Quarterly Report for Quarter Ending August 1, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the Condensed Consolidated Financial Statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. See "Cautionary Statement Regarding Forward-Looking Information" below, "Item 1A. Risk Factors" in our Annual Report filed on Form 10-K for the year ended January 31, 2025 and "Part II, Item 1A Risk Factors" of this Quarterly Report on Form 10-Q, for a discussion of the uncertainties, risks and assumptions associated with these statements.

As used in this Quarterly Report on Form 10-Q, references to the "Company", "Lands' End", "we", "us", "our" and similar terms refer to Lands' End, Inc. and its subsidiaries. Our fiscal year ends on the Friday preceding the Saturday closest to January 31. Other terms that are commonly used in this Quarterly Report on Form 10-Q are defined as follows:

Executive Overview

Description of the Company

Lands' End is a leading digital retailer of solution-based apparel, swimwear, outerwear, accessories, footwear, home products and uniforms. We offer products online at www.landsend.com, through third-party distribution channels, our own Company Operated stores and third-party license agreements. We also offer products to businesses and schools, for their employees and students, through the Outfitters distribution channel. We are a classic American lifestyle brand that creates solutions for life's every journey.

Lands' End was founded in 1963 by Gary Comer and his partners to sell sailboat hardware and equipment by catalog. While our product focus has shifted significantly over the years, we have continued to adhere to our founder's motto as one of our guiding principles: "Take care of the customer, take care of the employee and the rest will take care of itself."

We identify our operating segments according to how our business activities are managed and evaluated. Following internal organizational changes and realignment of distribution channel responsibilities in Fourth Quarter 2024, our operating segments now consist of: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail.

We have determined that the U.S. eCommerce, Outfitters and Third Party operating segments share similar economic and other qualitative characteristics, and therefore, the results of these operating segments are aggregated into the U.S. Digital segment. The Europe eCommerce, Licensing and Retail operating segments are not quantitatively significant to be separately reported. See Note 12, Segment Reporting.

Distribution Channels

We identify six separate distribution channels for revenue reporting purposes:

Macroeconomic Challenges

Macroeconomic issues which impact consumer discretionary spending, such as realized inflation-based price increases and high interest rates, have continued to have an impact on our business. Apparel purchases historically have been influenced by domestic and global economic conditions, which may negatively impact customer demand and may require higher levels of promotion in order to attract and retain customers. Additionally, the variable interest rates associated with our Debt Facilities are negatively affected by higher interest rate environments. Macroeconomic challenges may lead to increased cost of raw materials, packaging materials, labor, energy, fuel, debt and other inputs necessary for the production and distribution of our products. Ongoing uncertainty surrounding global trade policy, including the potential for increased tariffs on goods manufactured in key sourcing regions, could elevate product costs. We are monitoring these developments and are actively pursuing mitigation strategies, but escalating trade tensions may pressure margins and disrupt supply chain efficiency.

Restructuring

We incurred restructuring charges, primarily severance and benefit costs, related to cost optimization of business operations and strategic initiatives. During Year-to-Date 2025, we reduced approximately 6% of our corporate office positions and incurred

restructuring charges, primarily severance and benefit and other related costs. The reductions in the corporate office positions were made to better align with the evolving needs of the business and to invest in key growth areas. Additionally, we incurred ongoing costs related to exploring strategic alternatives to maximize shareholder value and have included those costs as part of restructuring.

We incurred $2.4 million and $2.3 million of restructuring costs during the Second Quarter 2025 and Second Quarter 2024, respectively. Restructuring costs of $5.8 million and $2.7 million were incurred Year-to-Date 2025 and Year-to-Date 2024, respectively.

As of August 1, 2025, approximately $3.2 million of restructuring costs incurred had yet to be paid and are included in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

Basis of Presentation

The Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and include the accounts of Lands' End, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated.

Seasonality

We experience seasonal fluctuations in our Net revenue and operating results and historically have realized a significant portion of our net revenue and earnings for the year during our fourth fiscal quarter. We generated approximately 34.0% of our net revenue in the fourth quarters of Fiscal 2024 and Fiscal 2023.

