Lands End Inc

NASDAQ:LE

Earnings Call Analysis

Company Strives for Profit Amid Revenue Dip

In Q3, revenue fell to $325 million, a 12.5% drop year-over-year, due to the closure of the Japan e-commerce business and lower Delta revenue. Despite this, the company's focus on profitability led to an adjusted EBITDA of $17 million, surpassing the high end of its guidance. Gross margin improved significantly by 700 basis points to 47%, attributed to new products and efficient inventory management, although overall global e-commerce sales dipped by 13%. The company is updating its yearly guidance to $1.45-$1.48 billion in revenue, with an expected net loss of $5 million to $2 million and EBITDA between $80 million to $84 million. For Q4, they project a net revenue between $490-$520 million and an adjusted net income of $8-$11 million.

Leadership and Financial Highlights

The company welcomed Bernie as the new Chief Financial Officer, solidifying the leadership team. This quarter showcased strong execution of their solutions-based strategy, generating $17 million in adjusted EBITDA, surpassing guidance expectations. Success was attributed to improving inventory positions, which decreased by 25%, and gross margins, which improved by 700 basis points.

Strategy and Customer Focus

A significant strategic shift from demographic to behavioral customer targeting has been implemented, focusing on two key high-value customer cohorts: resolvers and evolvers. The approach aims to create a more compelling customer journey, with an outfit-centric approach and improved marketing strategies, which has led to increased traffic and engagement, particularly in U.S. e-commerce.

Product and Market Development

The authority in outerwear solutions and an expansion into swim solutions, including patented shaping technology, were key drivers of strong performance. Efforts are underway to expand B2B opportunities, with new partnerships such as Healthcare Corporation of America and plans to innovate with integrated sizing technology. The third-party business also improved, with strong performances in select marketplaces and a new swim collection launched with Target.

Financial Performance

Total revenue for Q3 was reported at $325 million, slightly below guidance with a 12.5% decline from the prior year, but adjusted EBITDA increased by 4%. Gross margin reached 47%, driven by product strength, improved inventory management, and reduced clearance sales. The focus has been on profitability over revenue, with improved inventory efficiency resulting in a 25% reduction in inventory levels. Ongoing efforts are targeting cost savings, inventory management, and digital evolution. A goodwill impairment led to a net loss for the quarter, however, without this, the adjusted net loss stood at $4 million.

Future Outlook and Guidance

Looking ahead, the company expects Q4 net revenue between $490 million to $520 million, with adjusted net income of $8 to $11 million. Full year guidance has been updated to $1.45 billion to $1.48 billion in net revenue, with a projected net loss of $5 million to $2 million, and adjusted EBITDA of $80 to $84 million. Inventory management improvements are anticipated to support gross margin expansion moving forward.

Holiday Sales Trends

The company launched early Black Friday promotions, leading to increased traffic and gross profit dollars across channels. While promotional activity is heightened during the holiday season, the strategy remains geared towards improving gross margins rather than reliance on high promotional discounts.

Earnings Call Transcript 2024-Q3

[Operator]

Good day, everyone, and welcome to the Lands' End third quarter earnings conference call. [Operator Instructions] Please note today's call will be recorded, and I'll be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Bernie McCracken, Chief Financial Officer. Please go ahead.

[Bernard McCracken, executive]

Good morning, and thank you for joining the Lands' End earnings call for a discussion of our third quarter 2023 results which we released this morning and can be found on our website, landsend.com. I'm Bernie McCracken, Lands' End Chief Financial Officer, and I'm pleased to join you today with Andrew McLean, our Chief Executive Officer.

After the prepared remarks, we will conduct a question-and-answer session. Please also note that the information we're about to discuss includes forward-looking statements. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed on this call.

Factors that could contribute to such differences include, but are not limited to those items noted and included in the company's SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q. 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 in company's outlook to change. 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 the call over to Andrew.

[Andrew McLean, executive]

Thank you, Bernie. Good morning, and thank you for joining us today. Before I turn to our Q3 results, I'd like to congratulate Bernie on his appointment to Chief Financial Officer, which we announced in September after having served as our interim CFO since January. I couldn't be more pleased to continue working with Bernie and I'm more than confident that he will continue to lead our financial organization with excellence.

With that, I'll turn to our Q3 performance. Our results were characterized by strong execution of our solutions-based strategy to deliver quality for our customers and value to our shareholders.

