Lands' End, Inc.

Good day everyone and welcome to the Lands End first quarter 2025 earnings call. At this time all participants are in a listen only mode. Later you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note this call may be recorded. I'll be standing by if you should need any assistance. It is now my pleasure to turn the program over to Tom Althos.

Good morning, and thank you for joining the Land's End Earnings Call for a discussion of our first quarter 2025 results, which were released this morning and can be found on our website, landsend.com. I'm Tom Althos, Land's End Senior Director of Financial Planning and Analysis, and I'm pleased to join you today with Andrew McClain, our Chief Executive Officer, and Bernie McCracken, our Chief Financial Officer. After the 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 risk 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 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 will be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. 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 Andrew.

Thank you, Tom. Good morning, and thank you for joining us today. We continue to execute our proven customer-centric strategy through creative engagement, viral moments centered around reimagining of our iconic totes, expansion of our brand through licensing, and, of course, fresh solutions-based product. In addition, the period was characterized by improvement in the resiliency of our supply chain to maintain our momentum throughout fiscal 2025. Most pleasing was the continued performance at the top and bottom of our P&L, with growth in GMB, which was low single digits positive when adjusted for prior year inventory sell-off, and a 12% improvement in our adjusted bottom line as we continued to flow through higher levels of incremental profitability, all accomplished on a faster inventory turn and with improved working capital. As always, our focus remains on building our brand, maintaining discipline around promotional activity, and staying the course to develop a healthier long-term brand. This resulted in a record gross margin rate for the quarter, with our margin rate just shy of 51% and 210 basis points greater than last year. These are strong foundations upon which to build. We intentionally drove significant change in our supply chain as we accelerated production in the Western Hemisphere, giving us both speed and additional avenues to mitigate tariffs and provide resiliency. Less than 8% of our purchase order dollars last fiscal year were utilized on buys out of China, while our supply of key franchises, including our sector-leading American-grown Supima, are now co-sourced across the globe. By intentionally creating a diverse sourcing network and strong relationships with excellent vendors, we are increasingly positioned to remain agile in our sourcing decisions, helping to address headwinds from the impact of tariffs. Innovation is the key to our successful brand building. As I touched on last quarter, we're leveraging digital and experiential marketing strategies that build our cultural relevancy, drive traffic to our own channels, and translate to new customer conversion. We recently launched our Tote Girl Summer campaign, which features brand fans and influencers on social media and a series of pop-up shops across iconic summertime locations. The campaign introduces lovers of our iconic canvas pocket tote to a wider assortment of Land's End apparel and swim products that fit their lifestyle as perfectly as our pocket tote. We kicked off Memorial Day weekend with pop-up shops throughout the Hamptons, Jersey Shore, Charleston, and Nashville, and will host further coastal pop-ups, including the Nantucket Hotel, in June, July, and August. These viral moments, covered extensively on TikTok and Instagram, saw these one-of-a-kind totes changing hands after purchase. As a reminder, our pocket tote remains our number one item in driving new customer acquisition and consistently attracts customers from all age ranges, notably driving brand awareness with a younger Gen Z and millennial cohort. We also improved our customer experience in the first quarter through our focus on offering greater personalization, including the launch of a new AI-driven recommendation and outfitting engine that makes it easier for customers to personalize products. In addition, we improved our SMS marketing program capabilities, generating nearly 400,000 new subscribers in Q1. Picking up on our customer, our willingness to protect the brand continued to yield results with growth in new customers supplemented by increases in one to two times buyers and our highest LTV, five times buyers. Renewing our customer file, reaching a broader base of consumers, and leveraging our franchise products like Swim and Supima remain priorities as we build long-term shareholder value. Turning to product, with the late Easter and colder weather pushing Swim selling back, our Wonderweight and Squall outerwear franchises were key winners for us in the quarter, as were our Wear Now items, like our Any Weather fleece and barn coats. Women's bottoms, knits, sweaters, and dresses also performed successfully. Once the swim season kicked into gear, we saw good engagement with our core franchises. Tugless, a 40-year-plus stalwart of the category, has expanded exponentially, building on the original one-piece silhouette to offer two-piece, cross-body dresses, rompers, and backless in a range of colors and prints. This continued focus on winning with market-leading franchises is a core brand platform that we are extending across channels and licenses to broaden distribution and create long-term shareholder value. Turning to the performance of our various businesses, beginning with our asset-light B2C activities. Our asset licensing business had a strong first quarter and continues as a significant vehicle for growth of the Land's End brand, with revenues up over 60% year-on-year. Within the channels, we saw success in both the clubs and traditional department stores as the brand continues to reach new customers and offers incredible price and value. During the quarter, we completed the negotiation of additional licenses for travel accessories, men's underwear and base layer, and women's intimates. Our activity continues into the second quarter as we recently executed licenses for hosiery and cold weather accessories. The skill sets that the company is developing around the licensing of its IP and its integration of a leading channel and category experts to augment its core competencies in e-commerce continues to set it apart from competitors and offers Land's End strategic options for significant future growth. Turning to our B2B Outfitters business, I am pleased to note that B2B delivered our revenue and profit objectives for the quarter. We saw strong performance across our enterprise business, as well as growth in our school uniform business. We're pleased to launch a partnership with Delta Airlines in the second quarter, to serve as their uniform provider through the end of 2027. We're excited to be working with Delta again as we finalize the details of our collaboration together. Our school uniform business saw strong new customer growth in the quarter with commitments in annualized new business of $13 million, driven from a focus on leveraging our strength as a sector leader to drive outreach across the country and supplemented by a competitor exiting the segment. As previously noted, we have the most domestic embroidery capabilities of any retailer in the United States. We are continuing to win by leveraging the strength of our brand, our steadfast focus on quality, our market-leading embroidery and personalization capabilities, and our great customer service. Looking at our B2C business, domestically we sharpened the customer proposition between LandZen.com, and our third-party marketplaces using a proprietary AI tool to maximize rankings through application of product titles and descriptions. This has created significant growth across our Amazon, Macy's, and Nordstrom's marketplaces. For example, on Amazon, we obsess on ranking by focusing our efforts on our top 25 items, product page optimization, prime eligibility, and in-stock availability. By leading with these top performers, we can create algorithm-maximizing product titles and descriptions that drive search rankings complemented with solutions-driven imagery. We can achieve better margins, maintain efficient inventory levels, and turn faster. With new leadership, Europe began to show green shoots of progress to become the highly solutions-oriented, highly engaged, elevated brand that we know it is capable of being. During the quarter, we relaunched both the German and UK websites, taking a different marketing and assortment approach to each, supported by specific and local influencer talent. That work continued into marketplaces where we launched on next.com, our first true marketplace experience in Europe. This work to develop nuanced, customer-focused touch continues apace. In May, we relaunched a French catalog as a prelude to a full relaunch of a French language website next month. In June, we will begin selling on Debenhams.com, again creating a path to a specific customer with a specific experience. I'll now turn it over to Bernie to discuss our first quarter performance in more detail.