Q1 2025 Lands' End Inc Earnings Call

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Operator: Good day, everyone, and welcome to today's Lands End First Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star and 2. Please note this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to the Chief Financial Officer. Bernie McCracken, please go ahead.

Speaker Change: Good day, everyone and welcome to today's Lands' end first quarter earnings call.

At this time all participants are in a listen only mode.

Speaker Change: You'll have the opportunity to ask questions during the question and answer session.

Speaker Change: You May register to ask a question at any time by pressing the star one on your telephone keypad. He may withdraw yourself from the queue by pressing star and two. Please note. This call is being recorded and will be standing by if you should need any assistance and it's now my pleasure to turn the conference over to Chief Financial Officer.

Speaker Change: Bernie Mccracken. Please go ahead.

Bernard Louis McCracken: Good morning, and thank you for joining the Lands End Earnings Call for a discussion of our first quarter 2024 results, which we released this morning. They can be found on our website, landsend.com. I'm Bernie McCracken, Lands End's Chief Financial Officer, and I'm pleased to join you today with Andrew McLean, our Chief Executive Officer. After the prepared remarks, we will conduct a question and answer session.

Bernard Louis McCracken: Good morning.

Speaker Change: Thank you for joining the Lands' end earnings call Great discussion of our first quarter 2024 results.

Speaker Change: Which we released this morning and can be found on our website Landsend com.

Speaker Change: Bernie Mccracken lands and Chief Financial Officer.

Speaker Change: I'm pleased to join you today with Andrew Mccarthy, our Chief Executive Officer.

Speaker Change: After the prepared remarks, we will conduct a question and answer session.

Bernard Louis McCracken: Please also note that the information we're about to discuss includes forward-looking statements, which involve risk and uncertainty. 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 report 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. However, subsequent events and developments may cause the company's outlook to change. During this call, we'll be referring to non-GAAP measures, which are not prepared in accordance with generally accepted accounting principles.

Speaker Change: Please also note that the information we're about to discuss includes forward looking statements.

Speaker Change: Such statements involve risks and uncertainties.

Speaker Change: The company's actual results could differ materially from those discussed on this call.

Speaker Change: 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 report on.

Speaker Change: 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.

Speaker Change: Subsequent events and developments may cause the company's outlook to change.

Speaker Change: 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.

Bernard Louis McCracken: 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 landsend.com. With that, I will turn the call over to Andrew. Thanks, Bernie.

Speaker Change: 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 lands' end Dot com.

Speaker Change: With that I will turn the call over to Andrew.

Speaker Change: Yes.

Andrew J. McLean: Good morning, and thank you for joining us today. We delivered strong first quarter 2024 results from the continued execution of our strategy centered around Lands End being the innovative, solutions-based brand that's ready for life on every journey. This vision is the cornerstone of our value creation strategy, which is underpinned by three key priorities: build the brand, increase product margins, and grow our customer base. Our deliberate efforts to generate more profitable sales by deploying asset life approaches in tandem with our core digital businesses gained momentum in the first quarter of 2024, resulting in an increase in gross profit dollars and significant gross margin expansion.

Andrew J. McLean: Thanks, Britney good morning, and thank you for joining US today, we delivered strong first quarter of 2024 results from the continued execution of our strategy centered around <unk> innovative solutions based Brad that's ready for life separate journey.

Andrew J. McLean: This patient at the cornerstone of our value creation strategy, which is underpinned by three key priorities.

Andrew J. McLean: The brand increased product margins and grow our customer base.

Andrew J. McLean: Our deliberate efforts to generate more profitable sales by deploying asset light approach it in tandem with our core digital video game.

Andrew J. McLean: <unk> momentum in the first quarter of 2024, resulting in an increase in gross profit dollars and significant gross margin expansion.

Andrew J. McLean: With inventory down 23% year over year in the first quarter, we remain nimble and continue to prioritize newness and speed to market in our assortment, introducing new styles, fabrics, and colors to which our customers responded positively. We are focused on further improving our inventory turn through a variety of speed and efficiency initiatives. As noted, it also serves as a reminder to our customers to buy it now, or it may be gone.

Andrew J. McLean: With inventories down 23% year over year in the first quarter, we remain nimble and continue to prioritize uses speak to market, our assortment, introducing new styles fabrics and colors to which our customers responded positively.

Andrew J. McLean: We are focused on further improving our inventory turns for a variety of speed and efficiency initiatives.

Andrew J. McLean: It also serves as a reminder to our customer.

Andrew J. McLean: And that may be gone.

Andrew J. McLean: Based on our gross merchandise value, or GMV, we returned the brand to growth in the first quarter with a low single-digit increase year-over-year. We did this by continuing to evolve our brand story, especially across our digital and licensing channels. We're also leveraging our proprietary data to better understand the shopping behaviors of our two key customer cohorts, resolvers and revolvers, to further refine our customer journey and match that with a user experience that is reflective of the Lands Ends of today.

Andrew J. McLean: Based on our gross merchandise value for CMV.

Andrew J. McLean: Return the brand to growth in the first quarter with a low single digit increase year over year.

Andrew J. McLean: By continuing to evolve our brand story, especially across our digital and licensing channels.

Andrew J. McLean: We're also leveraging our proprietary data to better understand the shopping behaviors about two key customer cohorts resolver and developers.

Andrew J. McLean: To further refine our customer journey and match that with a user experience that is reflective of the land's end as of today.

Andrew J. McLean: Late in Q1, we continued to showcase our innovation when we introduced our newly designed website that better represents Lands End as a brand ready for customers at every moment. Social media has become a key part of our marketing and one that has generated strong new customer acquisition. By combining our elevated brand story with a multi-faceted paid social media approach, we're better promoting newness across our assortment, which drives traffic to our own channels and drives more full-price selling. As a result, in the first quarter, we more than doubled demand from social media year over year.

Andrew J. McLean: Late in Q1, we continued to showcase our innovation when we introduced our newly designed website.

Andrew J. McLean: Ah represents lands' end at the Brian ready for customers every moment.

Andrew J. McLean: Social media has become a key part of our marketing or one that has generated strong new customer acquisition by combining our elevated brand story with a multi faceted paid social media approach work better promoting units across our assortment, which drives traffic to our own channels and drive more.

Andrew J. McLean: Full price selling.

Andrew J. McLean: As a result in the first quarter, we've more than doubled demand for social media year over year.

Andrew J. McLean: Moving forward, we will continue to build our brand through marketing rather than discounts. We will do this by taking a more adfit-centric approach to our assortment, featuring significantly more productive and compelling inventory that facilitates demand across natural adjacencies. From a product standpoint, we had several high-performing categories during the first quarter. Our transitional weather solutions performed particularly well and were a key driver of our success.

Andrew J. McLean: Moving forward, we will continue to build our brands food marketing rather than discount.

Andrew J. McLean: We will do this by taking a more adequate centric approach to our assortment featuring significantly more productive and compelling inventory.

Andrew J. McLean: So, let's take demand across natural adjacencies.

Andrew J. McLean: From a product standpoint, we had several high performing categories. During the first quarter and saw increased full price seller introducing use it.

Andrew J. McLean: Our transitional whether solutions performed particularly well and were a key driver of our success is milder weather prevailed across the winter and early spring, we seized the opportunity to meet the moment for our customers by leading into our wherein our approach to our assortment, which yielded great customer response.

Andrew J. McLean: As milder weather prevailed across the winter and early spring, we seized the opportunity to meet the moment for our customers by leading into our where-now approach to our assortment, which yielded a great customer response. Through our authority in outerwear, we once again drove sales across key adjacencies, with layering products, including women's sweaters and knit tops, performing particularly well. Zeroing in on our tour, we're pleased with the performance of our weatherproof assortment of lightweight jackets, raincoats, and fleeces, which all continue to perform well in the first quarter.

Andrew J. McLean: Through our authority in outerwear, we once again drove sales across key adjacencies with layering products, including women's sweaters, and knit tops falling, particularly well.

Andrew J. McLean: Growing in all of that to where we're pleased with the performance of our weatherproof assortment of lightweight jacket, raincoats and leases, which all continue to perform well in the first quarter.

Andrew J. McLean: Women's bottoms were another winner, with customers responding well to new styles like wide-leg denim and chino pants and on-trend materials like linen and gauze. In addition to delivering units in key apparel categories, our strong franchises like our Wonderweight line of ultralight packable outerwear, squall jackets, and drifter sweaters enable us to offer a family of products that solidify our positioning as a lifestyle brand.

