Lands' End Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
September 9, 2025

Key Takeaways

  • Positive Sentiment: Lands’ End reported stable GMV year-over-year in Q2 and highlighted growing momentum across key product categories and channels, driven by its shift to an asset-light, distributed commerce model and expanding B2B contracts in travel, banking, and school uniforms.
  • Positive Sentiment: The licensing business grew 19% and third-party marketplaces rose about 14% in Q2, delivering over half of new customer growth with virtually no capital investment and strengthening brand reach on platforms like Amazon and Macy’s.
  • Negative Sentiment: Second-quarter net revenue declined 7% to $294 million, adjusted EBITDA fell 18% to $14 million, and the company recorded an adjusted net loss of $1.9 million, with European sales down 15% and a slower start to the swim season.
  • Neutral Sentiment: For Q3, Lands’ End expects net revenue of $320 million to $350 million with mid- to high-single-digit GMV growth, and full-year guidance targets $1.33 billion to $1.40 billion in revenue, reflecting current tariff mitigation efforts and $25 million in planned capital expenditures.
  • Positive Sentiment: Digital and social engagement showed strength, with Instagram followers doubling and social-driven website traffic up nearly 19%, supported by new AI-driven personalization and targeted catalog strategies to deepen customer loyalty.
AI Generated. May Contain Errors.
Earnings Conference Call
Lands' End Q2 2026
00:00 / 00:00

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Operator

Good afternoon, everyone. Welcome to today's Lands' End Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during our question-and-answer session. You may register to ask a question at any time by pressing star one on your telephone. Also, today's call is being recorded, and if you should need any operator assistance during the call today, please press star zero at any time. Now, at this time, I'd like to turn things over to Mr. Tom Altholz, Senior Director of Financial Planning and Analysis. Please go ahead, sir.

Tom Altholz
Tom Altholz
Senior Director of Financial Planning and Analysis at Lands' End

Good evening, and thank you for joining the Lands' End Earnings Call for a discussion of our second quarter 2025 results, which we released this afternoon and can be found on our website, landsend.com. I'm Tom Altholz, Lands' End Senior Director of Financial Planning and Analysis, and I'm pleased to join you today with Andrew McLean, our Chief Executive Officer, and Bernard McCracken, our Chief Financial Officer. After the prepared remarks, we will conduct a question-and-answer session. Please also note that the information we're about to discuss includes forward-looking statements. Such statements involve risks and uncertainties. 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, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

Tom Altholz
Tom Altholz
Senior Director of Financial Planning and Analysis at Lands' End

The forward-looking information that is provided by the company on this call represents the company's outlook as of today. We do not undertake any obligation to update forward-looking statements made by us. Subsequent events and developments may cause the company's outlook to change. During the 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 our earnings release issued earlier today, a copy of which is posted in the Investor Relations section of our website at landsend.com. With that, I'll turn the call over to Andrew.

Andrew McLean
Andrew McLean
CEO at Lands' End

Thanks, Tom. Good evening, and thank you for joining us. To begin today's call, I want to spend a moment talking about a key theme we've seen over the past several months, including over the course of the second quarter and, importantly, continuing into the third quarter. That theme is a noticeable increase in momentum across our business. Across our key product categories, channels, and engagement, we are seeing improvements that give us confidence that our strategy to serve our customers every journey is working. Our weatherproofed assortment that prioritizes newness and speed to market continues to resonate with customers, enables more high-quality sales, and deepens customer loyalty. Turning to the second quarter, we continue to reach new and existing customers across a broad base of channels as we have done in previous quarters.

Andrew McLean
Andrew McLean
CEO at Lands' End

We are engaging with them where and when they want to shop and providing considered merchandise stories that resonate individually and create leverage as we reposition the brand via a sophisticated distributed commerce model. Our increasing shift towards an asset-light, low-capital intensity model allows us to rapidly deploy newness to optimize customer engagement, and with GMV holding steady year-on-year, we're beginning to see the benefits of that work. In the B2B channel, our team built on their successes by deepening relationships in the travel and banking sectors, extending a number of our long-term enterprise contracts. Critically, we continue to invest in our brand.