Working capital requirements typically increase during the second and third quarters of the fiscal year as inventory builds to support peak selling periods and, accordingly, working capital requirements typically decrease during the fourth quarter of the fiscal year as inventory is sold. Cash provided by operating activities is typically higher in the fourth quarter of the fiscal year due to reduced working capital requirements during that period.

Results of Operations

The following tables set forth, for the periods indicated, selected income statement data, both in dollars and as a percentage of Net revenue:

Depreciation and amortization are not included in our cost of sales because we are a reseller of inventory and do not believe that including depreciation and amortization is meaningful. As a result, our gross margins may not be comparable to other entities that include depreciation and amortization related to the sale of their product in their gross margin measure.

Definitions, Reconciliations and Uses of Non-GAAP Financial Measures

In addition to our Net income (loss) determined in accordance with GAAP, for purposes of evaluating operating performance, we report the following non-GAAP measures: Adjusted net income (loss) and Adjusted EBITDA. Adjusted net income (loss) is also expressed on a diluted per share basis.

We believe presenting non-GAAP financial measures provides useful information to investors, allowing them to assess how the business performed excluding the effects of significant non-recurring or non-operational amounts. We believe the use of the non-GAAP financial measures facilitates comparing the results being reported against past and future results by eliminating amounts that we believe are not comparable between periods and assists investors in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with management's own methods for evaluating business performance.

Our management uses Adjusted net income (loss) and Adjusted EBITDA to evaluate the operating performance of our business for comparable periods and to discuss our business with our Board of Directors, institutional investors and other market participants. Adjusted EBITDA is also used as the basis for a performance measure used in executive incentive compensation.

The methods we use to calculate our non-GAAP financial measures may differ significantly from methods other companies use to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. Adjusted net income (loss) and Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as these measures may exclude a number of important cash and non-cash recurring items.

Adjusted net income (loss) is defined as net income (loss) excluding significant non-recurring or non-operational items as set forth below. Adjusted net income (loss) is also presented on a diluted per share basis. While Adjusted net income (loss) is a non-GAAP measurement, management believes that it is an important indicator of operating performance and useful to investors.

The following tables set forth, for the periods indicated, a reconciliation of Net loss to Adjusted net loss and Adjusted diluted

loss per share:

While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance, and is useful to investors, because EBITDA excludes the effects of financings, investing activities and tax structure by eliminating the effects of interest, depreciation and income tax.

The following tables set forth, for the periods indicated, selected income statement data, both in dollars and as a percentage of Net revenue and a reconciliation of Net loss to Adjusted EBITDA:

In assessing the operational performance of our business, we consider a variety of financial measures. We operate in six separate distribution channels for revenue reporting purposes: U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Licensing and Retail. A key measure in the evaluation of our business is revenue performance by distribution channel as well as consolidated Gross margin. We manage and assess the performance of each of our operating segments using variable profit, which is defined as Net revenue minus cost of sales and variable selling expenses. This segment measure excludes fixed personnel costs, incentive compensation, office occupancy, information technology, professional fees and depreciation and amortization. See Note 12, Segment Reporting for more information regarding variable profit, which is a non-GAAP measure, as well as a reconciliation of variable profit to Income (loss) before income taxes.

We use Net revenue to evaluate revenue performance for the U.S. eCommerce, Europe eCommerce, Outfitters, Third Party, Retail and Licensing distribution channels. We use GMV, which equals total order value of all Lands' End branded merchandise sold to customers through business-to-consumer and business-to-business channels, as well as the estimated retail value of the merchandise sold through third party distribution channels, as an important indicator of the performance of the comparable growth of the total brand.

Discussion and Analysis

Second Quarter 2025 compared with Second Quarter 2024

Gross Merchandise Value

Gross Merchandise Value ("GMV") was approximately flat when compared to Second Quarter 2024.

