Ladies and gentlemen, thank you for standing by and welcome to the Lands' End Third Quarter 2020 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now hand the conference over to Bernard McCracken, Chief Accounting Officer. Please go ahead.

Good morning, and thank you for joining the Lands' End earnings call for a discussion of our third quarter fiscal 2020 results, which we released this morning and can be found on our website landsend.com. On the call today, you will hear from Jerome Griffith, our Chief Executive Officer and President; and Jim Gooch, our Chief Operating Officer and Chief Financial Officer. After the company's 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, quarterly reports on Form 10-Q, and Form 8-K dated June 2020. 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. Of note, in this respect, the COVID-19 pandemic continues to have significant impact on our business and its duration can materially alter our outlook. During this call, we'll be referring to non-GAAP measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued earlier today, a copy of which is posted in the Investor Relations section of our website at landsend.com. With that, I will turn over the call to Jerome Griffith.

Thank you, Bernie. Good morning and thank you for joining us today for a discussion of our third quarter results. We were extremely pleased with our third quarter performance. Our teams executed at an exceptional level to achieve strong results despite the challenges created by COVID. I am both proud and grateful for their efforts. The investments we've put toward leveraging data analytics to inform our strategies around product, ecommerce, and marketing continued to pay dividends and driving growth to new customers and strong retention rates. We have also made great strides in driving improved profitability. To that end, in addition to once again generating double-digit growth on our global e-commerce business, we delivered 52% adjusted EBITDA growth in the third quarter. This performance underscores the momentum behind the Lands' End brand and the progress we're making in delivering long-term profitable growth. Additionally, the launch of Lands' End in the Kohls.com and to 150 Kohl’s stores at the end of September is off to a strong start. Based on the early success, we plan to expand the Lands' End assortment and increase the number of points of distribution from 150 Kohl’s stores to 300 in 2021. Also during the third quarter as previously announced, we completed the refinancing of our term debt, further improving our liquidity position, which Jim will speak to shortly. Turning to some brief highlights of our financial results, third quarter total revenue grew approximately 6%, driven by our global e-commerce sales, which were up approximately 20% ahead of our expectation for low double-digit growth for this business. We grew adjusted EBITDA 52% to approximately $29 million and expanded adjusted EBITDA margin by approximately 240 basis points to 7.9%. We continue to lean into our strong heritage as an American lifestyle brand that offers comfort, quality, great…

Thank you, Jerome and good morning. Our global e-commerce business once again delivered strong performance in the third quarter. Well as expected our outfitter business remain challenged as a result of the pandemic. We continue to make great progress on the strategies we have outlined while leveraging our strong foundation to advance our growth initiatives. Total revenue increased 5.9% to 360 million, compared to 340 million last year. Momentum continued in our global e-commerce business, which increased 20% with strong results in our U.S. e-commerce business, which grew approximately 14% and our international e-commerce business with a 51% increase for the quarter. During the quarter, we saw strength in a number of our categories, including fleece, sleepwear, loungewear, and knits, as well as in our home business. With many consumers still working from home these categories deliver double-digit growth in the quarter as our marketing strategies emphasize the comfort and value in our product assortments. Partially offsetting the strong global e-commerce growth, sales in our Outfitter business were down 26% due to ongoing pressure as a result of COVID-19. The Outfitters results reflect overall sequential improvement versus last quarter, although our travel related national accounts in our small and midsize businesses remain challenged. The most significant improvement came in our school uniform business where sales were approximately flat to last year for the quarter. Overall, we expect performance in this business to remain choppy with a recent spike in the pandemic. Moving to our retail business sales decreased approximately 44% in the third quarter to $8 million. This decrease was driven by lower traffic due to the pandemic, partially offset by improved conversion in our stores. Gross margin in the third quarter increased approximately 10 basis points to 45.4%, as compared to last year. Gross margin benefited from our improved…

Thanks, Jim. Despite the continued uncertainty related to COVID, we continue to demonstrate our ability to manage our business effectively and deliver meaningful EBITDA growth during a very difficult environment. We remain focused on driving market share gains through continuously enhancing our engagement with existing customers and gaining market share through our own channel, as well as through new partnerships and collaborations. Our four core growth strategies remain: getting the product right, being a digitally driven company, implementing a unit channel distribution strategy, and enhancing our infrastructure and processes. As previously mentioned, we're very pleased with the response to our product offering in the quarter. As we head into the holiday season, it will be an important time for gift giving. Our key item strategy will focus on sleepwear, outerwear, and home. Within these categories, since holiday is an important time for family, we plan to emphasize whole house family messaging, specifically with regards to patterns. Our let's get comfy theme highly relevant in today's environment will remain the focus of our messaging. Within digital, we continue to see incredible opportunity to drive traffic and market share as we refine our search engine optimization techniques. Our holiday promotional and markdown strategy will continue to leverage data analytics and machine learning to effectively determine optimal prices for our customers. As a result, we expect lower markdowns and higher product margin rates than previous years, despite the highly promotional environment and incremental shipping expenses. As we advance our data analytics capabilities, from quarter-to-quarter, we will continue to gain further knowledge of customer behavior trends. Turning to our retail business, we continue to monitor retail trends to evaluate a post pandemic store strategy. However, with the current rise in cases of COVID-19, our priority right now is the health and safety of our…

Thank you. [Operator Instructions] Our first question comes from the line of Alex Fuhrman with Craig-Hallum. Your line is now open.

