Good day, everyone, and welcome to today's Lands' End 4Q Fiscal Year 2024 End Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note today's conference is being recorded. It is now my pleasure to turn the conference over to Tom Altholz. Please go ahead.

Good morning, and thank you for joining the Lands' End earnings call for discussion of our fourth quarter and fiscal 2024 results, which we released this morning 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 Bernie McCracken, our Chief Financial Officer. After the prepared remarks, we will conduct a question-and-answer session. Please also note that the information we are about to discuss includes forward-looking statements. Such statements involve risk and uncertainties. The Company's actual results could differ materially from those discussed on the 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. The forward-looking information that is provided by the Company on this call represents the Company's outlook as of today, and we do not undertake any obligation to update the forward-looking statements made by us. Subsequent events and developments may cause the Company's outlook to change. During this 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 will turn the call over to Andrew.

Thanks, Tom. Good morning, and thank you for joining us today. We are proud of our fourth quarter and full-year 2024 results, which reflect our successful and deliberate evolution of Lands' End into a modern, digitally-focused, forward-looking brand that's ready for life's every journey. Our North Star is an obsession with providing our customers with fresh and relevant solutions based products and engaging with them in a highly personalized manner, utilizing industry-leading capabilities. This approach helps them understand and deepen their relationship with Lands' End. By the numbers, the strong execution of our strategy enabled us to deliver on our fourth quarter commitments. We achieved low single-digit GMV growth on a like-for-like quarterly basis. Our sixth consecutive quarter of growth in gross profit dollars up 3% year-over-year. Our eighth consecutive quarter of gross margin expansion up approximately 760 basis points year-over-year. Adjusted EBITDA of $44 million up 38% year-over-year and adjusted net income of $18 million and adjusted EPS of $0.57 up 120% year-over-year. Our fourth quarter performance was key as we closed out the full-year, delivering mid single-digit GMV growth with net revenue of $1.36 billion on a like-for-like basis. Gross margin improvement of 550 basis points to 48% compared to 43% in fiscal 2023 with year-over-year increases in each quarter throughout the fiscal year. Adjusted EBITDA of $93 million, a year-over-year increase of 10% and a substantial increase in net income and return to profitability with adjusted net income of $30 million or $0.40 per share, when combined with our balance sheet improvements of growing high single-digit ROIC. I'm pleased with our successful evolution of the Lands' End business model. In particular, the outstanding performance of our licensing segment demonstrates the strength of the strategic initiative and further demonstrates its remarkable potential. Licensing is fueling significant expansion of…

Thank you, Andrew. GMV increased low-single digits on a like-for-like basis for the fourth quarter of 2024, primarily driven by the ongoing successful execution of our licensing strategy. For the fourth quarter, total revenue performance came in at $442 million, a decrease of 14% compared to last year. When excluding the impact of the 53rd week and the transition of kids and footwear products to licensing arrangements, total revenues decreased by mid-single digits year-over-year. Gross profit increased by 3% compared to last year, driven by our eighth straight quarter of gross margin expansion. Gross margin in the fourth quarter was 46%, an approximately 760 basis point improvement from the fourth quarter of 2023. The margin improvement was driven by newness across the assortment, lower promotional activity and fewer clearance sales. We delivered adjusted EBITDA of $44 million in the fourth quarter, a year-over-year increase of 38%. These revenue and profitability results reflect our continued efforts to prioritize less promotional, higher quality sales over sales volume, which has translated to consistent gross profit margin improvement throughout our business. Before moving into the discussion of our performance across different lines of business, we want to note that consistent with segment reporting requirements, our forthcoming 10-K will include new segment level reporting based on business units with similar characteristics. There will be more detail to share in the 10-K, but for the purpose of consistency on today’s discussion, we are continuing to provide detail about our business units rather than the broader segments. Our U.S. E-commerce business saw a sales decrease of 19% compared to the fourth quarter of 2023. Excluding the impact of the 53rd week and kids and footwear, U.S. E-commerce sales decreased mid-single digits year-over-year. Sales from Lands' End Outfitters was down 2% from the fourth quarter of 2023 when…

