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 | 26 Weeks Ended | |||||||||||||||
(in thousands, except per share data) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Net revenue | $ | 307,945 | $ | 302,190 | $ | 607,770 | $ | 570,555 | ||||||||
Cost of sales (excluding depreciation and amortization) | 171,179 | 168,025 | 337,979 | 313,748 | ||||||||||||
Gross profit | 136,766 | 134,165 | 269,791 | 256,807 | ||||||||||||
Selling and administrative | 129,041 | 127,336 | 253,041 | 248,682 | ||||||||||||
Depreciation and amortization | 6,897 | 6,175 | 13,058 | 12,683 | ||||||||||||
Other operating (income) expense, net | (47 | ) | 480 | 290 | 1,988 | |||||||||||
Operating income (loss) | 875 | 174 | 3,402 | (6,546 | ) | |||||||||||
Interest expense | 7,001 | 6,167 | 13,913 | 12,292 | ||||||||||||
Other (income) expense, net | (412 | ) | (494 | ) | 3,452 | (1,236 | ) | |||||||||
Loss before income taxes | (5,714 | ) | (5,499 | ) | (13,963 | ) | (17,602 | ) | ||||||||
Income tax benefit | (429 | ) | (1,619 | ) | (6,048 | ) | (5,883 | ) | ||||||||
NET LOSS | $ | (5,285 | ) | $ | (3,880 | ) | $ | (7,915 | ) | $ | (11,719 | ) | ||||
NET LOSS PER COMMON SHARE | ||||||||||||||||
Basic: | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.25 | ) | $ | (0.37 | ) | ||||
Diluted: | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.25 | ) | $ | (0.37 | ) | ||||
Basic weighted average common shares outstanding | 32,212 | 32,079 | 32,168 | 32,054 | ||||||||||||
Diluted weighted average common shares outstanding | 32,212 | 32,079 | 32,168 | 32,054 |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
NET LOSS | $ | (5,285 | ) | $ | (3,880 | ) | $ | (7,915 | ) | $ | (11,719 | ) | ||||
Other comprehensive (loss) income, net of tax | ||||||||||||||||
Foreign currency translation adjustments | (1,540 | ) | 622 | (3,176 | ) | 1,139 | ||||||||||
COMPREHENSIVE LOSS | $ | (6,825 | ) | $ | (3,258 | ) | $ | (11,091 | ) | $ | (10,580 | ) |
(in thousands, except share data) | August 3, 2018 | July 28, 2017 | February 2, 2018 | |||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 194,391 | $ | 176,955 | $ | 195,581 | ||||||
Restricted cash | 1,953 | 3,300 | 2,356 | |||||||||
Accounts receivable, net | 25,925 | 24,632 | 49,860 | |||||||||
Inventories, net | 349,597 | 370,470 | 332,297 | |||||||||
Prepaid expenses and other current assets | 40,967 | 36,216 | 26,659 | |||||||||
Total current assets | 612,833 | 611,573 | 606,753 | |||||||||
Property and equipment, net | 142,261 | 126,825 | 136,501 | |||||||||
Goodwill | 110,000 | 110,000 | 110,000 | |||||||||
Intangible asset, net | 257,000 | 257,000 | 257,000 | |||||||||
Other assets | 8,349 | 17,007 | 13,881 | |||||||||
TOTAL ASSETS | $ | 1,130,443 | $ | 1,122,405 | $ | 1,124,135 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 186,207 | $ | 181,685 | $ | 155,874 | ||||||
Other current liabilities | 91,747 | 85,415 | 100,257 | |||||||||
Total current liabilities | 277,954 | 267,100 | 256,131 | |||||||||
Long-term debt, net | 484,350 | 488,146 | 486,248 | |||||||||
Long-term deferred tax liabilities | 58,420 | 91,015 | 59,137 | |||||||||
Other liabilities | 10,494 | 14,144 | 15,526 | |||||||||
TOTAL LIABILITIES | 831,218 | 860,405 | 817,042 | |||||||||
Commitments and contingencies | ||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||
Common stock, par value $0.01 authorized: 480,000,000 shares; issued and outstanding: 32,212,290, 32,087,532 and 32,101,793, respectively | 320 | 320 | 320 | |||||||||
Additional paid-in capital | 349,338 | 345,139 | 347,175 | |||||||||
Accumulated deficit | (36,665 | ) | (72,172 | ) | (29,810 | ) | ||||||
Accumulated other comprehensive loss | (13,768 | ) | (11,287 | ) | (10,592 | ) | ||||||
Total stockholders’ equity | 299,225 | 262,000 | 307,093 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,130,443 | $ | 1,122,405 | $ | 1,124,135 |
26 Weeks Ended | ||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (7,915 | ) | $ | (11,719 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 13,058 | 12,683 | ||||||
Amortization of debt issuance costs | 965 | 856 | ||||||
Loss on property and equipment | 284 | 62 | ||||||
Stock-based compensation | 2,696 | 1,800 | ||||||
Deferred income taxes | 128 | (88 | ) | |||||
Change in operating assets and liabilities: | ||||||||
Inventories | (20,223 | ) | (43,493 | ) | ||||
Accounts payable | 33,678 | 22,434 | ||||||
Other operating assets | 18,545 | 5,603 | ||||||
Other operating liabilities | (16,384 | ) | (1,333 | ) | ||||
Net cash provided by (used in) operating activities | 24,832 | (13,195 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchases of property and equipment | (22,203 | ) | (20,223 | ) | ||||
Net cash used in investing activities | (22,203 | ) | (20,223 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Payments on term loan facility | (2,575 | ) | (2,575 | ) | ||||
Payments of employee withholding taxes on share-based compensation | (533 | ) | (629 | ) | ||||
Net cash used in financing activities | (3,108 | ) | (3,204 | ) | ||||
Effects of exchange rate changes on cash, cash equivalents and restricted cash | (1,114 | ) | 469 | |||||
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (1,593 | ) | (36,153 | ) | ||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD | 197,937 | 216,408 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | $ | 196,344 | $ | 180,255 | ||||
SUPPLEMENTAL CASH FLOW DATA | ||||||||
Unpaid liability to acquire property and equipment | $ | 4,990 | $ | 4,438 | ||||
Income taxes paid, net of refunds | $ | 1,349 | $ | 3,802 | ||||
Interest paid | $ | 12,938 | $ | 11,257 |
(in thousands) | February 2, 2018(As reported) | Impact of Adoption | February 3, 2018 | |||||||||
Assets: | ||||||||||||
Prepaid expenses and other current assets | $ | 26,659 | $ | 10,425 | $ | 37,084 | ||||||
Liabilities: | ||||||||||||
Other current liabilities | 100,257 | 9,365 | 109,622 | |||||||||
Stockholders' Equity: | ||||||||||||
Accumulated deficit | (29,810 | ) | 1,060 | (28,750 | ) |
August 3, 2018 | ||||||||||||
(in thousands) | Balances Without Adoption | Impact of Adoption | As Reported | |||||||||
Assets: | ||||||||||||
Prepaid expenses and other current assets | $ | 31,757 | $ | 9,210 | $ | 40,967 | ||||||
Liabilities: | ||||||||||||
Other current liabilities | 83,657 | 8,090 | 91,747 | |||||||||
Stockholders' Equity: | ||||||||||||
Accumulated deficit | (37,785 | ) | 1,120 | (36,665 | ) |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands, except per share amounts) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Net loss | $ | (5,285 | ) | $ | (3,880 | ) | $ | (7,915 | ) | $ | (11,719 | ) | ||||
Basic weighted average common shares outstanding | 32,212 | 32,079 | 32,168 | 32,054 | ||||||||||||
Dilutive effect of stock awards | — | — | — | — | ||||||||||||
Diluted weighted average common shares outstanding | 32,212 | 32,079 | 32,168 | 32,054 | ||||||||||||
Basic loss per share | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.25 | ) | $ | (0.37 | ) | ||||
Diluted loss per share | $ | (0.16 | ) | $ | (0.12 | ) | $ | (0.25 | ) | $ | (0.37 | ) |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Beginning balance: Accumulated other comprehensive loss (net of tax of $3,250, $6,189, $2,816 and $6,691, respectively) | $ | (12,228 | ) | $ | (11,909 | ) | $ | (10,592 | ) | $ | (12,426 | ) | ||||
Other comprehensive (loss) income: | ||||||||||||||||
Foreign currency translation adjustments (net of tax of $410, $(135), $844, and $(637), respectively) | (1,540 | ) | 622 | (3,176 | ) | 1,139 | ||||||||||
Ending balance: Accumulated other comprehensive loss (net of tax of $3,660, $6,054, $3,660, and $6,054, respectively) | $ | (13,768 | ) | $ | (11,287 | ) | $ | (13,768 | ) | $ | (11,287 | ) |
August 3, 2018 | July 28, 2017 | February 2, 2018 | |||||||||||||||||||
(in thousands) | Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||
Term Loan Facility, maturing April 4, 2021 | $ | 493,113 | 5.34 | % | $ | 498,263 | 4.48 | % | $ | 495,688 | 4.82 | % | |||||||||
Current ABL Facility, maturing November 16, 2022(1) | — | — | % | — | — | % | — | — | % | ||||||||||||