Andrew McLean
Andrew McLean
CEO at Lands' End

Our deliberate strategy to weatherproof our assortment with solutions for life's every journey and deliver for our customers in any environment, while also enhancing speed across our supply chain, has enabled us to be nimble and react quickly, especially as we see buying patterns shifting to more worn-out items. In the second quarter, the B2C businesses were dominated by our licensing and third-party marketplaces, where we continued to see vastly expanded reach, resulting in a more balanced model that, importantly, delivered over half of our new customer growth on virtually no capital investment. With regard to sourcing, as you've heard us talk about over the past several quarters, we have been intentionally repositioning our sourcing network to better serve the business we are building, leading to a more balanced supply chain that enables us to bring new solutions to customers with more speed and frequency throughout the year.

Andrew McLean
Andrew McLean
CEO at Lands' End

For example, our licensed partners are becoming part of our sourcing network, allowing us low-lift access to their vendor networks, while also providing those same partners with leverage from the Lands' End sourcing footprint. Another consequential outcome of our updated sourcing strategy has been the ability to navigate tariff headwinds. By tapping into the full breadth of our sourcing matrix, we're able to swiftly and strategically reposition fabric and manufacturing as tariff conditions evolve. The resilience is there to see as we continue to deliver gross margin rates above last year in the quarter, even as we felt initial tariff headwinds. We feel confident that we have mitigated the near-term impact of tariffs for the remainder of fiscal 2025, especially with the majority of our fall holiday items already shipped. As Bernie will detail, this is reflected in our guidance. Turning to product, we had notable wins.

Andrew McLean
Andrew McLean
CEO at Lands' End

We launched a focused Lands' End Essentials line on Amazon, consisting of approximately 40 styles, providing access points to new and existing customers. The product, key item basics across Women, Men's, and Swim, is priced at the good end of our merchandising pyramid, gives a taste of the solutions Lands' End is famous for, and invites the customer to find the better-best assortment on our brand site. This Essentials product line is a perfect segue from our licensing product to our brand and is attracting new customers. In the brand channels, credit to the tote bag, where our ongoing efforts to collaborate and innovate, ranging in size from mini to maxi and in construction from canvas to straw, have allowed us to expand the assortment. We also added a customization package that is unique in the industry.

Andrew McLean
Andrew McLean
CEO at Lands' End

As seasonal buying habits are changing, we are benefiting from the work we've done to weatherproof our assortment, allowing us to deliver customers what they want, when they want it, be it swim for summer recreation or outerwear to battle the elements. Following a colder spring and slower start for swim, we saw momentum build throughout the summer as weather improved and experienced a strong August. Both Swim and Outerwear were top five items over Labor Day weekend, reflecting changing consumer tastes around weatherproofing. As a nod to Q3, our customers are responding positively to our on-trend assortment. Embroidered jeans are our best seller without the need to discount, and we have expanded our popular barrel-leg fit. We're pleased to report that these trends with our worn-out fall product are resonating strongly with customers, laying the foundation for a strong third quarter in these important franchise categories.

Andrew McLean
Andrew McLean
CEO at Lands' End

Turning to the performance of our various businesses, beginning with our B2B business. Our B2B business continues to set us apart from competitors and had a terrific quarter with growth in both top and bottom line performance. On the commercial uniform side, our focus on building scale and contract duration with our enterprise customers yielded significant results. This year, we have won and are extending contracts with several large clients, marking our highest growth in contract duration that we have recorded during the second quarter this side of the company's spin out in 2014. As we dial up this strategy, we expect to add other household names in our key industry sectors over the coming year. Our school uniform business had another strong quarter with revenue up high single digits, fueled by new customer wins.

Andrew McLean
Andrew McLean
CEO at Lands' End

We're continuing to win by leveraging the strength of our brand, our steadfast focus on quality, our market-leading embroidery and personalization capabilities, and our great customer service. Turning to our B2C business, our asset-light licensing business remains a significant growth vehicle for the Lands' End brand. We saw a particularly strong performance in the club stores with continued wins across Men's, Women's, and Kids categories, and the expected introduction of footwear in that channel later in the year. Lands' End remains a highly desirable brand with licensed partners reporting new interest from a number of distributors in both the department store and club channels. Our third-party marketplace business delivered strong top-line results, driven by performance in Macy's and a record-setting Prime Week on Amazon, where we launched the Lands' End Essentials line I mentioned earlier. This targeted approach continues to enhance discoverability, conversion, and drive brand equity across platforms.