Speaker Change: <unk> buses right another winner with customers responding well to new styles like wide leg, denim and pants and on trend materials like Linden and costs.

Speaker Change: In addition to delivering units in key apparel categories are strong franchises like our wonder White line of Ultra light Packable elsewhere score jackets, and dresses sweaters enable us to offer a family of products that solidify our position as a lifestyle brand we remain incredibly confident in our ongoing innovation.

Andrew J. McLean: We remain incredibly confident in our ongoing innovation strategy. Turning to our swim business, we took a view across the season that allowed us to introduce and sell our key franchises, including the newly patent-pending WaveShaper sculpting suit, at full price for a longer time period. Periodic events, like our highly popular National Swimsuit Day, have reduced our reliance on daily promotions to drive sales.

<unk> strategy.

Speaker Change: Turning to our small business, we took a view across the season that allowed us to introduce and sell our key franchises, including the newly patent pending wave shaper sculpting. So at full price for a longer time period.

Speaker Change: I think events like our highly popular national Swimsuit day have reduced our reliance on daily promotions to drive sales and across all our channels, we were able to deliver on our gross margin goals, while leveraging the success, whether it's to drive growth in our new to file customer accounts in.

Speaker Change: In fact looking at the season to date.

Speaker Change: Where we're consistently flowing more newness.

Speaker Change: <unk> business has the potential to exceed our margin dollar clients, while maintaining our leading market share.

Andrew J. McLean: And across all our channels, we were able to deliver on our gross margin goals while leveraging the success of swim. In fact, looking at the season to date, when we are consistently flowing more units, our swim business has the potential to exceed our margin dollar plans while maintaining our leading market share. Before I touch on the performance of our various businesses, I want to remind you that we are preparing to change the way we talk about our performance to be more consistent with the evolution of our brand. Specifically, we plan to discuss our business in terms of B2C and B2B, beginning with our C2C activity.

Speaker Change: Before I touch on the performance of our various businesses.

Speaker Change: Want to remind you that we are preparing to change the way we talk about our performance to be more consistent with the evolution of our brand.

Speaker Change: Specifically, we plan to discuss our business in terms of B to C and b to B.

Speaker Change: Beginning with RFP to see activities.

Andrew J. McLean: Our U.S. e-commerce business is our largest direct-to-consumer channel. The business delivered its fifth consecutive quarter of great margin performance with an increase of over 600 basis points due to our more targeted approach to promotion, which drives higher quality sales and improved inventory management. As we've mentioned, we continue to maximize key events to drive demand with lower levels of inventory. We are utilizing occasions like President's Day and National Swimsuit Day to lean into newness and quality products that our customers are responding to. These events have allowed us to drive profitability by achieving more full-price sales while maintaining lower levels of promotional activity. Put another way, our strategy is not to simply move units.

Speaker Change: Our U S E Commerce business is our largest direct to consumer channel business delivered its fifth consecutive quarter of great margin performance with an increase of over 600 basis points.

Speaker Change: Due to a more targeted approach to promotions, which drives higher quality sales and improved inventory management.

Speaker Change: As we've mentioned we continue to maximize key events to drive demand with lower levels of inventory, we are utilizing occasions, like Presidents' day, and national Swimsuit day to meet continuous and quality products that our customers are responding to.

Speaker Change: These events have allowed us to drive profitability by achieving more full price sales, while maintaining lower levels of promotional activity.

Speaker Change: Another way our strategy is not to simply move units were maintaining lower promotional levels, while achieving more quality from the strength of our brand and the solutions we offer our customers.

Andrew J. McLean: We're maintaining lower promotional levels while achieving more quality sales from the strength of our brand and the solutions we offer customers. In addition to driving quality sales, these efforts around key events are also driving a nice increase in new customer acquisition, with our global new customer acquisition increasing in the first quarter year over year by high single digits. Building upon a strong fourth quarter, our European business continued its upward trend in Q1 with exceptional gross margin expansion of over 1,000 basis points year over year. As in the U.S., we continue to prioritize newness and better inventory management with a focus on increasing margin through lower levels of promotional activity.

Speaker Change: In addition to driving quality sales. These efforts around key events are also driving a nice increase in new customer acquisition with our global new customer acquisition, increasing in the first quarter year over year by high single digits.

Speaker Change: Building upon our strong fourth quarter, our European business continued its upward trend in Q1 with exceptional gross margin expansion of over 1000 basis points year over year as in the U S. We continued to prioritize newness and better inventory management with a focus on increasing margins through lower levels of.

Speaker Change: <unk> activity.

Andrew J. McLean: Moving to our third-party business, we continue to see strong results from our approach of working with partners that share our vision for customer-focused solutions and are additive to our assortment. While third-party marketplace revenue was down year over year, we saw similar margin expansion from sales through these marketplaces as we did through sales directly from Lands End, further reinforcing our brand positioning and story to customers who shop with us in these other channels. We are managing the third-party business in close coordination with our U.S. Consumer Division, enabling us to better align our approach across the various channels where consumers interact with Lands End.

Speaker Change: Moving to our third party business, we continued to see strong results from our approach of working with partners that share our vision for customer focused solutions that are additive to our assortment.

<unk> third party marketplace revenue was down year over year, we saw similar margin expansion from sales through these marketplaces as we head through sales directly from Lands' end.

Speaker Change: Further reinforcing our brand positioning and story to customers, who shop with us in these other channels.

Speaker Change: We are managing the third party business in close coordination with our U S consumer sufficient.

Speaker Change: Billing us to better align our approach across the various channels, where consumers interact with landsend.

Andrew J. McLean: Our coordinated approach to maintaining a similar customer experience across our third-party and direct business, while also tailoring the assortment for each partner based on their customer needs, helps us drive traffic to our website, where a customer can access an even wider array of our products. Another benefit of this approach, and paired with our focus on better inventory management, is that we can better manage our go-to-market channels and maximize the efficiency of our inventory. During the first quarter, our licensing strategy, which adds asset-like, recurring revenue streams, continued to accelerate. Our initial foray into the Costco channel exceeded our expectations, with a handful of swimsuit options selling quickly.

Speaker Change: Our coordinated approach to maintaining a similar customer experience across our third party from direct business. While also tailoring the assortment for each partners based on their customer needs helps us drive traffic to our website, where a customer can access an even wider array of our solutions.

Speaker Change: Another benefit of this approach and paired with our focus on better inventory management is that we can better manage our go to market channels and maximize the efficiency of our inventory.

Speaker Change: During the first quarter, our licensing strategy, which adds asset like recurring revenue streams continued to accelerate our initial foray into the cosco channel exceeded our expectations, but a handful of exclusive options of selling through quickly.

Andrew J. McLean: Along with previously announced licensing agreements in kids and in footwear, we entered into a new licensing agreement for our home product, which expands a business that was already performing well into new channels. While we recognize only licensing royalties on our P&L, the incremental GMV allowed us to return the brand to growth and positions it well for the future. Turning now to our B2B partners, Citrus Business.

Speaker Change: Along with previously announced licensing agreements and kids footwear, we entered into a new licensing agreement for our home products, which expands our business that was already performing well into new channels.

Speaker Change: While we recognize early licensing royalties on our P&L the incremental GMP allowed us to return the brand to growth and positions us well for the future.

Speaker Change: Turning now to our B to B Outfitters business we.

Andrew J. McLean: We have used the time wisely over the last year to kickstart the sales engine for a business that we believe can become a high performer for Lands End. This focus, evident last year, allowed us to add new accounts and deliver compelling Q1 results in our school uniform business, something we'll look to build on in subsequent quarters. As we have outlined in the past, we significantly retooled the business to focus on customers by size and by industry, leveraging our strengths and being the provider of choice to large, medium, and small businesses that share our outlook for high-quality products and outstanding customer service.

Speaker Change: We have to use the time wisely over the last year to kickstart the sales engine for our business that we believe can become a high performer for lands end.

Speaker Change: This focused effort in past year allowed us to add new accounts and deliver compelling Q1 results and our school uniform business something we will look to build in subsequent quarters.

Speaker Change: In addition, as we have outlined in the past, we significantly retooled the business to focus on customers by size and by industry, leveraging our strength in being the provider of choice to large medium and small businesses that share our outlook for high quality product and outstanding customer service.