Net Revenue

Net revenue was $294.1 million for the Second Quarter of 2025, a decrease of $23.1 million or 7.3%, from $317.2 million during the Second Quarter of 2024.

U.S. Digital Segment Net revenue was $255.3 million for the Second Quarter of 2025, a decrease of $15.1 million or 5.6% from $270.4 million in the Second Quarter of 2024.

U.S. eCommerce Net revenue was $167.3 million for the Second Quarter of 2025, a decrease of $21.0 million or 11.2%, from $188.3 million during the Second Quarter of 2024. The Second Quarter of 2025 decrease reflected a slower start to the seasonal swim product.

Outfitters Net revenue was $66.4 million for the Second Quarter of 2025, an increase of $3.2 million or 5.1%, from $63.2 million during the Second Quarter of 2024. The school uniform channel increased high single digits primarily due to new customers acquired from a competitor exiting the business. Revenue from the business uniform channel was up year-over-year driven by our enterprise accounts.

Third Party Net revenue was $21.6 million for the Second Quarter of 2025, an increase of $2.7 million or 14.3%, from $18.9 million during the Second Quarter of 2024. The increase was primarily due to curated product assortments which resulted in strength across marketplaces.

Europe eCommerce Net revenue was $19.6 million for the Second Quarter of 2025, a decrease of $3.4 million or 14.8%, from $23.0 million during the Second Quarter of 2024. The decrease was primarily due to inventory timing from supply chain challenges and macroeconomic conditions while continuing to increase distribution channels with several marketplace expansions.

Licensing and Retail Net revenue was $19.2 million for the Second Quarter of 2025, a decrease of $4.7 million or 19.7%, from $23.9 million during the Second Quarter of 2024. The revenue decreased due to the performance of U.S. Company Operated stores partially offset by licensing revenues increasing approximately 19%.

Gross Profit

Gross profit was $143.4 million for the Second Quarter of 2025, a decrease of $8.5 million or 5.6% from $151.9 million during the Second Quarter of 2024. Gross margin increased approximately 90 basis points to 48.8% in the Second Quarter of 2025, compared with 47.9% in the Second Quarter of 2024. The gross margin improvement was primarily driven by improved promotional productivity and the expansion of the licensing business.

Selling and Administrative Expenses

Selling and administrative expenses decreased $6.1 million to $129.4 million or 44.0% of Net revenue in the Second Quarter of 2025 compared with $135.5 million or 42.7% of Net revenue in the Second Quarter of 2024. The approximately 130 basis points increase was primarily driven by deleverage from lower revenues.

Depreciation and Amortization

Depreciation and amortization expense decreased $1.0 million to $7.7 million in the Second Quarter of 2025 compared with $8.7 million in the Second Quarter of 2024. The decrease in depreciation and amortization is primarily driven by lower software depreciation as a result of major software projects becoming fully depreciated.

Other Operating Expense

Other operating expense, net was $2.4 million in the Second Quarter of 2025 compared to $5.2 million in the Second Quarter of 2024. The decrease was primarily driven by restructuring costs incurred. See Note 1, Background and Basis of Presentation.

Operating Income

As a result of the above factors, Operating income was $4.0 million in the Second Quarter of 2025 compared to $2.5 million in the Second Quarter of 2024.

Interest Expense

Interest expense was $9.3 million in the Second Quarter of 2025 compared to $10.4 million in the Second Quarter of 2024. The $1.1 million decrease was primarily driven by lower ABL Facility interest related to lower average outstanding balances and lower applicable interest rates under the Term Loan Facility.

Other Expense (Income)

Other income was insignificant in the Second Quarter of 2025 compared to $0.1 million in the Second Quarter of 2024.

Income Tax (Benefit) Expense

We recorded an income tax benefit at an overall effective rate of 30.5% and 33.4% for the Second Quarter of 2025 and Second Quarter of 2024, respectively. The overall effective tax rate for the 13 weeks ended August 1, 2025 varies from the U.S. federal statutory rate of 21% as a result of state taxes, and non-deductible expenses. The overall effective tax rate for the 13 weeks ended August 2, 2024 varies from the U.S. federal statutory rate of 21% as a result of state taxes, non-deductible expenses, and the impact of stock-based compensation.

