Lands' End, Inc. Stock

Hello, and welcome, everyone, joining today's Lands' End Second Quarter Fiscal 2026 Earnings Call. [Operator Instructions]. Please note, this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Tom Altholz. Please go ahead.

Good morning, and thank you for joining us for a discussion of our second quarter of fiscal 2026 results, which we released this morning and can be found on our website, landsend.com. I'm Tom Altholz, Lands' End's Senior Director of Financial Planning and Analysis. And I'm pleased to join you today with Charlie Cole, 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 the information we're about to discuss includes forward-looking statements. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed on this 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 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'll turn the call over to Charlie.

Thank you, Tom, and good morning, everyone. I'm honored to be joining you for my first earnings call as CEO of Lands' End. I have spent my career leading digital and e-commerce companies through customer engagement and brand transformations, and I'm excited to be utilizing that experience to help unlock the next phase of growth for this iconic American brand.

As you know, I joined the company on July 13, and I spent the past several weeks getting to know the company. Since then, I've been meeting with teams across the company, reviewing the business and listening to customers to ensure a strong foundation to evaluate and execute on the right opportunities ahead. What I found reinforces my confidence in the strength of this brand, loyalty of our customer base and a strong culture that remains a genuine competitive advantage. It's clear to me that the opportunity is significant, and we have strong strategic direction. The work now is ensuring the infrastructure is in place to support it. Put simply, Lands' End is a great business with tremendous opportunity ahead.

With that, let me take you through the highlights of the quarter. Across the business, our teams made deliberate decisions on marketing spend, on customer acquisition and on inventory, which we believe position us well for the back half of the year. The product portfolio had clear bright spots this quarter, continuing to leverage product solutions through our key franchises. Women's and men's apparel, especially knits, had a good quarter overall, and bags performance, led by our iconic 5-pocket tote, was a meaningful driver of growth and new customer acquisition. Our swim business continued to execute on owning the weather with high single-digit revenue growth in the U.S. e-commerce business in the quarter.

The areas generating real momentum are the ones I'm most energized about. For example, totes remain one of our strongest new-to-brand acquisition tools, and value-added services like embroidery and personalization make the economics even more attractive. Our U.S. new-to-file customer count grew double digits, largely driven by totes and swim, demonstrating our continued ability to use accessories to reach new demographics. Sleep is a category we're excited to develop year-round, and early indicators are positive. Initial reads on outerwear and Christmas stockings are also encouraging, give us good initial visibility into Q3 and Q4.

Beyond the product, our marketing activity in Q2 generated some real highlights. Our collaborations with T&T and Wawa and our presence in Nantucket each put Lands' End in front of new and younger audiences in a way that felt authentic to who we are, driving real engagement across social platforms and building the kind of brand equity that compounds over time, not just media conversion. We are especially pleased with our Wawa collaboration, where our iconic tote to over 2.6 billion impressions and more importantly, sold out in hours. These types of activations are driving a step change in our social media following. Of note, traffic across our social channels, including Instagram, increased over 30% year-over-year.

While it is early in my tenure, I already see a meaningful opportunity to strengthen how we reach, engage and convert customers. We have a strong data foundation and a loyal core customer base. The opportunity is to use that foundation more effectively, including through more personalized marketing, better customer targeting and greater efficiency at acquisition. We will pursue that work deliberately with the core Lands' End customer at the center of our strategy.

Turning to inventory, our inventory levels in the second quarter were higher than the prior year due to tariff uncertainty last year. Current year inventory is more representative of pre-2025 levels and is within our planned parameters, which include increases due to continued tariff headwinds and challenges processing value-added service orders with our new warehouse management system.

Our U.S. e-commerce business increased 9% compared to Q2 2025, reflecting the recovery with the rollout of our new warehouse management system across our distribution centers in the first quarter. That issue has been addressed in our core U.S. e-commerce business, and we caught up with shipments by the end of the quarter. In our third-party marketplace business, the standout was Nordstrom. The anniversary sale was a strong moment for the brand, and our franchise categories, outerwear and Wanderweight in particular, continue to resonate in that channel. Across our marketplaces, we continue to pursue a disciplined strategy that emphasizes quality and higher-margin sales over volume.

In our Europe business, we made several deliberate pivots, and the early results are encouraging. Revenue finished essentially flat, but our product margin performance was strong, reflecting the strategic choice to leverage key franchises to build the business for long-term success. This, paired with our successful efforts to reach new customers at lower cost and through more deliberately differentiated storytelling in our markets, give us confidence in the path ahead for our Europe business. In addition to the improvement in profitability this quarter, Amazon Germany went live in August, and we are excited to leverage our global experience on Amazon with an entirely new customer.

Turning to Lands' End Outfitters, our B2B business. Underlying demand was solid in the quarter, though revenue performance does not fully reflect that. Challenges in our value-added services related to our new warehouse management system and concentrated in B2B customers carried into Q2, which was not anticipated and are reflected in our results. Revenue increased approximately 4% year-over-year with strength in national accounts, partially offset by warehouse management system challenges that impacted the timing of school uniform shipments.

Within national accounts, the story is positive with the Enterprise segment up year-to-date by more than 15% versus last year, led by growth in our airline accounts. We entered a new multiyear partnership with Delta Airlines in the second quarter of fiscal 2025, and employee reception to the program was overwhelmingly positive. Today, Delta is in the wear testing phase of its distinctly Delta uniform collection with more than 1,400 frontline employees participating across the system. Feedback and insights from the wear test will be incorporated into final product refinements ahead of the planned second half 2027 rollout.

Our school uniform business was impacted by challenges within our new warehouse management system related to processing value-added service products. As a result, shipments were delayed and backlog levels were significantly higher than the prior year, reducing revenue recognition during the quarter. Improving operations at Lands' End Outfitters is a priority. We have and will continue to take action, including working to increase output capacity, improve efficiency in our production process and prioritize shipment of orders to get ahead of customer timing dynamics.

We continue to be encouraged by the early progress of our intellectual property joint venture with WHP Global. As previously disclosed, the JV amended several significant licensing agreements that are expected to generate more than $150 million of long-term guaranteed royalty value, reinforcing our confidence in the long-term growth opportunities created by the partnership. I'll now turn it over to Bernie to discuss our second quarter financial performance in more detail.

Thank you, Charlie. For the second quarter of 2026, total revenue was $302 million, an increase of 3% compared to the second quarter of last year. Our U.S. e-commerce business saw a sales increase of 9% compared to the second quarter of 2025. As Charlie discussed, the order backlog from the new warehouse management system challenges in the first quarter benefited Q2 and positively impacted results. We're confident that the warehouse management system issue has been addressed in our core U.S. e-commerce business.

Our third-party marketplace business decreased approximately 20% as we continue to prioritize profitable high-quality sales and brand integrity over lower-margin promotional volume. While we saw a decline in revenue, our like-for-like gross margin compared to last year improved by over 500 basis points year-over-year, reflecting the benefits of our disciplined strategy by individual marketplace.

Sales from Lands' End Outfitters increased 4% from the second quarter of 2025. The increase was driven by our enterprise accounts, which more than offset the impact of the warehouse management system challenges in our school uniform business processing value-added service products. Sales in Europe increased 1% year-over-year, primarily driven by a strategic shift to a franchise-first assortment that simplified the business and drove improved product margins.

Gross profit increased by $14 million or 10% compared to last year. Gross margin in the second quarter was 52%, an approximately 320 basis point improvement from the second quarter of 2025. The gross margin increase was primarily driven by the IEEPA tariff refund, partially offset by the new royalty structure associated with the JV and increased costs associated with our new warehouse management system.

SG&A expenses increased by $6 million year-over-year. As a percentage of net revenue, SG&A increased by approximately 80 basis points, primarily driven by investment in digital marketing and operational inefficiencies from the temporary disruption of the new warehouse management system. For the second quarter, we reported adjusted net income of $2.7 million or $0.09 per share. We delivered adjusted EBITDA of $11 million in the second quarter, representing a year-over-year decrease of $4 million. The receipt of IEEPA tariff refunds was offset by the new royalty structure associated with the JV and the challenges in our new warehouse management system, processing value-added service products for school uniforms.

Moving to our balance sheet. Inventories at the end of the second quarter were $342 million, up 13% compared to last year. Inventory levels increased largely due to the intentionally lean inventory position we held a year ago amid tariff uncertainty. Inventory is more aligned with typical norms and our planned levels, including the impact of continued tariff headwinds. We remain confident in our holiday assortment and expect inventory to remain within typical levels.

Turning to our debt. We ended the second quarter with $60 million in ABL borrowings compared to $35 million last year. As discussed previously, we used the majority of the $300 million in cash proceeds from the WHP Global transaction to fully repay our term loan, leaving us with enhanced liquidity and significantly reduced interest payments. The remainder of the transaction consideration was used for transaction-related corporate expenses and taxes.

As a reminder, in conjunction with the April 1 closing of the WHP Global transaction, our Board authorized the repurchase of up to $100 million of common stock through March 31, 2029. During the second quarter, we repurchased approximately 900,000 shares for approximately $11 million, bringing the remaining balance of the authorization to $89 million as of the end of the quarter.

Now moving to guidance. Our guidance reflects the impacts of tariffs at current implemented rates, and we are continuing to execute mitigation measures to manage tariff headwinds for the remainder of fiscal 2026. For the third quarter of 2026, we expect net revenue of $300 million to $330 million, adjusted net income of $2 million to $6 million and adjusted diluted earnings per share of $0.07 to $0.20; adjusted EBITDA in the range of $14 million to $18 million.

For fiscal 2026, we now expect net revenue of $1.3 billion to $1.35 billion, adjusted net income of $13 million to $21 million and adjusted diluted earnings per share of $0.44 to $0.72. Adjusted EBITDA in the range of $62 million to $70 million. Full year guidance incorporates approximately $40 million in capital expenditures. With that, I'll turn the call back over to Charlie.

Thank you, Bernie. I want to close by saying how encouraged I am by what I am seeing across this business. The brand has tremendous strength, and we believe the opportunities to unlock its full potential are clear. I also want to take a moment to welcome Jimmy Ferolo, who recently joined us as Chief Digital and Technology Officer. Jimmy brings a proven track record of driving digital transformation and customer-centric innovation across leading consumer brands, most recently at Solairus Aviation and prior to that at Singer and Maui Jim. His deep expertise in scaling e-commerce capabilities and elevating the customer experience will be instrumental as we move into the next chapter of growth for Lands' End.

Martin Christopher, our former Chief Technology Officer, now reports to Jimmy, bringing strong continuity to our technological transformation. Jimmy's arrival is well timed. The focus right now is on tactical excellence to ensure we have the right infrastructure, technology and customer acquisition capabilities in place heading into the peak holiday selling season. That includes meeting customer expectations on shipping and fulfillment and deepening personalization across our offerings.

That work connects to something underappreciated about this business. Through decades of catalog and e-commerce engagement, we have built a foundation of owned customer data that few retailers can match. As we apply AI-powered capabilities across merchandising, marketing and customer retention, proprietary data combined with AI-enabled execution becomes a competitive advantage that grows more valuable over time. I look forward to meeting many of you in the months ahead. What I can tell you is that my conviction at Lands' End and in this team is only growing. With that, we look forward to your questions.

[Operator Instructions] We'll take our first question from Dana Telsey with Telsey Group.

Welcome, Charlie. Charlie, in your purview, as you think about the opportunities for Lands' End going forward and given your background, how do you see the enhanced execution, the involvement in technology, what happens with e-commerce? How does it fit the different categories, whether it's the e-commerce, international, outfitters, third party and obviously, the new relationship with WHP. What's your North Star going forward? And then I have a quick question on just the here and now.

Dana, thank you so much for the welcome. I really appreciate that, and thank you for the question. So one of the -- this question is so far reaching because it involves a lot of buzzwords, so I'm going to try to decouple them. My long-term vision for Lands' End is we are a modern AI engine that drives almost our entire customer experience. And so I want to unpack that a little bit. A modern AI engine can simultaneously evaluate so many things. And so I'll start with focusing on the e-commerce side of things, and I'll get into Lands' End Outfitters in Europe as well.

It can evaluate a customer's purchase history, their browsing behavior, the weather, the geography, the search patterns, inventory availability, full price sell-through targets, category affinity, and it could evaluate all these things at the same time. And so if you think about that just processing power and where you want to put that, you start with e-commerce front end CRM messaging, marketing targeting, including catalog segmentation and creative personalization. And so it's not an exaggeration, Dana, to say that I want an AI engine that sits at the center of our customer experience and enables an experience that our customers have really never seen before.

And if you wanted pragmatic examples, if somebody who has shopped at Lands' End has exclusively shopped outerwear, they should have a very different experience than someone who's exclusively shopped swim. That doesn't mean we don't show back and forth, but it does mean we give them a personalized experience to optimize not only conversion but lifetime value and frankly, Net Promoter Score as well. That's equally applicable to Europe. With Europe, we have to be aware of the realities of sort of the different data regulations, and so we'd be thoughtful of that as well.

And then with Lands' End Outfitters, it's actually the same answer. It's just with a different process because you think about our school business, that is fairly rhythmic. And so time becomes a very obvious kind of input where we have to reach out to customers at the right time with the right message based on their school schedule. And so that's a slight personalization that would allow us to give a much better experience. But it's not an exaggeration, Dana, to say, from a technology perspective, we are going to build an AI infrastructure that gives us an e-commerce platform that will rival the best in the industry, and that's the core goal. And so I'm happy to answer your follow-up question as well.

Great. The warehouse management system, I think, which the second quarter also had some impacts. Is that complete now? And is there anything on the shaping of third and fourth quarter and how you're seeing it, whether from a margin perspective or a top line perspective, how it differs this year from last year?

On the warehouse management system topic, we are now running at normal operations. And so it's caught up -- we are now caught up on the throughput. We are still working through a backlog, but operations are proceeding as normal at the same or higher levels than before the warehouse management system issues. It is also worth noting that there is more efficiency to unlock where we can actually put other infrastructure in place, but that will not happen until next year. But there is more efficiencies that will be unlocked as we can support the WMS with other software solutions as well. 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.

Got it. And then just the third quarter guide, anything to unpack there on the margin side in fourth quarter and remainder of expectations for tariffs?

Yes. Dana, our guidance reflects the current levels of tariffs that are in place. And the rest of the -- 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.

Our next question comes from Eric Beder with SCC Research.

