Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
May 01, 2020 | Jul. 20, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Lands' End, Inc. | |
Document Type | 10-Q | |
Trading Symbol | LE | |
Current Fiscal Year End Date | --01-29 | |
Entity Common Stock, Shares Outstanding | 32,600,590 | |
Amendment Flag | false | |
Entity Central Index Key | 0000799288 | |
Entity Filer Category | Accelerated Filer | |
Document Period End Date | May 1, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Security Exchange Name | NASDAQ | |
Entity File Number | 001-09769 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 36-2512786 | |
Entity Address, Address Line One | 1 Lands’ End Lane | |
Entity Address, City or Town | Dodgeville | |
Entity Address, State or Province | WI | |
Entity Address, Postal Zip Code | 53595 | |
City Area Code | 608 | |
Local Phone Number | 935-9341 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Income Statement [Abstract] | ||
Net revenue | $ 217,008 | $ 262,433 |
Cost of sales (excluding depreciation and amortization) | 122,853 | 142,559 |
Gross profit | 94,155 | 119,874 |
Selling and administrative | 105,796 | 116,844 |
Depreciation and amortization | 8,786 | 7,618 |
Other operating expense, net | 4,285 | 148 |
Operating loss | (24,712) | (4,736) |
Interest expense | 5,311 | 7,834 |
Other income, net | (173) | (867) |
Loss before income taxes | (29,850) | (11,703) |
Income tax benefit | (9,207) | (4,885) |
NET LOSS | $ (20,643) | $ (6,818) |
NET LOSS PER COMMON SHARE | ||
Basic: | $ (0.64) | $ (0.21) |
Diluted: | $ (0.64) | $ (0.21) |
Basic weighted average common shares outstanding | 32,448 | 32,261 |
Diluted weighted average common shares outstanding | 32,448 | 32,261 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Operations - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
NET LOSS | $ (20,643) | $ (6,818) |
Other comprehensive loss, net of tax, foreign currency translation adjustments | (1,259) | (234) |
COMPREHENSIVE LOSS | $ (21,902) | $ (7,052) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | May 01, 2020 | Jan. 31, 2020 | May 03, 2019 |
Current assets | |||
Cash and cash equivalents | $ 59,134 | $ 77,148 | $ 40,221 |
Restricted cash | 1,953 | 2,149 | 1,821 |
Accounts receivable, net | 35,381 | 50,953 | 27,510 |
Inventories, net | 383,163 | 375,670 | 319,319 |
Prepaid expenses and other current assets | 46,221 | 39,458 | 35,304 |
Total current assets | 525,852 | 545,378 | 424,175 |
Property and equipment, net | 155,511 | 157,665 | 152,405 |
Operating lease right-of-use asset | 38,621 | 38,665 | 29,327 |
Goodwill | 106,700 | 110,000 | 110,000 |
Intangible asset, net | 257,000 | 257,000 | 257,000 |
Other assets | 4,651 | 4,921 | 5,473 |
TOTAL ASSETS | 1,088,335 | 1,113,629 | 978,380 |
Current liabilities | |||
Current borrowings on ABL Facility | 75,000 | ||
Current borrowings on Term Loan | 382,858 | 5,150 | 5,150 |
Accounts payable | 101,445 | 158,436 | 98,623 |
Lease liability - current | 5,867 | 5,864 | 8,786 |
Other current liabilities | 82,904 | 114,116 | 84,172 |
Total current liabilities | 648,074 | 283,566 | 196,731 |
Long-term debt, net | 378,657 | 381,504 | |
Lease liability - long-term | 41,388 | 39,841 | 24,772 |
Deferred tax liabilities | 65,446 | 57,651 | 56,108 |
Other liabilities | 5,529 | 5,532 | 4,060 |
TOTAL LIABILITIES | 760,437 | 765,247 | 663,175 |
Commitments and contingencies | |||
STOCKHOLDERS’ EQUITY | |||
Common stock, par value $0.01 authorized: 480,000 shares; issued and outstanding: 32,596, 32,363 and 32,382, respectively | 326 | 324 | 324 |
Additional paid-in capital | 362,072 | 360,656 | 354,016 |
Accumulated deficit | (20,253) | 390 | (25,718) |
Accumulated other comprehensive loss | (14,247) | (12,988) | (13,417) |
TOTAL STOCKHOLDERS' EQUITY | 327,898 | 348,382 | 315,205 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 1,088,335 | $ 1,113,629 | $ 978,380 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | May 01, 2020 | Jan. 31, 2020 | May 03, 2019 |
Statement Of Financial Position [Abstract] | |||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 480,000,000 | 480,000,000 | 480,000,000 |
Common stock, shares issued | 32,596,000 | 32,382,000 | 32,363,000 |
Common stock, shares outstanding | 32,596,000 | 32,382,000 | 32,363,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (20,643) | $ (6,818) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 8,786 | 7,618 |
Amortization of debt issuance costs | 429 | 434 |
Loss (gain) on property and equipment | 842 | (55) |
Stock-based compensation | 1,828 | 1,974 |
Deferred income taxes | 8,132 | (2,501) |
Goodwill impairment | 3,300 | |
Other | 821 | (133) |
Change in operating assets and liabilities: | ||
Inventories | (8,502) | 2,234 |
Accounts payable | (54,084) | (20,205) |
Other operating assets | 6,902 | 10,612 |
Other operating liabilities | (28,009) | (29,450) |
Net cash used in operating activities | (80,198) | (36,290) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (10,789) | (15,042) |
Net cash used in investing activities | (10,789) | (15,042) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from borrowings under ABL Facility | 75,000 | |
Payments of term-loan | (1,288) | (101,287) |
Payments of employee withholding taxes on share-based compensation | (410) | (687) |
Net cash provided by (used in) financing activities | 73,302 | (101,974) |
Effects of exchange rate changes on cash, cash equivalents and restricted cash | (525) | (5) |
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (18,210) | (153,311) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | 79,297 | 195,353 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | 61,087 | 42,042 |
SUPPLEMENTAL CASH FLOW DATA | ||
Unpaid liability to acquire property and equipment | 4,707 | 4,901 |
Income taxes paid, net of refunds | (1,210) | 12 |
Interest paid | 4,667 | 6,966 |
Lease liabilities arising from obtaining Operating lease right-of-use assets | $ 3,074 | $ 3,731 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock Issued | Additional Paid-In Capital | Retained Earnings/ (Accumulated Deficit) | Accumulated Other Comprehensive Loss |
Balance at Feb. 01, 2019 | $ 322,711 | $ 320 | $ 352,733 | $ (17,159) | $ (13,183) |
Balance, shares at Feb. 01, 2019 | 32,220 | ||||
Net loss | (6,818) | (6,818) | |||
Cumulative translation adjustment, net of tax | (234) | (234) | |||
Change in accounting principle related to lease accounting, net of tax | Accounting Standards Update 2016-02 | (1,741) | (1,741) | |||
Stock-based compensation expense | 1,974 | 1,974 | |||
Vesting of restricted shares | $ 4 | (4) | |||
Vesting of restricted shares, shares | 185 | ||||
Restricted stock shares surrendered for taxes | (687) | (687) | |||
Restricted stock shares surrendered for taxes, shares | (42) | ||||
Balance at May. 03, 2019 | 315,205 | $ 324 | 354,016 | (25,718) | (13,417) |
Balance, shares at May. 03, 2019 | 32,363 | ||||
Balance at Jan. 31, 2020 | 348,382 | $ 324 | 360,656 | 390 | (12,988) |
Balance, shares at Jan. 31, 2020 | 32,382 | ||||
Net loss | (20,643) | (20,643) | |||
Cumulative translation adjustment, net of tax | (1,259) | (1,259) | |||
Stock-based compensation expense | 1,828 | 1,828 | |||
Vesting of restricted shares | $ 2 | (2) | |||
Vesting of restricted shares, shares | 275 | ||||
Restricted stock shares surrendered for taxes | (410) | (410) | |||
Restricted stock shares surrendered for taxes, shares | (61) | ||||
Balance at May. 01, 2020 | $ 327,898 | $ 326 | $ 362,072 | $ (20,253) | $ (14,247) |
Balance, shares at May. 01, 2020 | 32,596 |
Background and Basis of Present
Background and Basis of Presentation | 3 Months Ended |
