x | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 36-2512786 | |
(State or Other Jurisdiction of Incorporation of Organization) | (I.R.S. Employer Identification No.) | |
1 Lands’ End Lane Dodgeville, Wisconsin | 53595 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x | |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |
Emerging growth company | ¨ |
Page | ||||
PART I FINANCIAL INFORMATION | ||||
Item 1. | Financial Statements (Unaudited) | |||
Condensed Consolidated Statements of Operations | ||||
Condensed Consolidated Statements of Comprehensive Operations | ||||
Condensed Consolidated Balance Sheets | ||||
Condensed Consolidated Statements of Cash Flows | ||||
Notes to Condensed Consolidated Financial Statements | ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | |||
Item 4. | Controls and Procedures | |||
PART II OTHER INFORMATION | ||||
Item 1. | Legal Proceedings | |||
Item 1A. | Risk Factors | |||
Item 6. | Exhibits | |||
Signatures |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands, except per share data) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Net revenue | $ | 325,489 | $ | 311,476 | $ | 896,044 | $ | 876,919 | ||||||||
Cost of sales (excluding depreciation and amortization) | 183,515 | 177,825 | 497,262 | 477,446 | ||||||||||||
Gross profit | 141,974 | 133,651 | 398,782 | 399,473 | ||||||||||||
Selling and administrative | 129,122 | 132,365 | 377,804 | 390,291 | ||||||||||||
Depreciation and amortization | 6,347 | 4,795 | 19,031 | 13,419 | ||||||||||||
Other operating expense (income), net | 564 | (86 | ) | 2,552 | (40 | ) | ||||||||||
Operating income (loss) | 5,941 | (3,423 | ) | (605 | ) | (4,197 | ) | |||||||||
Interest expense | 6,350 | 6,149 | 18,642 | 18,493 | ||||||||||||
Other income, net | (576 | ) | (432 | ) | (1,812 | ) | (1,413 | ) | ||||||||
Income (loss) before income taxes | 167 | (9,140 | ) | (17,435 | ) | (21,277 | ) | |||||||||
Income tax expense (benefit) | 5 | (1,918 | ) | (5,878 | ) | (6,316 | ) | |||||||||
NET INCOME (LOSS) | $ | 162 | $ | (7,222 | ) | $ | (11,557 | ) | $ | (14,961 | ) | |||||
NET INCOME (LOSS) PER COMMON SHARE (Note 2) | ||||||||||||||||
Basic: | $ | 0.01 | $ | (0.23 | ) | $ | (0.36 | ) | $ | (0.47 | ) | |||||
Diluted: | $ | 0.01 | $ | (0.23 | ) | $ | (0.36 | ) | $ | (0.47 | ) | |||||
Basic weighted average common shares outstanding | 32,095 | 32,029 | 32,068 | 32,018 | ||||||||||||
Diluted weighted average common shares outstanding | 32,117 | 32,029 | 32,068 | 32,018 |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
NET INCOME (LOSS) | $ | 162 | $ | (7,222 | ) | $ | (11,557 | ) | $ | (14,961 | ) | |||||
Other comprehensive (loss) income, net of tax | ||||||||||||||||
Foreign currency translation adjustments | (79 | ) | (2,183 | ) | 1,060 | (2,952 | ) | |||||||||
COMPREHENSIVE INCOME (LOSS) | $ | 83 | $ | (9,405 | ) | $ | (10,497 | ) | $ | (17,913 | ) |
(in thousands, except share data) | October 27, 2017 | October 28, 2016 | January 27, 2017 | |||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 92,913 | $ | 131,532 | $ | 213,108 | ||||||
Restricted cash | 1,640 | 3,300 | 3,300 | |||||||||
Accounts receivable, net | 39,044 | 40,101 | 39,284 | |||||||||
Inventories, net | 423,540 | 425,290 | 325,314 | |||||||||
Prepaid expenses and other current assets | 48,934 | 40,942 | 26,394 | |||||||||
Total current assets | 606,071 | 641,165 | 607,400 | |||||||||
Property and equipment, net | 129,955 | 115,871 | 122,836 | |||||||||
Goodwill | 110,000 | 110,000 | 110,000 | |||||||||
Intangible asset, net | 257,000 | 430,000 | 257,000 | |||||||||
Other assets | 17,454 | 16,142 | 17,155 | |||||||||
TOTAL ASSETS | $ | 1,120,480 | $ | 1,313,178 | $ | 1,114,391 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 160,340 | $ | 180,608 | $ | 162,408 | ||||||
Other current liabilities | 103,886 | 101,093 | 86,446 | |||||||||
Total current liabilities | 264,226 | 281,701 | 248,854 | |||||||||
Long-term debt, net | 487,197 | 490,992 | 490,043 | |||||||||
Long-term deferred tax liabilities | 91,392 | 158,048 | 90,467 | |||||||||
Other liabilities | 14,568 | 16,766 | 13,615 | |||||||||
TOTAL LIABILITIES | 857,383 | 947,507 | 842,979 | |||||||||
Commitments and contingencies | ||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||
Common stock, par value $0.01 authorized: 480,000,000 shares; issued and outstanding: 32,095,021, 32,029,359 and 32,029,359, respectively | 320 | 320 | 320 | |||||||||
Additional paid-in capital | 346,153 | 343,319 | 343,971 | |||||||||
Retained (deficit) earnings | (72,010 | ) | 34,368 | (60,453 | ) | |||||||
Accumulated other comprehensive loss | (11,366 | ) | (12,336 | ) | (12,426 | ) | ||||||
Total stockholders’ equity | 263,097 | 365,671 | 271,412 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,120,480 | $ | 1,313,178 | $ | 1,114,391 |
39 Weeks Ended | ||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (11,557 | ) | $ | (14,961 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 19,031 | 13,419 | ||||||
Product recall | — | (212 | ) | |||||
Amortization of debt issuance costs | 1,284 | 1,284 | ||||||
Loss on disposal of property and equipment | 151 | 172 | ||||||
Stock-based compensation | 2,855 | 1,578 | ||||||
Deferred income taxes | 355 | 839 | ||||||
Change in operating assets and liabilities: | ||||||||
Inventories | (96,522 | ) | (99,997 | ) | ||||
Accounts payable | 944 | 40,186 | ||||||
Other operating assets | (21,890 | ) | (25,100 | ) | ||||
Other operating liabilities | 17,542 | 15,933 | ||||||
Net cash used in operating activities | (87,807 | ) | (66,859 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Proceeds from sale of property and equipment | — | 44 | ||||||
Change in restricted cash | 1,660 | — | ||||||
Purchases of property and equipment | (29,143 | ) | (26,083 | ) | ||||
Net cash used in investing activities | (27,483 | ) | (26,039 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Payments on term loan facility | (3,863 | ) | (3,863 | ) | ||||
Payments of employee withholding taxes on share-based compensation | (674 | ) | (396 | ) | ||||
Net cash used in financing activities | (4,537 | ) | (4,259 | ) | ||||
Effects of exchange rate changes on cash | (368 | ) | 321 | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (120,195 | ) | (96,836 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 213,108 | 228,368 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 92,913 | $ | 131,532 | ||||
SUPPLEMENTAL CASH FLOW DATA | ||||||||
Unpaid liability to acquire property and equipment | $ | 4,796 | $ | 3,101 | ||||
Income taxes paid, net of refunds | $ | 3,220 | $ | 3,220 | ||||
Interest paid | $ | 17,106 | $ | 16,892 |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands, except per share amounts) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Net income (loss) | $ | 162 | $ | (7,222 | ) | $ | (11,557 | ) | $ | (14,961 | ) | |||||
Basic weighted average shares outstanding | 32,095 | 32,029 | 32,068 | 32,018 | ||||||||||||
Dilutive effect of stock awards | 22 | — | — | — | ||||||||||||
Diluted weighted average shares outstanding | 32,117 | 32,029 | 32,068 | 32,018 | ||||||||||||
Basic earnings (loss) per share | $ | 0.01 | $ | (0.23 | ) | $ | (0.36 | ) | $ | (0.47 | ) | |||||
Diluted earnings (loss) per share | $ | 0.01 | $ | (0.23 | ) | $ | (0.36 | ) | $ | (0.47 | ) |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Beginning balance: Accumulated other comprehensive loss (net of tax of $6,054, $5,467, $6,691 and $5,053, respectively) | $ | (11,287 | ) | $ | (10,153 | ) | $ | (12,426 | ) | $ | (9,384 | ) | ||||
Other comprehensive (loss) income: | ||||||||||||||||
Foreign currency translation adjustments (net of tax (benefit) expense of $66, $1,176, $(571) and $1,590, respectively) | (79 | ) | (2,183 | ) | 1,060 | (2,952 | ) | |||||||||
Ending balance: Accumulated other comprehensive loss (net of tax of $6,120, $6,643, $6,120 and $6,643, respectively) | $ | (11,366 | ) | $ | (12,336 | ) | $ | (11,366 | ) | $ | (12,336 | ) |
October 27, 2017 | October 28, 2016 | January 27, 2017 | |||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||
Term Loan Facility, maturing April 4, 2021 | $ | 496,975 | 4.49 | % | $ | 502,125 | 4.25 | % | $ | 500,838 | 4.25 | % | |||||||||
ABL Facility, maturing April 4, 20191 | — | — | % | — | — | % | — | — | % | ||||||||||||
496,975 | 502,125 | 500,838 | |||||||||||||||||||
Less: Current maturities in Other current liabilities | 5,150 | 5,150 | 5,150 | ||||||||||||||||||
Less: Unamortized debt issuance costs - Term Loan Facility | 4,628 | 5,983 | 5,645 | ||||||||||||||||||
Long-term debt, net | $ | 487,197 | $ | 490,992 | $ | 490,043 |
October 27, 2017 | October 28, 2016 | January 27, 2017 | ||||||||||
ABL maximum borrowing | $ | 175,000 | $ | 175,000 | $ | 175,000 | ||||||
Outstanding Letters of Credit | 17,788 | 13,845 | 19,705 | |||||||||
Borrowing availability under ABL | $ | 157,212 | $ | 161,155 | $ | 155,295 |