Andrew McLean
Andrew McLean
CEO at Lands' End

Marketplaces are relatively low list, capital light, and fit neatly into our distributed commerce go-to-market model. Along with licensing, we see marketplaces as a compelling driver of continued growth in the reach and brand value of Lands' End. Importantly, it's where our consumer is shopping and where we are meeting those new to our iconic brand. Our U.S. e-commerce business continues its evolutionary journey as the central hub of our commerce strategy, representing the most fashion-forward, collection-oriented manifestation of the brand. We continue to elevate the site, creating a more immersive and experiential look and feel that best presents our collection to customers, existing and new. Our recent momentum, with a strong start to the third quarter, is positioning Lands' End as a trusted, high-quality brand with broad consumer appeal, especially among the all-important 35-50-year-old demographic. The website in both mobile and desktop showcases ever-greater levels of personalization.

Andrew McLean
Andrew McLean
CEO at Lands' End

Our deployment of our new AI-driven recommendation and outfitting engine makes it easier for customers to mix and match products. Additionally, we're driving more segmented and personalized campaigns, leveraging our SMS and email platforms, while expanding communications with AI agents, a rapidly evolving search sector. Social commerce is the final part of our distributed commerce platform. While we don't break out this segment and include it within our U.S. e-commerce results, it had a wonderful quarter, with our Instagram followers growing by over 100% since last year. Our total social traffic increased nearly 19% versus last year and nearly 60% in June and July versus last year. Reaching a new and younger customer, we created bespoke campaigns. For example, our Tote Girl Summer campaign.

Andrew McLean
Andrew McLean
CEO at Lands' End

Offering our iconic pocket tote with personalization options at a series of pop-up shops in popular summer destinations, we continue to attract new customers at a rapid clip, and the tote remains our number one new-to-brand acquisition product. Europe showed improvement during the second quarter, with revenue declines beginning to moderate as we became more effective sellers and positioned the brand to build on the distributed commerce success that we are seeing in the U.S. Specifically, we launched the French language website with limited discounting and a more evolved look and feel. In addition, we began to elevate the look and feel of the German and U.K. sites, collaborating with more premium partners like SheerLuxe and Secret Escapes. For fall holiday, we plan to launch several designer collaborations as part of that reposition.

Andrew McLean
Andrew McLean
CEO at Lands' End

As with the U.S., we look to asset-light, low-list launches to broaden our reach, including opening on Amazon, Debenhams, and Next, with results significantly ahead of expectation. Europe will continue to be a test bed for us, and while each market has its own dynamics, we're committed to building a global brand and view the halo that these markets can provide Lands' End as invaluable. I'll now turn it over to Bernie to discuss our second quarter performance in more detail.

Bernard McCracken
Bernard McCracken
CFO at Lands' End

Thank you, Andrew. For the second quarter, total revenue performance was $294 million, a decrease of 7% compared to the second quarter last year, and GMV was approximately flat year-over-year. Licensing and our presence across our third-party marketplace partners continued to help the business diversify and reduce risk from any one business unit, product, or partner. Our U.S. e-commerce business saw sales decrease 11% compared to the second quarter of 2024. The decrease was largely driven by the slow start to the swim season, and as Andrew discussed, we saw strong swim results through Labor Day, which we have incorporated into our third quarter forecast. Our third-party marketplace business grew approximately 14%, with year-over-year growth across our marketplaces.

Bernard McCracken
Bernard McCracken
CFO at Lands' End

We were very pleased with our performance in Macy’s and Amazon, and we believe improved performance at Kohl’s has positioned the marketplace business well for the back half of the year. Sales from Lands' End Outfitters increased 5% from the second quarter of 2024. Sales from our school uniform channel increased high single digits, driven by our acquisition of new school accounts. Revenues from the business uniform channel were up year-over-year, driven by our enterprise accounts. Sales in Europe decreased 15% year-over-year, primarily due to supply chain challenges on key seasonal products and broader macroeconomic pressures. However, we are encouraged by the early progress from adding additional channels and expect this business to improve in the back-half of the year. Revenue from our licensing business grew 19% year-over-year, reflecting the continued momentum of our licensing program.