May 01, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Background and Basis of Presentation | NOTE 1. BACKGROUND AND BASIS OF PRESENTATION Description of Business Lands' End, Inc. ("Lands' End" or the "Company") is a leading uni-channel retailer of casual clothing, accessories, footwear and home products. Lands’ End offers products online at www.landsend.com Terms that are commonly used in the Company's Notes to Condensed Consolidated Financial Statements are defined as follows: • ABL Facility - Asset-based senior secured credit agreements, dated as of November 16, 2017, with Wells Fargo Bank, N.A. and certain other lenders • Adjusted EBITDA - Net income (loss) net of Income tax benefit, Other income (expense), net, Interest expense, Depreciation and amortization and certain significant items • ASC - FASB Accounting Standards Codification, which serves as the source for authoritative GAAP, as supplemented by rules and interpretive releases by the SEC which are also sources of authoritative GAAP for SEC registrants • ASU - FASB Accounting Standards Update • CARES Act – The Coronavirus Aid, Relief and Economic Security Act signed into law on March 27, 2020. • Debt Facilities - Collectively, the ABL Facility and the Term Loan Facility • Deferred Awards - Time vesting stock awards • EPS - Earnings per share • ESL - ESL Investments, Inc. and its investment affiliates, including Edward S. Lampert • FASB - Financial Accounting Standards Board • First Quarter 2020 – The 13 weeks ended May 1, 2020 • First Quarter 2019 - The 13 weeks ended May 3, 2019 • Fiscal 2018 - The 52 weeks ended February 1, 2019 • Fiscal 2019 - The 52 weeks ended January 31, 2020 • GAAP - Accounting principles generally accepted in the United States • LIBOR - London inter-bank offered rate • Option Awards - Stock option awards • Performance Awards - Performance-based stock awards • Sears Holdings or Sears Holdings Corporation - Sears Holdings Corporation, a Delaware corporation, and its consolidated subsidiaries • Second Quarter 2020 – the 13 weeks ending July 31, 2020 • Separation - On April 4, 2014 Sears Holdings distributed 100% of the outstanding common stock of Lands' End to its shareholders • Term Loan Facility - Term loan credit agreements, dated as of April 4, 2014, with Bank of America, N.A. and certain other lenders • Transform Holdco - Transform Holdco LLC, an affiliate of ESL, which on February 11, 2019 acquired from Sears Holdings substantially all of the go-forward retail footprint, and other assets and component businesses of Sears Holdings as a going concern • Year-to-Date 2020 - The 13 weeks ended May 1, 2020 • Year-to-Date 2019 - The 13 weeks ended May 3, 2019 Basis of Presentation The Condensed Consolidated Financial Statements include the accounts of Lands' End, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. Dollar amounts are reported in thousands, except per share data, unless otherwise noted. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Lands' End Annual Report on Form 10-K filed with the SEC on March 23, 2020. Pursuant to ASC 205, Presentation of Financial Statements, the Company is required to and does evaluate at each annual and interim period whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The Company’s Term Loan Facility matures on April 4, 2021, which is within one year after the date of the Condensed Consolidated Financial Statements issued with this Quarterly Report on Form 10-Q. As of May 1, 2020, the remaining balance outstanding under the Term Loan Facility was $384.1 million. In addition, in the event the Term Loan Facility debt is not extended, repaid or otherwise refinanced at least six months before its maturity date, the Company’s ABL Facility would mature on January 4, 2021. Given the amount currently outstanding under the Term Loan Facility and its maturity date of April 4, 2021, and based on the definitions in the relevant accounting standards, management has determined that this condition raises substantial doubt about the Company’s ability to continue as a going concern. This evaluation does not consider the potential mitigating effect of management’s plans that have not been fully implemented. When substantial doubt is deemed to exist, management may evaluate the mitigating effect of its plans to determine if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. The Company is in the process of seeking new financing to replace the Term Loan Facility and, to the extent this can be successfully secured, is expected to alleviate the doubt raised by the application of ASC 205. Due to the Company’s recent trends of profitable growth, management believes that it will be able to refinance the Term Loan Facility on acceptable terms despite the challenging financial environment reflecting the COVID-19 pandemic. The Company currently has received non-binding term sheets from multiple investors for transactions which would allow it to refinance the Term Loan Facility debt and is in active discussions and negotiations regarding the refinancing. The Company’s financial forecasts indicate sufficient liquidity for at least the next twelve months under the terms of these proposals. However, as the ability to secure a refinancing is conditional upon the execution of agreements with new or existing investors, which is considered outside of the Company’s control, for an amount that allows the Company to meet its obligations as they become due within a period of at least one year from the date of issuance of its financial statements, the refinancing is not considered probable of occurring until such time as the refinancing is completed. The Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Impact of the COVID-19 Pandemic COVID-19 surfaced in late 2019 and has spread around the world, including to the United States. In March 2020, the World Health Organization declared COVID-19 a pandemic. During First Quarter 2020 the COVID-19 pandemic had a disruptive impact on the Company’s business operations and an unfavorable impact on the Company’s results of operations. Health and Safety of Employees and Consumers From the beginning of the COVID-19 pandemic, the Company’s priority has been the safety of employees and customers. On March 16, 2020 , the Company temporarily closed its 26 U.S. stores. These stores remained closed at the end of First Quarter 2020 with a phased reopening in Second Quarter 2020. Additionally, the Company has implemented extra precautions in its office and distribution centers. These precautions were Customer Demand In the First Quarter 2020, demand across all operating segments decreased. The ultimate timing and impact of demand levels will depend on the duration and scope of the COVID-19 pandemic, overall economic conditions and consumer preferences. Supply Chain During First Quarter 2020, the Company did not experience any significant disruption of its supply chain. However, in response to decreased demand, future orders were reduced and some existing product was repurposed. The Company continues to place a priority on business continuity and contingency planning. The Company may experience additional disruptions in the supply chain as the pandemic continues, though the Company cannot reasonably estimate the potential impact or timing of those events, and the Company may not be able to mitigate such impact. Expense Reduction Beginning in First Quarter 2020, the Company took the following actions to reduce overall expense as a response to decreased demand due to the COVID-19 pandemic: • Temporarily reduced base salaries, including a reduction of 50% in the base salary of its Chief Executive Officer and President, 20% reductions in the base salaries of the Company’s other senior management members and scaled salary reductions throughout the Company. • Furlough of approximately 70% of corporate employees and nearly 100% of retail employees beginning on March 28, 2020. Some personnel returned to work beginning on April 13, 2020, however approximately 49% of the workforce remained furloughed at the end of First Quarter 2020. • Fiscal 2020 merit increases were eliminated. • The Board of Directors compensation was temporarily reduced. • The Company's 401(k) match was temporarily suspended. • Planned capital expenditures for Fiscal 2020 were reduced by approximately 50%. • Other discretionary operating expenses were significantly reduced. Liquidity and Capital Resources The Term Loan Facility matures on April 4, 2021. The ABL Facility matures on November 16, 2022, however in the event the Term Loan Facility debt is not extended, repaid or otherwise refinanced at least six