493,113 | 498,263 | 495,688 | |||||||||||||||||||
Less: Current maturities in Other current liabilities | 5,150 | 5,150 | 5,150 | ||||||||||||||||||
Less: Unamortized debt issuance costs | 3,613 | 4,967 | 4,290 | ||||||||||||||||||
Long-term debt, net | $ | 484,350 | $ | 488,146 | $ | 486,248 |
(in thousands) | August 3, 2018 | July 28, 2017 | February 2, 2018 | |||||||||
Current ABL Facility maximum borrowing(1) | $ | 175,000 | $ | 175,000 | $ | 175,000 | ||||||
Outstanding Letters of Credit(1) | 14,862 | 10,362 | 22,328 | |||||||||
Borrowing availability under ABL(1) | $ | 160,138 | $ | 164,638 | $ | 152,672 |
i. | Time vesting stock awards ("Deferred Awards") are in the form of restricted stock units and only require each recipient to complete a service period for the awards to be earned. Deferred Awards generally vest over three years. 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") 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 ten years for all Option Awards currently outstanding. Options are granted with a strike price equal to the stock price on the date of grant. |
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 granted prior to Fiscal 2018 had annual vesting, but due to the performance criteria, were not eligible for straight-line expensing. All Performance Awards granted prior to Fiscal 2018 were forfeited during the period. For Performance Awards granted in Fiscal 2018, the Target Shares earned can range from 0% to 200% and depend on the achievement of Adjusted EBITDA and revenue performance measures for the cumulative three-fiscal year performance period from Fiscal 2018 to Fiscal 2020. The applicable percentage of the Target Shares, as determined by performance, vest after the completion of the applicable three year performance period, and unearned Target Shares are forfeited. The fair value of the Performance Awards granted in Fiscal 2018 is based on the closing price of the Company’s common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period reduced for estimated forfeitures of those awards not expected to vest due to employee turnover and adjusted based on the Company's estimate of the percentage of the aggregate Target Shares expected to be earned. |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Deferred Awards | $ | 1,231 | $ | 1,015 | $ | 1,940 | $ | 1,436 | ||||||||
Option Awards | 187 | 185 | 374 | 276 | ||||||||||||
Performance Awards | 312 | 21 | 382 | 88 | ||||||||||||
Total stock-based compensation expense | $ | 1,730 | $ | 1,221 | $ | 2,696 | $ | 1,800 |
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(1) | Weighted Average Grant Date Fair Value per Share | |||||||||||||||
Unvested as of February 2, 2018 | 497 | $ | 22.07 | 343 | $ | 8.73 | 15 | $ | 21.94 | ||||||||||||
Granted | 289 | 22.00 | — | — | 195 | 21.90 | |||||||||||||||
Vested | (137 | ) | 21.85 | (86 | ) | 8.73 | — | — | |||||||||||||
Forfeited or expired | (16 | ) | 22.13 | — | — | (18 | ) | 21.93 | |||||||||||||
Unvested as of August 3, 2018 | 633 | 21.86 | 257 | 8.73 | 192 | 21.90 |
August 3, 2018 | July 28, 2017 | February 2, 2018 | ||||||||||||||||||||||
(in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||
Long-term debt, including short-term portion | $ | 493,113 | $ | 476,470 | $ | 498,263 | $ | 418,541 | $ | 495,688 | $ | 443,641 |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands, except for number of stores) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Rent, CAM and occupancy costs | $ | 4,027 | $ | 5,597 | $ | 8,521 | $ | 11,506 | ||||||||
Retail services, store labor | 3,723 | 5,594 | 7,853 | 11,142 | ||||||||||||
Financial services and payment processing | 452 | 676 | 841 | 1,148 | ||||||||||||
Supply chain costs | 106 | 200 | 236 | 391 | ||||||||||||
Total expenses | $ | 8,308 | $ | 12,067 | $ | 17,451 | $ | 24,187 | ||||||||
Number of Lands’ End Shops at Sears at period end | 147 | 204 | 147 | 204 |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Sourcing | $ | 1,497 | $ | 2,682 | $ | 3,314 | $ | 5,080 | ||||||||
Shop Your Way | 215 | 321 | 382 | 697 | ||||||||||||
Shared services | 48 | 48 | 95 | 95 | ||||||||||||
Total expenses | $ | 1,760 | $ | 3,051 | $ | 3,791 | $ | 5,872 |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Call center services | $ | — | $ | — | $ | — | $ | 1,160 | ||||||||
Lands' End business outfitters revenue | 293 | 271 | 618 | 542 | ||||||||||||
Credit card revenue | 169 | 221 | 322 | 433 | ||||||||||||
Royalty income | 86 | 86 | 113 | 114 | ||||||||||||
Gift card (expense) | (4 | ) | (7 | ) | (8 | ) | (13 | ) | ||||||||
Total income | $ | 544 | $ | 571 | $ | 1,045 | $ | 2,236 |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Net revenue: | ||||||||||||||||
Apparel | $ | 256,457 | $ | 250,318 | $ | 515,740 | $ | 481,255 | ||||||||
Non-apparel | 30,584 | 29,665 | 56,476 | 53,736 | ||||||||||||
Service and other | 20,904 | 22,207 | 35,554 | 35,564 | ||||||||||||
Total net revenue | $ | 307,945 | $ | 302,190 | $ | 607,770 | $ | 570,555 |
• | 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 through Company Operated 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 | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Net revenue: | ||||||||||||||||
Direct | $ | 276,602 | $ | 259,938 | $ | 549,975 | $ | 488,228 | ||||||||
Retail | 31,343 | 42,252 | 57,795 | 82,327 | ||||||||||||
Total net revenue | $ | 307,945 | $ | 302,190 | $ | 607,770 | $ | 570,555 |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Adjusted EBITDA: | ||||||||||||||||
Direct | $ | 15,761 | $ | 13,080 | $ | 38,095 | $ | 24,918 | ||||||||
Retail | 398 | 1,859 | (4,168 | ) | (1,288 | ) | ||||||||||
Corporate / other | (8,434 | ) | (8,110 | ) | (17,177 | ) | (15,505 | ) | ||||||||
Total adjusted EBITDA | $ | 7,725 | $ | 6,829 | $ | 16,750 | $ | 8,125 | ||||||||
(Gain) loss on property and equipment | (52 | ) | — | 284 | 62 | |||||||||||
Transfer of corporate functions | 5 | 480 | 6 | 1,926 | ||||||||||||
Depreciation and amortization | 6,897 | 6,175 | 13,058 | 12,683 | ||||||||||||
Operating income (loss) | $ | 875 | $ | 174 | $ | 3,402 | $ | (6,546 | ) | |||||||
Interest expense | 7,001 | 6,167 | 13,913 | 12,292 | ||||||||||||
Other (income) expense, net | (412 | ) | (494 | ) | 3,452 | (1,236 | ) | |||||||||
Income tax benefit | (429 | ) | (1,619 | ) | (6,048 | ) | (5,883 | ) | ||||||||
NET LOSS | $ | (5,285 | ) | $ | (3,880 | ) | $ | (7,915 | ) | $ | (11,719 | ) |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Depreciation and amortization: | ||||||||||||||||
Direct | $ | 6,234 | $ | 5,489 | $ | 11,805 | $ | 11,267 | ||||||||
Retail | 293 | 353 | 575 | 707 | ||||||||||||
Corporate / other | 370 | 333 | 678 | 709 | ||||||||||||
Total depreciation and amortization | $ | 6,897 | $ | 6,175 | $ | 13,058 | $ | 12,683 |
(in thousands) | August 3, 2018 | July 28, 2017 | February 2, 2018 | |||||||||
Total Assets: | ||||||||||||
Direct | $ | 856,293 | $ | 846,313 | $ | 856,986 | ||||||
Retail | 53,379 | 73,953 | 49,933 | |||||||||
Corporate / other | 220,771 | 202,139 | 217,216 | |||||||||
Total assets | $ | 1,130,443 | $ | 1,122,405 | $ | 1,124,135 |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Capital expenditures: | ||||||||||||||||
Direct | $ | 9,874 | $ | 8,832 | $ | 20,462 | $ | 20,213 | ||||||||
Retail | 1,581 | 9 | 1,741 | 10 | ||||||||||||
Total capital expenditures | $ | 11,455 | $ | 8,841 | $ | 22,203 | $ | 20,223 |
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
(in thousands) | August 3, 2018 | July 28, 2017 | August 3, 2018 | July 28, 2017 | ||||||||||||
Net revenue: | ||||||||||||||||
United States | $ | 271,011 | $ | 264,830 | $ | 527,178 | $ | 497,155 | ||||||||
Europe | 25,938 | 26,808 | 57,105 | 52,205 | ||||||||||||
Asia | 10,996 | 10,552 | 23,487 | 21,195 | ||||||||||||
Total Net revenue | $ | 307,945 | $ | 302,190 | $ | 607,770 | $ | 570,555 |
August 3, 2018 | ||||||||
(in thousands) | 13 Weeks Ended | 26 Weeks Ended | ||||||
Deferred Revenue Beginning of Period | $ | 15,890 | $ | 12,838 | ||||
Deferred Revenue Recognized in Period | (15,890 | ) | (12,838 | ) | ||||
