Lands’ End, the Dodgeville, Wisc.-based all-American casual clothing brand, showed improved profitability in the third quarter through its continued focus on product innovation, customer acquisition and reducing price promotions.
Lands’ End narrowed its net loss to $600,000, or $0.02 loss per diluted share, for the period ended Nov. 1, from a net loss of $112.4 million, or $3.52 loss per share, in the third quarter of fiscal 2023, which included a noncash goodwill impairment charge of $106.7 million from a decline in the company’s stock price and market capitalization.
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Adjusted net income last quarter was $1.8 million, or $0.06 income per diluted share, compared to an adjusted net loss of $3.6 million, or $0.11 loss per share, in the year-ago quarter.
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Adjusted EBITDA was $20.3 million in the third quarter of fiscal 2024 compared to $17.3 million in the year ago quarter.
Net revenue decreased slightly to $318.6 million last quarter from $324.7 million in the third quarter of fiscal 2023. Excluding the impact of transitioning kids and footwear products to licensing arrangements, net revenue increased by low-single digits year-over-year. The company is digitally focused selling apparel, accessories and home goods for families.
“Throughout the third quarter, we sustained momentum from our deliberate efforts to drive higher quality sales, resulting in growth in both gross margin and gross profit dollars. Our sharp focus on innovation and creating solutions for life’s every journey is supporting the continued evolution of our strategy and brand,” Andrew McLean, chief executive officer, said in a statement Thursday morning. “In addition to serving our loyal existing customers, our new customer acquisition increased 20 percent year-over-year, and is up mid-teens year-to-date. As we look to the holiday season, the Black Friday through Cyber Monday weekend met our expectations and was characterized by strong customer engagement with balanced performance across our channels.”
Gross profit was $161.1 million, an increase of $8.5 million, or 5.6 percent, from $152.6 million in the third quarter of fiscal 2023. Gross margin increased about 360 basis points to 50.6 percent compared to 47 percent in third quarter of fiscal 2023.
Chief financial officer Bernie McCracken attributed the margin improvement to lower promotional activity, strength in product solutions, newness across the channels and improved supply chain costs.
“By improving profit margins across our business units, we have been able to reinvest in the business, including our marketing efforts focused on new customer acquisition,” McCracken said in his prepared statement. “In the third quarter, we delivered low-double-digit growth in GMV [gross merchandise value], which exceeded our guidance range, and adjusted EBITDA growth of 17 percent year-over-year, which was within our guidance range.”
In other results reported by the company, global e-commerce net revenue was $211.1 million, a decrease of $5.3 million from $216.4 million in the third quarter of fiscal 2023.
U.S. e-commerce net revenue was $186.1 million, a decrease of 2.2 percent from $190.2 million in the third quarter of fiscal 2023 primarily due to the transition of kids and footwear products from a direct-to-license model, lower promotional activity and improved inventory management resulting in increased gross profit from higher gross margins. Excluding the impact of transitioning kids and footwear products to licensing arrangements, U.S. e-commerce net revenue increased by low-double digits year-over-year.
International e-commerce net revenue decreased 4.6 percent, primarily driven by lower promotional activity and a decrease in markdown and clearance sales in the year-ago quarter.
Outfitters net revenue was $73.4 million, a decrease of $0.9 million, or 1.2 percent, from $74.3 million in the third quarter of fiscal 2023. The business uniform channel increased year-over-year primarily due to the strength in national accounts. The school uniform channel decreased primarily due to the timing of customer orders earlier in the back-to-school season as compared to the prior year.
Third-party net revenue was $25.5 million, an increase of $1.5 million, or 6.3 percent, from $24 million in the third quarter of fiscal 2023. The increase was primarily due to revenue generated from licensing arrangements.
For the fourth quarter of fiscal 2024 the company expects net revenue to be between $440 million and $480 million, compared to $514.9 million a year ago; net income between $18 million and $21 million from a loss of $8.6 million a year ago, adjusted net income between $16 million and $19 million from $8 million in the year-ago period.