Thank you, Bernie. With a successful 2024 behind us, we have now turned our attention to 2025 and beyond with clear strategic goals and priorities. GMV growth supplemented by a return to growth in revenue, speed-to-market allowing us to control inventory and drive enhanced margins and increased ROIC. SG&A leveraging as we grow, including by delayering the organization and utilizing new technologies. Marketing leverage, driven by a careful consideration of the balance between catalog and digital spend and an emphasis on leveraging technologies like AI-driven personalization and driving increased adjusted EBITDA. Within our business, we will continue our focus on increasing our asset-light licensing business to grow and enhance our brand, solutions oriented products that customers love to power the whole company, our Uniforms business to aggressively continue developing meaningful long-term partnerships and marketplace specialization to forge winning partnerships to extend the reach of our brand. As we close out the year, I want to thank all Lands' End's employees for their tireless work and dedication to this iconic American brand and to our loyal customers who depend on us to be there for life's every journey. Because of their hard work and the strong execution of our strategy, 2024 was a pivotal year and our successes set up Lands' End for a bright future ahead. Lastly, earlier this month, we announced that the Board of Directors has initiated a process to explore strategic alternatives, including a sale, merger or similar transaction involving the company to maximize shareholder value. Because the review is ongoing, we will not be commenting further on it at this time and will provide an update once appropriate. We look forward to your questions.

Thank you. [Operator Instructions] We'll take our first question from Dana Telsey with Telsey Group. Please go ahead.

Hi. Nice to see the progress on the year. Andrew, it seems like the business is becoming more asset-light as the potential to continue to increase the adjusted EBITDA and profitability. As you see the growth from licensing and now the entry into Amazon in a bigger way and we are seeing what’s happening with the health of the consumer, how do you frame what the cadence of the year could look like in terms of sales? And as you think of the other business lines, whether E-commerce – the U.S. E-commerce business, how are you seeing that develop in terms of where we could see the rate of growth going forward? And does pricing come into any play given the headwinds of what we’ve been seeing from tariffs? Thank you.

Thanks, Dana. Great set of questions. I look at February, which is the month I think we’ve all been through, there’s been a lot of conversation on it. And I look at the performance of really some of our product because it was a colder February, I’ve been talking for the last couple of years about weatherproofing the assortment and we really leaned in on our outerwear and our fleece for February and we’re able to drive that. And in fact, as we came through, we see that’s a record on a record in terms of the comps that we’re driving out of that business and some of the franchises I pull out of that would be feather free. We saw the customer really lean in. They like that. They like being in that product. It’s a great price point. It’s a lower price point than Wanderweight, which is the down fill that we have, but we’re able to pull through. And I think that’s going to characterize the year. We’re merchants fundamentally. And for us, the whole industry, it’s about being able to take our assortment and manage it in the best way possible against everything that gets thrown at you. And that’s what we’re going to continue to do in every channel we’re in. I appreciate you picking up on the asset-light licensing business and we are continuing to lean into that. We see significant opportunity there. For Lands' End, it really becomes about creating a flywheel effect where the more physical representation that we can have of the brand in some of these channels and actually some of the better product that we can get into because we don’t have the resources ourselves, the more we can put ourselves in front of a new customer in a…

And then Dana, Bernie, and I will lean into the tariffs a little bit. As you know and we’ve talked about in the past, we are not heavily risked in China. It’s less than 8% of our buy. So our guidance incorporates the impact of already implemented tariffs at this point.

And I’ll just give you the product sensibility on that. It will mean less Cashmere in our lineup, but that doesn’t mean we’re walking away from it. We’re replacing it with Merino. We’re replacing it with cotton fiber that we can get out of other markets. It’s again that notion of you have your business, you have issues that come up, you have headwinds, you have tailwinds, we manage in and we manage through.