Bernard McCracken
Bernard McCracken
CFO at Lands' End

This growth was fueled by increased brand visibility from existing licensees, further expanding our reach and impact. Gross profit decreased by 6% compared to last year. Gross margin in the second quarter was 49%, an approximately 90 basis point improvement from the second quarter of 2024. The margin improvement was driven by continued strength in full-price selling across key categories and expansion of our licensing business. SG&A expenses decreased by $6 million year-over-year. As a percentage of net revenue, SG&A increased 130 basis points, primarily driven by deleverage from lower revenues. For the second quarter, we had an adjusted net loss of $1.9 million or $0.06 per share. We delivered adjusted EBITDA of $14 million in the second quarter, representing a year-over-year decrease of 18%.

Bernard McCracken
Bernard McCracken
CFO at Lands' End

The decrease was driven by initial tariff headwinds, Europe e-commerce performance, and the slow start to the swim season, partially offset by marketplaces, licensing, and outfitters. Moving to our balance sheet, inventories at the end of the second quarter were $302 million, down 3% compared to last year, reflecting disciplined inventory management and proactive measures to mitigate tariff impacts. In terms of our debt, at the end of the second quarter, our term loan balance was $241 million, and our ABL had $35 million of borrowings outstanding. Total long-term debt was flat to last year. During the second quarter, we repurchased $2 million of shares under our $25 million share repurchase authorization announced in March of last year, bringing the balance of the remaining authorization to $9 million as of the end of the quarter. Now moving to guidance.

Bernard McCracken
Bernard McCracken
CFO at Lands' End

Our guidance includes the impact of tariffs at the current implemented rates. We are implementing mitigation measures to effectively manage the tariff headwinds at current levels for the remainder of fiscal 2025. For the third quarter, we expect net revenue to be between $320 million-$350 million, while GMV is expected to be mid to high single-digit growth. Adjusted net income of $3 million-$7 million and adjusted diluted earnings per share of $0.10-$0.22, and our adjusted EBITDA to be in the range of $24 million-$28 million. Turning to full year, we now expect net revenue to be between $1.33 billion-$1.40 billion, while GMV is expected to be low to mid-single-digit growth.

Bernard McCracken
Bernard McCracken
CFO at Lands' End

Adjusted net income of $19 million-$27 million and adjusted diluted earnings per share of $0.62-$0.88, and our adjusted EBITDA to be in the range of $98 million-$107 million. Our guidance for the full year incorporates approximately $25 million in capital expenditures. With that, I'll turn the call back over to Andrew.

Andrew McLean
Andrew McLean
CEO at Lands' End

Thanks, Bernie. I want to thank Lands' End's employees for their hard work and dedication during the quarter. With their support, we have created a truly distributed commerce retailer with the reach to deliver for customers existing and new across channels, geographies, and categories. Looking ahead to the third quarter, we are seeing broad strength across all categories in our U.S. business, building on our custom momentum and the trends we saw develop over the course of the second quarter. Our sales and margin over Labor Day weekend were the best we've had in the last decade, bringing significant new to file sign-up. As I mentioned earlier, this reflects the intentional work we've done to weatherproof our business and ensure our customers have what they want when they want it. It also underscores the strength of our strategy to be promotional around holidays while maintaining full-price selling in between.

Andrew McLean
Andrew McLean
CEO at Lands' End

Finally, the board's previously announced process to explore strategic alternatives remains ongoing. We will not be commenting further on it at this time, and we will provide an update once appropriate. With that, we look forward to your questions.

Operator

Thank you very much. Ladies and gentlemen, at this time, if you would like to ask a question, please press star one on your telephone. If you find your question has been addressed, you may remove yourself from the queue by pressing star two. Once again, star one for questions. We'll go first this afternoon to Dana Telsey of the Telsey Group.

Dana Telsey
Dana Telsey
CEO and CRO at Telsey Advisory Group

Hi. Good afternoon, everyone, and nice to hear about the progress. Andrew, the acceleration in momentum on the top line that you're talking about, frankly, into the third quarter now, what are you seeing by product category? How much of it is lower promotions? Given the tariff environment, have you taken price? It sounds like the Lands' End Essentials is a new opportunity. What are you seeing that's driving the business? How is the margin and price points relative to the rest of the mix? Thank you.

