Lands’ End warehouse snags lead to Q1 revenue drop

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Lands’ End has been hard at work on its generational glow-up in an effort to attract younger, digitally native customers while holding on to its older base. To that end, in March the company appointed Sarah Sylvester to be its first chief marketing officer in nearly a decade. However, it’s hard to serve a DTC consumer if goods aren’t shipping properly. 

On a Tuesday call, Chief Financial Officer Bernie McCracken told analysts that gross profits declined 16% year over year for the quarter and gross margin was down 47%.

“That decline was driven principally by the de-leverage created by the temporary distribution center disruption, the new royalty structure associated with the WHP Global joint venture and continued tariff headwinds,†McCracken said. He added that, excluding the impact of the warehouse disruption, “we would have expected low single-digit revenue growth in the quarter.â€

The distribution center problem led to a decline in the U.S. e-commerce business, which was down 10% compared to the first quarter of 2025. In Europe, which was not impacted by the disruption, e-commerce net revenue was up 14.5% for the period.

McCracken told analysts on the call that the warehouse issue “is behind us†and said the company expects positive comps in the second quarter.

“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,†CEO Andrew McLean said. “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,†which bodes well for the company’s product and merchandising strategy.

The company’s new joint venture deal with WHP, which closed on April 1, should help provide focus and a little financial breathing room. Lands’ End used the proceeds to repay its $234 million term loan, and in turn, gave WHP control over its intellectual property and related assets, including its licensing business. Lands’ End is still in charge of its DTC operations, as well as Outfitters, its business-to-business division. The latter saw a revenue decline of 10.3% to $38.5 million for the first quarter, also related primarily to the company’s warehouse woes.

McLean cited WHP Global’s recent agreement to buy Marc Jacobs as another positive for Lands’ End, as the company’s shareholders benefit from the growth of WHP Global’s whole portfolio.

Along with the WHP deal, the Lands’ End board authorized the repurchase of up to $100 million of common stock through March 2029. That should also give the company a bit of a leg up in terms of building value.

Looking ahead, McLean said he was confident in the company’s customer loyalty and brand commitment.

“Our customer relationship remains a distinctive advantage, with the average customer relationship spanning 20 years,†he said. “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.â€