Q3 2025 Lands' End Inc Earnings Call
Plans and three Q earnings call at this time all participants are in a listen only mode. Later, you will have the opportunity to ask questions. During the question and answer session.
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Speaker Change: Good morning, and thank you for joining the Lands' end earnings call for a discussion of our third quarter 2024 results, which we released this morning and can be found on our website.
Speaker Change: <unk> Dot com.
Speaker Change: I'm talking about those lands and senior director of financial planning and analysis and I'm pleased to join you today with Andrew Oakley, Our Chief Executive Officer, and Bernie Mccracken, Our Chief Financial Officer.
Speaker Change: After the prepared remarks, we will conduct a question and answer session.
Speaker Change: Please also note that the information we're about to discuss includes forward looking statements.
Such statements involve risks and uncertainties.
Speaker Change: The company's actual results could differ materially from those discussed on this call factors that could contribute to such differences include but are not limited to those items noted and included in the company's SEC filings.
Speaker Change: 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.
Speaker Change: And we do not undertake any obligation to update the forward looking statements made by us.
Speaker Change: Subsequent events and developments may cause the company's outlook to change.
Speaker Change: During this call we will be referring to non-GAAP measures.
Speaker Change: These non-GAAP measures are not prepared in accordance with generally accepted accounting principles.
Speaker Change: A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today a.
Speaker Change: A copy of which is posted in the Investor Relations section of our website at <unk> Dot com.
Andrew Oakley: With that I will turn the call over to Andrew.
Andrew Oakley: Thank you Tom good morning.
Thank you for joining us today our.
Speaker Change: Our performance in the third quarter of 2024 was characterized by the continued execution of our solutions based strategy and customer focus to drive higher quality standards.
Speaker Change: In the third quarter, we delivered net revenue of $319 million.
Speaker Change: Adjusted EBITDA of $20 million.
Speaker Change: A year over year increase of 17% and a low double digit percentage growth in GMP.
Speaker Change: Through the evolution of our strategy for further solidifying our position as a classic American lifestyle brand that create solutions for life's every journey.
Speaker Change: And attracting new and existing customers to a wide ranging assortment of fresh on trend items.
Speaker Change: At the same time, we're leveraging new and innovative tactics, including greater personalization across our marketing programs to best engage customers and drive greater buying throughout the year.
Speaker Change: Paired with our strong execution, we also delivered growth in gross margin and gross profit dollars in the third quarter.
Speaker Change: When looking at our inventories our efforts are continuing to yield results.
Speaker Change: In the third quarter, we drove a 20% year over year improvement in our inventory position and a double digit increase in our churn rate.
Speaker Change: Focus on uses of wear now products remain key to the success.
Speaker Change: By bringing customers relevant items faster.
Speaker Change: To increase full price sales of quality inventory.
Moment.
Speaker Change: Thereby reducing the depth of promotions.
One way, we are optimizing our supply chain is by moving fabric closer to production with a focus on the western hemisphere, which helps reduce shipping time, while diversifying our sourcing relationships.
We are always focused on identifying efficiencies across our supply chain, we will continue to take steps to innovate and enhance our resiliency.
Speaker Change: Critically our ongoing Congress to redefine and elevate our brands across our marketing channels is proving fruitful.
As we continue to showcase lands' end as a quality brand that appeals to a wide range of consumers across price points, we're becoming a bigger part of the conversation on social media channels and ultimately more culturally relevant.
Speaker Change: Put another way we are.
Speaker Change: Being greater impact from our work to build the brand from our deliberate investments in marketing rather than by relying on discounting.
Speaker Change: For example, our recent campaign to promote our family of iconic tote bags has been a success.
Speaker Change: Strategic marketing campaign targeted promotional activity and the first of its kind of toast pop up in New York City.
Speaker Change: As a result total sales are up substantially year over year, and our new customer acquisition from telco customers outpaced overall, new customer acquisition for the quarter, largely driven by consumers much younger than our typical customer.
Speaker Change: <unk> chose to make great gifts for everyone. So order yours by December the eighth and get them on the ground in time for the holiday season.
Speaker Change: Thanks to our marketing efforts, we drove a 20% increase in new customer acquisition in the third quarter and year to date, we've delivered mid teens percentage growth in our new to file customers when compared to last year.
So I think the products are transitional outerwear, including our 1% White franchise for fleeces, and best performed especially well in the third quarter active wear now items.
Speaker Change: Any weather fleece and Bon ton.
Speaker Change: Additionally, sales of our layering products like woven tops sweaters and flannels continued their momentum from Q2, despite a warmer fall.
Speaker Change: We saw strength in sweaters throughout the quarter and holiday sweaters performed especially well.
Speaker Change: We're also pleased with the strong response and home from our efforts to evolve and elevate that assortment.
Speaker Change: We're building a more authentic and innovative lands and digital experience to drive improvements in speed personalization loyalty promotions and merchandising.
Speaker Change: As we discussed last quarter.
Speaker Change: Supporting the execution of our strategy. We're in the process of implementing a new ERP to increase collaboration and planning across the business and with our partners.
Speaker Change: Turning to the performance of our various businesses as a reminder, consistent with the evolution of our brand. We now discuss our business in terms of B to C and BCP channels.
Speaker Change: Beginning with our B to C activities.
Speaker Change: Our U S e-commerce business delivered its seventh consecutive quarter of margin improvement with an increase of approximately 350 basis points.
Speaker Change: As a result of our evolved marketing strategy and a more measured approach to promotions, which continued to drive higher quality sales.
Speaker Change: New to file customer growth and improved inventory management.
Our strategy to maximize key events paid off well in the third quarter.
Speaker Change: We did so with lower levels of promotional activity, which contributed to our strong gross margin performance.
Speaker Change: I will discuss our plans to continue these efforts into the holidays in a few moments.
Speaker Change: Our European business contiguous momentum during the third quarter.
and our new-to-file customers when compared to last year.
Speaker Change: More than offsetting consumer headwinds across the continent with gross margin of approximately 900 basis points and gross profit up 13% year over year.
Turning to product, our transitional outerwear, including our Wonder White franchise of fleeces and vests, performed especially well in the third quarter, as did wear-now items like our Anyweather Sleeve and Bond Coat.
Speaker Change: This gross margin performance exceeded our expectations in both the U K and Germany with the brand attracting new and existing customers to its balanced offering of weatherproof outerwear and elevated Nate.
Additionally, sales of our layering products, like woven tops, sweaters, and flannels, continued their momentum from Q2 despite the warmer fall.
Speaker Change: We remain confident about the trajectory of our international business.
We saw strength in sweaters throughout the quarter, and holiday sweaters performed especially well. We're also pleased with the strong response in HOME from our efforts to evolve and elevate that assortment.
