Lands' End B2B and Marketplace Gains

Lands' End(NASDAQ:LE) reported second-quarter 2025 results on September 4, 2025, with revenue of $294 million, a 7% year-over-year (YoY) decline, and adjusted EBITDA of $14 million, down 18% YoY. Despite the revenue drop, gross merchandise value (GMV) was flat YoY, and management highlighted progress in channel diversification, margin improvement, and ongoing strategic review. The following insights detail the company's evolving business model, supply chain resilience, and B2B momentum.

Marketplace expansion drives Lands' End customer growth

Licensing revenue increased 19% YoY, and third-party marketplace sales grew 14% YoY, with Amazon and Macy’s partnerships delivering most new customer growth. These asset-light channels have become central to the company's distributed commerce strategy, reducing reliance on core e-commerce and enabling customer acquisition with minimal capital investment.

"In the second quarter, the B2C businesses were dominated by our licensing and third-party marketplaces, we continue to see vastly expanded reach resulting in a more balanced model that importantly, delivers over half of our new customer growth on virtually no capital investment."
-- Andrew McLean, Chief Executive Officer

This shift to diversified, capital-light distribution channels positions Lands' End to scale efficiently and mitigate risk from single-channel dependency, supporting long-term growth and brand reach.

Supply chain agility supports Lands' End margin gains

Gross margin improved by 90 basis points YoY to 49% in the second quarter, even as the company faced initial tariff headwinds. Management credited agile vendor renegotiations, external sharing of tariff burdens, and limited price pass-throughs to customers for this margin resilience.

"We have made a number of changes in our sourcing network. They have been very successful for us, and they have given us the nimbleness to move in and out of markets as tariffs come. And we have also worked with our vendors and narrowed the number of vendors. And that has given us the ability to share some of the burden with them. So we think about them for half of the tariff rise that we are seeing. Of the remainder, we are splitting that fairly evenly between internal changes we are making to address below-margin performance, and the rest is passed through as what I would say is a relatively small increase to the customer. And we will endeavor to make that the smallest number it can be. But I do not want to sugarcoat it that we can absorb the whole thing."
-- Andrew McLean, Chief Executive Officer

By leveraging supply chain flexibility and vendor partnerships, Lands' End is able to protect profitability and maintain pricing power, even in a volatile tariff environment.

B2B segments strengthen Lands' End revenue stability

Outfitters (commercial uniforms) and school uniforms, the company's key B2B channels, posted 5% and high-single-digit revenue growth YoY, respectively. Recent contract wins with enterprise clients and expansion in OCATEC (chemical safety certified) school products have improved contract duration and customer retention, differentiating the business from cyclical retail trends.

"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 durations that we have recorded during the second quarter. This side of the company's spin has been 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, Chief Executive Officer

The B2B segment's contract momentum and product differentiation provide Lands' End with a more predictable and defensive revenue base, supporting resilience against retail market volatility.

Looking Ahead

Management guided net revenue to $320 million to $350 million for the third quarter of fiscal 2025, with mid- to high-single-digit GMV growth, adjusted net income of $3 million to $7 million, and adjusted EBITDA of $24 million to $28 million. Full-year guidance projects $1.33 billion to $1.4 billion in revenue, low- to mid-single-digit GMV growth, adjusted net income of $19 million to $27 million, $0.62 to $0.88 adjusted diluted EPS, and $98 million to $107 million of adjusted EBITDA, including $25 million in capital expenditures. The board’s review of strategic alternatives remains ongoing, with no new disclosures provided during the call.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.