Q2 2025 Lands' End Inc Earnings Cal

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and Andrew McLean

Good evening.

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Thank you for watching!

Operator: Good morning and welcome to the Lands-In second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's prepared remarks, there will be a question-and-answer session. You may register to ask a question at any time by pressing Star 1 on your telephone keypad. You may remove yourself at any time by pressing star 2. Please note today's call will be recorded, and I'll be standing by if you should need any assistance.

Thank you for watching!

Speaker Change: Good morning and welcome to the lands in second quarter earnings conference call.

Speaker Change: At this time, I'll participate in a listen only mode. After the speaker's prepared remarks, there will be a question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. You may remove yourself at any time by pressing star 2.

Speaker Change: Please note today's call will be recorded and I'll be standing by if you should need any assistance. It is now my pleasure to turn the call over to Tom Olfels. Senior Director, Financial Planning and Analysis, please go ahead.

Tom Auffles: It is now my pleasure to turn the call over to Tom Auffles. Senior Director, Financial Planning and Analysis. Please go ahead.

Tom Auffles: Good morning and thank you for joining the Lands' End second earnings call for a discussion of our second quarter, 2024 results, which we released this morning and can be found on our website, landsend.com.

Speaker Change: Thank you for watching!

Tom Olfels: Good morning, and thank you for joining the land send earnings call for discussion of our second quarter, 2024 results, which will release this morning and can be found at our website, landsend.com.

Tom Auffles: I'm Tom Auffos, Lands-in Senior Director of Financial Planning and Analysis, and I'm pleased to join you today with Andrew McLean, our Chief Executive Officer, and Bernie McCracken, our Chief Financial Officer. After the prepared remarks, we will conduct a question-and-answer session.

Tom Olfos: I'm Tom Olfos, Lance and Senior Director of Financial Planning and Analysis, and I'm pleased to join you today with Andrew McLean, our Chief Executive Officer and Bernie McCracken, our Chief Financial Officer. After the prepare remarks, we will conduct a question and answer session.

Tom Auffles: We also note that the information we're about to discuss includes forward-looking statements. Such statements involve risk and uncertainties. The company's actual results could differ materially from those discussed on this call. Factories 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.

Tom Olfos: We also note that the information we're about to discuss includes forward-looking statements.

Tom Olfos: The State Mints involve risk and uncertainties.

Tom Olfos: The company's actual world's oaths could differ literally from those discussed on this call.

Tom Olfos: Factors that could contribute to such differences include, but are not limited to those items noted and included in the company's SEC filings.

Tom Olfos: and including our annual report on Form 10K and quarterly reports on Form 10Q.

Tom Olfos: 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.

Tom Auffles: Subsequent events and developments may cause the company's outlook to change.

Tom Olfos: The subsequent events and developments may cause the company's outlook to change.

Tom Auffles: During this call, we will 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 the earnings release issued earlier today, a copy of which is posted in the investor relations section of our website at landsend.com.

Tom Olfos: During this call, we will be referring to non-gap measures.

Tom Olfos: These non-gap measures are not prepared in accordance with generally accepted accounting principles.

Tom Olfos: A reconciliation of non-gap financial measures to the most directly comparable gap measures can be found in the earnings release issued earlier today, a copy of which is posted in the Inventful Relations section of our website at landsend.com.

Andrew McLean: With that, I will turn the call over to Andrew. Thank you, Tom. Good morning, and thank you for joining us today. We delivered robust second quarter of 2024 results, reflecting the continued execution of our solutions-based strategy. Our focus on innovation across our business is evolving the Lands' End brand and disortment, attracting new customers and further improving our supply chain and inventory position. These achievements are driving increased close margin and closed profit dollars.

Tom Olfos: with that I will turn the call over to Andrew.

Andrew: Thank you Tom, good morning and thank you for joining us today.

Andrew: We delivered robust second quarter 2024 results.

Andrew: Reflecting the continued execution of our solution-based strategy, our focus on innovation across our business is evolving the land-send brand and the sortment, attracting new customers and further improving, far supply chains and inventory position.

Speaker Change: Be the Chief Minister driving increased close margin and close profit dollars.

Andrew McLean: Let me provide a few highlights. We deliver net revenue of $317 million at the top end of our guidance range. Adjusted EBITDA of $17 million dollars, a year-over-year increase of 8%, also at the high end of our guidance range, and GMV up mid-single digits percentage growth. Innovation is the keystone of our strategy. By bringing fresh thinking and new approaches across our business, we're driving more profitable sales. At the result, we're confident that we position Lands' End well for a strong back half of the year and beyond. Our continued efforts to prioritize newness and speed to market in our assortment resulted in the 21% year-over-year improvement in our inventory position and a 15% increase in our turn rate.

Speaker Change: Let me provide a few highlights.

Speaker Change: We delivered net revenue of $317 million at the top end of our guidance range.

Speaker Change: Adjusted EBITDA of $17 million.

Speaker Change: A year over year increase of 8% also at the high end of our guidance range, and GMV mid-singual digits percentage growth.

Speaker Change: Innovation is the keystone of our strategy by bringing fresh thinking and new approaches across our business. We're driving more profitable sales. After result, we are confident that we position land-end well for a strong backpack of the year and beyond.

Speaker Change: Our continued efforts to prioritize new lists and speak to market in our assortment, resulted in a 21% year-over-year improvement in our inventory position, and a 15% increase in our turn rate. We remain nimble in managing our inventory as we take a deliberate approach to our workforce.

Andrew McLean: We remain nimble in managing our inventory as we take a deliberate approach to our assortment, staying on top of trends in introducing fresh styles, fabrics, and colors that fit the moment, are consistent with our brand and, most importantly, the customer's love.

Speaker Change: Staying on top of trends in introducing fresh styles, fabrics and colors that fit the moment are consistent with our brands and most importantly that custom was love.

Andrew McLean: We also made strides in our efforts to redefine and elevate our brand across our digital channels in the second quarter. The progress we've made is showcasing Land's End as a quality brand that appeals to a wide range of consumers. The year-to-date we've seen mid-single digit growth in our new to-file customers and, importantly, these new to-file customers are on average 10 years younger. All told, our marketing investments are reinvigorating both our brand and driving more traffic to our own channels, translating to greater new customer conversion and more full-price sales.

Speaker Change: We also made strides in our efforts to redefine and elevate our brand across our digital channels in the second quarter. The progress we've made is showcasing land end as a quality brand that appeals to a wide range of consumers.

Operator: [inaudible] you, thank you, thank you,[inaudible] Our focus on innovation across our business is evolving the Lands End brand and disortment, attracting new customers and further improving our supply chain and inventory position. These achievements are driving increased close margin and closed profit dollars.

Speaker Change: Year-to-date we've seen mid-fingled digit growth in our youth-to-final customers. And importantly, these youth-to-final customers are on average 10 years younger.

Speaker Change: Old Holt are marketing investments, are we in bigger rating both our brand?

Speaker Change: I'll drive in more traffic to our own channels, translating to greater new customer conversion and more full-price sales.

Andrew McLean: This is we're generating to-date. We are laying the groundwork for sustained long-term growth tomorrow. From a product perspective, we monitor throughout the quarter, resulting in gross margin and profit meaningfully higher than the same period last year. Our speed to market initiatives to facilitate our warehouse approach to our assortment. Customers responded incredibly well to units driven by new products at the highest levels we've seen in five years. Units in woven dresses and tops and denim perform this despite the warmer weather. The strength of our layering products showed through in the second quarter, with summer sweaters and this in particular seeing higher sales volume and demand.

Speaker Change: This is where generating today, we are laying the groundwork for sustained long-term growth tomorrow.

Speaker Change: from a product perspective.

Speaker Change: Bonded throughout the quarter, resulting in gross margins and profit meaningfully higher than the same period last year.

Speaker Change: [inaudible]

Speaker Change: Customers respond to incredibly well, to newness.

Speaker Change: Driven by new product at the highest levels we've seen in five years. Units in woven dresses and tops and denim performed a special.

Speaker Change: Despite the warmer weather, the strength of our layering products showed through in the second quarter with summer sweaters and nests in particular seeing higher.

Andrew McLean: The standout category for the whole of spring summer has been women's apparel. From our new denim sale, we have seen huge success. The drift of sweaters has rapidly become one of our leading itemists, and it's now expanding. As we turn our attention to fall holiday, we are well positioned to transition our assortment towards our weatherproofed out-to-wear in a wonder-weight franchise, and are any weather fleas, both of which are trending strongly thus far in the third quarter, capitalizing on trends. On Swim, we are pleased with our performance across our swim and vacation categories. Like I mentioned earlier, our products throughout the quarter, and we're proud to have filed another patent in our swim liner during the quarter for next season.

Speaker Change: Bells Paulian and the man.

Speaker Change: The standout category for the whole of Spring Summer has been women's apparel, from our new Dan and Silver.

Speaker Change: We have seen huge success.

Speaker Change: The Drift of Sweatser has rapidly become one of our leading writers and is now expanding.

Speaker Change: As we turn our attention to fall holiday, we are well positioned to transition our assortment towards our weather proofs elsewhere.

Speaker Change: the Wonder White franchise and there are any weather fleets.

Speaker Change: Both of which are trending strongly thus far in the third quarter, capitalizing on.

John Frens: John Frens

Speaker Change: On Swin, we are pleased with our performance across our Swin and Vacation Categories. Like I mentioned earlier, we...

Speaker Change: our products throughout the quarter and we're proud to have filed another patent in our swim line-up during the quarter for next season. There's one for a week.

Andrew McLean: This one for the future. Innovation remains a continued theme across our entire business, as we listen carefully to our customers, build product style, and bring speed to market. That's exactly what this new patent-to-technology and our swim business does, and we're thrilled to have championed for our customers.

Speaker Change: Future. Innovation remains a continued theme across our entire business, as we listen carefully to our customers build products.

Speaker Change: and Bringspeed to Market. That's exactly what this new patent technology and our school business does. And worth the real to have a chance.

Andrew McLean: Turning to the performance of our various businesses, we are continuing to prepare to revolve the way we talk about our business 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 B2C activities. Our USE commerce business is our largest direct-to-consumer channel. The business delivered its six consecutive quarter of great margin performance, with an increase of over 700 basis points due to our more targeted approach to promotions and refined marketing strategy. With quality sales, use the file customer close and improved inventory management.

Speaker Change: and Super Arcasters.

Speaker Change: Turning to the performance of our various businesses, we are continuing to prepare to revolve the way we talk about our business, the more consistent with the evolution of our brand.

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

Speaker Change: beginning with our B2C activities.

Speaker Change: Our U.S.E. commerce business is our largest direct to consumer channel. The business delivered at six consecutive quarter of great margin performance, with an increase of over 700 basis points due to our more targeted approach to promotions and refined marketing strategy.

Andrew McLean: Let me provide a few highlights. We deliver net revenue of $317 million at the top end of our guidance range. Adjusted EBITDA of $17 million dollars, a year-over-year increase of 8 percent also at the high end of our guidance range and GMV up mid-single digits percentage close. Innovation is the keystone of our strategy. By bringing fresh thinking and new approaches across our business, we're driving more profitable sales. As a result, we're confident that we position Lands End well for a strong back half of the year and beyond.

Speaker Change: The quality sales, new societal customer growth and improved inventory management.

Andrew McLean: We continue to maximize key events such as worth to drive demand. Combined with our targeted promotion and marketing strategies, these key events enable us to showcase our fit centric assortment across owned and organic channels to drive more traffic and ultimately more higher margin sales.

