Q2 2021 Lands End Inc Earnings Call
[music].
Thank you for your patience and please standby ladies and a second quarter 2021 earnings conference call will begin momentarily. Thank you for your patience and please continue to standby.
[music].
Thank you for standing by and welcome to the Lands' end second quarter 2021 earnings call. At this time, all participants are in listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
I asked the question James assertion newspapers Star then one on your telephone please be advised that today's call is being recorded.
If you require additional systems I started this in order to reach an operator.
I'd like to hand, the call over to Bernard Mccracken CEO. Please go ahead.
Good morning, and thank you for joining the Lands' end earnings call for a discussion of our second quarter results, which we released this morning and can be found on our website landsend dotcom or the call. Today, you will hear from Jerome Griffith, Our Chief Executive Officer, and Jim Gooch, Our President and Chief Financial Officer.
After the company's prepared remarks, we will conduct a question answer session.
Please also note that the information we're about to discuss includes forward looking statements such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed on this call factors that could contribute to such differences include but are not limited to those items noted and included in the company's SEC.
Filings, including our annual report on Form 10-K, and quarterly reports on Form 10-Q. The forward looking information that is provided by the company on this call represents the company's outlook as of today and we do not undertake any obligation to update forward looking statements made by us subsequent events.
Developments may cause the company's outlook to change.
Of note in this respect the COVID-19 pandemic continues to have an impact on our business and its duration could materially alter our outlook.
During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of our GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in.
The Investor Relations section of our website at lids and dotcom.
With that I will turn the call over to Jerome Griffith.
Thank you Bonnie good morning, everyone and thank you for joining us today for a discussion of our second quarter results building on our July 20th announcement, where we raised our second quarter and full year outlook. We are extremely pleased with our results across all financial metrics.
This quarter lands and delivered the highest second quarter revenue in our 58 year history.
Our top line momentum was driven by the continued strength in our global ecommerce business as well as the earlier than expected recovery in our outfitters business as both our national accounts and school uniforms businesses showed meaningful improvement.
Within our global ecommerce business are digitally led product offering and compelling marketing strategies continued to drive growth.
Or are digitally led e-commerce business and are continuing to enhance our capabilities through our data driven focus an important driver of our customer acquisition.
During the second quarter, we increased our global new customers by 8% from the prior year and 41% from the second quarter of 2019.
Our total global customer file expanded 4% from the prior year and 13% from the same period in 2019.
As we shared with you last quarter, our new customers are profitable within the first year supporting our efficient new customer acquisition strategies.
The overall customer file has continued to perform and behaved similarly to our pre pandemic customers with retention rates consistently over 55% even as stores have reopened.
We continue to profitably and sustainably expand our presence in global ecommerce apparel.
As we enhance our capabilities across the four strategic pillars, we first shared with you over three years ago.
Our progress is demonstrated by the strength of our financial performance and our encouraging customer metrics.
Our sustainable performance with both our new and existing customers is in part driven by the marketing initiatives. We have implemented as we continue to further enhance our digital capabilities.
Over the past few quarters, we've increased our marketing spend by prioritizing. It is a key investment in building our brand and business.
Beginning last quarter, we started to further emphasize our presence in social media through paid programs, which we accelerated during the second quarter. This builds on our digital first marketing approach and complements our more advanced initiatives and search engine optimization.
Both our paid social media as well as search engine optimization, our highly productive marketing vehicles, allowing us to strengthen our new customer acquisition and retain our existing customers.
While our trends in paid social media are strong we remain in early stages and see continued opportunity to drive new customers to the brand through this channel.
I will now provide you with some detail on our product this quarter.
Let's get comfy messaging, which we introduced pre pandemic remained our focus this quarter as strong trends in Casuals Asian continuing.
We emphasized our one closet message the versatility of our product offering and the diversity of our fit as well as built marketing campaigns around our brand pillars.
During the quarter the swimwear category saw a significant increase as more customers began to take vacations again, a trend that has extended later into the season compared to prior years we.
We saw strength across the entire swimwear family with particular growth and more versatile product such as board shorts swim skirts and dresses.
We also saw strength in our sleepwear knits and woven business.
