This article first appeared on GuruFocus .
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Total Revenue:$302 million, an increase of 3% compared to the second quarter of last year.
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U.S. E-commerce Revenue:Increased 9% compared to Q2 2025.
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Third-Party Marketplace Revenue:Decreased approximately 20% as the company prioritizes profitable, high-quality sales over lower-margin promotional volume.
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Lands' End Outfitters Revenue:Increased 4% from the second quarter of 2025, driven by enterprise accounts.
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Europe Revenue:Increased 1% year-over-year.
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Gross Profit:Increased by $14 million, or 10%, compared to last year.
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Gross Margin:52%, an approximately 320 basis point improvement from the second quarter of 2025.
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SG&A Expenses:Increased by $6 million year-over-year; as a percentage of net revenue, increased by approximately 80 basis points.
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Adjusted Net Income:$2.7 million, or $0.09 per share.
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Adjusted EBITDA:$11 million, a year-over-year decrease of $4 million.
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Inventories:$342 million at the end of the second quarter, up 13% compared to last year.
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ABL Borrowings:$60 million, compared to $35 million last year.
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Share Repurchases:Repurchased approximately 900,000 shares for approximately $11 million during the quarter.
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Q3 2026 Guidance:Net revenue of $300 million-$330 million; adjusted net income of $2 million-$6 million; adjusted diluted EPS of $0.07-$0.20; adjusted EBITDA of $14 million-$18 million.
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Fiscal 2026 Guidance:Net revenue of $1.3 billion-$1.35 billion; adjusted net income of $13 million-$21 million; adjusted diluted EPS of $0.44-$0.72; adjusted EBITDA of $62 million-$70 million.
Release Date: September 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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U.S. e-commerce revenue grew 9% in Q2, driven by recovery from warehouse management system issues and strong product categories like swim and totes.
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Gross margin improved by 320 basis points year-over-year to 52%, aided by tariff refunds and disciplined marketplace strategy.
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New-to-file customer count in the U.S. grew double digits, fueled by totes and swim, indicating successful customer acquisition.
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Lands' End Outfitters enterprise segment grew over 15% year-to-date, with new multi-year partnership with Delta Air Lines showing positive early results.
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IP joint venture with WHP Global is expected to generate over $150 million in long-term guaranteed royalty value, reinforcing growth prospects.
Negative Points
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Third-party marketplace revenue declined approximately 20% due to strategic focus on higher-margin sales over volume.
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Warehouse management system challenges persisted into Q2, causing shipment delays and higher backlog in school uniform business, impacting revenue recognition.
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Inventory levels increased 13% year-over-year, reflecting tariff headwinds and higher costs, which may pressure future margins.
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Adjusted EBITDA decreased by $4 million year-over-year to $11 million, impacted by JV royalty structure and WMS-related operational inefficiencies.
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SG&A expenses rose by $6 million, with increased digital marketing spend and temporary WMS disruptions affecting profitability.
Q & A Highlights
Q: What is your long-term vision for Lands' End, and how do you see technology and AI enhancing execution across e-commerce, Outfitters, and international? A: Charlie Cole (CEO): My long-term vision is to build a modern AI engine that drives almost our entire customer experience. This engine would simultaneously evaluate a customer's purchase history, browsing behavior, weather, geography, search patterns, inventory availability, and category affinity to create a personalized experience. For example, a customer who exclusively shops outerwear should have a very different experience than one who shops swim. This is equally applicable to Europe and Lands' End Outfitters, where we can use time-based personalization for the rhythmic school business. We are going to build an AI infrastructure that gives us an e-commerce platform that will rival the best in the industry.
Q: Is the warehouse management system (WMS) issue completely resolved, and how will it impact the third and fourth quarters? A: Charlie Cole (CEO): We are now running at normal operations and are caught up on throughput. We are still working through a backlog, but operations are proceeding as normal at the same or higher levels than before the issues. There is more efficiency to unlock next year by supporting the WMS with other software solutions. As it pertains to Q3 and Q4, we don't anticipate any effect on our guidance for the WMS, with the exception of the catch-up that will come out of the Lands' End Outfitters division.