Speaker Change: and we continue to maximize key events such as me.

Speaker Change: North, to drive the man.

Speaker Change: Combined with our targeted promotion and marketing strategies, these key events enable us to showcase our Fitcentric assortment across owned and organic channels to drive more traffic and ultimately more higher margin sales

Andrew McLean: What that our European business has come full circle with growth in revenue and profitability during the quarter. The team in Europe continues to innovate and customers well. Europe has proven to be a great test market for the rest of our business.

Speaker Change: What that our European business has come full circle with growth in revenue and profitability during the courtship.

Andrew McLean: Our continued efforts to prioritize newness and speed to market in our assortment resulted in a 21 percent year-over-year improvement in our inventory position and a 15 percent increase in our turn rate. We remain nimble in managing our inventory as we take a deliberate approach to our assortment, staying on top of trends in introducing fresh styles, fabrics, and colors that fit the moment, are consistent with our brand and, most importantly, the customer's love.

Speaker Change: The team in Europe continues to innovate and customers well Europe has proven to be a great test market for the rest of our business.

Andrew McLean: Turning to third party, we yes, in our strategy to focus on assortment, tailored to individual marketplaces, and work with partners that share our vision for customer-focused solutions. We're pleased to announce that we recently launched on Nordstrom's online marketplace, presenting a terrific opportunity to further elevate our brand. Our partnership, we're broadening the availability and visibility of land zen merchandise while reaching new customers who can find their way to land.

Speaker Change: Turning to third party week.

Speaker Change: Yes, in our strategy to focus on the sort, and to individual marketplaces, a work with partners that share our vision for customer-focused solution.

Speaker Change: for a police tournament that we recently launched on Nordstrom's online marketplace, presenting a terrific opportunity to further elevate our brand.

Andrew McLean: We also made strides in our efforts to redefine and elevate our brand across our digital channels in the second quarter. The progress we've made is showcasing Lands End as a quality brand that appeals to a wide range of consumers. Year-to-date, we've seen nitsingle digit growth in our new-to-file customers and importantly, these new-to-file customers are on average 10 years younger. All told, our marketing investments are reinvigorating both our brand and driving more traffic to our own channels, translating to greater new customer conversion and more full-price sales. This is what we're generating today.

Speaker Change: and Partnership were broadening the availability and visibility of land and merchandise while reaching new customers who can find their way to land.

Andrew McLean: Now on to licensing, which provides asset-like recurring income streams, while allowing us to concentrate on... Licensing continue to grow in the quarter, and we are pleased to announce that we have entered into a license to distribute Land Full Sailor Kent. This will further the visibility and reach of our brand among a broader consumer base while creating a stations of Lands End. Our clubs channel performed well in the second quarter. We renamed bullish on clubs as a powerful part of the strategy, by providing access to an attractive customer who may be familiar with Lands' End or may be meeting us for the first time while we were at the fulfillment fees on our P&L.

Speaker Change: Now on to licensing which provides asset-like recurring income streams, allowing the concentrate on pay.

Speaker Change: Lieson's in continue to grow in the courts, and we are pleased to announce that we have entered into a licensed distributed land and a parallel out.

Speaker Change: Ocelacans, this will further the visibility and reach of our brand among a broader consumer base. We're creating a...

Speaker Change: and Stations of Landsend. Our club's channel performed well in the second quarter. We renamed bullish on clubs at a powerful part of...

Andrew McLean: We are laying the groundwork for sustained long-term growth tomorrow. From a product perspective, we're going to throw out the quarter, resulting in growth margins and profit meaningfully higher than the same period last year. Our speed-to-market initiatives to facilitate our wear-and-out approach to our assortment. Customers responded incredibly well to new-to-file customers and driven by new product at the highest levels we've seen in five years. Units in woven dresses and tops and denim performed despite the warmer weather, the strength of our layering products showed through in the second quarter with summer sweaters and nits in particular seeing higher sales volume and demand.

Speaker Change: and St. Travegy, so I'm providing access to an attractive customer who may be familiar with Lansend or may be meeting us for the first time while we were...

Andrew McLean: The GNV associated with our license business allowed us to drive overall brand growth and the turning that to our B2B outfit just business. We made solid progress during the second quarter to reap business around its core strengths that are hallmarks of our brand, particularly high quality, durable, relevant, personalized and customized, backed by outstanding customer service. Our site catalogs and marketing were all relaunched for the more contemporary feel to better purchasing managers, more interested in product that fits the work and the home life of a dynamic US employee base. We are also opening this, which we expect will enable our outfitter sales and merchandise teams to better attract and serve customers through our expertly crafted branded apparel solutions.

Speaker Change: and the fulfillment fees on our P&L. The GMV associated with our licensed business allowed us to drive overall brand growth.

Speaker Change: Turning that to our B2B out for justice, we make solid progress during the second quarter to week.

Speaker Change: and this around its course grants that are hallmarks of our brand, particularly high-quality, durable, relevant, personal life and customized.

Speaker Change: Back by outstanding customer service, our site catalogs and marketing were all relaunch but were contemporary feel to better.

Andrew McLean: The standout category for the whole of spring summer has been women's apparel from our new denim sale. We have seen huge success. The drift of sweaters has rapidly become one of our leading items and it's now expanding. As we turn our attention to fall holiday, we are well positioned to transition our assortment towards our weatherproofed out-to-wear in a wonder-weight franchise, and are any weather fleas, both of which are trending strongly thus far in the third quarter, capitalizing on trends. On swim, we are pleased with our performance across our swim and vacation categories. Like I mentioned earlier, we are proud to have filed another patent in our swim line-up during the course of the next season.

Speaker Change: the purchasing managers. More interested in product that fits the work and the home life of a dynamic U.S. employee base.

Speaker Change: We are also a millionaire.

Speaker Change: which we expect will enable our out-for-scales and motion-dike teams to backtrack and serve customers through our expertly trusted branded apparel solutions.

Andrew McLean: Additionally, during this period, we made the decision to exit the low profit and commoditized promotional products category, allowing us to focus on serving our customers from a point of strength. We've developed strong capabilities to serve customers in the financial services industry and are targeting growth in that sector, as companies increasingly recognize the economic and professional benefits of branded work or start apparel. For example, we have partnered with a major client in Wells Fargo, entering into a multi-year agreement to launch the career apparel program. Beginning this month, Land then will exit approximately 35,000 employees across over 4,000 branches.

Speaker Change: Additionally, during this period, we made a decision to access the low-profit and commoditized promotional products category, allowing us to focus on serving our customers from a point of strength.

Speaker Change: We've developed strong capabilities to serve customers in the financial services industry and are targeting growth in that sector. As companies increasingly recognize the economic and professional benefits of branded workforce that peril.

Andrew McLean: There's one for the future. Innovation remains a continued theme across our entire business, as we listen carefully to our customers, build product style and bring speed to market. That's exactly what this new patent technology and our swim business does, and worth thrilled to have championed for our customers.

Speaker Change: For example, we have partnered with a major client, Wells Fargo, entering into a multi-year agreement to launch the career apparel program. Beginning this month, land-dend will outset approximately 35,000 employees across the country.

Andrew McLean: In the school channel, even with a later back-to-school season, we saw outstanding results in the second quarter that have continued into August, with our first app revenue up low single digits and gross margin expanding by over 500 basis points. Our commitments last year could deliver great products on time, earned us high marks with our PTAs, and we were able to add and service new schools this year with a strong pipeline for 2025.

Speaker Change: In the school channel, even with a later back-to-school season, we saw outstanding results in the second quarter that have continued into August with our first half revenue up a low single digits and cross margin expanding by over 500 basis points.

Andrew McLean: Turning to the performance of our various businesses, we are continuing to prepare to revolve the way we talk about our business to be more consistent with the evolution of our brands. Specifically, we plan to discuss our business in terms of B2C and B2B, beginning with our B2C activities. Our USE commerce business is our largest direct-to-consumer channel. The business delivered its six consecutive quarter of great market performance with an increase of over 700 basis points due to our more targeted approach to promotions and refined marketing strategy.

Speaker Change: Our commitment last year could deliver great product on time earned as high marks for our PTAs and we were able to add and serve as new school this year with a strong pipeline for 2025.

Andrew McLean: It's worth mentioning that our Wisconsin-based embroidery centers make us the largest and arguably most nimble domestic provider in this channel.

Speaker Change: It's worth mentioning that our Wisconsin-based embroidery centres make us the largest and arguably most nimble domestic provider in this channel.

Andrew McLean: Before handing it over to Bernie, I want to spend a moment elaborating on the fantastic progress that we've made to improve our inventory position and how the concepts of speed is so critical to our strategy. It is worth noting that during the quarter, we achieved the lowest second quarter inventory levels this decade, coupled with the lowest discount rate on one of the fastest turning inventory levels since our public listing in 2014. B is a watchword for our teams. Over the last year, we have significantly increased speed across our supply chain, shifting production to the west and hemisphere, lowering skew cans, creating chase capabilities for new and existing products, and leaving inventory open well into each season as we deliver freshness to the customer every single month.

Speaker Change: Before handing it over to Bernie, I want to spend a moment elaborating on the fantastic progress that we've made to improve our inventory position and how the concept of speed is so critical to our strategy.

Andrew McLean: With quality sales, use the file customer growth and improved inventory management. We continue to maximize key events such as worth to drive demand. Combined with our targeted promotion and marketing strategies, these key events enable us to showcase our fit centric assortment across owned and organic channels to drive more traffic and ultimately more higher margin sales.

Andrew McLean: That our European business has come full circle with growth in revenue and profitability during the quarter. The team in Europe continues to innovate and customers well, Europe has proven to be a great test market for the rest of our business.

Andrew McLean: We look forward to accelerating our speed to market initiatives, which create more opportunities for inventory reductions, drive margin, and ultimately let us better serve our customers.

Andrew McLean: Turning to third party, we yes, in our strategy to focus on assortment, tailored to individual marketplaces, and work with partners that share our vision for customer-focused solutions. We're pleased to announce that we recently launched on Nordstrom's online marketplace, presenting a terrific opportunity to further elevate our brand. Our partnership were broadening the availability and visibility of LandsN merchandise, while reaching new customers who can find their way to land.

We look forward to accelerating our speed to market initiatives, which create more opportunities for inventory reductions drive margin and ultimately led us better serve our customers.

Bernard McCracken: I'll now turn it over to Burning to discuss our second quarter performance in more detail. Thank you, Andrew. As a second quarter, total revenue performance came in at the high end of our guidance range at $317 million, a decrease of 2% compared to last year. GMV increased mid single digits for the second quarter of 2024, which was in line with our guidance. As a reminder, we believe GMV, 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 the comfortable growth of our brand.

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

Bernie: Thank you Andrew.

Bernie: For the second quarter total revenue performance came in at the high end of our guidance range at $317 million.

Bernie: A decrease of 2% compared to last year.

Bernie: GMB increased mid single digits for the second quarter of 2024, which was in line with our guidance as.

Andrew McLean: Now on to licensing, which provides asset-like recurring income streams, while allowing us to concentrate on licensing and continue to grow in the quarter. We are pleased to announce that we have entered into a license to distribute land under Full Sailor Kent. This will further the visibility and reach of our brand among a broader consumer base, while creating a stations of Lands End.

Bernie: As a reminder, we believe <unk>, which accounts for the total order value of all merchandise sold to customers through BDC and BBB channels as well as the retail value of the merchandise sold through third party channels is an important indicator of the performance of the comparable growth of our brand.