We built on our momentum from Q2, further improved our inventory position, injected newness across our assortment and continue to prioritize gross margin improvement to drive incremental gross profit dollars. Our deliberate strategy to improve development of our solution-driven products generated more profitable sales, resulting in gross margin and profit expansion and adjusted EBITDA of $17 million above the high end of our guidance range.

As I've previously noted, we're executing a deliberate strategy to drive higher-quality sales with a larger portion of our sales occurring with no or lower levels of promotions rather than simply prioritizing moving units so we can enhance gross margin and deliver increased cash flows. Paired with our work to further improve our inventory position, it's clear this strategy is working.

Q3 marked our third successive quarter of significant inventory and margin improvement. With a 25% reduction and 700 basis points of improvement, respectively. We are confident that we have found a winning formula, increasing [ turns ] of merchandise while maintaining lower, more efficient inventory geared to our targeted customer cohorts. We're taking advantage of the flexibility that our lower inventory levels provide to continuously refresh our assortment with new styles, colors and fabrics more frequently throughout the year.

Our customers are responding exceptionally well to this approach. As we introduced last quarter, the transition from a demographic focus to behavioral focus when it comes to our customers. We're zeroing in on two key high-value customer cohorts, which we call our resolvers and our evolvers in leveraging our proprietary data to better understand their shopping behaviors. As a reminder, resolvers are the largest cohort of our existing base.

Their solutions-oriented dressers that prefer a classic styles and value quality over trends and shop primarily on necessity, 2 to 3 times a year. Evolvers are our second largest cohort as an opportunity for growth. They are discovering and refining their style as an ongoing journey, wearing what fits their current moment. They generally have more buying potential and spend more than revolvers.

As part of our identity as a solutions company, we're changing the way we think about our assortment and marketing strategy and aligning them more closely to how our key cohorts shop. We're creating more compelling customer journey that provides a more holistic look and feel the Lands' End iconic American brand and the way we design, present and sell our products.

We're taking a more outfit centric approach to our assortment and go-to-market strategy. Designing and prioritizing products across categories that feature significantly more productive inventory and facilitate sales across natural adjacencies. You can see this in how we are showing up in digital and with the look and feel of our website and marketing. As a digitally native company, we're using this new approach alongside our investors to drive more robust engagement with our key cohorts.

We're continuing to improve our site experience with more targeted marketing to present our customers with relevant and engaging content to drive quality sales. As a result, we have seen increased traffic and engagement from social media and with repeat exposure, we expect our social media prospects to continue growing nicely.

On the heels of strategic infrastructure enhancements we've made to improve our internal efficiency, we've begun pivoting our IT focus to enhance our customer-facing processes. We recently welcomed a new technology leader who will spearhead these efforts and work with me to roadmap our strategy and identify leading partners to drive innovation consistent with our asset-light model.

Our authority in outerwear solutions was a key driver of our strong performance this quarter, both in the U.S. and internationally. We drove sales in key adjacencies, especially bottoms and sweaters. For new styles in key fabrics like corduroy, denim and velvet and new colors contributed to the strong performance. Upmost demand in nearly all our women's categories were up double digits in our U.S. e-commerce business.

Our Swim Solutions finished the summer strong in August, and we are looking forward to building on that success with the introduction of our upcoming spring swim assortment, which includes a recommitment to the one-piece category with the creation of our product family centered around our classic [ topless ] solution and the enhancement of control-based technologies, including a shaping technology that we have protected via a patent application. Swim remains an incredibly innovative space for Lands' End to grow and develop.

Building on the theme we discussed before, our customers are responding positively to freshness across categories. This is contributing to strong performance in our layering products and transitional outerwear solutions which gives us confidence that we will be able to continue this trajectory more consistently in the months and years ahead.

Our U.S. e-commerce business, our largest direct-to-consumer channel delivered a second consecutive quarter of great margin performance due to our more targeted approach to promotions and improved inventory management.

When we offer our customers the solutions they need in a relevant presentation with attractive fabrications, color and value, they are responding and not necessarily waiting for discounts at the level we've had in recent years. We are also continuing our efforts to maximize key events and solidate to drive demand with our customers responding well. It is more targeted promotional strategy, which complements our broader strategy to minimize markdowns and show conviction in our solutions-based categories has led to improved margins.

Turning to our International business. As with our U.S. business, our strong performance was driven by our authorities in transitional outerwear solutions. Thanks to prioritizing newness and improved inventory management, we delivered margins that were in line with our U.S. business.