Speaker Change: Begun to look at geographic expansion, both inside and outside of Europe and are continuing to focus on new customer acquisition efforts.
We're building a more authentic and innovative land-end digital experience to drive improvements in speed, personalization, loyalty, promotions, and merchandising.
Speaker Change: Same time driving more full price sales in the region.
Speaker Change: Turning to third party, we continued to see success with our strategy of focusing on Assortments tailored to individual marketplaces of working with partners that both share our vision, our customer focused solutions and elevate our brand.
As we discussed last quarter, supporting the execution of our strategy, we're in the process of implementing a new ERP to increase collaboration and planning across the business and with our partners.
Speaker Change: Our recently launched partnership with Nordstrom online marketplaces performed well in the third quarter further proof that land's end as strengthening our position as an elevated brand.
Turning to the performance of our various businesses. As a reminder, consistent with the evolution of our brand, we now discuss our business in terms of B2C and B2B channels.
Speaker Change: We're seeing great traction with significant full price selling on the platform driven by onshore wind.
beginning with our B2C activities.
Now on to licensing.
Our U.S. e-commerce business delivered its 7th consecutive quarter of margin improvement with an increase of approximately 350 basis points.
Licensing continued to grow in the third quarter, our asset light licensing strategy continues to be a powerful part of our brand evolution and our customer acquisition strategy, helping to boost our relevancy with a large attractive base of customers. Our clubs channel performed well and we expect that strength to continue in the fourth quarter.
As a result of our evolved marketing strategy and a more measured approach to promotions, which continue to drive higher quality sales, new-to-file customer growth, and improved inventory management.
Speaker Change: Looking at 2025, we are actively negotiating additional license arrangement and continue to believe in the capital light growth oriented results for this channel provides.
Our strategy to maximize key events paid off well in the third quarter. We did so with lower levels of promotional activity, which contributed to our strong gross margin performance. I'll discuss our plan to continue these efforts into the holidays in a few moments.
Speaker Change: While we recognize only licensing royalties and fulfillment fees on our P&L. The GMB associated with this business allowed us to drive low double digit overall brand growth build market share and reach a much broader consumer base.
Our European business continued its momentum during the third quarter.
More than offsetting consumer headwinds across the continent, with gross margin up approximately 900 basis points and gross profit up 13% year-over-year.
Speaker Change: Turning to our B to B Outfitters business.
Our b to B business began to hit its stride during the quarter, we built a substantial new customer pipeline, emphasizing our leading market positions in banking travel and health related sectors.
This gross margin performance exceeded our expectations in both the UK and Germany with the brand attracting new and existing customers to its balanced offering of weatherproof outerwear and elevated knit.
Speaker Change: Re launched our website and catalog with a more contemporary feel and reorganized our sales team to emphasize these business segment oriented categories.
We remain confident about the trajectory of our international business, have begun to look at geographic expansion both inside and outside of Europe, and are continuing to focus on new customer acquisition efforts while at the same time driving more full-price sales in the region.
Speaker Change: As we elevate and expand our b to C channels, we are seeing the impact in our <unk> channel as customers recognize us for our strong product capabilities elevate to the assortment.
Speaker Change: <unk> and managing asset line faster, turning quicker speed to market business.
Turning to third party, we continue to see success in our strategy of focusing on assortments tailored to individual marketplaces and working with partners that both share our vision for customer-focused solutions and elevate our brand.
Speaker Change: Revenue from our business uniform channel increased 7% year over year, primarily due to key wins, including the ramp up of our partnership with Wells Fargo to outfit approximately 35000 employees across over 4000 branches.
Our recently launched partnership with Nordstrom Online Marketplace performed well in the third quarter, further proof that Land's End is strengthening our position as an elevated brand. We're seeing great traction with significant full-price selling on the platform, driven by Outerwear.
Speaker Change: Looking ahead, we are ambitious about this channel believe we have a well defined market position and look forward to further leveraging it to provide recurring revenues and relatively high barriers to change.
Now on to licensing.
Speaker Change: School uniforms had a terrific end to the season. Once again, we were able to meet the seasonal peak and deliver on the expectations of both our school customers and their parents purchases.
Licensing continued to grow in the third quarter. Our asset-light licensing strategy continues to be a powerful part of our brand evolution and our customer acquisition strategy.
Speaker Change: We're the leading market share provider in the channel and continue to pursue growth with both existing and new uniform customers.
helping to boost our relevancy with a large, attractive base of customers. Our bus channel performed well and we expect that strength to continue in the fourth quarter.
Speaker Change: Our sales team has been notably busy since October with the exit of a significant industry player that diligence has provided opportunities to add a meaningful amount of customers revenue and profit for lands' end school uniform business.
Looking at 2025, we are actively negotiating additional license arrangements and continue to believe in the capital-like, growth-oriented results that this channel provides.
While we recognize only licensing royalties and fulfillment fees on our P&L, the GMV associated with this business allowed us to drive low, double-digit overall brand growth, build market share, and reach a much broader consumer base.
I'm, taking this moment to also reassure our existing customers that we have the capabilities to continue to deliver on our school uniforms promise, while accommodating the incremental business.
I'll now turn it over to Bernie to discuss our third quarter performance in more detail.
going through our B2B outsiders business.
Bernie McCracken: Thank you Andrew.
Our B2B business began to hit its stride during the quarter. We built a substantial new customer pipeline, emphasizing our leading market positions in banking, travel, and health-related sectors.
Bernie McCracken: For the third quarter total revenue performance came in at the middle of our guidance range at $319 million, a decrease of 2% compared to last year.
Bernie McCracken: When excluding the impact of transitioning the kids and footwear products two licensing agreements total revenue grew by low single digits year over year.
As we elevate and expand our B2C channels, we are seeing the impact in our B2B channel as customers recognize us for our strong product capabilities, elevated assortment, and competence in managing asset life, faster turning, quicker speed to market business.
Bernie McCracken: <unk> increased low double digits for the third quarter of 2024, which exceeded our guidance.
Bernie McCracken: We delivered adjusted EBITDA of $20 million in the third quarter, which came within our guidance range and was a 17% increase over last year.
Revenue from our business uniform channel increased 7% year-over-year, primarily due to key wins, including the ramp-up of our partnership with Wells Fargo to outfit approximately 35,000 employees across over 4,000 branches.
Bernie McCracken: These results reflect our continued efforts to prioritize profitability and balance sheet efficiency versus only the top line.
Bernie McCracken: We continue to improve profit margin across our business units, which has allowed us to continue to reinvest in the business.
Looking ahead, we are ambitious about this channel. Believe we have a well-defined market position and look forward to further leveraging it to provide recurring revenues and relatively high barriers to change.
Bernie McCracken: Gross profit increased by 6% compared to last year, driven by our seventh straight quarter of gross margin expansion.