Bernard McCracken: As Andrew noted, we delivered just an EBITDA of $17 million in the second quarter, which came in at the high end of our guidance range, in a year-over-year increase of 8%. These results reflect our continued efforts to prioritize profitability and balance of the energy efficiency versus solely sales. We continue to improve profit margin across our business units, which has allowed us to reinvest in the business, especially in new customer acquisition. Growth profit increased by 9% compared to last year, driven by our 6th straight quarter of growth margin expansion. Growth margin in the second quarter was 48%, and approximately 470 basis point improvement from the second quarter of 2023.

Bernie: As Andrew noted, we delivered adjusted EBITDA of $17 million.

Andrew McLean: Our clubs channel performed well in the second quarter. We renamed bullish on clubs as a powerful part of the strategy, by providing access to an attractive customer who may be familiar with Lands End, or may be meeting us for the first time. While we were at the fulfillment fees on our P&L, the GNV associated with our license business allowed us to drive overall brand growth, and the turning that to our B2B outfit just business.

Bernie: In the second quarter.

Andrew: Which came in at the high end of our guidance range and a year over year increase of 8%.

Speaker Change: These results reflect our continued efforts to prioritize profitability and balance sheet efficiency versus solely sales.

Speaker Change: We continue to improve profit margins across our business units, which has allowed us to reinvest in the business, especially in new customer acquisition.

Speaker Change: Gross profit increased by 9% compared to last year, driven by our sixth straight quarter of gross margin expansion.

Andrew McLean: We made solid progress during the second quarter to reap business around its core strengths, but our hallmarks of our brand, particularly high quality, durable, relevant, personalized, and customized, backed by outstanding customer service. Our site, catalogs, and marketing were all relaunched for the more contemporary feel to better purchasing managers, more interested in product that fits the work and the home life of a dynamic US employee base. We are also opening this, which we expect will enable our outfiter sales and merchandise teams to better attract and serve customers through our expertly crafted branded apparel solutions.

Speaker Change: Gross margin in the second quarter was 48% and approximately 470 basis point improvement from the second quarter of 2023.

Bernard McCracken: The margin improvement was driven by product solutions and newness across the assortment. Lower promotional activity, reduction in sales of clearance inventory, and improved supply chain costs.

Speaker Change: The margin improvement was driven by product solutions and newness across the assortment.

Speaker Change: Promotional activity.

Speaker Change: The reduction in sales of clearance inventory and improved supply chain costs.

Bernard McCracken: Our U.S.E. Commerce business saw a sales decrease of 4% compared to the second quarter of 2023. Excluding the impact of transitioning kids and footwear products from a direct to a license model, our U.S.E. commerce sales would have increased mid-single digits. We generated a 14% increase in growth profit dollars, driven by continued efforts to prioritize higher quality sales. Our European e-commerce business increased growth profit dollars by 26%. Compared to the second quarter of 2023, with sales increasing 1% year-over-year. Fails from Lanzand Outfitters were down 7% from the second quarter of 2023. We were pleased with the strong start to the back-to-school season as our school uniform revenue increased by mid-single digits compared to last year.

Speaker Change: Our U S ecommerce business saw a sales decrease of 4% compared to the second quarter of 2023.

Speaker Change: Excluding the impact of transitioning kids and footwear products from a direct to a license model. Our U S. Ecommerce sales would have increased mid single digits, we generated a 14% increase in gross profit dollars driven by continued efforts to prioritize higher quality sales.

Andrew McLean: Additionally, during this period, we made the decision to exit the low profit and commoditize promotional products category, allowing us to focus on serving our customers from a point of strength. We've developed strong capabilities to serve customers in the financial services industry, and are targeting growth in that sector, as companies increasingly recognize the economic and professional benefits of branded work or start apparel. For example, we have partnered with a major client in Wells Fargo, entering into a multi-year agreement to launch the career apparel program.

Speaker Change: Our European E Commerce business increased gross profit dollars by 26% compared to the second quarter of 2023 with sales increasing 1% year over year.

Speaker Change: Sales from Lands' end outfitters were down 7% from the second quarter of 2023.

We were pleased with the strong start to the back to school season, as our school uniform revenue increased by mid single digits compared to last year.

Bernard McCracken: Our business uniform channel decreased year-over-year primarily due to the timing changes with certain national accounts and some pricing resistance from smaller accounts as a result of macroeconomic challenges. We continue to work to offset these challenges through margin and branding initiatives. Our third-party business increased growth profit dollars by over 30% compared to the second quarter of 2023, with revenue increasing by over 23% year-over-year. The increase was primarily due to revenue generated from licensing and wholesale arrangements. Licensing and our expansion to Nord Stream's marketplace continued to help the business diversify and reduce risk to anyone individual partner.

Speaker Change: Our business uniform channel decreased year over year, primarily due to the timing changes with certain national accounts and some pricing resistance from smaller accounts as a result of macroeconomic challenges. We continue to work to offset these challenges through margin and branding initiatives.

Andrew McLean: Beginning this month, land then will exit approximately 35,000 employees across over 4,000 branches. In the school channel, even with a later back-to-school season, we saw outstanding results in the second quarter that have continued into August with our first app revenue up low single digits and gross margin expanding by over 500 basis points. Our commitments last year could deliver great products on time, earned us high marks with our PTAs, and we were able to add and service new schools this year with a strong pipeline for 2025. It's worth mentioning that our Wisconsin-based embroidery centers make us the largest and arguably most nimble domestic provider in this channel.

Speaker Change: Our third party business increased gross profit dollars by over 30% compared to the second quarter of 2023 with revenue increasing by over 23% year over year.

Speaker Change: The increase was primarily due to revenue generated from licensee and wholesale arrangements licensing and our expansion to nordstrom's marketplace continue to help the business diversify and reduce risk to any one individual partner.

Bernard McCracken: As a percentage of sales, STA was 43%, which was an increase of approximately 440 basis points compared to 2023. Primarily driven by reinvesting in the business through higher digital marketing spend focused on new customer acquisition, third-party professional services, and higher incentive-related personnel costs.

Speaker Change: As a percentage of sales SG&A was 43%, which was an increase of approximately 440 basis points compared to 2023.

Andrew McLean: Before handing it over to Bernie, I want to spend a moment elaborating on the fantastic progress that we've made to improve our inventory position and how the concepts of speed is so critical to our strategy. It is worth noting that during the quarter, we achieved the lowest second quarter inventory levels this decade, coupled with the lowest discount rate on one of the fastest turning inventory levels since our public listing in 2014.

Speaker Change: Primarily driven by reinvesting in the business through higher digital marketing spend focused on new customer acquisition.

Speaker Change: Third party professional services and higher incentive related personnel costs.

Bernard McCracken: For the second quarter, we had a net loss of $5.3 million, or 17 cents per share. We had an adjusted net loss of $0.7 million or two cents per share, which exceeded our guidance range. Moving to our balance sheet, inventory at the end of the second quarter was $312 million compared to $396 million a year ago. The 21% improvement in our inventory position benefited from our supply chain team's ongoing efforts to drive efficiencies paired with our deliberate strategy to increase terms of our own sort of it. In terms of our debt, at the end of the second quarter, our term loan balance was $254 million, and our AVL had $20 million of borrowings outstanding, which was $50 million lower than the second quarter last year.

Speaker Change: For the second quarter, we had a net loss of $5 3 million or <unk> 17 per share. We had an adjusted net loss of $7 million or <unk> <unk> per share, which exceeded our guidance range.

Speaker Change: Moving to our balance sheet.

Andrew McLean: B is a watch word for our teams. Over the last year, we have significantly increased speed across our supply chain, shifting production to the west and hemisphere, lowering skew cans, creating chase capabilities for new and existing products and leaving inventory open well into each season as we deliver freshness to the customer every single month. We look forward to accelerating our speed to market initiatives which create more opportunities for inventory reductions, drive margin and ultimately let us better serve our customers.

Speaker Change: Inventories at the end of the second quarter were $312 million compared to $396 million a year ago with.

Speaker Change: The 21% improvement in our inventory position benefited from our supply chain teams ongoing efforts to drive efficiencies paired with our deliberate strategy to increase turns of our assortment shortly.

Speaker Change: In terms of our debt at the end of the second quarter, our term loan balance was $254 million and our ABL had $20 million of borrowings outstanding.

Which was $50 million lower than the second quarter last year.

Bernard McCracken: I'll now turn it over to Burning to discuss our second quarter performance in more detail. Thank you, Andrew. For the second quarter, total revenue performance came in at the end of our guidance range at $317 million.

Bernard McCracken: During the second quarter, we repurchased $4 million worth of shares under our $25 million share repurchased authorization announced in March, bringing the balance of the remaining authorization to $20 million as of the end of the quarter.

Speaker Change: During the second quarter.

Speaker Change: We repurchased $4 million worth of shares under our $25 million share repurchase authorization announced in March bringing the balance of the remaining authorization to $20 million as of the end of the quarter.

Bernard McCracken: A decrease of 2% compared to last year. GMV increased mid single digits for the second quarter of 2024, which was in line with our guidance. As a reminder, we believe GMV, 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 the comfortable growth of our brand.

Bernard McCracken: Now moving to guidance, we are continuing to prioritize high quality sales and improve cash flows, which we expect to drive continued growth, profit, and margin expansion during the fall and holiday selling season. In the third quarter, we expect net revenue to be between $300 million and $340 million, with gross merchandise value or GMV expected to be mid to high single-digit growth. We expect an adjusted net income of $0 to $3 million and adjusted diluted earnings per share to be between $0 and $0.10. We expect adjusted EBITDA to be in the range of $19 million to $23 million.

Speaker Change: Now moving to guidance, 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 fall and holiday selling season in the third quarter, we expect net revenue to be between $300 million.

Speaker Change: $340 million with gross merchandise value or <unk> expected to be mid to high single digit growth. We expect in adjusted net income of zero to $3 million and adjusted diluted earnings per share to be between zero and 10.

Bernard McCracken: As Andrew noted, we delivered a just an ebita of $17 million in the second quarter, which came in at the high end of our guidance range in a year over year increase of 8%. These results reflect our continued efforts to prioritize profitability and balance efficiency versus solely sales. We continue to improve profit margin across our business units, which has allowed us to reinvest in the business, especially in new customer acquisition. Growth profit increased by 9% compared to last year, driven by our sixth straight quarter of growth margin expansion.

Speaker Change: We expect adjusted EBITDA to be in the range of 19 million to $23 million.

Bernard McCracken: For the full year, we have raised our profit guidance. We now expect net revenue to be between $1.35 to $1.43 billion, while GMV is expected to be mid to high single digit growth. We now expect an adjusted net income of $9 million to $15 million and adjusted diluted earnings per share of $0.29. We now expect our adjusted EBITDA to be in the range of $90 million to $98 million. Our guidance for the full year incorporates approximately $35 million in capital expenditures.

Speaker Change: For the full year, we have raised our profit guidance. We now expect net revenue to be between $135 billion to $143 billion. While <unk> is expected to be mid to high single digit growth.

Speaker Change: We now expect adjusted net income of.

Speaker Change: Of 9 million to $15 million and adjusted diluted earnings per share of <unk> 29 to 48.

Bernard McCracken: Growth margin in the second quarter was 48%. In a approximately 470 basis point improvement from the second quarter of 2023. The margin improvement was driven by product solutions and newness across the assortment, lower promotional activity, reduction in sales of clearance inventory, and improved supply chain costs. Our U.S, e-commerce business saw a sales decrease of 4% compared to the second quarter of 2023, excluding the impact of transitioning kids and footwear products from a direct to a license model, our U.S, e-commerce sales would have increased amid single digits.