i. | Time vesting stock awards ("Deferred Awards") which are in the form of restricted stock units which only require each recipient to complete a service period; Deferred Awards generally vest over three years or in full after a three year period. The fair value of Deferred Awards is based on the closing price of the Company's common stock on the grant date and is reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. |
ii. | Stock option awards ("Option Awards") which provide the recipient with the option to purchase a set number of shares at a stated exercise price over the term of the contract, which is 10 years for all Option Awards currently outstanding. |
iii. | Performance-based stock awards ("Performance Awards") are in the form of restricted stock units and have, in addition to a service requirement, performance criteria that must be achieved for the awards to be earned. Performance Awards have annual vesting, but due to the performance criteria, are not eligible for straight-line expensing. Therefore, Performance Awards are amortized using a graded expense process. Similar to the Deferred Awards, Performance Awards fair value is based on the closing price of the Company’s common stock on the grant date and the compensation expense is reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Deferred Awards | $ | 879 | $ | (301 | ) | $ | 2,315 | $ | 1,067 | |||||||
Option Awards | 176 | — | 452 | — | ||||||||||||
Performance Awards | — | 127 | 88 | 511 | ||||||||||||
Total stock-based compensation expense | $ | 1,055 | $ | (174 | ) | $ | 2,855 | $ | 1,578 |
Deferred Awards | Option Awards | Performance Awards | |||||||||||||||||||
(in thousands, except per share amounts) | Number of Shares | Weighted Average Grant Date Fair Value per Share | Number of Shares | Weighted Average Grant Date Fair Value per Share | Number of Shares | Weighted Average Grant Date Fair Value per Share | |||||||||||||||
Outstanding as of January 27, 2017 | 252 | $ | 24.42 | — | $ | — | 69 | $ | 26.38 | ||||||||||||
Granted | 403 | 21.79 | 343 | 8.73 | — | — | |||||||||||||||
Vested | (59 | ) | 23.00 | — | — | (41 | ) | 28.33 | |||||||||||||
Exercised | — | — | — | — | — | — | |||||||||||||||
Forfeited or expired | (80 | ) | 24.77 | — | — | (28 | ) | 23.47 | |||||||||||||
Outstanding as of October 27, 2017 | 516 | 22.39 | 343 | 8.73 | — | — |
Assumption | Low | High | ||
Risk-free interest rate | 1.82% | - | 1.90% | |
Expected dividend yield | —% | - | —% | |
Volatility | 45.59% | - | 46.12% | |
Expected life (in years) | 6.25 | - | 6.25 | |
Weighted average exercise price per share | $18.10 | - | $22.00 |
October 27, 2017 | October 28, 2016 | January 27, 2017 | ||||||||||||||||||||||
(in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||
Long-term debt, including short-term portion | $ | 496,975 | $ | 414,353 | $ | 502,125 | $ | 386,636 | $ | 500,838 | $ | 379,385 |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands, except for number of stores) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Rent, CAM and occupancy costs | $ | 5,376 | $ | 6,165 | $ | 16,882 | $ | 18,707 | ||||||||
Retail services, store labor | 5,268 | 6,004 | 16,410 | 18,034 | ||||||||||||
Financial services and payment processing | 479 | 573 | 1,627 | 1,963 | ||||||||||||
Supply chain costs | 167 | 183 | 558 | 735 | ||||||||||||
Total expenses | $ | 11,290 | $ | 12,925 | $ | 35,477 | $ | 39,439 | ||||||||
Number of Lands’ End Shops at Sears at period end | 188 | 219 | 188 | 219 |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Sourcing | $ | 3,445 | $ | 4,941 | $ | 8,525 | $ | 7,979 | ||||||||
Shop Your Way | 83 | 596 | 780 | 1,670 | ||||||||||||
Shared services | 48 | 48 | 143 | 143 | ||||||||||||
Total expenses | $ | 3,576 | $ | 5,585 | $ | 9,448 | $ | 9,792 |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Call Center Services | $ | — | $ | 1,976 | $ | 1,160 | $ | 5,777 | ||||||||
Lands' End Business Outfitters revenue | 222 | 333 | 764 | 1,307 | ||||||||||||
Credit card revenue | 205 | 265 | 638 | 776 | ||||||||||||
Royalty income | 55 | 56 | 169 | 182 | ||||||||||||
Gift card (expense) | (7 | ) | (7 | ) | (20 | ) | (20 | ) | ||||||||
Total income | $ | 475 | $ | 2,623 | $ | 2,711 | $ | 8,022 |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Net revenue: | ||||||||||||||||
Apparel | $ | 272,175 | $ | 252,082 | $ | 759,460 | $ | 725,062 | ||||||||
Non-apparel | 38,559 | 37,854 | 93,067 | 95,021 | ||||||||||||
Service and other | 14,755 | 21,540 | 43,517 | 56,836 | ||||||||||||
Total net revenue | $ | 325,489 | $ | 311,476 | $ | 896,044 | $ | 876,919 |
• | The Direct segment sells products through the Company’s e-commerce websites and direct mail catalogs. Operating costs consist primarily of direct marketing costs (catalog and e-commerce marketing costs); order processing and shipping costs; direct labor and benefits costs and facility costs. Assets primarily include goodwill and trade name intangible assets, inventory, accounts receivable, prepaid expenses (deferred catalog costs), technology infrastructure, and property and equipment. |
• | The Retail segment sells products and services through dedicated Lands’ End Shops at Sears across the United States and the Company’s stand-alone Lands’ End stores. Operating costs consist primarily of labor and benefits costs; rent, CAM and occupancy costs; distribution costs; and in-store marketing costs. Assets primarily include retail inventory, fixtures and leasehold improvements. |
• | Corporate overhead and other expenses include unallocated shared-service costs, which primarily consist of employee services and financial services, legal and corporate expenses. These expenses include labor and benefits costs, corporate headquarters occupancy costs and other administrative expenses. Assets include corporate headquarters and facilities, corporate cash and cash equivalents and deferred income taxes. |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Net revenue: | ||||||||||||||||
Direct | $ | 290,326 | $ | 272,080 | $ | 778,554 | $ | 750,660 | ||||||||
Retail | 35,104 | 39,340 | 117,317 | 126,077 | ||||||||||||
Corporate / other | 59 | 56 | 173 | 182 | ||||||||||||
Total net revenue | $ | 325,489 | $ | 311,476 | $ | 896,044 | $ | 876,919 |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Adjusted EBITDA: | ||||||||||||||||
Direct | $ | 29,100 | $ | 13,904 | $ | 54,018 | $ | 41,516 | ||||||||
Retail | (6,003 | ) | (3,583 | ) | (7,405 | ) | (7,063 | ) | ||||||||
Corporate / other | (10,245 | ) | (9,035 | ) | (25,635 | ) | (25,271 | ) | ||||||||
Total adjusted EBITDA | $ | 12,852 | $ | 1,286 | $ | 20,978 | $ | 9,182 | ||||||||
Product recall | — | (212 | ) | — | (212 | ) | ||||||||||
Loss on disposal of property and equipment | 89 | 126 | 151 | 172 | ||||||||||||
Transfer of corporate functions | 475 | — | 2,401 | — | ||||||||||||
Depreciation and amortization | 6,347 | 4,795 | 19,031 | 13,419 | ||||||||||||
Operating income (loss) | $ | 5,941 | $ | (3,423 | ) | $ | (605 | ) | $ | (4,197 | ) | |||||
Interest expense | 6,350 | 6,149 | 18,642 | 18,493 | ||||||||||||
Other income, net | (576 | ) | (432 | ) | (1,812 | ) | (1,413 | ) | ||||||||
Income tax expense (benefit) | 5 | (1,918 | ) | (5,878 | ) | (6,316 | ) | |||||||||
NET INCOME (LOSS) | $ | 162 | $ | (7,222 | ) | $ | (11,557 | ) | $ | (14,961 | ) |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Depreciation and amortization: | ||||||||||||||||
Direct | $ | 5,747 | $ | 4,027 | $ | 17,015 | $ | 11,097 | ||||||||
Retail | 285 | 408 | 992 | 1,233 | ||||||||||||
Corporate / other | 315 | 360 | 1,024 | 1,089 | ||||||||||||
Total depreciation and amortization | $ | 6,347 | $ | 4,795 | $ | 19,031 | $ | 13,419 |
(in thousands) | October 27, 2017 | October 28, 2016 | January 27, 2017 | |||||||||
Total Assets: | ||||||||||||
Direct | $ | 934,508 | $ | 1,073,975 | $ | 805,201 | ||||||
Retail | 67,965 | 78,373 | 69,792 | |||||||||
Corporate / other | 118,007 | 160,830 | 239,398 | |||||||||
Total assets | $ | 1,120,480 | $ | 1,313,178 | $ | 1,114,391 |
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
(in thousands) | October 27, 2017 | October 28, 2016 | October 27, 2017 | October 28, 2016 | ||||||||||||
Capital expenditures: | ||||||||||||||||
Direct | $ | 8,791 | $ | 8,041 | $ | 29,004 | $ | 25,804 | ||||||||
Retail | — | 25 | 10 | 279 | ||||||||||||
Corporate / other | 129 | — | 129 | — | ||||||||||||
Total capital expenditures | $ | 8,920 | $ | 8,066 | $ | 29,143 | $ | 26,083 |
• | Executive overview. This section provides a brief description of our business, accounting basis of presentation and a brief summary of our results of operations. |
• | Discussion and analysis. This section highlights items affecting the comparability of our financial results and provides an analysis of our segment results of operations for Third Quarter 2017 and Third Quarter 2016. |
• | Liquidity and capital resources. This section provides an overview of our historical and anticipated cash and financing activities. We also review our historical sources and uses of cash in our operating, investing and financing activities. |
