Lands’ End’s CEO Andrew McLean said he was proud of the team’s execution of its strategy, which focused on new product and “higher quality sales”.

The US-based apparel and homeware retailer said it successfully reduced its inventory, while improving profits, despite falling revenue in both FY 2023 (53 weeks ended 2 February 2024 and Q4 2023 (14 weeks ended 2 February 2024).

McLean added: “We ended the fiscal year with a strengthened balance sheet, supported by our recent term loan refinancing, positioning us to continue investing in the strategic growth and evolution of our iconic brand. We have entered fiscal 2024 with strong momentum and I am confident that we will build on our progress and drive meaningful value creation for Lands’ End’s shareholders and other stakeholders over the long term.”

FY 2023 highlights for Lands’ End

• Net revenue decreased 5.3% to $1.47m compared to $1.56m in FY 2022.
• Gross profit increased 5.3% to $625.5m, up from $593.8m in FY 2022.
• Adjusted EBITDA was $84.3m in FY 2023, up from $70.5m in FY 2022.

Net revenue from Lands’ End’s e-commerce business decreased by 2.7% in the US and 15.7% in Europe. Lands’ End said this was caused by “promotional productivity in key product solutions” as its improved inventory management resulted in higher margins with lower clearance inventory sales.

A deal with Delta Air Lines concluded in the first quarter of FY 2023, leading to a 1.5% increase in net revenue in Lands’ End’s outfitters business as the airline purchased inventory.

Adjusted net loss for FY 2023 was $4.8m, or $0.15 loss per diluted share compared to adjusted net loss of $7.7m or $0.23 loss per diluted share in FY 2022.

Q4 focus on inventory

In Q4 2023, Lands’ End delivered a 13.5% increase in gross profit, which it attributed to new products, transitional outerwear and adjacent categories and improved inventory management.

Lands’ End achieved a 29.1% reduction in inventory compared to Q4 2022, through “improved management”.

Q4 also saw a $5.1m decrease in year-on-year revenue from the company’s Delta Air Lines deal, which ended earlier in FY 2023.

Speaking on a call with investors, McClean said: “We were able to be nimble and disciplined throughout the holiday season, prioritising newness during what is a highly promotional period for our industry.”

What next for Lands’ End?

Lands’ End’s chief financial officer Bernie McCracken said: “We expect to continue to prioritise high-quality sales and improved cash flows, which we believe will enable Lands’ End to drive continued gross profit and margin expansion.

McCracken added: “When comparing today’s outlook to the prior year period, keep in mind that the first quarter of fiscal 2023 included the inventory sales from the conclusion of the Delta Air Lines contract, positively impacting revenue by over $25m and generating approximately $12m in adjusted EBITDA.”

In September 2023 Land’s End reported wider losses for the second quarter due to lower sales and increased expenses and costs.