Gross margin in Europe grew nicely by approximately of [ 1,000 ] basis points year-over-year. During the third quarter, we continued executing on our licensing strategy, which adds royalty guarantees and new income streams, allowing us to continue to focus on our core capabilities. Recently, we entered into a licensing agreement for all kids categories, and we're continuing to ramp up activities under our existing agreements with Costco and as I mentioned on our last call, for footwear, we expect begin seeing income from 3 licenses in 2024. Moving forward, we expect to maintain our expanded focus on licensing and are continuing to build a robust pipeline of potential partners.

Turning to the Outfitters business, we are making headway in our efforts to enhance performance and ensure this critical business achieves the results we're confident it can. To be clear, we see great opportunity to profitably grow our share of the market serving the businesses and [ stores ] and fuel our B2C customer acquisition engine. Our partnership with American Airlines and the upcoming launch of our partnership with Santander, are great examples of our work to earn the business of large accounts.

In addition, we will launch a new partnership with Healthcare Corporation of America in the first quarter of 2024 [ outfitting ] 3,500 managers and frontline employees in their Parallon division. Similarly, we're expanding on the progress we made last quarter in our school uniform business through new relationships with large school districts that will ramp up in 2024. We continue to see schools as a key pipeline for our outfitters business and having achieved a 92% satisfactory rate among our existing school partners this season, we believe we're well positioned to capture additional market share.

We're driving innovation in our business with a planned introduction of integrated sizing technology to select [ B2B ] customers and schools, with plans to roll it out more broadly. This tool provided by [indiscernible] allows the purchase such as scan their body with their phone and get fitted with a 97% accuracy rate, driving both customer satisfaction and an expected reduction in returns and exchanges.

This technology which takes into consideration personal privacy and information security, also had applications to our B2C business, and we are actively exploring ways to integrate it with the consumer experience.

We're taking steps to drive efficiency across our B2B business during the process of reorganizing and revamping the organizational structure of our Outfitters division to expand our reach and capture greater market share. We recently hired a new B2B business development leader with over 20-years of experience, who is focused on building out a pipeline of mid-market and enterprise opportunities.

We also restructured our portfolio management team from a regional focus to a business segment or infrastructure that will enable our teams to hyper-focus on unique needs of each customer group.

We're working with our partners at Salesforce to enable a stronger data-driven sales process and also implementing marketing automation technology to improve customer communication, create better defined customer journeys from [ outreach ] and lead generation and more effectively engage with existing and prospective customers.

Moving to our third-party business, we saw a nice improvement in the quality of the demand, thanks to the deliberate approach we took to better tailor our assortment to each marketplace and lead into successful categories with a focus on quality of sales, improving gross margin, better inventory turn and freshness.

The results were productive with Macy's, Target and Amazon performing consistently well with women outerwear and swim driving demand across each of these marketplaces. With the holiday season underway, the Lands' End have launched an exclusive women swim collection at Target and select warm weather doors beginning November 26 for rollout to 200 total doors by early January 2024.

The new swim collection includes nearly 70 pieces of our iconic swimwear in new fabrics, prints and colors, including excesses. We're very excited to be partnering with Target to make our leading product category available to Target customers. Bernie will now discuss our third quarter performance as well as our fourth quarter outlook.

Following that discussion, we will share what we've seen so far in the holiday season before taking your questions.

[Bernard McCracken, executive]

Thank you, Andrew. For the third quarter, total revenue performance came in slightly below our guidance range at $325 million, a decrease of 12.5% compared to last year or 9% when adjusting for our Japan e-commerce business which closed in 2022 and accounted for $10 million of revenue in the third quarter of last year and excluding the $4 million difference in year-over-year revenue from Delta.

As Andrew noted, we delivered adjusted EBITDA of $17 million, up 4% year-over-year, which exceeded the high end of our guidance range. Fundamental to these results is our conscious decision to focus on profitability and balance sheet efficiency versus solely on revenue, which has improved gross profit dollars and markets.

Gross margin in the third quarter was 47% and an approximately 700 basis point improvement from the third quarter of 2022. The margin improvement was primarily driven by new products across the brand, strength in transitional outerwear and adjacent product categories, reduction in sales of clearance inventory and improvements in supply chain costs. While we are pleased with our gross margin improvements we were focused on driving additional supply chain cost savings and product cost reductions and improved seasonal inventory management.

While our U.S. e-commerce business saw a sales decrease of 10% compared to the third quarter of 2022, we generated an increase in gross profit dollars of 7% driven by our concerted effort to reduce promotions within key categories, especially our outerwear solutions, new products across the brand and improved inventory management.