Just a few quick questions. Let's talk about international here. What should we be thinking about? I know prior, Europe was a kind of a -- a little bit more fashion forward, a little more of a driver of trend. Is that still how you look at that? And how does that fit in terms of the JV and the other international opportunities?

For international, Eric, our focus is predominantly on our European e-commerce business. And the focus there has been to really -- our Q2 focus was on margin above everything else. And so that's driving a less promotional business, which you could qualify as a bit more fashion forward and a bit more trend focused. We actually feel really good about where our European business is. And there is some slight nuance to the trends, obviously, even within the continent between Germany, the U.K., et cetera.

But the Lands' End value proposition is the same, frankly, internationally, where we were fortunate enough in June of 2026 to be awarded with the highest rating from Forbes and their Best Brands for Value report. I directly think that spans borders, where we're going to deliver value and durability and kind of leverage our unique heritage in a way, they will have international appeal. There will be slight nuances from a merchandising perspective, trends such as weather is going to affect what people buy depending on where they live.

And so we're certainly not naive to that. But I believe that the Lands' End brand should have international appeal and ultimately have the same foundation regardless of where it is in the world. And that will be true also by channel, whether it's direct e-commerce, whether it's with our JV with WHP, whether it's with Amazon or other partners. So we're going to do everything we can to make sure the Lands' End brand is ubiquitous regardless of where it is in the world.

And then, Eric, just to add on a little bit, and you'll notice this in our comments in the script, the Europe business, while we still consider it to be fashion forward and to drive some trends, we have pulled it back a little and have got them to be more into our franchises, which is driving a higher profitability.

Okay. Let's talk about the WHP piece a little bit. When do you believe -- okay, so where are we in terms of adding new licenses? And when do you believe that those licenses will start to kick in and help drive the joint venture overall profitability, which you share in?

Yes. Eric, our guidance reflects the royalties and licensing royalties that we will receive for the remainder of this year. As you know, any kind of licensing agreement has a long 10 years before it will benefit us going forward. There's product that needs to be made and outlets to be garnered. So right now, the basics of our guidance reflects the licenses that we had in place and a few of the new smaller licenses that we had signed prior to WHP and that they have taken on into the next level.

You mentioned here about the potential next year for new software and some of the potential positive -- some of the potential rollouts, I think potential efficiencies you get from that. How big should we think of that as an opportunity in '27 and going forward?

Thanks, Eric, for all your questions. Predominantly, it's going to be infrastructure across the warehouse, and you would see the opportunity basically in service levels, more than anything else. So I wouldn't expect it to have any direct input to our guidance. But in a similar fashion to my answer to Dana on our technological infrastructure, really, it's around enabling a customer experience that will exceed expectations. So in a lot of ways, the benefits will be focused more from a lifetime value perspective, but as opposed to direct guidance.

Our next question comes from Michael Kupinski with NOBLE Capital Markets.

And Charlie, welcome to Lands' End. The company appears to -- the quarter indicated that you have some favorable underlying revenue trends, and I kind of want to drill down on that a little bit. The Outfitters grew like 4.4% despite continued school uniform processing challenges. And I was just wondering, can you give us some color on how the order book is trending now? And what growth rate do you believe the business can sustain once operations are like fully normalized?

Michael, thank you for the warm welcome. The Outfitters business also had a real bright spot with enterprise clients as well, which we mentioned. And so the growth rate is also already aligned in our guidance, but we're remarkably bullish on that business. And I would also say, as I referenced when I responded to Dana, there is also increased opportunity by improving their customer experience through that same commerce focus. So while we are very bullish on our guidance, we're equally bullish on to improve the customer experience from a front-end perspective, from a messaging perspective and from a marketing perspective. I'm actually visiting with some Outfitters' clients next week, including Delta and American Airlines. So I'm excited to kind of get deeper involved in that business.

Got you. And the -- in Q2, the U.S. commerce revenue increased 9%. And I think part of that was a carryover from the Q1 distribution disruption. What would have been the underlying e-commerce growth, excluding that catch-up benefit?

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.

Okay. And obviously, inventory is up a little bit, and it seems like you're saying that it's a little bit more normalized. Can you talk about specific inventory that you're leaning into the quarter as you kind of go into the holiday season here?

Yes, Michael, I think one of the keys, right, is comparing year-on-year is that last year, we were dealing with a lot of uncertainty around tariffs and where and what countries and what products were going to be tariffed at different rates. And so we were very conservative in the types of products that we brought in and where they were being produced.

So I think you'll find, especially when we talk about owning the weather, that our outerwear is going to have a broader assortment than it did last year, where that was the place we were probably most conservative and that we really feel we'll be able to leverage that in the back half of the year, especially as the weather gets colder. But as we've talked about over the last couple of years, it's about layering for us, too, that owning the weather isn't just when -- for our heavy down coats, it's about having fleece and sweaters and owning that transition period, too. So we're very excited about this back half.

Thank you. This concludes our Q&A session as well as our conference call. Thank you for your participation. You may now disconnect.

Hello, and welcome, everyone, joining today's Lands' End First Quarter Fiscal 2026 Enhanced Earnings Call. [Operator Instructions] Please note, this call is being recorded. It is now my pleasure to turn the meeting over to Tom Altholz. Please go ahead.

Good morning, and thank you for joining our First Quarter Fiscal 2026 Enhanced Earnings Conference Call. In addition to our financial results, we will discuss our forward-looking strategy and financial outlook following the closing of our joint venture transaction with WHP Global.

This morning's news release and an accompanying investor presentation can be found on our website, landsend.com. I'm Tom Altholz, Lands' End's 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're about to discuss includes forward-looking statements. Such statements involve risks and uncertainties.

The company's actual results could differ materially from those discussed on this 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 and in the slides which accompany this webcast and can be found on our Investor Relations website.

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 forward-looking statements made by us.

Subsequent events and developments may cause the company's outlook to change. In addition, our comments also present illustrative examples of potential outcomes related to our joint venture.

There can be no assurance that such examples will occur or that the joint venture will deliver the hypothetical results presented. 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'll turn the call over to Andrew.

Thank you, Tom. Good morning, everyone. I'll begin by noting that as we previewed last quarter, today's call will cover both our Q1 earnings as well as a more comprehensive discussion of our strategic priorities and the significant opportunities ahead.

After our quarterly results, we will provide an overview of the joint venture transaction with WHP Global, which closed on April 1, our post-transaction operating model, including the key growth drivers behind it, our financial outlook for Q2, and full year 2026 as well as 3-year targets and the potential value creation opportunities the joint venture unlocks.

We'll discuss more shortly, but at a high level, it's helpful to note that the creation of the joint venture marked a genuine inflection point for our business. By changing the structure of our business, we believe that we have enhanced the character of Lands' End as an investment and enhance the prospects for this iconic American brand and company.

We entered this new chapter with momentum. We closed fiscal 2025 with a return to top line growth in the fourth quarter. For the full year, we expanded gross margin, grew adjusted EBITDA and more than doubled adjusted net income, building a strong foundation for what comes next.

Because of the many changes to our business on today's call, we will provide you with a clear picture of what to expect from the company. And then, of course, we'll look forward to your questions.

With that, let me touch on some highlights from the first quarter. As we look at the first quarter, the most important takeaway is that underlying demand for the Lands' End brand continued to strengthen.

Consumer traffic was up double digits, new customer acquisitions improved and Outfitters entered the year with a growing order book that reinforces our confidence in the business. While our reported results were affected by the temporary operational disruption tied to our U.S. distribution center upgrades, which delayed shipments, and therefore, muted sales, the underlying sales performance of the business was stronger than the headline numbers suggest.

Absent those issues, we had the orders needed to drive positive sales comps for the company. Europe provides a particularly clear proof point. In that business, where distribution centers were not an issue, we delivered strong double-digit revenue growth, confirming that our product merchandising was customers.

Importantly, the backlog that built to roughly 1 week of demand has now been cleared. We are back to operating in a steady state, and we are already beginning to capture efficiency gains that should improve delivery speed, elevate the customer experience and support stronger execution as we move through the year.

Despite the operational challenges in the first quarter, we saw year-over-year improvement in both adjusted net income and adjusted earnings per share. A primary driver of that improvement was lower interest expense following repayment of the term loan in the quarter.

And we have seen that momentum continue into the second quarter. Q2 has started off well with positive revenue comps and ongoing new customer growth through and now post the important Memorial Day period, led by key categories, including swim, totes and men's.

There are, of course, a few factors that make the first quarter more complex to read on the surface. We repositioned parts of our marketplace business to prioritize profitability over lower quality revenue, and that decision weighed on top line growth in the quarter, even as it improved the quality of our sales and flow-through of profitability.

We also completed the creation of our joint venture with WHP Global during the quarter, an important strategic milestone that changes how certain elements of our P&L are presented. Gross margin now reflects the additional cost of royalty payments under the license structure.

Licensing royalty revenue is no longer reflected in our reported revenue and the benefit of our 50% share of JV profits is reflected in adjusted EBITDA. At the same time, elimination of our term loan materially lowers interest expense.

Bernie will walk through these changes later in our call. Another factor affecting the quarter was tariffs. We continue to manage through that pressure, including booking at the higher rate currently in effect, while policy remains uncertain.

Even with that headwind, we see encouraging evidence that the underlying margin structure of the business is improving. When we put it all together, our view is clear, fiscal 2026 is positioned to deliver positive revenue growth.

Our customer file is expanding with strength in younger cohorts, -- underlying merchandise margins are improving before the impact of tariffs and royalties and our operational footing is getting stronger.

Just as important, we are guiding our adjusted EBITDA to grow versus 2025 on a like-for-like basis with further upside based on WHP Global unlocking more licensing value from the Lands' End brand.

That is why we remain optimistic, energized and confident in the path ahead. Those themes show up clearly when we look at the first quarter across our businesses. Our core franchises continue to resonate.

Customer engagement improved and each part of the portfolio offer useful evidence that the strategic work underway is strengthening the foundation of the company. Turning to our U.S. consumer business.

Our solutions-based products and franchises continue to resonate as the reliable anchors of the business. Women's apparel and swim delivered positive comps in the first quarter, driven by product and fit improvements that are also showing up in lower return rates, a testament to the success of our solution strategy and our product and merchandising teams.

Swim also continues to benefit from our separate strategy and UPF 50 franchise. Continuing a theme we've seen build over the past several years, totes were a standout, driving revenue and bringing new customers into the brand.

The strong response to newness in the assortment, including our Canvas Dog Tote Carrier, reinforces our view that totes remain both a meaningful growth category and a powerful expression of the brand.

And to put a finer point on it, there is no category that better showcases the strength of our embroidery and personalization offering. From an overall product perspective, heading into Q2, we feel good about the assortment and the print and color stories we have in place.

Our new CMO, Sarah Sylvester, who joined in March is already having a stellar impact, building on the success of our focus to better market the brand and reach new customers. New-to-brand customer acquisition was up low single digits in the quarter over last year, proof that we are and continuing to convert new customers.

Social followership continued to increase by more than 30% year-over-year, and traffic was up mid-teens across U.S. digital channels with every channel showing growth. In addition to adding new customers, our product-led solutions-based approach continued to win across multigenerational customer segments.

We are also continuing to lean into experiential marketing. Recent swim-focused activations and our plans for another Nantucket pop-up build on the success we had there last year. These efforts are designed to put the brand in front of new customers in high affinity environments with one of our most important categories.

In third-party marketplaces, we deliberately pulled back on promotional activity to prioritize profitability. Amazon performed well, and we remain focused on making our key items bigger on the platform.

At Nordstrom, more full price selling in the quarter reinforces how we want the brand to be positioned in a premium retail environment. Our European business had a strong first quarter, and the top and bottom line results reflect disciplined execution.

The strategic shift to a franchise-first assortment simplifies the business, improves inventory efficiency and ensures our strongest programs anchor the range. Our focus on newness and solutions-based products resonated with our customers when they were ready to buy early in the season.

Investment in a more localized consumer experience, European photography, more locally relevant content, resonated with customers. We also launched a charity tote collaboration with 4 prominent London-based designers to reimagine our signature canvas tote ahead of London Fashion Week, a brand moment that reinforced our relevance with a new and influential audience.

Turning to our business-to-business offering, Lands' End Outfitters. Outfitters had a strong quarter with demand led by national accounts, specifically our airline accounts, a channel where we have demonstrated expertise and leadership in meeting clients' exacting requirements.

In schools, the timing of promotional activity shifted in the quarter, and we pulled back in February and April. We view this as a timing dynamic, not a demand issue and expect a portion of that volume to come back in Q2. Importantly, the pipeline remains healthy. Overall, underlying demand in our Outfitters business is strong. The pipeline is growing, and we see identifiable opportunities ahead in Q2 and beyond. I'll now turn it over to Bernie to discuss our first quarter performance in more detail.

Thank you, Andrew. For the first quarter, total revenue was $239 million, a decrease of 9% compared to Q1 2025. That result was driven primarily by the temporary disruption associated with the rollout of our new warehouse management system and the deliberate pacing of shipments as we ramped our distribution centers back to normal capacity.

Importantly, that disruption was timing related rather than demand related. And excluding its impact, we would have expected low single-digit revenue growth in the quarter. We delivered adjusted EBITDA of negative $6 million, down $16 million from the prior year, reflecting the shipment timing disruption, the effect of the new royalty structure following the WHP Global transaction and continued tariff pressure.

Our U.S. e-commerce business decreased 10% compared to Q1 2025, reflecting the temporary disruption tied to the rollout of our new warehouse management system across our distribution centers.

That issue is behind us, and we expect to return to positive comps in Q2. Sales from Lands' End Outfitters decreased 10% from Q1 2025, while Outfitters results were also affected by the distribution center upgrades.

Absent those issues, we would have had positive sales comps, and we continue to feel good about the underlying demand environment, the order book and the pipeline heading into the balance of the year.

Third-party marketplace revenue decreased 6%. The decline was mainly driven by a strategic focus on higher-margin, higher-quality sales, prioritizing brand integrity over lower value promotion-driven volume.

Performance on Amazon remained solid, and we were encouraged by the level of full price selling in premium environments such as Nordstrom. As a result, while this strategy weighed on reported revenue, it improved the quality of the business and supports healthier margin flow-through over time.

In our European e-commerce business, our transformation work is continuing. Sales grew 15% versus last year and profitability improved with gross margin increasing approximately 70 basis points in the first quarter.