• | Contractual Obligations and Off-Balance-Sheet Arrangements. This section provides details of the Company's off-balance-sheet arrangements and contractual obligations for the next five years and thereafter. |
• | Financial Instruments with Off-Balance-Sheet Risk. This section discusses financial instruments of the Company that could have off-balance-sheet risk. |
• | Application of critical accounting policies and estimates. This section summarizes the accounting policies that we consider important to our financial condition and results of operations and which require significant judgment or estimates to be made in their application. |
• | Recent accounting pronouncements. This section summarizes recently issued accounting pronouncements and the impact or expected impact on the Company's financial statements. |
13 Weeks Ended | ||||||||||||||
October 27, 2017 | October 28, 2016 | |||||||||||||
(in thousands) | $'s | % of Net revenue | $’s | % of Net revenue | ||||||||||
Net revenue | $ | 325,489 | 100.0 | % | $ | 311,476 | 100.0 | % | ||||||
Cost of sales (excluding depreciation and amortization) | 183,515 | 56.4 | % | 177,825 | 57.1 | % | ||||||||
Gross profit | 141,974 | 43.6 | % | 133,651 | 42.9 | % | ||||||||
Selling and administrative | 129,122 | 39.7 | % | 132,365 | 42.5 | % | ||||||||
Depreciation and amortization | 6,347 | 1.9 | % | 4,795 | 1.5 | % | ||||||||
Other operating expense (income), net | 564 | 0.2 | % | (86 | ) | — | % | |||||||
Operating income (loss) | 5,941 | 1.8 | % | (3,423 | ) | (1.1 | )% | |||||||
Interest expense | 6,350 | 2.0 | % | 6,149 | 2.0 | % | ||||||||
Other income, net | (576 | ) | (0.2 | )% | (432 | ) | (0.1 | )% | ||||||
Income (loss) before income taxes | 167 | 0.1 | % | (9,140 | ) | (2.9 | )% | |||||||
Income tax expense (benefit) | 5 | — | % | (1,918 | ) | (0.6 | )% | |||||||
NET INCOME (LOSS) | $ | 162 | — | % | $ | (7,222 | ) | (2.3 | )% |
39 Weeks Ended | ||||||||||||||
October 27, 2017 | October 28, 2016 | |||||||||||||
(in thousands) | $’s | % of Net revenue | $’s | % of Net revenue | ||||||||||
Net revenue | $ | 896,044 | 100.0 | % | $ | 876,919 | 100.0 | % | ||||||
Cost of sales (excluding depreciation and amortization) | 497,262 | 55.5 | % | 477,446 | 54.4 | % | ||||||||
Gross profit | 398,782 | 44.5 | % | 399,473 | 45.6 | % | ||||||||
Selling and administrative | 377,804 | 42.2 | % | 390,291 | 44.5 | % | ||||||||
Depreciation and amortization | 19,031 | 2.1 | % | 13,419 | 1.5 | % | ||||||||
Other operating expense (income), net | 2,552 | 0.3 | % | (40 | ) | — | % | |||||||
Operating loss | (605 | ) | (0.1 | )% | (4,197 | ) | (0.5 | )% | ||||||
Interest expense | 18,642 | 2.1 | % | 18,493 | 2.1 | % | ||||||||
Other income, net | (1,812 | ) | (0.2 | )% | (1,413 | ) | (0.2 | )% | ||||||
Loss before income taxes | (17,435 | ) | (1.9 | )% | (21,277 | ) | (2.4 | )% | ||||||
Income tax benefit | (5,878 | ) | (0.7 | )% | (6,316 | ) | (0.7 | )% | ||||||
NET LOSS | $ | (11,557 | ) | (1.3 | )% | $ | (14,961 | ) | (1.7 | )% |
• | EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax costs or benefits. |
• | Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of results. We have adjusted our results for these items to make our statements more comparable and therefore more useful to investors as the items are not representative of our ongoing operations. |
◦ | We exclude a benefit related to the reversal of a portion of the product recall accrual recognized in Fiscal 2014 as this was an unusual event that affects the comparability of our financial results. |
◦ | Transfer of corporate functions - severance associated with a transition of certain corporate activities from our New York office to our Dodgeville headquarters. |
◦ | Gain or loss on the sale of property and equipment - management considers the gains or losses on disposal of assets to result from investing decisions rather than ongoing operations. |
13 Weeks Ended | ||||||||||||||
October 27, 2017 | October 28, 2016 | |||||||||||||
(in thousands) | $’s | % of Net revenue | $’s | % of Net revenue | ||||||||||
Net income (loss) | $ | 162 | — | % | $ | (7,222 | ) | (2.3 | )% | |||||
Income tax expense (benefit) | 5 | — | % | (1,918 | ) | (0.6 | )% | |||||||
Other income, net | (576 | ) | (0.2 | )% | (432 | ) | (0.1 | )% | ||||||
Interest expense | 6,350 | 2.0 | % | 6,149 | 2.0 | % | ||||||||
Operating income (loss) | 5,941 | 1.8 | % | (3,423 | ) | (1.1 | )% | |||||||
Depreciation and amortization | 6,347 | 1.9 | % | 4,795 | 1.5 | % | ||||||||
Product recall | — | — | % | (212 | ) | (0.1 | )% | |||||||
Transfer of corporate functions | 475 | 0.1 | % | — | — | % | ||||||||
Loss on disposal of property and equipment | 89 | — | % | 126 | — | % | ||||||||
Adjusted EBITDA | $ | 12,852 | 3.9 | % | $ | 1,286 | 0.4 | % |
39 Weeks Ended | ||||||||||||||
October 27, 2017 | October 28, 2016 | |||||||||||||
(in thousands) | $’s | % of Net revenue | $’s | % of Net revenue | ||||||||||
Net loss | $ | (11,557 | ) | (1.3 | )% | $ | (14,961 | ) | (1.7 | )% | ||||
Income tax benefit | (5,878 | ) | (0.7 | )% | (6,316 | ) | (0.7 | )% | ||||||
Other income, net | (1,812 | ) | (0.2 | )% | (1,413 | ) | (0.2 | )% | ||||||
Interest expense | 18,642 | 2.1 | % | 18,493 | 2.1 | % | ||||||||
Operating loss | (605 | ) | (0.1 | )% | (4,197 | ) | (0.5 | )% | ||||||
Depreciation and amortization | 19,031 | 2.1 | % | 13,419 | 1.5 | % | ||||||||
Product recall | — | — | % | (212 | ) | — | % | |||||||
Transfer of corporate functions | 2,401 | 0.3 | % | — | — | % | ||||||||
Loss on disposal of property and equipment | 151 | — | % | 172 | — | % | ||||||||
Adjusted EBITDA | $ | 20,978 | 2.3 | % | $ | 9,182 | 1.0 | % |
• | Increased use of cash to pay down accounts payable due to higher payables entering the current year, and |
• | Increased inventory build due to more timely receipts in the current year. |
Amended and Restated Certificate of Incorporation of Lands’ End, Inc. (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by Lands’ End, Inc. on March 20, 2014 (File No. 001-09769)). | ||
Amended and Restated Bylaws of Lands’ End, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on April 8, 2014 (File No. 001-09769)). | ||
Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.* | ||
Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.* | ||
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | ||
101.INS | XBRL Instance Document* | |
101.SCH | XBRL Taxonomy Extension Schema Document* | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |
101.DEF | XBRL Taxonomy Extension Definition Document* | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* | |
* | Filed herewith. | |
** | Furnished herewith. |
By: | /s/ James F. Gooch |
James F. Gooch | |
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer (Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Lands’ End, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
December 5, 2017 |
/s/ Jerome S. Griffith |
Jerome S. Griffith |
Chief Executive Officer and President (Principal Executive Officer) |
Lands’ End, Inc. |
1. | I have reviewed this quarterly report on Form 10-Q of Lands’ End, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
December 5, 2017 |
/s/ James F. Gooch |
James F. Gooch |
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Lands’ End, Inc. |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
December 5, 2017 |
/s/ Jerome S. Griffith |
Jerome S. Griffith |
Chief Executive Officer and President (Principal Executive Officer) |
December 5, 2017 |
/s/ James F. Gooch |
James F. Gooch |
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Oct. 27, 2017 |
Dec. 05, 2017 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Lands' End, Inc. | |
Entity Central Index Key | 0000799288 | |
Current Fiscal Year End Date | --02-02 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Oct. 27, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 32,097,483 |
Condensed Consolidated and Combined Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 27, 2017 |
Oct. 28, 2016 |
Oct. 27, 2017 |
Oct. 28, 2016 |
|
Net revenue | $ 325,489 | $ 311,476 | $ 896,044 | $ 876,919 |
Cost of sales (excluding depreciation and amortization) | 183,515 | 177,825 | 497,262 | 477,446 |
Gross profit | 141,974 | 133,651 | 398,782 | 399,473 |
Selling and administrative | 129,122 | 132,365 | 377,804 | 390,291 |
Depreciation and amortization | 6,347 | 4,795 | 19,031 | 13,419 |
Other operating expense (income), net | 564 | (86) | 2,552 | (40) |
Operating income (loss) | 5,941 | (3,423) | (605) | (4,197) |
Interest expense | 6,350 | 6,149 | 18,642 | 18,493 |
Other income, net | (576) | (432) | (1,812) | (1,413) |
Income (loss) before income taxes | 167 | (9,140) | (17,435) | (21,277) |
Income tax expense (benefit) | 5 | (1,918) | (5,878) | (6,316) |
NET INCOME (LOSS) | $ 162 | $ (7,222) | $ (11,557) | $ (14,961) |