Net Income (Loss)

As a result of the above factors, Net loss was $3.7 million and diluted loss per share was $0.12 in the Second Quarter of 2025 compared with Net loss of $5.3 million and diluted loss per share was $0.17 in the Second Quarter of 2024.

Adjusted Net Income (Loss)

Adjusted net loss was $1.9 million and Adjusted diluted loss per share was $0.06 in the Second Quarter of 2025 compared to Adjusted net loss of $0.7 million and Adjusted diluted loss per share of $0.02 in the Second Quarter of 2024.

Adjusted EBITDA

As a result of the above factors, Adjusted EBITDA was $14.1 million in Second Quarter 2025 and $17.1 million in Second Quarter 2024, respectively.

U.S. Digital Segment Results of Operations

Variable Profit

U.S. Digital Segment variable profit was $56.7 million in the Second Quarter of 2025, a decrease of $6.1 million compared to $62.8 million in the Second Quarter of 2024. U.S. Digital Segment variable profit was 22.2% of Net revenue in the Second Quarter of 2025, which is a decrease of 100 basis points compared to 23.2% of Net revenue in the Second Quarter of 2024. The decrease in variable profit as a percentage of Net revenue was driven by deleverage from lower revenues and channel mix partially offset by product solutions and newness across the assortment, improvements in supply chain costs and cost controls across the entire business.

Product cost of goods sold was $100.5 million or 39.4% of U.S. Digital Segment revenue in the Second Quarter of 2025 compared to $105.7 million or 39.1% of U.S. Digital Segment revenue in the Second Quarter of 2024. Shipping cost of goods sold was $33.0 million or 12.9% of U.S. Digital Segment revenue in the Second Quarter of 2025 compared to $34.8 million or 12.9% of U.S. Digital Segment revenue in the Second Quarter of 2024. The increase in Product and Shipping costs of goods sold as a percentage of U.S. Digital Segment revenue was primarily due to product assortment mix partially offset by improvements in supply chain costs.

Marketing expenses were $43.3 million or 17.0% of U.S. Digital Segment revenue in the Second Quarter of 2025 compared to $41.9 million or 15.5% of U.S. Digital Segment revenue in the Second Quarter of 2024. The increase in Marketing expenses was primarily due to higher digital spend focused on new customer acquisition.

Year-to-Date 2025 compared with Year-to-Date 2024

Gross Merchandise Value

Gross Merchandise Value ("GMV") decreased low-single digits compared to Year-to-Date 2024. Excluding the $12.7 million impact of transitioning kids and footwear inventory to licensees during First Quarter 2024, GMV increased by low-single digits.

Net Revenue

Net revenue was $555.3 million for Year-to-Date 2025, a decrease of $47.3 million or 7.8%, from $602.6 million during Year-to-Date 2024. Excluding the impact of transitioning kids and footwear inventory to licensees, Net revenue decreased by 5.8%.

U.S. Digital Segment Net revenue was $483.0 million for Year-to-Date 2025, a decrease of $16.1 million or 3.2% from $499.1 million in Year-to-Date 2024.

U.S. eCommerce Net revenue was $338.0 million for Year-to-Date 2025, a decrease of $20.9 million or 5.8%, from $358.9 million during Year-to-Date 2024. Year-to-Date 2025 reflected continued strength in our weather proofed Outerwear and transitional key items offset by a slower start to the seasonal swim product.

Outfitters Net revenue was $109.3 million for Year-to-Date 2025, an increase of $3.5 million or 3.3%, from $105.8 million during Year-to-Date 2024. The business uniform channel increased year-over-year primarily due to strength in enterprise accounts. The school uniform channel increased primarily due to new customers acquired from a competitor exiting the business.