Gross profit in the first quarter decreased 16% versus the prior year, and gross margin was down 47%, approximately 410 basis points year-over-year. That decline was driven principally by the deleverage created by the temporary distribution center disruption the new royalty structure associated with the WHP Global joint venture and continued tariff headwinds.

At the same time, the underlying merchandise margin of the business remained healthy, supported by our solutions-focused merchandising strategy, disciplined promotional posture and better product mix.

SG&A increased $3 million year-over-year and as a percentage of net revenue increased approximately 570 basis points. This reflected a combination of the fixed cost deleverage from lower reported revenue and the ongoing investment in marketing and brand building.

Adjusted net loss for the quarter was $4 million or $0.11 per share compared to adjusted net income of $5 million or $0.18 per share in the prior year. While those comparisons reflect a complex quarter, we believe they do not fully capture the underlying momentum in demand, the benefits of the new structure or the earnings power of the business as operations normalize.

Turning to the balance sheet. Inventory at the end of the first quarter was $300 million compared to $262 million a year ago. That increase primarily reflects the timing effects of the distribution center ramp-up and the impact of tariffs on inventory costs.

As operations normalize and inventory flow improves, we expect inventory levels to become better aligned with demand and with our revenue trajectory. In terms of our debt, we ended the first quarter with $30 million in ABL borrowings compared to $40 million last year.

As previously announced, we used the majority of the $300 million in cash proceeds from the WHP Global transaction to fully repay our term loan, leaving us with enhanced liquidity and significantly reduced interest payments.

The remainder of the transaction consideration was used for transaction-related and other corporate expenses. Finally, in conjunction with the April 1 closing of the WHP Global transaction, our Board authorized the repurchase of up to $100 million of common stock through March 31, 2029.

As we will discuss in more detail shortly, with a strong balance sheet and this authorization in place, we have meaningful flexibility to evaluate opportunities to enhance shareholder value, including returning capital to shareholders. We will provide second quarter and full year 2026 guidance in the next section of this call. With that, I'll turn it back to Andrew.

Thanks, Bernie. We'll now turn to a broader discussion of our strategy and outlook following the completion of the transformational JV we created with WHP Global and the opportunity for shareholder value it created going forward.

I'll be referring to the slides, which are now on the screen of this webcast and can also be found on our Investor Relations website. Beginning on Slide 3, we want to spend a moment clearly laying out the strategic and financial rationale for the JV and importantly, how it translates into multiple reinforcing drivers of shareholder value.

First, in April, we completed the creation of the JV, which included Lands' End contributing our intellectual property in exchange for $300 million in gross proceeds from WHP Global. Lands' End and WHP each have 50% ownership of the JV with WHP having a controlling interest.

We believe this transaction drove immediate value for our shareholders, both indirectly and directly. The $300 million of proceeds from WHP enabled us to immediately pay our term loan in full, deleveraging the balance sheet and fundamentally changing our financial position.

This is a step change, not an incremental improvement in financial flexibility. In addition, WHP Global completed a tender offer for approximately $100 million in Lands' End shares at a purchase price of $45 per share available to all shareholders to realize near-term value creation.

WHP's acquisition of approximately 7% of Lands' End at a substantial premium signals their commitment to the future success and growth of our company. Under the long-term license agreement with the JV, Lands' End will pay the JV annual royalties of at least $50 million, and we will receive half of all JV profits on a quarterly basis.

These profits will come from the royalties we pay, the growth of Lands' End's existing licenses, which were contributed to the JV as well as the growth of the brand with new licenses. The expansion possibilities available to the JV create a highly attractive revenue stream, creating a recurring, high-quality source of earnings with the JV expected to operate with EBITDA margins of no less than 85%.

By partnering with WHP Global, we believe Lands' End is now positioned as a brand to grow faster and more profitably than it could have on a stand-alone basis. This is because WHP is a proven global licensing platform with a track record of scaling brands across new categories, new geographies and new partners.

In just a moment, I'll discuss the JV's early wins. Finally, the opportunity to exchange our stake into WHP Global equity creates a unique and powerful second layer of value for shareholders should WHP execute a monetization event, such as a sale or an IPO, Lands' End may exchange our stake in the JV for equity in WHP Global at the same multiple that WHP receives in the monetization event.

Importantly, scaled brand management companies like WHP typically command materially higher valuation multiples than traditional retailers. This creates the opportunity for Lands' End shareholders to effectively step up into a higher multiple business through the exchange event.

When you step back, this transaction delivers multiple layers of value, immediate value realization, balance sheet transformation, accelerated high-margin licensing growth, growing royalty income platform and high multiple upside opportunity.

These are additive, not alternative drivers of shareholder value. Turning to Slide 5. We've outlined here the 4 key levers to drive value for all Lands' End shareholders. First, as I just referenced, the significant financial flexibility we have following the completion of the JV transaction represents a fundamental reset of our financial position.

By eliminating our term loan debt in full, we strengthened our financial position while shedding debt covenants that previously limited our ability to execute on strategies that could grow shareholder value.

Second, key to our success over the years has been the strength of our direct-to-consumer business and our B2B platform, Lands' End Outfitters. Across both businesses, we operate highly capable, digitally enabled platforms that when paired with ongoing strategic focus and cost discipline, provide the operating foundation to support future growth, cash generation and shareholder value creation.

Third, -- following the completion of the JV transaction, the Lands' End Board authorized a $100 million share repurchase program through March 2029. This is a clear and deliberate capital allocation option aligned with shareholder value creation.

At current prices, this authorization represents the ability to repurchase a significant portion of shares outstanding. Programs at this scale are often associated with both EPS accretion and multiple expansion over time.

Importantly, we now have the financial flexibility to act opportunistically when we believe our stock is trading below its intrinsic value. Finally, as I referenced earlier, the ability for Lands' End to exchange our JV stake for equity in WHP Global in a potential WHP monetization event presents compelling and unique upside opportunity.

This is a highly differentiated component of our equity story, one that is not typically reflected in traditional retail valuations. Now turning to our commercial strategy on Slide 6. Consistent with the JV agreement, Lands' End will continue to do what it does best and operate its portions of the Lands' End business under a long-term license agreement with the JV. This model creates 2 complementary growth engines.

Lands' End is focused on operating, driving its consumer businesses through its websites, serving the needs of enterprises with Outfitters and day-to-day positioning and delivery of Lands' End through other digital channels such as marketplaces.

The joint venture is focused on extending the brand, unlocking higher-margin licensing growth across new categories, partners and geographies. Together, they expand both the earnings power and the strategic reach of the Lands' End brand.

Our direct-to-consumer business remains the core of the Lands' End operating model. Through our digital channels in the U.S., U.K., France and Germany as well as marketplace partners, including Amazon, Nordstrom, Kohl's, Macy's and Target, we meet customers where they are and serve them with a solutions-based customer-first assortment.

Across this business, we are expanding our customer file, improving new-to-brand acquisition and strengthening gross margin by emphasizing higher quality, full price selling rather than chasing lower value promotional volume.

Next, our B2B business, Lands' End Outfitters, provides branded apparel and uniform solutions to national accounts, Fortune 500 companies, small and midsized businesses and more than 5,000 U.S. schools.

Outfitters is a competitively differentiated business with a long runway ahead. We win by combining the strength of the Lands' End brand with market-leading embroidery and personalization capabilities, service levels customers trust and a platform that supports recurring demand across attractive markets.

Importantly, these operating businesses are the Lands' End cash flow engine. They fund reinvestment in product, marketing, technology and customer experience. They support disciplined capital return and they provide the earnings base from which we can create value as the JV adds incremental high-margin growth.

In other words, Lands' End and the JV are designed to work together. The operating company drives durable commerce and cash generation, while the JV extends the reach and monetization of the brand.

Now that we've discussed this transaction and our operating model, it's important to highlight the growth drivers that strengthen Lands End, support cash generation and position the company to deliver long-term shareholder value.

Beginning on Slide 7. On the top left is the strategy you've heard us talk about before, one that has been greatly accelerated through the JV with WHP Global. Together, we're partnering to expand the Lands' End brand into new categories, new channels and international markets where we do not currently operate.

WHP Global brings a terrific track record when it comes to licensing high-caliber brands, and we have great confidence in their ability to drive success with the Lands' End brand. This strategy is now materially accelerated through WHP's platform.

Shifting to the right, another core growth driver is our solutions-driven product strategy. We build the brand to be ready for life's every journey with franchises that solve real customer needs and keep Lands' End relevant across the arc of the year.

In outerwear, we are focused on owning the weather through standard programs like Squall, Wanderweight and Anyweather. In swim, Tugless, Slender and our new SlenderLite Suits extend that same solutions leadership into a category where Lands' End has been a market leader for more than a decade by bridging fashion, technology, fit and function.

Our tote franchise tells the same story. It is iconic, functional and a true wardrobe staple and the business continues to grow double digits. Just as important, totes are the #1 item purchased by new-to-file customers who are younger than our existing customers, making the category both a significant revenue driver and one of the strongest entry points into the brand.

Moving down the slide and picking up on that theme, our customer relationship remains a distinctive advantage with the average customer relationship spanning 20 years, and we continue to bring in new customers who show strong loyalty once they enter the brand.

There is also real connectivity across our divisions, a school uniform mom can become a DTC customer, then shop with her child over time, reinforcing the lifetime value cycle that makes the Lands' End customer model so powerful.

Finally, on the bottom right of the slide, underpinning everything we do to drive performance is our continued focus on world-class operational execution. First, we're continuing to invest in and grow our 2 digitally native businesses, our DTC and B2B platform, leaning into the franchises and solutions that are clearly resonating with customers.

Second, we are deploying AI and advanced analytics to sharpen our marketing with a focus on reaching the right customers at the right moment with greater precision and efficiency. Third, we are deepening our personalization capabilities to deliver a stronger digital experience, strengthen customer loyalty and convert onetime buyers into repeat customers.

These are active areas of investment and focus, and we believe the progress we make here will be meaningful drivers of the company's future performance. Moving to Slide 9. Our intellectual property joint venture with WHP Global closed on April 1, 2026.

And in roughly 60 days, we have already seen clear evidence of the platform's potential. The JV has agreed to consolidate and extend 3 licenses with our largest apparel licensee to create 1 license through 2033 at meaningfully higher guaranteed minimum royalties, reached an agreement in principle to extend our footwear partnership by 7 years and selected a new home textiles partner after a competitive process.

Together, these actions are expected to drive more than $150 million of long-term guaranteed royalty value to the JV over the term of these agreements with additional opportunities active across more than a dozen new categories and international markets.

Just as important, WHP Global continues to expand its brand platform with real ambition, validating our choice of partner. This recently announced definitive agreement to acquire Marc Jacobs from LVMH increases WHP's global retail sales to more than $9.5 billion annually and further strengthens its position in premium fashion.

That matters to Lands' End because our exchange option gives shareholders exposure not only to the growth of our brands within the JV, but also to the value creation potential of a scaling increasingly strategic platform. Taken altogether, these updates reinforce the strategic value of the joint venture and give us even greater confidence in the long-term opportunity with WHP Global. Bernie, over to you.

I'll take Slide 11, where we reset the baseline for how to think about Lands' End financially following the creation of the joint venture. What we've done here is recast our fiscal 2025 results as if the JV structure had been in place for the entire year.

And similarly, we used the proceeds to pay off the term loan. This is an important step to provide investors with a clear comparable starting point as we move forward. At a high level, there are 4 key changes to call out in this exercise.

First, on revenue. Reported revenue declined modestly by approximately $18 million. This reflects the fact that certain licensing revenues are no longer recorded within Lands' End as those rights now sit with the JV. Second, at the gross profit level, you see a more significant change.

Gross profit decreases by about $83 million and gross margin declined from 49% to 43%. This is primarily due to the introduction of royalty payments that Lands' End now makes to the JV under the long-term license agreement.

Third, and importantly, you begin to see the offset from the new structure in other income, which now includes our 50% share of JV profits. That contribution adds approximately $37 million in this recast view.

When you put these elements together, adjusted EBITDA shifts from $102 million to $56 million. While that is a lower absolute level, it's critical to emphasize that this is largely a structural reclassification rather than a reflection of weaker underlying economic.

Finally, and just as important, below the line, the benefits of the transaction become very clear. Interest expense declined dramatically from roughly $37 million to just over $4 million as a result of fully repaying the term loan with the proceeds from the JV transaction.

So while adjusted net income and EPS are modestly lower in this recast view, the company is now operating with significantly reduced leverage, materially lower interest burden and a more flexible capital structure.

Stepping back, the key takeaway from this slide is straightforward. We are establishing a new financial baseline that reflects a hybrid model where Land's End generates cash through consumer digital and Outfitters, while the joint venture provides a growing high-margin royalty stream through licensing.

This framework is what underpins our outlook for improving earnings quality, stronger cash generation and long-term shareholder value creation. Now turning to guidance on Slide 12. Our guidance reflects current conditions, including tariffs at currently implemented rates and prevailing macroeconomic factors.

For the second quarter, we expect net revenue to be between $290 million to $310 million, adjusted net income of $2 million to $5 million and adjusted diluted earnings per share of $0.06 to $0.16 and our adjusted EBITDA to be in the range of $11 million to $14 million.

Turning to full year. We expect net revenue to be between $1.3 billion to $1.4 billion, adjusted net income of $10 million to $20 million and adjusted diluted earnings per share of $0.32 to $0.65 and our adjusted EBITDA to be in the range of $68 million to $78 million.

Our guidance for the full year incorporates approximately $40 million in capital expenditures. Let me shift now to our 3-year targets, which we view as a separate but important way to frame the earnings power of the business under the new model.

Starting with revenue, we are targeting mid-single-digit annual growth over this period. It's important to emphasize that this growth is expected to be driven primarily by our core operating businesses, specifically continued expansion in direct-to-consumer and Outfitters.

We see opportunity to grow through increased customer acquisition and retention, strength in key product franchises and continued momentum in our B2B platform. Turning to profitability. We expect to deliver a growing adjusted EBITDA margin reaching the high single digits over time.

That margin expansion is supported by improved merchandise margins, disciplined cost management, operating leverage as the business scales and increasing contribution from high-margin JV profit streams.

And importantly, underpinning both our growth and margin outlook is the step change in financial flexibility we've achieved following the JV transaction. With a stronger balance sheet and significantly reduced interest burden, we now have greater capacity to allocate capital deliberately and consistently in support of shareholder value creation.