Revenue Deferred in Period | 8,460 | 8,460 | ||||||
Deferred Revenue End of Period | $ | 8,460 | $ | 8,460 |
August 3, 2018 | ||||||||
(in thousands) | 13 Weeks Ended | 26 Weeks Ended | ||||||
Balance as of Beginning of Period | $ | 19,290 | $ | 19,272 | ||||
Gift cards sold | 9,281 | 25,353 | ||||||
Gift cards redeemed | (11,683 | ) | (26,347 | ) | ||||
Gift card breakage | (262 | ) | (1,652 | ) | ||||
Balance as of August 3, 2018 | $ | 16,626 | $ | 16,626 |
• | 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 Second Quarter 2018, Second Quarter 2017, Year-to-Date 2018 and Year-to-Date 2017. |
• | 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 | ||||||||||||||
August 3, 2018 | July 28, 2017 | |||||||||||||
(in thousands) | $'s | % of Net revenue | $’s | % of Net revenue | ||||||||||
Net revenue | $ | 307,945 | 100.0 | % | $ | 302,190 | 100.0 | % | ||||||
Cost of sales (excluding depreciation and amortization) | 171,179 | 55.6 | % | 168,025 | 55.6 | % | ||||||||
Gross profit | 136,766 | 44.4 | % | 134,165 | 44.4 | % | ||||||||
Selling and administrative | 129,041 | 41.9 | % | 127,336 | 42.1 | % | ||||||||
Depreciation and amortization | 6,897 | 2.2 | % | 6,175 | 2.0 | % | ||||||||
Other operating (income) expense, net | (47 | ) | — | % | 480 | 0.2 | % | |||||||
Operating income (loss) | 875 | 0.3 | % | 174 | 0.1 | % | ||||||||
Interest expense | 7,001 | 2.3 | % | 6,167 | 2.0 | % | ||||||||
Other (income) expense, net | (412 | ) | (0.1 | )% | (494 | ) | (0.2 | )% | ||||||
Loss before income taxes | (5,714 | ) | (1.9 | )% | (5,499 | ) | (1.8 | )% | ||||||
Income tax benefit | (429 | ) | (0.1 | )% | (1,619 | ) | (0.5 | )% | ||||||
NET LOSS | $ | (5,285 | ) | (1.7 | )% | $ | (3,880 | ) | (1.3 | )% |
26 Weeks Ended | ||||||||||||||
August 3, 2018 | July 28, 2017 | |||||||||||||
(in thousands) | $’s | % of Net revenue | $’s | % of Net revenue | ||||||||||
Net revenue | $ | 607,770 | 100.0 | % | $ | 570,555 | 100.0 | % | ||||||
Cost of sales (excluding depreciation and amortization) | 337,979 | 55.6 | % | 313,748 | 55.0 | % | ||||||||
Gross profit | 269,791 | 44.4 | % | 256,807 | 45.0 | % | ||||||||
Selling and administrative | 253,041 | 41.6 | % | 248,682 | 43.6 | % | ||||||||
Depreciation and amortization | 13,058 | 2.1 | % | 12,683 | 2.2 | % | ||||||||
Other operating (income) expense, net | 290 | — | % | 1,988 | 0.3 | % | ||||||||
Operating income (loss) | 3,402 | 0.6 | % | (6,546 | ) | (1.1 | )% | |||||||
Interest expense | 13,913 | 2.3 | % | 12,292 | 2.2 | % | ||||||||
Other (income) expense, net | 3,452 | 0.6 | % | (1,236 | ) | (0.2 | )% | |||||||
Loss before income taxes | (13,963 | ) | (2.3 | )% | (17,602 | ) | (3.1 | )% | ||||||
Income tax benefit | (6,048 | ) | (1.0 | )% | (5,883 | ) | (1.0 | )% | ||||||
NET LOSS | $ | (7,915 | ) | (1.3 | )% | $ | (11,719 | ) | (2.1 | )% |
• | 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. |
◦ | Transfer of corporate functions - severance and contract losses associated with a transition of certain corporate activities from our New York office to our Dodgeville headquarters. |
◦ | Gain or loss on property and equipment - management considers the gains or losses on asset valuation to result from investing decisions rather than ongoing operations. |
13 Weeks Ended | ||||||||||||||
August 3, 2018 | July 28, 2017 | |||||||||||||
(in thousands) | $’s | % of Net revenue | $’s | % of Net revenue | ||||||||||
Net loss | $ | (5,285 | ) | (1.7 | )% | $ | (3,880 | ) | (1.3 | )% | ||||
Income tax benefit | (429 | ) | (0.1 | )% | (1,619 | ) | (0.5 | )% | ||||||
Other (income) expense, net | (412 | ) | (0.1 | )% | (494 | ) | (0.2 | )% | ||||||
Interest expense | 7,001 | 2.3 | % | 6,167 | 2.0 | % | ||||||||
Operating income (loss) | 875 | 0.3 | % | 174 | 0.1 | % | ||||||||
Depreciation and amortization | 6,897 | 2.2 | % | 6,175 | 2.0 | % | ||||||||
Transfer of corporate functions | 5 | — | % | 480 | 0.2 | % | ||||||||
(Gain) on property and equipment | (52 | ) | — | % | — | — | % | |||||||
Adjusted EBITDA | $ | 7,725 | 2.5 | % | $ | 6,829 | 2.3 | % |
26 Weeks Ended | ||||||||||||||
August 3, 2018 | July 28, 2017 | |||||||||||||
(in thousands) | $’s | % of Net revenue | $’s | % of Net revenue | ||||||||||
Net loss | $ | (7,915 | ) | (1.3 | )% | $ | (11,719 | ) | (2.1 | )% | ||||
Income tax benefit | (6,048 | ) | (1.0 | )% | (5,883 | ) | (1.0 | )% | ||||||
Other (income) expense, net | 3,452 | 0.6 | % | (1,236 | ) | (0.2 | )% | |||||||
Interest expense | 13,913 | 2.3 | % | 12,292 | 2.2 | % | ||||||||
Operating income (loss) | 3,402 | 0.6 | % | (6,546 | ) | (1.1 | )% | |||||||
Depreciation and amortization | 13,058 | 2.1 | % | 12,683 | 2.2 | % | ||||||||
Transfer of corporate functions | 6 | — | % | 1,926 | 0.3 | % | ||||||||
Loss on property and equipment | 284 | — | % | 62 | — | % | ||||||||
Adjusted EBITDA | $ | 16,750 | 2.8 | % | $ | 8,125 | 1.4 | % |
• | Improved inventory management reducing both overall and aged inventory, |
• | Lower Accounts payable payments in Fiscal 2018 due to timing of inventory receipts and payments, |
• | Higher receipts from Accounts receivable, net in Fiscal 2018 due to high customer receivables outstanding at the beginning of the year related to the Delta Airlines launch. |
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)). | ||
Letter Agreement with respect to RRC/CRC Charges, dated as of July 9, 2018, by and between Sears, Roebuck and Co. and Lands' End, Inc., amending Lands' End Shops at Sears Retail Operations Agreement, dated as of April 4, 2014.* | ||
Letter Agreement with respect to Assistant Store Manager - Apparel Charges, dated as of July 9, 2018, by and between Sears, Roebuck and Co. and Lands' End, Inc., amending Lands' End Shops at Sears Retail Operations Agreement, dated as of April 4, 2014.* | ||
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. | RRC/CRC Charges. The Parties acknowledge that the Retail Ops Agreement provides certain charges to be imposed on Lands’ End for (i) Inbound Vendor Cross Docking and (ii) Disposition of Unsalable, Defective and Obsolete Goods as set forth on pages A-13, A-14, and A-15 of Appendix #2 thereto which the parties desire to revise effective February 1, 2018. Accordingly, the Parties hereby agree that pages A-13, A-14, and A-15 are hereby amended as set forth in the column entitled “Changes” on the attached Exhibit A. |
2. | No Other Amendments. Except as expressly amended herein, the Retail Ops Agreement shall continue in full force and effect in accordance with the terms as if fully set forth herein. |
Sincerely, | ||||
LANDS’ END, INC. | ||||
/s/ Claudia Mazo | ||||
Claudia Mazo | ||||
SVP Retail | ||||
AGREED AND ACKNOWLEDGED | ||||
SEARS, ROEBUCK AND CO. | ||||
By: | /s/ Robert Phelan | |||
Its: | SVP, Finance | |||
Date: | July 23, 2018 |
Services | Fees/Methodology for Determining Fees | Changes | ||||||
2. | Inbound Vendor Cross Docking | Current Fixed (Monthly): $32,600 Variable Handling: based on receipt and disbursement volume and vary by flowpath (e.g., automatic cross-dock). Rate at actual cost. | Current Fixed (Monthly): $21,190 | |||||
• | SRC will provide cross-dock access into the Designated Company Stores. | |||||||
• | Cross dock cartons by 2 forms: | |||||||
1.1 | Cross dock Inbound Vendor cartons from upstream DCs and move cartons to stores while providing systemic information of contents (JIT, RIM Flow and Central Stocking processes) | |||||||
1.2 | Cross dock Vendor Direct to Store cartons via servicing RRC (EMP Expedited Merchandise Process) | Variable Handling: based on receipt and disbursement volume and vary by flowpath (e.g., automatic cross-dock). Rate at actual cost. | ||||||
1.2.1 | RRC acknowledges the carton ID (no receipt) as arrived at RRC and ships out on next store delivery | |||||||
1.2.2 | RRC passes vendor provided information via ASN to store. Store receipt triggers payment to vendor. | |||||||
• | Move cross dock cartons to stores on next outbound delivery. DCs do not stock cross dock product | |||||||
ACD rate: $0.20/ctn | ||||||||
2014 Full RRC Rate Table: | ||||||||