months before its maturity date, the ABL Facility would mature on January 4, 2021. During First Quarter 2020, the Company increased capacity under the ABL Facility by $25.0 million so that maximum borrowings are $200.0 million. The Company is in the process of seeking to refinance the Term Loan Facility however the timeline for this process has been increased due to the impact of the COVID-19 pandemic on the financial markets. Goodwill and Indefinite-Lived Intangible Asset The duration and severity of the COVID-19 pandemic could result in future impairment charges for goodwill and the trade name indefinite-lived intangible asset. The Company considered the COVID-19 pandemic to be a triggering event in First Quarter 2020 for the Outfitters and Japan eCommerce reporting units and therefore completed an interim test for impairment of goodwill for these reporting units as of May 1, 2020. The interim tests employed the assumption that revenue in the Outfitters and Japan eCommerce reporting units will return to Fiscal 2019 levels by Fiscal 2023 (the 53 weeks ending February 2, 2024). The testing resulted in no impairment of the Outfitters reporting unit and full impairment of the $3.3 million of goodwill allocated to Japan eCommerce reporting unit. Lease Modifications In April 2020, the FASB issued guidance indicating that entities may elect not to evaluate whether a concession provided by lessors is a lease modification. Under existing lease guidance, an entity would have to determine if a lease concession was the result of a new arrangement reached with the landlord, which would be accounted for under the lease modification framework, or if the concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The FASB guidance provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. During the First Quarter 2020, the Company did not modify any leases as a result of the COVID-19 pandemic and as a result, the Company has not yet made a policy election with respect to lease modifications. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
May 01, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Recent Accounting Pronouncements | NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS In June 2016, the FASB issued ASU 2016-13, Financial Statements - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
Loss Per Share
Loss Per Share | 3 Months Ended |
May 01, 2020 | |
Earnings Per Share Basic And Diluted [Abstract] | |
Loss Per Share | NOTE 3. LOSS PER SHARE The numerator for both basic and diluted EPS is net loss. The denominator for basic EPS is based upon the number of weighted average shares of Lands’ End common stock outstanding during the reporting periods. The denominator for diluted EPS is based upon the number of weighted average shares of Lands' End common stock and common stock equivalents outstanding during the reporting periods using the treasury stock method in accordance with U.S. GAAP. Potentially dilutive securities for the diluted EPS calculations consist of nonvested equity shares of common stock and in-the-money outstanding options where the current stock price exceeds the option strike price. The following table summarizes the components of basic and diluted EPS: 13 Weeks Ended (in thousands, except per share amounts) May 1, 2020 May 3, 2019 Net loss $ (20,643 ) $ (6,818 ) Basic weighted average common shares outstanding 32,448 32,261 Dilutive effect of stock awards — — Diluted weighted average common shares outstanding 32,448 32,261 Basic loss per share $ (0.64 ) $ (0.21 ) Diluted loss per share $ (0.64 ) $ (0.21 ) Stock awards are considered anti-dilutive based on the application of the treasury stock method or in the event of a net loss. There were 1,205,821 and 796,269 anti-dilutive shares excluded from the diluted weighted average shares outstanding for First Quarter 2020 and First Quarter 2019, respectively. |
Other Comprehensive Loss
Other Comprehensive Loss | 3 Months Ended |
May 01, 2020 | |
Equity [Abstract] | |
Other Comprehensive Loss | NOTE 4. OTHER COMPREHENSIVE LOSS Other comprehensive loss encompasses all changes in equity other than those arising from transactions with stockholders and is comprised solely of foreign currency translation adjustments. 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Beginning balance: Accumulated other comprehensive loss (net of tax of $3,453 and $3,505 respectively) $ (12,988 ) $ (13,183 ) Other comprehensive loss: Foreign currency translation adjustments (net of tax benefit of $337 and $61 respectively) (1,259 ) (234 ) Ending balance: Accumulated other comprehensive loss (net of tax of $3,790 and $3,566 respectively) $ (14,247 ) $ (13,417 ) No amounts were reclassified out of Accumulated other comprehensive loss during any of the periods presented. |
Debt
Debt | 3 Months Ended |
May 01, 2020 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 5. DEBT The Company's debt consisted of the following: May 1, 2020 May 3, 2019 January 31, 2020 (in thousands) Amount Rate Amount Rate Amount Rate Term Loan Facility, maturing April 4, 2021 $ 384,100 4.25 % $ 389,250 5.75 % $ 385,388 5.05 % ABL Facility, maturing November 16, 2022 75,000 2.07 % — —% — —% 459,100 389,250 385,388 Less: Current maturities in Current liabilities 457,858 5,150 5,150 Less: Unamortized debt issuance costs 1,242 2,596 1,581 Long-term debt, net $ — $ 381,504 $ 378,657 The following table summarizes the Company's borrowing availability under the ABL Facility: (in thousands) May 1, 2020 May 3, 2019 January 31, 2020 ABL Facility maximum borrowing $ 200,000 $ 175,000 $ 175,000 Current borrowings under ABL 75,000 — — Outstanding letters of credit 8,656 11,203 23,299 Borrowing availability under ABL $ 116,344 $ 163,797 $ 151,701 During First Quarter 2020, the Company increased capacity under the ABL Facility by $25.0 million so that maximum borrowings are $200.0 million. Interest; Fees The interest rates per annum applicable to the loans under the Debt Facilities are based on a fluctuating rate of interest measured by reference to, at the borrowers’ election, either (i) an adjusted LIBOR rate plus a borrowing margin, or (ii) an alternative base rate plus a borrowing margin. The borrowing margin is fixed for the Term Loan Facility at 3.25% in the case of LIBOR loans and 2.25% in the case of base rate loans. For the Term Loan Facility, LIBOR is subject to a 1% interest rate floor. The borrowing margin for the ABL Facility is subject to adjustment based on the average excess availability under the ABL Facility for the preceding fiscal quarter. LIBOR borrowings will range from 1.25% to 1.75% for the ABL Facility. Base rate borrowings will range from 0.50% to 1.00% for the ABL Facility. Customary agency fees are payable in respect of the Debt Facilities. The ABL Facility fees also include (i) commitment fees in an amount equal to 0.25% of the daily unused portions of the ABL Facility, and (ii) customary letter of credit fees. As of the end of First Quarter 2020 the Company had borrowings of $75.0 million on the ABL Facility. Representations and Warranties; Covenants Subject to specified exceptions, the Debt Facilities contain various representations and warranties, and restrictive covenants that, among other things, restrict the ability of Lands’ End and its subsidiaries to incur indebtedness (including guarantees), grant liens, make investments, make dividends or distributions with respect to capital stock, make prepayments on other indebtedness, engage in mergers or change the nature of their business. In addition, if excess availability under the ABL Facility falls below the greater of 10% of the loan cap amount or $15.0 million, Lands’ End will be required to comply with a minimum fixed charge coverage ratio of 1.0 to 1.0. The Debt Facilities do not otherwise contain financial maintenance covenants. The Company was in compliance with all financial covenants related to the Debt Facilities as of May 1, 2020. The Debt Facilities contain certain affirmative covenants, including reporting requirements such as delivery of financial statements, certificates and notices of certain events, maintaining insurance, and