Sleepwear remains a strong category as customers are responding to our expanded year round offering.
We continue to believe the casually ization trend that we embarked on prior to the pandemic will remain as.
As more companies embrace a hybrid in office work from home approach, we expect comfort to remain a priority driving more casual wear to work is that.
Our khakis and woven businesses, both of which were strong this quarter are attractively positioned to benefit from the Casuals Asian trend.
During the second quarter, our U S e-commerce sales were encouraging increasing 8% from a year ago, our performance in Europe increased a strong 17% from the prior year in the second quarter.
Our outfitters business continued to recover driven by better than expected performance in our national accounts, and our school uniforms business, where the number of households has returned to nearly 2019 levels.
Our performance at Kohl's exceeded our expectations again this quarter and we remain highly encouraged by this partnership which has allowed us to expand our brand to consumers with similar attributes to our consistent existing customer base.
We will continue to carefully examine future partnerships and distribution expansion opportunities.
We are proud of what we have achieved these past few years building a strong business model that has withstood an unprecedented operating environment and is now performing even stronger.
The accelerated momentum in our performance, which is reflected in our record high sales. This quarter is further proof of our operating model positioning us to drive long term profitable growth.
With that I will turn the call over to Jim who will provide you with greater detail on our financial performance during the second quarter.
Thank you Jerome and good morning.
We're very pleased with the strong results we delivered in the second quarter as we continue to make great progress across our strategic initiatives, despite the still difficult environment.
Similar to last quarter I'll make select comparisons to our second quarter of 2019 to help normalize for the significant improvement we saw in our business in Q2 of last year.
As you May recall, COVID-19 negatively impacted our business in March and April of last year with the recovery in the second quarter of 2020.
For the second quarter as compared to last year total revenue increased 23, 1% to $385.0 million and grew 29% from the second quarter of 2019.
This was at the high end of our revised guidance of 380 to 385 million. We provided you on July 20th and well above our initial guidance of $345 million to $355 million.
Our global ecommerce sales increased seven 7% from 2052, 5% from 2019, that's the momentum in our business remains strong.
The strength was led by our U S ecommerce business, which increased seven 6% from 2055, 7% from 2019.
Our international business also expanded eight 2% in the quarter from the prior year due to the 17, 1% growth in Europe.
Our better than expected results were driven by strength across a number of our key categories, including swimwear sleepwear and knits.
The strength in swimwear was aided by increased leisure travel during the quarter and our overall growth was supported by marketing strategies continue to message of value and comfort in our product.
Revenue for our third party business increased to $20.0 million, that's a $14 million improvement compared to last year.
This increase was largely driven by our performance through Kohl's, particularly as we expanded our swimwear offering to an additional 150 doors during the quarter.
In our outfitter business sales increased 75% due to a faster than expected recovery in our national accounts and school uniform business.
We're seeing demand in our travel related national accounts continue to accelerate as leisure travel recovered and airlines started to accelerate hiring to meet this demand.
Our school uniform business is roughly back to 2019 levels.
We're seeing a return to a more normal back to school shopping pattern.
While small and medium sized businesses continued to see a slower recovery, we remain confident that the strategies, we're putting forward will drive improvement for this business over the long term.
Moving to our retail business during the quarter, we delivered revenue of $14 million a significant improvement from 2020, when our stores were largely closed.
We're pleased with the performance of our same store sales increased 3% from the second quarter of 2019 as traffic continues to improve and conversion remains strong.
Gross margin in the second quarter increased to 46, 3% approximately 290 basis point improvement from 2020.
The expansion was led by our U S E Commerce business, where we continue to benefit from our enhanced promotional strategies.
We leverage data analytics, and our pricing and inventory management.
Partially offsetting this expansion was higher shipping costs and surcharges, which we continue to see this quarter as overall global supply chains remain challenged as well as a higher sales mix from lower margin third party channel.
As a percentage of sales SG&A improved to 35, 6% down approximately 10 basis points from 2020.
The improvement was due to leverage on higher sales and continued expense controls, which were partially offset by higher digital marketing and prior year COVID-19 related onetime expense reductions.
Our SG&A as a percent of sales improved approximately 540 basis points compared to the second quarter of 2019, despite our higher digital marketing spend.