Thank you.

Thank you. And our next question will come from Marni Shapiro with Retail Tracker. Please go ahead.

Congrats on all the improvements. I have to just call out, you’ve done and Andrew, you know I’ve been obsessed about this and I love the new straw tote bag. You’ve done an exceptional job with pop-up social media getting in this younger customer, taking advantage of a moment out there. I guess how do you move those customers, these younger customers coming in from tote bags into your other segments? Like what’s the next obvious move? You have a couple of very iconic segments in your house. And then just on licensing, if I could ask a follow-up. As you continue to extend the licensing, at the same time, you’re improving and elevating the core Lands' End brand. Do you have very strict guardrails around the marketing that others are doing with your licensing? What does that look like?

Yes, I’ll start with the licensing. And good morning, Marni. It’s nice to have you on the call. I have a big background. I mean, you know my past history, I mean, I’ve licensed with Urban Outfitters, I’ve licensed with American Eagle. And for me, it’s really about leaning in and having a very tight agreement so that you have approval over the product, you have approval over the manufacturing, and you have approval over where it’s going to be sold. And so we contractually obligate our partners on that. And I wouldn't do anything that put our customer or our brand positioning in jeopardy because from my perspective, and I truly believe this, the customer doesn't know that they're dealing with a licensee. As far as they’re concerned, they’re dealing with Lands' End. And so it should always be representative. And actually, one of the things and it is a point of difference for us, and that’s been intuiting this as I’ve gone along. It’s been in the back of my mind, but it’s really come to the fore because we sell all the products on our website. So we have the licensees consign their inventory, we’ll sell it out of our own distribution facilities. We’re able to see exactly what the quality of the product is and we’re able to run it through our own QC processes. We’re able to read the customer feedback from the site. And so it gives us that extra control point, a lot of license source don’t necessarily get. So there’s a real value add in there. You’re right about the pop-ups. You’re right about the social media. And I’m going to just note it because it was a great fact. When we did the Katie Holmes photoshoot, we got 7.1 billion impressions…

Yes. There’s a lot of, I would say, nostalgia is a huge theme out there in general with the consumers and I feel like people have a lot of nostalgia for this brand. So best of luck with the spring season.

Okay. Thanks, Marni. Take care.

Thank you. We’ll take our next question from Eric Beder with SCC Research. Please go ahead.

Good morning. In terms of the licensed product, can we get kind of a feel for how it’s going to flow? I know last year you launched shoes and there was an in between period where there weren’t shoes. I’m assuming we’ve been kind of in that in between period I believe now with kids. When are we going to see kids start to come into your catalog and rollout through there? And in terms of the wholesale and other pieces, when are we going to start to see some of these products, the license products roll in?

Kids and shoes are already there. So there in the market, you will see home on Amazon with our license partner comes the back half of the year. And in addition to that, you’ll see our licensed partner in Kohl’s and also in Target with Swim as we get later into the year. So those are the biggies. In terms of the licenses that we’ve discussed, I talked about men’s underwear, I talked about women’s intimates, I talked about socks and hosiery, travel accessories and base layer, they will all launch in the back half of this year. So we’re continuing to build that muscle with the launches. And actually one I would add is you will see shoes come into the clubs in the back half of the year. And I want to call that out because you know the clubs can move a lot of volume. So I would expect to be talking about that as we get into the Q3 call.

Okay. In terms of – so we’ve seen a tremendous evolution in the catalog in the last few months. It’s become much more of a lifestyle and a resource here. And how is in the response to that? And what is kind of in the thought process and what should we be seeing going forward in terms of the catalog as a driver for a younger customer for a more customer who’s looking for that key item, a key look? Thank you.