providing additional guarantees and collateral in certain circumstances. Events of Default and Maturity The Debt Facilities include customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross defaults related to certain other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, and material judgments and change of control. The Term Loan Facility will mature on April 4, 2021. The ABL Facility matures on November 16, 2022, however in the event the Term Loan Facility debt is not extended, repaid or otherwise refinanced at least six months before its maturity date, the ABL Facility would mature on January 4, 2021. Pursuant to ASC 205, Presentation of Financial Statements, the Company is required to and does evaluate at each annual and interim period whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The Company’s Term Loan Facility matures on April 4, 2021, which is within one year after the date of the Condensed Consolidated Financial Statements issued with this Quarterly Report on Form 10-Q. As of May 1, 2020, the remaining balance outstanding under the Term Loan Facility was $384.1 million. Given the amount currently outstanding under the Term Loan Facility and its maturity date of April 4, 2021, and based on the definitions in the relevant accounting standards, management has determined that this condition raises substantial doubt about the Company’s ability to continue as a going concern. This evaluation does not consider the potential mitigating effect of management’s plans that have not been fully implemented. When substantial doubt is deemed to exist, management may evaluate the mitigating effect of its plans to determine if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. The Company is in the process of seeking new financing to replace the Term Loan Facility and, to the extent this can be successfully secured, is expected to alleviate the doubt raised by the application of ASC 205. Due to the Company’s recent trends of profitable growth, management believes that it will be able to refinance the Term Loan Facility on acceptable terms despite the challenging financial environment reflecting the COVID-19 pandemic. The Company currently has received non-binding term sheets from multiple investors for transactions which would allow it to refinance the Term Loan Facility debt and is in active discussions and negotiations regarding the refinancing. The Company’s financial forecasts indicate sufficient liquidity for at least the next twelve months under the terms of these proposals. However, as the ability to secure a refinancing is conditional upon the execution of agreements with new or existing investors, which is considered outside of the Company’s control, for an amount that allows the Company to meet its obligations as they become due within a period of at least one year from the date of issuance of its financial statements, the refinancing is not considered probable of occurring until such time as the refinancing is completed. The Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
May 01, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | NOTE 6. STOCK-BASED COMPENSATION The Company expenses the fair value of all stock awards over their respective vesting periods, ensuring that, the amount of cumulative compensation cost recognized at any date is at least equal to the portion of the grant-date fair value of the award that is vested at that date. The Company has elected to adjust compensation expense for an estimated forfeiture rate for those shares not expected to vest and to recognize compensation cost on a straight-line basis for awards that only have a service requirement with multiple vest dates. The Company has granted the following types of stock awards to employees at management levels and above: i . Time vesting stock awards ("Deferred Awards") are in the form of restricted stock units and only require each recipient to complete a service period for the award to be earned. Deferred Awards generally vest over three years. The fair value of Deferred Awards is based on the closing price of the Company's common stock on the grant date and is reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. ii. Performance-based stock awards ("Performance Awards") are in the form of restricted stock units and have, in addition to a service requirement, performance criteria that must be achieved for the awards to be earned. For Performance Awards granted in Fiscal 2018 and after, the Target Shares earned can range from 50% to 200% once minimum thresholds have been reached, and depend on the achievement of Adjusted EBITDA and revenue performance measures for the cumulative three-fiscal year performance period beginning in the fiscal year of the grant date. The applicable percentage of the Target Shares, as determined by performance, vest after the completion of the applicable three-year performance period, and unearned Target Shares are forfeited. The fair value of the Performance Awards granted in Fiscal 2018 and after are based on the closing price of the Company’s common stock on the grant date. Stock based compensation expense is recognized ratably over the related service period, reduced for estimated forfeitures of those awards not expected to vest due to employee turnover, and adjusted based on the Company's estimate of the percentage of the aggregate Target Shares expected to be earned. iii. Stock option awards ("Option Awards") provide the recipient with the option to purchase a set number of shares at a stated exercise price over the term of the contract, which is ten years for all Option Awards currently outstanding. Options are granted with a strike price equal to the stock price on the date of grant and vest ratably over a four-year period. The fair value of each Option Award is estimated on the grant date using the Black-Scholes option pricing model. The following table provides a summary of the Company's stock-based compensation expense, which is included in Selling and administrative expense in the Condensed Consolidated Statements of Operations: 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Deferred Awards $ 1,641 $ 1,365 Performance Awards — 422 Option Awards 187 187 Total stock-based compensation expense $ 1,828 $ 1,974 The following table provides a summary of the Deferred Awards activity for Year-to-Date 2020: Deferred Awards (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested as of January 31, 2020 745 $ 18.49 Granted 753 6.85 Vested (275 ) 19.87 Forfeited or expired (17 ) 17.21 Unvested as of May 1, 2020 1,206 10.91 Total unrecognized stock-based compensation expense related to unvested Deferred Awards was approximately $9.7 million as of May 1, 2020, which is expected to be recognized ratably over a weighted average period of 2.1 years. Deferred Awards granted to employees during Fiscal 2020 vest ratably over a period of three years. The following table provides a summary of the Performance Awards activity for Year-to-Date 2020: Performance Awards (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested as of January 31, 2020 412 $ 18.15 Granted — — Vested — — Forfeited or expired — — Unvested as of May 1, 2020 412 18.15 Total unrecognized stock-based compensation expense related to unvested Performance Awards was approximately $3.2 million as of May 1, 2020, which is expected to be recognized ratably over a weighted average period of 1.6 years. Performance Awards granted to employees during Fiscal 2019 and Fiscal 2018 vest, if earned, after completion of the applicable three-year performance period. The following table provides a summary of the Options Award activity for Year-to-Date 2020: Option Awards (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested as of January 31, 2020 171 $ 8.73 Granted — — Vested (74 ) 8.49 Forfeited or expired — — Unvested as of May 1, 2020 97 8.92 Total unrecognized stock-based compensation expense related to unvested Option Awards was approximately $0.7 million as of May 1, 2020, which is expected to be recognized ratably over a weighted average period of 0.9 years. The Option Awards have a life of ten years and vest ratably over the first four years. As of May 1, 2020, 245,098 shares related to Option Awards were exercisable. No options have been exercised as of May 1, 2020. |