Like to highlight that we've been investing in our digital marketing spend over the past few quarters given the importance of this initiative towards building, our brand awareness and helping to drive our long term growth.
Our strong performance led to net income for the quarter of $62.0 million or 48 per share compared to a net income of $8.0 million or <unk> 13 per share in 2020.
In addition to these GAAP measures adjusted EBITDA is an important profitability measure that we use to manage our business internally for the quarter. Adjusted EBITDA was 41.4 million, which was significantly above both our initial expectations and the $32.0 million we delivered in 2020.
Turning to the balance sheet inventories at the end of the quarter were $467.0 million compared to $446.0 million a year ago.
The continued strong sell through of our global ecommerce business has positioned us with healthy inventory levels as we head into the third quarter.
On July 29th we amended our ABL credit facility.
Pending the debt duration and reducing the interest rates further enhancing our strong liquidity position as a reminder.
Our debt structure is comprised of our ABL line of $275 million and approximately $265 million in our term loan.
We feel very comfortable with the current financial flexibility in our business.
Turning to our outlook, we're seeing strong momentum in consumer demand, which we expect to continue through the remainder of the year.
We're also extremely pleased with our margin performance, we've achieved as a result of the execution of our strategic initiatives.
That said due to the significant industry wide challenges in the supply chain, we expect our gross margin trends to moderate.
The back half of fiscal 2021.
Therefore, we are raising our adjusted EBITDA guidance to reflect the better than expected performance in the second quarter, while maintaining our second half outlook. Despite the strong consumer demand.
Our outlook is.
Counted for the industry wide supply chain headwinds that we currently have visibility into these include higher shipping costs and surcharges as.
As well as the continued shipping delays port congestion and manufacturing interruptions, particularly in Vietnam, which we expect to continue throughout 2021.
We're closely monitoring the situation and proactively managing our inventory as we head into 2022.
For the third quarter, we expect net revenue to be between $795 million we.
We expect net income of $6 five to 9 million and diluted earnings per share to be between 46.
We expect adjusted EBITDA to be in the range of $27 million to $30 million.
For the full year, despite the strong underlying demand trends, we're maintaining our second half outlook due to the aforementioned headwinds.
We continue to expect net revenue to be between $68.0, and $72.0 billion.
Primarily driven by our momentum in our global ecommerce business and recovery in our outfitters business.
We'd also note that if the strong travel trends continue we could see upside there our outerwear business in the back half.
We're raising our net income outlook to a range of $50.0 million to $51 million.
Diluted earnings per share to be between $36.0, and $52.0
We now expect adjusted EBITDA to be in the range of $136 million to $143 million.
With that I'll turn the call back over to Jerome.
Thanks, Jim we remain committed to delivering our long term profitable growth for our shareholders by consistently focusing our investments on our strategic pillars, including getting the product right.
A digitally driven company implementing a unit channel distribution strategy and enhancing both our infrastructure and processes.
Based on these pillars, we have created a strong and resilient foundation, which delivered second quarter global ecommerce sales growth of 33% over our 2019 pre pandemic levels we.
We see significant opportunity to capitalize on our multi dimensional growth ahead.
We believe the pandemic drove a permanent shift in consumer behavior, accelerating online shopping and increasing demand for comfort.
The increase in U S households, within our demographic, who are now more willing to shop online, which represents more than 95% of our business has meaningfully increased our total addressable market.
We remain focused on building our brand awareness and attracting more of these consumers to lands' end as we continue to see significant opportunity with new customers.
As such our marketing initiatives are an important investment priority, particularly in our digital strategies, where customer acquisition is highly efficient.
We are testing new strategies in social media and we will continue to refine our search engine optimization. We're also improving our catalog spending efficiency as we continue to enhance our profitability and digital capabilities.
Turning now to our product assortment, we are well positioned on our product and our let's get company messaging to leverage the more casual aesthetic driving the apparel market, particularly as people return to more normal activities.
We will continue to focus on our one closet message and diversity of fit as we introduce seasonal colors transitional items and more denim heading into the fall or data analytics is an important tool, we leveraged to inform our product assortment and we will evolve and enhance our capabilities.