Bernie McCracken: Gross margin in the third quarter was 51% and approximately 360 basis point improvement from the third quarter of 2023.
School Uniform had a terrific end to the season. Once again we were able to meet the seasonal peak and deliver on the expectations of both our school customers and their parent purchasers.
Bernie McCracken: Margin improvement was driven by newness across the assortment and lower promotional activity.
Bernie McCracken: Our U S ecommerce business saw a sales decrease of 2% compared to the third quarter of 2023.
We're the leading market share provider in the channel and continue to pursue growth with both existing and new Uniform customers.
Bernie McCracken: Excluding the impact of kids and footwear U S e-commerce sales increased low double digits year over year.
Our sales team has been notably busy since October with the exit of a significant industry player. Their diligence has provided opportunities to add a meaningful amount of customers, revenue and profit to Land's End school uniform business.
Bernie McCracken: We generated a 6% increase in gross profit dollars driven by continued efforts to prioritize higher quality sales.
Our European E Commerce business increased gross margin by approximately 900 basis points and gross profit dollars by 13% compared to the third quarter of 2023.
I'm taking this moment to also reassure our existing customers that we have the capabilities to continue to deliver on our School Uniforms promise while accommodating the incremental business.
Bernie McCracken: With sales decreasing 5% year over year.
I'll now turn it over to Bernie to discuss our third quarter performance in more detail.
Bernie McCracken: Sales for Lands' end outfitters were down 1% from the third quarter of 2023.
Bernie: Thank you, Andrew. For the third quarter, total revenue performance came in at the middle of our guidance range at $319 million, a decrease of 2% compared to last year.
Bernie McCracken: Sales from business uniform channel increased 7% over last year.
Bernie McCracken: Merrily due to the ramp up of our partnership with Wells Fargo.
Sales from our school uniform channel were down 8% year over year, driven primarily by the timing.
Bernie: When excluding the impact of transitioning the kids and footwear products to licensing agreements, total revenue grew by low single digits year over year.
Bernie McCracken: Customer orders compared to the prior year. Consequently, we are seeing the benefits of our higher quality sales approach in this channel demonstrated by a profitable back to school selling season that has driven high single digit growth in gross profit year to date.
Bernie: GMB increased low double digits for the third quarter of 2024, which exceeded our guidance.
Bernie: We delivered adjusted EBITDA of $20 million in the third quarter, which came within our guidance range and was a 17% increase over last year.
Bernie McCracken: Our third party business gross profit dollars increased by over 20% as compared to the third quarter of 2023 with revenue increasing by over 6% year over year the.
Bernie: These results reflect our continued efforts to prioritize profitability and balance sheet efficiency versus only the top line. We continue to improve profit margin across our business units, which has allowed us to continue to reinvest in the business.
Bernie McCracken: The increase was primarily due to revenue generated from licensing arrangements licensing and our presence across our third party marketplace partners continue to help the business diversify and reduce risk to any one individual partner.
Bernie: Gross profit increased by 6% compared to last year, driven by our seventh straight quarter of gross margin expansion.
As a percentage of sales SG&A was 44%, which was an increase of approximately 250 basis points compared to 2023.
Bernie: Gross margin in the third quarter was 51 percent, an approximately 360 basis point improvement from the third quarter of 2023.
Bernie McCracken: Primarily driven by reinvesting in the business through higher digital marketing spend focused on new customer acquisition.
Bernie: The margin improvement was driven by newness across the assortment and lower promotional activity.
Bernie: Our U.S. e-commerce business saw a sales decrease of 2% compared to the third quarter of 2023.
Bernie McCracken: For the third quarter, we had a net loss of $6 million or two cents per share. We had an adjusted net income of one 8 million or <unk> <unk> per share, which was within our guidance range.
Bernie: Excluding the impact of kids in footwear, U.S. e-commerce sales increased low double digits year over year.
Bernie: We generated a 6% increase in gross profit dollars driven by continued efforts to prioritize higher quality sales.
Bernie McCracken: Moving to our balance sheet.
Inventories at the end of the third quarter were $336 million compared to $422 million a year ago.
Bernie: Our European e-commerce business increased gross margin by approximately 900 basis points and gross profit dollars by 13% compared to the third quarter of 2023, with sales decreasing 5% year over year.
Bernie McCracken: The 20% improvement in our inventory position benefited from our supply chain teams ongoing efforts to drive efficiencies paired with our strategy to increase turns of our assortment.
Bernie McCracken: In terms of our debt at the end of the third quarter. Our term loan was $250 million and our ABL had $16 million of borrowings outstanding which was $50 million lower than the third quarter last year.
Bernie: Sales from lens and outfitters were down 1% from the third quarter of 2023.
Bernie: Sales from Business Uniform Channel increased 7% over last year, primarily due to the ramp-up of our partnership with Wells Fargo.
During the third quarter, 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 $16 million as of the end of the quarter.
Bernie: Sales from our school uniform channel were down 8% year-over-year, driven primarily by the timing of customer orders compared to the prior year.
Bernie: Consequently, we are seeing the benefits of our higher quality sales approach in this channel demonstrated by a profitable back-to-school selling season that has driven high single-digit growth in gross profit year to date.
Bernie McCracken: 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.
Bernie: Our third-party business gross profit dollars increased by over 20% compared to the third quarter of 2023, with revenue increasing by over 6% year-over-year.
Bernie McCracken: In the fourth quarter, we expect net revenue to be between $440 million and $480 million with gross merchandise value or <unk> expect it to be low to mid single digit growth.
Bernie: The increase was primarily due to revenue generated from licensing arrangements.
Bernie: Licensing and our presence across our third-party marketplace partners continue to help the business diversify and reduce risk to any one individual partner.
Bernie McCracken: We expect an adjusted net income of 16 million to $19 million and adjusted diluted earnings per share to be between 51 and 61 cities.
Bernie: As a percentage of sales, SG&A was 44%, which was an increase of approximately 250 basis points compared to 2023, primarily driven by reinvesting in the business through higher digital marketing spend focused on new customer acquisition.
Bernie McCracken: We expect adjusted EBITDA to be in the range of 43 million to $47 million.
Bernie McCracken: For the full year, we now expect net revenue to be between 136 to $1 4 billion, while <unk> is expected to be low to mid single digit growth.
Bernie: For the third quarter, we had a net loss of $0.6 million, or $0.02 per share. We had an adjusted net income of $1.8 million, or $0.06 per share, which was within our guidance range.
Bernie McCracken: We now expect adjusted net income of $11 million to $14 million and adjusted diluted earnings per share of <unk> 35 to 45 cents.
Moving to our balance sheet.
Bernie McCracken: We now expect our adjusted EBITDA to be in the range of $92 million $296 million.
