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LE
Earnings call · Jul 2026 (Q2 FY27)

LANDS' END Q2 FY27 earnings call LE

Sep 3, 2026 Source

Executive summary

Lands' End Q2 FY27 — Strong U.S. E-commerce Recovery and Margin Expansion

The new CEO outlined a vision for Lands' End as an AI-driven e-commerce platform, focusing on personalized customer experiences and leveraging proprietary data. The company reported strong U.S. e-commerce growth and significant gross margin expansion, despite ongoing impacts from warehouse management system issues on its B2B segment and a strategic reduction in lower-margin third-party marketplace sales. Management confirmed WMS issues are resolved for core e-commerce, with further efficiencies planned.

Highlights

5

  • U.S. e-commerce business increased 9% compared to Q2 FY25, reflecting recovery from WMS issues.

  • Gross margin improved by 320 basis points to 52% in Q2 FY26, primarily driven by IEPA tariff refunds.

  • Europe business revenue increased 1% year-over-year, with strong product margin performance due to a strategic shift.

  • U.S. new-to-file customer count grew double digits, largely driven by totes and swim.

  • The Wawa collaboration generated over 2.6 billion impressions and sold out in hours, driving social media traffic up 30% YoY.

Concerns

5

  • Third-party marketplace business decreased approximately 20% due to a strategic shift prioritizing higher-margin sales.

  • Adjusted EBITDA decreased $4 million year-over-year to $11 million in Q2 FY26.

  • Inventory levels were up 13% compared to last year, reaching $342 million at quarter-end.

  • ABL borrowings increased to $60 million compared to $35 million last year.

  • Warehouse management system challenges impacted B2B value-added services and school uniform shipments, reducing Q2 revenue recognition.

Guidance & targets

CategoryTargetConfidence
Net revenue
$300 million to $330 million
high materiality
High
Adjusted net income
$1 million to $6 million
medium materiality
High
Adjusted diluted earnings per share
$0.07 to $0.20
high materiality
High
Adjusted EBITDA
$14 million to $18 million
high materiality
High
Net revenue
$1.3 billion to $1.35 billion
high materiality
High
Adjusted net income
$13 million to $21 million
medium materiality
High
Adjusted diluted earnings per share
$0.44 to $0.72
high materiality
High
Adjusted EBITDA
$62 million to $70 million
high materiality
High
Capital expenditures
$40 million
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
U.S. e-commerce
Reflecting recovery with the rollout of new warehouse management system across distribution centers in Q1. The WMS issue has been addressed, and shipments were caught up by the end of the quarter. Underlying year-to-date growth is flat.
—9%——
Third-party marketplace
Strategic decrease as the company continues to prioritize profitable high-quality sales and brand integrity over lower-margin promotional volume. Like-for-like gross margin improved by over 500 basis points year-over-year.
—-20%——
Lands' End Outfitters (B2B)
Driven by enterprise accounts, which more than offset WMS challenges in the school uniform business processing value-added service products. School uniform shipments were delayed, resulting in significantly higher backlog levels.
Enterprise segment YTD growth: >15%
—4%——
Europe
Primarily driven by a strategic shift to a franchise-first assortment that simplified the business and drove improved product margins. Amazon Germany went live in August.
—1%—strong product margin performance

Product announcements

ProductTypeDetails
Delta Airlines uniform collectionmilestone

Deals & partnerships

WHP Global Intellectual property joint venture

The JV amended several significant licensing agreements, reinforcing confidence in the long-term growth opportunities created by the partnership.

Risks & headwinds

Warehouse management system (WMS) challenges Q2 FY26 (carryover from Q1)

impacted the timing of school uniform shipments; backlog levels were significantly higher than the prior year, reducing revenue recognition

Mitigation:Improving operations is a priority, including increasing output capacity, improving efficiency in production, and prioritizing shipments to get ahead of customer timing dynamics.