Our partnership with Kohl's continues to exceed our expectations and we remain pleased with the overall success, we expanded our swimwear distribution this quarter to an additional 150, kohl's stores, which will carry our broader assortment. This fall.
Our product offering is resonating with the kohl's customer both in stores and online where we are able to display our full offering.
During the quarter, we launched our second swimwear collection with Draper James the brand founded by Reese Witherspoon.
The performance of the collection and exceeded our expectations given the continued success of this collaboration we're excited for our sleepwear and home collections that are on track to launch this fall.
I would also like to now discuss our lands end marketplace. While we remain in early stages. We are pleased with our performance and the opportunity it represents longer term.
Our customers are looking to us for complementary product that addresses needs beyond our business and we are delivering appropriate solutions through these third party brands.
We will continue to work with third parties that share our brand aesthetic and messaging as we expand our overall offering to enhance our marketplace assortment.
Turning to our outfitters business, we saw a meaningful improvement in our national accounts and school uniform business.
Sales in our school uniform business are encouragingly nearing 2019 levels and we have seen a return to more normal back to school shopping patterns, we expect trends in both accounts to remains strong.
Consistent with our outlook, our small and medium sized accounts are seeing a slower pace of recovery. We are continuing to make progress against the steps we have discussed to advance our position as the authority in branded apparel and hard goods for small and medium sized businesses.
We have begun to enhance our website and streamline our processes as well as improve our marketing and pricing.
In conclusion, we are extremely pleased with our record second quarter revenue performance the momentum in our business. Despite the still challenging environment is further proof of the underlying strength of our operating model.
Grounded on our resilient global ecommerce business the strategic.
<unk> initiatives, we implemented over the past three years enabled us to emerge from the initial stages of this pandemic stronger accelerating our pre COVID-19 momentum.
We continue to manage our business for disciplined profitable growth as we focus on creating long term share holder value.
With our proven foundation strategic pillars of growth and an expanded total addressable market. We're very excited for our future. We look forward to updating you on our progress with that we will open the call for questions.
As a reminder to ask a question. Please press Star then one.
My Mum quick questions. Please.
Okay.
Yeah.
Again, Thats star one to ask a question.
We have a question from Alex Fuhrman with Craig Hallum Capital. Your line is open Sir.
So.
Great. Thanks, very much for taking my question and congratulations on a strong quarter.
<unk> wanted.
Wanted to ask about what youre seeing with the shipping.
Delays in costs year, obviously, it sounds like Youre able to raise your full year guidance. So clearly youre offsetting those costs, but are you starting to see any orders being canceled as a result of product taking longer to get delivered then you'd hope for and I guess more importantly, what strategies you have in place.
For the holiday season, where customers might be expecting to get their orders ahead of key dates like for it.
Yes, I can probably take the first part of that Alex.
We've been seeing these challenges really for the last year year and a half year.
The challenges have been moving.
Higher costs across the board, we've had as I said delays at various points in our supply chain and to date.
If you look at our strong performance, especially over the last couple of quarters.
I think our teams have been doing a great job of.
Trying to get out in front of these and offsetting those.
And our guidance to your point, we're expecting those to continue.
At a similar rate.
We're expecting some of the higher costs are associated with having to expedite shipping costs.
Costs associated with back orders to continue.
We're expecting the strong consumer demand to continue in the back half our biggest challenge will be if anything further happens, where we're just having difficulty getting the actual product.
And right now like I said the teams have been doing a good job.
But there are certainly challenges going on and we highlighted specifically in Vietnam, where.
Where we're seeing some factories shut down.
Great. That's really helpful. And then can you just give us an update as you think about that.
The seasonal workers that you typically hire how far along are you in that process already do you have a lot of those.
Workers with some kind of commitment here are you confident that that youre going to have the labor pool, you need for the holiday season.
Again teams are doing a great job of trying to get out in front of that is certainly a challenge.
But the.
The federal funding is stopping and Wisconsin. This month, so we're hoping to get a pickup from that.
I would say were slightly behind where we'd want to be for the season.
But we still think it's manageable going into Christmas.
Okay. That's really helpful. Thanks, very much and congratulations again on the really strong quarter.
Thank you.