Speaker Change: We now expect our adjusted EBITDA to be in the range of 90 million to $98 million.

Andrew: Our guidance for the full year incorporates approximately $35 million in capital expenditures as we have discussed we expect our improved inventory management to enable us to maintain inventory at normalized levels and bolster our work to further expand gross margin moving forward with that I will turn the call back over to Andrew.

Andrew McLean: As we have discussed, we expect our improved inventory management to enable us to maintain inventory at normalize levels and bolster our work to further expand gross margin moving forward. With that, as we turn the call back over to Andrew.

Andrew McLean: Thanks, Bernie. We have made significant progress in the second quarter against our strategic goals to expand our operational efficiency and our entire go to market philosophy. I'd like to thank our employees for their continued efforts to build an innovative, customer-first brand. Innovation has been the keystone of our success over the last 61 years, and the can-do culture of Lands' End is well suited to continue to drive that success. To that end, over the next 12 to 24 months, we will implement a new ERP that will increase collaboration and planning across the business. Crucially, it will enable us to build a more authentic and innovative Lands' End digital experience with improvements in speed, personalization, loyalty, promotions, and merchandising.

Andrew: Thanks, Tony we have made significant progress in the second quarter against our strategic goals to expand our operational efficiency and our entire go to market philosophy.

Bernard McCracken: We generated a 14% increase in growth profit dollars driven by continued efforts to prioritize higher quality sales. Our European e-commerce business increased growth profit dollars by 26%. Compared to the second quarter of 2023, with sales increasing 1% year over year. Fails from land-zend outfitters were down 7% from the second quarter of 2023. We were pleased with the strong start to the back-to-school season as our school uniform revenue increased by amid single digits compared to last year.

Andrew: I'd like to thank our employees for their continued efforts to build an innovative customer first brand.

Speaker Change: Innovation has been the Keystone of our success over the last 61 years and a can do culture of lands' end is well suited to continue to drive that success.

Speaker Change: To that end over the next 12 to 24 months, we will implement our new ERP that will increase collaboration and planning across the business.

Speaker Change: Crucially it will enable us to build a more authentic and innovative brand and digital experience with improvements in speed personalization loyalty promotions and merchandising.

Bernard McCracken: Our business uniform channel decreased year-over-year primarily due to the timing changes with certain national accounts and some pricing resistance from smaller accounts as a result of macroeconomic challenges. We continue to work to offset these challenges through margin and branding initiatives. Our third-party business increased growth profit dollars by over 30% compared to the second quarter of 2023, with revenue increasing by over 23% year-over-year. The increase was primarily due to revenue generated from licensing and wholesale arrangements.

Andrew McLean: We really are evolving a world-class brand and doing so in a way that's consistent with Lands' End's commitment to delivering the best possible customer experience. Lands End has always had the potential to be larger than this digital engine, and will that remain core to our success. We are well positioned to accelerate our momentum and drive brand growth via multiple avenues.

Speaker Change: We really are revolving a world class brand and doing so in a way that's consistent with <unk> commitment to delivering the best possible customer experience.

Speaker Change: <unk> has always had the potential to be larger than this digital engine and we'll that will remain core to our success, we are well positioned to accelerate our momentum and drive brand growth via multiple avenues.

Operator: We look forward to your questions. The floor is now open for your questions. If you would like to ask a question at this time, please press star one on your telephone. Keep at. You may remove yourself in any time by pressing star two. Once again, to ask a question, please press star one.

Speaker Change: We look forward to your questions.

Bernard McCracken: Licensing and our expansion to Nord Stream's marketplace continued to help the business diversify and reduce risk to anyone individual partner. As a percentage of sales, SGNA was 43%, which was an increase of a approximately 440 basis points compared to 2023. Primarily driven by reinvesting in the business through higher digital marketing spend focused on new customer acquisition, third-party professional services, and higher incentive-related personnel costs. For the second quarter, we had a net loss of 5.3 million dollars, or 17 cents per share.

Speaker Change: The floor is now open for your questions. If you would like to ask a question at this time. Please press star one on your telephone keypad.

Speaker Change: You may remove yourself into need to anytime by pressing star two.

Speaker Change: Once again to ask a question please press star one.

Dana Telsey: Our first question will come from Dana Telfi with Telfi Advisory Group. Please go ahead. Good morning everyone, and nice to see the progress. Do customer file up mid single, the new customer file up mid single digital is impressive.

Speaker Change: Our first question will come from Dana Telsey with Telsey Advisory Group. Please go ahead.

Dana Telsey: Good morning, everyone and nice to see the progress.

Speaker Change: New customer file up mid singles.

Yes, the new customer file up mid single digits as impressive anything that you're noticing about the demographics of that customer base versus your core chemo is mentioned about younger customers and then also but resonate with the gross margin is lower promotions what are you seeing any.

Dana Telsey: Anything that you are noticing about the demographics of that customer base versus your core, you will want to mention about younger customers. And then also what resonates throughout with the growth margin is lower promotions. What are you seeing in each of the channels with pricing and promotion?

Bernard McCracken: We had an adjusted net loss of 0.7 million dollars, or 2 cents per share, which exceeded our guidance range. Moving to our balance sheet, inventory at the end of the second quarter were 312 million dollars compared to 396 million dollars a year ago. The 21% improvement in our inventory position benefited from our supply chain teams on going efforts to drive efficiencies paired with our delivery strategy to increase terms of our income.

Speaker Change: Each of the channels with pricing and promotions and can you. Just also talk about the cadence for the quarter and how the exit rate is into the third quarter. Thank you.

Dana Telsey: And can you just also talk about the cadence of the quarter and how the exit rate is into the third quarter? Thank you.

Andrew McLean: Good morning, Dana. Nice to hear from you. Great, great questions as always. I'm just writing them down so I don't miss any part of it. I know the story is doing the same. You know, I mean it's like the consumer it.

Dana Telsey: Good morning Dana.

Dana Telsey: Nice to hear from you great great questions as always.

Speaker Change: Just right and have done so I don't Miss any part of it.

Bernard McCracken: In terms of our debt, at the end of the second quarter, our term loan balance was 254 million dollars, and our AVL had 20 million dollars of borrowings outstanding, which was 50 million dollars lower than the second quarter last year. During the second quarter, we repurchased 4 million dollars worth of shares under our 25 million dollar share repurchased authorization announced in March, bringing the balance of the remaining authorization to 20 million dollars as of the end of the quarter.

Speaker Change: <unk> during the same.

Speaker Change: And if I get to the consumer.

Andrew McLean: Dana, I think there's some noise on the line. You know, it's really about the consumer health. I think with the new customer file and from my perspective, it's a great measure of consumer health. And we saw that mid single digit positive, and it lined up with the growth in our overall GMV and specifically the US e-commerce business. So they were both mid single-digit positive as well. So we saw patterns in the business that spoke to health in the consumer. You know, I talked in the past about having multiple paths to our plan, and in particular, we talked about products and distribution, but it's equally important to recognize that the customer's way on that.

Speaker Change: Dana I think there is some noise on the line.

Dana Telsey: It's really about the consumer health I think with the new customer file and from my perspective, it's a great measure.

Consumer health and.

Dana Telsey: And we saw that mid single digit positive and it lined up with the growth in our overall GMB and specifically the U S. E Commerce business. So they were both mid single digit positive as well. So we saw patents and the business that spoke to health and the consumer.

Bernard McCracken: Now moving to guidance, we are continuing to prioritize high quality sales and improve cash flows, which we expect to drive continued growth profit and margin expansion during the fall and holiday selling season. In the third quarter, we expect net revenue to be between 300 million dollars and 340 million dollars with gross merchandise value or GMV expected to be mid to high single digit growth. We expect an adjusted net income of 0 to 3 million dollars and adjusted diluted earnings per share to be between 0 and 10 cents.

Dana Telsey: I've talked in the past about having multiple paths to our plan and in particular, we talked about product and distributions, but equally important to recognize that the customers way of that so it was pleasing the customers we added.

Andrew McLean: So it was pleasing that the customers we added were. In our high growth category, there were our revolvers, and on average they were 10 years younger. What I would add to your question about where we saw them, if that was consistent across the channels that we could measure, we were reaching a younger consumer everywhere, and the average reduction range from about eight years in some channels to 12 years in others. So it was pretty tight in terms of what we saw, and it very much fit that revolver, which is powerful for us, because we see them leaning into a broader range of categories.

Dana Telsey: And a high growth category than ever our revolvers and on average they were 10 years younger.

Speaker Change: What I would add to your question about where we saw where we saw them if that was consistent across the channels that we could measure we were reaching a younger consumer everywhere and the average reduction range from about eight years in some channels to 12 years to another so it was pretty tight in terms of what we saw in <unk>.

Bernard McCracken: We expected adjusted EBITDA to be in the range of 19 million dollars to 23 million dollars. For the full year, we have raised our profit guidance. We now expect net revenue to be between 1.35 to 1.43 billion dollars, while GMV is expected to be mid to high single digit growth. We now expect a adjusted net income of 9 million dollars to 15 million dollars, and adjusted diluted earnings per share of 29 cents to 48, since.

Speaker Change: Very much.

Speaker Change: Evolver.

Speaker Change: Which is powerful for us because we see them leaning into a broader range of categories.

Andrew McLean: And it continued to bolster our database, so we saw increases in A or B and increases in A U R, which sort of underpinned the margin conversation. You know, something, something enough. I mean, I would view that trend that we've continued to see from Q2 into Q3. If I look at the weekend, we just went through with the Labor Day holiday. We had a lot of new customer activity; there's a lot of intrigue with what we're seeing. Some of our classes, I think about dresses, are performing particularly well. We're seeing that customers might really come in, and there's no price resistance to it.

Speaker Change: <unk>.

Speaker Change: It continued to bolster our database so we saw increases in <unk>.

Speaker Change: <unk> and increases in AUR, which sort of underpin the margin conversation.

Speaker Change: <unk>.

Speaker Change: In summary, summing it up I mean, I would view that trend that we've continued to see from Q2 into Q3, if I look at the weekend, we just went through.

Bernard McCracken: We now expect our adjusted EBITDA to be in the range of $90 million to $98 million. Our guidance for the full year incorporates approximately $35 million in capital expenditures. As we have discussed, we expect our improved inventory management to enable us to maintain inventory at normalized levels and bolster our work to further expand gross margin moving forward.

Speaker Change: With the Labor day holiday we had.

Speaker Change: A lot of new customer activity.

Speaker Change: There's a lot of intrigue with what we're seeing some of our classes I think about dresses are performing particularly well, we're seeing that customer really come in and then there is no price resistance to it.

Andrew McLean: I'll let Bernie chime in with, I'll let Bernie chime in with part of it, but we drove the lowest promotion rates that we've seen in the company in a number of years. I look back all the way through to 2014 and the IPO. We saw promotion rates fall, and we see that as an avenue forward, continually updating our product, moving with speed, like reacting to the customer more, and it's very purchase, having that model and have it push as a forward. I would just add, Dana, these customers and the customers we found actually a portion of them are actually returning quicker than we have seen in the past and buying within a month or two again.

Speaker Change: I'll, let Bernie chime in with ill, let Brian chime in with part of it but we dropped the lowest promotion rates that we've seen in the company.

Andrew McLean: With that, I would turn the call back over to Andrew. Thanks, Bernie. We have made significant progress in the second quarter against our strategic goals to expand our operational efficiency and our entire go-to-market philosophy. I'd like to thank our employees for their continued efforts to build an innovative customer first brand. Innovation has been the keystone of our success over the last 61 years and the can-do culture of Lands End is well suited to continue to drive that success.