Third Party Net revenue was $35.6 million for Year-to-Date 2025, an increase of $1.2 million or 3.5%, from $34.4 million during Year-to-Date 2024. The increase was primarily due to curated product assortments which resulted in strength across marketplaces.

Europe eCommerce Net revenue was $37.5 million for Year-to-Date 2025, a decrease of $10.4 million or 21.7%, from $47.9 million during Year-to-Date 2024. The decrease was primarily due to new leadership using the first half to relaunch as a more premium brand while continuing to increase distribution channels with several marketplace expansions.

Licensing and Retail Net revenue was $34.8 million for Year-to-Date 2025, a decrease of $20.8 million or 37.4%, from $55.6 million during Year-to-Date 2024. The decrease was primarily driven by the impact of transitioning kids and footwear inventory to licensees in the First Quarter of 2024 and the performance of U.S. Company Operated stores partially offset by licensing revenue increasing approximately 36%.

Gross Profit

Gross profit was $276.1 million for Year-to-Date 2025, a decrease of $14.8 million or 5.1% from $290.9 million during Year-to-Date 2024. Gross margin increased approximately 140 basis points to 49.7% in Year-to-Date 2025, compared with 48.3% in Year-to-Date 2024. The gross margin improvement was primarily driven by improved promotional productivity and the expansion of the licensing business.

Selling and Administrative Expenses

Selling and administrative expenses decreased $10.1 million to $252.8 million or 45.5% of Net revenue in Year-to-Date 2025 compared with $262.9 million or 43.6% of Net revenue in Year-to-Date 2024. The approximately 190 basis points increase was primarily driven by deleverage from lower revenues.

Depreciation and Amortization

Depreciation and amortization expense decreased $1.8 million to $15.9 million in Year-to-Date 2025 compared with $17.7 million in Year-to-Date 2024. The decrease in depreciation and amortization is primarily driven by lower software depreciation as a result of major software projects becoming fully depreciated.

Other Operating Expense

Other operating expense, net was $5.8 million in Year-to-Date 2025 compared to $5.5 million in Year-to-Date 2024. The increase was primarily driven by restructuring costs incurred. See Note 1, Background and Basis of Presentation.

Operating Income

As a result of the above factors, Operating income was $1.6 million in Year-to-Date 2025 compared to $4.7 million in Year-to-Date 2024.

Interest Expense

Interest expense was $18.5 million in Year-to-Date 2025 compared to $20.8 million in Year-to-Date 2024. The $2.3 million decrease was primarily driven by lower ABL Facility interest related to lower average outstanding balances and lower applicable interest rates under the Term Loan Facility.

Other Expense (Income)

Other income was insignificant in Year-to-Date 2025 compared to $0.2 million in Year-to-Date 2024.

Income Tax (Benefit) Expense

We recorded an income tax benefit at an overall effective rate of 29.4% and 26.4% for the Year-to-date 2025 and Year-to-date 2024, respectively. The overall effective tax rate for the 26 weeks ended August 1, 2025 varies from the U.S. federal statutory rate of 21% as a result of state taxes, and non-deductible expenses. The overall effective tax rate for the 26 weeks ended August 2, 2024 varies from the U.S. federal statutory rate of 21% as a result of state taxes, non-deductible expenses, and the impact of stock-based compensation.

Net Income (Loss)

As a result of the above factors, Net loss was $11.9 million and diluted loss per share was $0.39 in Year-to-Date 2025 compared with Net loss of $11.7 million and diluted loss per share was $0.37 in Year-to-Date 2024.

Adjusted Net Income (Loss)

Adjusted net loss was $7.3 million and Adjusted diluted loss per share was $0.24 in Year-to-Date 2025 compared to Adjusted net loss of $6.9 million and Adjusted diluted loss per share of $0.22 in Year-to-Date 2024.

Adjusted EBITDA

As a result of the above factors, Adjusted EBITDA was $23.6 million in Year-to-Date 2025 and $28.6 million in Year-to-Date 2024, respectively.