Fixed: LE will be billed fixed amount set annually based upon previous year’s DC handling expenses attributed to LE. | ||||||||
LE will be charged variable handling rates for RDC services for merchandise shipped directly from an RRC to a LE store, if that service is requested at a rate of actual cost. | ||||||||
Rate & Fee Adjustments: On each anniversary of the Effective Date of this Agreement, LE’s rates and fees are subject to an annual adjustment per SRC’s cost structure. | Rate & Fee Adjustments: Before the beginning of each Fiscal Year hereafter, LE’s Current Fixed (Monthly) Fee will be adjusted proportionately to changes to LE Store Count. e.g. (Beg. FY2019 Stores/Beg FY 2018 Stores)*Current Fixed (Monthly) Rate | |||||||
CRC (Pages A14 and A-15) | ||||||||
Services | Fees/Methodology for Determining Fees | Changes | ||||||
2. | Disposition of Unsalable, Defective and Obsolete Goods | CRC handling services are billed on a per scan basis. | ||||||
• | Process DC returns to Vendor via RA procedures (Return Authorization) | Rate at actual cost. | ||||||
• | Provide liquidation service (sell to salvager, destroy/deface and dispose) per LE direction | |||||||
• | Manage the liquidation of damaged merchandise (assigned to damage bin) per LE guidelines | Transportation rates are based on the average size of the item and charged per scan. LE is assigned a rate based on the average cube per selling unit. | ||||||
• | SRC manages store liquidation recoveries such as Store RA flowing via SRC's reverse logistics network. | Fixed rate set at beginning of fiscal year based on changes to LE Store Count. e.g. (Beg. FY2019/Beg. FY2018 Stores)* Current Fixed (Monthly) Rate | ||||||
• | Salvage revenue is derived from recovery of salvageable merchandise. Rate is set by BU in accordance with our agreement with third party(s). | Fixed rate set at beginning of year based on prior year actual fixed costs attributed to LE. Fixed charges represent the portion of the CRC expense that does not vary with volume. | ||||||
2014 CRC Rates are as follows: CRC Handling: $0.349/scan Transportation: $0.130/scan Supplies: $0.068/Scan Fixed (Monthly): $16,611 Salvage Revenue: passed through based upon actual receipt. | Current Overall Scan Rate: $0.47 2018 CRC Handling Rate: $0.415/scan 2018 Transportation Rate: $0.130/scan 2018 Supplies Rate: $0.048/scan 2018 Total CRC Rate: $0.593/scan 2018 Fixed (Monthly): $10,289 |
Sincerely, | ||||
LANDS’ END, INC. | ||||
/s/ Claudia Mazo | ||||
Claudia Mazo | ||||
SVP Retail | ||||
AGREED AND ACKNOWLEDGED | ||||
SEARS, ROEBUCK AND CO. | ||||
By: | /s/ Paul Paluch | |||
Its: | PP | |||
Date: | 8-23-2018 |
Services | Fees/Methodology for Determining Fees | Changes | |
*Assistant Store Manager - Apparel Manage the LE Shop business in the store and lead/train associates in the department in stores with no dedicated LE salaried manager | Billed using the following formula: | The Assistant Store Manager - Apparel section of Appendix #2, Page A - 9 in the original Retail Operations Agreement shall be rendered null and void, effective February 1, 2018, SRC will not charge LE any amount of the Apparel Assistant Store Manager cost going forward | |
(Actual cost of Apparel Assistant Store Manager *(store level LE Sales/store level Apparel ASM Sales) = fee | |||
Apparel ASM Sales are the sales of the divisions that the Apparel ASM manages |
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. |
September 6, 2018 |
/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. |
September 6, 2018 |
/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. |
September 6, 2018 |
/s/ Jerome S. Griffith |
Jerome S. Griffith |
Chief Executive Officer and President (Principal Executive Officer) |
September 6, 2018 |
/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 |
6 Months Ended | |
---|---|---|
Aug. 03, 2018 |
Sep. 04, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Lands' End, Inc. | |
Entity Central Index Key | 0000799288 | |
Current Fiscal Year End Date | --02-01 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Aug. 03, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 32,212,290 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
|
Net revenue | $ 307,945 | $ 302,190 | $ 607,770 | $ 570,555 |
Cost of sales (excluding depreciation and amortization) | 171,179 | 168,025 | 337,979 | 313,748 |
Gross profit | 136,766 | 134,165 | 269,791 | 256,807 |
Selling and administrative | 129,041 | 127,336 | 253,041 | 248,682 |
Depreciation and amortization | 6,897 | 6,175 | 13,058 | 12,683 |
Other operating (income) expense, net | (47) | 480 | 290 | 1,988 |
Operating income (loss) | 875 | 174 | 3,402 | (6,546) |
Interest expense | 7,001 | 6,167 | 13,913 | 12,292 |
Other (income) expense, net | (412) | (494) | 3,452 | (1,236) |
Loss before income taxes | (5,714) | (5,499) | (13,963) | (17,602) |
Income tax benefit | (429) | (1,619) | (6,048) | (5,883) |
NET LOSS | $ (5,285) | $ (3,880) | $ (7,915) | $ (11,719) |
NET LOSS PER COMMON SHARE | ||||
Basic (in USD per share) | $ (0.16) | $ (0.12) | $ (0.25) | $ (0.37) |
Diluted (in USD per share) | $ (0.16) | $ (0.12) | ||
Basic weighted average common shares outstanding (shares) | 32,212 | 32,079 | 32,168 | 32,054 |
Diluted weighted average common shares outstanding (shares) | 32,212 | 32,079 | 32,168 | 32,054 |
Condensed Consolidated Statements of Comprehensive Operations Statement - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
|
NET LOSS | $ (5,285) | $ (3,880) | $ (7,915) | $ (11,719) |
Other comprehensive (loss) income, net of tax, foreign currency translation adjustments | (1,540) | 622 | (3,176) | 1,139 |
COMPREHENSIVE LOSS | $ (6,825) | $ (3,258) | $ (11,091) | $ (10,580) |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Aug. 03, 2018 |
Feb. 02, 2018 |
Jul. 28, 2017 |
---|---|---|---|
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 | 32,212,290 | 32,101,793 | 32,087,532 |
Common stock, shares outstanding | 32,212,290 | 32,101,793 | 32,087,532 |
Background and Basis of Presentation |
6 Months Ended |
---|---|
Aug. 03, 2018 | |
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, footwear and home products. We offer products through catalogs, online at www.landsend.com and affiliated specialty and international websites, and through retail locations. We are a classic American lifestyle brand with a passion for quality, legendary service and real value, and seek to deliver timeless style for women, men, kids and the home. Terms that are commonly used in the Company's notes to Condensed Consolidated Financial Statements are defined as follows: • ABL Facilities - Collectively, the Prior ABL Facility and the Current ABL Facility • Adjusted EBITDA - Net loss net of Income tax benefit, Other income, net, Interest expense, Depreciation and amortization and certain significant items • ASC - FASB Accounting Standards Codification • ASU - FASB Accounting Standards Update • CAM - Common area maintenance for leased properties • Company Operated stores - Lands' End retail stores • Current ABL Facility - Asset-based senior secured credit agreements, dated as of November 16, 2017, with Wells Fargo Bank, N.A. and certain other lenders • Debt Facilities - Collectively, the Current ABL Facility and the Term Loan Facility • Deferred Awards - Time vesting stock awards • EPS - Earnings (loss) per share • ESL - ESL Investments, Inc. and its investment affiliates, including Edward S. Lampert • FASB - Financial Accounting Standards Board • First Quarter 2018 - The thirteen weeks ended May 4, 2018 • Fiscal 2018 - The fifty-two weeks ending February 1, 2019 • Fiscal 2020 - The fifty-two weeks ending January 29, 2021 • Fourth Quarter 2017 - The fourteen weeks ended February 2, 2018 • GAAP - Accounting principles generally accepted in the United States • Lands' End Shops at Sears - Lands' End shops operated within Sears stores • LIBOR - London inter-bank offered rate • Option Awards - Stock option awards • Performance Awards - Performance-based stock awards • Prior ABL Facility - Asset-based senior secured credit agreements, dated as of April 4, 2014, with Bank of