Bernie: And a number of years I look back over the length.

Bernie: 2000, fourteens in the IPO.

Speaker Change: We saw a we saw a promotion rate fall and we see that as an avenue for with continually.

Speaker Change: Updating our product moving with speed reacting to the customer more and it's very purchase.

Speaker Change: Having that model and have it pushes us forward.

Andrew McLean: To that end, over the next 12 to 24 months, we will implement a new ERP that will increase collaboration and planning across the business. Crucially, it will enable us to build a more authentic and innovative land-end digital experience with improvements in speed, personalization, loyalty, promotions and merchandising. We really are evolving a world-class brand and doing so in a way that's consistent with Lands End's commitment to delivering the best possible customer experience. Lands End has always had the potential to be larger than this digital engine and will that remain core to our success? We are well positioned to accelerate our momentum and drive brand growth via multiple avenues.

Speaker Change: And I would just add Dana these customers the new customers we found.

Dana Telsey: Actually a portion of them are actually returning quicker than we've seen in the past and buying within a month or two again.

Andrew McLean: And then just to reiterate the strength of our customer file, once we have tagged on and have a customer, they have an average 10-year of us with 18 years, and we convert at twice the industry average with those customers. And then, as your question about the flow of the quarter, it was fairly even for us through the quarter. And the one benefit from us having multiple businesses is our less than business had a strong second quarter. And that just all sets some of the other business where we're not as big a back-to-school business in our U.S.D.

Dana Telsey: And then just to reiterate the strength of our customer file once we have tagged on and have a customer. They have an average tenure of us with 18 years and we convert at twice the industry average with those customers.

Dana Telsey: And then as your question about the flow of the quarter. It was fairly even for us through the quarter and the one benefit from us having multiple businesses is our last few business had a strong second quarter.

Dana Telsey: And that just offset some of the other business, where we're not we're not as big a back to school business.

Andrew McLean: We look forward to your questions.

Dana Telsey: In our USA business, but in our school business that carries all of July and August for Us. So they had a very strong.

Dana Telsey: business, but in our school business, that carries July and August for us. And they had a very strong second quarter and into August. God, thank you.

Operator: The floor is now open for your questions. If you would like to ask a question at this time, please press star one on your telephone and keep at. You may remove yourself in any time by pressing star two. Once again, to ask a question, please press star one.

Dana Telsey: Second quarter and into August.

Speaker Change: Got it.

Bernard McCracken: And one other thing on the inventory level is burning. Inventory continues to remain very clean. Are you seeing any? How are you planning inventory go forward? And what are you seeing in terms of any freight charges or lead times in getting product in and out, and any outlook for the holiday? Thank you. As we reported, we have a 470 basis point improvement in gross margin. We expect to continue to see those types of improvements through the back half of the year. They do account for any challenges in our freight and transportation. Our transportation team has done a fantastic job of avoiding any of and being proactive to any of the issues that we've seen.

Speaker Change: Thank you and just one other quick thing on the inventory level, starting inventory continue to remain very clean.

Dana Telsey: Our first question will come from Dana Telfi with Telfi Advisory Group. Please go ahead. Good morning, everyone, and nice to see the progress. Do customer file up mid single? The new customer file up mid single digit is impressive. Anything that you are noticing about the demographics of that customer base versus your core, you will want to mention about younger customers. And then also, what resonates throughout with the growth margin is lower promotions.

Speaker Change: Are you seeing any how are you planning inventories go forward and what are you seeing in terms of freight charges, our lead times in getting product and any outlook for holiday. Thank you.

Speaker Change: Yes.

Speaker Change: As we reported we have a 470 basis point improvement in gross margin.

Speaker Change: We expect to continue to see those types of improvements through the back half of the year.

Speaker Change: They do account for any challenges in our freight and transportation.

Dana Telsey: What are you seeing in each of the channels with pricing and promotion? Can you just also talk about the cadence of the quarter and how the exit rate is into the third quarter? Thank you. Morning, Dana. Nice to hear from you. Great questions as always. I'm just writing them down, so I don't miss any part of it. I'm just throwing these two in the same. You know, I mean, it's like the consumer.

Speaker Change: Our transportation team has done a fantastic job alone voiding.

Speaker Change: And being proactive to any of the issues that we've seen and we've been able to mitigate those costs and those delays up to this point.

Bernard McCracken: And we've been able to mitigate those costs and those delays up to this point. So they've done an excellent job. We expect our inventories to stay at historical lows. As Andrew has implemented and he talked about in his comments, an initiative around speed. And we'll be bringing in product more frequently and closer to our shores. Yeah, I mean, I think I just add to that, Dana. You know, we talked about it's more than just you can't production; we're getting speed from being closer to the customer, and we've moved our material amount of our business, and it will continue to grow during the back half into less than hemisphere.

Speaker Change: So they've done an excellent job.

We expect our inventories to stay at historical.

Speaker Change: Historical lows.

Speaker Change: As Andrew has implemented and you talked about in his comments.

Dana Telsey: Dana, I think there's some noise on the line. You know, it's really about the consumer health, I think, with the new customer file. And from my perspective, it's a great measure of consumer health. And we saw that mid single digit positive. And it lined up with the growth in our overall GMV. And specifically the USE commerce business. So they were both mid single digit positive as well. So we saw patterns in the business that spoke to health in the consumer.

Andrew: An initiative around speed.

Andrew: And we'll be bringing product more frequently.

Andrew: Closer to our shores.

Yes, I mean, I think I'd, just add to that Dana.

Speaker Change: We talked about more than just SKU count reduction, we're getting speed for being closer to the customer.

Speaker Change: Moved a material amount of our business and it will continue to grow during the back half into western hemisphere. So we haven't really experienced the transportation issues, but that does it's three days from Central America to port of Houston. So.

Bernard McCracken: So we don't really experience the transportation issues, but that there's, it's three days from Central America to poor Houston. So you know, we get speed in there and there is a lot of capacity in that, in that lane, and we don't expect that to change. So we see the whole package really coming together because we get nearer to the customer and being able to control more of the variables related to supply chain. Thank you.

Dana Telsey: You know, I talked in the past about having multiple paths to our plan. And in particular, we talked about products and distribution. But it's equally important to recognize that the customer's way on that. So it was pleasing that the customers we added were, in our high growth category, there were our revolvers and on average they were a 10 years younger. What I would add to your question about where we saw them, if that was consistent across the channels that we could measure, we were reaching a younger consumer everywhere and the average reduction range from about eight years and some channels to 12 years and others.

Speaker Change: We get speed in there and there is a lot of capacity in that.

Speaker Change: And that line and we don't expect that to change. So we see the whole package really coming together as we get nearer to the customer and being able to.

Speaker Change: Control more of the variables related to supply chain.

Speaker Change: Thank you.

Eric Better: Thank you. Our next question will come from Eric better with SCC Research. Please go ahead.

Eric Beder: Our next question will come from Eric Beder with SCC Research. Please go ahead. Good morning. Good morning, Eric. All right.

Eric Better: Good morning.

Eric Better: Good morning.

Dana Telsey: So it was pretty tight in terms of what we saw and it very much fit that revolver which is powerful for us because we see them leaning into a broader range of categories and it continued to bolster our database. So we saw increases in A or B and increases in A U R, which sort of hit the margin conversation. You know, something summing it up, I mean I would view that so I trends that we've continued to see from Q2 and Q3, if I look at the weekend which has went through with the Labor Day holiday, we had a lot of new customer activity, there's a lot of intrigue with what we're seeing, some of our classes, I think about dresses are performing particularly well, we're seeing that customer really come in and there's no price resistance to it.

Eric Beder: I'm congratulations on adding Nordstrom to the digital marketplace mix. You know, where you now have a pretty wide range of customers now in the digital marketplace who calls target Nordstrom ACs.

Good morning, Bob Congratulations on adding new options in the digital marketplace mix.

Speaker Change: We're now have a pretty wide range of customers now in the digital marketplace from Kohl's target Nordstrom Macy's.

Eric Beder: You know, are you actively looking for even further partners here in their ability, maybe do that internationally? Now, where should we see that evolving now? And all these players to the mix in the terms of the digital marketplace.

Speaker Change: Are you actively looking for even further partners here.

Speaker Change: Is there ability maybe to do that internationally, but where should we see that evolving knowledge.

Speaker Change: And all of these players to the mix in terms of the digital marketplace.

Andrew McLean: Yeah.

Speaker Change: Yes.

Andrew McLean: Morning. Morning, Eric. It's, it's a great question. I mean, I think what you're continuing to see is we put more energy into it. We've got a very good spread. And if you think, if you think about merchandising permits, good, better, best. We've got some good players in there. We've got some better players in there. And we now have a best player in there with Nordstroms. And it's more about how we involve our product architecture on those sites. And I think, you know, if you look at what we've done with Nordstroms, you know, one of the areas we really went into and great conversations with them was around school and school uniforms. So we don't have that really as part of our, as part of our merchandising strategy for the others.

Eric Better: Good morning, Eric.

Question.

Speaker Change: I mean, I think what youre continuing to see as we put more energy into the hedges that we've got a very good spreads.

Speaker Change: If you think if you think about Merchandizing pyramid, good better best we've got some good players in that we've got some better player. Then there may not have best player in that with nordstrom's and it's more about how we evolve our product architecture.

Andrew McLean: I'll let Bernie chime in with, I'll let Bernie chime in with part of it, but we drove the lowest promotion rates that we've seen in the company in a number of years. I look back all the way through to 2014 and the IPO and we saw promotion rates fall and we see that as an avenue forward, continually updating our product, moving with speed, like reacting to the customer more and it's very virtuous, having that model and have it push us forward.

Speaker Change: On those sites and I think if you look at what we've done with nordstroms, where one of the areas. We really went into the great conversations with Fabless was around scope.

<unk> unit four so we don't have that really as part of our router.

Speaker Change: As part of our merchandising strategy for the others and that was that that was a source of nordstrom's.

Andrew McLean: And that was, that was, that was a first for Nordstroms. And I think as we lean in, it's like we can be more strategic, have better strategic conversations with our marketplace partners, and then tailor that assortment. I mean, I will tell you Target tends to be more of a swim and calls tends to be more about women's wear and you know, May sees it somewhere in between.

Speaker Change: I think as we lean into it so we can be more strategic had better strategic conversations with <unk>.

Andrew McLean: And I would just add Dana, these customers and the customers we found actually a portion of them are actually returning quicker than we have seen in the past and buying within a month or two again. And then just to reiterate the strength of our customer file, once we have tagged on and have a customer, they have an average 10 year of us with 18 years and we convert at twice the industry average with those customers.

Speaker Change: Marketplace partners, and then tailor that assortment comment I will tell you target tends to be more about swim.

Speaker Change: <unk>.

<unk> tends to be more about.

Speaker Change: Womenswear.

Speaker Change: Macy's is somewhere in between.

Andrew McLean: You're dead right in where we go next. I think the cup, look, there are a few info points that we would look for in the US and in North America. But I think that the opportunity for us is to really grow international, and it's something that we can now fully come to terms with.

Speaker Change: You're dead right in where we go next I think.

Speaker Change: There are a few infill points that we would look for.

The U S and in North America, but I think that the opportunity for us to really grow international and.

Andrew McLean: And then as your question about the flow of the quarter, it was fairly even for us through the quarter and the one benefit from us having multiple businesses is our less than business had a strong second quarter. And that just all sets some of the other business where we're not we're not as big a back-to-school business in our USD business, but in our school business, that carries July and August for us and they had a very strong second quarter ending to August.