Fair Value Measurements of Fina
Fair Value Measurements of Financial Assets and Liabilities | 3 Months Ended |
May 01, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements of Financial Assets and Liabilities | NOTE 7. FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS AND LIABILITIES Restricted cash is reflected on the Condensed Consolidated Balance Sheets at fair value. The fair value of restricted cash was $2.0 million, $1.8 million and $2.1 million as of May 1, 2020, May 3, 2019 and January 31, 2020, respectively based on Level 1 inputs. Restricted cash amounts are valued based upon statements received from financial institutions. The carrying amount of the Company's Cash and cash equivalents, Accounts receivable, net, Accounts payable, Current borrowings on ABL Facility, and Other current liabilities approximate their fair value as recorded due to the short-term maturity of these instruments. Carrying values and fair values of long-term debt, including the short-term portion, in the Condensed Consolidated Balance Sheets are as follows: May 1, 2020* May 3, 2019 January 31, 2020 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including short-term portion $ 384,100 $ 299,118 $ 389,250 $ 381,952 $ 385,388 $ 378,643 * At the end of First Quarter 2020 all debt is short- term. Long-term debt, including short-term portion was valued utilizing Level 2 valuation techniques based on the closing inactive market bid price on May 1, 2020, May 3, 2019, and January 31, 2020. There were no nonfinancial assets or nonfinancial liabilities recognized at fair value on a nonrecurring basis as of May 1, 2020, May 3, 2019, and January 31, 2020. |
Income Taxes
Income Taxes | 3 Months Ended |
May 01, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8. INCOME TAXES Provision for Income Taxes At the end of each quarter, the Company estimates its effective income tax rate pursuant to ASC 740. The rate for the period consists of the tax rate expected to be applied for the full year to ordinary income adjusted for any discrete items recorded in the period. The Company recorded a tax benefit at an overall effective tax rate of 30.8% and 41.7% for First Quarter 2020 and First Quarter 2019, respectively. The First Quarter 2020 rate reflects the estimated tax benefits as a result of the CARES Act. The First Quarter 2019 rate reflects the tax benefits resulting from the change in status of various foreign jurisdictions. The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of employer side social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. Discrete items that were recognized during the three months ended May 1, 2020 included the vesting of certain share-based compensation awards and the technical corrections aspect of the CARES Act related to carryback of net operating losses (“NOLs”) in years beginning in 2017. The effective income tax rate for the full year is determined by the level and composition of income (loss) before income taxes, excluding discrete items as discussed above, which is subject to federal, state, local and foreign income taxes. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
May 01, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9. COMMITMENTS AND CONTINGENCIES Legal Proceedings The Company is party to various claims, legal proceedings and investigations arising in the ordinary course of business. Some of these actions involve complex factual and legal issues and are subject to uncertainties. At this time, the Company is not able to either predict the outcome of these legal proceedings or reasonably estimate a potential range of loss with respect to the proceedings. While it is not feasible to predict the outcome of such pending claims, proceedings and investigations with certainty, management is of the opinion that their ultimate resolution should not have a material adverse effect on results of operations, cash flows or financial position. As disclosed in the Company’s Annual Report on Form 10-K for the year ended January 1, 2020, the Company is the defendant in three separate lawsuits, each of which seeks class certification and allege adverse health events and personal property damage as a result of wearing uniforms manufactured by Lands’ End: (1) Gilbert et al. v. Lands' End, Inc. Andrews et al. v. Lands' End, Inc. Davis et al. v. Lands' End, Inc. and Lands' End Business Outfitters, Inc. Gilbert, Andrews Davis By order dated April 20, 2020, the Court consolidated the Gilbert Andrews Davis DeCrescentis et al., v. Lands' End, Inc. The Company is vigorously defending the Consolidated Wisconsin Action and believes it is without merit. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
May 01, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 10. RELATED PARTY TRANSACTIONS According to statements on Schedule 13D filed with the SEC by ESL, ESL beneficially owns significant portions of both the Company's and Sears Holdings Corporation's outstanding shares of common stock. Therefore, Sears Holdings Corporation, the Company's former parent company, is considered a related party. On February 11, 2019 Transform Holdco acquired from Sears Holdings substantially all of the go-forward retail footprint, and other assets and component businesses of Sears Holdings as a going concern. The Company believes that ESL holds a significant portion of the membership interest of Transform Holdco and therefore considers that entity to be a related party as well. Sourcing The Company is party to a contract with a subsidiary of Sears Holdings to provide agreed upon buying agency services, on a non-exclusive basis, in foreign territories from where the Company purchases merchandise. These services, primarily based upon quantities purchased, include quality-control functions, regulatory compliance, product claims management and new vendor selection and setup assistance. Total expense from these services in First Quarter 2020 was $1.4 million compared to $1.7 million in First Quarter 2019. These amounts are capitalized into inventory and are expensed through cost of goods sold over the course of inventory turns and included in Cost of sales in the Condensed Consolidated Statements of Operations. The Company’s contract for these services expires on June 30, 2020 and services rendered to the Company under this contract ceased on April 20, 2020. |
Segment Reporting
Segment Reporting | 3 Months Ended |
May 01, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | NOTE 11. SEGMENT REPORTING The Company’s operating segments consist of U.S. eCommerce, Outfitters, Europe eCommerce, Japan eCommerce and Retail. The Company determined that each of the operating segments have similar economic and other qualitative characteristics thus the results of the operating segments are aggregated into one reportable external segment, consistent with the Company’s multi-channel business approach. Net revenue is presented by product channel in the following table: 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Net revenue: eCommerce $ 181,541 $ 208,902 Outfitters 31,799 43,083 Retail 3,668 10,448 Total net revenue $ 217,008 $ 262,433 |
Revenue
Revenue | 3 Months Ended |
