Lands' End swings to profit on joint-venture gain
The apparel seller posted a $330.7 million net income after a $491.6 million gain tied to its WHP Global partnership.
The apparel seller Lands' End (LE) swung to a $330.7 million net profit in its fiscal first quarter, reversing an $8.3 million loss a year earlier, as a one-time gain from its joint venture with WHP Global offset a sharp decline in core operations.
The quarter marked a structural inflection for the company, which completed a $491.6 million transaction with WHP Global in April that eliminated its term loan and introduced a new royalty structure. Those changes masked an 8.5% year-over-year revenue decline to $238.9 million, which the company attributed to a temporary distribution-center disruption. Excluding that disruption, management estimated revenue would have grown at a low single-digit rate, down from 4.7% growth in the prior quarter.
Revenue contraction and higher costs compressed gross margin by 410 basis points to 46.7%, extending a 30-basis-point decline in the prior quarter. Adjusted EBITDA fell 165% to a $6.2 million loss from $9.5 million a year earlier, breaking a streak of sequential improvements that included a 28% increase in the third quarter of 2025.
The U.S. digital segment, which accounts for 86% of total revenue, saw sales drop 9.9% to $205.1 million, while Outfitters revenue fell 10.3% to $38.5 million. Europe eCommerce bucked the trend, rising 14.5% to $20.5 million, accelerating from 9.3% growth in the prior quarter. Selling and administrative expenses ballooned to 53.0% of net revenue from 47.3% a year earlier, driven by deleverage from lower sales and increased digital marketing spend.
Lands' End used proceeds from the WHP Global transaction to fully repay its $234 million term loan, reducing interest expense and improving financial flexibility. The company also launched a $100 million share-repurchase program in April, though only $0.3 million was spent in the quarter.
For the second quarter, management projected net revenue of $290 million to $310 million, adjusted EBITDA of $11 million to $14 million, and adjusted net income of $2 million to $5 million. Full-year guidance calls for revenue of $1.30 billion to $1.40 billion, adjusted EBITDA of $68 million to $78 million, and adjusted net income of $10 million to $20 million, reflecting the new joint-venture economics.
Inventory levels rose 14% to $299.9 million as of May 1, reflecting timing effects from the distribution-center ramp-up and tariff impacts, the company said.