That concludes our Q&A session.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may now disconnect everyone have a great day.
Okay.
Right.
[music].
Yes.
Yes.
Yes.
Yeah.
Okay.
Okay.
No.
[music].
[music].
[music].
Thank you for standing by and welcome to the Lands' end second quarter 2021 earnings call. At this time, all participants are in listen only mode.
After the Speakers' presentation there'll be a question answer session to ask a question James recession, maybe five Star then one on your telephone.
Be advised that today's call is being recorded.
If you require additional systems.
He works with an operator I'd now like to hand, the call over to Bernard Mccracken CEO. Please go ahead.
Good morning, and thank you for joining the Lands' end earnings call for a discussion of our second quarter results, which we released this morning and can be found on our website landsend dotcom or.
On the call today, you'll hear from Jerome Griffith, our Chief Executive Officer, Jim Gooch, Our President and Chief Financial Officer. After the company's prepared remarks, we will conduct a question answer session.
Please also note that the information we're about to discuss includes forward looking statements such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed on this call factors that could contribute to such differences include but are not limited to those items noted and included in the company's SEC.
<unk> filings.
Our annual report on Form 10-K, and quarterly reports on Form 10-Q. The forward looking information that is provided by the company on this call represents the company's outlook as of today and we do not undertake any obligation to update forward looking statements made by us sub.
Subsequent events and developments may cause the company's outlook to change.
Of note in this respect the COVID-19 pandemic continues to have an impact on our business and its duration to materially alter our outlook.
During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in.
The Investor Relations section of our website at lids and dotcom.
With that I will turn the call over to Jerome Griffith.
Thank you Britney good morning, everyone and thank you for joining us today for a discussion of our second quarter results building on our July 20th announcements, where we raised our second quarter and full year outlook. We are extremely pleased with our results across all financial metrics.
This quarter lands and delivered the highest second quarter revenue in our 58 year history.
Our top line momentum was driven by the continued strength in our global ecommerce business as well as the earlier than expected recovery in our outfitters business as both our national accounts and school uniforms businesses showed meaningful improvement.
Within our global ecommerce business are digitally led product offering and compelling marketing strategies continued to drive growth.
We are a digitally led e-commerce business and are continuing to enhance our capabilities through our data driven focus an important driver of our customer acquisition.
During the second quarter, we increased our global new customers by 8% from the prior year and 41% from the second quarter of 2019.
Our total global customer file expanded 4% from the prior year and 13% from the same period in 2019.
As we shared with you last quarter, our new customers are profitable within the first year supporting our efficient new customer acquisition strategies. The overall customer file has continued to perform and behave similarly to our pre pandemic customers with retention rates consistently over 55% even as stores have reopened.
We continue to profitably and sustainably expand our presence in global ecommerce apparel.
As we enhance our capabilities across the four strategic pillars, we first shared with you over three years ago.
Our progress is demonstrated by the strength of our financial performance and our encouraging customer metrics.
Our sustainable performance with both our new and existing customers in part driven by the marketing initiatives. We have implemented as we continue to further enhance our digital capabilities.
For the past few quarters, we've increased our marketing spend by prioritizing. It is a key investment in building our brand and business.
Beginning last quarter, we started to further emphasize our presence in social media through paid programs, which we accelerated during the second quarter. This builds on our digital first marketing approach and complements our more advanced initiatives and search engine optimization.
Both our paid social media as well as search engine optimization, our highly productive marketing vehicles, allowing us to strengthen our new customer acquisition and retain our existing customers.
While our trends in paid social media are strong we remain in early stages and see continued opportunity to drive new customers to the brand through this channel.
I will now provide you with some details on our product this quarter.
Let's get comfy messaging, which we introduced pre pandemic remained our focus this quarter as strong trends in Casuals Asian continuing.
We emphasized our one closet message the versatility of our product offering and the diversity of our fit as well as build marketing campaigns around our brand pillars.
During the quarter the swimwear categories saw significant increase as more customers began to take vacations again, a trend that has extended later into the season compared to prior years we.
We saw strength across the entire swimwear family with particular growth and more versatile product such as board shorts swim skirts and dresses.
We also saw strength in our sleepwear knits and woven business.