May 01, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue | NOTE 12. REVENUE Revenue includes sales of merchandise and delivery revenue related to merchandise sold. Substantially all of the Company's revenue is recognized when control of product passes to customers, which for the eCommerce and Outfitters channels is when the merchandise is expected to be received by the customer and for the Retail channel is at the time of sale in the store. The Company recognizes revenue, including shipping and handling fees billed to customers, in the amount expected to be received when control of the Company's products transfers to customers, and is presented net of various forms of promotions, which range from contractually-fixed percentage price reductions to sales returns, discounts, and other incentives that may vary in amount. Variable amounts are estimated based on an analysis of historical experience and adjusted as better estimates become available. The Company's revenue is disaggregated by product channel and geographic location. Revenue by product channel is presented in Note 11, Segment Reporting 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Net revenue: United States $ 172,746 $ 216,873 Europe 30,376 30,826 Asia 11,348 11,844 Other 2,538 2,890 Total Net revenue $ 217,008 $ 262,433 Contract Liabilities Contract liabilities consist of payments received in advance of the transfer of control to the customer. As products are delivered and control transfers, the Company recognizes the deferred revenue in Net revenue in the Condensed Consolidated Statements of Operations. The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer, which is reported in Other current liabilities in the Condensed Consolidated Balance Sheets, as well as amounts recognized through Net revenue for each period presented. The remainder of deferred revenue as of May 1, 2020 is expected to be recognized in Net revenue in the fiscal quarter ending July 31, 2020, as products are delivered to customers. 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Deferred Revenue Beginning of Period $ 8,096 $ 9,051 Deferred Revenue Recognized in Period (8,096 ) (9,051 ) Revenue Deferred in Period 15,896 10,199 Deferred Revenue End of Period $ 15,896 $ 10,199 Revenue from gift cards is recognized when (i) the gift card is redeemed by the customer for merchandise, or (ii) as gift card breakage, an estimate of gift cards which will not be redeemed where the Company does not have a legal obligation to remit the value of the unredeemed gift cards to the relevant jurisdictions. Gift card breakage is recorded within Net revenue in the Condensed Consolidated Statements of Operations. Prior to their redemption, gift cards are recorded as a liability, included within Other current liabilities in the Condensed Consolidated Balance Sheets. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards: 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Balance as of Beginning of Period $ 22,592 $ 18,191 Gift cards sold 8,831 15,117 Gift cards redeemed (8,127 ) (13,033 ) Gift card breakage (94 ) (265 ) Balance as of End of Period $ 23,202 $ 20,010 Refund Liabilities Refund liabilities, primarily associated with product sales returns and retrospective volume rebates, represent variable consideration and are estimated and recorded as a reduction to Net revenue based on historical experience. As of May 1, 2020, May 3, 2019 and January 31, 2020, $16.7 million, $17.3 million and $21.6 million, respectively, of refund liabilities, primarily associated with product returns, were reported in Other current liabilities in the Condensed Consolidated Balance Sheets. An asset for product returns is recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
May 01, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
New Accounting Pronouncements | In June 2016, the FASB issued ASU 2016-13, Financial Statements - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
May 01, 2020 | |
Earnings Per Share Basic And Diluted [Abstract] | |
Schedule of Components of Basic and Diluted EPS | The following table summarizes the components of basic and diluted EPS: 13 Weeks Ended (in thousands, except per share amounts) May 1, 2020 May 3, 2019 Net loss $ (20,643 ) $ (6,818 ) Basic weighted average common shares outstanding 32,448 32,261 Dilutive effect of stock awards — — Diluted weighted average common shares outstanding 32,448 32,261 Basic loss per share $ (0.64 ) $ (0.21 ) Diluted loss per share $ (0.64 ) $ (0.21 ) |
Other Comprehensive Loss (Table
Other Comprehensive Loss (Tables) | 3 Months Ended |
May 01, 2020 | |
Equity [Abstract] | |
Schedule of Other Comprehensive Loss | Other comprehensive loss encompasses all changes in equity other than those arising from transactions with stockholders and is comprised solely of foreign currency translation adjustments. 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Beginning balance: Accumulated other comprehensive loss (net of tax of $3,453 and $3,505 respectively) $ (12,988 ) $ (13,183 ) Other comprehensive loss: Foreign currency translation adjustments (net of tax benefit of $337 and $61 respectively) (1,259 ) (234 ) Ending balance: Accumulated other comprehensive loss (net of tax of $3,790 and $3,566 respectively) $ (14,247 ) $ (13,417 ) |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
May 01, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Company's Debt | The Company's debt consisted of the following: May 1, 2020 May 3, 2019 January 31, 2020 (in thousands) Amount Rate Amount Rate Amount Rate Term Loan Facility, maturing April 4, 2021 $ 384,100 4.25 % $ 389,250 5.75 % $ 385,388 5.05 % ABL Facility, maturing November 16, 2022 75,000 2.07 % — —% — —% 459,100 389,250 385,388 Less: Current maturities in Current liabilities 457,858 5,150 5,150 Less: Unamortized debt issuance costs 1,242 2,596 1,581 Long-term debt, net $ — $ 381,504 $ 378,657 |
Summary of Company's Borrowing Availability Under ABL Facility | The following table summarizes the Company's borrowing availability under the ABL Facility: (in thousands) May 1, 2020 May 3, 2019 January 31, 2020 ABL Facility maximum borrowing $ 200,000 $ 175,000 $ 175,000 Current borrowings under ABL 75,000 — — Outstanding letters of credit 8,656 11,203 23,299 Borrowing availability under ABL $ 116,344 $ 163,797 $ 151,701 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
May 01, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock-Based Compensation Expense | The following table provides a summary of the Company's stock-based compensation expense, which is included in Selling and administrative expense in the Condensed Consolidated Statements of Operations: 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Deferred Awards $ 1,641 $ 1,365 Performance Awards — 422 Option Awards 187 187 Total stock-based compensation expense $ 1,828 $ 1,974 |
Summary of Deferred Awards Activity | The following table provides a summary of the Deferred Awards activity for Year-to-Date 2020: Deferred Awards (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested as of January 31, 2020 745 $ 18.49 Granted 753 6.85 Vested (275 ) 19.87 Forfeited or expired (17 ) 17.21 Unvested as of May 1, 2020 1,206 10.91 |
Summary of Performance Awards Activity | The following table provides a summary of the Performance Awards activity for Year-to-Date 2020: Performance Awards (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested as of January 31, 2020 412 $ 18.15 Granted — — Vested — — Forfeited or expired — — Unvested as of May 1, 2020 412 18.15 |
Summary of Options Award Activity | The following table provides a summary of the Options Award activity for Year-to-Date 2020: Option Awards (in thousands, except per share amounts) Number of Shares Weighted Average Grant Date Fair Value per Share Unvested as of January 31, 2020 171 $ 8.73 Granted — — Vested (74 ) 8.49 Forfeited or expired — — Unvested as of May 1, 2020 97 8.92 |
Fair Value Measurements of Fi_2
Fair Value Measurements of Financial Assets and Liabilities (Tables) | 3 Months Ended |
May 01, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Value and Fair Value of Long-term Debt | Carrying values and fair values of long-term debt, including the short-term portion, in the Condensed Consolidated Balance Sheets are as follows: May 1, 2020* May 3, 2019 January 31, 2020 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt, including short-term portion $ 384,100 $ 299,118 $ 389,250 $ 381,952 $ 385,388 $ 378,643 * At the end of First Quarter 2020 all debt is short- term. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
May 01, 2020 | |
Segment Reporting [Abstract] | |
Summary of Net Revenue by Product Channel | Net revenue is presented by product channel in the following table: 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Net revenue: eCommerce $ 181,541 $ 208,902 Outfitters 31,799 43,083 Retail 3,668 10,448 Total net revenue $ 217,008 $ 262,433 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