U.S. Digital Segment Results of Operations

Variable Profit

U.S. Digital Segment variable profit was $109.6 million in Year-to-Date 2025, a decrease of $8.1 million compared to $117.7 million in Year-to-Date 2024. U.S. Digital Segment variable profit was 22.7% of Net revenue in Year-to-Date 2025, which is a decrease of 20 basis points compared to 23.6% of Net revenue in Year-to-Date 2024. The decrease in variable profit as a percentage of Net revenue was driven by deleverage from lower revenues and channel mix partially offset by product solutions and newness across the assortment, improvements in supply chain costs and cost controls across the entire business.

Product cost of goods sold was $184.1 million or 38.1% of U.S. Digital Segment revenue in Year-to-Date 2025 compared to $185.5 million or 37.2% of U.S. Digital Segment revenue in Year-to-Date 2024. Shipping cost of goods sold was $62.2 million or 12.9% of U.S. Digital Segment revenue in Year-to-Date 2025 compared to $68.0 million or 13.6% of U.S. Digital Segment revenue in Year-to-Date 2024. The increase in Product and Shipping cost of goods sold as a percentage of U.S. Digital Segment revenue was primarily

due to product assortment mix partially offset by improvements in supply chain costs. Marketing expenses were $83.2 million or 17.2% of U.S. Digital Segment revenue in Year-to-Date 2025 compared to $81.0 million or 16.2% of U.S. Digital Segment revenue in Year-to-Date 2024. The increase in Marketing expenses was primarily due to higher digital spend focused on new customer acquisition.

Liquidity and Capital Resources

Liquidity

Our primary need for liquidity is to fund working capital requirements of our business, which are inventory purchases, payments on debt, capital expenditures and for general corporate purposes. Our cash and cash equivalents and the ABL Facility serve as sources of liquidity for short-term working capital needs and general corporate purposes. The ABL Facility had a balance outstanding of $35.0 million on August 1, 2025, other than letters of credit. Cash generated from our net revenue and profitability, and to a lesser extent our changes in working capital, are driven by the seasonality of our business, with a significant amount of net revenue and operating cash flows generally occurring in the fourth fiscal quarter of each year. We expect that our cash on hand and cash flows from operations, along with revolving on the ABL Facility, will be adequate to meet our capital requirements and operational needs for at least the next 12 months.

ABL Facility

Our $225.0 million committed revolving ABL Facility, as amended to date, includes a $35.0 million sublimit for letters of credit and is available for working capital and other general corporate liquidity needs. The amount available to borrow is the lesser of (1) the Aggregate Commitments of $225.0 million ("ABL Facility Limit") or (2) the Borrowing Base or Loan Cap which is calculated from Eligible Inventory, Trade Receivables and Credit Card Receivables, all foregoing capitalized terms not defined herein are as defined in the ABL Facility. The balance outstanding on August 1, 2025 and August 2, 2024 was $35.0 million and $20.0 million, respectively. The balance of outstanding letters of credit was $10.9 million and $8.1 million on August 1, 2025 and August 2, 2024, respectively. The borrowing availability under the ABL Facility was $87.6 million and $117.5 million as of August 1, 2025 and August 2, 2024, respectively.

Effective with the Fifth Amendment to the ABL Facility, dated March 28, 2025 (the "Fifth Amendment"), the 0.10% adjustment to the SOFR benchmark interest rate was eliminated and the benchmark rates under the ABL Credit Agreement are, at our election, either: (1) Term SOFR (which is a forward looking term rate based on the secured overnight financing rate), or (2) a Base Rate (which is the greatest of (a) 0% per annum, (b) the federal funds rate plus 0.50%, (c) the one-month Term SOFR rate plus 1.00%, or (d) the Wells Fargo "prime rate"). The borrowing margin for SOFR Rate loans is (i) where the average daily total outstanding for the previous quarter is less than $95.0 million, 1.50%, and (ii) where the average daily total outstanding for the previous quarter is equal to or greater than $95.0 million, 1.75%. For Base Rate loans, the borrowing margin is (i) where the average daily total outstanding for the previous quarter is less than $95.0 million, 0.75%, and (ii) where the average daily total outstanding for the previous quarter is equal to or greater than $95.0 million, 1.00% ("Applicable Borrowing Margin"). The Applicable Borrowing Margin for all loans is based upon the average daily total loans outstanding for the previous quarter. The Fifth Amendment had no material interest rate impact.