That includes reinvestment in the business to support profitable growth, maintaining a disciplined cost structure and executing against our authorized share repurchase program when we see compelling value. So while revenue growth is driven by the core business, the combination of financial flexibility, capital allocation discipline and high-margin JV economics positions us to deliver high-quality earnings and stronger long-term returns to shareholders. Back to you, Andrew.

Thanks, Bernie. We want to spend a few minutes walking through how Lands' End realizes value from the JV today and the potential additional upside embedded in the exchange option over time.

On Slide 13, the framework is straightforward. There are 2 complementary sources of value from the JV, recurring royalty cash flow and event-driven equity upside. First, the JV generates royalty income from the Lands' End operating company from new licenses added over time.

Because Lands' End owns 50% of the JV, we receive 50% of those profits on a quarterly basis, net of expenses. That creates a recurring, high-quality earnings stream that grows as the brand expands.

Second, in the event of a qualifying WHP global monetization event, Lands' End may or in some cases, be obligated to exchange its JV stake for equity in WHP Global at the same valuation multiple implied by that transaction.

Because scaled brand management companies like WHP often command materially higher multiples than traditional retailers, this creates a meaningful second layer of potential value. Put simply, the JV can create value in 2 ways: through cash earnings we receive along the way and through the equity value that could be realized in a potential monetization event.

Slide 14 is intended to show what the second source of value could mean under various illustrative assumptions. Now turning to Slide 14. This is one of the most important slides in the presentation because it illustrates how a potential WHP monetization event could translate into additional value for Lands' End shareholders beyond the recurring royalty stream we discussed on the prior slide.

The mechanics are straightforward. Lands' End owns 50% of the JV and in certain qualifying WHP monetization events such as a sale or an IPO, we may exchange that JV stake for equity in WHP Global.

The value of that exchange would be based on the JV's EBITDA at the time of the event and the valuation multiple implied by the WHP transaction. Put differently, if the JV grows meaningfully and WHP is valued at a premium multiple in a monetization event, Lands' End could participate in that upside through the exchange option.

To illustrate the range of outcomes, we've modeled 2 scenarios using different assumptions for JV EBITDA and the monetization multiple. In the first scenario, assuming JV EBITDA of $100 million on a trailing 12-month basis and determined in accordance with our LLC agreement and a 13x monetization multiple, the JV would be valued at approximately $1.3 billion.

Lands' End's 50% share of that value would be approximately $650 million, which equates to roughly $22 per Lands' End share. In the second scenario, assuming JV EBITDA of $150 million and a 15x monetization multiple, the JV value would rise to approximately $2.25 billion.

Lands' End's 50% share would be approximately $1.1 billion or about $38 per Lands' End share. These scenarios are illustrative and actual outcomes will depend on the timing and terms of any potential monetization event.

But the purpose of this slide is clear to show that the exchange option could represent a meaningful and currently under reflected component of Lands' End's value. We do not believe this is reflected in our current valuation, and we now have both the balance sheet flexibility and the repurchase authorization to respond when the disconnect is too wide.

Before we open the line for Q&A, I want to take a moment to bring together what we have covered today. We came into this call with a clear objective to give investors a fuller picture of where Lands' End is headed and why we believe the company is at a genuine inflection point.

We have real momentum in the business, and we are executing against a clear and deliberate strategy. At its core, Lands' End remains fundamentally strong with underlying demand, growing new customer acquisition and improving engagement across key categories.

We have created a business model that is now more flexible, less leveraged and better positioned to convert brand strength into earnings and cash flow. At the same time, the WHP transaction has strengthened our investment case in multiple ways.

We have realized immediate value through the $45 per share WHP tender offer, significantly deleveraged the balance sheet and created new avenues for long-term value creation through recurring JV profit participation and the exchange option.

Additionally, our Board has authorized a $100 million share repurchase program. Taken together, we believe the opportunity in front of Lands' End has never been clearer. We have an iconic brand, durable customer relationships, differentiated operating platforms, improved fundamentals and a capital structure that now gives us the ability to invest in growth while also acting decisively on behalf of shareholders.

To our shareholders, our message is straightforward. We believe there is significant value in this company, and we are focused on driving shareholder value. We appreciate your support, and we take this responsibility seriously, and we are focused to deliver the progress and value creation opportunities we have outlined today.

Finally, I want to thank all of our dedicated employees at Lands' End. Together, you've built a tremendous brand, and the results we've discussed today are a reflection of your commitment and hard work. With that, we are pleased to open the line for questions.

[Operator Instructions] We'll take our first question from Dana Telsey with Telsey Advisory Group. Please go ahead. Your line is open.

Hi. Good morning, everyone. Thank you very much for the detailed presentation of the opportunities that lie ahead, which certainly are compelling. A couple of questions just on the now and in the future. On the now, in terms of current business trends, what you're seeing, is the distribution center warehouse management system update complete? Is there any hangover into Q2? And then tariffs and tariff refunds and how you're planning that?

And then on the future, with the opportunities that WHP brings, particularly in licensing, how are the 2 of you ensuring that it's the quality that you want, design process? And how do you see the time line of when new license categories begin to evolve? And what you -- in terms of the royalty stream, how you're thinking about it between the two of you? And then lastly, just on that $45 price, how did that come to be? Or how did that number come to be? What's the background? Or how did that get set up?

I'll get going, and Bernie can fill in. Current business trends are really pretty positive. I mean we said it in the call that we had seen positive comps not just through Memorial Day, but beyond Memorial Day. And actually, we're seeing a stronger swim season come together.

There's been a trend in the market for the last couple of years for one pieces. We do see that continuing. Our big product launch for the spring was the SlenderLite Suit, and that's been very positively received.

But actually, one of the things that we're seeing that I'm particularly pleased about because it really is in Land's End DNA are 2 pieces. We put mix and match capabilities into the site that let you personalize a whole lot more.

And frankly, they're a great solution and that they -- your top may be a medium and your bottom may be a small and we can accommodate you appropriately. And I think that continues to be very positive for us and a nice surprise.

In terms of that, we've seen really good numbers coming out of our home business, our men's business and actually even our women's business. As it's warmed up, we've really seen the numbers also warm up and feel good about where Q2 is.

With regard to tariffs, I mean, there's 2 parts to this. There's the accounting of it and then there's the book part of it. And I would say, and I'll let Bernie speak to it, we have started to receive cash back from the government for the tariffs that were ruled illegal last year.

And then for this year, we're just taking a very prudent stance. We're booking everything at 15%, so the higher rate and then realizing it as it comes in and right now at a lower rate, but we just stand ready to deal with that and really have built it into our operating model.

We've done a lot of work around AUC to make sure that we have good margin structure that can see us through this. We've done a lot of editing our line and making sure that it's more balanced and more concentrated. And actually, we continue to reduce the number of factories that we source to. That's been something that I've been working on since I joined the company. And I think with Matt DelVecchio coming in as our Head of Sourcing, we'll continue to see that reduce further. Before I go on to the future questions, I'm just going to see if there are any sort of...

Yes. I think the only thing I'd add on the tariffs is when Andrew talks about us consolidating our supply chain, what we've done is we've gone with many larger manufacturers who have very flexible supply chains and can move between countries so that as there is challenges in tariffs in one country, we're able to move that production to a different country with the same vendor with the same timing, and that's been very positive for us. And as Andrew talked about, been very positive for our average unit cost of product.

Thank you, Bernie. Turning to the future and your questions there, Dana. I mean, first of all, let's just get to the emotional side of it. We ran a long process, and we found the partner that best match Lands' End, and that was WHP. So we see the world from the same perspective, and we see their ambition and vision and it meshes with us.

If you look at the Marc Jacobs deal, that's a big push forward for a scaled brand management company like WHP. And so if that's their direction, that's the direction we saw during the joint venture negotiations.

And I think that speaks volumes to how we will go forward. From a more practical standpoint, obviously, we have a governance solution in place where -- we sit -- I sit along with my Chair, Josephine, on the Board of the IP company, along with Yehuda, Stanley, and Effie.

So we're able to meet on a regular basis and ensure the brand goes forward right. And then fundamentally, once you get below that, and this is part of our agreement and again, part of why we bought into WHP as such a great partner for us.

They talk about Lands' End, HQ, what we represent and what Bernie and I were discussing this morning and all of the design comes out there and all of the direction. And they have been really great sort of tapping into the work that Kim and Sarah are doing, in particular, in the consumer brand to make sure that we're really staying on brand and the story is consistent, and we don't end up with some weird looking brand that grows around the world.

So that's been excellent. I think the time line for new licenses, we should expect to see new licenses really start to kick off next year, if I'm perfectly honest. There's a lot of work going on right now.

And I think we mentioned that there's probably a dozen or so in the pipeline, licenses in the pipeline that Yehuda and his team are working on. And we're very excited about those and doing our part to help to bring them to market. In terms of how we look at those royalty streams coming in, we're very thoughtful about how we balance that out. how we put that into the numbers. And we looked at various business cases. And the one we presented to you, I would say, is the most realistic and then I'll let Bernie give his comments on it.

Yes. I think I'd also like to start with on -- when you talked about the time line of opportunities. What WHP started with is renegotiating the current licenses we have, and they've been able to extend the terms of those licenses and increase the total amount of GMR, which we stated in our presentation, which I think is a big first step and shows what benefits they're going to start applying to this.

As far as the royalty streams go, we already had the Lands' End licensing team already had some new licenses in line, and those stuff will start coming in -- we will start producing royalties in the fall. And then we expect to see the WHP effect take effect in the next year, as Andrew stated.

And then I think to your last question on the $45 per share, Dana, I think I'd direct you to talk to Stanley and E at WHP as to why they make that. On a completely separate note, I'd point you to Page 10, where we looked at what a potential monetization event could be in an exchange.

And scenario 2 is an incremental $38, which if you take that with our share price right now, puts you above that $45 threshold. That's how I would look at a number like that. But again, I can't speak for them.

I think that's -- I think as a conversation you should feel free to have with you who invest and you see them. But I think it all underpins the incredible amount of value that I think is achievable within the greater Lands' End world.

Also, as I look at it, the opportunity that shareholders have is really to invest with Lands' End and participate in WHP's event. It's a great backdoor in for a regular investor that isn't necessarily available with WHP being private and part of a private equity company. So there's some upsides in there that I think merit further exploration that we feel really excited about.

And Dana, just one last follow-up to one of the litany of questions you asked about the DC status. That is behind us. We have completed that implementation and are back on pace and shipping on time.

Yes, Dana, we switched WM on. And it's like how many of these calls if you've done where some have switched on Manhattan and they find themselves backlogged by weeks. We were backlogged by 1 week, and we've taken care of that.

Thank you.

Thank you.

Thanks, Dana.

We'll move next with Marni Shapiro with The Retail Tracker. Please go ahead. Your line is open.

Hey, guys. So before I ask about product, which is really my favorite conversation, could you just clarify one thing about the JV? Any licenses that Yehuda will do for the brand, do you have -- I don't want to say control, but like at least a red stamp so that they -- we don't see something crazy or they don't set up shop with a huge display in the front of Walmart selling Lands' End grapefruits or something weird?

That's a great question, Marni. We have a 50-50 joint venture. which is our IP company, the licenses are within that. It is controlled by WHP. There are some instances where we have rights over where the brand can go, and they should address exactly what you're talking about so that if things went crazy, we wouldn't end up in a place where we didn't think it was right for the brand. And I think there's an understanding that bears reiterating that has come through that we very much see the world in the same way. We see growth opportunities for Lands' End around the world in categories and in channels. And I think that there are so many of those to go get that we're not really going to get into a conversation about the brand being diluted -- and again, I come back to it, Lands' End was an important deal for WHP to do. That's an important marker for its portfolio. And the stepping stone from there was to Marc Jacobs. So you can see the trajectory that Yehuda and his team are taking. And I think that speaks volumes to the ambition that we have for this joint venture.

And -- but Marc Jacobs isn't part of -- Marc Jacobs part of the joint venture? I mean I understand that you would participate in -- the joint venture would participate in WHP's success, but it -- and Lands' End then gets a percentage from that. Is that how it works?

That's right. So WHP as an event, whatever multiple that they have that are 50% of our joint venture will convert at that EBITDA multiple, and then we'll receive that back. may convert.

Right. Yes, yes. Right. And then just to clarify one last thing. If you are watching -- you're watching your stock, you don't like the valuation. It's trading at you now have the ability to buy back shares and/or at some point, like if you feel like the valuation has been -- has not been fair for 6 months, you can turn to WHP and say, all right, let's do the sale. And is that an opportunity? Is that sort of the floor that you're putting at for the company?

No. specifically, we've given ourselves $100 million to go out and buy our stock in case we think it's undervalued. I mean we look at it and I point you to Page 10. We think that the exchange mechanism for us is worth an incredible amount of money. We don't necessarily believe that's reflected in our share price right now. And we do want it to be reflected in our share price, and we have the ammunition from our Board to go after it to get that value for our shareholders. In terms of the ability to back out or buy into it, no, this mechanism is a one-way mechanism where we will stay in partnership with WHP. We believe in this for the long term.

Okay. That makes sense. Perfect. And then could we just talk about 2 other things. You talked about the marketplaces, which you have with Target, Macy's, Nordstrom and then B2B as both growth vehicles. I guess if I was ranking the 2, is the B2B the bigger opportunity right now? Or is it kind of equally split?

B2B is an amazing opportunity. Don't get me wrong. I'll take all the opportunities out there, Marni. I think that we can continue -- I'm going to be greedy and ambitious for Lands' End. I think that B2B, we never give it enough airtime. But the reality of it is that's an incredibly powerful business for us going forward, and it touches so many different avenues because we split it into a couple of pieces. The school uniform continues to be really powerful for us. We're the largest player in the school uniform market.

We service over 5,000 schools. And I think the opportunity is almost unlimited to grow that, particularly as we see school uniforms being such a strong future trend. It's important that we stay with that. And we've really refined that model. I'm going to go to plug in for the team now. I mean everything we do for the school uniforms is done with OEKO?TEX. So you can send your kids to school in the knowledge that they're not wearing any chemicals in their uniforms that haven't been tested or could harm them. These are the best uniforms in the market.

We have a similar approach when it comes to the commercial uniforms. And the goal there is to continue to build with our big partners and then offer a full-service sort of self-service model increasingly to mid- and smaller-sized companies. And I think that if you look at the growth in the market space of B2B, there's one thing that is really absent brands. We bring a really strong brand and have a really strong brand positioning that I think can really enable and empower us to grow. So I'm greedy for both, but I do really want to call out that B2B business. It's an incredible business.

