Lands' End Q1 revenue drops 8.5 percent due to warehouse system rollout

The US apparel brand Lands' End has announced its financial results for the first quarter ended May 1, 2026. The period was characterized by operational adjustments, a major corporate transaction and varied performance across geographical segments.

Net revenue for the quarter reached 238.90 million dollars, representing an 8.5 percent decline compared to the 261.20 million dollars recorded in the first quarter of 2025. The company stated the drop was primarily caused by a temporary operational disruption tied to the rollout of a new warehouse management system and the deliberate pacing of shipments as US distribution centers returned to normal capacity. Excluding this impact, Lands' End estimates it would have delivered low single-digit revenue growth.

Gross profit decreased by 16 percent to 111.50 million dollars, down from 132.70 million dollars in the prior year. Gross margin contracted by approximately 410 basis points to 46.7 percent from 50.8 percent in the first quarter of 2025, driven by the distribution disruption, continued tariff pressures and a new royalty structure linked to its joint venture with brand management firm WHP Global.

Segment breakdown reveals international growth

The primary digital operations faced headwinds during the quarter. The US Digital segment generated net revenue of 205.10 million dollars, down 9.9 percent compared to the first quarter of the previous year. Within this division, US e-commerce net revenue declined 10.2 percent to 153.30 million dollars, also impacted by the warehouse transition.

The Outfitters division, which handles corporate uniform channels, recorded a 10.3 percent revenue decrease to 38.50 million dollars. Third-party net revenue dipped 5.7 percent to 13.30 million dollars, which management attributed to a strategic focus on higher-margin sales over promotion-driven volume.

Conversely, the European e-commerce division posted positive results. Net revenue for the region grew 14.5 percent to 20.50 million dollars. The company attributed this expansion to a strategic shift toward a franchise-first assortment model that simplified operations and improved inventory efficiency.

Joint venture drives net income surge

Reported net income reached 330.70 million dollars, or 10.56 dollars per diluted share, a substantial shift from the net loss of 8.30 million dollars, or 0.27 dollars loss per diluted share, in the first quarter of 2025. This net income growth was primarily driven by the closing of the WHP Global transaction.

On an adjusted basis, the company narrowed its losses. Adjusted net loss improved to 3.50 million dollars, or an adjusted diluted loss per share of 0.11 dollars, compared to an adjusted net loss of 5.40 million dollars, or 0.18 dollars loss per share, last year. Adjusted EBITDA fell by 165 percent to negative 6.20 million dollars from 9.50 million dollars.

Lands' End chief executive officer Andrew McLean stated that consumer traffic increased by double digits during the quarter and noted that the WHP Global partnership marks an inflection point that eliminates term-loan debt. The majority of the 300 million dollars in cash proceeds from the transaction was utilized to fully repay the company's outstanding term loan.

Outlook

The company initiated a share repurchase program authorized on April 1, 2026, buying back 0.30 million dollars of common stock during the quarter, leaving 99.70 million dollars available under the authorization until March 31, 2029.

Looking ahead to the full fiscal year 2026, Lands' End expects net revenue to be between 1.30 billion dollars and 1.40 billion dollars. Net income is projected between 310 million dollars and 320 million dollars, with adjusted net income expected in the range of 10 million dollars to 20 million dollars.

For second quarter fiscal 2026, the company expects net revenue to be between 290 million dollars and 310 million dollars, net loss to be between 5 million dollars and 2 million dollars and diluted loss per share to be between 0.16 dollars and 0.06 dollars, while adjusted net income to be between 2 million dollars and 5 million dollars and adjusted diluted earnings per share to be between 0.06 dollars and 0.16 dollars. The company forecasts adjusted EBITDA in the range of 11 million dollars to 14 million dollars.