The ABL Facility fees include (i) commitment fees of 0.20% or 0.30% based upon the average daily unused commitment (aggregate commitment less loans and letter of credit outstanding) under the ABL Facility for the preceding fiscal quarter, (ii) customary letter of credit fees and (iii) customary annual agent fees. The Fifth Amendment extended the maturity date of the ABL Facility to the earlier of (a) March 28, 2030 and (b) September 29, 2028 if, on or prior to such date, the Term Loan Facility has not been refinanced, extended or repaid in full in accordance with the terms thereof and not replaced with other indebtedness. Under applicable accounting guidance, certain unamortized debt issuance costs originating from the ABL Facility are deferred and amortized over the extended term of the ABL Facility, and certain unamortized debt issuance costs have been written off. As of August 1, 2025, we had $35.0 million borrowings outstanding under the ABL Facility.

Long-Term Debt

The Term Loan Facility will mature on December 29, 2028, and amortizes at a rate equal to 1.25% per quarter. Depending upon our Total Leverage Ratio, as defined in the Term Loan Facility, mandatory prepayments in an amount equal to a percentage of the our excess cash flows in each fiscal year, ranging from 0% to 75% are required. The Term Loan Facility also has typical prepayment requirements for the proceeds of certain asset sales, casualty events and extraordinary receipts. Voluntary prepayment and certain mandatory prepayments made (i) between December 30, 2024 and December 29, 2025 would result in a prepayment premium equal to 2% of the principal amount of the loan prepaid, (ii) between December 30, 2025 and December 29, 2026, would result in a prepayment premium equal to 1% of the principal amount of the loan prepaid, (iii) between December 30, 2026 and December 29, 2027, would

result in a prepayment premium equal to 0.5% of the principal amount of the loan prepaid and (iv) thereafter no prepayment premium is due.

The interest rates per annum applicable to the loans under the Term Loan Facility are based on a fluctuating rate of interest equal to, at our election, either (1) Term Loan Adjusted SOFR loan (subject to a 2% floor) plus an applicable margin, or (2) an alternative base rate loan plus an applicable margin. The applicable margin is based on our net leverage and will be, (i) for Term Loan Adjusted SOFR loans, 8.25% per annum if the total leverage ratio is greater than or equal to 2.75:1.00, 8.00% per annum if the total leverage ratio is less than 2.75:1.00 but greater than or equal to 2.25:1.00, and 7.75% per annum if the total leverage ratio is less than 2.25:1.00 and (ii) for base rate loans, 7.25% per annum if the total leverage ratio is greater than or equal to 2.75:1.00, 7.00% per annum if the total leverage ratio is less than 2.75:1.00 but greater than or equal to 2.25:1.00, and 6.75% per annum if the total leverage ratio is less than 2.25:1.00. In each case, the net leverage is determined as of the last day of each applicable measurement period.

The Term Loan Facility contains customary agency fees.

Debt Facilities

Guarantees; Security

All obligations under the Debt Facilities are unconditionally guaranteed by Lands' End, Inc. and, subject to certain exceptions, each of its existing and future direct and indirect subsidiaries. The ABL Facility is secured by a first priority security interest in certain working capital of the borrowers and guarantors consisting primarily of accounts receivable and inventory. The Term Loan Facility is also secured by a second priority security interest in the same collateral, with certain exceptions.

The Term Loan Facility is also secured by a first priority security interest in certain property and assets, including certain fixed assets such as real estate, stock of subsidiaries and intellectual property, in each case, subject to certain exceptions. The ABL Facility is also secured by a second priority interest in the same collateral, with certain exceptions.