May 01, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Disaggregated of Revenue by Geographic Location | The Company's revenue is disaggregated by product channel and geographic location. Revenue by product channel is presented in Note 11, Segment Reporting 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Net revenue: United States $ 172,746 $ 216,873 Europe 30,376 30,826 Asia 11,348 11,844 Other 2,538 2,890 Total Net revenue $ 217,008 $ 262,433 |
Summary of Deferred Revenue | The following table summarizes the deferred revenue associated with payments received in advance of the transfer of control to the customer, which is reported in Other current liabilities in the Condensed Consolidated Balance Sheets, as well as amounts recognized through Net revenue for each period presented. The remainder of deferred revenue as of May 1, 2020 is expected to be recognized in Net revenue in the fiscal quarter ending July 31, 2020, as products are delivered to customers. 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Deferred Revenue Beginning of Period $ 8,096 $ 9,051 Deferred Revenue Recognized in Period (8,096 ) (9,051 ) Revenue Deferred in Period 15,896 10,199 Deferred Revenue End of Period $ 15,896 $ 10,199 |
Reconciliation of Gift Card Contract Liability | The following table provides the reconciliation of the contract liability related to gift cards: 13 Weeks Ended (in thousands) May 1, 2020 May 3, 2019 Balance as of Beginning of Period $ 22,592 $ 18,191 Gift cards sold 8,831 15,117 Gift cards redeemed (8,127 ) (13,033 ) Gift card breakage (94 ) (265 ) Balance as of End of Period $ 23,202 $ 20,010 |
Background and Basis of Prese_2
Background and Basis of Presentation - Additional Information (Details) | Mar. 28, 2020 | Mar. 16, 2020Store | May 01, 2020USD ($) | Jan. 31, 2020USD ($) | May 03, 2019USD ($) |
Unusual Risk Or Uncertainty [Line Items] | |||||
Impairment of goodwill | $ 3,300,000 | ||||
COVID-19 | |||||
Unusual Risk Or Uncertainty [Line Items] | |||||
Approximately percentage of furlough of corporate employees | 70.00% | ||||
Approximately percentage of furlough of retail employees | 100.00% | ||||
Approximately percentage of workforce remained furloughed | 49.00% | ||||
Approximately percentage of planned capital expenditures reduced | 50.00% | ||||
Impairment outfitters reporting unit | $ 0 | ||||
Impairment of goodwill | $ 3,300,000 | ||||
Chief Executive Officer | COVID-19 | |||||
Unusual Risk Or Uncertainty [Line Items] | |||||
Temporarily base salary reduction percentage | 50.00% | ||||
President | COVID-19 | |||||
Unusual Risk Or Uncertainty [Line Items] | |||||
Temporarily base salary reduction percentage | 20.00% | ||||
United States | Novel Coronavirus | |||||
Unusual Risk Or Uncertainty [Line Items] | |||||
Number of stores temporarily closed | Store | 26 | ||||
Term Loan Facility | |||||
Unusual Risk Or Uncertainty [Line Items] | |||||
Secured debt, remaining balance outstanding | $ 384,100,000 | $ 385,388,000 | $ 389,250,000 | ||
Debt instrument, maturity date | Apr. 4, 2021 | ||||
ABL Facility | |||||
Unusual Risk Or Uncertainty [Line Items] | |||||
Debt instrument, maturity date | Nov. 16, 2022 | ||||
Increase in borrowing capacity | $ 25,000,000 | ||||
Line of credit facility, maximum borrowing capacity | $ 200,000,000 | $ 175,000,000 | $ 175,000,000 |
Loss Per Share - Schedule of Co
Loss Per Share - Schedule of Components of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Earnings Per Share Basic And Diluted [Abstract] | ||
Net loss | $ (20,643) | $ (6,818) |
Basic weighted average common shares outstanding | 32,448 | 32,261 |
Diluted weighted average common shares outstanding | 32,448 | 32,261 |
Basic loss per share | $ (0.64) | $ (0.21) |
Diluted loss per share | $ (0.64) | $ (0.21) |
Loss Per Share - Additional Inf
Loss Per Share - Additional Information (Details) - shares | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Earnings Per Share Basic And Diluted [Abstract] | ||
Antidilutive shares excluded from diluted weighted average shares outstanding | 1,205,821 | 796,269 |
Other Comprehensive Loss - Sche
Other Comprehensive Loss - Schedule of Other Comprehensive Loss (Parenthetical) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
May 01, 2020 | May 03, 2019 | Jan. 31, 2020 | Feb. 01, 2019 | |
Equity [Abstract] | ||||
Accumulated other comprehensive loss, tax | $ 3,790 | $ 3,566 | $ 3,453 | $ 3,505 |
Foreign currency translations adjustment, tax | $ 337 | $ 61 |
Other Comprehensive Loss - Sc_2
Other Comprehensive Loss - Schedule of Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance | $ 348,382 | $ 322,711 |
Balance | 327,898 | 315,205 |
Accumulated Other Comprehensive Loss | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Balance | (12,988) | (13,183) |
Balance | (14,247) | (13,417) |
Foreign Currency Translation Adjustment | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Foreign currency translation adjustments (net of tax benefit of $337 and $61 respectively) | $ (1,259) | $ (234) |
Other Comprehensive Loss - Addi
Other Comprehensive Loss - Additional Information (Details) - USD ($) | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Equity [Abstract] | ||
Amounts reclassified from accumulated other comprehensive loss | $ 0 | $ 0 |
Debt - Schedule of Company's De
Debt - Schedule of Company's Debt (Details) - USD ($) $ in Thousands | May 01, 2020 | Jan. 31, 2020 | May 03, 2019 |
Line Of Credit Facility [Line Items] | |||
Long-term debt | $ 459,100 | $ 385,388 | $ 389,250 |
Less: Current maturities in Current liabilities | 457,858 | 5,150 | 5,150 |
Less: Unamortized debt issuance costs | 1,242 | 1,581 | 2,596 |
Long-term debt, net | 378,657 | 381,504 | |
Term Loan Facility | |||
Line Of Credit Facility [Line Items] | |||
Secured debt | $ 384,100 | $ 385,388 | $ 389,250 |
Debt instrument, interest rate, stated percentage | 4.25% | 5.05% | 5.75% |
ABL Facility | |||
Line Of Credit Facility [Line Items] | |||
Long-term Line of Credit | $ 75,000 | ||
Debt instrument, interest rate, stated percentage | 2.07% |
Debt - Summary of Company's Bor
Debt - Summary of Company's Borrowing Availability Under ABL Facility (Details) - ABL Facility - USD ($) | May 01, 2020 | Jan. 31, 2020 | May 03, 2019 |
Line Of Credit Facility [Line Items] | |||
ABL Facility maximum borrowing | $ 200,000,000 | $ 175,000,000 | $ 175,000,000 |
Current borrowings under ABL | 75,000,000 | ||
Outstanding letters of credit | 8,656,000 | 23,299,000 | 11,203,000 |
Borrowing availability under ABL | $ 116,344,000 | $ 151,701,000 | $ 163,797,000 |
Debt - Additional Information (
Debt - Additional Information (Details) | 3 Months Ended | ||
May 01, 2020USD ($) | Jan. 31, 2020USD ($) | May 03, 2019USD ($) | |
ABL Facility | |||
Line Of Credit Facility [Line Items] | |||
Increase in borrowing capacity | $ 25,000,000 | ||
Line of credit facility, maximum borrowing capacity | $ 200,000,000 | $ 175,000,000 | $ 175,000,000 |
Debt instrument, maturity date | Nov. 16, 2022 | ||
ABL Facility | Secured debt | |||
Line Of Credit Facility [Line Items] | |||
Line of credit facility, unused commitment fee percentage | 0.25% | ||
Borrowing under facility | $ 75,000,000 | ||
Line of credit facility, covenant terms, minimum percentage of loan cap amount | 10.00% | ||
Line of credit facility, covenant terms, minimum excess credit availability | $ 15,000,000 | ||
Line of credit facility, covenant terms, minimum fixed charge coverage ratio | 1 | ||
ABL Facility | LIBOR | Secured debt | Minimum | |||
Line Of Credit Facility [Line Items] | |||
Spread on variable rate | 1.25% | ||
ABL Facility | LIBOR | Secured debt | Maximum | |||
Line Of Credit Facility [Line Items] | |||
Spread on variable rate | 1.75% | ||
ABL Facility | Base rate | Secured debt | Minimum | |||
Line Of Credit Facility [Line Items] | |||
Spread on variable rate | 0.50% | ||
ABL Facility | Base rate | Secured debt | Maximum | |||
Line Of Credit Facility [Line Items] | |||
Spread on variable rate | 1.00% | ||
Term Loan Facility | |||
Line Of Credit Facility [Line Items] | |||
Interest rate floor | .01 | ||
