Lands’ End(LE)2025-03-27 20:04Financial Performance - Net revenue for Fiscal 2024 was $1,362,935, a decrease of 7.4% compared to $1,472,508 in Fiscal 2023[199]. - Gross profit increased to $653,345, representing a gross margin of 47.9%, up from 42.5% in the previous fiscal year[199]. - Operating income for Fiscal 2024 was $50,957, compared to a loss of $77,515 in Fiscal 2023, indicating a significant turnaround[199]. - Adjusted net income for Fiscal 2024 was $12,572, compared to a loss of $4,783 in Fiscal 2023, with adjusted diluted net earnings per share at $0.40[206]. - Total Net revenue for Fiscal 2024 was $1.36 billion, a decrease of $109.6 million or 7.4% from $1.47 billion in Fiscal 2023[213]. - U.S. Digital Segment Net revenue was $1.15 billion in Fiscal 2024, a decrease of $138.6 million or 10.7% from $1.29 billion in Fiscal 2023[214]. - Adjusted EBITDA was $92.6 million in Fiscal 2024, compared to $84.3 million in Fiscal 2023[233]. - Licensing and Retail Net revenue increased by $38.9 million or 58.5% to $105.4 million in Fiscal 2024[219]. - U.S. eCommerce Net revenue decreased by 9.4%, but increased by 2.3% when excluding the impact of licensing transition and the 53rd week[215]. - Variable profit for U.S. Digital Segment was $265.4 million in Fiscal 2024, a decrease of $0.5 million compared to Fiscal 2023, but increased as a percentage of Net revenue to 23.0%[234]. Cost Management - Restructuring charges incurred were $5.6 million in Fiscal 2024, down from $7.3 million in Fiscal 2023, reflecting ongoing cost optimization efforts[193]. - Interest expense decreased to $40,439 in Fiscal 2024 from $48,291 in Fiscal 2023, reflecting improved financial management[199]. - Interest expense decreased by $7.9 million to $40.4 million in Fiscal 2024, primarily due to lower average outstanding balances[226]. Operational Changes - The company closed its Japan eCommerce operations, incurring approximately $0.3 million in costs during Fiscal 2023, with no closing costs in Fiscal 2024[194]. - The company has restructured its operating segments, now including U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing, and Retail[189]. Cash Flow and Investments - The company generated net cash of $53.1 million from operating activities in Fiscal 2024, a decrease of $77.5 million compared to Fiscal 2023[258]. - Net cash used in investing activities was $35.0 million in Fiscal 2024, primarily for updating digital information technology infrastructure[259]. - The company plans to invest approximately $30.0 million in capital expenditures for strategic investments and infrastructure in Fiscal 2025[259]. Debt and Financial Obligations - The company has a $275.0 million committed revolving ABL Facility, with a $70.0 million sublimit for letters of credit, maturing on July 29, 2026[242]. - As of January 31, 2025, the borrowing availability under the ABL Facility was $129.3 million, with outstanding letters of credit totaling $10.1 million[245]. - The Current Term Loan Facility provides borrowings of $260.0 million, maturing on December 29, 2028, with a quarterly amortization rate of 1.25%[245]. - Total contractual obligations as of January 31, 2025, amounted to $515.5 million, with principal payments on long-term debt at $247.0 million[261]. - The company was in compliance with its financial covenants in the Debt Facilities as of January 31, 2025[256]. Impairments and Valuations - Goodwill impairment of $70.4 million and $36.3 million was recorded for the U.S. eCommerce and Outfitters reporting units[271]. - The fair value of the indefinite-lived intangible asset (Lands' End trade name) exceeded the carrying value by less than 15% in Fiscal 2023 and Fiscal 2022, resulting in no impairment charges[273]. Foreign Currency and Economic Factors - Net revenue from the International distribution channel represented 8% of total net revenue in Fiscal 2024[282]. - A 10% change in foreign currency exchange rates could have resulted in a net revenue change of approximately $10.3 million in Fiscal 2024[282]. - Foreign currency translation losses for Fiscal 2024 totaled approximately $0.4 million related to international subsidiaries[282]. - The company had $8.7 million of cash and cash equivalents denominated in foreign currency as of January 31, 2025[283]. - The company does not utilize financial instruments for trading purposes or hedging to limit foreign currency exchange rate exposures[282]. - Macroeconomic challenges, including inflation and high interest rates, continue to impact consumer discretionary spending and may require increased promotions[192]. Interest Rate Sensitivity - Each one percentage point change in interest rates associated with the Current Term Loan Facility would result in a $2.5 million change in annual cash interest expenses[284]. - Assuming the ABL Facility was fully drawn to $275.0 million, each one percentage point change in interest rates would result in a $2.8 million change in annual cash interest expense[284]. Other Considerations - The excess and obsolete reserve balances were $11.7 million as of January 31, 2025, down from $18.1 million in the previous year[267]. - The company believes that the judgments and estimates regarding deferred tax assets are reasonable, but actual results may differ materially[279].