Red Flags Detected
- Covenant Breach (new) — Company violated fixed charge coverage and funded debt-to-EBITDA covenants as of January 31, 2026, requiring lender waiver to avoid debt acceleration.
- Material Weakness (worsened) — Material weakness in internal controls over foreign reporting packages persists for second year with no remediation achieved; now explicitly tied to lack of ITGCs at locations using non-standard systems.
- Goodwill Impairment (worsened) — Third consecutive year of goodwill impairments: $2.6M on LHD (FY26) following $10.5M on Pacific and Eagle (FY25), indicating serial acquisition underperformance.
- Valuation Allowance (new) — Company recorded full valuation allowance against domestic deferred tax assets in Q3 FY26, increasing total allowance from $6.6M to $18.3M, signaling reduced confidence in near-term U.S. profitability.
Lakeland divests two product lines, records $2.6M impairment, breaches debt covenants
Filed April 16, 2026 · Period ending January 31, 2026 · Compared to 10-K Apr 17, 2025 · ~1 min read
Key Changes
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high
Company breached two credit facility covenants as of January 31, 2026 (fixed charge coverage and debt-to-EBITDA ratios), requiring lender waiver on April 13, 2026. Outstanding debt doubled to $28.5M while available credit fell to $11.5M.
MD&A: Liquidity verify on EDGAR → -
high
Gross margin collapsed 820 basis points to 32.9% despite 15% revenue growth, driven by tariff, freight, and material cost inflation the company could not pass through to customers. Net loss widened from $18.1M to $25.3M.
MD&A: Results of Operations verify on EDGAR → -
high
Sold high-visibility and FR/AR product lines to National Safety Apparel for $14M post-period (March 2026), narrowing portfolio focus. Separately divested Decatur warehouse for $6.1M, generating $4.3M one-time gain.
Business: Divestitures verify on EDGAR →
2 more material changes behind this preview — plus the full narrative summary, section-by-section diffs against the prior filing, and verbatim quotes with EDGAR citations.
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Generated by AI · Jun 11, 2026 12:48 AM