Sleepwear remains a strong category as customers are responding to our expanded year round offering.
We continue to believe the casually ization trend that we embarked on prior to the pandemic will remain.
As more companies embrace a hybrid in office work from home approach, we expect comfort to remain a priority driving more casual wear to work is that our.
Our khakis and woven businesses, both of which were strong this quarter are attractively positioned to benefit from the casualization trend.
During the second quarter, our U S e-commerce sales were encouraging increasing 8% from a year ago, our performance in Europe increased a strong 17% from the prior year in the second quarter.
Our outfitters business continued to recover driven by better than expected performance in our national accounts, and our school uniforms business, where the number of households has returned to nearly 2019 levels.
Our performance at coal has exceeded our expectations again this quarter and we remain highly encouraged by this partnership which has allowed us to expand our brand to consumers with similar attributes to our existing existing customer base.
We will continue to carefully examine future partnerships and distribution expansion opportunities.
We are proud of what we have achieved these past few years building a strong business model that has withstood an unprecedented operating environment and is now performing even stronger.
The accelerated momentum in our performance, which is reflected in our record high sales. This quarter is further proof of our operating model positioning us to drive long term profitable growth with that I will turn the call over to Jim who will provide you with greater details on our financial performance during the second quarter.
Thank you Jerome and good morning.
We're very pleased with the strong results we delivered in the second quarter as we continue to make great progress across our strategic initiatives, despite the still difficult environment.
Similar to last quarter I'll make select comparisons to our second quarter of 2019 to help normalize for the significant improvement we saw in our business in Q2 of last year.
May recall, COVID-19 negatively impacted our business in March and April of last year with the recovery in the second quarter of 2020.
For the second quarter as compared to last year total revenue increased 23, 1% to $385.0 million and grew 29% from the second quarter of 2019.
This was at the high end of our revised guidance of $380 million to $385 million. We provide you on July 20th and well above our initial guidance of $345 million to $355 million.
Our global ecommerce sales increased seven 7% from 2052, 5% from 2019 as the momentum in our business remains strong.
The strength was led by our U S ecommerce business, which increased seven 6% from 2055, 7% from 2019.
Our international business also expanded eight 2% in the quarter from the prior year due to the 17, 1% growth in Europe.
Our better than expected results were driven by strength across a number of our key categories, including swimwear sleep wear and knits.
The strength in swimwear was aided by increased leisure travel during the quarter and our overall growth was supported by marketing strategies that continue to message of value and comfort in our product.
Revenue for our third party business increased to $20.0 million, that's a $14 million improvement compared to last year.
This increase was largely driven by our performance through calls, particularly as we expanded our swimwear offering to an additional 150 doors during the quarter.
In our outfitter business sales increased 75% due to a faster than expected recovery in international accounts and school uniform business.
We're seeing demand in our travel related national accounts continued to accelerate as leisure travel recovered and airlines started to accelerate hiring to meet this demand.
Our school uniform business is roughly back to 2019 levels.
We're seeing a return to a more normal back to school shopping pattern.
While small and medium sized businesses continue to see a slower recovery. We remain confident that the strategies. We are putting forward will drive improvement for this business over the long term.
Moving to our retail business during the quarter, we delivered revenue of $14 million a significant improvement from 2020, when our stores were largely closed.
We're pleased with the performance of our same store sales increased 3% from the second quarter of 2019 as traffic continues to improve and conversion remains strong.
Gross margin in the second quarter increased to 46, 3% approximately that 290 basis point improvement from 2020.
The expansion was led by our U S E Commerce business, where we continued to benefit from our enhanced promotional strategies as we leverage data analytics, and our pricing and inventory management.
Partially offsetting this expansion was higher shipping costs and surcharges, which we continue to see this quarter as overall global supply chains remain challenged as well as a higher sales mix from lower margin third party channel.
As a percentage of sales SG&A improved at 35, 6% down approximately 10 basis points from 2020.
The improvement was due to leverage on higher sales and continued expense controls, which were partially offset by higher digital marketing and prior year COVID-19 related onetime expense reductions.