Andrew McLean
Andrew McLean
CEO at Lands' End

Hey, thanks, Dana. It's nice to hear from you. We've really been progressing the business towards a distributed commerce model over the last 12 months. In fact, we saw this with our customers' shopping habits as we've sort of moved from our very traditional customer, our resolver, to our revolver. I know I've talked about that on previous calls. We started to actually look at where the customer was shopping, and quite a lot of the work we did around working with AI agents took us down this path where we started to see customer habits are changing. Customers are migrating to different channels. There are new customers to tap into. It became clear to us that we had opportunities that lay beyond just a traditional brand site. The brand site won't always be the alpha to us. It's going to be the most fashion-forward version of the brand.

Andrew McLean
Andrew McLean
CEO at Lands' End

It's going to be the most complete version. We know that those customers are shopping. We see within our, let's just talk marketplaces from the distributed model, we see that there's an Amazon customer who wants a price point. By really focusing in on a couple of handfuls of SKUs, we put ourselves in a position that we can really lean in, put the marketing behind those SKUs, and reach them at price points that matter. We think we can build a significant business. Our Q3 numbers have been absolutely astonishing, actually, as we've lent further into this. What we're seeing is a tremendous amount of those customers then migrate to see the full assortment on landsend.com. We think that there's a flywheel effect that's going to be happening and that will continue to accelerate and spin the business forward as we see that momentum continue.

Andrew McLean
Andrew McLean
CEO at Lands' End

I would just note that at the top end of that, we have Macy's and Nordstrom, where we sell some of the highest price points that we have in the company. Our AOVs have been somewhat astonishing. We see that as we're reaching the top of our merchandise pyramid. Again, we're putting the product where we see a certain customer, and we're matching that product to the customer all the better. Now we're able to manage promotions differently against each of those. In fact, one thing I want to call out, I think the team's done a great job on this, is we built an AI engine that basically creates product display pages, PDPs, and it will build language that's appropriate to each page. If you see a product that's on landsend.com, how the page materializes by the time you get to Amazon, it will read differently.

Andrew McLean
Andrew McLean
CEO at Lands' End

It will read more appropriate to the Amazon bots and AI search tools, and it will read differently and probably more elevated in all candor to a Nordstrom customer. We're starting, we're being much more thoughtful about how we address each of these segments. In terms of the category conversation that's out there, we've seen strength across all categories. The second quarter was definitely, there was momentum all the way through it. Slower May with swim, which is really important to us. It's a third of the business in May. What we saw was that built in June, it built in July, and then interestingly, it built into August.

Andrew McLean
Andrew McLean
CEO at Lands' End

What I'm starting to see is that the strategy that the designers and merchants put in place around weatherproofing has been incredible for us because we are able to sell to the customer when they want it, not just where they want it. It was something I'd not seen in the company's history before over Labor Day weekend, where we had both Swim and Outerwear as top five categories, which was new to us. That was relatively full-price selling because, again, we're trying to meet more of the discounting in different channels. It's like having the customer on landsend.com with something more premium, we were able to manage markdown around that. You asked me about tariffs and are we handing anything on to the customer? I'm going to be honest, yes, we are. As little as we possibly can.

Andrew McLean
Andrew McLean
CEO at Lands' End

We look at our tariffs and the view we took for 2025, which is in the guidance, and into 2026, is that we're making a number of changes. We've made a number of changes in our sourcing network. They've been very successful for us, and they've given us the nimbleness to move in and out of markets as tariffs come. We've also worked with our vendors and narrowed the number of vendors. That's given us the ability to share some of the tariff burden with them. We think about them for half of the tariff rise that we're seeing. Of the remainder, we're splitting that fairly evenly between internal changes that we're making as we get after our below margin. The rest of it is going through to what I would say is a relatively small increase to the customer. We will endeavor to make that the smallest number it can be. I don't want to sugarcoat it, but we can absorb the whole thing. I think I got everything in there. I'm happy to go back to it if you've got more.

Tom Altholz
Tom Altholz
Senior Director of Financial Planning and Analysis at Lands' End

Dana, the only thing that's on the product categories would be that, you know, one of the exciting things for us is as people are shifting their timing on purchases. Whilst we noted that swim was a little bit later swim season, it's a little bit of a negative for Q2, but it's actually been a nice tailwind to start Q3 as that swim kicks in. When Andrew was talking about essentials, it's a smaller part of our business, but it's been really a big lift in its early days in both Amazon and the other places that we're putting it.