America, N.A. and certain other lenders, terminated November 16, 2017 • Sears Holdings or Sears Holdings Corporation - Sears Holdings Corporation, a Delaware corporation, and its consolidated subsidiaries (other than, for all periods following the Separation, Lands' End) • SEC - United States Securities and Exchange Commission • Second Quarter 2018 - The thirteen weeks ended August 3, 2018. • Second Quarter 2017 - The thirteen weeks ended July 28, 2017 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 - Shop Your Way member loyalty program • Target Shares - Shares to be delivered to participants based on achievement of target performance metrics • Tax Act - The Tax Cuts and Jobs Act passed by the United States government on December 22, 2017 • 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 agreements, dated as of April 4, 2014, with Bank of America, N.A. and certain other lenders • UTBs - Gross unrecognized tax benefits • Year-to-Date 2018 - The twenty-six weeks ended August 3, 2018 • Year-to-Date 2017 - The twenty-six weeks ended July 28, 2017 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 29, 2018. Reclassifications In the First Quarter 2018, the Company adopted ASU 2016-18, Restricted Cash, which changed the required presentation of Restricted cash on the Condensed Consolidated Statements of Cash Flows to include those amounts generally described as Restricted cash or restricted cash equivalents with Cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown. As a result of the adoption, the Company reclassified the amount of beginning-of-period cash, cash equivalents, and restricted cash presented in the Condensed Consolidated Statement of Cash Flows to include Restricted cash. |
Recent Accounting Pronouncements |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS 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. In First Quarter 2018, the Company adopted the guidance using the modified retrospective method resulting in only those contracts that were open as of the date of adoption requiring assessment. The comparative information presented in the Condensed Consolidated Financial Statements was not restated and is reported under the accounting standards in effect for the periods presented. The adoption of this guidance did not have, and is not expected to have, a significant impact on our reported revenue, gross margin or income from operations. Revenues include sales of merchandise and delivery revenues related to merchandise sold. Substantially all of the Company's revenue is recognized when control of product passes to customers, which for the Direct segment is when the merchandise is expected to be received by the customer and for the Retail segment, is at the time of sale in the store. Revenues are adjusted for estimated returns and volume rebates with a corresponding liability recorded. Effective in the First Quarter 2018, the Company changed its balance sheet presentation for estimated product returns by reporting a product return asset for the right to receive returned products and a returns liability for amounts expected to be refunded to customers as a result of product returns. The product return asset is reported within Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheet. Prior to adoption, product return assets were netted against deferred revenue and reported within Other current liabilities. The impact of the adoption was recorded as a non-cash transaction in other operating assets and other operating liabilities in the condensed consolidated statement of cash flows.The returns liability and payments received from customers for future delivery of products are reported within Other current liabilities in the Condensed Consolidated Balance Sheet. The adoption of this guidance did not have an impact on the recording of these liabilities. The Company recorded a decrease to opening Accumulated deficit and Other current liabilities in the Condensed Consolidated Balance Sheet of $1.1 million due to the cumulative impact related to the accounting for gift card breakage. The impact of adoption on the Condensed Consolidated Balance Sheet as of February 3, 2018 was:
The impact of the new revenue recognition guidance on our Condensed Consolidated Balance Sheet as of August 3, 2018 was:
See Note 12, Revenue for additional disclosures. 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. The Company has evaluated the impacts of this ASU and has identified a change in the timing of recognition of revenue from gift cards. The Company will recognize breakage income over the breakage period for the estimated portion of unredeemed gift cards that is unlikely to be redeemed where the Company does not have an obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. This guidance was adopted by the Company during First Quarter 2018 and resulted in a cumulative impact to be recognized as a reduction in Accumulated deficit and Other current liabilities of $1.1 million for estimated gift card breakage occurring prior to Fiscal 2018, under the modified retrospective approach described under the preceding Revenue from Contracts with Customers section. 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 Condensed Consolidated Statement of Cash Flows. This guidance was adopted by the Company during First Quarter 2018. As a result of the adoption, the Company changed the presentation in its Condensed Consolidated Statements of Cash Flows for all periods presented. 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 result in 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 |
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Earnings Per Share, Basic and Diluted [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | LOSS PER SHARE The numerator for both basic and diluted EPS is net 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 440,906, 41,080, 454,433, and 69,239 anti-dilutive shares excluded from the diluted weighted average shares outstanding for Second Quarter 2018, Second Quarter 2017, Year-to-Date 2018, and Year-to-Date 2017, respectively. |
Other Comprehensive (Loss) Income |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | DEBT The Company's debt consisted of the following:
(1) July 28, 2017 amounts pertain to Prior ABL Facility. The following table summarizes the Company's borrowing availability under the ABL Facilities:
(1) July 28, 2017 amounts pertain to Prior 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 Facilities is subject to adjustment based on the average excess availability under the ABL Facilities for the preceding fiscal quarter. LIBOR borrowings will range from 1.25% to 1.75% and 1.50% to 2.00% for the Current ABL Facility and Prior ABL Facility, respectively. Base rate borrowings will range from 0.50% to 1.00% for the ABL Facilities. Customary agency fees are payable pursuant to the terms of the Debt Facilities. The ABL Facilities fees also include (i) commitment fees in an amount equal to 0.25% and 0.25% to 0.375% of the daily unused portions of the Current ABL Facility and Prior ABL Facility, respectively, 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 Current 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 August 3, 2018. 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. |
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:
The following table provides a summary of the activities for stock awards for Year-to-Date 2018:
(1) For those awards with respect to which the performance period is not yet complete, the number of unvested shares in the table above is based on the participants earning their Target Shares at 100%; however, the cumulative expense recognized reflects changes in estimated achievement of the performance measures as they occur. Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $10.0 million as of August 3, 2018, which is expected to be recognized ratably over a weighted average period of 2.2 years. Deferred Awards granted to various employees during Fiscal 2018 generally vest ratably over a period of three years. Total unrecognized stock-based compensation expense related to unvested Option Awards was approximately $2.0 million as of August 3, 2018, which is expected to be recognized ratably over a weighted average period of 2.6 years. The Option Awards have a life of ten years and vest ratably over a period of four years. The fair value of each Option Award was estimated on the grant date using the Black-Scholes option pricing model. As of August 3, 2018, 85,784 shares related to Option Awards were exercisable. No options have been exercised as of August 3, 2018. Total unrecognized stock-based compensation expense related to unvested Performance Awards was approximately $3.3 million as of August 3, 2018, which is expected to be recognized ratably over a weighted average period of 2.6 years. Performance Awards granted to various employees during Fiscal 2018 vest, if earned, after completion of the applicable three year performance period. |
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 Restricted cash is reflected on the Condensed Consolidated Balance Sheets at fair value. The fair value of restricted cash was $2.0 million, $3.3 million and $2.4 million as of August 3, 2018, July 28, 2017 and February 2, 2018, respectively based on Level 1 inputs. Restricted cash amounts are valued based upon statements received from financial institutions. The carrying amount of the Company's Cash and cash equivalents, Accounts receivable, Accounts payable and Other current liabilities approximate their fair value as recorded due to the short-term maturity 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 August 3, 2018, July 28, 2017, and February 2, 2018. There were no nonfinancial assets or nonfinancial liabilities recognized at fair value on a nonrecurring basis as of August 3, 2018, July 28, 2017, and February 2, 2018. |
Income Taxes |
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Aug. 03, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company recorded a tax benefit for the Second Quarter 2018 and Year-to-Date 2018, with effective tax rates of 7.5% and 43.3%, respectively. This compares to effective tax rates of 29.4% and 33.4% for the Second Quarter 2017 and Year-to-Date 2017. The lower effective tax rate was primarily due to the Tax Act. The Year-to-Date 2018 rate also reflects the reversal of UTBs reported in the First Quarter 2018 driven by favorable state tax audit settlements for periods prior to separation from Sears Holdings Corporation, partially offset by impacts of the Tax Act. The Tax Act was enacted on December 22, 2017. In connection with the Tax Act, the Company re-measured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future under the Tax Act. Pursuant to Staff Accounting Bulletin No. 118, a provisional amount for the change in law was recorded in Fourth Quarter 2017. As these estimates are refined and potential planning opportunities present themselves, the Company will revise its estimate. The Company will continue its assessment of the impact of the Tax Act on the business and Consolidated Financial Statements throughout the one-year measurement period as provided by SAB 118. As of August 3, 2018, the Company had UTBs of $1.9 million. Of this amount, $1.5 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, 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 $2.6 million, $11.8 million and $7.4 million as of August 3, 2018, July 28, 2017, and February 2, 2018, respectively. |
Commitments and Contingencies |
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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. |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 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 the Company. Descriptions of these transactions are included in the Company's Fiscal 2017 Form 10-K filed with the SEC on March 29, 2018 and proxy statement filed with the SEC on April 6, 2018. 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's contract under which it receives sourcing services from an affiliate of Sears Holdings runs through June 30, 2020. The Company continues to participate in the Shop Your Way program. 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 was net of agreed upon costs directly attributable to the Company providing these services. The income was 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 August 3, 2018, July 28, 2017 and February 2, 2018, the Company included $1.9 million, $3.0 million and $2.0 million in Accounts receivable, net, respectively, and $2.0 million, $3.6 million and $2.9 million in Accounts payable, respectively, in the Condensed Consolidated Balance Sheets to reflect amounts due from and owed to Sears Holdings. At August 3, 2018, July 28, 2017 and February 2, 2018, respectively, a $2.6 million, $11.8 million and $7.4 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 casual clothing, accessories, footwear, and home products, and has two reportable segments: Direct and Retail. Product revenue is divided by product categories: Apparel and Non-apparel. The Non-apparel revenue includes 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 reportable segments are strategic business units that offer similar products and services but are either shipped directly from its warehouses (Direct) or sold through 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 Net loss appearing on the Condensed Consolidated Statements of Operations net of Income tax benefit, Other income, net, Interest expense, Depreciation and amortization and certain 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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Revenue Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer | NOTE 12. REVENUE The Company adopted authoritative guidance related to the recognition of revenue from contracts with customers effective First Quarter 2018 using the modified retrospective method. The comparative information presented in the Condensed Consolidated Financial Statements was not restated and is reported under the accounting standards in effect for the periods presented. See Note 2, Recent Accounting Pronouncements, for a discussion of the significant changes resulting from adoption of the guidance. The adoption of the guidance did not have a significant impact on revenue. Revenues include sales of merchandise and delivery revenues related to merchandise sold. Substantially all of the Company's revenue is recognized when control of product passes to customers which for the Direct segment is when the merchandise is expected to be received by the customer and for the Retail segment is at the time of sale in the store. The Company recognizes revenue, including shipping and handling fees billed to customers, in the amount expected to be received when control of the Company's products transfers to customers, and is presented net of various forms of promotions, which range from contractually-fixed percentage price reductions to sales returns, discounts, and other incentives that may vary in amount. Variable amounts are estimated based on an analysis of historical experience and adjusted as better estimates become available. There were no changes to estimates in Second Quarter 2018. The Company's revenues are disaggregated by product categories and geographic location. Revenue by product category is presented in Note 11, Segment Reporting. Revenue by geographic location was:
The Company elected to exclude from revenue, taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and concurrent with revenue-producing activities, and as a result there is no change in presentation from prior comparative periods. Contract Liabilities Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in Net revenue in the Condensed Consolidated Statements of Operations. The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer reported in Other current liabilities in the Condensed Consolidated Balance Sheets and amounts recognized through Net revenues for each period presented. The remainder of deferred revenue as of August 3, 2018 is expected to be recognized in Net revenue in the fiscal quarter ending November 2, 2018, as products are delivered to customers.