And then can I sneak in one more?

The products...

Is greatly improved. I mean the women's has looked so amazing this spring. And you guys are right there on the trends, but with a lens from Lands' End, which I really appreciate. And I'm on your site all the time. And sometimes I question, why are you so promotional? I know it's very hard to pull that needle, but there are times where I'm on the site and I'm looking at some of this great product, and I'm thinking you don't need to discount this. But is it a process to get away from that? Or is it priced with the intention of that because at the end of the day, in the U.S., people want to deal.

Thank you, Marni. First of all, it's great that you're on our site. It's great that you like our product. I know you and your mom will both wear it, so you are perfect intergenerational customers. And that just -- that's exactly what we're looking for. I put everything into a 2x2 grid and the sort of like there's new and 5x customers and the 5x customers are the ones who've been with us for 20 years on one axis and then along the other axis, there's like full price and discount pricing. And it's the weighting of it, Marni, in that we've got a lot of customers who've been with us for years. And so we do tend to adopt more of a high-low strategy. So it's not that we build the product and then we suddenly find we have to discount it and give it away when you get on the site and you see those offers. Part of the secret sauce is that we've built our margins around that. And so that 5x customer who's the preponderance of our customers still, they really like the deal. And so they get a great deal, and we make plenty of margin in it. I can't say that we don't work on it every day to improve it, we do. But that's the model.

Makes sense. Congrats. Best of luck for the spring season -- summer season, I guess.

Yes. Hey, thank you. Take care. We'll talk soon.

Thank you. We will move next with Eric Beder with Small Cap Consumer Research. Please go ahead. Your line is open.

Good morning. Can we talk a little bit -- a few things here. First of all, we've seen continued emphasis on kind of leveraging the embroidery and the customization for the consumer to get them to kind of, I guess, buy more product and kind of shift even more to a lifestyle brand. I mean, how much are you looking upon that? I know you've always done it with totes. But now when you're looking at the catalogs, you can see pretty much with every product and a push. And is that bringing in kind of a different or better customer?

Okay. I'll take that one. And is this -- you try to complete your bingo card and get me to say sausage dog again? I would say that we think that we have a competitive advantage in that we are the largest embroiderer in the United States. And we think that personalization is one of the most important trends out there. And so our choice has been to lean into it. And actually, what we're really doing is we're putting machines to work. We have -- I think you've been to our distribution facility, Eric.

We have hundreds of these machines, and we have a staff that are well and smartly able to use them. And we have started to run basically a light manufacturing process with our systems and our processes that allow us to get more throughput. It's value added to the customer. It's value-added to us because there's an incremental cost that comes with it. And I think that it gives the customer choices in how they want to be seen and how they want to present themselves and how much they want to spend.

So the entry price points for a tote bag may be great, but you can certainly make it into your own with a whole customization kit that actually goes beyond embroidery and we can give you chains, pearls, doodads, whatever you want to put on it. And so yes, it's a concerted strategy. It has incredible reach. It takes -- and it works on both the customers that customer groups that I was just talking to Marni about. So it's our new to our new-to-brand customers, they tend to find it in social. That's become very powerful for us.

And social is about your own personalized feed, the algorithm interacts with you and you interact with it. And so we're able to really give you that breadth of personalization that you're seeking. And then for our 5x customer, who tends to be more of a value seeker, that's that long-term customer. Again, we give them opportunities to buy the products at a price that they like that then customize on top of it and that allows us to build margin, give us that differentiation and move the whole customer cohort upwards.

And Eric, we also create leverage because we require to have all that infrastructure for our B2B business. So by then leveraging that into our D2C business, we're just getting extra benefit from those machinery.

Great. So it's a great leverage tool. When you look at you talked about the freedom to now pursue more share repurchases than you were before under the prior debt agreement. I guess the other piece here is that I know Lands' End hasn't done this, but you now have, I guess, the potential to acquire other brands and look at other companies to invest in also. Is that part of a long-term kind of playbook here, too, that you can leverage kind of the infrastructure you've built that way?

Yes. As we build away from the transaction and build out cash, we've never been in a position really where we've been able to reach out and deploy capital where it might make the best sense for the best return for our shareholders. And we now have the latitude to do that, and we will do that. So if it makes sense to buy the stock, we will buy the stock back. If it makes sense to go out and acquire a complementary company, we will go out and acquire a complementary company. And I think that, that's a great place for us to be in that many paths to valuation have opened up for us. And then you sort of like layer on top of it, we've got this option or exchange component if and when WHP has an event is a third stream of value for us that I just think is incredibly powerful for shareholders and potential investors in the Land stock.

And then obviously, with the partnership, you have the same ability to use structures like the recent Marc Jacobs deal they did with GI. They bring that flow in there, too.

Yes. I think that retail is obviously changing a lot. I've talked about this before. Things have -- things in the industry are not so cut and dry as they were. And I think that we're all looking for different ways to unlock value for our shareholders. And the deal that we did and then I think subsequently a version of it has come to pass between WHP and Marc Jacobs, we'll see more of that because I think that we all bring certain skills to the table. We all have certain investor profiles. I think the opportunity is to look for like-minded partners and like-minded companies where we can amplify that and drive shareholder value.

Great. When you look at the international business, could you -- I know that you've been expanding in France and Germany. How should we think about the potential -- the potential of those and how that's moving forward and the potential now in the new structure to continue kind of the European expansion? Or is that going to be part of the licensing?

I think it's going to be a hybrid. I think that it is going to be a hybrid. There are -- we have certain rights to markets, particularly digital marketplaces in the countries that you've mentioned. And then our joint venture with WHP has rights to different components of retail in some different countries in there. It doesn't mean that we won't go to market together. It doesn't mean that we won't assess some of those opportunities to take within the 4 walls of land.

But I think that there's is opportunity. And if we call it out specifically, it has been a very strong first half so far for Germany. We've been very pleased to see what's going on in that market. The customer has really embraced where we're taking the brand. The brand looks different than it's been. We've really made a conscious decision to get away from our traditional cataloging routes. That doesn't mean that we're not sending catalogs out, but it means that we're coming to market in a more branded way, attracting newer customers and really looking to leverage our brand strengths versus maximize with the customers we had.

If I contrast that, the U.K., it's been harder. I think the economy is a little more challenged. In the U.K., there is more uncertainty in the U.K. But even in saying that, we've continued to see positive comps in there through the first quarter and into the second. So I remain quietly optimistic that we're going in the right direction with our franchise product that we have in place geared towards new and existing customers and really being about a more aspirational brand that fits the consumer's life much as we've done in the U.S. But again, as I've talked about in the past, elevating it along the way so that it creates a halo for our brand in the U.S.

Great. Last one. You've talked a lot about the changes in the DC and how they impacted negatively impacted. What going forward will the upgrade that you've done in the DC drive help improve the business going forward?

Okay. It's a lot of questions this morning, Eric. They're all good questions. The DC -- by moving to the Manhattan warehouse management system, we've been able to make the distribution center in real time. So we can actually complete and fulfill orders within the day. So we pick up a day for our customers. And that's really important because that cuts down our delivery time for a standard order roughly 20% to 25% -- and I think that's an important enabler. It also opens us up to a future where we are able to, for example, Prime badge our product on the website, I think to really leverage the Amazon network as we go forward that we haven't been able to do before. And then the third part is it really enables us to do a lot more work around embroidery and personalization that we've not been able to reach. So there are immediate improvements for the customer, and I think they'll only continue to grow. Thank you, Eric.

Great. Congrats. Thank you.

Our next question comes from Michael Kupinski with NOBLE Capital Markets. Please go ahead. Your line is open.

Thank you for the comprehensive detail on the company's transformation. A couple of quick questions. You mentioned the CapEx will be $40 million. What additional investments are required to complete the warehouse transformation? And I guess if you could just tell us what would maintenance CapEx, what would that look like?

Sure. And welcome, Michael, to our calls. Most of that $40 million is actually our investment in SAP, which we will go live with next year. And then, of course, the WM, which is helping prepare us to be able to go on SAP going forward. From a maintenance standpoint, we will be setting a new baseline once we have SAP in place, and then we will be able to set that baseline. But our expectations are after SAP is in place and we have that fully run rate built in that we will be at $20 million or less.

Got you. And the gross margin decline of 400 basis points, how much of that was attributable to the distribution disruptions, tariffs? What gross margin level should investors expect once the operations are fully normalized?

Right. As you would be aware, the tariffs were not in place in the product last year in the first quarter. So all tariffs are extra in Q1. So there's a run rate there that is affected that we have now hopefully mitigated going forward. And then, of course, with the distribution disruption, there was costs that were incurred, but the product -- the revenue was not recorded. So we will expect to be flat on a like-for-like basis. But now when you build in, if you look at the resetting the baseline and you build in the royalties from the WHP deal, you'll be able to calculate what that variance will be running forward. It was 500 basis points, 600 basis points when you do the resetting of the baseline. And that will be an effective rate for the most part going forward from the effect of the WHP deal.

So I think, Michael, you should -- if you look at Page 7, that's what Greg is referring to. We've got that -- we recast 2025. We have the 43% margin in there. I think that sets the new base from which we'll work. And you should plan for your model for improvements on that annually.

Got you. And then the increased inventory levels, how much of that was timing related? I know that you said that there was -- you think that there is a shift into Q2. I was just wondering if there -- if you could just -- I know there's some seasonality and things like that. But I mean, is there a way to kind of tell us a little bit about the shift that you were thinking...

Sure. It's equal parts timing from the DC. It's equal parts tariffs compared to last year. And it's equal parts, we took a very conservative approach when tariff risk became part of the situation, and we reduced our inventory buys through that period. And we are now resetting back to our normal purchasing levels.

Okay. Perfect. And in terms of the tariffs, are there additional mitigation actions that remain available? Or is that largely now complete?

We will continue to look at pricing opportunities to the consumer. We've passed -- I mean, roughly, and I know we haven't had the chance to meet Michael, but we took the view and we continue to take the view that the vendors would take about half the tariffs and then we would split the remainder between ourselves and the consumer, and that continues to be how we think about it going forward. So there is a piece of it that we're definitely going to have to eat and it will flow through the P&L, but that's reflected in the margin guidance that we've just given you.

Okay. Perfect. And I just want to go back to the stock buyback one more time. I know that -- you indicated that the stock is currently trading well below intrinsic value. The repurchase authorization is nearly 1/3 of the current market capitalization of the company. What determines the pace of buybacks? And under what conditions are you -- would you become aggressively buyers of your stock?

I think that's something that we'll view in future calls. I think that's too early for us to get into at the moment. What I would say is that we have the ammunition. We are ready to use it. We believe that the stock price should be higher, and we will continue to make judgment calls on how we buy into that. And I think it's better that we spend more time on the future call, but that we have more time line grow about where you have seen the buybacks I would agree with you, $100 million would be a significant buyback. It would change our float materially.

And actually, it would change the valuation of the company. As we made comments in the main body of the presentation, we really would expect this to be something that drove our multiple. And as we saw the EPS increase, we'd expect an elevated stock price coming out of it just based on looking at how this has happened or transformed other companies. Okay. We are out of time. The market opens in 5 minutes. So Michael, we will look forward to speaking to you offline.

Thank you. This does conclude our Q&A session as well as our conference call. Thank you for your participation. You may now disconnect.

Welcome, everyone, joining the Lands' End Fourth Quarter and Fiscal Year-End 2025 Earnings Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions]

It is now my pleasure to turn the meeting over to Tom Altholz. Please go ahead.

Good morning, and thank you for joining us this morning for a discussion of our fourth quarter and fiscal 2025 results, which we released this morning and can be found on our website, landsend.com. I'm Tom Altholz, [ Lands' End's 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're about to discuss includes forward-looking statements. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed on this 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 and our solicitation recommendation statement filed on Schedule 14D-9 on March 11, 2026. 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 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 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'll turn the call over to Andrew.

Thanks, Tom, and good morning, everyone. The fourth quarter was a turning point for Lands' End. As we return to top line growth driven by our most significant businesses and capped off a year in which we strengthened the foundation for sustainable, profitable long-term growth. During the quarter, we also announced a transformative transaction with WHP Global, which we're confident -- built up that platform and will help deliver compelling value for shareholders. More on that in a moment.

Focusing first on our performance. We delivered 5% comp growth driven by strong execution across our owned, licensed and marketplace businesses. GMV grew by mid-single digits in the fourth quarter, reflecting broad-based momentum and increasing relevance of the Lands' End brand. We're seeing that momentum show up clearly across the business. Our third-party marketplace business grew mid-single digits, led by double-digit growth at Amazon, where our iconic Bedford Quarter Zip sweater was the #1 pullover on Amazon during Black Friday weekend. Our business in Europe delivered high single-digit comps, reversing a multi-quarter trend as we reenergized our customer file and delivered on our solutions focus. Our school uniform -- building on another successful back-to-school season.

In our U.S. consumer business, our solutions-based products and franchises continue to resonate. Iconic products, including Christmas stockings and Canvas pocket totes were both up double digits year-over-year, and we saw strength across our weatherproofed assortment as well. Increased investment in digital marketing, accelerated customer acquisition, delivering measurable results by year-end [indiscernible] household in Q4 versus last year, our strongest performance since the pandemic and ended the year with positive new-to-brand growth overall.

And we're not just adding customers, we're leveraging the household. Lands' End is increasingly a multigenerational brand serving grandmother, mother and granddaughter. We also leaned into brand building in new ways, launching our holiday shop earlier and activating experiences like our chaotically customized New York pop-up, which further helped introduce Lands' End to new and younger customers driving awareness and engagement across social platforms. Our product franchises continue to differentiate Lands' End and they're driving profitable growth. As noted, we moved quickly to spot and lead the Quarter Zip trend that took off on TikTok over the holidays, and it became a #1 item across multiple customer touch points.

In womenswear, our Owning the Weather strategy is working, feather-fee, outerwear and drifter sweaters delivered best ever sales and best-ever margin fourth quarters.

Turning to our adjusted EBITDA. As we closed out the year, we made a deliberate choice to prioritize growth and set the stage for long-term value creation. We delivered $102 million in adjusted EBITDA for the full year, up 10% from last year and in line with our expectations. The key takeaway here is that we executed our strategy, delivered significant growth, maintained a disciplined approach to expenses and strengthened our financial foundation to generate ongoing momentum. We're well positioned heading into 2026. And I couldn't be more confident about the opportunities ahead for Lands' End and the value creation potential for our investors.