Andrew J. McLean: Consistent with our approach in the B2C businesses, we have chosen to prioritize quality of sales and profits ahead of revenue and deprioritize low-return businesses, notably our promotional products business. That effort has resulted in a more connected approach to client development through a national sales team, with successful relaunches of existing clients and several new launches in the process for 2025. We'll look forward to continuing this close story in the coming quarter. I'll now turn it over to Bernie to discuss our first quarter performance with Morty Sampson. Thank you, Andrew.

Speaker Change: Consistent with our approach in the <unk> businesses, we have chosen to prioritize quality of sales and profit ahead of revenue and prioritize low return businesses, notably our promotional products business.

Speaker Change: That effort has resulted in a more connected approach to client development through our national sales team with successful relaunches of existing clients and several new launches in process for 2025.

Speaker Change: We will look forward to continuing this quarter story in coming quarters.

Speaker Change: I'll now turn it over to Bernie to discuss our first quarter performance in more detail.

Bernard Louis McCracken: Thank you Andrew.

Bernard Louis McCracken: Before I dive into our results, I want to remind everyone on the call that the first quarter of 2023 included the conclusion of our work with Delta. This resulted in the pull-forward of significant revenue and gross profit dollars into the first quarter of last year. We're making notes here as the comps adjusting per delta are more indicative of our year-over-year performance across the company. For the first quarter, total revenue performance came in slightly above our guidance range at $285.5 million, a decrease of 8% compared to last year, but a 1% increase when excluding the $27 million difference in year-over-year revenue from Delta. GMB increased by low single digits for the first quarter of 2024, which was in line with our guidance.

Bernard Louis McCracken: Before I dive into our results I want to remind everyone on the call that the first quarter of 2023 included the conclusion of our work with Delta.

Bernard Louis McCracken: This resulted in the pull forward of significant revenue and gross profit dollars into the first quarter last year.

Bernard Louis McCracken: We're making no here as the comps adjusting for Delta are more indicative of our year over year performance across the company.

Bernard Louis McCracken: With the first quarter total revenue performance came in slightly above our guidance range at $285 5 million.

Bernard Louis McCracken: A decrease of 8% compared to last year.

Bernard Louis McCracken: We're a 1% increase when excluding the $27 million difference in year over year revenue from Delta.

Bernard Louis McCracken: <unk> increased low single digits for the first quarter of 2024, which was in line with our guidance as a reminder, we believe GMB, which accounts for the total order value of all merchandise sold to customers through BDC MPW channels as well as the retail value.

Bernard Louis McCracken: As a reminder, we believe GMB, which accounts for the total order value of all merchandise sold to customers through B2C and B2B channels, as well as the retail value of the merchandise sold through third-party channels, is an important indicator of the performance of comparable growth of our brand. We delivered adjusted EBITDA of $12 million in the first quarter, which exceeded the high end of our guidance range and was a year over year increase of over 60% when excluding the $13 million difference from Delta.

Bernard Louis McCracken: Of the merchandise sold through third party channels is an important indicator of the performance of the comparable growth of our brand.

Bernard Louis McCracken: We delivered adjusted EBITDA of $12 million in the first quarter.

Bernard Louis McCracken: Which exceeded the high end of our guidance range and a year over year increase of over 60% when excluding the $13 million difference from Delta.

Bernard Louis McCracken: These results reflect our continued efforts to prioritize profitability and balance sheet efficiency versus solely sales, which has continued to improve our profit margins across our business units. Gross profit increased by 1% compared to last year, driven by our fifth straight quarter of gross margin expansion. And excluding the $13 million difference from Delta, gross profit increased by 11%, and gross margin in the first quarter was 49%, an approximately 410 basis point improvement from the first quarter of 2023. The market improvement was driven by new products across the assortment and strength in transitional outerwear. Swimwear and Adjacent Product Categories, lower promotional activity, a reduction in sales of clearance inventory, and improvements in supply chain costs.

Bernard Louis McCracken: These results reflect our continued efforts to prioritize profitability and balance sheet efficiency versus solely sales, which is continuing to improve our profit margins across our business units.

Bernard Louis McCracken: Gross profit increased by 1% compared to last year, driven by our fifth straight quarter of gross margin expansion in.

Bernard Louis McCracken: And excluding the $13 million difference from Delta gross profit increased by 11%.

Bernard Louis McCracken: Gross margin in the first quarter was 49% and approximately 410 basis point improvement from the first quarter of 2023.

Bernard Louis McCracken: The margin improvement was driven by new products across the assortment strengthened transitional outerwear swim.

Bernard Louis McCracken: Swimwear and adjacent product categories.

Bernard Louis McCracken: Lower promotional activity reduction.

Bernard Louis McCracken: The reduction in sales of clearance inventory and improvements in supply chain costs.

Bernard Louis McCracken: Our U.S. e-commerce business saw a sales decrease of 4% compared to the first quarter of 2023, and we generated a 10% increase in gross profit dollars driven by continued efforts to prioritize higher quality sales. Our European e-commerce business increased gross profit dollars by 27% compared to the first quarter of 2023, with sales down 2% year over year. Sales from Lands End Outfitters were down 42% from the first quarter of 2023, reflecting the impact of Delta. Excluding the $27 million difference in year-over-year revenue from Delta, the Alfred business was down 9%.

Bernard Louis McCracken: Our U S ecommerce business saw a sales decrease of 4% compared to the first quarter of 2023, and we generated a 10% increase in gross profit dollars driven by continued efforts to prioritize higher quality sales.

Bernard Louis McCracken: Our European E Commerce business increased gross profit dollars by 27% compared to the first quarter of 2023 with sales down 2% year over year.

Bernard Louis McCracken: Sales from Lands' end outfitters were down 42% from the first quarter of 2023.

Bernard Louis McCracken: Collecting the impact from Delta.

Bernard Louis McCracken: Excluding the $27 million difference in year over year revenue from Delta the outfitters business was down 9%.

Bernard Louis McCracken: Our third-party business increased gross profit dollars by over 40% compared to the first quarter of 2023, with revenue increasing by over 60% year over year. The increase in sales was primarily due to revenue from licensing arrangements, including $10.5 million of KITS product inventory sold to a licensee as this business transitioned to a licensing model. Online marketplaces saw increased gross profit from higher margins driven by the expansion of our higher quality sales strategy to third-party partners.

Bernard Louis McCracken: Our third party business increased gross profit dollars by over 40% compared to the first quarter of 2023.

Bernard Louis McCracken: With revenue increasing by over 60% year over year.

Bernard Louis McCracken: The increase in sales was primarily due to revenue from licensing arrangements, including $10 5 billion of kids product inventory sold toy licensee as this business transitions to a licensing model.

Bernard Louis McCracken: Online marketplaces saw increased gross profit from higher margins driven by the expansion of our higher quality sales strategy to third party partners.

Bernard Louis McCracken: As a percentage of sales, SG&A was 45%, which was an increase of approximately 630 basis points compared to 2023, primarily due to de-leverage from lower revenues and investment in digital marketing, driving new customer acquisition. As Andrew noted, these investments are critical to our strategy, and we are already beginning to see them drive results. For the first quarter, we had a net loss of $6.4 million, or $0.20 per share. We had an adjusted net loss of $6.2 million, or 20 cents per share, which came in better than our guidance range.

Bernard Louis McCracken: As a percentage of sales SG&A was 45%.

Bernard Louis McCracken: Which was an increase of approximately 630 basis points compared to 2023.

Speaker Change: Primarily due to deleverage from lower revenues and investment in digital marketing driving new customer acquisition as Andrew noted. These investments are critical to our strategy and we are already beginning to see them drive results.

Speaker Change: For the first quarter, we had a net loss of $6 4 million.

Speaker Change: Or <unk> 20 per share.

Speaker Change: We had an adjusted net loss of $6 2 million or <unk> 20 per share.

Speaker Change: Which came in better than our guidance range.

Bernard Louis McCracken: Moving to our balance sheet, inventories at the end of the first quarter were $289 million, compared to $376 million a year ago. The 23% improvement in our inventory position was a result of our supply chain team's continued efforts to drive efficiencies in our business. In terms of our debt, at the end of the first quarter, our term loan balance was $257 million.