Speaker Change: It's something that we cannot fully come to terms with I do want to plug the international business that made it in my comments that in my comments, but I just want to reiterate.

Andrew McLean: I do want to plug the International business. I've made it in my comment. I said it in my comments, but I just want to reiterate that they returned their business to close, they returned their business to profitability, and there aren't that many European-based retailers who were saying that at the moment. So I would congratulate my team on that. And now it's about how we take that forward, and those are some of the conversations we're all familiar with, the players in the UK. This is a long established market, same with Germany, and I think it actually gives us expansion opportunities not just in Europe, but into, in particular, South America and north of the border into Canada that we can really begin to pursue over the next couple of quarters.

Speaker Change: They returned therapy device to gross return that business to profitability.

Speaker Change: There aren't that many European based retailers, who are saying that at the moment.

Speaker Change: So I would congratulate my team on that and now it's about how we take that forward and those are some of the conversations we're all familiar with the players in the UK. This is a long established market same with Germany, and I think it actually gets at the expansion opportunities not just in Europe that into in particular South America.

Andrew McLean: God, thank you. And one other thing on the inventory level is burning, the inventory continues to remain very clean. Are you seeing any, how are you planning inventory go forward? And what are you seeing in terms of any freight charges or lead times in getting product and out any outlook for the holiday? Thank you. Yes, as we reported, we have a 470 basis point improvement in gross margin. We expect to continue to see those types of improvements through the back half of the year.

Speaker Change: North of the border into Canada that we can really begin to pursue over the next couple of quarters.

Andrew McLean: That will be another growth area for us.

Speaker Change: That will be another growth area for us.

Speaker Change: Thanks.

Andrew McLean: I've seen that you have continued to expand the categories of the catalogs you rolled out jewelry this month. When you look at it, you know, I guess as you go back and forth from the catalog, I'm trying to maximize the overall returns. How she'd be thinking about the potential to add categories to ionic action. Could you remind us how the catalog interplays with these licenses also?

Speaker Change: I see that you have continued to expand the categories and the catalog he rolled out jewelry this month.

Speaker Change: If you look at it.

Speaker Change: I guess as you go back and forth on Macau Im trying to maximize the overall returns.

Andrew McLean: They do account for any challenges in our freight and transportation. Our transportation team is done a fantastic job of avoiding any of and being proactive to any of the issues that we've seen. And we've been able to mitigate those costs and those delays up to this point. So they've done an excellent job. We expect our inventory to stay at historical lows. As Andrew has implemented and he talked about in his comments, a speech, an initiative around speed.

Speaker Change: How should we be thinking about the potential to add categories action could you remind us how the catalog interplay with the license that's awesome. Thank you.

Andrew McLean: Thank you. Excuse me. I guess with all my attention. Yeah, absolutely.

Speaker Change: Excuse me.

Speaker Change: You asked what the licensing.

Andrew McLean: So that's part of the package of services that we bring to our license partners and that, you know, there are some contractual obligations certainly around marketing that we expect to support the categories they've taken on, but in addition, you know, we can offer a placement or catalogs for them out of cycle, and that's a nice part of the organization that we're building, which is a marketing services group for those partners, and it's something I've done before, it's something that a number of retailers have done, and it's a great, it's a great skill set to have because you basically come to the table to partner with a suite of services, and it's like, you know, we had talked in the past and then we've talked to you about it about the book of business that those partners picked up when they became our partners, so this is, this takes it to the next level, in terms of categories that we put in.

Speaker Change: Absolutely. So thats part of that part of a package of services that we bring to our licensed partners in that.

Speaker Change: There are some contractual obligations certainly around marketing that we expect to support that category has been taken on better than addition.

Andrew McLean: And we'll be bringing in product more frequently and closer to our shores. Yeah, I mean, I think I just add to that, Dana, you know, we talked about it's more than a just skewed camp reduction, we're getting speed from being closer to the customer and we've moved our material amount of our business and it will continue to grow during the back-up into less than hemisphere. So we don't really experience the transportation issues but that there's, it's three days from Central America to poor Houston.

Speaker Change: We can offer our placement or catalogs for them.

Andrew McLean: So, you know, we get speed in there and there is a lot of capacity in that, in that lane and we don't expect that to change. So we see the whole package really coming together as we get nearer to the customer and being able to control more of the variables related to supply chain. Thank you.

Speaker Change: Cycle and that's.

Speaker Change: Our nascent part of the organization that we're building, which is a marketing services group for those partners.

Speaker Change: It's something I've done before it's something that a number of retailers have done.

Speaker Change: It's a great. It's a great skill set to have because you basically come to the table so partner with a suite of services.

Speaker Change: We had talked in the past I know, we've talked to you about it.

Speaker Change: About the book of business that those partners picked up when they became a partner for this is that it takes it to the next level in terms of categories that we put in.

Andrew McLean: One of my strategies for this company, and it's a winning strategy, is to build more of a collection business, and that's really important to get away from just having dinner and item business. The item business is there; we know it's important, but being able to sell that story in a maximalist kind of way, and it's like, build the outset, we'll build the basket, and it's no surprise to me that we're seeing our A.O.V. build, you know, a sweet and active season, month after month, but as the customer comes in and is able to complete the outset, and things like jewelry, they're wonderful add-ons to complete the complete outset.

Speaker Change: One of my strategies for this company.

Speaker Change: It's a it's a winning strategy is to build more of our collection business.

Speaker Change: It's really important to get away from just having been an item business the item businesses that we know it's important.

Eric Beder: Our next question will come from Eric Beder with SCC Research. Please go ahead.

Speaker Change: Being able to sell that story in a maximalist kind of way.

Andrew McLean: Good morning. Good morning, Eric. All right. I'm congratulations on adding Nordstrom to the digital marketplace mix. You know, where you now have a pretty wide range of customers now in the digital marketplace and calls, Target, Nordstrom, Macy's, you know, do you, are you actively looking for even further partners here in their ability to do that internationally? Now, where should we see that evolving now that you handle these players to the mix in the terms of the digital marketplace?

Speaker Change: At the outset, we'll build the basket.

Speaker Change: No surprise to me that we're seeing are the build.

Speaker Change: Season after season month after month as the customer comes in and is able to completely outfit and things like jewelry, they're wonderful add ons.

Speaker Change: Complete the completely outfit you should never go crazy on it and make it 50% of your buy conceptually, but it should be there that should be it should be part of the package because.

Andrew McLean: You should never go crazy on it and make it 50% of your buy conceptually, but it should be there; that should be part of the package. Because what we found over time, and apologies for a big breakfast, but, you know, we have found over the years from our catalog that if, say, we have a pair of shoes in there that aren't aligned, send pair of shoes, we've got the customer calling our call center and asking where they can buy them from. So they want to buy everything they see, so we'll sell them everything they see.

Speaker Change: What we found over time.

Speaker Change: Apologies for that.

Speaker Change: We have found over the years.

Andrew McLean: Yeah. Morning, morning, Eric. It's a great question. I mean, I think what you're continuing to see is we put more energy into it. It's that we've got a very good spread and if you think, if you think about merchandising permits, good, better best we've got some good players in there. We've got some better players in there and we now have a best player in there with Nordstroms and it's more about how we involve our product architecture on those sites.

Speaker Change: From our catalog and say we have a pair of shoes in there that on <unk>, we've got the customer, calling our call center and asking where they can buy them from so they want to buy everything they say, so we will sell them everything they say.

Andrew McLean: Right, and my last question in terms of, excuse me, in terms of the outfitters, you know, I know you want to imagine in there, you're starting to see the turns, you know, we are, we are all, we kind of like, what ending or quarter are we in, in terms of outfitters getting to kind of, where do you like it to be an potential for it? Thank you. I spent my whole life at the bottom of the second, the top of the third, so it's really hard for me to. There were no point in my career, I never said, oh yeah, we're at the bottom of the night.

Speaker Change: Great.

Speaker Change: Last last question in terms of.

Speaker Change: Excuse me.

Speaker Change: <unk>.

Speaker Change: In terms of.

Andrew McLean: And I think, you know, if you look at what we've done with Nordstroms, you know, one of the areas we really went into and the great conversations with them was around school and school uniforms. So we don't have that really as part of our, as part of our merchandising strategy for the others. And that was that was that was a first for Nordstroms. I think as we lean in, it's like we can be more strategic, have better strategic conversations with our marketplace partners and then tailor that assortment.

Speaker Change: Outfitters.

I know you've put new management in there you're starting to see the terms, where we are are we kind of like what inning are quarter are we in terms of outfitters getting to kind of where you'd like it to be a potential for it. Thank you.

Speaker Change: I spent my whole life of the part of the second of the top of the third bucket is really hard for me to.

Speaker Change: No point in my career have I ever said, Oh, yes, we're at the.

Part of the ninth we're always striving.

Andrew McLean: We're always striving for what's next. As I look at it, I think you're seeing all the signs that you would want to see in that business. I mean, with the addition of another large customer, we call them whales in Wells Fargo, was a significant win for the company, not just the uniformist business in the second quarter in it. It can't be understated what that means for us because it's not just about Wells Fargo; it's about the fact that we have built a sales team and we have built an organizational support system that can go out and build on that with further whales. So that's very much in place, and that's a focus for our business.

Speaker Change: Typing for what's next.

Speaker Change: <unk>.

As I look at it I think I think <unk> seen all of the signs that you would want to see in that business.

Andrew McLean: I mean, I will tell you, Target tends to be more about swim and calls tends to be more about women's wear and you know, may sees it somewhere in between. You're dead right in where we go next. I think the cup, there are a few info points that we would look for in the US and in North America. But I think that the opportunity for us is to really grow international and it's something that we can now fully come to terms with.

Speaker Change: The addition of another large customer we call them whales and Wells Fargo was a significant win.

Speaker Change: Four.

Speaker Change: The company not just the uniforms business in the second quarter and it can't be understated.

Speaker Change: <unk>.

Speaker Change: What that means for us because it's not just about wells Fargo.

Speaker Change: We have built a sales team and we have built by organizational support system that can go up and that bill was on that with sort of whales.

Andrew McLean: I do want to plug the international business. I've made it in my comment, I said it in my comments, but I just want to reiterate that they returned their business to close, they returned their business to profitability and there aren't that many European based retailers who were saying that at the moment. So I would congratulate my team on that. And now it's about how we take that forward and those are some of the conversations we're all familiar with the players in the UK.

Speaker Change: So thats very much in place and that's a focus for our business. We had started to drift down the path of.

Andrew McLean: We had started to drift down the path of being to see practices within the uniformist business, and I've taken as back to being much more focused on B2B. Lands' End is a great brand. It is an iconic American brand, and we bring not just that brand, but we bring really amazing product, the last and endures and fantastic customer service, and those are the attributes that we're really getting behind in the uniforms business. And if it's not called for that, we're not going to do it. And it's the same with the school's business; that was, we're probably at the top of the bird there because last summer we made sure we delivered on that business, and that was paramount to it.

Speaker Change: B to C practices within the uniform business.

Speaker Change: <unk> taken is back to being much more focused on b to B lands' end.

Speaker Change: A great brand. It is an iconic American brand, we bring not just fat brands, but we bring.

Andrew McLean: This is the long established market, same with Germany. And I think it actually gives us expansion opportunities not just in Europe but into, in particular, South America and North of the border into Canada that we can really begin to pursue over the next couple of quarters. That will be another close area for us. I see that you have continued to expand the categories in the catalog. You rolled out jewelry this month.

Speaker Change: Really.