That's an important perspective in the context of the transaction we announced with WHP Global. This is a partnership we are executing from a position of strength. This partnership with WHP Global, which includes the creation of a joint venture to monetize and build on our IP through licensing is compelling for our shareholders and other stakeholders. It is designed to do several things at the same time, unlock near and long-term value, accelerate brand licensing growth, materially strengthen our balance sheet and expand our strategic flexibility as the same operating company our customers know and love. The WHP Global team led by Yehuda Shmidman, has a successful track record licensing and growing a number of diverse and well-recognized brands like ours. We expect their deep expertise will further expand Lands' End into new categories channel internationally, creating incremental long-term higher-return growth opportunities for Lands' End's shareholders.

As part of this strategic transaction, Lands' End will contribute its intellectual property to the JV and receive $300 million in cash proceeds for WHP's controlling 50% stake in the JV. After the transaction closes, we plan to use the majority of the cash proceeds to retire our term loan in full. Let me reiterate, the transaction will leave us with zero term loan debt and markedly reduced interest expense. This immediate balance sheet reset will provide the opportunity to evaluate and execute on potential investments, including investing in our direct-to-consumer and Outfitters growth and capital allocation alternatives that drive long-term shareholder value.

This is not a sale of the whole company. Under our long-duration license agreement, Lands' End will pay royalties to the JV and in return, receive roughly 50% of both our royalty payment and other royalty payments received by the JV net of JV expenses. Additionally, WHP has launched a tender offer to purchase approximately 2.2 million shares at $45 per share, a substantial premium to the pre-transaction trading levels. This purchase of Lands' End stock represents WHP's further commitment to the success of Lands' End platform as a whole validating our belief in the strength of our business.

Finally, there is significant upside potential for Lands' End shareholders to participate in the WHP monetization event including an IPO for sale of WHP. Specifically, Lands' End may exchange its 50% stake in the joint venture for shares in WHP Global itself at the same valuation multiple as WHP receives as part of its monetization event. This is notable as IP companies like WHP Global historically raised capital at valuation multiples in the mid- to high teens, higher than typical retail apparel companies. Overall, this partnership validates both the lasting strength and the tremendous opportunity ahead for the Lands' End brand. We believe this is a compelling outcome for the company and our shareholders, and we look forward to completing the transaction in the coming weeks and continued growth of our brand thereafter.

I'll now turn it over to Bernie to discuss our performance in more detail.

Thank you, Andrew. For the fourth quarter of fiscal 2025, total revenue performance was $462 million, an increase of 5% compared to the fourth quarter of 2024. GMV grew mid-single digits, driven by strong performance in our Outfitters, third-party marketplace and U.S. e-commerce businesses. Gross profit increased by 4% compared to last year. Gross margin in the fourth quarter was 45%, a slight decrease of approximately 30 basis points year-over-year driven by tariff headwinds, partially offset by our solutions focused go-to-market strategy. When excluding the impact of the unmitigated IEEPA or IEEPA tariffs, gross margin increased by approximately 140 basis points to 47% compared to the prior year. Our U.S. e-commerce business grew 5% compared to Q4 2024, with record new-to-brand acquisition of 20% year-over-year. Third-party marketplace revenue grew 4% led by Amazon, which was up double digits year-over-year. Nordstrom also delivered strong outerwear results. We began to see the benefits from the transformation work in our European e-commerce business as sales grew 9% during the fourth quarter.

SG&A expenses increased by $12 million year-over-year. As a percentage of net revenue, SG&A increased approximately 90 basis points primarily driven by increased marketing spend to drive new customer acquisition and incentive accruals, partially offset by leverage from revenue growth and operational efficiencies.

We delivered adjusted EBITDA of $47 million, which represents a 9% increase compared to the prior year. For the fourth quarter, we had adjusted net income of $24 million or $0.76 per share. As Andrew stated, we capped off a year where we strengthened the foundation for sustainable, profitable growth across the company. For fiscal 2025, we delivered GMV growth in the low single digits, gross margin increase of approximately 80 basis points to 49%. When excluding the impact of the unmitigated IEEPA tariffs, gross margin expanded by approximately 180 basis points to 50%. Adjusted EBITDA increased by 10% to $102 million, with adjusted EBITDA margin increasing by approximately 90 basis points to 8%, the increase was primarily driven by the expansion of our licensing and Outfitters businesses and continued gross margin expansion. Adjusted net income increased by over 100% to $27 million with adjusted earnings per share increasing by $0.46 to $0.86.

Moving to the balance sheet. Inventories at the end of the fourth quarter were $269 million compared to $265 million a year ago. When excluding the impact of IEEPA tariffs on our inventory position, Inventory in the fourth quarter decreased 2%. In terms of our debt, at the end of the fourth quarter, our term loan balance was approximately $234 million, and we had zero borrowings on our ABL.

Turning to the pending transaction. We will use the majority of the $300 million in cash proceeds from the WHP transaction to fully repay our term loan, leaving us with no term loan debt, enhanced liquidity and significantly reduced interest payments. As Andrew noted, this balance sheet transformation will provide more flexibility to the company as we consider and pursue opportunities to enhance shareholder value. In addition to Lands' End paying royalties to the JV, excess cash generated by the JV will be distributed quarterly to both Lands' End and WHP based on ownership split less expenses of the JV. This includes royalty income from Lands' End and other licensees of the JV. Finally, as a reminder, we have $9 million remaining on our existing share repurchase program. As outlined in our earnings press release and as a result of the previously announced joint venture with WHP Global, we are not providing forward financial guidance at this time. With the closing of the transaction anticipated by the end of our first quarter, we expect to provide financial guidance with the release of our first quarter results.

With that, I'll turn the call back to Andrew.

Thanks, Bernie. So here's what investors should expect from us in 2026. First, we will maintain our focus on driving profitable customer growth, improving acquisition, retention and lifetime value through smarter marketing, better personalization and a stronger digital experience. Second, we'll keep raising the bar on product and innovation leaning into franchises and solution-oriented assortments that are clearly resonating. Third, we will stay disciplined on costs and execution, continuing to fund growth while building operating leverage. And fourth, we will expand the brand's reach, particularly internationally through licensing and third-party marketplaces. And with WHP's platform and global expertise, we can move faster into new categories and geographies.

To support that growth agenda, we're also excited to welcome Sarah Sylvester as Chief Marketing Officer. This is a new role for Lands' End and reflects our commitment to building brand awareness and accelerating growth. Sarah brings more than 2 decades of marketing leadership experience, most recently at Victoria's Secret PINK, and we're confident she'll make an immediate impact.

As Bernie referenced, we're looking forward to discussing our strategy and outlook in more detail on our first quarter earnings call following the close of the WHP transaction. During that enhanced earnings call, we'll walk through our priorities and what we believe is a clear path to long-term shareholder value creation.

Let me close with the headline. Lands' End is well positioned in 2026 and beyond, as highlighted by our growing operational and financial strength. Our fiscal 2025 performance together with the opportunity to deliver outstanding value through the partnership with WHP and our strengthened balance sheet give us great confidence in the future of this iconic company. In addition to established long-term GMV growth, in 2025, we returned to revenue growth and improved the model across channels. we delivered positive performance across the business, including a 5% comp growth in the most recent quarter, and we did it with momentum coming from multiple engines, Outfitters, marketplaces and our own digital businesses. Just as important, we strengthened the health of the business.

Customer acquisition accelerated. We acquired 20% more new to brand households in Q4 and our product-led solutions-based approach continue to win across multigenerational customer segments. Now we're entering fiscal 2026 with a clearer financial profile and more strategic flexibility.

With the WHP transaction, we will be well positioned to drive real growth while also investing in our future. We are excited to work with the WHP team and take the Lands' End brand to new levels. We're confident that this transaction and all that it enables will result in a better company for customers, a better company for partners and importantly, a better company for shareholders. As always, we'll be guided by a fierce adherence to taking actions that have improved our earnings power and delivering outstanding shareholder value.

Thank you to our teams and customers. And with that, we will take your questions.

[Operator Instructions] And we'll take our first question from Marni Shapiro with Retail Tracker.

Congratulations. This is so exiting, congratulations on the hire of Sarah. I guess, Andrew, I have a big picture question. I know you're going to discuss strategy once the deal closed, but the hire of Sarah is a big deal for Lands End. From my vantage point, you guys have been very quick on marketing already online, especially St. Patrick's Day, you were right there with the green set, it was fantastic. I guess, how should we think about it differently? Is this external reach? Is this influencer's events? Could you talk a little bit about where your head is at with that?

And then just one very quick one on the WHP deal. Will you guys be able to work with them closely to make sure that any deals that they sign align with your brand vision for Lands' End going forward so that they don't go off and do something that's not within -- what works for the brand? I'm assuming yes, but I just want to ask the question.

It's nice to hear from you. Let's start with the WHP question. It's a great question. And obviously, that came into how we selected our partner. We didn't want to go with any partner. We want to go with a partner that was like-minded and saw the world in the same way as us. So that made that part of the negotiation really easy that you're not going to find the brand distributed through your local car wash kind of thing. So we feel good about it and actually the message really is one of our amplification. We view the partnership with WHP as been one that can really amplify and grow the licensing business that we'd already successfully put in place.

And actually, that sort of turns to your next question, which is what's Sarah going to be doing. And that's really about amplification. Lands' End has not had a CMO in 10 years. And marketing had been split somewhat between creative and performance. Since I've come in, we've been reuniting that and really getting more focused around the customer, we have our solutions. We're ready for [ life's ] every journey, and that puts the customer at the center of everything we do. But underneath, Sarah is a some great talent. We brought John Caruso in. And I think you've probably seen the impacts of his work over the last few months as he's joined us, in particular, I can point to the CBK on Insta that we did where we caught the trend and we went with it, same with St. Patrick's Day. And actually, that ripples all the way through our business now where we don't run in silos, we run as a company. So if you think about what we did with the Quarter Zip during the fourth quarter and hit that trend head on, you and I talked, you saw that coming through on the home page where we converted the home page overnight to really reflect what was in the market. And for us, as we bring Sarah in, it's about bringing our existing customer along. They're still incredibly important to us by adding a new and younger customer and really pulling all the strands together. And I've said this from our own licensing business, and I'll say it again from the WHP transaction, when we are distributed widely, more people are seeing the brand. More people will come and see the websites that we run. And I think they'll be more impressed than -- as we continue to amplify what we're doing with WHP, so what amplified, what Sarah and her team are doing to really broaden that reach. And I looked at the May catalog yesterday, we were doing sign off on that, you're going to be blown away by some of the changes that we're already starting to put in place are incredible. So it's traditional media that we've used, it's newer media, it's a broader reach. It's an amplification story. I'm really excited about this year.

And we'll take our next question from Dana Telsey with Telsey Group.

As you think, one of the interesting numbers that you mentioned, Andrew, was the -- I think it was 20% new to customer file that you grew the customer base this year. Who were those customers? Is it a different demographic, the same demographic? And does this mean that did your overall customer file grow?

And then on just -- I know you're not giving guidance, but any general themes of puts and takes on margins as we go through the year whether it's tariffs, whether it's what's happening with energy prices and how you're thinking, given the solutions-based offerings, how you're thinking about pricing this year?

And just lastly, Europe, big turnaround in Europe, what are you seeing there? And then the Amazon piece up double digits. You mentioned Nordstrom, I think last quarter, you mentioned Macy's. How are those third parties doing?

Okay. I'm going to try and hit them all, Dana. I was writing like fury as you are asking those questions. Yes, the customer file started growing again. And I think that's been really important that we've started to establish a really solid core of customers. And I think as we look at it, we've spent a lot of time segmenting this file and making sure that they get segmented messages and we can increase that reach.

There was a point that I made in my commentary, and it was that we're approaching the whole household. And that was not a trivial point. That was a really important point where we want to be a broadly distributive brand with a real broad reach. And we have product and solutions and franchises to do that. So that notion of hitting grandmother, mother and granddaughter is absolutely key for us.

And we test it, we're testing it out physically. We're testing it out in our e-commerce strategies. And one of the places that you would have seen it was in our chaotically customized Christmas store, say that fast, in SoHo, where we really were able to welcome, in particular, mothers and daughters, mother would bring in her tote bag and we'd embroider that, granddaughter would come in and -- or daughter would come in and pick up a new tote and the ability to customize, I think, is one of our secret weapons that we're really able to bring to the fore.

As we've been through a process over the last year, I think everyone is aware of that. One of the things that came out of it is that we have a real competitive advantage in our ability to customize and customization is really the future because it's a form of personalization. And so if you look at the dots that we're joining where we brought Sarah in, we brought John Caruso in, we've upped the intensity of that marketing team. We've been working on our product franchises and we're putting together a view of an differentiated customer approaching each segment and giving them more of what they want. You'll see that continue across the year that this year, we'll make a move to Shopify and replace our back end with SAP, and that's going to give us even more opportunity to drive that customization. And then I think the amplification we get from WHP and the distribution we get will further open us up to our broader array of customers.

So that customer that's coming in is younger. That customers coming in is just as wealthy in their own way, and they have significant opportunity, and we are generating them from all of our businesses. And I would be remiss of me not to mention that many of them come in through our school uniforms. And you saw the school uniforms business was strong. And it's like that is a great customer to come to us, and that's a [ 40-something ].

In terms of the year, there are lots of -- we will give full guidance on it. I would say the jumping off point for it is the $102 million that we just reported for the year 2025. We expect that we will be building on that. And I think we'll look forward to discussing that in more detail.

In terms of how we think about the tariffs and the war that's going on, we're not seeing any impact from the war on the business right now in the U.S. as the notion, and we're seeing this in European media outlets, as the notion of fuel shortages, fuel rationing, airlines flights being canceled, starts to take more grip in Europe, we are seeing some agitation from some of our more economically disadvantaged customer groups. We'll continue to watch that. We haven't seen that in the U.S. It would be, again, remiss of me not to say that we're not watching for it, and we're not going to take action around it. But that's certainly a challenge to come.

With regard to tariffs, we've been very aggressive with tariffs. And I think that the team has done a wonderful job. We brought in a new Head of Sourcing, Matt DelVecchio, Matt's a very tenured, seasoned executive. Joins us from [indiscernible] J.Crew, I think is going to really help us get to grips further with the tariffs so that we can mitigate those in the business.