Representations and Warranties; Covenants

Subject to specified exceptions, the Debt Facilities contain various representations and warranties and restrictive covenants that, among other things, restrict Lands' End, Inc.'s and its subsidiaries' ability 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.

The Term Loan Facility contains financial covenants, including a quarterly maximum total leverage ratio test and a monthly minimum liquidity test.

Under the ABL Facility, if excess availability falls below the greater of 10% of the Loan Cap amount or $12.0 million, we will be required to comply with a minimum fixed charge coverage ratio of 1.0 to 1.0.

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.

As of August 1, 2025, we were in compliance with the financial covenants in the Debt Facilities.

Events of Default

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, material judgments and change of control.

Cash Flows and Capital Expenditures

Cash Flows from Operating Activities

Net cash provided by operating activities was $0.5 million during Year-to-Date 2025 compared to $4.9 million during Year-to-Date 2024. The decrease in net cash provided by operating activities was primarily due to the decrease in adjusted EBITDA.

Cash Flows from Investing Activities

Net cash used in investing activities was $17.2 million and $11.5 million during Year-to-Date 2025 and Year-to-Date 2024, respectively. Cash used in investing activities for both periods was primarily used for investments to update our digital information technology infrastructure.

For Fiscal 2025, we plan to invest approximately $25.0 million in capital expenditures for strategic investments and infrastructure, primarily in technology and general corporate needs.

Cash Flows from Financing Activities

Net cash provided by financing activities was $22.1 million during Year-to-Date 2025, compared to $6.9 million during Year-to-Date 2024. The increase in net cash provided by financing activities is primarily due to an increase in borrowings under our ABL Facility in the Second Quarter 2025 as compared to the prior year.

Contractual Obligations and Off-Balance-Sheet Arrangements

There have been no material changes to our contractual obligations and off-balance-sheet arrangements as discussed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025.

Financial Instruments with Off-Balance-Sheet Risk

The ABL Facility is available for working capital and other general corporate liquidity needs. The balance outstanding on August 1, 2025 and August 2, 2024 was $35.0 million and $20.0 million, respectively. The balance of outstanding letters of credit was $10.9 million and $8.1 million on August 1, 2025 and August 2, 2024, respectively.

Application of Critical Accounting Policies and Estimates

We believe that the assumptions and estimates associated with revenue, inventory valuation, indefinite-lived intangible asset impairment assessments and income taxes have the greatest potential impact on our financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

For a complete discussion of our critical accounting policies, please refer to our Annual Report on Form 10-K for the year ended January 31, 2025. There have been no significant changes in our critical accounting policies or their application since January 31, 2025.

Recent Accounting Pronouncements

See Part I, Item 1, Note 2, Recently Issued Accounting Pronouncements Not Yet Adopted, of the Condensed Consolidated Financial Statements (unaudited) included in this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This document contains forward-looking statements. Forward-looking statements reflect our current views with respect to, among other things, future events and performance. These statements may discuss, among other things, our GMV, variable profit, net sales, gross margin, operating expenses, operating income, net income, adjusted net income, adjusted EBITDA, cash flow, financial condition, financings, impairments, expenditures, growth, strategies, plans, achievements, dividends, capital structure, organizational structure, future store openings, market opportunities and general market and industry conditions. We generally identify forward-looking statements by words such as "anticipate," "estimate," "expect," "intend," "project," "plan," "predict," "believe," "seek," "continue," "outlook," "may," "might," "will," "should," "can have," "likely," "targeting" or the negative version of these words or comparable words. Forward-looking statements are based on beliefs and assumptions made by management using currently available information. These statements are only predictions and are not guarantees of future performance, actions or events. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management's underlying beliefs and assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. These risks and uncertainties include those risks, uncertainties and factors discussed in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 and "Part II, Item 1A Risk Factors" of our Quarterly Report on Form 10-Q for the quarter ended May 2, 2025. Forward-looking statements speak only as of the date on which they are made. We expressly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable securities laws and regulations.