NET INCOME (LOSS) PER COMMON SHARE (Note 2) | ||||
Basic (in USD per share) | $ 0.01 | $ (0.23) | $ (0.36) | $ (0.47) |
Diluted (in USD per share) | $ 0.01 | $ (0.23) | $ (0.36) | $ (0.47) |
Basic weighted average common shares outstanding (shares) | 32,095 | 32,029 | 32,068 | 32,018 |
Diluted weighted average common shares outstanding (shares) | 32,117 | 32,029 | 32,068 | 32,018 |
Condensed Consolidated and Combined Statements of Comprehensive Income Statement - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 27, 2017 |
Oct. 28, 2016 |
Oct. 27, 2017 |
Oct. 28, 2016 |
|
NET INCOME (LOSS) | $ 162 | $ (7,222) | $ (11,557) | $ (14,961) |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (79) | (2,183) | 1,060 | (2,952) |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $ 83 | $ (9,405) | $ (10,497) | $ (17,913) |
Condensed Consolidated and Combined Balance Sheets (Parenthetical) - $ / shares |
Oct. 27, 2017 |
Jan. 27, 2017 |
Oct. 28, 2016 |
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 480,000,000 | 480,000,000 | 480,000,000 |
Common stock, shares issued | 32,095,021 | 32,029,359 | 32,029,359 |
Common stock, shares outstanding | 32,095,021 | 32,029,359 | 32,029,359 |
Background and Basis of Presentation |
9 Months Ended |
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Oct. 27, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Basis of Presentation | BACKGROUND AND BASIS OF PRESENTATION Description of Business and Separation Lands' End, Inc. (“Lands' End” or the “Company”) is a leading multi-channel retailer of casual clothing, accessories and footwear, as well as home products. Lands' End offers products through catalogs, online at www.landsend.com and affiliated specialty and international websites, and through retail locations, primarily at Lands’ End Shops at Sears and Lands’ End stores. Terms that are commonly used in the Company's notes to condensed consolidated financial statements are defined as follows: • ABL Facility - Asset-based senior secured credit agreement, dated as of April 4, 2014, with Bank of America, N.A. and certain other lenders • ASC - Financial Accounting Standards Board Accounting Standards Codification, which serves as the source for authoritative GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative GAAP for Securities and Exchange Commission registrants • ASU - FASB Accounting Standards Update • CAM - Common area maintenance for leased properties • Debt Facilities - Collectively, the ABL Facility and the Term Loan Facility and excluding the New ABL Facility • EPS - Earnings (loss) per share • ERP - Enterprise resource planning software solutions • ESL - ESL Investments, Inc. and its investment affiliates, including Edward S. Lampert • FASB - Financial Accounting Standards Board • First Quarter 2017 - The thirteen weeks ended April 28, 2017 • Fiscal 2017 - The fifty-three weeks ending February 2, 2018 • Fiscal 2016 - The fifty-two weeks ended January 27, 2017 • Fiscal 2014 - The fifty-two weeks ended January 30, 2015 • Fiscal November 2017 - the four week fiscal month ending November 24, 2017 • GAAP - Accounting principles generally accepted in the United States • LIBOR - London inter-bank offered rate • New ABL Facility - Asset-based senior secured credit agreement, dated as of November 16, 2017, with Wells Fargo Bank, National Association • Sears Holdings or Sears Holdings Corporation - Sears Holdings Corporation, a Delaware Corporation, and its consolidated subsidiaries • SEC - United States Securities and Exchange Commission • Second Quarter 2016 - The thirteen weeks ended July 29, 2016 • Separation - On April 4, 2014 Sears Holdings distributed 100% of the outstanding common stock of Lands' End to its shareholders • SHMC - Sears Holdings Management Corporation, a subsidiary of Sears Holdings Corporation • SYW or Shop Your Way - Shop Your Way member loyalty program • Tax Sharing Agreement - A tax sharing agreement entered into by Sears Holdings Corporation and Lands' End in connection with the Separation • Term Loan Facility - Term loan credit agreement, dated as of April 4, 2014, with Bank of America, N.A. and certain other lenders • Third Quarter 2017 - The thirteen weeks ended October 27, 2017 • Third Quarter 2016 - The thirteen weeks ended October 28, 2016 • UTBs - Gross unrecognized tax benefits related to uncertain tax positions • Year to Date 2017 - the thirty-nine weeks ended October 27, 2017 • Year to Date 2016 - the thirty-nine weeks ended October 28, 2016 Basis of Presentation The Condensed Consolidated Financial Statements include the accounts of Lands' End, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. Dollar amounts are reported in thousands, except per share data, unless otherwise noted. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Lands' End Annual Report on Form 10-K filed with the SEC on March 31, 2017. Reclassifications In First Quarter 2017, the Company adopted ASU 2016-09, Compensation - Stock Compensation, which changed the required presentation of payments of employee withholding taxes on share-based compensation on the Condensed consolidated statements of cash flows from an operating activity to a financing activity. As a result of the adoption, the Company reclassified payments of employee withholding taxes on share-based compensation from Other operating liabilities for the Year to Date 2016 to Payments of employee withholding taxes on share-based compensation. Other requirements of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS (LOSS) PER SHARE The numerator for both basic and diluted EPS is net income (loss). The denominator for basic EPS is based upon the number of weighted average shares of Lands’ End common stock outstanding during the reporting periods. The denominator for diluted EPS is based upon the number of weighted average shares of Lands' End common stock and common stock equivalents outstanding during the reporting periods using the treasury stock method in accordance with the ASC. Potentially dilutive securities for the diluted EPS calculations consist of nonvested equity shares of common stock and in-the-money outstanding stock options, if any, to purchase the Company’s common stock. The following table summarizes the components of basic and diluted EPS:
Stock awards are considered anti-dilutive based on the application of the treasury stock method or in the event of a net loss. There were 827,057, 376,347, 692,175 and 314,664 shares excluded from the diluted weighted average shares outstanding for Third Quarter 2017, Third Quarter 2016, Year to Date 2017 and Year to Date 2016, respectively. |
Other Comprehensive Income (Loss) |
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Other Comprehensive Income (Loss) | OTHER COMPREHENSIVE (LOSS) INCOME Other comprehensive (loss) income encompasses all changes in equity other than those arising from transactions with stockholders, and is comprised solely of foreign currency translation adjustments.
No amounts were reclassified out of Accumulated other comprehensive loss during any of the periods presented. |
Debt |
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Debt | DEBT The Company's debt consisted of the following:
1 Debt arrangement terminated on November 16, 2017. The following table summarizes the Company's borrowing availability under the ABL Facility:
Interest; Fees The interest rates per annum applicable to the loans under the Debt Facilities are based on a fluctuating rate of interest measured by reference to, at the borrowers’ election, either (i) an adjusted LIBOR rate plus a borrowing margin, or (ii) an alternative base rate plus a borrowing margin. The borrowing margin is fixed for the Term Loan Facility at 3.25% in the case of LIBOR loans and 2.25% in the case of base rate loans. For the Term Loan Facility, LIBOR is subject to a 1% interest rate floor. The borrowing margin for the ABL Facility is subject to adjustment based on the average excess availability under the ABL Facility for the preceding fiscal quarter, and may range from 1.50% to 2.00% in the case of LIBOR borrowings and may range from 0.50% to 1.00% in the case of base rate borrowings. Customary agency fees are payable pursuant to the terms of the Debt Facilities. The ABL Facility fees also include (i) commitment fees, based on a percentage ranging from approximately 0.25% to 0.375% of the daily unused portions of the ABL Facility, and (ii) customary letter of credit fees. Representations and Warranties; Covenants Subject to specified exceptions, the Debt Facilities contain various representations and warranties and restrictive covenants that, among other things, restrict the ability of Lands’ End and its subsidiaries to incur indebtedness (including guarantees), grant liens, make investments, make dividends or distributions with respect to capital stock, make prepayments on other indebtedness, engage in mergers or change the nature of their business. In addition, if excess availability under the ABL