Moving to our balance sheet inventories at the end of the first quarter were $289 million compared to $376 million a year ago to.

Speaker Change: 23% improvement in our inventory position was a result of our supply chain teams continued efforts to drive efficiencies in our business.

Speaker Change: In terms of our debt at the end of the first quarter, our term loan balance was $257 million.

Bernard Louis McCracken: And our ABL had $40 million of borrowings outstanding, which was $60 million lower than the first quarter of last year. During the first quarter, we purchased $1 million worth of shares under our $25 million share repurchase authorization announced in March, bringing the balance of the remaining authorization to $24 million as of the end of the quarter. Now, moving to guidance.

And our ABL had $40 million of borrowings outstanding.

Speaker Change: Which was a $60 million lower than the first quarter last year.

Speaker Change: During the first quarter, we purchased $1 million worth of shares under our $25 million share repurchase authorization announced in March.

Speaker Change: Bringing the balance of the remaining authorization to $24 million as of the end of the quarter.

Speaker Change: Now moving to guidance.

Bernard Louis McCracken: We are continuing to prioritize high-quality sales and improved cash flows, which we expect to drive continued gross profit and margin expansion during the summer selling season. For the second quarter, we expect net revenue to be between $290 million and $320 million, with gross merchandise value, or GMV, expected to be mid to high single-digit growth. We expect an adjusted net loss of $4.5 million to two million dollars, and adjusted diluted loss per share to be between 14 cents and 6 cents. We expect Justin Ibena's revenue to be in the range of $14 million to $17 million.

Speaker Change: We are continuing to prioritize high quality sales and improved cash flows, which we expect to drive continued gross profit and margin expansion during the summer selling season.

Speaker Change: In the second quarter, we expect net revenue to be between $290 million and $320 million.

Speaker Change: With gross merchandise value or GMB, they expect it to be mid to high single digit growth. We expect an adjusted net loss of $4 $5 million.

Speaker Change: $2 million and adjusted diluted loss per share to be between 14.

Speaker Change: And <unk>.

Speaker Change: We expect adjusted EBITDA to be in the range of $14 million to $17 million.

Bernard Louis McCracken: For the full year, we raised the low end of our revenue guidance and now expect net revenue to be between $1.36 and $1.45 billion, while GMV is expected to be low to mid-single-digit growth. We now expect adjusted net income of $5.5 million to $13 million and adjusted diluted earnings per share of 18 cents to 41 cents. We now expect our adjusted EBITDA to be in the range of $88 million to $97 million. Our guidance for the full year incorporates approximately $30 million in capital expenditures.

Speaker Change: For the full year.

We raised the low end of our revenue guidance and now expect net revenue to be between 136 to $1 45 billion. While <unk> is expected to be low to mid single digit growth.

Speaker Change: We now expect adjusted net income of $5 5 million.

Speaker Change: To $13 million and adjusted diluted earnings per share of <unk> 18 to 41.

Speaker Change: We now expect our adjusted EBITDA to be in the range of $88 million to $97 million.

Speaker Change: Our guidance for the full year incorporates approximately $30 million in capital expenditures.

Bernard Louis McCracken: As we have discussed, we expect our improved inventory management to enable us to maintain inventory at normalized levels and also to further expand gross margin moving forward. With that, I will turn the call back over to Andrew. Thanks, Bernie.

Speaker Change: As we have discussed we expect our improved inventory management to enable us to maintain inventory at normalized levels.

Speaker Change: Also our work to further expand gross margin moving forward.

With that I will turn the call back over to Andrew.

Andrew J. McLean: I want to thank our team for their hard work and for delivering a great start to the year following a busy holiday season. We're making significant progress against our strategy, and our efforts to innovate every aspect of our business and define and refine our brand are bearing fruit. As we transition from spring to summer, we are encouraged by how our customers are responding to our assortment of summer solutions that offer both fashion and functionality.

Andrew J. McLean: Thanks Ernie.

Andrew J. McLean: I want to thank our team for their hard work and for delivering a great start to the year following a busy holiday season.

We're making significant progress against our strategy and our efforts to innovate every aspect of our business and define and refine our brands are bearing fruit.

Andrew J. McLean: As we transition from spring to summer we are encouraged by how are customers responding to our assortment of summer solutions that offer both fashion and function.

Andrew J. McLean: Our strong performance during the recent memorial day holiday weekend gives us confidence that the solutions, we provide and our go to market strategy at the right once the land bank for our customers.

Andrew J. McLean: We are incredibly excited for what's in store for lands end in 2024, as we become a larger part of our customers' daily lives as a brand that can truly me any moment for our customers.

Andrew J. McLean: Our strong performance during the recent Memorial Day holiday weekend gives us confidence that the solutions we provide and our go-to-market strategies are the right ones for Lands End and for our customers. We're incredibly excited for what's in store for Lands End in 2024, as we become a larger part of our customers' daily lives as a brand that can truly meet any moment for our customers. On May 30th, I had the honor of ringing the NASDAQ opening bell alongside many members of our team to celebrate Lands End's 10th anniversary as a public company.

Andrew J. McLean: On maintenance 30th.

Andrew J. McLean: On a ringing the NASDAQ opening bell alongside many members of our team to celebrate <unk> 10th anniversary as a puppy.

Speaker Change: Click company.

Andrew J. McLean: It's amazing to see how much Lands End has evolved since then and particularly over the last year while staying true to its heritage as an iconic American lifestyle brand. Thanks to the great Lands End team. We're extremely confident in Lands End's future and our unique ability to serve as a partner to our customers, ready for life's every journey. That concludes our prepared remarks. We look forward to your questions.

Speaker Change: Amazing to see how much lands' end has evolved since then and particularly over the last year, while staying true to its heritage as an iconic American lifestyle brand.

Speaker Change: Thanks to the great land sensing, we're extremely confident in <unk> future and our unique ability to serve as a partner to our customers ready for life equity journey.

Speaker Change: That concludes our prepared remarks, we look forward to your questions.

Speaker Change: Thank you.

Operator: At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. We will pause for a moment to allow questions to queue. And we will take our first question from Dana Telsey with Telsey Research.

Speaker Change: At this time, if you would like to ask a question. Please press the star and one on your telephone keypad, you may remove yourself from the queue at any time by pressing star Kim.

Speaker Change: And we will pause for amendment to allow questions to queue.

Speaker Change: And we will take our first question from Dana Telsey with Telsey research.

Dana Lauren Telsey: Good morning, Andrew and Bernie. Congratulations on the nice progress. It's nice to see.

Dana Lauren Telsey: Good morning, Andrew and Bernie Congratulations on the nice progress nice to see as you think about your core customer and resolve the evolve that what are you seeing in terms of is there a differentiation in terms of price point differentiation in categories out there and with the improved gross margin.

Dana Lauren Telsey: As you think about your core customer, Resolver, and the Evolver, what are you seeing in terms of differentiation in terms of price points, differentiation in category sell-through, and with the improved gross margin, the reduction in promotions? Anything changing on the full price sell-through that you're getting and also anything different in terms of sell-through of newer items versus core and classic? Basically, the health of the consumer as you see it. Thank you.

Speaker Change: A reduction in promotions.

Speaker Change: Anything changing on the full price sell through that Youre getting and also anything different in terms of sell through newer items versus core and classic.

Speaker Change: The health of the consumer as you see it thank.

Speaker Change: Thank you.

Andrew J. McLean: Hey Dana, it's Andrew. Thanks very much. It's nice to hear from you. Yeah, we do see a difference between the Resolver and the Evolver. The Resolver is our long-term customer. We have millions of them, and our Evolver is the one that we really feel we can expand into, and there's a lot of consideration to be had from that customer. The Resolver has traditionally been a [inaudible] Prince was very, very strong during the quarter for both Evolvers and Resolvers, but we saw that Resolver really start to make the move and buy into more full-price products.

Andrew J. McLean: Hey, Dana its Andrew Thanks, very much.

Dana Lauren Telsey: Nice to hear from you.

Speaker Change: Yes, we do see a difference between the resolver and evolve.

Speaker Change: It's over.

Speaker Change: On long term customer.

Speaker Change: We have made we have supplemented our revolver is the one that we really feel we can expand into and that's a lot.

Speaker Change: There's a lot of consideration to be had from that customer. The resolver has traditionally been a.

Speaker Change: Customer who comes back and shops, one category and they tend to replace watts warn that we have seen that.