Bernie: Inventories at the end of the third quarter were $336 million compared to $422 million a year ago.
Bernie McCracken: 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.
Bernie: The 20% improvement in our inventory position benefited from our supply chain team's ongoing efforts to drive efficiencies, paired with our strategy to increase turns of our assortment.
Bernie: In terms of our debt, at the end of the third quarter, our term loan was $250 million, and our ABL had $60 million of borrowings outstanding, which was $50 million lower than the third quarter of last year.
Andrew Oakley: With that I turn the call back over to Andrew.
Andrew Oakley: Thank you Bernie.
Andrew Oakley: I want to spend a minute discussing our initial read on the Black Friday cyber Monday weekend.
Andrew Oakley: This kickoff to the holiday season was inline with our expectations and was further demonstration that our strategy is working throughout the weekend. We saw both longer tenures at New York for Lands' end customers visit engage and purchased directly from lands' end.
Bernie: During the third quarter, 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 $16 million as of the end of the quarter.
Andrew Oakley: We also saw balanced across our channels continued strength and growth in our licensed products and strong performance in our marketplace business.
Bernie: 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.
Andrew Oakley: Taken together, we're pleased with the start to the holiday season.
Andrew Oakley: Before we conclude I would like to highlight two updates to our leadership team.
Bernie: In the fourth quarter, we expect net revenue to be between $440 million and $480 million, with Gross Merchandise Value, or GMV, expected to be low to mid-single-digit growth.
Andrew Oakley: First I'd like to congratulate him on her appointment Atlantans Chief Creative Officer. Kim previously served as our senior Vice President of product and merchandising, where she played a key part in our brand evolution efforts.
Bernie: We expect an adjusted net income of $16 million to $19 million and adjusted diluted earnings per share to be between 51 cents and 61 cents.
Look forward to her future contributions and her new role where she leads all elements of the creative vision, the lens and global brands.
Andrew Oakley: Secondly in October we announced that after almost 30 years, Atlanta, and Angie Reger, our chief transformation Officer will retire effective April 15th 2025.
Bernie: We expect the adjusted EBITDA to be in the range of $43 million to $47 million.
Bernie: For the full year, we now expect net revenue to be between $1.36 to $1.4 billion, while GMV is expected to be low to mid-single-digit growth.
Andrew Oakley: Angie is a consummate leader who has not only been instrumental to the execution of our inventory strategy that has become a trusted advisor.
Bernie: We now expect adjusted net income of $11 million to $14 million and adjusted diluted earnings per share of 35 cents to 45 cents.
Andrew Oakley: Behalf of the entire management team.
Andrew Oakley: Want to thank Angie for all of her contributions.
Andrew Oakley: We wish him nothing but the best in her well deserved retirement.
Bernie: We now expect our adjusted EBITDA to be in the range of $92 million to $96 million.
Andrew Oakley: As always I want to thank all of <unk> employees wherever they are for their dedication to the brand the company and our continued success with.
Bernie: 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 we look forward to your questions.
Speaker Change: At this time, if you would like to ask a question. Please press the star and one on your telephone keypad.
Speaker Change: You may remove yourself from the queue at any time by pressing star team once again that is star one.
With that, I turn the call back over to Andrew.
Andrew: Thank you, Bernie. I want to spend a minute discussing our initial read on the Black Friday, Cyber Monday weekend.
Speaker Change: Ask a question.
Speaker Change: We will pause for a moment to allow questions to queue.
Andrew: This kick-off to the holiday season was in line with our expectations and was further demonstration that our strategy is working. Throughout the weekend, we saw both longer tenured and newer to Lands' End customers visit, engage and purchase directly from Lands' End.
Speaker Change: And we'll take our first question from Dana Telsey Telsey Group. Your line is open.
Dana Telsey: Hi, good morning, everyone.
Dana Telsey: New customer acquisition, the new customer acquisition increase 20% is definitely a call out what are you seeing working there what are the demographics of these new customers.
Andrew: We also saw balance across our channels, continued strength and growth in our licensed products, and strong performance in our marketplace business.
Dana Telsey: How is it informing our product development and then just getting some more color on the Black Friday weekend kickoff today.
Andrew: taken together, we're pleased with its start to the holiday season.
Andrew: Before we conclude, I'd like to highlight two updates to our leadership team.
Speaker Change: Well were in the fourth quarter.
Speaker Change: This quarter what are you seeing in terms of the promotional landscape given the fact that the strength of your margin how much is internal versus external and lastly, China.
Andrew: First, I'd like to congratulate Kim Moss on her appointment as Land's End Chief Creative Officer.
Andrew: Kim previously served as our Senior Vice President of Products and Merchandising, where she played a key part in our brand evolution efforts. I look forward to her future contributions in her new role, where she leads all elements of the creative vision for the land-end global brand.
Speaker Change: The percentage of goods from China, and thoughts on tax impact and what it may mean for pricing for you.
Speaker Change: Great.
Dana Telsey: Kickoff with them China Dana.
Dana Telsey: We work to put some real agility into our supply chain over the last couple of years in China now accounts for less than 6% open to buy.
Andrew: Secondly, in October, we announced that after over 30 years at Land's End, Angie Reger, our Chief Transformation Officer, will retire, except it's April 15th, 2025.
We had been progressively moving towards western Hemisphere, we have taken the view that the closer we can get the product to our customer.
Andrew: Angie is a consummate leader who has not only been instrumental to the execution of our inventory strategy, but has become a trusted advisor. On behalf of the entire Land's End team, I want to thank Angie for all her contributions.
Dana Telsey: The quicker, we're going to be able to determine that works with our margin model really well so we're not feeling.
Dana Telsey: Much pressure around China.
Andrew: We wish her nothing but the best in her well-deserved retirement.
Dana Telsey: Anything specifically it would be round cashmere cut that tends to be a smaller part of our assortment in any case. So we're good there.
Andrew: As always, I want to thank all of the Lands End employees, wherever they are, for their dedication to the brand, the company, and our continued success. With that, we look forward to your questions.
Dana Telsey: In terms of kind of go together the new customer.
Dana Telsey: The landscape in the fourth quarter, if we if we look at the new customer we're really.
Speaker Change: At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad.
Dana Telsey: A couple of cohorts, which we talked about before on prior calls we've got that resolved for us which tends to be our traditional customer come back tend to buy the same items.
Speaker Change: You may remove yourself from the queue at any time. So, once again, that is star and one.
Dana Telsey: You know where we're at.
Dana Telsey: And come back and then we've got our resolve are who tends to be at you our customer we continue to see the path with adding sorry revolvers as our new customers.
Speaker Change: to ask a question. We will pause for a moment to allow questions to queue.
