken
Name:
Bernard McCracken
Title:
Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
Date: September 3, 2026