The Company's policy with respect to gift cards is to record revenue when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage and the Company determines that it does not have an obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. Gift card breakage is recorded within Net revenue in the Condensed Consolidated Statements of Operations. Prior to their redemption, gift cards are recorded as a liability, included within Other current liabilities in the Condensed Consolidated Balance Sheets. The total contract liability related to gift cards issued was $16.6 million, $18.0 million and $19.3 million as of August 3, 2018, July 28, 2017 and February 2, 2018, respectively. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards:
Refund Liabilities Refund liabilities, primarily associated with product sales returns and retrospective volume rebates represent variable consideration and are estimated and recorded as a reduction to Net revenue based on historical experience. As of August 3, 2018, July 28, 2017 and February 2, 2018, $18.6 million, $9.6 million and $11.1 million, respectively, of refund liabilities, primarily associated with product returns, were reported in Other current liabilities in the Condensed Consolidated Balance Sheets. Prior to adoption, product return assets and return liabilities were reported within Other current liabilities. As of the adoption date, the product return assets were reclassified and reported as a component of Prepaid expenses and other current assets, and return liabilities continued to be reported in Other current liabilities in the Company's Condensed Consolidated Balance Sheet. See Note 2, Recent Accounting Pronouncements, for additional details on the impact of this change. |
Recent Accounting Pronouncements (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements | 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. In First Quarter 2018, the Company adopted the guidance using the modified retrospective method resulting in only those contracts that were open as of the date of adoption requiring assessment. The comparative information presented in the Condensed Consolidated Financial Statements was not restated and is reported under the accounting standards in effect for the periods presented. The adoption of this guidance did not have, and is not expected to have, a significant impact on our reported revenue, gross margin or income from operations. Revenues include sales of merchandise and delivery revenues related to merchandise sold. Substantially all of the Company's revenue is recognized when control of product passes to customers, which for the Direct segment is when the merchandise is expected to be received by the customer and for the Retail segment, is at the time of sale in the store. Revenues are adjusted for estimated returns and volume rebates with a corresponding liability recorded. Effective in the First Quarter 2018, the Company changed its balance sheet presentation for estimated product returns by reporting a product return asset for the right to receive returned products and a returns liability for amounts expected to be refunded to customers as a result of product returns. The product return asset is reported within Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheet. Prior to adoption, product return assets were netted against deferred revenue and reported within Other current liabilities. The impact of the adoption was recorded as a non-cash transaction in other operating assets and other operating liabilities in the condensed consolidated statement of cash flows.The returns liability and payments received from customers for future delivery of products are reported within Other current liabilities in the Condensed Consolidated Balance Sheet. The adoption of this guidance did not have an impact on the recording of these liabilities. The Company recorded a decrease to opening Accumulated deficit and Other current liabilities in the Condensed Consolidated Balance Sheet of $1.1 million due to the cumulative impact related to the accounting for gift card breakage. The impact of adoption on the Condensed Consolidated Balance Sheet as of February 3, 2018 was:
The impact of the new revenue recognition guidance on our Condensed Consolidated Balance Sheet as of August 3, 2018 was:
See Note 12, Revenue for additional disclosures. 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. The Company has evaluated the impacts of this ASU and has identified a change in the timing of recognition of revenue from gift cards. The Company will recognize breakage income over the breakage period for the estimated portion of unredeemed gift cards that is unlikely to be redeemed where the Company does not have an obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. This guidance was adopted by the Company during First Quarter 2018 and resulted in a cumulative impact to be recognized as a reduction in Accumulated deficit and Other current liabilities of $1.1 million for estimated gift card breakage occurring prior to Fiscal 2018, under the modified retrospective approach described under the preceding Revenue from Contracts with Customers section. 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 Condensed Consolidated Statement of Cash Flows. This guidance was adopted by the Company during First Quarter 2018. As a result of the adoption, the Company changed the presentation in its Condensed Consolidated Statements of Cash Flows for all periods presented. 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 result in 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 (Tables) |
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Aug. 03, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] |
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 03, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share, Basic and Diluted [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 440,906, 41,080, 454,433, and 69,239 anti-dilutive shares excluded from the diluted weighted average shares outstanding for Second Quarter 2018, Second Quarter 2017, Year-to-Date 2018, and Year-to-Date 2017, respectively. |
Other Comprehensive (Loss) Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 03, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income (loss) |
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 03, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 Facilities:
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Schedule of aggregate scheduled maturities | The Company's debt consisted of the following:
(1) |
Stock-Based Compensation (Tables) |
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Aug. 03, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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Fair Value of Financial Assets and Liabilities (Tables) |
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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:
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Related Party (Tables) |
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Aug. 03, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Segment Reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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
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Revenue Revenue (Tables) |
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Aug. 03, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue |
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Activity of Gift Card Liability Balance |
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Deferred Revenue, by Arrangement, Disclosure [Table Text Block] |
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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
|
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Net loss | $ 5,285 | $ 3,880 | $ 7,915 | $ 11,719 |
Basic weighted average common shares outstanding (shares) | 32,212,000 | 32,079,000 | 32,168,000 | 32,054,000 |
Dilutive effect of stock awards | 0 | 0 | 0 | 0 |
Diluted weighted average common shares outstanding (shares) | 32,212,000 | 32,079,000 | 32,168,000 | 32,054,000 |
Basic (in USD per share) | $ (0.16) | $ (0.12) | $ (0.25) | $ (0.37) |
Diluted (in USD per share) | $ (0.16) | $ (0.12) | ||
Antidilutive securities excluded from computation of earnings per share, amount | 440,906 | 41,080 |
Other Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
Feb. 02, 2018 |
Jan. 27, 2017 |
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Accumulated Other Comprehensive (Loss) Income, Net of Tax [Roll Forward] | ||||||
Beginning balance: Accumulated other comprehensive loss (net of tax of $3,250, $6,189, $2,816 and $6,691, respectively) | $ (12,228) | $ (11,909) | $ (10,592) | $ (12,426) | ||
Other comprehensive (loss) income: | ||||||
Foreign currency translation adjustments (net of tax of $410, $(135), $844, and $(637), respectively) | (1,540) | 622 | (3,176) | 1,139 | ||
Ending balance: Accumulated other comprehensive loss (net of tax of $3,660, $6,054, $3,660, and $6,054, respectively) | (13,768) | (11,287) | (13,768) | (11,287) | ||
Accumulated other comprehensive loss, tax | 3,660 | 6,054 | $ 3,660 | $ 6,054 | $ 3,250 | $ 6,189 |
Foreign currency translations adjustment, tax | $ 410 | $ (135) |
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
Feb. 02, 2018 |
||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation | $ 1,730 | $ 1,221 | $ 2,696 | $ 1,800 | ||||
Restricted Stock Units (RSUs) [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation | $ 1,231 | 1,015 | $ 1,940 | 1,436 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 633,000 | 633,000 | 497,000 | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 10,000 | $ 10,000 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 2 months | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 21.86 | $ 21.86 | $ 22.07 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 289,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 22.00 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | (137,000) | (137,000) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ 21.85 | $ 21.85 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (16,000) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 22.13 | |||||||
