Lands' End, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Lands End Fourth Quarter and Fiscal 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star then 0. I would now like to do so through this conference call. Mr. Brady McCracken, you may begin.

Good morning, and thank you for joining the Lands End Earnings Call for a discussion of our Fourth Quarter Earnings and fiscal 2020 results, which we released this morning and can be found on our website, landsend.com. On the call today, you will hear from Jerome Griffith, our Chief Executive Officer, and Jim Gooch, our President and Chief Financial Officer. After the company's prepared remarks, we will conduct a question and answer session. Please also note that the information we're about to discuss includes forward-looking statements. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed on this call. Factors that could contribute to such differences include but are not limited to those items noted and included in the company's SEC filings, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and Form 8-K dated June 2, 2020. The forward-looking information that is provided by the company on this call represents the company's outlook as of today. and we do not undertake any obligation to update forward-looking statements made by us. Subsequent events and developments may cause the company's outlook to change. Of note, in this respect, the COVID-19 pandemic continues to have an impact on our business, and its duration could materially alter our outlook. During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in the investor relations section of our website at landsend.com. With that, I will turn the call over to Jerome Griffith.

Thank you, Bernie. Good morning, and thank you for joining us today for a discussion of our fourth quarter and full year results. Looking back on 2020, I'm extremely proud of what our team has accomplished over the past year. Retrospectively, 2020 taught us a lot about the strength and resilience of our business model and the diligence and endurance of our team, for which I am very grateful. We moved quickly to protect our business, our people, and our customers, while at the same time maintaining our focus on the continued execution of our strategic pillars. Getting the product right, being a digitally driven company, implementing a unit channel distribution strategy, and enhancing our infrastructure and processes. As a digitally led e-commerce business, we are uniquely positioned to capitalize on the accelerated shift to online shopping. We benefited from our investments in data analytics, our e-commerce technology, marketing, and business process improvements to drive sales from both existing and new customers. In fact, our new customer acquisition grew 21% for the year, and 14% in the fourth quarter as a result of our data-driven initiatives combined with our comfort-oriented product assortment. To summarize our full-year fiscal 2020 results, we grew adjusted EBITDA by approximately 12% to $87 million and expanded adjusted EBITDA margin by approximately 70 basis points to 6.1%. Revenue increased 1%, excluding the American Airlines launch in fiscal 2019. Total revenue was driven by 9% growth in our global e-commerce business, largely offset by the impact of COVID across our three Outfitters business segments, which Jim will discuss in more detail. Turning to our fourth quarter, in mid-January, we raised our fourth quarter guidance due to our strong holiday performance, and we are pleased to have come in ahead of those expectations. Our global e-commerce business in the fourth quarter was led by the continued emphasis on our Let's Get Comfy initiative through the holiday seasons. Our strongest performing categories were focused on the stay-at-home lifestyle, including sleepwear, loungewear, and knits. Sleepwear, which we marketed for the whole family, was a highlight of the quarter, with customers responding very positively to the versatility in our product assortment. In loungewear, our offering of indoor-outdoor sweats resonated with consumers and more time being spent on outdoor activities and the continued demand for comfort. We also lean more heavily into transitional outerwear during the quarter, which proved to be the right decision with strong reception across fleece and lightweight outerwear. Our knit business remains a top-performing category as we continue to update our style and colors to meet customers' lifestyle needs. We continue to see a strong desire for comfort, quality, and great value that we don't believe is going away. Our e-commerce business in Europe was very strong in the fourth quarter, up 38%. resulting from initiatives we implemented to drive market share gains. We are pleased with the strong acceptance of our brand in Europe, with a more than 100% increase in new customers during the holiday period versus last year. We continue to see opportunity for growth over the long term in this region as we execute a similar playbook to what drove improved performance in the U.S. and advance our market share position. Turning to our recent partnership with Kohl's, we remain pleased with the early results in the business, particularly Kohl's.com We remain on track to expand distribution to 300 Kohl's doors in 2021 and look forward to continuing to grow this partnership. Meanwhile, one of our newer initiatives, the Land's End Marketplace, grew to 24 new sellers in fiscal 2020. While still a very small business, we're encouraged by the response thus far. We skewed these offerings to home-related brands over holiday to align with consumer demand for decor as they continue to spend most of their time at home. Turning to marketing, we continue to emphasize our digital initiatives. During the quarter, we significantly increased our social media presence, which drove increased traffic to our site. We also continue to upgrade dynamic promotions through testing on landsend.com to determine what customers best react to as we refine our promotional strategies to focus on driving sales at higher margins. As we begin to envision what the world will look like post-COVID, we believe many of the changes the retail industry has experienced are here to stay. This includes both the accelerated shift towards digital and the strong demand for casual, both of which are at the core of what we do. Our performance over the last years furthers our confidence that we are well positioned to achieve long-term profitable growth. Before I turn it to Jim, I'd like to address the press release you may have seen earlier this week announcing his appointment to president of Land's End. Jim's been an incredible partner as we executed the transformation of the business through the execution of our strategic pillars. He will continue to serve as CFO in addition to taking on the oversight of our e-commerce, international, outfitters, third party, and retail businesses. Sarah Rasmussen, Executive Vice President and Chief Customer Officer, will assume oversight of the company's information technology and performance marketing functions. Peter Gray, Executive Vice President Chief Administrative Officer, and General Counsel, will assume responsibility for distribution center operations. We have assembled an incredibly talented management team with these three executives, in addition to Chay Tai, Executive Vice President, Chief Product Officer, and Matt Traynor, Senior Vice President and Brand Creative. I will focus the majority of my time on our strategic direction and further growth opportunities as we continue our journey forward. I'll further speak to this when I review our three-year financial targets following Jim's discussion. With that, I'll turn it over to Jim.