Speaker Change: And we'll take our first question from Dana Telsey with Telsey Group. Your line is open.
Dana Telsey: <unk>.
Dana Telsey: They tend to be 10 to 12 years younger we see them coming in from all avenues, our website, our third party business, our stores and I can talk about the pop ups that we had in Soho it because it really spoke to.
Hi, good morning, everyone.
Dana Telsey: Hi, the new customer acquisition increase of 20% was definitely a call out.
Speaker Change: What are you seeing working there? What are the demographics of these new customers?
Dana Telsey: So as a cultural moment that we're having with our choke backs, where we're able to reach out via Influencers and target a customer who's been there late 'twenty early thirties.
Speaker Change: and how is it informing your product development. And then just getting some more color on the Black Friday weekend and the kickoff to this.
Speaker Change: Well, we're in the fourth quarter, but the fourth quarter, what are you seeing in terms of the promotional landscape, given the fact of the strength of your margin? How much is internal versus external? And lastly, China?
Dana Telsey: We're continuing to Halo then.
Dana Telsey: And which this new group.
Dana Telsey: They come with a very much as a fashion forward perspective, youre seeing that in our assortment I know that you spend time on our site data.
Dana Telsey: And I think you'll see that the more fashion on there and we've modernized whole parts of the assortment. So even if I say nothing is traditional.
Dana Telsey: At our star fish Pant, which is.
Speaker Change: We've worked to put some real agility into our supply chain over the last couple of years and China now accounts for less than 6% of our open-to-buy
Dana Telsey: Probably 30 years old at this point.
Dana Telsey: Half.
Dana Telsey: Nice to see you can buy the existing patents so their traditional customer and you can buy an elevated version of that or a more fashionable actionable version of it or are newer customer.
Speaker Change: We had been progressively moving towards Western Hemisphere. We have taken a view that the closer we can get the product to our customer, the quicker we're going to be able to turn. And that works with our margin model really well. So we're not feeling...
Dana Telsey: It's a trick to be able to keep these two customer cohorts together, because we want both of them. It isn't a matter of meeting those system. We want both of them, we want to be a family lifestyle brand and being able to have these two cohorts.
Speaker Change: much pressure around China. If there's anything specifically it would be around Kashmir but that tends to be a smaller part of our assortment in any case so we're good there.
Dana Telsey: And be able to reach them via the appropriate marketing. It is absolutely critical I would say to that where there might be more traditional reaches from say Facebook too.
Speaker Change: In terms of, they kind of go together, the new customer and the promotional landscape in the fourth quarter.
Speaker Change: If we look at the new customer, we're really seeing a couple of cohorts, which we talked about before on prior calls. We've got the resolvers, which tend to be our traditional customer, come back, tend to buy the same items.
Dana Telsey: More.
Speaker Change: Uh huh.
Speaker Change: All of our base customer we would use pop up so we would use social media or we would use influencers to rapidly evolve our customer and actually coming out of the work that we did.
Speaker Change: You know, wear it out and come back, and then we've got a resolver who tends to be new or a customer. We continue to see the past with adding 8-story revolvers as our new customers.
Speaker Change: With the bump up in New York, We've actually moved on and we're working with them influence at National Park.
I'm here with a pop up in Miami, and a website, where she's customizing lands' end.
Speaker Change: In terms of the promotional landscape.
Speaker Change: They tend to be 10 to 12 years younger. We see them coming in from all avenues on our website.
Speaker Change: We're not going to buy into the promotional landscape.
Speaker Change: But we have a model for our business that we're going to find very firmly on it which is managing our inventories tightly bringing the best product to market, but we can and being far less promotional than we have been in the past and we will continue to drive gross margins. So it should come as no surprise that the third quarter gross.
Speaker Change: our third-party business, our stores, and I can talk about the pop-up that we had in Soho because it sort of really spoke to sort of our cultural moments that we're having with our tote bags.
Speaker Change: We're able to reach out via influencers and target a customer who's in their late 20s to early 30s. So we're continuing to halo down.
Speaker Change: Margin was the highest.
Speaker Change: and reach this new group. And they come with a very much a fashion forward perspective.
Speaker Change: Can find at any quarter going all the way back to the IPO.
Speaker Change: That's a pattern that we will continue with them, we see that that's a way to win versus just kind of playing the promotional game.
Speaker Change: You're seeing that in our assortment. I know that you spend time on our site, Dana. I think you'll see that there's more fashion on there, and we've modernized whole parts of the assortment. So even if I say something as traditional as our starfish pants, which is...
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thanks, Steve.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: He's probably 30 years old at this point, you know, we have.
Speaker Change: <unk> research your line is open.
Speaker Change: Modernize it so you can buy the existing pants for the traditional customer, and you can buy an elevated version of it or a more fashionable version of it for
Speaker Change: Good morning.
Speaker Change: Good morning, Eric.
Speaker Change: Okay, let's talk a little bit of licensing.
Speaker Change: First of all I know you just talked about aggressively kind of adding more licenses and what is kind of a criteria. When you look for new licenses and where do you want to go and cookies.
are your customer.
Speaker Change: You know, it is a trick to be able to keep these two customer cohorts together because we want both of them. It isn't a matter of needing both of them. We want both of them. We want to be a family lifestyle brand and being able to have these two
Speaker Change: One could you remind us of what is new that beyond the two license you have coming up for 2025, and you know how should we be thinking about longer term. The split is kind of here between light product and non licensed product.
cohorts and be able to reach them.
Speaker Change: Sorry, what was the last part you broke up on me there Eric.
Speaker Change: I'm sorry, the split between you know longer term what should be the split between your amount of licensed products sold versus non licensed product.
and more.
Speaker Change: Revolver-based customer, we would use pop-up, we would use social media, or we would use influencers to our newer Revolver customer and actually coming out of the work that we did
Speaker Change: I'll start with that one it's kind of it's an 80 20 rule and that I think about 20% of what we should be doing should be coming from licenses.
Speaker Change: I've been.
Speaker Change: <unk> been doing this for a lot of my career and I think when you start to become one of our licensees.
Speaker Change: Probably give out too much ground control, mostly about just kind of keep the whole concept of like playing playing playing to the same beat.
in terms of the promotional landscape.
Speaker Change: And if you have too many licensees that becomes a challenge and I have talked before about just trying to manage too.
Speaker Change: Between five and 10 licensees for the.
Speaker Change: So the whole of the.
Speaker Change: The whole of the business.
Speaker Change: Managing our inventories tightly, bringing the best product to market that we can, and being far less promotional than we have been in the past, then we will continue to drive gross margins. So, it should come as no surprise that the third quarter gross margin was the highest that I could find in any quarter, going all the way back to the IPO.
Speaker Change: <unk> licenses that we'll be adding on top of the ones. We've discussed homestar in 2025.