Facility falls below the greater of 10% of the loan cap amount or $15.0 million, Lands’ End will be required to comply with a minimum fixed charge coverage ratio of 1.0 to 1.0. The Debt Facilities do not otherwise contain financial maintenance covenants. The Company was in compliance with all financial covenants related to the Debt Facilities as of October 27, 2017. The Debt Facilities contain certain affirmative covenants, including reporting requirements such as delivery of financial statements, certificates and notices of certain events, maintaining insurance, and providing additional guarantees and collateral in certain circumstances. New ABL Facility Subsequent to the balance sheet date, on November 16, 2017, the Company entered into an asset-based lending credit agreement with Wells Fargo Bank, National Association, which provides for maximum borrowings of $175.0 million for the Company, subject to a borrowing base. The New ABL Facility has a letter of credit sub-limit of $70.0 million. The New ABL Facility is available for working capital and other general corporate purposes. The New ABL Facility will mature no later than November 16, 2022, subject to customary extension provisions provided for therein. Also on November 16, 2017, in connection with the effectiveness of the New ABL Facility, the company terminated its existing ABL Facility, dated as of April 4, 2014, among the Company, Lands’ End Europe Limited, the financial institutions party thereto as lenders and Bank of America, N.A., as administrative agent and collateral agent, terminated all loan related documents and repaid all outstanding amounts thereunder. Guarantees; Security for the New ABL Facility All obligations under the New ABL Facility are unconditionally guaranteed by the Company and, subject to certain exceptions, each of its existing and future direct and indirect wholly-owned domestic subsidiaries. The New ABL Facility is secured by (1) a first priority security interest in certain working capital of the Company and guarantors consisting primarily of accounts receivable and inventory and (2) a second priority security interest in certain property and assets of the Company and guarantors, including certain fixed assets and stock of subsidiaries. Interest; Fees for New ABL Facility The interest rates per annum applicable to the loans under the New ABL Facility are based on a fluctuating rate of interest measured by reference to, at the Company’s election, either (1) an adjusted LIBOR plus a borrowing margin, or (2) an alternative base rate plus a borrowing margin. The borrowing margin for the New ABL Facility is subject to adjustment based on the average daily availability under the ABL Facility for the preceding fiscal quarter, and may range from 1.25% to 1.75% in the case of LIBOR borrowings and may range from 0.50% to 1.00% in the case of base rate borrowings. Customary agency fees are payable in respect of the New ABL Facility and include (1) commitment fees in an amount equal to 0.25% of the daily unused portions of the ABL Facility, and (2) customary letter of credit fees. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | STOCK-BASED COMPENSATION The Company expenses the fair value of all stock awards over their respective vesting periods, ensuring that, the amount of cumulative compensation cost recognized at any date is at least equal to the portion of the grant-date value of the award that is vested at that date. The Company has elected to adjust compensation expense for an estimated forfeiture rate for those shares not expected to vest and to recognize compensation cost on a straight-line basis for awards that only have a service requirement with multiple vest dates. The Company has granted the following types of stock awards to employees at management levels and above:
The following table provides a summary of the Company's stock-based compensation expense, which is included in Selling and administrative expense in the Condensed Consolidated Statements of Operations:
In the Third Quarter 2016 there was a reversal of prior period expense due to the resignation of the former Chief Executive Officer. The following table provides a summary of the activities for stock awards for Year to Date 2017:
Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $9.0 million as of October 27, 2017, which is expected to be recognized ratably over a weighted average period of 2.4 years. Deferred Awards granted to various employees during Year to Date 2017 generally vest ratably for a period between fifteen months to four years. There was no unrecognized stock-based compensation expense related to unvested Performance Awards as of October 27, 2017. Total unrecognized stock-based compensation expense related to unvested Option Awards was approximately $2.5 million as of October 27, 2017, which is expected to be recognized ratably over a weighted average period of 3.4 years. The Option Awards vest ratably over 4.0 years and the contract to buy Option Awards extends for another 6.0 years. The fair value of each Option Award was estimated on the grant date using the Black-Scholes option pricing model. No Option Awards were exercisable as of October 27, 2017. The fair value of Option Awards is determined on the grant date utilizing a Black-Scholes option pricing model. The following assumptions were utilized in deriving the fair value for Option Awards granted during Year to Date 2017:
The simplified method was used to calculate the Expected life (in years) to be utilized in the Black-Scholes option pricing model applied to Option Awards granted in Fiscal 2017. The simplified method was used as the company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of the Option Awards due to the limited period of time since the Company began publicly issuing shares. |
Fair Value of Financial Assets and Liabilities |
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Fair Value of Financial Assets and Liabilities | FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES The Company determines fair value of financial assets and liabilities based on the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 inputs—unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. An active market for the asset or liability is one in which transactions for the asset or liability occurs with sufficient frequency and volume to provide ongoing pricing information. Level 2 inputs—inputs other than quoted market prices included in Level 1 that are observable, either directly or indirectly, for the asset or liability. Level 2 inputs include, but are not limited to, quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted market prices that are observable for the asset or liability, such as interest rate curves and yield curves observable at commonly quoted intervals, volatilities, credit risk and default rates. Level 3 inputs—unobservable inputs for the asset or liability. Restricted cash is reflected on the Condensed Consolidated Balance Sheets at fair value. The fair value of restricted cash was $1.6 million, $3.3 million and $3.3 million as of October 27, 2017, October 28, 2016 and January 27, 2017, respectively based on Level 1 inputs. Restricted cash amounts are valued based upon statements received from financial institutions. Cash and cash equivalents, accounts receivable, accounts payable and other current liabilities are reflected on the Condensed Consolidated Balance Sheets at cost, which approximates fair value due to the short-term nature of these instruments. Carrying values and fair values of long-term debt, including the short-term portion, in the Condensed Consolidated Balance Sheets are as follows:
Long-term debt, including short-term portion was valued utilizing Level 2 valuation techniques based on the closing inactive market bid price on October 27, 2017, October 28, 2016, and January 27, 2017. There were no nonfinancial assets or nonfinancial liabilities recognized at fair value on a nonrecurring basis as of October 27, 2017, October 28, 2016, and January 27, 2017. |
Goodwill and Intangible Assets |
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Oct. 27, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSET The Company's intangible assets, consisting of a trade name and goodwill, were valued as a result of business combinations accounted for under the purchase accounting method. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. The net carrying amounts of goodwill and trade name are included within the Company's Direct segment. ASC 350, Intangibles - Goodwill and Other, requires companies to test goodwill and indefinite-lived intangible assets for impairment annually, or more often if an event or circumstance indicates that the carrying amount may not be recoverable. As a result of the 2016 annual impairment test the Company recorded a non-cash pretax trade name intangible asset impairment charge of $173.0 million in Fiscal 2016. There were no impairment charges recorded for the intangible asset in Year to Date 2017. If actual results are not consistent with our estimates and assumptions used in estimating revenue growth, future cash flows and asset fair values, we could incur further impairment charges for the intangible asset or goodwill, which could have an adverse effect on our results of operations. The annual test for impairment will be conducted as of the end of Fiscal November 2017. The intangible asset was $257.0 million, $430.0 million and $257.0 million as of October 27, 2017, October 28, 2016 and January 27, 2017, respectively. There were no impairments for goodwill during any periods presented or since goodwill was first recognized. |