Sales in our Europe e-commerce business in the quarter were down 8% year-over-year, reflecting continued macroeconomic challenges. But again, increased gross profit dollars by 18%, driven by promotional effectiveness and improved inventory management. Globally, e-commerce sales decreased 13% from last year or 10% when adjusted for Japan.

Sales from Lands' End Outfitters were down 8% from the third quarter of 2022. Excluding the $4 million difference in year-over-year revenue from Delta, the Outfitters business was down 3%, primarily driven by high single-digit growth in both our national accounts and midsized customers more than offset by school uniform due to timing shifts in back-to-school deliveries last year, related to supply chain disruptions from the second quarter to the third quarter.

Revenue for our third-party business was down 22% compared to the prior year, primarily driven by weaker performance at Kohl's, partially offset by strong performance at Macy's and Target. Our partnership with Macy's, which launched this year, is performing very well, driven by strong sales in women's swim and apparel. SG&A expenses increased $3 million compared to last year. As a percentage of sales, SG&A was 42%, which was an increase of 590 basis points compared to 2022 primarily due to approximately 400 basis points of deleverage from lower revenues and a 145 basis points due to higher incentive-based personnel costs. Partially offset by lower marketing and continued cost controls.

We're continuing to look for ways to improve SG&A and we'll be taking action to drive savings as we continue to evolve our digitally native business. During the third quarter, we took a $107 million impairment of goodwill due to the decline of our stock price and the resulting market capitalization, which led to a net loss for the quarter of $112 million or $3.52 per share compared to a net loss of $5 million or $0.14 per share in 2022. Excluding the non-cash goodwill impairment, our adjusted net loss was $4 million or $0.11 per share.

Moving to our balance sheet. Inventories at the end of the third quarter were $422 million compared to $565 million a year ago. A 25% improvement in our inventory position was a result of the actions the company has taken to improve inventory efficiency by reducing inventory purchases and capitalizing on speed-to-market initiatives. Year-to-date net cash provided by operations was $163 million [indiscernible] year than last year, primarily due to this improved inventory productivity.

In terms of our debt, at the end of the third quarter, our term loan balance was $234 million and our $275 million ABL had $110 million of borrowings outstanding which was $50 million lower than the third quarter last year. Despite lower borrowings outstanding on the ABL, we continue to have elevated interest expense driven by higher market rates.

We're continuing to explore opportunities to refinance our debt and are committed to doing so subject to favorable market conditions. During the third quarter, we repurchased $3 million worth of shares under the company's previously announced $50 million share repurchase authorization, bringing the balance of the remaining authorization to $32 million as of the end of the quarter.

Now moving to guidance, building on our prior discussion, we are continuing to prioritize high-quality sales and improved cash flows, which we expect to drive continued gross profit and margin expansion during the holiday season.

In the fourth quarter, we expect net revenue to be between $490 million and $520 million. We expect adjusted net income of $8 million to $11 million and adjusted diluted earnings per share to be between $0.25 and $0.34. We expect adjusted EBITDA to be in the range of $217.5 million (sic) [$27.5 million] to $31.5 million, which takes into account SG&A impacts related to normalized compensation approach.

Based on our third quarter results and fourth quarter guidance, we're updating our full year guidance and now expect net revenue of $1.45 billion to $1.48 billion. We expect adjusted net income to be in the range of a net loss of $5 million to $2 million. An adjusted diluted loss per share of $0.16 to $0.07. We expect adjusted EBITDA to be in a range of $80 million to $84 million.

Our guidance for the full year incorporates approximately $35 million in capital expenditures. As we have discussed, our improved inventory management, will enable us to maintain inventory at normalized levels and bolster our work to further expand gross margin moving forward.

And with that, I will turn the call back over to Andrew.

[Andrew McLean, executive]

Thank you, Bernie. Before we wrap up, I'd like to briefly touch on our holiday sales trends. Like other retailers, we introduced Black Friday promotions earlier this year and began to see traffic ramp up as we progress through November with significantly stronger traffic and increased gross profit dollars across our channels on Black Friday and over the weekend, headed into Cyber week.

This holiday season, we are better engaging with our customers through our improved brand focus to higher-quality sales, further supporting our enhanced inventory position as we approach the end of our fiscal year.

Like other retailers, holiday promotions are higher than across the balance of the year. However, we continue to scale those promotions back versus prior holiday periods and remain committed to our strategy of driving increased gross margin in both dollars and rate.