Q: Can you provide color on how the Outfitters order book is trending and what growth rate the business can sustain once operations are fully normalized? A: Charlie Cole (CEO): The Outfitters business had a real bright spot with enterprise clients. The growth rate is already aligned in our guidance, but we are remarkably bullish on that business. There is increased opportunity by improving the customer experience through a commerce focus, from front-end, messaging, and marketing perspectives. I am visiting with Outfitters clients next week, including Delta Air Lines and American Airlines, to get deeper involved in that business.
Q: What would have been the underlying U.S. e-commerce growth excluding the carryover benefit from the Q1 distribution disruption? A: Bernard McCracken (CFO): The U.S. business on a year-to-date basis, since the carryover was completed through the second quarter, is flat for the year or flattish.
Q: How should we think about the international business, and does it remain fashion-forward and trend-driven? A: Charlie Cole (CEO): For international, our focus is predominantly on our European e-commerce business. In Q2, the focus was on margin above everything else, driving a less promotional business. The Lands' End value proposition is the same internationally, delivering value and durability. There will be slight nuances from a merchandising perspective based on weather and location, but the brand should have international appeal with the same foundation regardless of where it is distributed. Bernard McCracken (CFO) added that while Europe is still considered fashion-forward, they have pulled it back to focus more on core franchises, which is driving higher profitability.
Q: Where are we in terms of adding new licenses through the WHP Global joint venture, and when will they start to drive overall profitability? A: Bernard McCracken (CFO): Our guidance reflects the royalties we will receive for the remainder of this year. Any kind of licensing agreement has a long lead time before it benefits us going forward, as product needs to be made and outlets garnered. The basics of our guidance reflect the licenses we had in place and a few new smaller licenses signed prior to WHP that they have taken to the next level.
Q: How significant is the opportunity for new software and efficiencies in 2027 and going forward? A: Charlie Cole (CEO): Predominantly, it's going to be infrastructure across the warehouse, and the opportunity will be seen in service levels. I wouldn't expect it to have any direct input to our guidance. Similar to our technological infrastructure, it's about enabling a customer experience that will exceed expectations. The benefits will be focused more from a lifetime value perspective rather than direct guidance.
Q: Can you talk about the specific inventory you are leaning into as you head into the holiday season? A: Bernard McCracken (CFO): Last year we were dealing with uncertainty around tariffs and were very conservative in the types of products we brought in. This year, especially regarding owning the weather, our outerwear will have a broader assortment than last year, which we feel we can leverage in the back half of the year as the weather gets colder. It's about layering, owning the transition period with fleece and sweaters, not just heavy down coats. We are very excited about this back half.
Q: What is your North Star regarding the enhanced execution and involvement of technology across the different business segments? A: Charlie Cole (CEO): My long-term vision is a modern AI engine that drives almost our entire customer experience. It can evaluate a customer's purchase history, browsing behavior, weather, geography, search patterns, inventory availability, and category affinity simultaneously. We will start with the e-commerce front-end, CRM messaging, and marketing targeting. For example, a customer who has exclusively shopped outerwear should have a very different experience than someone who has exclusively shopped swim. This is equally applicable to Europe and Outfitters, where we can use time as an input for the rhythmic school business. We are going to build an AI infrastructure that gives us an e-commerce platform that will rival the best in the industry.
Q: Are there any other year-on-year differences or tariff expectations to unpack in the third and fourth quarter guidance? A: Bernard McCracken (CFO): Our guidance reflects the current levels of tariffs that are in place. There isn't really any other year-on-year differences that we'll be dealing with. We feel very good about the guidance we gave and the expectations that we will hit that.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