Speaker Change: Behavior, even with our resolve rates begin to move.

Speaker Change: We are seeing them starting to shop still largely single categories, but we've expanded the category of Swift to include your whole outfit. So we've seen that get picked up but we're starting to see them come back and buy more fashion.

Speaker Change: Five more prints.

Speaker Change: Prince look very very strong during the quarter for both.

Speaker Change: If over time revolvers, but we saw that result will really start to make the move.

Andrew J. McLean: With the Evolver, I mean, I think you can see from our commentary that we had a good run-up in our new-to-file customers, and our overall database is probably as healthy as it's been in the last few years. We saw a customer come in who was really going to buy broadly across categories and buy broadly at full price. We saw wins in key categories for us, obviously in Swim and in Bottoms, and Women's Tops were extremely powerful.

Speaker Change: And that volume to more full priced product, which we have over I mean, I think you could see from our commentary that we had.

Speaker Change: It could run off in our new to file customers and our overall database is probably as healthy as it's been in the last few years.

Speaker Change: We saw customer come into what is really going to buy broadly across categories and five broadly at full price. We saw wins in key categories for us, obviously and swim and in bottoms and in women's tops were extremely powerful we actually saw improvements in our underlying men's business so and.

Andrew J. McLean: We actually saw improvements in our underlying men's business. So, in answer specifically to your health concerns of the consumer, we didn't see the consumer back off. We attracted more consumers. We sold more to those consumers, and we sold more to those consumers at a higher margin. So, I feel that right now, the strength of the customer is in relatively good shape. I guess your follow-on question would be Q2, and we gave some guidance in the script about what we saw on Memorial Day weekend. Memorial Day weekend was extremely busy for us as well.

Speaker Change: Specifically to your health of the consumer.

Speaker Change: We didn't see the consumer back half, we attracted more consumers, we sell more to those consumers and we sold more to those consumers that are higher margin. So.

Speaker Change: Feeling that right now is the strength of our customers.

Speaker Change: Relatively good shape.

Speaker Change: Yes. Your follow on question would be Q2, and we gave some guidance.

Speaker Change: In the script about what we've seen them move on.

Speaker Change: Memorial Day weekend Memorial Day weekend was extremely strong for us as well and we saw both our customer cohorts resolve this and therefore, what's come through and actually we've started to breakout our resolver and evolve we're seeing resolver is who exhibit.

Andrew J. McLean: We saw both our customer cohorts, Resolvers and Evolvers, come through, and actually, we've started to break open our Resolver and Evolver categories. We're seeing Resolvers who exhibit Evolver behaviors. I think we're going to be widening this group a little bit as we lean more into different customer cohorts and follow through on the various journeys that our customers are taking, because there are more than just two customer cohorts and there are more than just one journey.

Speaker Change: Ballpark behaviors.

Speaker Change: I think we're going to be for lightning. This group a little bit as we lean more into different customer cohorts and following through on the various journeys that our customers are taking because it's more than just two customer cohorts or it's more than just one journey.

Speaker Change: Got it thank you follow up.

Andrew J. McLean: Follow-up. How are you thinking about marketing spend for the year to acquire new customers? And then you mentioned the Costco business and that strength. Anything else happening on third parties that could be interesting, whether increasing third-party business, new third-party business, or third-party business that you're swapping for something else? Thank you.

Speaker Change: Or are you thinking about marketing spend for the year to acquire new customers and then you mentioned, the Costco business and that strength anything else happening on third parties that we should that could be interesting, whether increasing third party data third party data.

Speaker Change: Third party business that you're swapping for something else.

Andrew J. McLean: Okay, so, you know, with the marketing. We're quite careful with our marketing, which is, it's like the marketing is going to have to have a return in seasons. So, you know, we did increase that, and we saw a return in new customers. But, you know, we made sure that we covered our bases, and it generated enough incremental gross margin that we were going to hit our plans. I'm not one for, you know, taking the foot off the gas in terms of where we're going to go with our numbers.

Speaker Change: Okay, so either with the with the market, we're quite careful with our marketing which is just like the marketing is going to have to have a return of the heating season. So we did increase that we saw returned is new to file.

Speaker Change: We made sure that we covered our bases as it generated enough incremental gross margin that we were going to hit our plans.

Speaker Change: <unk>.

Speaker Change: I'm not one for taken the foot off the gas in terms of where we're going to go with our numbers.

Andrew J. McLean: What we did see was that we pushed more into consideration by looking at, like, cultural events and being sort of more focused further up the funnel with our customers than we had been before. So, you know, I'll give you an example. We created, over Memorial Day weekend, we created 2.3 billion impressions with our marketing, versus over 700 million last year. And, you know, that's symptomatic of how we're investing in the experience of the brand versus just putting simple discounts out there. Now, there'll always be some form of discounting, particularly with paid search, but we've been able to reduce the overall levels of that discounting to maintain a much fuller-priced business.

Speaker Change: We did see was we pushed more into consideration.

Speaker Change: By looking at like cultural events and things are more focused further up the funnel with our customers than we had been before so.

I can't give you. An example, we created over Memorial Day weekend, we created two 3 billion impressions with our marketing.

Speaker Change: Over 700 million last year.

Speaker Change: That's symptomatic of how we're investing in the experience of the brands versus just putting simple discount side of that.

Speaker Change: They'll always be some form of discounting, particularly with paid search, but we've been able to reduce the overall levels of that discounting to maintain a much fuller priced business and that allows US then to continue the cycle of investing in new customers I was pleased with the new customer file not just because it was up.

Andrew J. McLean: And that allows us then to continue the cycle of investing in new customers. I was pleased with the new customer file, not just because it was up, but because it was up across the board. We saw it in different channels. We saw it in different geographies.

Speaker Change: It was up across the board we saw it in different channels, we saw it in different geographies.

Andrew J. McLean: Now, I do want to give a shout-out to them on the call. They did a really nice job driving their new customers to file as well. And that augurs well for success for us later in the year and into future years as we work on getting those customers back in for their second purchase at Costco. We were really happy with Costco. Hello, David. Can you hear us?

Speaker Change: Our teams in Europe now I, just wanted to give a shout out to them on the call today are really a nice job driving their new to file as well and that augurs well for success for US later in the year and into future years as we work on getting those customers back in for that second purchase.

Operator: Yes, I can hear you. Okay. In terms of Costco, we were really very happy with Costco.

Speaker Change: In terms of <unk>.

Speaker Change: Costco, we were really happy with.

David: Hello, David can you hear US yes. Thank you.

Andrew J. McLean: Okay, in terms of Costco, we were really very happy with Costco. There were just a handful of items that we put in there, and they blew out really quickly.

Andrew J. McLean: It's just a hand.

Speaker Change: Okay.

Terms of Casco, we were really very happy with customers. It's just a handful of.

Speaker Change: Items that we put in there and they blew out really quickly.

Speaker Change: Business that will go back.

Andrew J. McLean: It's a business that we'll go back into. You know, we like that. I would say that, you know, we'll always keep it small, but the opportunity to reach a much wider customer cohort and, particularly, involvement is there, and it's powerful. And, you know, I look at their size, the size of Costco relative to us, and there's a lot of running room to be had in that. In terms of what's coming up next, we're going to be going on to a new marketplace, so watch this space in Q2.

Speaker Change: Back into.

Speaker Change: We like that I would say that we will always keep it small, but the opportunity to reach a much wider customer cohort and particularly.

Speaker Change: All of us.

Speaker Change: Is there and it's powerful.

Speaker Change: I look at their size the size of Costco relative to US there is a lot of running room to be had in that in.

Speaker Change: In terms of what's coming up next we're going to be going onto a new marketplace. So watch the space in that in Q2.

Andrew J. McLean: I think there's an opportunity there. And in terms of our licensing, yeah, absolutely. I mean, you know, I look at it as an opportunity as we expand geographies. I know we haven't done that yet, but it's certainly something that's on the horizon for us. And as we expand into different channels to really get the brand out there and more visible to the consumer, and reach new consumers. So, you know, as we look at areas we could go into, and I'm just giving examples rather than giving specifics, but if you think about things like beauty and wellness, those are big areas for us to lean into.

I think there is opportunity there and then in terms of our licensing yes, absolutely I mean, I look at it as an opportunity as we expand geographies.