Debt instrument, maturity date | Apr. 4, 2021 | ||
Secured debt, remaining balance outstanding | $ 384,100,000 | $ 385,388,000 | $ 389,250,000 |
Term Loan Facility | LIBOR | Secured debt | |||
Line Of Credit Facility [Line Items] | |||
Spread on variable rate | 3.25% | ||
Term Loan Facility | Base rate | Secured debt | |||
Line Of Credit Facility [Line Items] | |||
Spread on variable rate | 2.25% |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) $ in Millions | 3 Months Ended |
May 01, 2020USD ($)shares | |
Minimum | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Target shares earned | 50.00% |
Maximum | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Target shares earned | 200.00% |
Deferred Awards | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Vesting period | 3 years |
Compensation expense not yet recognized | $ 9.7 |
Compensation expense not yet recognized, recognition period | 2 years 1 month 6 days |
Performance Awards | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Vesting period | 3 years |
Compensation expense not yet recognized | $ 3.2 |
Compensation expense not yet recognized, recognition period | 1 year 7 months 6 days |
Performance awards period considered | 3 years |
Option Awards | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Vesting period | 4 years |
Options awards expiration period | 10 years |
Compensation expense not yet recognized, recognition period | 10 months 24 days |
Compensation expense not yet recognized | $ 0.7 |
Options awards exercisable | shares | 245,098 |
Options exercised | shares | 0 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Share-based compensation | $ 1,828 | $ 1,974 |
Deferred Awards | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Share-based compensation | 1,641 | 1,365 |
Performance Awards | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Share-based compensation | 422 | |
Option Awards | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Share-based compensation | $ 187 | $ 187 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Deferred Awards Activity (Details) - Deferred Awards | 3 Months Ended |
May 01, 2020$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares, Unvested awards at beginning of year | shares | 745,000 |
Number of Shares, Granted | shares | 753,000 |
Number of Shares, Vested | shares | (275,000) |
Number of Shares, Forfeited | shares | (17,000) |
Number of Shares, Unvested awards at end of year | shares | 1,206,000 |
Weighted Average Grant Date Fair Value, Unvested awards at beginning of year | $ / shares | $ 18.49 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 6.85 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 19.87 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 17.21 |
Weighted Average Grant Date Fair Value, Unvested awards at end of year | $ / shares | $ 10.91 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Performance Awards Activity (Details) - Performance Awards | 3 Months Ended |
May 01, 2020$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares, Unvested awards at beginning of year | shares | 412,000 |
Number of Shares, Granted | shares | 0 |
Number of Shares, Vested | shares | 0 |
Number of Shares, Forfeited | shares | 0 |
Number of Shares, Unvested awards at end of year | shares | 412,000 |
Weighted Average Grant Date Fair Value, Unvested awards at beginning of year | $ / shares | $ 18.15 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Unvested awards at end of year | $ / shares | $ 18.15 |
Stock-Based Compensation - Su_4
Stock-Based Compensation - Summary of Options Award Activity (Details) - Option Awards | 3 Months Ended |
May 01, 2020$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Shares, Unvested option awards at beginning of year | shares | 171,000 |
Number of Shares, Granted | shares | 0 |
Number of Shares, Vested | shares | (74,000) |
Number of Shares, Forfeited | shares | 0 |
Number of Shares, Unvested option awards at end of year | shares | 97,000 |
Weighted Average Grant Date Fair Value, Unvested option awards at beginning of year | $ / shares | $ 8.73 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 8.49 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 0 |
Weighted Average Grant Date Fair Value, Unvested option awards at end of year | $ / shares | $ 8.92 |
Fair Value Measurements of Fi_3
Fair Value Measurements of Financial Assets and Liabilities - Additional Information (Details) - USD ($) | May 01, 2020 | Jan. 31, 2020 | May 03, 2019 |
Nonrecurring | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Nonfinancial assets fair value disclosure | $ 0 | $ 0 | $ 0 |
Nonfinancial liabilities fair value disclosure | 0 | 0 | 0 |
Fair Value | Level 1 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Restricted cash fair value | $ 2,000,000 | $ 2,100,000 | $ 1,800,000 |
Fair Value Measurements of Fi_4
Fair Value Measurements of Financial Assets and Liabilities - Schedule of Carrying Value and Fair Value of Long-term Debt (Details) - USD ($) $ in Thousands | May 01, 2020 | Jan. 31, 2020 | May 03, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Current borrowings on ABL Facility | $ 75,000 | ||
Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Current borrowings on ABL Facility | 384,100 | ||
Long-term debt, including short-term portion | $ 385,388 | $ 389,250 | |
Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Current borrowings on ABL Facility | $ 299,118 | ||
Fair Value | Level 2 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Long-term debt, including short-term portion | $ 378,643 | $ 381,952 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax expense (benefit), percentage | (30.80%) | (41.70%) |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - Sears Holdings Corporation - Sourcing - USD ($) $ in Millions | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Related Party Transaction [Line Items] | ||
Related party expenses | $ 1.4 | $ 1.7 |
Related party transaction, expiry date | Jun. 30, 2020 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 3 Months Ended |
May 01, 2020Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Segment Reporting - Summary of
Segment Reporting - Summary of Net Revenue by Product Channel (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Segment Reporting Information [Line Items] | ||
Net revenue | $ 217,008 | $ 262,433 |
eCommerce | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 181,541 | 208,902 |
Outfitters | ||
Segment Reporting Information [Line Items] | ||
Net revenue | 31,799 | 43,083 |
Retail | ||
Segment Reporting Information [Line Items] | ||
Net revenue | $ 3,668 | $ 10,448 |
Revenue - Disaggregated of Reve
Revenue - Disaggregated of Revenue by Geographic Location (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 217,008 | $ 262,433 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 172,746 | 216,873 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 30,376 | 30,826 |
Asia | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 11,348 | 11,844 |
Other Geographical Location | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 2,538 | $ 2,890 |
Revenue - Summary of Deferred R
Revenue - Summary of Deferred Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Revenue From Contract With Customer [Abstract] | ||
Deferred Revenue Beginning of Period | $ 8,096 | $ 9,051 |
Deferred Revenue Recognized in Period | (8,096) | (9,051) |
Revenue Deferred in Period | 15,896 | 10,199 |
Deferred Revenue End of Period | $ 15,896 | $ 10,199 |
Revenue - Reconciliation of Gif
Revenue - Reconciliation of Gift Card Contract Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Revenue From Contract With Customer [Abstract] | ||
Balance as of Beginning of Period | $ 22,592 | $ 18,191 |
Gift cards sold | 8,831 | 15,117 |
Gift cards redeemed | (8,127) | (13,033) |
Gift card breakage | (94) | (265) |
Balance as of End of Period | $ 23,202 | $ 20,010 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | May 01, 2020 | Jan. 31, 2020 | May 03, 2019 |
Other Current Liabilities | |||
Deferred Revenue Arrangement [Line Items] | |||
Refund liability | $ 16.7 | $ 21.6 | $ 17.3 |