Employee Stock Option [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation | $ 187 | 185 | $ 374 | 276 | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 2,000 | $ 2,000 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 7 months | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 257,000 | 257,000 | 343,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Option, Nonvested, Weighted Average Exercise Price | $ 8.73 | $ 8.73 | $ 8.73 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | |||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.00 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | (86,000) | (86,000) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ 8.73 | $ 8.73 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 0 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ 0.00 | |||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Exercisable Options | 85,784 | 85,784 | ||||||
Performance Shares [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based compensation | $ 312 | $ 21 | $ 382 | $ 88 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | [1] | 192,000 | 192,000 | 15,000 | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 3,300 | $ 3,300 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 7 months | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 21.90 | $ 21.90 | $ 21.94 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | [1] | 195,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 21.90 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | [1] | 0 | 0 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price | $ 0.00 | $ 0.00 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | [1] | (18,000) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 21.93 | |||||||
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Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands |
Aug. 03, 2018 |
Feb. 02, 2018 |
Jul. 28, 2017 |
---|---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Restricted cash | $ 1,953 | $ 2,356 | $ 3,300 |
Long-term debt, including short-term portion | 493,113 | 495,688 | 498,263 |
Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt, including short-term portion | 493,113 | 495,688 | 498,263 |
Fair Value | Level 1 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Restricted cash | 2,000 | 2,400 | 3,300 |
Fair Value | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt, including short-term portion | $ 476,470 | $ 443,641 | $ 418,541 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
Feb. 02, 2018 |
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Income Tax Examination [Line Items] | |||||
Effective tax rate | 7.50% | 29.40% | 43.30% | 33.40% | |
Unrecognized tax benefits | $ 1.9 | $ 1.9 | |||
Unrecognized tax benefits, if recognized, would impact effective tax rate | 1.5 | 1.5 | |||
Sears Holdings Corporation | Other assets | |||||
Income Tax Examination [Line Items] | |||||
Indemnification receivable, uncertain tax positions | $ 2.6 | $ 11.8 | $ 2.6 | $ 11.8 | $ 7.4 |
Related Party - Narrative and Related Party Costs (Details) - Sears Holdings Corporation $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Aug. 03, 2018
USD ($)
|
Jul. 28, 2017
USD ($)
|
Aug. 03, 2018
USD ($)
|
Jul. 28, 2017
USD ($)
|
Feb. 02, 2018
USD ($)
|
|
Related Party Transaction | |||||
Number of Lands’ End Shops at Sears at period end | 147 | 204 | 147 | 204 | |
Rent CAM, And occupancy costs | |||||
Related Party Transaction | |||||
Related party expenses | $ 4,027 | $ 5,597 | $ 8,521 | $ 11,506 | |
Retail services, store labor | |||||
Related Party Transaction | |||||
Related party expenses | 3,723 | 5,594 | 7,853 | 11,142 | |
Financial services and payment processing | |||||
Related Party Transaction | |||||
Related party expenses | 452 | 676 | 841 | 1,148 | |
Supply chain costs | |||||
Related Party Transaction | |||||
Related party expenses | 106 | 200 | 236 | 391 | |
Costs related to Lands' End Shops at Sears | |||||
Related Party Transaction | |||||
Related party expenses | 8,308 | 12,067 | 17,451 | 24,187 | |
Accounts receivable, net | |||||
Related Party Transaction | |||||
Accounts receivable, net, due from related party | 1,900 | 3,000 | 1,900 | 3,000 | $ 2,000 |
Accounts payable | |||||
Related Party Transaction | |||||
Accounts payable, due to related party | 2,000 | 3,600 | 2,000 | 3,600 | 2,900 |
Other assets | |||||
Related Party Transaction | |||||
Indemnification receivable, uncertain tax positions | $ 2,600 | $ 11,800 | $ 2,600 | $ 11,800 | $ 7,400 |
Related Party - Details of General Corporate Services (Details) - Sears Holdings Corporation - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
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Sourcing | ||||
Related Party Transaction | ||||
Related party expenses | $ 1,497 | $ 2,682 | $ 3,314 | $ 5,080 |
Shop Your Way | ||||
Related Party Transaction | ||||
Related party expenses | 215 | 321 | 382 | 697 |
Shared services | ||||
Related Party Transaction | ||||
Related party expenses | 48 | 48 | 95 | 95 |
Costs related general corporate services | ||||
Related Party Transaction | ||||
Related party expenses | $ 1,760 | $ 3,051 | $ 3,791 | $ 5,872 |
Related Party - Details of Use of Intellectual Property or Services (Details) - Sears Holdings Corporation - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
|
Related Party Transaction | ||||
Related party revenue, net | $ 1,045 | $ 2,236 | ||
Call center services | ||||
Related Party Transaction | ||||
Related party revenue, net | $ 0 | $ 0 | 0 | 1,160 |
Lands' End business outfitters revenue | ||||
Related Party Transaction | ||||
Related party revenue, net | 293 | 271 | 618 | 542 |
Credit card revenue | ||||
Related Party Transaction | ||||
Related party revenue, net | 169 | 221 | 322 | 433 |
Royalty income | ||||
Related Party Transaction | ||||
Related party revenue, net | 86 | 86 | 113 | 114 |
Gift card (expense) | ||||
Related Party Transaction | ||||
Related party transaction | (4) | (7) | $ (8) | $ (13) |
Revenue and costs for the use of intellectual property or services | ||||
Related Party Transaction | ||||
Related party revenue, net | $ 544 | $ 571 |
Segment Reporting (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Aug. 03, 2018
USD ($)
|
Jul. 28, 2017
USD ($)
|
Aug. 03, 2018
USD ($)
segment
|
Jul. 28, 2017
USD ($)
|
Feb. 02, 2018
USD ($)
|
|
Summary of Segment Data | |||||
Net revenue | $ 307,945 | $ 302,190 | $ 607,770 | $ 570,555 | |
Adjusted EBITDA | 7,725 | 6,829 | 16,750 | 8,125 | |
Loss on property and equipment | (52) | 0 | 284 | 62 | |
Transfer of corporate functions | 5 | 480 | 6 | 1,926 | |
Depreciation and amortization | 6,897 | 6,175 | 13,058 | 12,683 | |
Operating income (loss) | 875 | 174 | 3,402 | (6,546) | |
Interest Expense | 7,001 | 6,167 | 13,913 | 12,292 | |
Other (income) expense, net | (412) | (494) | 3,452 | (1,236) | |
Income tax benefit | (429) | (1,619) | (6,048) | (5,883) | |
NET LOSS | (5,285) | (3,880) | (7,915) | (11,719) | |
Assets | 1,130,443 | 1,122,405 | 1,130,443 | 1,122,405 | $ 1,124,135 |
Capital expenditures | 11,455 | 8,841 | $ 22,203 | 20,223 | |
Reportable segments | |||||
Segment Reporting Information [Line Items] | |||||
Number of reportable business segments | segment | 2 | ||||
Reportable segments | Direct | |||||
Summary of Segment Data | |||||
Net revenue | 276,602 | 259,938 | $ 549,975 | 488,228 | |
Adjusted EBITDA | 15,761 | 13,080 | 38,095 | 24,918 | |
Depreciation and amortization | 6,234 | 5,489 | 11,805 | 11,267 | |
Assets | 856,293 | 846,313 | 856,293 | 846,313 | 856,986 |
Capital expenditures | 9,874 | 8,832 | 20,462 | 20,213 | |
Reportable segments | Retail | |||||
Summary of Segment Data | |||||
Net revenue | 31,343 | 42,252 | 57,795 | 82,327 | |
Adjusted EBITDA | 398 | 1,859 | (4,168) | (1,288) | |
Depreciation and amortization | 293 | 353 | 575 | 707 | |
Assets | 53,379 | 73,953 | 53,379 | 73,953 | 49,933 |
Capital expenditures | 1,581 | 9 | 1,741 | 10 | |
Reportable segments | Corporate / other | |||||
Summary of Segment Data | |||||
Adjusted EBITDA | (8,434) | (8,110) | (17,177) | (15,505) | |
Depreciation and amortization | 370 | 333 | 678 | 709 | |
Assets | 220,771 | 202,139 | 220,771 | 202,139 | $ 217,216 |
Apparel | |||||
Summary of Segment Data | |||||
Net revenue | 256,457 | 250,318 | 515,740 | 481,255 | |
Non-apparel | |||||
Summary of Segment Data | |||||
Net revenue | 30,584 | 29,665 | 56,476 | 53,736 | |
Services and other | |||||
Summary of Segment Data | |||||
Net revenue | $ 20,904 | $ 22,207 | $ 35,554 | $ 35,564 |
Revenue Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Aug. 03, 2018 |
Aug. 03, 2018 |
May 04, 2018 |
Feb. 02, 2018 |
Jul. 28, 2017 |
|
Deferred Revenue Arrangement [Line Items] | |||||
Contract liabilities | $ 8,460 | $ 8,460 | $ 15,890 | $ 12,838 | |
Revenue recognized | (15,890) | (12,838) | |||
Increase (Decrease) in Contract with Customer, Liability | 8,460 | 8,460 | |||
Other Current Liabilities [Member] | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Gift card liability | 16,626 | 16,626 | $ 19,290 | 19,272 | $ 18,000 |
Refund liability | $ 18,600 | $ 18,600 | $ 11,100 | $ 9,600 |
Revenue Revenue - Disaggregated Net revenue by Geographic Area (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 03, 2018 |
Jul. 28, 2017 |
Aug. 03, 2018 |
Jul. 28, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 307,945 | $ 302,190 | $ 607,770 | $ 570,555 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 271,011 | 264,830 | 527,178 | 497,155 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 25,938 | 26,808 | 57,105 | 52,205 |
Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 10,996 | $ 10,552 | $ 23,487 | $ 21,195 |
Revenue Revenue - Activity of Gift Card Liability Balance (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Aug. 03, 2018 |
Aug. 03, 2018 |
|
Deferred Revenue Arrangement [Line Items] | ||
Revenue recognized | $ (15,890) | $ (12,838) |
Gift cards sold | ||
Deferred Revenue Arrangement [Line Items] | ||
Gift cards sold | 9,281 | 25,353 |
Gift cards redeemed | ||
Deferred Revenue Arrangement [Line Items] | ||
Revenue recognized | (11,683) | (26,347) |
Gift card breakage | ||
Deferred Revenue Arrangement [Line Items] | ||
Revenue recognized | (262) | (1,652) |
Other Current Liabilities [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Gift card liability at beginning of period | 19,290 | 19,272 |
Gift card liability at beginning of period | $ 16,626 | $ 16,626 |
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