Speaker Change: We haven't done that yet, but its certainly something thats on the horizon for us and as we expand into different channels to really get the brand out there and more visible.

Speaker Change: To the consumer and reach a new consumer so as we look at areas we could go into.

Speaker Change: And.

Speaker Change: I'm, just giving examples rather than giving specifics, but if you think about things like beauty and wellness those big areas for us to lean into we see that there.

Andrew J. McLean: We see that there is a great opportunity with the brand to take it a little further forward. And we like our positioning. It's not a discount positioning. This is a more elevated brand now. It's more culturally relevant. It deserves the consideration of the customer. We don't take our customers for granted. And as we expand those licensing channels, we look for like-minded partners who share that philosophy.

Speaker Change: Great opportunity with the brands to take it a little further forward, we like competition is not a discount positioning this is.

Speaker Change: More elevated brand names.

Speaker Change: More culturally relevant.

Deserves the consideration of the customer we don't take our customer for granted as we expand those licensing channels. When you look for like minded partners, who share that philosophy.

Speaker Change: Got it.

Thank you.

Speaker Change: Thanks Dana.

Andrew J. McLean: Thank you. And we will take our next question from Eric Buter with SCC Research.

Speaker Change: Thank you and we will.

Speaker Change: We'll take our next question from Eric <unk> with SCC research.

Eric Buter: Good morning; let me add my congratulations. Thanks, sir.

Speaker Change: Good morning, let me add my congratulations.

Eric: Thanks, Eric.

Eric Buter: We'll talk a little bit about licensing. I believe that you've started to do the shoe business again with the licensee, and I'm curious what the response has been to that in terms of being able to offer expanded styles and the customer response to that. And I guess an update here now, when you should start to see the kids' license products shipped over and the new category you mentioned also. And I do have a follow-up.

Eric: We will talk a little bit about licensing.

Speaker Change: I believe that you're starting now to do the shoe.

This is again with the licensee and I'm curious what the response has been to that in terms of being able to offer expanded styles and the customer response to that and I guess an update here now when you should start to see the kids licensed products silver.

Speaker Change: The new category you mentioned also in Nigeria.

Andrew J. McLean: Yeah, okay, fantastic. We're obviously happy with our license. It gave us a nice contribution in the first quarter, and it was great to see that overall, the company's close merchandise value was positive. It's a really strong sign that our strategies are taking root, not just with the channels that we're distributing in, but with the product and branding differences that we're making and the customers that we're really reaching here. Right now, there wasn't really much to talk about in Q1, as it turns out, Eric.

Speaker Change: Yes, Okay fantastic.

Speaker Change: We're obviously.

Speaker Change: With our licensing.

Speaker Change: It's a nice contribution in the first quarter and it was great to see the overall.

Speaker Change: Company's gross merchandise value was positive.

Really strong signs that our strategies are taking not just with the channels that with it distributes again, but with the product.

Speaker Change: Branding differences that we're making in the customer.

Speaker Change: We're really reaching here.

Speaker Change: Right now though.

Not really much to talk about it in Q1 as it turns out areas that we.

Andrew J. McLean: Andrew McLean, Lands End Inc., Lands End Inc., Lands End Inc., Lands End Inc., [inaudible] I'm very, very happy with it. I think that the elevation of the product and the representation of how we view Lands End is really powerful. I think the opportunity to take that product and add it to the product that we're generating ourselves gives us a tremendous opportunity for amplification, not just in the back half of the year but in future years to come.

Speaker Change: Moved over to.

Speaker Change: Our shoes license, but we really only started to see product come in towards the end of the quarter that will ramp up on our website through the second quarter and are carefully where most benefit will come from will be from distribution in channels outside of our own digital channels, we will get that reach into.

Speaker Change: <unk>.

Speaker Change: Two other retail channels and wholesale channels and Youll really see that as a as a back half upside for the business.

Speaker Change: A similar story with kits, there's nothing new on kids, we're working with our partner <unk>.

Speaker Change: Selling through our existing kits product and we won't see that.

Speaker Change: Use this really until the back half of the year at the earliest and again.

Speaker Change: Loan growth path into us.

Speaker Change: Why is that distribution beyond our website.

Speaker Change: What I would say is just given the initial results and given the product.

Speaker Change: <unk>.

We're very very happy with it I think that the elevation of the product and the representation of how we view lands' end is is really powerful I think the opportunity to take that product and add.

Speaker Change: It too.

Speaker Change: Products that were generating ourselves it gives us a tremendous opportunity for amplification not just in the back half of the year.

Speaker Change: Two years to come.

Andrew J. McLean: Great. Let's shift gears and talk about international business. So that was a really strong international result. I'd like to drill down a little bit more. I know you've talked before about international having some of their own products for each region and how that really helped drive margins and other things. I'm curious where that kind of strategy is. And when you look at the international scene, where do you think the best potential in terms of countries is awesome too?

Shifting gears to talk about international so that was really.

Speaker Change: Strong international results.

Speaker Change: I'd like to drill down a little bit more I know you've talked before about.

Speaker Change: Our national some of their own products for each region and how that really helped drive margins under the pieces I'm curious did that where is that kind of strategy is and when you look at the <unk> International where do you think the best potential in terms of demand.

Andrew J. McLean: Thank you.

Speaker Change: Countries is awesome. Thank you.

Andrew J. McLean: Yeah, great. The own product, the own product question is a great one. We gave them the, let me step back. With the international business, what's great about it is that we gave them the opportunity to test and learn for the whole organization. So ideas that work internationally are ideas that we're happy to bring back to our domestic business in the U.S. And, you know, the mission that we set them on early was their sourcing because we had moved during the pandemic to having one global assortment. And, you know, the customers in Germany saw the same products as the customers in the U.S. That really didn't work. I've had a lot of experience with that in my career.

Speaker Change: Yes, great.

The one product the one product question is a great one.

Speaker Change: We gave the Mark let me step back.

Speaker Change: With the international business, what's great about the assets that we gave them the opportunity to test and learn for the whole organization. So ideas that work internationally. Our idea is that we're happy to bring back to our domestic business in the U S.

Speaker Change: And so.

Speaker Change: So I think the mission that we set them on early resolve their sourcing because we had moved in the pandemic to having one global assortment and the customers in Germany saw the same product that the customers in the EU and the U S.

Speaker Change: That really doesn't work.

Speaker Change: Had a lot of experience with that in my career.

Andrew J. McLean: And you can do it for a little bit of time, but you can't do it consistently because trends just evolve at slightly different times. And if you put your customer at the center of everything you do, and we do put our customer at the center of everything we do, it's... We want to give them reasons for consideration beyond just discounting. And so we really needed to start to localize the assortment or some percent of the assortment, and that's what we did.

Speaker Change: You can you can do it for a little bit of time, but you can't do it consistently because trends just evolve at slightly different times.

Speaker Change: If you put the customer at the center of everything you do and we do for our customer at the center of everything we do.

Speaker Change: We want to give them reasons for consideration beyond just discounting and so we really needed to start to localize the assortment or some percent of the assortment at SaaS swap we did so.

Andrew J. McLean: So we will likely never be more than about 20 percent of the assortment being localized in the international markets we're in right now because we do want to get sourcing leverage there. But our opportunity to test and learn falls into two buckets.

Speaker Change: We will likely never be more than about 20% of the assortment being localized in.

Speaker Change: International the international markets, where we're at right now because we do work to guest sourcing leverage.

Speaker Change: But we.

Speaker Change: Our opportunity to test and learn falls into two buckets one.

Speaker Change: It's really we're trying something.

Speaker Change: A new line or new fabrication.

Speaker Change: Modest change to our assortment.

Speaker Change: To test out quickly with our partners in Europe, or there is something thats important to the markets that we don't have we saw the whole crocheted trend come into Europe before it came into the U S and we were able to jump on that and get ahead of it very quickly, particularly.

Speaker Change: Particularly for the U K and then it moves to Germany. It is interesting to say that that's now moved into the U S. As we follow that fashion and that becomes a global trend.

Andrew J. McLean: We follow that fashion as it becomes a global trend, and we'll continue to do that. That's a very good arrangement for us. We like having sourcing closer to home. The closer we can be to the customer, I think the more opportunity to make money and drive margins there are, and particularly it fits a more asset-light approach and not having heavy inventories. The potential for where we would go is that we have adjacencies in Europe that are easy to expand into and sit right in front of us.