Dana Telsey
Dana Telsey
CEO and CRO at Telsey Advisory Group

Thank you.

Operator

Thank you. We go next now to Eric Beder of SCC Research.

Eric Beder
Founder and Head Analyst at SCC Research

Good afternoon.

Tom Altholz
Tom Altholz
Senior Director of Financial Planning and Analysis at Lands' End

Afternoon Eric.

Eric Beder
Founder and Head Analyst at SCC Research

Could you talk a little bit about the flow of licensing here? I know that the first-half had kind of a little bit of push and take because you were shifting licensing from a category you previously had into a licensing category. What are we going to see in the back-half in terms of potentially now becoming expanding the categories beyond what you've done before with the licensing mechanism?

Andrew McLean
Andrew McLean
CEO at Lands' End

Hey, Eric, I'm going to take the front half, and then I'll let Bernie take the back-half. We're up 36% on our licensing revenues, and that's a number you'll see in the queue, but I really wanted to call that out. We continue to look at how we will drive the business forward in the back-half with that. I mean, the back-half, we think that there is upside to it, because there are new licenses. On top of that, we get into the holiday season, and it's like we were really still sort of in our infancy last year on this. We see tremendous upside opportunity. Actually, the sky's the limit in terms of the licenses we can go after. We've been a little slower for some reasons this year. I think as we get into the future, we see opportunity to accelerate those number of licenses.

Tom Altholz
Tom Altholz
Senior Director of Financial Planning and Analysis at Lands' End

Yeah, what I would add to that, we started the year, the licensees started the business in early last year. There's a ramp-up for those. What we're starting to see as we hit the back half of this year is them accelerating. Our current licensees are accelerating to their full potential. We'll get that benefit in the back half of this year while we also have the new licensees starting to build their program. We'll get the benefit next year of them building up to full potential.

Andrew McLean
Andrew McLean
CEO at Lands' End

One of the leverage points that I find really interesting is as we go down this path, and I've done this before in my career, which is to pull the licensees to get the licenses together and go to a big customer, you know, a big department store customer, and really, you know, have them all present as a complete house of Lands' End. In doing that, it's very powerful to have that leverage. As we negotiate into that, we see that as an amplification of licenses that wasn't originally anticipated in what we were laying out the business model, but it is now. It became very obvious as we went further into this. We see upside here.

Eric Beder
Founder and Head Analyst at SCC Research

Great. When you're looking at outerwear, last year you shifted and continued to shift the outerwear to more wear now and thinner and kind of not as heavy product. That was a big success. What should we be thinking about how you're going to handle outerwear this year? Obviously, it seems like it started out pretty well on Labor Day.

Andrew McLean
Andrew McLean
CEO at Lands' End

Oh, Eric, I was in product meetings all morning, and you should see like the outerwear that's to come. It's absolutely darling. In as much as I want to give you the full entry, and I will, I mean, I'd point you to some of the new products that we have out there around Squall in particular. I will send you the PDP of the rain jacket. You will see a couple of things. You will see new product, new innovation, and you will see new PDPs that really speak to how the customer wants to shop. The PDP almost in its own way acts as a landing page for the brand. It's like, there's incredible use of imagery. There's incredible use of storyline in there. Actually, we lean heavily into customer reviews.

Andrew McLean
Andrew McLean
CEO at Lands' End

Part of why I was loving the product so much this morning is the team were showing me early reviews on it, which are many of them five star. We see it from our resolver and our revolver customer, and we know when both of those are loving the product, that it's going to be a home run. I don't think you're necessarily going to see new new franchises being added, but I think you'll see those franchises being deepened. I'm not going to give you the whole story. You're going to have to wait to see some of it because we've got some astonishing product coming up.

Eric Beder
Founder and Head Analyst at SCC Research

Great. Last question. When you look at the catalogs, there's been an increasing focus on events and lifestyle and driving kind of multiple purchases for that. When you look at your customer base, that 35-50-year-old customer is your focus. How has been their response to that versus kind of the prior core? Are you seeing those customers continue to increase on the price in terms of percentage of buying all pieces? Thank you.