We will remain competitive with our pricing and be smart about how we target the different segments of our customer file to drive classical demand throughout the holiday season. However, we remain cautious given the week's ahead and the additional weekend between Black Friday and Christmas, which could push some business later and beyond our shipping catalogues.

As I mentioned earlier, we are confident that we have found the winning formula to achieve more productive sales by focusing on a better understanding of our customers' shopping behavior and faster-moving inventory. Our customer-centric strategy is working, as I am pleased with the progress our team has made. As we continue to play to our strengths and improve operational efficiencies across the business, we're well positioned to finish strong through the year.

That concludes our prepared remarks. We look forward to your questions.

[Operator]

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

[Dana Telsey, analyst]

Nice to see the progress on the profitability. The continuation of the lower inventories, I think, down 30% in the second quarter, down 25% now in the third quarter. Where do you see what the normalized rate of inventory level should be, how are you planning that going forward? And then on -- it's nice to see scaling back on the promotions on that you're seeing, especially post the Black Friday time period, what are you seeing in terms of categories, outerwear, how are you planning? How are AURs?

And then on the margin focus, what are you seeing in terms of under the hood on the margins, whether it's freight or whether it's [ AUC ], what is the opportunity for the gross margin going forward?

[Andrew McLean, executive]

So leading into the question that we continue to see opportunity with inventory and pulling that back, we're kind of working business more to a turn and see an opportunity to move in the business between 3 and 4 turns. I mean, obviously, it gets harder as the turns increase where you're looking, but it's a function of the speed that we're putting into our supply chain.

So we've talked a lot, and this is going to be related to your AUR comments as well. We talked a lot about getting speed in and having more freshness, more consistently in the business month after month after month, versus that more traditional model of buying twice a year. And that in and itself will give us more opportunity to increase the turns going into next year, and it will give us opportunity to show up and maintain the average of the retails.

I'm going to talk to scaling back promotions. We scaled back promotions even through Black Friday and Cyber Monday. I just want to emphasize that point in the script. We did come into early, one of the things I've noticed about Lands' End it's probably more to do with our [ catalog ] history than everything else. We really kick off holiday in October. October tends to be a bigger month for us than August, that's different than I've experienced in my career. And it's really -- it's the start of the holiday shopping period. And holiday for us is really all about successful October and November and in that last couple of weeks after Cyber Monday.

So what you saw is that really begin to market Black Friday in October, consistent with our starting holiday, and that's what's new in there. In terms of the overall level of promotion, they were falling and they were falling consistently, seeing a lot of box of offers that we've traditionally done. You would see it going up to 70%, I don't like them going up to 70%, I'd rather they are up at 40% off. But that's where we started as we sort of pulled the needle out in terms of where the problems are at. We saw that the customer came with us on the journey, particularly when we offer newness in there.

We noted in the call in Q3, and it's been something we've seen all year that the women's categories were all posting double-digit comps and gross margin comps. And it would be fair to say that we've seen that continue. We've seen very successful acceptance of our products in those categories. Answering your question about categories. Are we sort of worried? Or not worried? We took some -- we made some changes in how we approached outerwear. Coming through last year, we clearly were taking really our [indiscernible] We were discounting them as gifting for Black Friday or Cyber Monday, and it was just too much discount to be given.

And I felt we needed to take a different direction on that. In addition to that, it's not a political statement. Winters are getting warmer and they happen later. So we had changed the weighting of the fabrics and the product that we brought in really for the early part of holiday. So it was less about that heavy outerwear, I will tell you certainly even in the Midwest today as we sit here in the snow. But for the first 5, 6 weeks, we really got behind other programs. We brought in a [indiscernible] but it's the best program that's been very successful. It gave us a price point at a margin and it actually fits with where climate with that.

In addition to that, we brought in a new middleweight jacket. We've introduced a new program Wanderweight [indiscernible] but it's pack and pull down, and it's been a very successful sort of entry price point into heavier outerwear for us. So very pleased with how outerwear has performed, pleased with how women's has performed. And actually, we showed that we brought categories alongside that along for the ride. We saw good performance in men's and actually even products like [ Home ] last year. I remember this very clearly, we were discounting [ Home ] very heavily. We haven't needed to do that.