Speaker Change: We will continue to do that that's a very good arrangement for us, we like having sourcing closer to the hub.

Speaker Change: The closer we can be to the customer I think the more opportunity to make money and drive margins that are in particularly it fits.

Speaker Change: More asset light approach and not having heavy inventories the potential for where we would go as we have adjacencies in Europe that are easy to expand into and sit right in front of us.

Andrew J. McLean: You know, France is a big market. We're not really pushing the narrative in France. That's an opportunity for us that just leverages existing infrastructure. Similarly, with countries like Austria, we can leverage our German operations. And then I think we can expand to other markets where we see opportunity, from Eastern Europe to Spain. We have considered the Middle East at the time. It's not right right now.

Speaker Change: Frances.

Speaker Change: Big market, we're not really pushing the narrative in France, that's an opportunity for us, but just leverages existing infrastructure.

Only with countries like Austria.

Speaker Change: We can elaborate John German.

Speaker Change: Operations.

Speaker Change: Think we can expand to other markets, where we see opportunity from eastern Europe to.

Speaker Change: To Spain.

Speaker Change: We have considered the middle east the time, it's not right right now we will come back to that market another market that interests us where we had exited as Japan, we see opportunity there.

Andrew J. McLean: We will come back to that market. Another market that interests us where we have exited is Japan. We see opportunity there for significant leverage. That's an itch I'm going to scratch at some point.

Speaker Change: For a significant leverage that set that set that chunk of the scratch at some point.

Andrew J. McLean: And then really, a market I've been successful in in my career, and I see a lot of opportunity. I think there's a market there. There are several South American markets. There's Chile and Colombia, I think, are two that stand out. North America, obviously. There's Mexico. We see those as being really sort of easy leaps for us because the narrative for Mexico is that it's not too far away from the U.S., and we see that customer in our cohort, in any case.

And then really a market I've been successful in my career and I see a lot of opportunity in Latin America, we sell pretty substantially.

Speaker Change: Into Mexico, right now, it's mostly expats.

Speaker Change: But I think there's a market there are several.

South American markets this Chile.

Speaker Change: Tom.

Speaker Change: Colombia, I think or two that stand out North America, obviously, there is Mexico.

Speaker Change: We see those as being really <unk> elite florists, because the analysis of Mexico is not too far away from the U S and we see.

Speaker Change: See that customer in our cohort in any case.

Andrew J. McLean: Great. Thank you, Gretzky. Thank you.

Speaker Change: Great. Thank you congrats again.

Andrew J. McLean: Thank you. Thanks, Eric.

Speaker Change: Thank you thank you Sir.

Speaker Change: Thank you.

Alex Joseph Fuhrman: And we will take our next question from Alex Fuhrman with Craig Capital Group.

Speaker Change: We will take our next question from Alex Fuhrman with <unk> capital.

Alex Joseph Fuhrman: Hey guys, thanks very much for taking my question. You wanted to ask about the impact that some of your more kind of high-end technical items that are more functional are having on gross margin. Looks like, you know, you guys are having a lot of success.

Alex Joseph Fuhrman: Hey, guys. Thanks, very much for taking my question.

Alex Joseph Fuhrman: Wanted to ask about.

Speaker Change: The impact that some of your more kind of high end technical items that are more functional are having on gross margin looks like you guys are having a lot of things that you mentioned the longer way Packable jacket.

Alex Joseph Fuhrman: You mentioned the Wanderweight packable jacket and swimwear as well. Seeing as how you guys are selling a lot of more technical, you know, UV resistant, and tummy tucking type items over $100, which I believe is more than the brand that's historically commanded. How much more opportunity is there to be, you know, inserting more of those high-value, higher-priced items into the assortment? And are there other categories where you think there's an opportunity, outside of maybe swim and outerwear, where you can really take the assortment up like that?

Speaker Change: When were as well.

Speaker Change: Guys are selling a lot of more technical UV resistant tummy tuck in type items over $100, which I believe is more than that the brand is historically command it how much more opportunity is there.

That would be inserting more of those high value higher price items into the assortment and are there other categories, where you think there is an opportunity.

Speaker Change: Outside of maybe swimming, outerwear, where where you can really take the assortment up like that.

Andrew J. McLean: Morning, Alex. How are you doing? I'm doing fine.

Speaker Change: Good morning, Alex how are you.

Andrew J. McLean: I'm doing great. Thanks, Andrew.

Alex Joseph Fuhrman: I'm doing great. Thanks, Andrew.

Alex Joseph Fuhrman: Tom.

Andrew J. McLean: Roughly, about a third of our items right now are some form of solution. So as we look through the greater assortment, they've got something on them. It might be some protection factor.

Alex Joseph Fuhrman: Roughly.

Speaker Change: About a third of our items right now or some form of solution.

Speaker Change: So as we look through the greater assortment, they've got something on them it might be some protections factor it might be so sounds like Tommy flattening technology it might be.

Andrew J. McLean: It might be some sort of tummy flattening technology. It might be, you know, pants that will move with you as you resize. They all sold really, very well. If we look at those items, they really appeal to the customer and attract the consideration of a largely full-price paying customer. And so, clearly, there's a lot of running room for us to lean into to continue to expand that assortment over the coming years and, quite frankly, drive higher gross margins.

Speaker Change: Pants that will.

Speaker Change: We'll move with you as you've as you've resized.

Speaker Change: Sales. So it was really very well if we look at those items, they really appeal to the customer and attract the consideration of a largely full priced paying customer and so clearly there is a lot of running room for us to lean into to continue to expand.

Speaker Change: Assortment over the coming years quite frankly.

Speaker Change: And drive higher gross margins I, just think it's also worth noting that we could change the business model fairly substantially this year to slow and use us more continuously.

Andrew J. McLean: I just think it's also worth noting that we did change the business model fairly substantially this year to flow newness more continuously. And if I just look at something like our women's business in the first quarter, we saw that newness drove about 80% of our upside, and we had significant upside in our newness. I think the other part that I don't want to forget is that, you know, much as we're engineering solutions into this, we're also, like, reaching underlying trends.

Speaker Change: If I just look at something like our womens business in the first quarter newness.

Speaker Change: We saw.

Speaker Change: It drove about 80% of our upside as we had significant upside on users I think the other part that I don't want to forget is that.

Speaker Change: As were engineering solutions into this growth.

Speaker Change: Reaching underlying trends or customer deserves that trend at night, they serve to be able to address in a way that makes them feel great and so there were other wins within that I wouldnt necessarily call a solution.

Andrew J. McLean: Our customers deserve the trend, and they deserve to be able to dress in a way that makes them feel great. And so, you know, there were other wins within there that I wouldn't necessarily call a solution, but I would call out as being kind of differentiated from where we've been before.

Speaker Change: I would.

Speaker Change: I would call out as being differentiated from where we've been before so for example, our number one performing items.

Andrew J. McLean: So, for example, our number-one performing item in jeans was our high-rise, wide leg. We saw similar results within linen, and those are styles that, as a brand, we've not necessarily approached in the past. I think also, you know, we changed some of our philosophy on how we would drive third layer pieces. And if I look at sweaters, I want to make sure that they get a call out. The sweater teams, the company overall really excelled in the first quarter with that third piece layering.

Speaker Change: <unk> software.

Speaker Change: I think you're probably the jeans was a high rise wide leg, we saw similar within Atlanta than those styles.

Speaker Change: Brand with not necessarily approached in the past.

Speaker Change: I think also.

Speaker Change: We changed some of our philosophy on how we would drive.

Speaker Change: Third layer pieces as I look at sweaters I wanted to make sure that they can call out.

Speaker Change: This latter teams the company going for really acts out of the first quarter with that third piece Larry.

Andrew J. McLean: And, you know, in particular, if I look at our drifter sweater, it doesn't come with a solution per se, not to say we won't engineer one in. But it's been a very powerful ad and driven significant increases in that. I would say of a 12-week plan that we had for sweaters, they had it in within eight weeks.

Speaker Change: And in particular, if I look at our drift or sweater it doesn't come with the solution with <unk> not to say, we both engineer one in.

Speaker Change: It's been a very powerful App has driven significant increases of I would say of a 12 week plan that we had with lessors. They had it was eight weeks. So that gives you a sense of how powerful that classes they come to us.