Speaker Change:
Speaker Change: We will continue to provide our own merchandise on our site, although we've given ourselves of the option.
Speaker Change: Today with us.
Speaker Change: Goodbye from our licensed partner and we can evaluate that as we go forward.
Speaker Change: I think that's a pattern that we'll continue with. We see that that's a way to win versus just playing the promotional game.
Speaker Change: But we just didn't have the experience of selling it and outside of our digital channels.
Speaker Change: We're looking at non core.
Speaker Change: Go to Beadaholique.com for all of your beading supply needs! Beading supplies and beading supplies need your support!
Speaker Change: Category, So I would say.
Thank you.
Speaker Change: Excuse he is one that we continue to look at we look at things like luggage, we look at things like fragrance. There's a number of areas that we can lean into lean into in that space and we'll continue to do that the other big one that's going to be coming up the international.
Thank you.
Speaker Change: Thank you. We'll take our next question. Next, we're with SCC Research. Your line is open. Thank you. Thank you. Thank you. Thank you.
Good morning.
Morning, Eric.
Thanks. Let's talk a little bit about licensing.
Speaker Change: Three licensed groups that we've talked about one's product once channel one's geographic and I think what youll see as we.
Speaker Change: First of all, I know you talked about aggressively adding more licenses. What is kind of the criteria when you look for new licenses and where do you want to go? And could you – that's one. Could you remind us of what is new beyond the two licenses you have coming up for 2025?
We built the brand over the coming over the coming months.
Speaker Change: We'll start to look more towards international and we were already at.
Speaker Change: Talking to a number of potential partners about it and I think that could be very positive for the business and really start to balance out.
Speaker Change: And, you know, how should we think about, you know, longer term, the split kind of here between licensed product and non-licensed product?
Speaker Change: That sort of like a heavy north American airlines that we have.
Speaker Change: Sorry, what was the last part? You broke up on me there, Eric. I'm sorry, the split between, you know, longer term, what should be the split between the amount of licensed products sold versus non-licensed products?
Speaker Change: And you asked me a question on licensing criteria our criteria is.
Speaker Change: First of all they have that the partner has to be established in this space.
Speaker Change: I'll start with that one. It's an 80-20 rule in there. I think about 20% of what we should be doing should be coming from licenses. I've been doing this for a lot of my career, and I think when you start to become over-licensed, you
I've seen a lot of deals in my career that don't work out because he went with the highest most attractive set of economics that the partner was able to deliver on it and in particular I've seen vendors struggled with this the most or manufacturers struggle with it the most.
Speaker Change: probably give up too much brand control. Mostly, it's about just trying to keep the whole concert playing to the same beat. And if you have too many licensees, that becomes a challenge. And I've talked before about just trying to manage to, you know, between five and ten licensees for the
Speaker Change: And they think they're going to capture 78 people into the margin and the reality of difficult about the whole cost structure. So we've established partners that we can lean in they've got a proven track record in this space and they really they have the best shot with our brand values and do they have to be ready for likes to equity journey.
Speaker Change: for the whole of the business. For licenses that we'll be adding on top of the ones we've discussed, HomeStart in 2025,
Speaker Change: It's the promise, we make to our customers and we view.
Speaker Change: Customers, who shop license.
Speaker Change: Or licensed channels.
Speaker Change: Importantly, as we view the customers who shop, our OTA channels.
Speaker Change: We will continue to provide our own home merchandise on our site, although we've given ourselves the option to be able to buy from our licensed partner, and we can evaluate that as we go forward. But we just didn't have the experience of selling it outside of our digital channels.
Speaker Change: We have to have that promise cap so that cause it materially important part obviously behind that we're going to look at the economics, which is going to be a combination of royalty.
Speaker Change: Minimum payments and we like that that gives us good longevity longevity and protection to both our P&L and balance sheet.
Speaker Change: We're looking at non-core categories, so I would think, you know,
Speaker Change: UC is one that we continue to look at. We look at things like luggage. We look at things like fragrance. There's a number of areas that we can lean into.
Speaker Change: I would say this just to underscore.
Speaker Change: That capital that asset light capital model of licensing is really important to us and I think it came through very clearly in the numbers, where we had strong double digit GNP clause as a company. So lands' end is gaining market share and very clearly is starting to come through in the unprofitable.
Speaker Change: lead into in that space, and we'll continue to do that. The other big one that's going to be coming up is international. You know, there's the three license groups that we talked about. One's product, one's channel, and one's geographic. And I think what you'll see as we build the brand up over the coming months
Speaker Change: Let's see.
Speaker Change: Great one last quickie on inventories you're done.
Speaker Change: that will start to look more towards international. We were already out talking to a number of potential partners about it and I think that could be very positive for the business and really start to balance out at that sort of like heavy North American reliance that we have.
Speaker Change: This job in reducing inventories in Michigan kind of licensing and kind of where youre resetting the manufacturing it sounds like there was actually probably still more there how should we be thinking about the opportunities inventories, even though you've spent the.
Speaker Change: The last seven quarters, reducing the inventory about thank you.
Speaker Change: I think you asked me a question on licensing criteria. The criteria is...
Speaker Change: Eric.
Eric: We expect a normalized inventory levels going forward.
Speaker Change: First of all, the partner has to be established in this space.
Eric: As we continue to improve our infrastructure and our comply chain processes. There will be some efficiencies built into that where we'll be able to as Andrew said near shore more product and not have to have it on our balance sheet and be able to.
Speaker Change: I've seen a lot of deals in my career that just don't work out because
Eric: By closer to trend.
Speaker Change: I've seen vendors struggle with this the most or manufacturers struggle with this the most work.
Eric: So we're excited about that going forward, but you can think of our inventory levels now as being a normalized levels going forward as we build those efficiencies.
Speaker Change: and they think they're going to capture 70, 80 points of margin and the reality is they forgot about the whole cost structure. So we need established partners that we can lean in, they've got a proven track record in this space.
Speaker Change: Okay, great. Thank you and good luck for the rest of the holiday season.
Speaker Change: Okay.
Speaker Change: Thank you we'll take our next question from Alex Fuhrman with Craig Hallum Capital Group. Your line is open.
and Bob Marley.
Hey, guys. Thanks for taking my question and congratulations on a strong quarter during what seems like there's been a pretty promotional holiday season for a lot of retailers year.
Speaker Change: Product or licensed channels just as importantly as we view the customers who shop our own channels and we
Speaker Change: We have to have that promise kept, so that's going to be the materially important part.
Speaker Change: Wanted to ask just about the guidance.
obviously behind that.
Speaker Change: You know if we could just drill into the revenue versus the G. M B looks like.
Speaker Change: We're going to look at the economics, which is going to be a combination of loyalty and minimum payments, and we like that, it gives us good longevity and protection to both our P&L and balance sheet.