Great, thank you very much for taking my question and congratulations on a really strong quarter. You know, I wanted to ask about what you've been seeing so far. It sounds like the unseasonably warm weather has had a little bit of an impact on your outerwear business. Anything to call out, you know, now that we're just on the other side of Thanksgiving weekend, about, you know how your brands performed during Black Friday and through Cyber Monday, any anything notable to call out there?

Hey, Alex, thanks for the question. I think like everybody else, we're seeing a shift in consumer behavior this holiday season with obviously an emphasis on online shopping. Black Friday itself was a positive day for us both domestically and internationally. We saw solid growth in our business year-over-year. And we're pretty encouraged by the continued resilience and performance of our global e-commerce business. But the fourth quarter got off to a slower start in the U.S., particularly due to our heavy outerwear category. I don't like to bring up weather; I always think weather is kind of a cheap excuse. But I think as everybody knows cold weather hasn't really started yet. And if we couple that with people staying home and indoors and not commuting because of COVID, the demand for heavy outerwear just isn't there yet. But if you look at our other categories, as you would expect, our other categories are performing well, same categories in third quarter going into the fourth quarter the people have had good [demand for].

Great, that's really helpful. Thanks. And then it sounds like you guys are acquiring a lot of new customers here or at least in the third quarter. Where has that been coming from? Has there been any, you know, particular marketing channel that's been effective or new products that have been bringing new customers in or is that some kind of a continuation of the efforts that you've been putting in place for a while now?

It's a bit of a mix. I mean, obviously, search has always been, you know, the lion's share of where we have new customers coming in from a marketing standpoint, but what we've seen is that a couple of other areas are performing super well for us. Even though we put smaller dollars into it, social media has been doing really well. And we've got some video out on connected TV, which seems to be doing a pretty good job for us. Couple that with, you know big increases in knitwear, loungewear, active wear, which is bringing in a lot of newer customers for us. And those customers tend to be on the younger side from where our existing customer base is. So that looks pretty good for us.

Great, that's helpful. And then, you know, lastly, if I could just ask, you know, on the Outfitters side of the business, I mean, obviously that's pretty, you know, closely impacted by the pandemic, just curious, I mean you work with a lot of the biggest companies out there in retail and transportation, what's the outlook for next year? I mean, at what point do you think things are going to start turning around for some of your big customers?

I think that what you're going to see is a longer call back in any of the travel related products. Anybody that's really related to travel right now, we're seeing increases albeit small increases. I think we're really going to be concentrating in the Outfitters business is going to be on the small and mid-size businesses and making their customer experience easier. We think that there's a big opportunity for us to improve the customer experience online of getting your product logo or getting your product customized in multiple ways and making that an easier customer experience. And we're going to see a lot of concentration in that part of the business.

You know, Alex, I think you touched on that, as far as the Outfitters. It's really three different businesses. If you remember, it's about one-third school, one-third, small and midsize business, and one-third is large national accounts. So, Jerome mentioned that. The large national accounts is probably going to be the slowest recovery. We're very excited to see the sequential improvement that we mentioned in the school business, and that business was actually fairly flat for the quarter.

That's great. Well, thanks. Thanks very much both of you.

Thank you. Our next question comes from the line of Steve Marotta with C.L. King & Associates. Your line is now open.

Good morning Jerome and Jim, congratulations on the third quarter as well. As far as, Jerome, you just touched on it as it relates to staying at home for Outerwear, assuming we get a relatively normal winter season from this moment forward, could there still be a negative impact on that category? Just because people aren't going out as much, and if so, how do you quantify that?

I think Steve from what we put out with guidance we've taken that into account for what we think will be happening over the course of the next few months. As you know, the COVID is really in front of us, not behind us based upon the date so far. So, I think we've taken that into account in the guidance.

I think as far as the quantification, Steve, to Jerome's point, it's in the guidance. I think the other thing we feel really good about, and we mentioned this, because we had such a healthy back end of the second quarter and the third quarter. Our inventory positions are so healthy, so lean that even though we might have a little bit of challenge in some of the heavy outerwear, you know, we don't think there's a lasting impact there.

Got you. International commerce was up really, really well, can you come in on the tactics that helped that? What is that as a percent of sales right now? And how can you capitalize on that segment of the business going forward?

I think a lot of the things that are working there internationally are a lot of the things that you hear us doing on the U.S. side. So, many of those things we've been doing for the last several quarters there from what we've been doing from a digital perspective, from what we've been doing from a data analytics perspective, from what we've been doing with capturing new customers. We're now rolling many of those things out, especially in Europe. And we've really seen significant positive impacts there.

And how big a percent of the sales was that in the third quarter?

I don't think we give that as a specific number, but I think you can go back to history and do some of the math obviously continues to grow. The overall global e-commerce business is now probably up over 80% as a percent of our total with some of the challenges in the Outfitter business and that continued growth on the e-commerce side.

Got you. Okay, very helpful. Thank you. I'll take the rest of my questions offline. Thank you.

Thanks Steve.

Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.