Then actually on the one-off that we gained were towards a $10 Supima Towel, I mean we sold a lot of towels that day. There was pent-up demand waiting for it. Last part of it, as we think about the [ AUC ] and the margin conversation. We've got a lot of our gains in Q3 from actually lower discount rates. The real benefit of the average of the cost work that we did is still to come to us. If you remember, we made the arrangement and make the changes in our sourcing organization to move to [ lean ] fund. That was a Q2 event, and we really -- even with the speed of our supply chain, we won't do the full effect of that given inventory turns and so little to back off of next year. So we still think that the best is to come in terms of continued margin upside from AUC.

And the discounting, we started with women's and like women's is where we've seen the most progress. As we expand that thinking there to other categories, we will see that we will be able to continue that momentum as well. And it's the story was such as -- Dana, We stayed with it pretty consistently since I took over -- absolutely committed to it. I believe we'll get this done. And this is a really great margin story that we have in Lands' End at the moment and really a re-elevation of our product. And then, Dana, I'll just add for the inventories for perspective that you can use pre-pandemic levels as a guide to what our future levels will be and the timing of the inventory levels.

And then you also received benefit as you have saw [indiscernible] in the announcement that we also have announced a number of license with kids, our licensing arrangements will also have a benefit to reducing our inventories.

[Dana Telsey, analyst]

Got it.

[Operator]

Our next question will come from Alex Fuhrman with Craig-Hallum Capital Group.

[Alex Fuhrman, analyst]

So clearly, the focus on prioritizing profitability over revenue is producing some nice results here. I'm curious how much more room you think there is to pull back on unprofitable sales? Could there be another leg down of revenue as you identify more promotions or clearance activity that you want to pull back on? And then looking out over the next couple of years, as you add more high-margin revenue, presumably from growing the licensing business, can you continue to grow EBITDA without necessarily a big increase in revenue?

Can this be a $100 million EBITDA business on the current $1.5 billion revenue base as you start to grow some of those other areas like licensing?

[Bernard McCracken, executive]

Yes, Alex. I'm not sure you've been sitting in some of our strategy meetings. But yes, I think what really is important for us when we talk about licensing, that's one of the strategies that will reduce our [ clearance ] sales. When we get out of the products, we're not as focused on that we don't have authority on, we'll be able to drive without a topline, we'll be able to drive a better profit. A better net income number from a licensing arrangement than selling a lot of product at clearance that we tended to do in the past. So I think you definitely hit on that we expect to be able to drive up [ $100 million ] of EBITDA in a $1.5 billion revenue company.

[Andrew McLean, executive]

And saying that, Alex, it's like as we look further out, there's a point where we have the customer reeducated. That's what's happening right now. I mean we have customer [ deciles ] and our lowest [ decile ] is the one that we have probably averaged the most customers, they love the brand, they are committed to the brand. You know what customers come then they stay with Lands' End for 17, 18, 19 years. What they're not -- what they're struggling most to respond to is that they traditionally uses a little bit like a such option -- which is like they put product in their basket and they wait and talk they get the price they want, and then they'll buy it.

We're moving towards customers who will buy the product now or it won't be there. We're not going to discount our product. We're going to spend on our brands. We're going to stand on what we believe are the key attributes of the Lands' End solution company that we have built and we're going to drive that.

And I think what you will see, and we're seeing it ourselves in our internal discussions that we're shifting from -- sorry, the simple decile based model that looks at all customers the same and we're moving to more thoughtful psychographic model that looks at customers in cohorts and the 2 cohorts that we've identified are resolvers and evolvers, and it would be fair to say that we've used the fourth quarter to start repositioning some of the thinking around them and how we go to market to them, how we sell to them more uniquely versus more generically and how we attract them, part of what we've been doing in Q4, part of what we use Black Friday and Cyber Monday for was to go out and find new customers, new customers that we like, which is why -- and I know it's just some throwaway comments in the script, but it's why we talk so much about social media.

We really like the customer we're finding from that. They fit our revolver platform, and it's like they are much less inclined to buy at a discount. So we're doing the hard work right now, the commitment you're getting from me, the commitments you're getting from this management team is that we're going to deliver gross margin comps in dollars. This isn't just about getting rate and declaring victory. We understand so we are here to drive EBITDA and ultimately, earnings per share. And it's like we are fairly focused on that. So we're constantly evaluating that and threading that needle every day, be that Black Friday, Cyber Monday or just a casual Tuesday in January.

[Alex Fuhrman, analyst]

Okay. That's really helpful. I appreciate your insights, and congratulations again on the strong third quarter results.

[Andrew McLean, executive]

Thank you, Alex.

[Operator]

Thank you. This does conclude today's Lands' End Third Quarter Earnings call. You may all disconnect at this time, and have a wonderful day.