Andrew J. McLean: So that gives you a sense of how powerful that class has become to us. So I don't know if I totally answered your question, but I'm happy to talk about it a little more.

Speaker Change: I don't know if I totally answered your question I'm happy to let me converted a little bit to the numbers.

Andrew J. McLean: Let me translate it a little bit to the numbers. You know, the significant gross profit drivers we've achieved over the last three quarters, but mostly in Q1, have been through lower discounting. So our AURs are up, so we're getting a higher price. And we get that higher price from new units. We're getting that higher price from the right trend, and we're getting that higher price from having solutions. The rest of that benefit has come from lower costs on our products. So while we're adding a lot of these solutions, we're actually still driving a lower cost of the product coming in. So those two factors are really what's driving that gross margin improvement that you're seeing.

Speaker Change: The significant gross profit drivers we've achieved over the last three quarters, but mostly in Q1.

Speaker Change: It's been through lower.

Speaker Change: The lower discounting so our AUR is are up so we're getting a higher price, we're getting that higher price from newness were getting that higher price from the right trend and we're getting that higher price from having solutions.

Speaker Change: The rest of that benefit has been come from lower costs on our products. So while we're adding a lot of these solutions, we're actually still driving a lower cost of the product coming in.

Speaker Change: So those two factors are really what's driving that gross margin improvement that you are saying.

Andrew J. McLean: Great, that's really helpful. Thank you both for the very thorough response and congratulations on the strong results you're seeing. Thanks, thanks.

Speaker Change: Great. That's really helpful. Thank you both for the very thorough response and congratulations on the strong results Youre seeing.

Alex Joseph Fuhrman: Thanks, Alex.

Speaker Change: Okay. Thanks, Alex.

Steve Silver: Thank you. And we will take our next question from Steve Silver with Argus Research.

Speaker Change: Thank you and we will take our next question from Steve Silver with Argus Research.

Steve Silver: Good morning. Thanks, Operator, and thanks for taking the question. A lot of my questions have already been asked, so I guess I just have a big-picture question for you guys. In your prepared remarks, you touch upon quite a few themes of using technology, having a strategy focused on innovation and announcing new patents for SWMR, for example, and announcing great results in terms of social media campaigns. I'm just curious as to whether you think Lands End is doing anything unique in these regards or if you're just doing a lot of these things better than competitors that are also looking to take their data and leverage it into high-growth areas.

Steve Silver: Good morning, Thanks, operator, and thanks for taking the question.

Steve Silver: A lot of my questions have already been asked so I guess I just have a big picture question for you guys.

Speaker Change: In your prepared remarks, you touched upon quite a few themes of using technology.

Speaker Change: Having a strategy focused on innovation and announcing new patents for swimwear for example.

Speaker Change: Dancing great results in terms of social media campaigns.

Speaker Change: Just curious as to whether you think land is doing anything unique in these regards or if youre just doing a lot of these things better than competitors that are also looking to take their data and leverages leverages into high growth areas.

Andrew J. McLean: Hi Steve. It's nice to meet you. It's Andrew McLean.

Steve Silver: Hi, Steve It's nice to me is and drove our claims.

Speaker Change: We have a vision.

Speaker Change: Really is to be the innovative solutions brand for life separate journey.

Andrew J. McLean: We have a vision, and it really is to be the innovative solutions brand for life's every journey. And that's the lens by which we judge everything in the organization. So as we go through our day, and we make decisions around products, we make decisions around technology investment, we make decisions around marketing, it's like that's the filter that we pass everything through. And I think the fact that we're patent pending on merchandise gives you an indication that we really want to differentiate ourselves, and we want to pull away from the industry at large, and we see an opportunity to do that.

Speaker Change: Thats the lens by which we judge everything at the organization. So as we go through our day and we make decisions around product, we make decisions around technology investments, we make decisions around marketing that's like that's the filter that we passed everything through.

Speaker Change: I think the fact that we're.

Speaker Change: <unk> patent pending pardon.

Speaker Change: Merchandise gives you an indication of we really want to differentiate ourselves and we want to pull away from the industry at large and we see an opportunity to do that it's not for nothing.

Andrew J. McLean: It's not for nothing that we have a leading market share in Women's Swim, but we are looking to create ways to differentiate our position, which is really why we come back to the solutions that are really along with you for your journey.

Speaker Change: We have a leading market share in women's swim.

Speaker Change: But women over 40.

Speaker Change: We're not just defending that by just trying to stay put.

Speaker Change: We're growing that and actively looking to expand that we see tremendous opportunity and we've been.

Speaker Change: Great on the technology that we've engineered into this product and I think you should watch for more patents coming on that as we differentiate ourselves, but we are also really led and thought about how the customer wants to wear it how it fits with their lifestyle and that's taken us away from being quite so basic and a little more focused on patent and then a little more focused on <unk>.

Speaker Change: A little more focused on their lifestyle and that will always continue to see us not necessarily be at the edge of everything but we are looking to create ways to differentiate our position, which is really why we come back to the solutions.

Speaker Change: Or really along with you for either your journey.

Andrew J. McLean: I think as it comes to our technology, we've always been able to differentiate ourselves on our data. And I think for the company, the size we are, we've been able to punch above our weight, and we'll continue to do so. We have a number of data scientists on staff, and for us, it's really about looking inside and being able to change how we think about a customer in a way that best suits how we're trying to go to market and best suits their lifestyle. So you won't hear us talk about demographics as much as you'll hear us talk about psychographics. I don't tend to hear that when I'm out in the industry quite as much.

Speaker Change: I think as it comes through our technology, we've always been able to differentiate ourselves on.

Speaker Change: And I think for the company of the size, but.

Speaker Change: We've been able to punch above our weight.

Speaker Change: We'll continue to do so we have a number of data scientists on staff and for US It's really about looking at <unk>.

To change, how we think about a customer in a way that best suits, how we're trying to come to market and best suits. Their lifestyle. So you won't hear us talk about demographics as much as Youll hear us talk about psychographics.

Speaker Change: I don't tend to hear that when I'm out in the industry quite as much and I think that's another differentiator for us because we're really building assortment of brands those customers at the center of.

Andrew J. McLean: And I think that's another differentiator for us because we're really building assortments around those customers at the center of their work. They're at the center of everything we do. And we want to be there for their journey. As it pertains to technology, I would say, continue to watch this space. It's like Lands End has traditionally always been at the leading edge of being first into the industry. And I think we've probably fallen a little back on that.

Speaker Change: At the center of everything we do we want to be there for their journey as it pertains to technology I would say continue to watch this space that's like Lands' end has.

Speaker Change: Traditionally always been at the.

Speaker Change: Leading edge of being first into the industry and I think we'd probably follows a little back on that.

Andrew J. McLean: But it's our intention to really continue to use that where appropriate to differentiate ourselves, and you know, if I look at the notion of, "Making sure it's an experience that's always growing with you, and giving you as much access to it as possible." So, no technology for technology's sake, in fact. For nothing sake, what we're doing is very measured, it's thoughtful, and it's pointed to where we think we can create the most value for our customers and, by extension, ourselves.

Speaker Change: Our attention to really continue to use that where appropriate to differentiate ourselves and you know as I look at that the notion of.

Steve Silver: That's very helpful. Thank you so much, and congratulations on the quarter. Thank you.

Speaker Change: What the WAF as a relationship with the customer is going to be is changing and it's probably changing as fast as it has in.

Steve Silver: Thank you.

Speaker Change: A number of years look at the growth that she has a team of <unk>.

Speaker Change: Or is there there are other ideas around loyalty.

Speaker Change: We are really working on is in the organization and make it about your experience as a customer with lens and make sure. Your individual experience make sure. It's an experience that coal was growing with you and give you as much access to as possible. So no technology for technology's sake.

Speaker Change: Nothing for nothing side, what we're doing is very measured thoughtful and pointed to where we think we can create the most value for our customers and by extension ourself.

Speaker Change: That's very helpful. Thank you so much and congratulations on the quarter.

Steve Silver: Thank you Steve.

Ed: Thank you Ed.

Operator: It appears that we have no further questions at this time. This does conclude Lands End's First Quarter Earnings Call. Thank you for your participation. You may disconnect at any time.

Operator: ?? ?? ??

Speaker Change: It appears that we have no further questions. At this time. This does conclude <unk> first quarter earnings call. Thank you for your participation you may disconnect at any time.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.