I think you asked me about Amazon being up double digits. I mean we took a conscious decision to drive Amazon. We see a new customer there. We see a younger customer there, and they're very trend driven. We're going to continue to follow that customer and do that in a profitable way. We're excited about where the future can go with Amazon and continue to believe in opening up to this notion of convenience.

And I think if I had to pick out a couple of threads for 2026 overall, clearly, we want to stand for our franchises. Clearly, we want to reach beyond our existing customer cohort and reach a younger customer. And I think the third part of this is we want to deliver on our promise of convenience. We think convenience is going to be incredibly important to the customer and something that they will be willing to pay for and at the very least, expect.

Now I'm conscious I might have missed some of your questions, Dana. So I'll give you a second to come back to me.

The only other thing I wanted to know, on the European business, well you mentioned the European business and the strength there. Anything else on any other wholesale customers to mention? And then, Bernie, just obviously, debt repayment, anything we should be thinking about balance sheet as we go through the year?

Sure. I think as we've noted, as part of the WHP deal, when it closes, we will be paying off our long-term debt, which will then, of course, create flexibility for us to now pursue other opportunities to drive shareholder value through capital allocation alternatives. So we're pretty excited about the flexibility this will give us going forward.

Yes. We'd expect to come out of this and be a growth company, Dana. I think for Land's End sort of unshackled from debt there is real opportunity for our shareholders out there, and that's our every intention to go get it.

Our next question comes from Eric Beder with SCC Research.

Can you talk a little bit about what is driving the turnaround in Europe? I know you changed a lot of things there and are those pieces of that transferable to potentially the U.S. business or other international businesses?

Eric, I've been clear since I came into the business about a couple of things on Europe. One is, is that I always want it to be more elevated than the U.S. to provide cache, that we're known as a sophisticated European brand, and that carries through to our customers in the U.S.

I think the second part is I always want to use it to test out concepts and test ideas that can be carried and transferred back to the U.S. And I think that in the fourth quarter, we achieved both of those. We got back to very much a focus on our franchises. And actually, we led that, if you look at the business, with really the reintroduction of our Tote bag and the personalization that comes with that to reach wider to the customer cohort. We also reengineered our catalogs and tested out new ideas in those as well as the notion of a lot more dynamic content around video versus static images that we've tended to use in the U.S. So you'll see transfer of that actually come back.

On the flip side of that, we do have stronger franchises in the U.S. and continue to want those to grow in Europe. And a lot of our plans really to focus around taking some of those franchises and continue to lean into them. The most obvious one being the one I've just discussed, which is the Tote back, which is so iconic here in America, but hasn't really had the legs internationally for us that can be incredibly powerful once we start to get behind that. So we were pleased with a get back to basics in Europe, get focused around the customer in Europe, get focused around personalization in Europe and where we took that. And the results came through really strongly for us. We had three, but frankly, very difficult quarters followed by a really strong fourth quarter. And I appreciate the forbearance of the team in working through that. I think they did a really nice job. And now it's for us to build on that for this year. And I think absent war fuel shortages than anything else that's out there, all things being equal, we can take a good run at that.

Great. And [indiscernible] some interesting things in terms of personalization. I know that you've leaned into a lot more to Q4 the shops and other pieces. Is that -- what are the demographics of that customer? Does that customer -- is that a younger customer? Is that -- how should we be thinking about that? Because I know it's definitely continued into spring to push into that beyond just the tote into other apparel categories.

Well, I'll finish up on Q4 because it's definitely not in the spring, but the Christmas stocking sales that we had were absolutely incredible. I mean, to have the Christmas stocking which it's a nice program for us, but it's not traditionally been a huge program, be it a top 5 program over a holiday, was really incredible for us. So that's all about personalization.

And in terms of who we're seeing, we're using our marketing to reach wider than we traditionally have. So this isn't about just getting them for the grandkids. This is about the grandkids themselves coming in and getting more. And actually, the way we met the younger customer is we've widened the amount of embroidery that we can do. So our #1 image for the fourth quarter was actually a sausage dog. And I think that was really, really key for us.

I think that there was an incredible opportunity for us to just expand beyond where we've been, which was traditionally, you put mom, dad, grandpa wherever the kid's name on it. We're now really starting to flex the muscle we have with personalization and that's been a real competitive advantage for us in 2026 to continue to lean into that. I think you'll see more from us and you'll see us understand how we can really bring that to the market. So there's good news in there.

Just to finish. The tote will be ubiquitous. But we can -- if you look at the Christmas shop that we had, we embroidered cashmere. I think there's very few people doing that right now. And I think that's a competitive differentiator as well. So another franchise starts to fall into line on that program with value added to be sort of layered on top, Bernie?

And then Eric, to add to that, the infrastructure we have the benefit of is from our school uniform and our business-to-business that built the infrastructure of embroidery capabilities. so that the rest of the business now is the benefit in the USD business and the marketplace businesses eventually will all benefit from having that on top of having that younger customer in that uniform business that also we can attract through our personalization.

Great. Last one, I can't not mention Outfitters. That was a great quarter. You picked up share from school uniforms and obviously, you picked up some larger B2B clients. What is the potential here? And are we just scratching the service on where this can go?

Yes. I've always been a fan of Outfitters, you and I have talked about this quite a lot. And I think that Outfitters once we got it firmly in its lane and behind the franchises where it can excel, this sky has become the limit.

Our teams just got back from a sourcing trip in India with one of our major airline partners and they couldn't be happier about the breadth we're able to offer and the opportunity that we're creating for their employees. And I'll say it again because it's worth noting the amplification that you get from having 100,000 airline employees who are somehow connected to the brand of Lands' End is really powerful and widened the reach of where we can go.

So I would continue to watch this space. I would continue to look for us to add major partners throughout the year. And you're absolutely right. I think this can power through because you remember, and it's worth saying because we don't talk about it that much is we signed long-term contracts. So you have -- it's a very sticky business. The switching costs tend to be quite high or the barriers to switching tend to be quite high. And so once you lock in, you could have them for many, many years. And I think there's a real power in what's almost a subscription business.

I think it's also important to note, Eric, being a differentiator in any industry is important. And in that industry, we tend to be the only one bringing a brand to the game. So that has proved very successful with our large consumer business and our larger partners as they want to do well for their employees and they want to bring a brand name to that employee and make them feel proud of what they wear.

Our final question comes from Steve Silver with Argus Research.

Congratulations on all the recent events. Guys, you talked about recently the goal of the company to modernize its infrastructure and its software platforms and suggested that maybe some of those decisions might have been put on hold while you were under the strategic review last year. I'm just curious as to whether any of those activities have now started since the deal was announced or if they're just waiting until the deal closes and really what the time line for implementation might look like just to really get updated with these systems.

We will have replaced our existing back-end infrastructure with SAP before we go into peak later this year, and we will have moved our front end of the consumer business on to Shopify. So again, that's going to happen before peak. During the process that we went through over the last year, we stopped pending the outcome of that. But we didn't stop. While we stopped across the company, we didn't refrain from continuing the desktop work that was key to making sure that we stayed on time. And then as we announced the transaction with WHP, we restarted the sort of heavier lifting to make sure that we could be timely to be in place before we get to peak. We feel good about where we're at. There's always risk associated with it in these big projects. But I think they're really important for the company. We're well along. We feel good about it. I think the opportunity to sort of further leverage our infrastructure that they provide is not just an SG&A game, it's also a revenue and margin gain for us as well.

That's helpful. Great. And then one more, if I may, and it's probably very little you can say about it at this point. But given the prospect of eliminating the term loan, and is really giving the company a flexibility that hasn't had in quite some time. Is there any like low-hanging fruit in terms of strategic opportunities for growth? Andrew, you mentioned that you're going to be looking at Lands' End now as being more as a growth company. Is there anything even just category wise that you're thinking just in terms of what some of those opportunities might be to invest in growth?

I don't blame you for asking, Steve, but we're going to have an extended cut, we're going to have an extended Q1 call. We'll look forward to sharing with you then. It's the obvious question. You're right to ask it, and we'll look forward to our next call.

Thank you. This does bring us to the end of our question-and-answer session as well as Lands' End Fourth Quarter and Fiscal Year-End 2025 Earnings Call. We appreciate your time and participation. You may now disconnect.

Hello, and welcome, everyone, joining today's Lands' End Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions]

It is now my pleasure to turn the meeting over to Tom Altholz. Please go ahead.

Good morning. and thank you for joining us this morning for a discussion of our third quarter 2025 results, which we released this morning and can be found on our website, landsend.com. I'm Tom Altholz, Lands' End's 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're 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 this 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 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'll turn the call over to Andrew.

Thank you, Tom. Good morning, and thank you for joining us. At its core, our third quarter performance was a strong demonstration of our strategy and its ability to drive value for all stakeholders. We generated compelling results, including gross margin expansion, stronger customer engagement and enhanced brand awareness. And critically, we built on and sustained the positive momentum that began during the second quarter.

As a customer-obsessed solutions-oriented forward-looking business, we are connecting with customers where and how they want to shop, delivering high-quality solutions that fit their lives. And we're doing all this in an asset light, agile way that provides the opportunity for us to continue focusing on driving growth and value creation.

For example, a return to EPS profitability and 28% growth in our adjusted EBITDA, coupled with record gross margin and adjusted EBITDA rates since our spin-off, point to a brand delivering on its potential.

In addition, growth in our GMV was supplemented by low single-digit gains in our North American businesses with flat revenues overall. Underpinning these wins is an unwavering belief in the customer. Over the last 3 years, we have intentionally taken steps to expand our traditional base to include new and evolved product, playing to our strengths with core products, while developing new and exciting solutions to reach a broader audience.

Our brand is more relevant than ever. Our marketing has expanded from functional to fund, our product speaks directly to how the customer wants to feel and our ambitions have found us increasingly meeting the customer where they are.

Starting with our B2B businesses. One of the most exciting developments in our Outfitters business was securing a long-term partnership with Delta Air Lines, which Delta announced in November. Delta selected Lands' End as the exclusive design and manufacturing partner for its next generation of uniforms, outfitting more than 60,000 employees worldwide, including airport customer service agents, onboard flight attendants and ground operations team. Our school uniform business delivered on the promise we've discussed all year up over 20% with a broad base of growth from both new and existing schools during the all-important back-to-school season.

Turning to B2C. Our licensing and third-party marketplace businesses remain major growth drivers. Third-party sales rose 34% year-over-year led by Amazon and Macy's, both up approximately 40%. Amazon's prime week performance was exceptional with our top 25 items accounting for more than half of our Amazon Marketplace sales. Our performance in this channel is also proving to be a great conduit to landsend.com, and yet we recognize that we are still only scratching the surface of this opportunity.

Our U.S. consumer business profitability increased year-over-year with outerwear leading the way, supported by strong results in both knitwear and bottoms. As we've discussed before, we're keenly focused on weather-proofing our assortment. Perhaps no category demonstrates that worth a proofing strategy more than outerwear, which is now an always-on category with transitional styles like Sherpa and rainwear extending the season and contributing to our performance.

And importantly, we saw the largest new customer increase during a quarter other than peak COVID in Q3 2020. Traffic increases in our U.S. consumer business were up 25%, driven by digital channels, social and search with the most U.S. eCommerce website, third quarter visits ever, a very positive indicator heading into the holiday season.

Turning to our holiday strategy. We leveraged learnings from last year and launched our Holiday Shop in mid-September, well ahead of many brands, and the results were strong. Holiday patents and novelty assortments sold rapidly. Christmas needlepoint stockings were up high double digits year-over-year and several prints in sleepwear and knits sold out quickly. Our focus on customization and personalization continue to resonate, reinforcing our positioning as a solutions-oriented brand.

As part of our Holiday launch, we executed another very successful pop-up shop in New York City in November called our Chaotically Customized Holiday Shop. We were thrilled to see so many customers come out to customize our iconic Tote Bags and cashmere sweaters -- a major success for raising brand awareness and introducing Lands' End to new customers, many of whom are much younger than our typical customer.

A pop-up shop not only drove strong in-person sales but was a huge success online with more than 5 million social media impressions in just 5 days and coincided with record-breaking traffic to landsend.com, almost the same level we saw last year on Black Friday. With the introduction of embroidered totes, adding more customization options, Canvas tote sales were up triple digits.

Europe began to show early signs of improvement. During the first half of the year, we focused our efforts to become more effective sellers and position the brand to build on the success that we are seeing in the U.S. As part of these efforts, we recently announced 2 exciting collaborations with Harris Tweed and Lulu Guinness. In addition, we expanded our marketplace presence to include Amazon and Debenhams implementing our successful U.S. philosophy to meet the customer where they are.

We achieved record gross margins against the backdrop of uncertainty around tariffs, and continue to refine our highly flexible co-sourced strategy, allowing us to shift production as needed. Our focus around a smaller vendor pool is clearly win and continues at pace.

As I mentioned, we added more customers in the third quarter than at any point outside of the pandemic since our spin-off 11 years ago. Leveraging additional channels as part of our distributed commerce model is yielding results. We opened a TikTok shop and saw our Instagram followers swell toward 0.5 million. These customers are skewing younger, and we are seeing the brand relevance growing significantly with millennials with new-to-file customers averaging in the 45- to 50-year-old cohort.

Taken all together, our third quarter results reflect the intentional work we've done to weatherproof our assortment, align our promotional calendar to consumer behavior and ensure our customers can buy what they want, when they want it.

I'll now turn it over to Bernie to discuss our third quarter performance in more detail.

Thank you, Andrew. For the third quarter of fiscal 2025, total revenue performance was $318 million, essentially flat year-over-year, while GMV increased low single digits. Through licensing our network of third-party marketplace partners and our uniform business, we've built a more resilient model that doesn't rely too heavily on any one business unit, product or partner.

Our U.S. eCommerce business generated $180 million, a decrease of approximately 3% compared to the third quarter of 2024. The decrease was largely the result of improvements in promotional productivity and enhanced inventory efficiency, which resulted in over 100 basis points of gross margin expansion compared to the prior year.

Our third-party marketplace business grew approximately 34% with nearly all of our marketplace partners delivering year-over-year growth. We were very pleased with our exceptionally strong performance in Amazon and Macy's. Our strategic investment in third-party marketplace is accelerating brand reach and reinforcing our digital ecosystem, while driving deeper customer engagement on landsend.com and positioning the brand for long-term growth.

Sales from Lands' End Outfitters increased approximately 7% from the third quarter of 2024. Sales in our school uniform channel grew over 20%, driven by a strong back-to-school season and continued share gains across the market as we capitalize on industry disruption.