Tariff headwinds Remainder of fiscal 2026

continued tariff headwinds

Mitigation:Continuing to execute mitigation measures to manage tariff headwinds.

New royalty structure associated with JV Q2 FY26 and ongoing

partially offset gross margin increase; offset IEPA tariff refunds in adjusted EBITDA

What to watch in Q3 FY27

WMS operational efficiency improvements

next year
Current running at normal operations, caught up on throughput
Target more efficiency to unlock, other infrastructure in place

Why it matters

Further WMS efficiencies could improve service levels and support customer experience, impacting lifetime value and operational costs.

It is also worth noting that there is more efficiency to unlock where we can actually put other infrastructure in place, but that will not happen until next year.

Q&A highlights

How does the new CEO envision Lands' End's future, particularly regarding technology, e-commerce, and various business segments?

CEO Charlie Cole outlined a long-term vision to transform Lands' End into a modern AI engine driving the entire customer experience. This engine will leverage customer data for personalized marketing, optimizing conversion and lifetime value across e-commerce, CRM, and catalog segmentation, aiming for an industry-leading platform.

“My long-term vision for Lands' End is we are a modern AI engine that drives almost our entire customer experience.”

asked by Dana Telsey · answered by Charlie Cole

2 min read 7 chapters

Detailed narrative

CEO's Vision for Lands' End

New CEO Charlie Cole outlined a long-term vision to transform Lands' End into a modern AI engine driving the entire customer experience. This engine will leverage customer purchase history, browsing behavior, weather, geography, search patterns, inventory, and full-price sell-through targets to optimize conversion and lifetime value. The goal is to build an AI infrastructure that enables a personalized e-commerce platform rivaling the best in the industry, applicable across e-commerce, CRM, marketing, and catalog segmentation.

Warehouse Management System (WMS) Resolution

The company confirmed that the WMS issues impacting U.S. e-commerce throughput have been addressed, and operations are now running at normal levels, with shipments caught up by the end of Q2. While a backlog remains, it is being worked through, and no further impact on Q3/Q4 guidance is anticipated, except for a catch-up in the Outfitters division. Further efficiencies from WMS are expected to be unlocked next year with additional software solutions.

Product Portfolio Highlights

Key franchises like Women's and Men's apparel, especially knitwear, performed well in Q2. Bags, particularly the iconic 5-pocket tote, were a significant driver of growth and new customer acquisition. The swim business achieved high single-digit revenue growth in U.S. e-commerce. Early reads on outerwear and Christmas stockings are encouraging, providing good initial visibility for Q4.

Marketing and Brand Engagement

Collaborations with TNT and Wawa, along with a presence in Nantucket, successfully engaged new and younger audiences. The Wawa collaboration generated over 2.6 billion impressions and sold out in hours. Social media traffic, including Instagram, increased over 30% year-over-year, indicating successful brand equity building and engagement across social platforms.

Lands' End Outfitters Performance

Underlying demand in the B2B Outfitters business was solid, with revenue increasing approximately 4% year-over-year. Strength in national accounts, particularly the Enterprise segment (up over 15% year-to-date) led by airline accounts, partially offset WMS challenges that delayed school uniform shipments. A new multiyear partnership with Delta Airlines is in the wear-testing phase for a planned second half 2027 rollout.

Europe Business Strategic Shift

The Europe business saw revenue increase 1% year-over-year, but achieved strong product margin performance due to a strategic pivot towards a franchise-first assortment and less promotional activity. Efforts to acquire new customers at lower costs and through differentiated storytelling are yielding encouraging results, with Amazon Germany going live in August to leverage global experience.

WHP Global Joint Venture Impact

The intellectual property joint venture with WHP Global amended several significant licensing agreements. These amendments are expected to generate more than $150 million of long-term guaranteed royalty value, reinforcing the company's confidence in the long-term growth opportunities created by the partnership.

AI-generated summary of the company's earnings call. Not investment advice.