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Business Context and Reporting Period

Company: Lands' End, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year 2025 (ended January 30, 2026)
Business Overview: Lands' End is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products, and uniforms. The company operates primarily through U.S. eCommerce, Outfitters (B2B), Third Party marketplaces, and international channels. The company is currently executing a strategic shift involving a pending joint venture with WHP Global to monetize its intellectual property.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Total net revenue decreased 2.0% to $1.34 billion. The U.S. Digital segment grew slightly (0.7%), driven by a 6.0% increase in the Outfitters channel and a 9.2% increase in Third Party sales. However, these gains were offset by a 12.5% decline in Europe eCommerce and a 22.0% decline in Licensing and Retail due to the transition of wholesale accounts to a licensing model.
• Margin Expansion: Gross margin improved by 80 basis points to 48.7%. Management noted that excluding $13.0 million in unmitigated IEEPA tariff costs, gross margin would have increased by approximately 180 basis points to 49.7%.
• Operating Expenses: Selling and administrative expenses remained flat in absolute dollars ($561.2 million) but increased as a percentage of revenue (42.0%) due to deleveraging from lower sales and higher digital marketing spend for customer acquisition.
• Restructuring Costs: The company incurred $13.9 million in restructuring and other costs in Fiscal 2025, primarily related to strategic alternative exploration and a 6% reduction in corporate office positions.

Guidance, Outlook, and Strategic Developments

Pending WHP Transaction

On January 26, 2026, Lands' End announced a Membership Interest Purchase Agreement with WHP Global. Key terms include:

• Structure: Lands' End will contribute its intellectual property (IP) and licensing assets to a new joint venture (IPCo) and sell a 50% stake to WHP Global for $300 million in cash.
• Debt Repayment: Proceeds are intended to fully repay the company's Term Loan Facility ($234 million principal).
• License Agreement: Lands' End will license the brand back from the JV, subject to a guaranteed minimum royalty of $50 million per year for the first 11 years.
• Tender Offer: WHP Global commenced a tender offer to purchase up to $100 million of Lands' End common stock at $45.00 per share.

Outlook and Risks

• Strategic Focus: Post-transaction, the company aims to pursue strategic growth, invest in innovation, and accelerate key priorities with a strengthened capital structure.
• Tariff Uncertainty: A U.S. Supreme Court ruling on February 20, 2026, invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA). While this may lead to refunds, the process and timing remain uncertain.
• Seasonality: The business is highly seasonal, with approximately 34% of annual revenue generated in the fourth fiscal quarter.
• Majority Ownership: Edward S. Lampert beneficially owns 56.0% of outstanding shares, granting him substantial influence over corporate actions.

Investor Verification Checklist

• Transaction Closing: Verify the closing status of the WHP Global joint venture and the receipt of the $300 million cash proceeds.
• Debt Elimination: Confirm the full repayment of the Term Loan Facility and the resulting reduction in interest expense.
• License Obligations: Assess the impact of the new $50 million annual guaranteed minimum royalty on future operating margins.
• Tariff Refunds: Monitor the status of potential refunds related to the invalidated IEEPA tariffs and their impact on working capital.
• Revenue Mix: Track the performance of the Licensing channel as it transitions from wholesale sales to royalty-based revenue.