Income Taxes |
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Oct. 27, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Lands’ End and Sears Holdings Corporation entered into a Tax Sharing Agreement in connection with the Separation which governs Sears Holdings Corporation’s and Lands’ End’s respective rights, responsibilities and obligations after the Separation with respect to liabilities for United States federal, state, local and foreign taxes attributable to the Lands’ End business. In addition to the allocation of tax liabilities, the Tax Sharing Agreement addresses the preparation and filing of tax returns for such taxes and dispute resolution with taxing authorities regarding such taxes. Generally, Sears Holdings Corporation is liable for all pre-Separation United States federal, state and local income taxes. Lands’ End generally is liable for all other income taxes attributable to its business, including all foreign taxes. As of October 27, 2017, the Company had UTBs of $6.9 million. Of this amount, $4.5 million would, if recognized, impact its effective tax rate, with the remaining amount being comprised of UTBs related to gross temporary differences or other indirect benefits. Pursuant to the Tax Sharing Agreement, Sears Holdings Corporation is generally responsible for all United States federal, state and local UTBs, including interest and penalties, through the date of the Separation and, as such, an indemnification asset from Sears Holdings Corporation for the pre-Separation UTBs is recorded in Other assets in the Condensed Consolidated Balance Sheets. The indemnification asset was $12.0 million, $14.4 million and $11.4 million as of October 27, 2017, October 28, 2016, and January 27, 2017, respectively. The Company classifies interest expense and penalties related to UTBs and interest income on tax overpayments as components of income tax expense. As of October 27, 2017, the total amount of interest expense and penalties recognized on our balance sheet was $5.5 million ($3.6 million net of federal benefit). The total amount of such net interest expense recognized in the Condensed Consolidated Statements of Operations was insignificant for all periods presented. The Company files income tax returns in the United States and various foreign jurisdictions. Sears Holdings and the Company are under examination by various state tax jurisdictions for the years 2003 to 2014. |
Commitments and Contingencies |
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Oct. 27, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Legal Proceedings The Company is party to various claims, legal proceedings and investigations arising in the ordinary course of business. Some of these actions involve complex factual and legal issues and are subject to uncertainties. At this time, the Company is not able to either predict the outcome of these legal proceedings or reasonably estimate a potential range of loss with respect to the proceedings. While it is not feasible to predict the outcome of such pending claims, proceedings and investigations with certainty, management is of the opinion that their ultimate resolution should not have a material adverse effect on results of operations, cash flows or financial position taken as a whole. Beginning in 2005, the Company initiated claims in Iowa County Circuit Court against the City of Dodgeville (the "City") to recover overpaid taxes resulting from the City’s excessive property tax assessment of the Company’s headquarters campus for each tax year from 2005 through 2016. As of June 6, 2017 the City has refunded, as the result of various court decisions and a settlement agreement, over $7.5 million in excessive taxes and interest to the Company. All excessive property tax assessment claims arising with respect to the tax years 2005 through 2016 are now closed. The Company received refunds of $1.0 million of the above amount in First Quarter 2017, $1.2 million in Second Quarter 2016 and $1.1 million in Third Quarter 2016 which were recorded primarily within Selling and administrative costs in the Condensed Consolidated Statements of Operations. |
Related Party |
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Related Party | RELATED PARTY TRANSACTIONS According to statements on Schedule 13D filed with the SEC by ESL, ESL beneficially owns significant portions of both the Company's and Sears Holdings Corporation's outstanding shares of common stock. Therefore, Sears Holdings Corporation, the Company's former parent company, is considered a related party. In First Quarter 2017, ESL purchased approximately $4.0 million of the Company's outstanding debt at a discount of approximately $1.0 million. Due to the related party relationship, this discount was considered a cancellation of debt under Section 108 of the Internal Revenue Code, triggering additional income tax payments for the Company. As of May 4, 2017, ESL had divested itself of all of the Company's outstanding debt to an unrelated third party. In connection with and subsequent to the Separation, the Company entered into various agreements with Sears Holdings which, among other things, (i) govern specified aspects of the Company's relationship following the Separation, especially with regards to the Lands’ End Shops at Sears, and (ii) establish terms pursuant to which subsidiaries of Sears Holdings Corporation are providing services to us. Descriptions of these transactions are included in the Company's 2016 Annual Report on Form 10-K and proxy statement filed with the SEC on March 31, 2017. In its annual report on Form 10-K for its fiscal year ended January 28, 2017, Sears Holdings disclosed that its historical operating results indicate substantial doubt exists related to its ability to continue as a going concern. Sears Holdings also disclosed it believes that actions it has taken in the last 12 months and expected benefits from actions to be taken in 2017 are probable to mitigate the substantial doubt raised by its historical operating results and therefore will satisfy its liquidity needs for the 12 months following the issuance of its financial statements. The components of the transactions between the Company and Sears Holdings, which exclude pass-through payments to third parties, are as follows: Lands’ End Shops at Sears Related party costs charged by Sears Holdings to the Company related to Lands’ End Shops at Sears are as follows:
General Corporate Services Related party costs charged by Sears Holdings to the Company for general corporate services are as follows:
The Company has extended the contract under which it receives sourcing services through June 30, 2020 and the contract governing its participation in the Shop Your Way program through April 4, 2018. Use of Intellectual Property or Services Related party revenue and costs charged by the Company to and from Sears Holdings for the use of intellectual property or services is as follows:
Call Center Services The Company had entered into a contract with SHMC to provide call center services in support of Sears Holdings’ SYW. This income is net of agreed upon costs directly attributable to the Company providing these services. The income is included in Net revenue and costs are included in Selling and administrative expenses in the Condensed Consolidated Statements of Operations. The contract for call center services expired on April 30, 2017. Additional Balance Sheet Information At October 27, 2017, October 28, 2016 and January 27, 2017, the Company included $3.1 million, $4.6 million and $3.7 million in Accounts receivable, net, respectively, and $3.1 million, $3.8 million and $3.1 million in Accounts payable, respectively, in the Condensed Consolidated Balance Sheets to reflect amounts due from and owed to Sears Holdings. At October 27, 2017, October 28, 2016 and January 27, 2017, respectively, a $12.0 million, $14.4 million and $11.4 million receivable was recorded by the Company in Other assets in the Condensed Consolidated Balance Sheets to reflect the indemnification by Sears Holdings Corporation of the pre-Separation UTBs (including penalties and interest) for which Sears Holdings Corporation is responsible under the Tax Sharing Agreement. |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | SEGMENT REPORTING The Company is a leading multi-channel retailer of clothing, accessories and footwear, as well as home products, and has two operating segments: Direct and Retail. Product revenues are divided by product categories: Apparel and Non-apparel. The Non-apparel revenues include accessories, footwear, and home goods. Services and other revenue includes embroidery, monogramming, gift wrapping, shipping and other services. Net revenue is aggregated by product category in the following table:
The Company identifies reportable segments according to how business activities are managed and evaluated. Each of the Company’s operating segments are reportable segments and are strategic business units that offer similar products and services but are sold either directly from its warehouses (Direct) or through its retail stores (Retail). Adjusted EBITDA is the primary measure used to make decisions on allocating resources and assessing performance of each operating segment. Adjusted EBITDA is computed as Income before taxes appearing on the Condensed Consolidated Statements of Operations net of interest expense, depreciation and amortization and other significant items that while periodically affecting the Company's results, may vary significantly from period to period and may have a disproportionate effect in a given period, which may affect comparability of results. Reportable segment assets are those directly used in or clearly allocable to an operating segment’s operations. Depreciation, amortization, and property and equipment expenditures are recognized in each respective segment. There were no material transactions between reporting segments for any periods presented.
Financial information by segment is presented in the following tables. SUMMARY OF SEGMENT DATA
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Property, Plant and Equipment |
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Oct. 27, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | PROPERTY, PLANT AND EQUIPMENT As part of a multi-year plan to implement a global ERP system, assets were placed in service in connection with financial suite assets. No new ERP assets were placed in service during Third Quarter 2017 and $30.7 million were placed in service in Year to Date 2017. The Company began depreciating the assets over useful lives of 3 to 10 years. |
Recent Accounting Pronouncements |
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Oct. 27, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Intangibles - Goodwill and Other The Company elected to early adopt ASU 2017-04, Intangibles - Goodwill and Other, which simplifies the test for goodwill impairment by removing the second step of the goodwill impairment test. Under the new guidance, the Company will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit, during its annual test for impairment to be conducted as of the end of Fiscal November 2017. The new guidance does not amend the optional qualitative assessment of goodwill impairment. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance was deferred by ASU 2015-14, Revenue from Contracts with Customers, issued by the FASB in August 2015, and will be effective for Lands' End in the first quarter of its fiscal year ending February 1, 2019. Subsequently, the FASB has also issued accounting standards updates which clarify the guidance. The Company has developed a road map for implementation and is currently assessing the impact of adopting ASU 2014-09 on our revenue recognition practices. While most revenue recognition policies are not expected to change, the Company has identified anticipated changes to our Condensed Consolidated Statement of Operations related to the timing of revenue recognition for gift card breakage and to the Condensed Consolidated Balance Sheets to the presentation of the reserve for returns, in addition to increased disclosures required. The Company is continuing to study the impacts of this standard and its amendments and expects to finalize its evaluation in the fourth quarter of Fiscal 2017. Recognition of Breakage for Certain Prepaid Stored-Value Products In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. This update clarifies when it is acceptable to recognize the unredeemed portion of prepaid gift cards into income. This guidance will be effective for Lands' End in the first quarter of its fiscal year ending February 1, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Condensed Consolidated Financial Statements. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. This update clarifies issues to reduce the current and potential future diversity in practice of the classification of certain cash receipts and cash payments within the statement of cash flows. This guidance will be effective for Lands' End in the first quarter of its fiscal year ending February 1, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Condensed Consolidated Financial Statements. Restricted Cash In November 2016, the FASB issued ASU 2016-18, Restricted Cash. This ASU requires the inclusion of restricted cash with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. This guidance will be effective for the Company in the first quarter of its fiscal year ending February 1, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Condensed Consolidated Financial Statements. Leases In February 2016, the FASB issued ASU 2016-02, Leases, which will replace the existing guidance in ASC 840, Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This guidance will be effective for the Company in the first quarter of its fiscal year ending January 31, 2020. While it is expected that the standard will have a material increase in the assets and liabilities recorded on the Company's Consolidated Balance Sheet, the Company is still evaluating the overall impact on the Company's Condensed Consolidated Financial Statements. |
Recent Accounting Pronouncements (Policies) |
9 Months Ended |
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Oct. 27, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements | Intangibles - Goodwill and Other The Company elected to early adopt ASU 2017-04, Intangibles - Goodwill and Other, which simplifies the test for goodwill impairment by removing the second step of the goodwill impairment test. Under the new guidance, the Company will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit, during its annual test for impairment to be conducted as of the end of Fiscal November 2017. The new guidance does not amend the optional qualitative assessment of goodwill impairment. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance was deferred by ASU 2015-14, Revenue from Contracts with Customers, issued by the FASB in August 2015, and will be effective for Lands' End in the first quarter of its fiscal year ending February 1, 2019. Subsequently, the FASB has also issued accounting standards updates which clarify the guidance. The Company has developed a road map for implementation and is currently assessing the impact of adopting ASU 2014-09 on our revenue recognition practices. While most revenue recognition policies are not expected to change, the Company has identified anticipated changes to our Condensed Consolidated Statement of Operations related to the timing of revenue recognition for gift card breakage and to the Condensed Consolidated Balance Sheets to the presentation of the reserve for returns, in addition to increased disclosures required. The Company is continuing to study the impacts of this standard and its amendments and expects to finalize its evaluation in the fourth quarter of Fiscal 2017. Recognition of Breakage for Certain Prepaid Stored-Value Products In March 2016, the FASB issued ASU 2016-04, Recognition of Breakage for Certain Prepaid Stored-Value Products. This update clarifies when it is acceptable to recognize the unredeemed portion of prepaid gift cards into income. This guidance will be effective for Lands' End in the first quarter of its fiscal year ending February 1, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Condensed Consolidated Financial Statements. Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. This update clarifies issues to reduce the current and potential future diversity in practice of the classification of certain cash receipts and cash payments within the statement of cash flows. This guidance will be effective for Lands' End in the first quarter of its fiscal year ending February 1, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Condensed Consolidated Financial Statements. Restricted Cash In November 2016, the FASB issued ASU 2016-18, Restricted Cash. This ASU requires the inclusion of restricted cash with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. This guidance will be effective for the Company in the first quarter of its fiscal year ending February 1, 2019. The Company is currently in the process of evaluating the impact of adoption of this ASU on the Company's Condensed Consolidated Financial Statements. Leases In February 2016, the FASB issued ASU 2016-02, Leases, which will replace the existing guidance in ASC 840, Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This guidance will be effective for the Company in the first quarter of its fiscal year ending January 31, 2020. While it is expected that the standard will have a material increase in the assets and liabilities recorded on the Company's Consolidated Balance Sheet, the Company is still evaluating the overall impact on the Company's Condensed Consolidated Financial Statements. |
Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share, basic and diluted | The following table summarizes the components of basic and diluted EPS:
Stock awards are considered anti-dilutive based on the application of the treasury stock method or in the event of a net loss. There were 827,057, 376,347, 692,175 and 314,664 shares excluded from the diluted weighted average shares outstanding for Third Quarter 2017, Third Quarter 2016, Year to Date 2017 and Year to Date 2016, respectively. |
Other Comprehensive Income (Loss) (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income (loss) |
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Debt (Tables) |
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Line of Credit Facility [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities [Table Text Block] | The following table summarizes the Company's borrowing availability under the ABL Facility:
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Schedule of aggregate scheduled maturities | The Company's debt consisted of the following:
1 Debt arrangement terminated on November 16, 2017. |
Stock-Based Compensation (Tables) |
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Share-based Compensation Arrangements by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest [Table Text Block] |
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Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] |
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The fair value of Option Awards is determined on the grant date utilizing a Black-Scholes option pricing model. The following assumptions were utilized in deriving the fair value for Option Awards granted during Year to Date 2017:
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Fair Value of Financial Assets and Liabilities (Tables) |
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Oct. 27, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other financial assets and liabilities measured at fair value | Carrying values and fair values of long-term debt, including the short-term portion, in the Condensed Consolidated Balance Sheets are as follows:
Condensed Consolidated Balance Sheets at fair value. The fair value of restricted cash was $1.6 million, $3.3 million and $3.3 million as of October 27, 2017, October 28, 2016 and January 27, 2017, respectively based on Level 1 inputs. Restricted cash amounts are valued based upon statements received from financial institutions. |
Related Party (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 27, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party revenue and costs | Related party costs charged by Sears Holdings to the Company related to Lands’ End Shops at Sears are as follows:
Related party costs charged by Sears Holdings to the Company for general corporate services are as follows:
Related party revenue and costs charged by the Company to and from Sears Holdings for the use of intellectual property or services is as follows:
|
Segment Reporting (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 27, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from External Customers by Products and Services [Table Text Block] | Net revenue is aggregated by product category in the following table:
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Schedule of financial information by segment | Financial information by segment is presented in the following tables. SUMMARY OF SEGMENT DATA
|
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 27, 2017 |
Oct. 28, 2016 |
Oct. 27, 2017 |
Oct. 28, 2016 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 827,057 | 376,347 | 692,175 | 314,664 |
NET INCOME (LOSS) | $ 162 | $ (7,222) | $ (11,557) | $ (14,961) |
Basic weighted average common shares outstanding (shares) | 32,095,000 | 32,029,000 | 32,068,000 | 32,018,000 |
Dilutive effect of stock awards | 22,000 | 0 | 0 | 0 |
Diluted weighted average common shares outstanding (shares) | 32,117,000 | 32,029,000 | 32,068,000 | 32,018,000 |
Basic (in USD per share) | $ 0.01 | $ (0.23) | $ (0.36) | $ (0.47) |
Diluted (in USD per share) | $ 0.01 | $ (0.23) | $ (0.36) | $ (0.47) |
Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands |
Oct. 27, 2017 |
Jan. 27, 2017 |
Oct. 28, 2016 |
---|---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Restricted cash | $ 1,640 | $ 3,300 | $ 3,300 |
Long-term Debt | 496,975 | 500,838 | 502,125 |
Level 1 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Restricted cash | 1,600 | 3,300 | 3,300 |
Term Loan Facility | Secured debt | Reported Value Measurement [Member] | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Secured Debt | $ 496,975 | $ 500,838 | $ 502,125 |
Carrying Values and Fair Values of Financial Instruments Not Carried at Fair Value (Details) - Level 2 - USD ($) $ in Thousands |
Oct. 27, 2017 |
Jan. 27, 2017 |
Oct. 28, 2016 |
---|---|---|---|
Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt, including short-term portion | $ 414,353 | $ 379,385 | $ 386,636 |
Term Loan Facility [Member] | Secured Debt [Member] | Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Secured Debt | $ 496,975 | $ 500,838 | $ 502,125 |
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 27, 2017 |
Oct. 27, 2017 |
Oct. 28, 2016 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 110,000 | $ 110,000 | $ 110,000 |
Trade names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | 257,000 | $ 257,000 | $ 430,000 |
Impairment of Intangible Assets (Excluding Goodwill) | $ 173,000 |
Income Taxes (Details) - USD ($) $ in Millions |
Oct. 27, 2017 |
Jan. 27, 2017 |
Oct. 28, 2016 |
---|---|---|---|
Income Tax Examination [Line Items] | |||
Unrecognized tax benefits | $ 6.9 | ||
Unrecognized tax benefits, if recognized, would impact effective tax rate | 4.5 | ||
Amount of interest and penalties recognized | 5.5 | ||
Amount of interest and penalties recognized, net of federal benefit | 3.6 | ||
Sears Holdings Corporation | Other assets | |||
Income Tax Examination [Line Items] | |||
Indemnification receivable, uncertain tax positions | $ 12.0 | $ 11.4 | $ 14.4 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Jun. 06, 2017 |
Apr. 28, 2017 |
Oct. 28, 2016 |
Jul. 29, 2016 |
|
Gain Contingencies [Line Items] | ||||
Litigation Settlement, Amount Awarded from Other Party | $ 7.5 | $ 1.0 | $ 1.1 | $ 1.2 |
Related Party - Details of General Corporate Services (Details) - Sears Holdings Corporation - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 27, 2017 |
Oct. 28, 2016 |
Oct. 27, 2017 |
Oct. 28, 2016 |
|
Sourcing | ||||
Related Party Transaction | ||||
Related party expenses, net | $ 3,445 | $ 4,941 | $ 8,525 | $ 7,979 |
Shop Your Way Rewards Program | ||||
Related Party Transaction | ||||
Related party expenses, net | 83 | 596 | 780 | 1,670 |
Shared Services | ||||
Related Party Transaction | ||||
Related party expenses, net | 48 | 48 | 143 | 143 |
Costs related General Corporate Services | ||||
Related Party Transaction | ||||
Related party expenses, net | $ 3,576 | $ 5,585 | $ 9,448 | $ 9,792 |
Related Party - Details of Use of Intellectual Property or Services (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 27, 2017 |
Oct. 28, 2016 |
Oct. 27, 2017 |
Oct. 28, 2016 |
|
Sears Holdings Corporation | ||||
Related Party Transaction | ||||
Related party revenue, net | $ 475 | $ 2,623 | $ 2,711 | $ 8,022 |
Sears Holdings Corporation | Lands' End Business Outfitters Revenue | ||||
Related Party Transaction | ||||
Related party revenue, net | 222 | 333 | 764 | 1,307 |
Sears Holdings Corporation | Credit Card Revenue | ||||
Related Party Transaction | ||||
Related party revenue, net | 205 | 265 | 638 | 776 |
Sears Holdings Corporation | Royalty Income | ||||
Related Party Transaction | ||||
Related party revenue, net | 55 | 56 | 169 | 182 |
Sears Holdings Corporation | Gift Card Revenue | ||||
Related Party Transaction | ||||
Related Party Transaction, Amounts of Transaction | (7) | (7) | (20) | (20) |
Revenue, net | ||||
Related Party Transaction | ||||
Call Center Service Revenue | $ 0 | $ 1,976 | $ 1,160 | $ 5,777 |
Property, Plant and Equipment (Details) $ in Millions |
9 Months Ended |
---|---|
Oct. 27, 2017
USD ($)
| |
Enterprise Resource Planning [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Additions | $ 30.7 |
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