We recently reacquired the Delta Air Lines uniform business. While Lands' End will produce and supply new inventory going forward, we did not acquire Delta's existing stock. During the transition period, we will distribute a mix of Delta owned and Lands' End owned products to Delta employees. Revenue from Delta's legacy inventory will primarily consist of processing fees, whereas Lands' End products will generate full retail.

Sales in Europe decreased approximately 20% year-over-year, primarily due to increased promotional activity and continued macroeconomic pressures. Revenue from our licensing business grew over 30% year-over-year, reflecting the continued momentum of our licensing program. This growth was fueled by increased brand visibility from existing licensees, further expanding our reach and impact.

Gross profit increased by approximately 2% compared to last year. Gross margin in the third quarter was nearly 52%, and an approximately 120 basis point improvement from the third quarter of 2024. Margin improvement was supported by continued strength across key categories at a higher average unit retail and growth in our licensing business, partially offset by tariffs. These actions reflect disciplined execution by our supply chain team, which effectively minimize the impact of global tariffs.

SG&A expenses decreased by $2 million year-over-year. As a percentage of net revenue, SG&A [increased] approximately 60 basis points, primarily driven by operational efficiencies and strong cost controls across the entire business.

For the third quarter, we had an adjusted net income of $7 million or $0.21 per share. We delivered adjusted EBITDA of $26 million in the third quarter, representing a year-over-year increase of $6 million or approximately 28%. The increase primarily driven by gross margin expansion and strong SG&A discipline.

Moving to our balance sheet. Inventories at the end of the third quarter were $347 million, increasing only 3% compared to last year. This increase compared to prior year was primarily due to tariffs, partially offset by continued diligence in inventory management and tariff mitigation strategies.

In terms of our debt, at the end of the third quarter, our term loan balance was $237 million and our ABL had $75 million of borrowings outstanding. Total long-term debt was approximately flat to last year.

Now moving to guidance. For the full year, our guidance includes the impact of tariffs at the current regulatory rates. We have implemented mitigation measures to effectively manage the tariff headwinds at these levels for the remainder of 2025.

For the fourth quarter, we expect net revenue to be between $460 million to $490 million, while GMV is expected to be mid- to high single-digit growth. Adjusted net income of $22 million to $26 million and adjusted diluted earnings per share of $0.71 to $0.84 and our adjusted EBITDA to be in the range of $49 million to $54 million.

Turning to full year. We now expect net revenue to be between $1.33 billion to $1.36 billion, while GMV is expected to be low single-digit growth. Adjusted net income of $21 million to $25 million and adjusted diluted earnings per share of $0.68 to $0.81, and our adjusted EBITDA to be in the range of $99 million to $104 million. Our guidance for the full year incorporates approximately $28 million in capital expenditures.

With that, I'll turn the call back over to Andrew.

Thanks, Bernie. Turning to our fourth quarter. We were pleased with November, starting with a strong Veterans Day holiday and continuing through the Black Friday, Cyber Monday period. Successes were shared across our channels with notable achievements, including European Black Friday volumes hitting a post-pandemic high and a record-breaking performance from our Amazon Marketplace business.

Our deliberate and patient efforts to build our brand shows significant progress. We added more than 150,000 new customers in November and reached 0.5 million followers on Instagram. Our new customers continue to be younger and more diverse extending our presence with millennials and touching all the way to Gen Z.

Underpinning growth are our franchises, while heavier down outerwear led the business, we saw the true emergence of a competitive growth differentiator in personalized embroidery, particularly for totes and Christmas stockings. Here's to the Dachshund as our leading embroidery icon for the season. A call out too for our men's Bedford Quarter Zip, our top-selling item, which also earned a coveted #1 best seller rank for its category on Amazon over the period, introducing our brand to tens of thousands of new customers.

As always, I want to thank the entire Lands' End team for their commitment and belief as we managed through a significant period for the company.

We're also pleased to announce 2 key leadership appointments that are strengthening our strategic focus and helping to drive growth. Kym Maas has been promoted to President of U.S. Consumer and retains her role as Chief Creative Officer. John DeFalco has been promoted to President of Lands' End Outfitters where he will continue to lead our B2B business and drive growth in our enterprise and school uniform channels. Both Kym and John have been instrumental in leading our business, and we congratulate them both on these well-earned promotions.

Finally, the Board's process to explore strategic alternatives remains ongoing. We will not be commenting further on it at this time, and we will provide an update once appropriate.

With that, we look forward to your questions.

[Operator Instructions] Our first question comes from Dana Telsey of Telsey Group.

And nice to hear the update on the business. As you think about on the revenue side of business, the puts and takes of any of the different areas relative to your expectations, what did you see in promotional levels? And here going through Black Friday, any particular surprises?

And then just the continued strength of the gross margin is impressive. How do you think of the puts and takes on gross margin? And any framework for what could be different in '26?

Thank you, Dana. Great set of questions. With revenue, clearly, we were very happy with what we saw in the business in North America. We saw that move to a back to growth after a number of years of decline. And the disappointment in there was the business in Europe, which we've spoken to in the past. I think looking at it we've been leaning in and we continue to see that growth into the fourth quarter. And I think from my comments, you would have picked up that we saw some tremendous numbers from our European business in the month of November.

So what I would say is the momentum continues to build. We're incredibly excited about it. And if you recall, over the 3 years we've been together, our gross margins have made a step change during that period. So to now the growing top line with that gross margin structure in place really augurs well for the future of the brand.

In terms of promo levels, we did not see promo levels step out of line. We actually ran a very successful back-to-school campaign in August. And for many years, we had not really approached back-to-school, but reaching to a newer consumer, who is younger, has been really powerful for us because she comes in the shops for the kids and then shops for herself. And so we were able to manage promo levels really pretty well and felt good about that, and that's something that, again, has continued into the fourth quarter. And actually, if I -- I'm sort of mixing between third and fourth quarter, but we were very, very thoughtful about how we would manage our promo levels and we were very thoughtful about making sure we don't chase the business and that we get ahead of it and really manage to that gross margin because I think the route to the future of Lands' End lies through continuing to push that gross margin. The sales will always follow when you do that, and that's a function of having the right product for the right customer in the right channels.

In terms of Black Friday, surprises in there. I was actually very happy with how we ran Black Friday. I think the biggest surprise I got was actually prior to Black Friday, when we had tremendous success around Veterans Day. So the season started earlier for us. And we had made comments in the script there that we had started in September, but we did see good selling in September, but the selling was really very strong, very early in the quarter and then continued right through. And that was a different curve than we've been on.

There's a lot I could say about that. Here's what I think about it. I think that we are seeing so many new consumers to the brand with a different profile and different psychographic than we've necessarily seen in the past that we're actually seeing our seasonality change as we reflect that customer, and it probably looks more like something from a younger brand, and I can talk about that more if you want, when we talk later, but we feel good about where we're at.

Bernie, is there anything I missed?

No, I think you covered it all. As far as the puts and takes on gross margin, I think we're really proud of what we did in the third quarter. With the headwinds of tariffs, we were able to still drive an incremental improvement in gross margin rate, much of that is being driven by what Andrew just talked about, about promotions and being very deliberate about our promotional calendar and selling more full price at the start of the season and then pushing into promotions later in the season.

But it also -- we worked very hard to mitigate the tariffs to the best of our ability. But then we also really have pushed the investment in our DCs and in our systems. And we are really much more efficient than we were a year ago on putting products through our DCs and being more profitable in the process.

We'll now move on to Eric Beder of SCC Research.

Let me add my congratulations. We had a lot of -- so a lot of effort put into the licensing business. Could you give us kind of an update of where we are in terms of what we're going to see in 2026 in terms of licensing? What has been anniversaried? And kind of where does it become more accretive in apples-to-apples in terms of running through here?

Yes. Sure, Eric. I think that to start with, the Shoes and Kids business, we have annualized. And the upside to those businesses are -- they're getting their feet under them on our website and selling. And so we've seen really nice progression from them in growing that business, and we think that will continue to grow. We announced a couple of quarters ago, signing 5 or 6 smaller licenses. Those will kick into effect a little bit in fourth quarter, but more so in next year. And then we have a pipeline of additional licenses that we are working to expand to.

Okay. So it's fair to say that next year, it becomes -- your apples-to-apples some of -- most of the categories that we start to see the full kind of impact on what licensing can do in terms of revenues and in terms of margins, yes.

We expect -- I hope you're doing well. We expect to see licensing continue to grow for us. We see this as a growth opportunity. If you look at just shoes and kids by way of example. I mean, I believe we're still scratching the surface on that in terms of how far we can push it and new doors that we can go to.

And then actually, if you pick up on Bernie's comments, what we're doing on the website is phenomenal as well. We're really rebuilding those businesses. And actually, there's leverage that we get by having higher-quality kids and shoes on our website, along with other licenses, but I'll just stick to those 2 because they are anniversarying themselves. We're able to complete baskets and pull customers to the website for other categories.

And I go back to the customer that we are attracting to Lands' End, which is a younger millennial customer who's often got kids, and it's like to be able to come in and get their kids dressed and pull that together into one story is really key.

So I'll give you an example. When we licensed kids out, we did not -- we separated kids from our catalogs and we separated design. We've really taken the view over this back half of the year that they should come back together. So for example, if you watch sleepwear, we now do sleepwear for the family, and we do that tightly in partnership with our licensees. So what we're starting to see is the leverage now that you get from having those licenses so closely intertwined with the core business and tell one story. And I think that upside that we're really anticipating coming through in full next year. So we see opportunity.

Great. On the international front, you've had these great collaborations, Harris Tweed and Lulu Guinness. And when you look at it, a, what does that imply for the U.S.? And also, we've talked this conversation about how 15% as a percentage of the international business that comes to the U.S. in terms of product, how should we be thinking about that opportunity going forward. And as kind of the profile of the international completes, you have potential to do things like that maybe here.

So we do -- it's a great question. Thank you. We do, do collaborations in the U.S. So I think the Parke's collaboration has been really key. And if you go and look at Parke, she's an influencer out of Miami, splits her time in New York, and has done work with a number of terrific brands, of which Lands' End is one. So I just think that's a natural extension of what we are already doing.

With the Harris Tweed and Lulu Guinness collaborations, we wanted them to be halos in Europe and really help build the brand identity there. We have no issue and no reason not to bring those to the U.S. And I think you'll see more of us starting to do that. I think -- that's a little bit of a tail wagging the dog because what we're actually trying to do and intent on doing with the business in Europe is creating a halo there where it sits in more rarefied air and really pulls through a higher valuation for the brand because we've got this European cache in this European halo. That's part of the reason that we opened the French language website this year, which has actually been a really nice success for us, we didn't talk about it specifically on the call.

But we've seen the ability to reach a French customer adds cache, add sophistication, and that creates a halo that I think creates valuation for us. So we're not running these in isolation. We're not ignoring working with influencers or other brands. It's all there, and we're doing it all the time.

Last question on inventories. So inventories went up for the first time in a while. How should we be thinking about inventories going forward?

Sure, Eric. Actually, we're pretty proud that the inventory is only up 3% because with the overhang or tailwinds or headwinds of tariffs, we've worked very hard to be more efficient to bring product closer to selling and keep our inventories down. So despite the tariffs, we're only up 3%, and we really feel good about how hard the teams have worked on that.

And should we expect that level kind of low single digits going forward?

That's fair.

We'll now move on to Steve Silver of Argus Research.

My congratulations as well. Andrew, a couple of times during the prepared remarks, you mentioned the term scratching the surface, I guess, as it relates to licensing as well as the momentum you're seeing with the Amazon Marketplace. Curious as to your thoughts in terms of how long it takes for that surface to go beyond for deeper penetration to where it really starts driving an inflection point in GMV expansion?

That's a great question. I think that Amazon is a perfect example of that scratching the surface where you have to create momentum. I think it's -- I think there's a perception out there that you can take any brand and add it to Amazon and it will drive volume and profitability. The reality is like it's a channel that you have to open up. You have to market it in a different way, and you have to spend time really betting in, how your brand performs, because you're going to bring a different merchandising profile, you're going to bring a different costing profile. And ultimately, you're going to bring a different marketing profile because you're going to reach different consumers.

And so how you sell on Amazon is different than how you would necessarily sell on your own website or in stores or wherever. And I think that that's not done likely. It requires changes to supply chain, it requires changes to how you think about your marketing. It's more digital, it's more done with Amazon. And it's like -- and you have to make decisions on what customer you're going to meet there.

And I think we've done all that heavy lifting really over the last couple of years that set us up for tremendous growth. And we look out there and I hesitate to give numbers, Steve. But as I think about it, the bigger brands on Amazon in our space tend to have a handful of items and get to a couple of hundred million dollars.

And that tends to get you that #1 badge. Now we started to do that. I was very proud, the whole week of Black Friday and into Cyber Monday, we had the #1 badge for sweaters with our Bedford Quarter Zip and that really speaks volumes to us being able to get behind the TikTok trend, realize it's there and position ourselves to reach a new customer, and we're going to continue to be in and out of that as we look for these trend moments because that will really drive our business model on something like Amazon.

And it's no different when you go international. It's like you're really laying in the groundwork to build a brand because you want to be more than a flash in the pan, and you want to build something that's sustainable and endures for the long term.

Now with international, we'll look for more opportunities to license because we can leverage other people's skill sets. And I think that there's continued opportunity there. And if I look at the positioning that we've done, we'll talk about Lulu Guinness and Harris Tweed again, I think that really sets us up to be a brand that's going to have a draw right across the globe. It's not just about a handful of countries in Europe anymore.

That's helpful. Great. So with the customer base skewing to the low side, combined with Lands' End, its history of innovation, curious as to whether there's anything category wise we should be looking for in terms of new patents heading into the 2026 season?

Well, we are always open to that. And I think that you will continue to see that as we build around our concept of solutions, that the company very focused on solutions and those solutions lead to franchises.

If I look at outerwear, you've got franchises like FeatherFree, we'll continue to evolve those. And I think some of the work that we've been doing this year, we've produced water-resistant fleece. Have we put a patent on it? Not yet. Will we? Probably. But the reality is, is that we continue to look for ways to innovate that our customer will notice because it's a solution that really gets them ready for life's every journey. And that's something that we're incredibly proud of and I encourage all our teams of Lands' End to always be innovating. And I think that the customer recognizes that. And they lean into it. So it continues to be critical to our future.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.