Lands' End, Inc.

Good day, and welcome to the Land's End First Quarter 2022 Earnings Conference 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 this session, you will need to press star then 1 on your touchtone telephone. If anyone should require assistance during the conference, please press star then 0 to reach an operator. As a reminder, this call may be recorded. I would like to turn the call over to Bernie McCracken, Chief Accounting Officer. You may begin.

Good morning, and thank you for joining the Lands End Earnings Call for a discussion of our first quarter fiscal 2022 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 10-10 and quarterly reports on Form 10-Q. 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. 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 LandZen.com. With that, I will turn the call over to Jerome Griffin.

Thank you, Bernie. Good morning, and thank you for joining us today for a discussion of our first quarter results. Let me begin by expressing my gratitude to our team, who continue to demonstrate fortitude and agility as we navigate the ongoing supply chain challenges, the changing consumer landscape, and the difficult macro conditions. By actively managing our cost structure during this challenging period, we achieved adjusted EBITDA results within our expected range in the first quarter. Revenue for the quarter was down 6% versus 2021, but up 16% compared to 2019. We are seeing supply chain and macro pressures impact our global direct-to-consumer e-commerce business. However, we continue to see growth with strong performance across our outfitters business and in our third-party distribution channels. With our proven digitally-led business model, combined with our strategic pillars of growth and proven success in executing our strategic initiatives, We remain confident in the long-term growth potential of our business, despite the challenging period. Touching on the quarter, a number of factors impacted our top-line results, including ongoing supply chain delays that continue to impact the flow of new styles and colors. In addition, we saw an industry-wide slowdown in e-commerce traffic, particularly in the apparel category. Furthermore, unprecedented inflation in food and fuel impacted discretionary spending for many consumers. These challenges led to an associated decline in our buyer file for the quarter compared to last year. Given our highly loyal customer base with an average tenure of 18 years, we are confident that as inventory flow normalizes, the macro headwinds subside, these customers will return and we will be ready to meet their needs. While we navigate these headwinds, we continue to control what we can and leverage the strength of our digitally driven operating model to advance our strategic growth pillars. Next, I will highlight our progress across these strategic growth pillars, including product, digital, unit channel distribution, and infrastructure. Starting with product, our one-closet, versatile assortment continues to resonate with our customer. In both men's and women's, we're seeing demand for products that complement an evolving lifestyle with made-to-move fabrics that can be dressed up or down. With the trend in hybrid workplaces, we're seeing comfort-based products resonate well, particularly in our men's business. We saw strong demand for our performance chino, five pocket denim, and other styles that easily transition from working at home or at the office to social gatherings. Similarly, in women's, we saw that cow neck tunics and leggings and stretch fabrications received favorable response. We remain pleased with the continued strength in swimwear during the quarter as we lean into versatility that makes our swimwear offerings cross over from performance to casual. In addition, Outerwear was a strong category during the quarter, coming out of the winter months and into early spring as weather remained cooler. We continue to emphasize our let's get comfy messaging with our one closet focus, while at the same time highlighting the versatility of our product. As our customers' needs evolve, we plan to leverage our data analytics to adjust product assortment to adapt to these changes. Turning to marketing, we continue to make investments designed to drive customer engagement and brand awareness. The results we have seen are encouraging, and we plan to lean into refining search and improving the effectiveness of our catalog. Importantly, we continue to leverage our data-driven promotional strategies to optimize margin as the overall environment becomes more competitive. As in the past, our marketing initiatives remain focused on driving long-term customer growth. We mentioned last quarter that we engaged Gary Vanderchuk's VaynerMedia agency to accelerate our new customer acquisition, and that a brand campaign exploration was underway. As we head into fall, this Top of Funnel brand marketing campaign will allow us to showcase our product with a more aspirational, out-in-the-world approach across all channels, including catalog, social media, and our own website. The desired result is to develop a campaign to elevate and differentiate the Land's End brand from our competitors. Turning to our third-party partnerships, Our initial on-air launch with QVC in April was highly successful and exceeded our expectations. The category of focus was swimwear, and we saw an incredible response to our products, most notably board shorts, tankinis, and board skorts. Following a successful launch, we were looking at opportunities for the fall holiday season. In addition, we were discussing an expanded offering for spring and summer next year. We remain pleased with our Kohl's partnership, specifically within the swim category, where we expect to increase our swim offering to over 100 incremental doors this summer, and are excited by the long-term growth opportunity with Kohl's. As mentioned last quarter, we're now present in 300 doors and offer our full assortment on kohls.com. We also remain on track to build on this momentum and be in 500 doors by fall, which will bring our total coal store count to over 600 doors in 2022. We will continue to build on our existing partnerships while simultaneously seeking new partnership opportunities in additional channels. As mentioned last quarter, we expect to launch one to two new partnerships in 2022, and we look forward to providing an update on future earnings calls. Turning to our Outfitters business, we saw improved performance with growth across all business lines during the quarter. This was in part due to particular strength in our national accounts. Our small and medium-sized accounts performed very well as in-person events, such as trade shows, continued to return. Lastly, demand for school uniforms was very strong during the quarter. We expect demand for leisure travel, in-person company events, and in-person schooling to continue to drive growth in our Outfitters business. Turning to infrastructure, we continue to reinvest in our business to improve our operational efficiency and leverage advancements in technology to enhance our customer experience. We're in the process of our multi-year warehouse management system implementation, which will also encompass transportation management at a time where so much industry focus has been given to the movement of product. Overall, despite the challenges we faced in the first quarter, we were able to deliver adjusted EBITDA in line with expectations, demonstrating the agility of our business model. At the same time, the team did not miss a beat in executing across product, marketing, and our strategic initiatives, while also driving growth in our third-party and outfitters businesses. With that, I will turn it over to Jim.