Our SG&A as a percent of sales improved approximately 540 basis points compared to the second quarter of 2019, despite our higher digital marketing spend I'd like to highlight that we've been investing in our digital marketing spend over the past few quarters given the importance of this initiative towards building our brand awareness and <unk>.
<unk> to drive our long term growth.
Our strong performance led to net income for the quarter of $62.0 million or 48 per share compared to net income of $8.0 million or <unk> 13 per share in 2020.
In addition to these GAAP measures adjusted EBITDA is an important profitability measure that we use to manage our business internally for the quarter. Adjusted EBITDA was $45.0 million, which was significantly above both our initial expectations and the $32.0 million we delivered in 2020.
Turning to the balance sheet inventories at the end of the quarter were $467.0 million compared to $446.0 million a year ago.
The continued strong sell through of our global ecommerce business has positioned us with healthy inventory levels as we head into the third quarter.
On July 2019, we amended our ABL credit facility, extending the debt duration and reducing the interest rates further enhancing our strong liquidity position as a reminder.
Our debt structure is comprised of our ABL line of $275 million and approximately $265 million in our term loan.
We feel very comfortable with our current financial flexibility in our business.
Turning to our outlook, we are seeing strong momentum in consumer demand, which we expect to continue through the remainder of the year.
We're also extremely pleased with the margin performance, we've achieved as a result of the execution of our strategic initiatives.
That said due to the significant industry wide challenges in the supply chain, we expect our gross margin trends to moderate in.
In the back half of fiscal 2021.
Therefore, we are raising our adjusted EBITDA guidance to reflect the better than expected performance in the second quarter, while maintaining our second half outlook. Despite the strong consumer demand.
Our outlook is.
Counted for the industry wide supply chain headwinds that we currently have visibility into these include higher shipping costs and surcharges.
As well as the continued shipping delays port congestion and manufacturing interruptions, particularly in Vietnam, which we expect to continue throughout 2021.
We're closely monitoring the situation and proactively managing our inventory as we head into 2022.
For the third quarter, we expect net revenue to be between $795 million we.
We expect net income of $6 five to 9 million and diluted earnings per share to be between 46.
We expect adjusted EBITDA to be in the range of $27 million to $30 million.
For the full year, despite the strong underlying demand trends, we're maintaining our second half outlook.
The aforementioned headwinds.
We continue to expect net revenue to be between $68.0, and $72.0 billion.
Primarily driven by our our momentum in our global ecommerce business and recovery in our outfitters business.
We'd also note that if the strong travel trends continue we could see upside there our outerwear business in the back half.
We're raising our net income outlook to a range of $50.0 million to $51 million.
Diluted earnings per share to be between $36.0, and $52.0
We now expect adjusted EBITDA to be in the range of $136 million to $143 million.
With that I'll turn the call back over to Jerome.
Thanks, Jim we remain committed to delivering our long term profitable growth for our shareholders by consistently focusing our investments on our strategic pillars, including getting the product right.
A digitally driven company implementing a unit channel distribution strategy and enhancing both our infrastructure and processes.
Based on these pillars, we have created a strong and resilient foundation, which delivered second quarter Global E Commerce sales growth of 33% over our 2019 pre pandemic levels we.
We see significant opportunity to capitalize on our multi dimensional growth ahead.
We believe the pandemic drove a permanent shift in consumer behavior, accelerating online shopping and increasing demand for comfort.
The increase in U S households, within our demographic, who are now more willing to shop online, which represents more than 95% of our business has meaningfully increased our total addressable market.
We remain focused on building our brand awareness and attracting more of these consumers to lands' end as we continue to see significant opportunity with new customers.
As such our marketing initiatives are an important investment priority, particularly in our digital strategies, where customer acquisition is highly efficient.
We are testing new strategies in social media and we will continue to refine our search engine optimization. We're also improving our catalog spending efficiency as we continue to enhance our profitability and digital capabilities.
Turning now to our product assortment, we are well positioned on our product and our let's get company messaging to leverage the more casual aesthetic driving the apparel market, particularly as people return to more normal activities. We will continue to focus on our one closet message and diversity of fit as we introduce seasonal colors transitional items and more debt.
And heading into the fall or data analytics is an important tool, we leveraged to inform our product assortment and we will evolve and enhance our capabilities.