Andrew McLean
Andrew McLean
CEO at Lands' End

Yes, we continue to see the evolve. A 35-50-year-old new-to-file customer is coming to the brand, and they are buying across product categories and buy a bigger basket. It has been an incredibly successful strategy for us to lean into that versus the more traditional resolver customer who tends to come back and buy something that's worn out or to stick with one, as in one particular category. They just may be a swim customer, and that's who they're going to be. We're starting to see behavior of new cohorts, resolvers with, you know, evolver tendencies. We are starting to break down that barrier. What we have done with catalogs, and in particular, as we came into Q3, we were extremely thoughtful about this.

Andrew McLean
Andrew McLean
CEO at Lands' End

We really leaned in with our data scientists and began to be thoughtful about the particular kind of catalog that goes to a five-times shopper, which is effectively a resolver for us at this point, versus a customer we're trying to encourage to a second purchase because we know recency is very important to us. Actually, we began to segment the file more to chase after lapsed customers. We know there's a tremendous amount of value in there. We've begun actually with the catalog to prospect again after a number of years of not using the catalog to prospect and relying probably a little too much on performance marketing because I think performance marketing, it's under pressure in any case from AI agents. I think it has a tendency to be more transactional versus emotional. We find that, you know, we can handle transactional better on, say, Amazon.

Andrew McLean
Andrew McLean
CEO at Lands' End

That's a better place to be with that kind of customer purchase decision. For us, the catalog is, I think it's fair to say we've taken the catalog on the offensive this quarter. I think you're going to see more and more of that from us. Actually, you just might get different catalogs sent to you. I'll give you a very good example. Our traditional customer, that resolver, she likes to see red lines. What do I mean by that? She wants to see awards of his pricing. Our evolver doesn't want to see that. You might find that you get a different catalog depending on how we've evaluated you as a customer. We will continue to lean into this. The data science behind this is fascinating. Hopefully, we can spend some time walking you through it when you visit next.

Eric Beder
Founder and Head Analyst at SCC Research

Okay, good. Look forward to it. Thank you.

Operator

Thank you. We'll go next now to Steve Silver of Argus Research.

Steve Silver
Steve Silver
Senior Equity Research Analyst at Argus Research

Thanks, operator, and thanks for taking my questions. It's great to hear the progress in the Outfitters' business. It sounds like there might be some new opportunities to be announced over the course of the rest of the year. I am just curious as to your view of the state of the pipeline in outfitters broadly. Maybe if you can just put into some context how many prospects may be in more advanced stages of conversation at any point in time.

Andrew McLean
Andrew McLean
CEO at Lands' End

Yeah, thanks. How's it going, Steve? It's nice to hear from you.

Steve Silver
Steve Silver
Senior Equity Research Analyst at Argus Research

You as well.

Andrew McLean
Andrew McLean
CEO at Lands' End

We break it up into, when we break outfitters out into several buckets. I'm just going to start with school. We're very deliberately targeting growth in school. We have found that the product that we bring to market is OEKO-TEX certified, and that means that there's absolutely nothing bad in it. We find it to be very competitively priced, and it's something none of our competitors can do. We have a competitive advantage that we can lean in and go after progressively more schools from large to small. We've really tasked our team to grow that business. I would say not just because one of our competitors fell out last year, but because of our own doubling down and having a better go-to-market strategy, where we see opportunity to pick up those schools.

Andrew McLean
Andrew McLean
CEO at Lands' End

I tend to think about adding schools in anywhere from about $0.5 million-$3 million buckets, given the size of those. Opportunity in there with multiple customers. I think when it gets into the commercial uniforms business, I'm going to split it in two just to simplify over here all night. There's the smaller customers. We have completely rebuilt our experience for smaller customers, and it's starting to pay dividends for us. The site, which in my opinion had become extremely sort of B2C focused and was more category-driven, is now about the emphasis of differentiation and what we can bring to your business. The other part is we've done, we changed our IT philosophy to be more about sprints and sort of like longer projects. We're delivering continual upgrades, and that's allowing us to be much more focused on getting turnaround for the customer in there.

