Lands End Revenue Falls 7% in Fiscal Q2

Key Points

• Revenue fell 7.3% to $294.1 million in Q2 FY2025 as core U.S. ecommerce sales declined.

• Gross margin improved to 48.8%, up 0.9 percentage points year over year.

• Management lowered full-year revenue and growth guidance for FY2025, citing the expected impact of tariffs.

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Lands' End (NASDAQ:LE), an apparel and home goods retailer best known for its digital-first operations, released its earnings for the second quarter of fiscal 2025 on Sept. 9, 2025. The release showed declining revenue and profit trends as online sales weakened, while gross margins improved primarily due to better promotional productivity and the expansion of the licensing business. Management revised its full-year outlook for FY2025 downward, reflecting ongoing top-line challenges and supply chain headwinds.

Overall, the quarter highlighted persistent revenue pressure and operational progress in inventory and margin management.

Source: Lands' End. Note: Fiscal 2025's second quarter ended Aug. 1, 2025. Fiscal 2024's Q2 ended Aug. 2, 2024.

Company Overview and Key Drivers

Lands' End mainly sells clothing, accessories, and home goods, with over 90 % of its business handled online. Its digital platform lets customers buy directly, giving the company a broad reach and strong data capabilities. The brand is widely recognized for quality, practical design, and customer service.

Recent years have seen it focus on strengthening its digital retail operations, improving supply chain efficiency, and expanding into business-to-business (B2B) uniform sales and third-party online marketplaces. The company’s success hinges on digital channel growth, inventory control, supply chain reliability, and the brand’s ongoing appeal to loyal customers.

Quarterly Performance: Financials, Segments, and Operations

Revenue for Q2 FY2025 was $294.1 million, a drop of 7.3% compared to the year-earlier quarter. The decrease mainly came from weakness in the core U.S. ecommerce business, which saw sales fall 11.2% as swimwear orders started later than usual. The wider U.S. digital segment, covering both direct consumer and business customers, dropped 5.6% to $255.3 million. Europe's ecommerce revenue declined by 14.8% amid supply chain disruptions and softer regional demand.

The Outfitters segment, which handles school and corporate uniforms, was a bright spot with net revenue up 5.1%. This growth came from new school uniform customers, as a competitor exited the market, and higher business uniform orders. Third-party sales -- products sold via online marketplaces like Amazon and Macy’s -- increased 14.3% due to focused product assortments and better exposure. Licensing revenue also rose by 19%, but the overall Licensing & Retail category fell 19.7% due to weaker performance in U.S. company-operated stores.

Gross profit margin improved to 48.8%, up 0.9 percentage points from the prior year, driven by careful discounting and growth in high-margin licensing agreements. Despite this improvement, dollar gross profit declined as overall revenue shrank. Operating costs fell to $129.4 million, but represented a higher percentage of revenue -- 44%, up from 42.7% -- due to the negative impact of lower sales on cost leverage. Adjusted EBITDA, which measures operational cash earnings before interest, taxes, and certain accounting adjustments, decreased 17.5% from Q2 FY2024, landing at $14.1 million.

The company reported an adjusted net loss of $1.9 million, or $0.06 per share -- worse than the $0.7 million loss a year earlier. Inventory dropped 3% to $301.8 million, marking nine quarters of sequential reductions, as it continued to focus tightly on supply chain management. Management highlighted that this discipline allows for quicker adaptation to external pressures such as tariff changes or shipping delays. Cash and liquidity tightened modestly, with cash on hand at $21.3 million and more drawn from credit lines, but the company ended the quarter with $87.6 million in available borrowings.

Management pointed to gross margin progress and inventory management as key positives, while noting headwinds in core digital performance and cost absorption. CEO Andrew McLean said, “tangible improvements in key product categories, channels, and customer engagement reinforce our confidence that our strategy of providing solutions for every customer journey is working.” However, the board’s ongoing review of strategic alternatives -- which could include a sale, merger, or similar outcome -- remains unresolved and adds uncertainty going forward.

Looking Ahead: Guidance and Key Areas to Watch

Management reduced its full-year outlook for both revenue and gross merchandise value (GMV) in FY2025, reflecting continued caution around consumer demand and expectations for international and U.S. channel performance. The updated guidance calls for net revenue between $1.33 billion and $1.40 billion, trimming the upper end previously provided. GMV is now expected to grow by “low to mid-single digit” percentages, according to the company, down from the “mid to high-single digit” range previously referenced. For Q3 FY2025, expected net revenue is in the range of $320 million to $350 million, with net income projected between $2 million and $6 million.

Uncertainties remain for the coming quarters, including the impact of ongoing tariff levels, continued supply chain friction in both domestic and international channels, and any developments from the board’s strategic review. The company did not announce any dividend for the quarter. LE does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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