Our partnership with Kohl's continues to exceed our expectations and we remain pleased with the overall success, we expanded our swimwear distribution this quarter to an additional 150 cold stores, which will carry our broader assortment. This fall.
Our product offering is resonating with the kohl's customer both in stores and online where we are able to display our full offering.
During the quarter, we launched our second swimwear collection with Draper James the brand founded by Reese Witherspoon.
The performance of the collection exceeded our expectations given the continued success of this collaboration we're excited for our sleepwear and home collections that are on track to launch this fall.
I would also like to now discuss our lands end marketplace. While we remain in early stages. We are pleased with our performance and the opportunity it represents longer term.
Our customers are looking to us for complementary product that addresses needs beyond our business and we are delivering appropriate solutions through these third party brands.
We will continue to work with third parties that share our brand aesthetic and messaging as we expand our overall offering to enhance our marketplace assortment.
Turning to our outfitters business, we saw a meaningful improvement in our national accounts and school uniform business sale.
Sales in our school uniform business are encouragingly nearing 2019 levels and we have seen a return to more normal back to school shopping patterns, we expect trends in both accounts to remains strong.
Consistent with our outlook, our small and medium sized accounts are seeing a slower pace of recovery.
We are continuing to make progress against the steps we have discussed to advance our position as the authority in branded apparel and hard goods for small and medium sized businesses.
We have begun to enhance our website and streamline our processes as well as improve our marketing and pricing.
In conclusion, we are extremely pleased with our record second quarter revenue performance the momentum in our business. Despite the still challenging environment is further proof of the underlying strength of our operating model.
Grounded on our resilient global ecommerce business the strategic.
<unk> initiatives, we implemented over the past three years enabled us to emerge from the initial stages of this pandemic stronger accelerating our pre COVID-19 momentum.
We continue to manage our business for disciplined profitable growth as we focus on creating long term share holder value.
With our proven foundation strategic pillars of growth in an expanded total addressable market. We're very excited for our future. We look forward to updating you on our progress with that we will open the call for questions.
As a reminder to ask a question. Please press Star then one.
One moment for questions. Please.
Again, Thats star one to ask a question.
Okay.
We have a question from Alex Fuhrman with Craig Hallum Capital. Your line is open Sir.
Great. Thanks, very much for taking my question and congratulations on a strong quarter.
Wanted to ask about what youre seeing with the shipping.
Delays in costs Youre, obviously, it sounds like Youre able to raise your full year guidance. So clearly you're offsetting those costs, but are you starting to see any orders being canceled as a result of product taking longer to get delivered and you would hope for and I guess more importantly, what strategies you have in place.
For the holiday season, where customers might be expecting to get their orders ahead of key dates like retina.
Yes, I can probably take the first part of that Alex Yeah. We've been seeing these challenges relate for the last year year and a half year.
The challenges have been moving.
Higher costs across the board, we've had as I said delays at various points in our supply chain and to date.
If you look at our strong performance, especially over the last couple of quarters.
I think our teams have been doing a great job of.
Trying to get out in front of these and offsetting those.
And our guidance to your point, we're expecting those to continue.
At a similar rate.
We're expecting some of the higher costs are associated with having to expedite shipping costs.
Costs associated with back orders to continue.
And we're expecting the strong consumer demand to continue in the back half our biggest challenge will be if anything further happens, where we're just having difficulty getting the actual product.
And right now like I said the teams have been doing a good job, but there are certainly challenges going on and we highlighted specifically in Vietnam.
We're seeing some factories shut down.
Great. That's really helpful. And then can you just give us an update as you think about the seasonal workers that you typically hire how far along are you in that process already do you have a lot of those.
Workers with some kind of commitment you are you confident that that youre going to have the labor pool, you need for the holiday season.
Again teams are doing a great job of trying to get out in front of that it's certainly a challenge.
The federal funding is stopping and Wisconsin. This month, so we're hoping to get a pickup from that.
I would say, where we're slightly behind where we'd want to be for the season, but we still think it's manageable going into Christmas.
Okay. That's really helpful. Thanks, very much and congratulations again on the really strong quarter.
Thank you.
That concludes our Q&A session.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may now disconnect everyone have a great day.