Speaker Change: Little bit lower GMP guidance, despite revenue guidance being within the prior range, albeit a little bit lower at the midpoint. It is there a simple explanation there or is it just a matter of you know what.
Speaker Change: I would say this, just to underscore it all, that capital, that asset like capital model of licensing is really important to us and I think it came through very clearly.
I'll move lower than.
Speaker Change: First of all there is to it.
Erika: Yeah Erika of course.
U S e-commerce has the impact of transitioning.
Speaker Change: in the numbers where we had a strong double-digit GMV growth as a company. So Land's End is gaining market share and it very clearly is starting to come through in our profitability.
Erika: Our kids and footwear products to licensing arrangements. So naturally the revenue year on year will be lower in that business.
Erika: But those those businesses lean heavier into Q4, so it will be a little more effect on the revenue line in Q4, but that does not affect GMB is those businesses will be selling lands' end branded product.
Speaker Change: Great. One last thing on inventories. You've done a tremendous job of reducing inventories and listening to licensing and where you're resetting and manufacturing. It sounds like there is actually probably still more there. How should we be thinking about the opportunities in inventories, even though you've spent the last seven quarters reducing the inventory amount? Thank you.
Erika: Okay.
Bernie and then just big picture.
Speaker Change: Marketing over the last year or so you guys have been spending a lot more on marketing and seem to be getting a very strong return on that are there are opportunities to continue to increase marketing spending next year and in future years off of that base or do you feel like you've found a pretty good level for now.
Yeah, Eric, um...
Speaker Change: We expect to normalize inventory levels going forward as we continue to improve our infrastructure and our supply chain processes. There will be some efficiencies built into that where we'll be able to, as Andrew said, near shore more product and not have to have it on our balance sheet and be able to
Speaker Change: We spent the year investing in our marketing as you can tell that it's driven a very nice new customer acquisition, which we expect to create a flywheel and drive additional business going forward as we generate those additional revenues. We expect to then still spend at <unk>.
Speaker Change: by closer to trend. So we're excited about that going forward, but you can think of our inventory levels now as being our normalized levels going forward as we build those efficiencies.
Speaker Change: Okay, great. Thank you. And good luck for the rest of the holiday season.
Speaker Change: <unk> of that.
Thanks, Eric. Take care.
Speaker Change: <unk> percentage on marketing to keep that flywheel going.
Speaker Change: Thank you. We'll take our next question from Alex Furman with Craig Howland Capital Group. Your line is open.
Speaker Change: So we feel strongly that it'll stay on a percentage basis, and we will be able to start.
Speaker Change: As we improve our gross margins over the over the year. We've spent some of that investing in this marketing and new customer acquisition.
Alex Furman: Hey guys, thanks for taking my question and you know, congratulations on a strong quarter during what seems like it's been a pretty promotional holiday season for a lot of retailers here. Wanted to ask just about the guidance, if you know, if we could just drill into the revenue versus...
Speaker Change: We will be able to start leveraging that going forward.
Speaker Change: Okay. That's really helpful. Thank you.
Speaker Change: Thank you.
Alex Furman: GMB, you know, it looks like a little bit lower GMB guidance despite revenue guidance being within the prior range, albeit a little bit lower at the midpoint. Is there a simple explanation there or is it just a matter of, you know, a small move lower and, you know, that's what's all there is to it?
Speaker Change: Our last question from Steve <unk> with Argus Research your line is open.
Speaker Change: Thanks, operator, and thanks for taking the questions.
Speaker Change: I was curious about the new.
Speaker Change: Rollout of the third party business over the last couple of quarters, there's been a lot of talk about the expansion of the roster.
Speaker Change: Yeah, Eric, of course, you know, our U.S. e-commerce has the impact of transitioning
Including Nordstrom and Costco among others.
Speaker Change: are kids and footwear products to licensing arrangements. So naturally, the revenue year on year will be lower in that business. But those.
Speaker Change: I am curious as to how long do you expect that will take two.
Speaker Change: To kind of translate into.
Speaker Change: Increased traffic to land in West side, which you guys had talked about in previous quarters and the double digit increase in G. M V. In Q3, I'm curious as to how much of that you attribute to the third party expansion versus other.
Speaker Change: Those businesses lean heavier into Q4, so there will be a little more effect on the revenue line in Q4. But that does not affect GMB, as those businesses will be selling Land's End branded product.
Speaker Change: Okay, that's helpful, Bernie. And then just big picture, you know, marketing, over the last year or so, you guys have been spending a lot more on marketing and seem to be getting a very strong return on that. Are there opportunities to continue to increase marketing spending next year and in future years off of this base, or do you feel like you found a pretty good level for now?
Speaker Change: The other channels I'm, just trying to get a sense as to the data you're capturing from these third party businesses.
Speaker Change: In terms of new customer acquisitions in terms of what percentage of that is organic versus coming to us from these third parties.
Speaker Change: Yes.
Speaker Change: First of all good morning, How're you doing.
Speaker Change: Well. Thank you that's a great couple of questions I'm going to take the first one on.
Speaker Change: We've spent the year investing in our marketing. As you can tell that it's driven a very nice new customer acquisition.
Speaker Change: The third party business, we started Nordstrom.
Summer and it has.
Speaker Change: Exceeded all our expectations, what's been interesting is that.
Speaker Change: which we expect to create a flywheel and drive additional business going forward. As we generate those additional revenues, we expect to then still spend a percentage of that, an equal percentage on marketing to keep that flywheel going.
Speaker Change: We're tailoring each of these businesses.
Speaker Change: To a specific customer so we will merchandise accordingly from both a assortment and price points. So for example, with Nordstrom.
Speaker Change: We've already found that there's a very strong.
Speaker Change: So, we feel strongly that it'll stay on a percentage basis and we'll be able to start
Speaker Change: School customer on that.
Speaker Change: We're finding that we're able to be actually at the moment nordstrom's only resource for school and its really opened up a new Avenue for us and so there.
Speaker Change: As we improve our gross margins over the year, we've spent some of that investing in this marketing and new customer acquisition, and I think we'll be able to start leveraging that going forward.
Speaker Change: There is a lag between seeing those customers from the Nordstrom website.
Okay, that's really helpful. Thank you.
Speaker Change: The lands' end website, but we do see them because we current Saturday inventory work curtailed the assortment, we make it quite specific.
Speaker Change: Thank you. We'll take our last question from Steve Silver with Argus Research. Your line is open.
Speaker Change: And then we use that to find their way back alright data, we do spend a lot of data on this.
Thanks, Operator, and thanks for taking the questions.
