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:



	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

General Corporate Services

Related party costs charged by Sears Holdings to the Company for general corporate services are as follows:



	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

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:



	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

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.