Speaker Change: Amazing product.

Speaker Change: At endurance and fantastic customer service and those are the attributes that we're really getting behind and the uniforms business and if it's not core to that we're not going to do it and it's the same with the schools business, where we're probably at the top of a third third because last last summer we made sure we could lift.

Speaker Change: On that business and that was paramount to us this year, we've done it again, but we've done it with more margin that's been less discounting and we're adding schools as a consequence of that and building a pipeline. So if you hear me talking about the school uniform business and you hear me talking at that.

Andrew McLean: When you looked at it, you know, I guess as you go back and forth from the catalog trying to maximize your more returns, how should you be thinking about the potential to add categories? I actually could you remind us how the catalog interplays with the licenses also. Thank you. Yeah, absolutely. So that's part of that's part of a package of services that we bring to our license partners in that, you know, there are some contractual obligations certainly around marketing that we expect to support the categories being taken on, but in addition, you know, we can offer a placement or catalogs for them out of cycle and that's a nascent part of the organization that we're building, which is that marketing services group for those partners.

Andrew McLean: This year we've done it again, but we've done it with more margin. There's been less discounting, and we're adding schools as a consequence of that and building a pipeline.

Andrew McLean: So, if you hear me talking about the school uniform business and you hear me talking about the larger customers, that gives you an identity to where the strategy is really going to be focused over the next few years, and the signs were excellent in the second quarter.

Speaker Change: Sure.

Speaker Change: The larger customers that gives you an identity to where the strategy is really going to be focused over the next few years and the signs.

Speaker Change: Excellent in the second quarter.

Andrew McLean: Amazing, Brad, so much for the holidays, please. Hey, thanks. Thank you.

Speaker Change: Hey, Congrats good luck for the holiday season.

Eric Better: Hey, Thanks, Thanks, Eric.

Alex Fuhrman: Our next question will come from Alex Furman with Craig Hallum, Capital Group. Please go ahead. Great. Thanks very much for taking my question. Sounds like you're having a lot of success in the club channel. I'm curious if that is the biggest driver of the higher GMB guidance despite gap revenue moving a little bit lower, if there's maybe strength elsewhere in the third part of your licensing portfolio that's driving that dynamic. Do you? Yeah. I got this out.

Speaker Change: Thank you. Our next question will come from Alex Fuhrman with Craig Hallum Capital Group. Please go ahead.

Alex Fuhrman: Great. Thanks, very much for taking my question it sounds like Youre, having a lot of success in the club channel I'm curious if that is the biggest driver.

Andrew McLean: And it's something I've done before. It's something that a number of retailers have done. And it's a great skill set to have because you basically come to the table to partner with a suite of services. And it's like, you know, we had talked in the past and then we've talked to you about it about the book of business that those partners picked up when they became our partners. So this is this takes it to the next level.

The higher GMB guidance by GAAP revenues, moving a little bit lower maybe strength elsewhere.

Speaker Change: The third part of your licensing portfolio, that's driving that dynamic.

Speaker Change: Yes.

Andrew McLean: You know, I think one of the things I'm most excited about is you'll notice in our comments that when you exclude the shoes and the kids from last year's numbers, our USD business was up six percent, up mid single digits. So I think, you know, we have growth there. Our less than businesses up in the quarter during the back to school season. And then you get to layer in the licensing business and especially the clubs where they only get to see one or two styles. And if they are enamored with the lands and products, their next place to go is to landsend.com.

Speaker Change: Alex I think one of the things I'm most excited about as Youll notice.

Andrew McLean: In terms of categories that we put in, one of my strategies for this company and it's a winning strategy is to build more of a collection business. And that's really important to get away from just having been an item business, the item business is there. And we know it's important, but being able to sell that story in a maximalist kind of way and it's like, build the outset, we'll build the basket.

Speaker Change: In our comments that when you exclude the shoes and the kids from last year's numbers are.

Our USB business was up six are up mid single digits.

Speaker Change: So I think we have growth there our lessee business is up in the quarter during the back to school season, and then you'll get to layer in.

Speaker Change: The licensing business and especially the clubs.

Speaker Change: They only get to see one or two styles and if they are enamored with the lands' end product. The next place to go is to lands' end Dot com.

Andrew McLean: And it's no surprise to me that we're seeing our AOV build, you know, season after season, month after month as the customer comes in and is able to complete the outset. And it seems like jewelry, they're wonderful add-ons to complete the complete the outset. You should never go crazy on it and make it 50% of your buy conceptually, but it should be there and it should be part of the package because what we found over time, apologies for a big purpose, but you know, we have found over the years from our catalog that if say we have a pair of shoes in there that aren't a land-to-land pair of shoes, we've got the customer calling our call sensor and asking where they can buy them from.

Andrew McLean: So yes, that is a big portion of our GMB growth, but also our underlying businesses are supporting that also. It's worth noting, Alex, and one of the reasons I particularly like Costco and Sans is that with a Costco, we're just reaching so many of our potential evolve our customers. There's something like a third of the US shopped at Costco in any given year, and they are $100,000 plus income customers, and they are typically in their 30s, 40s, and 50s. The ability to harvest from there is up to us in order to make sure that we're putting great products in front of them. Then the other piece you get from it is it isn't Bernie's, right? It isn't very narrow assortment, but they buy one to two orders of magnitude bigger than we would ever have on our website, so that it really gets that one item out there.

Speaker Change: Yes that is a big portion of our GMB growth, but also our underlying businesses are supporting that also.

Speaker Change: It's worth noting Alex one of the reasons, particularly like Costco and Sam's is that.

Speaker Change: With the Costco, where Chesapeake chain, so many of our potential evolve our customers thats something like a third of the U S shops.

Speaker Change: Costco in any given year and they are.

Speaker Change: $100000 plus income customer habits, and they are typically in their thirties forties and <unk>.

Andrew McLean: So they want to buy everything they see, so we'll sell them everything they think. And last question in terms of, excuse me, in terms of the outfitters, you know, I know you've got management in there, you're starting to see the turns, you know, where are we kind of like, what ending or quarter are we in in terms of outfitters getting to kind of where you like it to be and then potential for it.

Speaker Change: The ability to harvest from there is up to us in order to tablets.

Speaker Change: Make sure that we're putting a great product in front of them then the other piece you get from that.

Speaker Change: It is a burn these right, it's a very narrow assortment that they buy.

Speaker Change: One to two orders of magnitude bigger than we would ever have on our website. So that really gets that one item out there.

Andrew McLean: It distributes it widely, and we see that customer back into our corelandsend.com business that I can't underestimate the power anymore. It's a fabulous business for us to be part of, and we're very happy with that. So if it's driving a big piece of business, we're happy with that as well. But I think Bernie's point holds on top of that. There's lots of places where the GMV is coming from, and it's great to see it's going market share in this new business model.

Tributes it wisely and we see that customer back into our core lines in dot com business.

Speaker Change: I can't underestimate the power.

Andrew McLean: Thank you. I spent my whole life at the bottom of the second, the top of the third, so it's like it's really hard for me to, there were no point in my career, I ever said, oh yeah, we're at the bottom As I look at it, I think you're seeing all the signs that you would want to see in that business. I mean, with the addition of another large customer, we call them whales in Wells Fargo was a significant win for the company, not just the uniformist business in the second quarter in it.

Speaker Change: Adding more as like it.

Speaker Change: It's a fabulous.

Speaker Change: Business for us to be caught up and were very happy with us going so.

Speaker Change: If it's driving a big piece of the business, we're happy with that as well, but I think.

Speaker Change: <unk> points hold on top of that there's lots of places where the <unk> is coming from it is great to see is growing market share in this new business model.

Alex Fuhrman: Great, that's really helpful. Thanks. And then just lastly, for me, Andrew, you mentioned new customers coming in have been about 10 years younger than the average customer in your file. How should we think about that? Is that more or less consistent with what you need to maintain a steady age profile as the rest of your customers get older, or is this really a conscious effort to try to attract younger customers and move the brand, perhaps finding it younger? It's a great question, Alex, and it's a little bit from Colony. It's a little bit from Colony, right?

Speaker Change: Great. That's really helpful. Thanks, and then just lastly for me Andrew you mentioned.

Andrew: New customers coming in it's been about 10 years younger.

Andrew: And then the average customer in your file how should we think about that is that is that more or less consistent with what you need to kind of maintain a steady age profile as the rest of your customers get older or is this really.

Andrew McLean: It can't be understated what that means for us because it's not just about Wells Fargo, it's about the fact that we have built a sales team and we have built an organizational support system that can go out and build on that with further whales, so that's very much in place and that's a focus for our business. We had started to drift down the path of being to see practices within the uniformist business and I've taken as back to being much more focused on B2B, Lands End is a great brand, it is an iconic American brand and we bring not just that brand but we bring really amazing product, the last and endures and fantastic customer service and those are the attributes that we're really getting behind in the uniforms business and if it's not called for that, we're not going to do it and it's the same with the schools business.

Speaker Change: Conscious effort to try to attract younger customers and move the brand perhaps.

Speaker Change: Can you get younger.

Speaker Change: It's a great question, it's great question Alex.

Speaker Change: It's a little bit for colony, it's a little bit from color be right Youre always managing to a particular point. Some some seasons, it's going to be some cases, it's going to be more about managing the yield of your existing customers. Some seasons, it's going to be about bringing in a new customer who is 10 years plus of younger and.

Andrew McLean: You're always managing to a particular point; in some seasons, it's going to be more about managing the yield of your existing customer. In some seasons, it's going to be about bringing a new customer who's 10 years plus younger. What I would say is that the customer has been aging in our file for the last few years. This is the first time when that customer has stopped aging. Our file, as we looked at it at the end of the second quarter, was the same age as it was in the same period last year, and that is a great thing to see.

While I would say is that the customer has been aging and are filed for the last few years.

Speaker Change: And this is the first time when that because that customer has stopped aging.

Speaker Change: As we looked at it at the end of the second quarter.

Andrew McLean: That was probably at the top of the birth there because last summer, we made sure we delivered on that business and that was paramount to it, this year we've done it again but we've done it with more margin, there's been less discounting and we're adding schools as a consequence of that and building a pipeline, so if you hear me talking about the school uniform business and you hear me talking about the larger customers, that gives you an identity to where the strategy is really going to be focused over the next few years and the signs were excellent in the second quarter. You can browse so much from the hall and excuse me. Hey, thanks. Thanks. You're here. Thank you.

Speaker Change: Was it the same age as it was in the same period last year and that is a great thing to see if.

Andrew McLean: And it's like, if we can start to back that up a little bit and build again for the long term, it augurs well for years, of course, in this brand. Very best, that's really helpful. Thank you so much. Thank you.

Speaker Change: We cannot start to back that up a little bit.

Speaker Change: And build a game for the long term.

Speaker Change: <unk> well four years of growth in this brand.

Speaker Change: Great. That's really helpful. Thank you so much.

Steve Silver: Our next question will come from Steve Silver with Argus Research. Please go ahead. Thanks, operator, and congratulations on the quarter as well. Given the fact that a really big part of the growth proposition for Lanzand is being able to sell products with minimal discounting, I'm curious as to how that's playing into the SG&A cost expansion. We saw in Q2 to acquire new customers, and just if you're using more aggressive discounting in conjunction with customer acquisitions for first-time visits to the website and things of that nature. Yes, Steve, thanks. What you'll find when you look at our growth of 470 basis points at gross margin close to two thirds of that was driven from a higher average unit retail out the door.

Speaker Change: Thank you. Our next question will come from Steve Silver with Argus Research. Please go ahead.