Speaker Change: I'm curious about the rollout of the third-party business over the last couple of quarters. There's been a lot of talk about the expansion of the roster, including Nordstrom and Costco, among others. I'm curious as to how long you expect that will take
Speaker Change: Third party continues to be one of the biggest areas from which we grab customers now there's a second part to this question, which is Costco Costco is managed at arm's length.
Speaker Change: Our licensed partner, where we manage that Nordstrom was relationship very specifically ourselves that's from Ari that supply from our inventory, but with our cost curve that supply from our partner inventory. So it's harder for us to get that data here's how high you would like.
Speaker Change: to kind of translate into increased traffic to the LAMBDEN website, which you guys have talked about in the previous quarter, and increase GMP and Q3.
Speaker Change: Having that physical manifestation of the brands and like minded retailers as well Costco in the club are very much viewed as a like minded and I've given the demographics of the customer right.
Speaker Change: I'm curious as to how much of that you attribute to the third-party expansion versus
Speaker Change: other channels, and just trying to get a sense as to the data you're capturing from these third-party businesses in terms of your new customer acquisitions, in terms of what percentage of that is organic versus coming to you from these third parties.
Speaker Change: Present, it presents oldest at the store.
Speaker Change: Anyway, and it opens us up not just to our existing consumer shopping there, but very much to a new consumer.
Speaker Change: And we do see the benefit as we go back and look at our customers are trying to match up against those that we survey to see if there is a growing percentage of them come from Costco for example, and we do see that coming through but in terms of harvest faster being able to tie that together, we don't have any insights given the army.
Yeah, we
Speaker Change: First of all, good morning, Steve. How are you doing? I'm well, thank you. It's a great couple of questions. I'm going to take the first one on the third party business. We started Nordstrom in the summer and it has
Speaker Change: exceeded all our expectations. What's been interesting is that we're tailoring each of these businesses.
Speaker Change: Given the.
Speaker Change: to a specific customer. So we will merchandise accordingly from both the assortment and the price point. So for example, with Nordstrom,
Speaker Change: Nature of that licensing agreements versus owning a third party.
Speaker Change: Yeah and to add on to that Steve.
The new customers in marketplaces, 80% of our <unk>.
Speaker Change: We've already found that there's a very strong school customer on there and you know, we're finding that
Speaker Change: Sales on our marketplaces are from customers, who either have never shopped or having shop with wins in over five years. So it's a new customer we are attracting there and then the benefit of the marketplaces. Andrew says is we are fulfilling that product from our single source of inventory. So wanted to de risk our inventory, but two more importantly from a customer.
Speaker Change: the Land N website, but we do see them because we curtail the inventory, we curtail the assortment, we make it quite specific, and then we use that to find their way back. Our data, we do spend a lot of data on this,
Speaker Change: <unk> standpoint is we are getting the information on that customer and knowing what that journey is for that customer, which you know is we're only a year or a couple of years into our expanded marketplace that we're starting to build those customer journeys and truly understand.
Speaker Change: Third party seems to be one of the biggest areas from which we grab customers.
Speaker Change: Where their next purchases from is it from that same marketplace is it always in dot com and it's it's data analytics that we're very excited to keep learning from and we're seeing you know we're seeing customers come from Betty happening is we're really only a year into our journey on Instagram.
Now, there's a second part to this question, which is...
Speaker Change: Costco. Costco's a licensed partner where we manage that noise from this relationship very specifically ourselves and that's supplied from our inventory, but with a Costco.
Speaker Change: And we have two advertisement followers nice so you know what.
Speaker Change: We're able to see customers from places, where we've never seen that before so operating spending is right. We've invested again understanding that customer journey and that's why we're so excited about the new customers that we're seeing to file in the third quarter and into the fourth quarter, where there they are coming in they're younger they come from.
Speaker Change: that supply from a partner inventory, so it's harder for us to get the data. Here's how I view it, though.
Speaker Change: having that physical manifestation of the brand in like-minded retailers, and while Costco is a club, a very much view as a like-minded retailer, given the demographics of the customer, that it presents almost as a store in many ways, and it opens us up, not just to our existing consumer shopping there, but very much to a new consumer.
Speaker Change: Any venues.
They're much more of a occasions buyers then they don't necessarily have to have an effect.
Speaker Change: Fire.
Speaker Change: I think that high intent is really transferring through too much my shrunk of margins for us and we will continue to do so.
I Don't
Speaker Change: We do see the benefit as we go back and look at our customers and try and match up against those that we surveyed to see if there's a glowing percentage of them come from Costco, for example, and we do see that coming through. But in terms of...
Speaker Change: Great I appreciate all the color and again best of luck for the rest of the holiday season.
Speaker Change: Thank you very much take care happy holiday.
Speaker Change: Thank you and that concludes today's teleconference. Thank you for your participation you may now disconnect.
Speaker Change: Harvey Fassbinger were to tie that together, we don't have the insights given the arm's length nature of that licensing agreement versus owning the third party.
Speaker Change: Right.
Speaker Change: Hum.
Speaker Change: Yeah, and to add on to that, Steve, you know, the new customers in marketplaces, 80% of our
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: sales on marketplaces are from customers who either have never shopped or haven't shopped with Land's End in over five years, so
Speaker Change: Yeah.
Speaker Change: Hum.
Speaker Change: Yeah.
Speaker Change: It's a new customer we're attracting there, and then the benefit of the marketplace, as Andrew says.
Speaker Change: [noise] Hum.
Speaker Change: is we are fulfilling that product from our single source of inventory.
Speaker Change: Hum.
Speaker Change: So one, it de-risks our inventory, but two, more importantly, from a customer acquisition standpoint,
Hum.
Speaker Change: Mhm.
Speaker Change: what that journey is for that customer, which, you know, as we're only a year or a couple of years into our expanded marketplace, that we're starting to build those customer journeys and truly understand.
Speaker Change: where their next purchase is from. Is it from that same marketplace? Is it only in ven.com? And it's data analytics that we're very excited to keep learning from. And we're seeing, you know, we're seeing customers come from many avenues. We're really only a year into our journey on Instagram.
Speaker Change: and we have 200,000 followers now so you know we're able to see customers from places where we've never seen them before so what Bernie's saying is right we've
invest against our understanding.
that customer journey is why.
Speaker Change: We're so excited about the new customers that we're seeing to file in the third quarter and into the fourth quarter where they're coming in, they're younger, they come from many venues.
Speaker Change: and they're much more about occasion buyers than they are necessarily about an event buyer. I think that high intent is really transferring through to much, much stronger margins for us and we'll continue to do so.
Speaker Change: Great, I appreciate all the color, and again, best of luck for the rest of the holiday season. Hey, thank you very much. Take care. Happy holidays.
Thank you.
Speaker Change: Thank you. And that concludes today's teleconference. Thank you for your participation. You may now disconnect.
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