Lands’ End, Inc. (NASDAQ: LE) reported first-quarter fiscal 2026 results on Tuesday, with revenue declining amid a temporary disruption related to distribution center upgrades, while management highlighted improving customer demand, strong European growth, and benefits from its recently completed partnership with WHP Global.
For the quarter ended May 1, 2026, the apparel retailer generated net revenue of $238.9 million, down 8.5% from $261.2 million in the prior-year period. The company attributed much of the decline to temporary operational challenges associated with implementing a new warehouse management system and a phased return to normal distribution capacity.
Management said that, excluding the impact of the disruption, the company believes it would have delivered low single-digit revenue growth during the quarter.
Customer Demand Trends Remain Positive
Despite lower reported sales, Lands’ End (LE) said consumer engagement improved during the quarter, with double-digit growth in customer traffic and stronger new customer acquisition trends.
The company’s European business was a standout performer, with eCommerce revenue rising 14.5% year-over-year to $20.5 million. Management credited the growth to a strategic shift toward a franchise-focused assortment that improved inventory efficiency and simplified operations.
Within the U.S. market, revenue from the Digital segment declined 9.9% to $205.1 million, while U.S. eCommerce sales fell 10.2% to $153.3 million. Outfitters revenue, which serves businesses and organizations through branded apparel and uniforms, declined 10.3% to $38.5 million, largely due to the warehouse-related disruption.
Third-party marketplace revenue decreased 5.7% to $13.3 million as the company continued prioritizing higher-margin sales channels over promotional volume.
Profitability Impacted by Operational Challenges
Gross profit declined 16% year-over-year to $111.5 million, while gross margin contracted to 46.7% from 50.8% in the prior-year quarter.
The company said margin pressure was driven by lower sales volumes, the impact of the new royalty structure tied to its WHP Global joint venture, and continued tariff-related costs.
Selling and administrative expenses increased to $126.5 million from $123.5 million a year ago. As a percentage of revenue, those expenses rose to 53.0%, reflecting lower revenue leverage and increased investment in digital marketing initiatives focused on customer acquisition.
Adjusted net loss improved to $3.5 million, compared with an adjusted net loss of $5.4 million in the prior-year period. Adjusted diluted loss per share improved to $0.11 from $0.18.
Adjusted EBITDA was negative $6.2 million, compared with positive adjusted EBITDA of $9.5 million a year earlier.
WHP Global Transaction Drives Reported Profit
Lands’ End reported net income of $330.7 million, or $10.56 per diluted share, compared with a net loss of $8.3 million, or $0.27 per share, in the prior-year quarter.
The significant increase was primarily driven by the previously announced transaction involving WHP Global, which generated approximately $300 million in cash proceeds.
The company used most of those proceeds to fully repay its term loan, significantly improving its balance sheet and reducing future interest expenses.
Financial Position Strengthens
Cash and cash equivalents increased to $23.1 million at quarter-end, compared with $18.1 million a year earlier.
Inventory levels rose 14% to $299.9 million, reflecting temporary distribution center impacts and higher costs associated with tariffs. Management expects inventories to become more closely aligned with revenue trends as operations normalize.
As of May 1, 2026, Lands’ End (LE) had $30 million outstanding under its asset-based lending facility and more than $104 million of available borrowing capacity.
The company also continued returning capital to shareholders, repurchasing approximately $0.3 million of stock during the quarter under its recently authorized $100 million share repurchase program.
Outlook
For the second quarter, Lands’ End expects revenue between $290 million and $310 million and adjusted EBITDA between $11 million and $14 million.
For the full fiscal year, the company forecasts revenue of $1.3 billion to $1.4 billion and adjusted EBITDA of $68 million to $78 million.
Management said the guidance reflects current tariff conditions and broader macroeconomic factors while assuming continued normalization of distribution operations.
Executives expressed confidence that stronger customer engagement, international growth, a more favorable capital structure, and benefits from the WHP Global joint venture will support improved performance throughout the remainder of fiscal 2026.