Steve Silver: Thanks, operator, and congratulations on the quarter as well.

Steve Silver: My questions.

Speaker Change: Given the fact, given the fact that.

Speaker Change: Really big part of the growth proposition for Lands' end is being able to sell products with minimal discounting.

Alex Fuhrman: Our next question will come from Alex Furman with Craig Hallum, Capital Group, please go ahead. Great. Thanks very much for taking my question. Sounds like you're having a lot of success in the club channel. I'm curious if that is the biggest driver of the higher GMB guidance despite gap revenue moving a little bit lower, there's maybe strength elsewhere in the third part of your licensing portfolio that's driving that dynamic. I think one of the things I'm most excited about is you'll notice in our comments that when you exclude the shoes and the kids from last year's numbers, our U.S.D, business was up six percent up mid single digits, so I think we have growth there.

Speaker Change: Curious as to how that's playing into the SG&A cost expansion, we saw in Q2.

To acquire new customers and just if you're using more aggressive discounting in conjunction with customer acquisitions.

Speaker Change: For first time visits to the website and things of that nature.

Steve Silver: Yes, Steve Thanks.

Speaker Change: What youll find when you look at our growth of 470 basis points of gross margin close to two thirds of that was driven from a higher average unit retail out the door. So we're actually discounting less as a whole as a company that is heavily driven by our product solutions and the newness that we're constantly bringing in to the business.

Bernard McCracken: So we're actually discounting less as a whole as a company. That's heavily driven by our product solutions and the newness that we're constantly bringing into the business. And then the new customer acquisition is more in areas like social and new areas for us. That's why that customer is 10 years younger, and they're actually buying at a higher average unit retail than our normal customer or that our long 10 year customer. So we're actually talked about the new patent being filed in the swim category.

Speaker Change: And then.

Speaker Change: The new customer acquisition is more in areas like social and new areas for us Thats why that customer is 10 years younger and they're actually buying at a higher average unit retail than our normal customer.

Alex Fuhrman: Our less than businesses up in the quarter during the back to school season and then you get to layer in the licensing business and especially the clubs, where they only get to see one or two styles, and if they are enumerated with the lands and product, their next place to go is to landsend.com. So yes, that is a big portion of our GMB growth, but also our underlying businesses are supporting that also.

Speaker Change: Our long tenured customer so we're actually being able to acquire those customers at a higher margin.

Speaker Change: Great and one follow up if I can.

Speaker Change: Then you talked about the new patents being filed in the swim category I'm curious as to whether the company maintains a pipeline of patent eligible products in development and maybe if so how that tracks maybe even as competitive just a couple of years ago.

Andrew McLean: And curious as to whether the company maintains a pipeline of patent eligible products in development, and maybe if so how that tracks, maybe even as compared to just a couple of years ago. Tracks different from a couple of years ago in that we had not been doing this a couple of years ago.

Alex Fuhrman: It's worth noting, Alex, and one of the reasons particularly like Costco and Sans is that with a Costco, we're just reaching so many of our potential evolve our customers. There's something like a third of the US shopped at Costco in any given year, and they are $100,000 plus income customers, and they are typically in their 30s, 40s and 50s. And the ability to harvest from there is up to us in order to be able to make sure that we're putting great products in front of them.

Speaker Change #100: It tracks difference of a couple of years ago that we had not been doing this a couple of years ago.

Andrew McLean: And one of the things I noticed about LandZend was that it was, in its earlier years, incredibly innovative. You know, we had one of the first companies to have a 1-800 number, which seems risible now, but at the time it was incredible. One of the first companies onto the, you know, say really one of the first companies to put data science behind this, it's cataloging, and even aspiration for the company to innovate along those avenues. I think innovation is dangerous when it just lands in one place in the company, and you have to stay ahead of innovation.

Speaker Change #101: One of the things I noticed about.

Speaker Change #102: <unk> was that it would.

Speaker Change #101: Okay.

Speaker Change #103: Earlier years, it was incredibly innovative.

Speaker Change #103: Under the first companies to have a one 800 number which seems.

Speaker Change #103: <unk> at the time was incredible one of the first companies onto the web site.

Alex Fuhrman: Then the other piece you get from it is it isn't Bernie's right, it isn't very narrow assortment, but they buy one to two orders of magnitude bigger than we would ever have on our website. So distributed widely, and we see that customer back into our core landsend.com business that I can't underestimate the power anymore. It's like it's just, it's a fabulous business for us to be part of and we're very happy with that going.

Speaker Change #103: Really one of the first companies to put data science behind bps cataloging.

Speaker Change #103: And I have an aspiration for the company to innovate along those avenues I think innovation.

Speaker Change #103: It is dangerous limit to Atlanta in one place in the company and you have to stay ahead of innovation. So I want to see innovation from everyone. I think is part of everyone's job I want to see the culture of the company be more innovative and so.

Andrew McLean: So I want to see innovation from everyone. I think it's part of everyone's job that I want to see, but culture of the company be more innovative. And so, as I've come in, it became clear to me that I wanted to really open the floodgates. And if we weren't talking about innovation in the past, it tends to be more on a digital footprint, and that certainly is important, and we're making strides on that path. But I think fundamentally, if we put our customer first, as we have done, and we build a great brand to them, we also build great products for them, which means different variations.

Speaker Change #104: How does that come in.

Speaker Change #104: Became clear to me that I wanted to really open the floodgate, if we werent talking about innovation in the past it tends to be more on.

Alex Fuhrman: So if it's driving a big piece of the business, we're happy with that as well, but I think Bernie's point holds on top of that. There's lots of places where the GMV is coming from, and it's great to see us growing market share in this new business model. Great, that's really helpful. Thanks. But then just lastly, for me, Andrew, you mentioned new customers coming in have been about 10 years younger than the average customer in your file.

Speaker Change #104: Digital footprint and that certainly is important.

Speaker Change #104: We're making strides on that path, but I think fundamentally.

Speaker Change #104: If we put our customer first as we have done and we put up we built a great brand. So then we also have built a great product for them, which means differentiation.

Andrew McLean: I've talked a lot about the solutions business, and it's been more of a solutions business and a fashion business, and those solutions, they require innovation. I want us to protect that innovation, and so there is a pipeline that's coming along, and I fear we'll get to calls where I just want to talk about innovation on patents because we're doing so many of them. I'm making a note to myself as I speak to you that I'm going to continue to do that because I want this company to become known again for its innovation, and right now, building solutions for our customer is a critical part of that.

Speaker Change #104: About the solutions business and it's been more of a solutions business and a fashion fashion business.

Alex Fuhrman: How should we think about that? Is that more or less consistent with what you need to kind of maintain a steady age profile as the rest of your customers get older, or is this really a conscious effort to try to attract younger customers and move the brand, perhaps a tiny bit younger? It's a great question, Alex. It's a little bit from Colony. It's a little bit from Colony, right? You're always managing to a particular point.

Speaker Change #104: And those solutions they require intubation and one is to protect that innovation and so there is a pipeline that's coming along and I fear will get to calls where I just want to talk about innovation.

Speaker Change #104: That's because we're doing so many of them.

Speaker Change #104: Im making a note to myself as I speak to you that I'm going to continue to do that because I want this company to become known at gain for its innovation and right now building solutions for our customer is a critical part of that.

Andrew McLean: So thank you for letting me get on my set box for that question, of course. Okay, thanks for all the additional color. I appreciate it. Thank you. At this time, there are no further questions than Q. This will conclude the Lands' End Second Quarter Earning Call. You may disconnect your line at this time and have a wonderful day.

Alex Fuhrman: Some seasons, it's going to be more about managing the yield of your existing customers. Some seasons, it's going to be about bringing in a new customer who's 10 years plus younger, and what I would say is that the customer has been aging in our file for the last few years, and this is the first time when that customer has stopped aging. Our file, as we looked at it, at the end of the second quarter, was the same age as it was in the same period last year, and that is a great thing to see. It's like, if we can start to back that up a little bit, and build a gain for the long term, it all goes well for years, of course, in this brand. That's really helpful.

Speaker Change #104: Thank you for letting me get on my Soapbox for that question of course.

Speaker Change #105: Hey, Thanks for all the additional color I appreciate it.

Andrew McLean: Thank you so much.

Keith: Thanks Keith.

Speaker Change #107: Thank you at this time there are no further questions in queue.

We will conclude the lands in second quarter earnings call. You may disconnect. Your line at this time and have a wonderful day.

Speaker Change #107: No.

Speaker Change #108: Uh huh.

Speaker Change #107: Yeah.

Speaker Change #107: Okay.

Speaker Change #109: One of them.

Speaker Change #109: Uh-huh.

Steve Silver: Thank you. Our next question will come from Steve Silver with Argus Research. Please go ahead.

Bernard McCracken: Thanks, Operator, and congratulations on the quarter as well. Given the fact that a really big part of the growth proposition for Lanzand is being able to sell products with minimal discounting, I'm curious as to how that's playing into the SGNA cost expansion. We saw it in Q2 to acquire new customers, and just if you're using more aggressive discounting in conjunction with customer acquisitions, for first time visits to the website and things of that nature.

Bernard McCracken: Yes, Steve, thanks. What you'll find when you look at our growth of 470 basis points at Gross Margin close to two-thirds of that was driven from a higher average unit retail out the door. So we're actually discounting less as a whole as a company that's heavily driven by our product solutions and the newness that we're constantly bringing in to the business. And then the new customer acquisition is more in areas like social and new areas throughout.

Bernard McCracken: That's why that customer is 10 years younger and they're actually buying at a higher average unit retail than our normal customer or that our long 10 year customer. So we're actually being able to acquire those customers at a higher margin.

Andrew McLean: Great, and one follow up if I can. You talked about the new patent being filed in the swim category. I'm curious as to whether the company maintains a pipeline of patent eligible products in development and maybe if so, how that tracks maybe even as compared to just a couple of years ago. Tracks different from a couple of years ago that we had not been doing this a couple of years ago. And one of the things I noticed about LandZend was that it was in its earlier years, it was incredibly innovative.

Andrew McLean: You know, we had one of the first companies to have a 1-800 number of which seems riseable now, but at the time it was incredible. One of the first companies onto the web, really one of the first companies to put data science behind it. It's cataloging and I have an aspiration for the company to innovate along those avenues. I think innovation is dangerous when it just lands in one place in the company and you have to say ahead of innovation.

Andrew McLean: So I want to see innovation from everyone. I think it's part of everyone's job that I want to see, but culture of the company be more innovative. And so as I come in, it became clear to me that I wanted to really open the floodgates. And if we weren't talking about innovation in the past, it tends to be more on a digital footprint and that certainly is important for making strides on that path.

Andrew McLean: But I think fundamentally, if we put our customer first as we have done and we put our, we build a great brand for them, we also build great products for them, which means different initiation. I've talked a lot about the solutions business and it's been more of a solutions business and a fashion business. And those solutions, they require innovation and I want us to protect that innovation. And so there is a pipeline that's coming along and I fear we'll get to calls where I just want to talk about innovation on patents because we're doing so many of them.

Andrew McLean: I'm making a note to myself as I speak to you that I'm going to continue to do that because I want this company to become known again for its innovation. And right now, building solutions for our customer is a critical part of that.

Andrew McLean: So that's thank you for letting me get on my set box for that much of course.

Andrew McLean: Okay, thanks for all the additional color. I appreciate it. Thank you.

Operator: At this time, there are no further questions than Q.

Operator: This will conclude the Lands End Second Quarter Earning Call. You may disconnect your line at this time and have a wonderful day.