The catalogs, you’re not seeing all the catalogs. We are able to drop 58 different catalogs in a year. So we have a huge breadth of assortment. And traditionally, it’s been very much about how many pages you get in the catalog. What you are seeing going forward far more now is it’s about the pages – it is about how many pages you get, but it’s also about what’s on those pages. And so as we lean in, we see a very traditional customer. You remember from various calls I’ve talked about the [indiscernible] customer who’s been with us a long time. They’re going to continue to see more of those traditional items, whereas the Evolver customer is going to see more of the collection put together. And I think it’s for us, we’ve definitely taken catalog and we’ve pivoted it away from being at channel and we’ve pivoted it to being a marketing device. And it really gets covered in the topic of personalization, where I just view it as another form of marketing that should be personalized. And the big driver for our industry over the next few years, I really do believe is going to be personalization. And so having that catalog that we’re able to slice and dice is going to be really important for us. It also has a comparing, I’m sat by Bernie. I’d be remissed if I missed out on that. There’s a customer who responds to the nudge from it versus getting 40 pages. And I think that nudge can be handled in different ways. It’s also an ability to prospect, but we lead in and instead of having to have a 40 or 50 page book, we might have a 10 page fold out postcard. And that might be the way that we lean into it. And again, we’re not necessarily doing that for cost reasons, but we are doing it to be thoughtful about the value that we put against the customer and the return on that individual customer from a pricing standpoint.

Great. Thank you.

Thank you, Eric.

[Operator Instructions] We’ll take our next question from Alex Fuhrman with Craig-Hallum. Please go ahead.

Hey, guys. Thanks for taking my question and congratulation on all the progress that you made last year. It looks like you’re expecting some pretty nice GMV growth for the year, but not as much in Q1. Can you just explain that difference and why you’re expecting GMV growth to accelerate after Q1?

Yes. Good morning, Alex. Last year in 2024, we were liquidating our shoe and kids inventory. So there’s a chunk that is non-comp last year and that’s pretty much the variance between, and on a like-for-like basis it will be very [indiscernible] for the whole year.

Okay. That’s really helpful, Bernie. Thanks. And then Andrew, you mentioned there’s a subset of your customer base that the holiday promotional strategy didn’t resonate. Is there a plan to try to get those customers back this year? Or is that a customer that’s more of a once a year customer looking for gifts or clearance items?

Hey, Alex. How is it going?

Good. Thanks.

Yes. Love the question. Alex, we love all of our customers, but I think there are different times to reach those customers. And instead of being 50 to 70 off over Black Friday or Cyber Monday because you’re just hunting volume, I think there’s a time when we can address that customer very specifically. And right now, it’s about how we manage our winter sale and our summer sale. It’s like we give great offers for them. It’s like we’ve got products that we specifically have engineered it for them. And I think it’s about how we connect them with that marketing. And the trick and it is a trick as we go down this path of personalization is how you widen that aperture out from them just being a sale customer a couple of times a year to introducing them to other franchises that they’re prepared to pay more for. And so I’ll give you a perfect example of it. We’ve always had the expedition parka as it’s been our most expensive piece of outerwear. It’s actually arguably the most expensive thing we’re carrying on the site at any one time. And we weatherproofed that by adding our lighter weight, Wanderweight, and then we further weatherproofed that by adding feather free, and we further weatherproofed on top of that by adding fleece. That creates a series of entry points for that customer and they can come in and they can find product that works for them at a price point that’s relevant to them. And we see very specific behavior there. So again, it’s back to the question Eric was asking is, how do you customize the marketing to be right on it? And it’s like the starting point is definitely these two sale events, but how we open the aperture from there will define it. And I’m not going to chase any customers away from the brand, but nor am I on the other side of this going to have a brand where we just discount to be at the – be at a price point that attracts a customer who’s not really going to be tremendously profitable for us and not really help support the brand. So there’s a couple of ways at it. Does that answer your question?

It sure does. Thanks very much, Andrew. Appreciate that.

No worries. See you, Alex.

Thank you. And this does conclude today’s program. Thank you for your participation. You may disconnect at any time.