Andrew McLean
Andrew McLean
CEO at Lands' End

I would say that it doesn't stop there because what we tend to find is many big companies who may well become the second group, which is our enterprise accounts, tend to start off by shopping as small. We can use that to prospect quite heavily. In terms of the enterprise accounts, I've got so much good news in there, but I'm really not in a position to share it. Obviously, on the last call, we talked about winning Delta back, and we're extremely proud about that. Our team just got back from Italy, where they had been with Delta assessing uniforms for the future. There's a lot of goodness to come from that. I would say that the impact of bringing a Delta back is not lost on other airlines out there. I'm going to leave it at that.

Andrew McLean
Andrew McLean
CEO at Lands' End

In financial services, we continue to dominate. The big play for us is going to be now building adjacent categories. One of the adjacent categories we really like is in the healthcare industry. I think you'll see us start to add that category more consistently and carefully. I just don't want to blanket everyone everywhere. Lands' End does better when it focuses on something and decides to win. That's how we work as a team.

Steve Silver
Steve Silver
Senior Equity Research Analyst at Argus Research

That's helpful. Thank you so much. One last one, if I may. You cited some progress in Europe with the narrowing of the declines there, also the implementation of new websites in some key European markets. I'm curious if you could put some context around the expectations for completing the turnaround of the European business and moving to something of more of a contribution to the overall business.

Andrew McLean
Andrew McLean
CEO at Lands' End

Yeah, that's a great question. You know, usually, I'm in Europe testing out ideas, good, bad, or indifferent. One idea that we're taking from the U.S. that's really important to us is this distributed commerce model. Just so we're on the same page, I mean, it really allows the customer to purchase directly from where they're browsing. We're meeting customers where they are rather than waiting for them to come to the brand site. That might be social media, it might be from online articles, it might be from smart devices, and it could be from marketplaces. We are working our way into social media, we're working our way into marketplaces, and I think I want to put emphasis on the marketplaces because Europe's retail has always been more marketplace-driven than in North America. That's an area of growth for us.

Andrew McLean
Andrew McLean
CEO at Lands' End

We opened Next, we opened Debenhams, we opened Amazon, and we've seen terrific starts to each of those. I think you'll see us continue to grow those and take from the strategy that's been already really successful in the U.S. I think that's focusing around product that's appropriate to that channel and product that is priced appropriately and narrow assortments that then encourage you to be curious about coming back to see either landsend.co.uk or the German site or actually the French site. That's the first part of it. In terms of the sort of brand sites themselves, the U.K. is in pretty good shape. I think we turned the corner there. We understood the U.K. consumer, and we've made inroads with them. I think we've got the product assortment right.

Andrew McLean
Andrew McLean
CEO at Lands' End

Right now, the area we're working on, and again, it was a meeting I was in earlier today, is to get focused around our German resolver customer. The evolver customer we've got nailed. It's about now working on the resolver customer, and that arguably is going to come through catalog. We are spending time working out, taking this, taking excuse upon a page out of what we've done in the U.S., and then working out how we can use the catalog as an effective tool to engage with that resolver German customer. That will bring us fully back to where the brand is contributing from Europe. I'm absolutely committed to it because the halo that we will get from Europe is key. The last point I will make on this, particularly to reach our evolver customers, watch for a couple of really powerful collabs coming.

Andrew McLean
Andrew McLean
CEO at Lands' End

The collab model that we've had, really, this is the success of the tote bag in the U.S. has created a halo for the brand everywhere. We're taking that on the road, and we're now going to be doing that in Europe. I would love to share who those collabs are for, but I think my team in Europe would be really, really upset with me. I'm going to stay quiet and watch this space.

Steve Silver
Steve Silver
Senior Equity Research Analyst at Argus Research

Great. Thank you so much for the call, and best of luck in the second half.

Andrew McLean
Andrew McLean
CEO at Lands' End

Hey, thank you. Take care.

Operator

Thank you. Gentlemen, that was our final question for today. That will bring us to the conclusion of today's Lands' End Earnings Conference Call. Again, everyone, we'd like to thank you all so much for joining us this afternoon and wish you all a great remainder of your day. Goodbye.

Executives
    • Andrew McLean
      Andrew McLean
      CEO
    • Tom Altholz
      Tom Altholz
      Senior Director of Financial Planning and Analysis
    • Bernard McCracken
      Bernard McCracken
      CFO
Analysts
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