10-QPeriod: Q3 FY2014

Burlington Stores, Inc. Quarterly Report for Q3 Ended Nov 2, 2013

Filed December 12, 2013For Securities:BURL

Summary

Burlington Stores, Inc.'s Form 10-Q filing for the quarterly period ended November 2, 2013, reveals a company undergoing significant transition, marked by a recent Initial Public Offering (IPO) in October 2013. For the nine months ended November 2, 2013, the company reported total revenues of $3,093.2 million, an increase of 9.9% compared to the prior year, driven by both comparable store sales growth (5.0%) and new store openings. Despite revenue growth, the company reported a net loss of $47.4 million for the period, an increase from the $42.6 million net loss in the prior year. This loss was influenced by increased costs related to debt amendments and the IPO, higher interest expenses, and stock option modification expenses, partially offset by improved operating results. Financially, the company ended the quarter with $31.6 million in cash and cash equivalents. Long-term debt stood at approximately $1.48 billion, net of current maturities. The company's balance sheet showed total assets of $2.98 billion and a stockholders' deficit of $215.8 million. The IPO provided $237.4 million in net proceeds, which were used for debt redemption, advisory fees, and general corporate purposes. The company's liquidity appears to be supported by operating cash flow and its ABL Line of Credit, with management confident in its ability to meet financial obligations for the next twelve months and beyond.

Financial Highlights

46 data points
Beta

Revenue

$1.06B

39.0% Gross Margin

Net Income

-$16.86M

-1.6% Net Margin

EPS (Diluted)

$-0.12

Total Assets

$2.98B

Cash & Equivalents

$31.56M

Free Cash Flow

-$28.83M

Financial Statements
Beta
Revenue$1.06B
Cost of Revenue$649.64M
Gross Profit$414.87M
SG&A Expenses$363.15M
Operating Expenses$1.10B
Net Income-$16.86M
EPS (Basic)$-0.12
Shares Outstanding (Basic)373.98M

Key Highlights

  • 1Net sales increased by 9.9% to $3,093.2 million for the nine months ended November 2, 2013, driven by comparable store sales growth of 5.0% and new store openings.
  • 2The company reported a net loss of $47.4 million for the nine months ended November 2, 2013, a slight increase from $42.6 million in the prior year's period.
  • 3Burlington Stores completed its Initial Public Offering (IPO) on October 7, 2013, raising $237.4 million in net proceeds.
  • 4Gross margin improved to 38.0% for the nine months ended November 2, 2013, from 37.5% in the prior year, attributed to better merchandising margins and a lower shrink accrual rate.
  • 5Selling and administrative expenses as a percentage of net sales improved to 32.9% from 33.6%, indicating operational leverage from sales growth.
  • 6The company's long-term debt stood at $1,484.3 million (net of current maturities) as of November 2, 2013.
  • 7Cash and cash equivalents decreased by $11.8 million to $31.6 million during the nine months ended November 2, 2013.

Frequently Asked Questions

For the nine months ended November 2, 2013, Burlington Stores reported total revenues of $3,093.2 million, an increase of 9.9% year-over-year. However, the company incurred a net loss of $47.4 million, compared to a net loss of $42.6 million in the same period last year. Key drivers for the revenue increase included a 5.0% rise in comparable store sales and contributions from new store openings. The increase in net loss was primarily due to higher costs associated with debt amendments, the IPO, increased interest expense, and stock option modification expenses, which outweighed improvements in operating results.

Burlington Stores completed its IPO on October 7, 2013, raising $237.4 million in net proceeds after deducting underwriting discounts and offering expenses. These proceeds were utilized to redeem approximately $221.8 million of Senior Notes, pay a $10.1 million termination fee to Bain Capital, and for other general corporate purposes. The IPO also triggered the termination of the Advisory Agreement with Bain Capital. The company's balance sheet reflects these changes, including a significant increase in Additional Paid-In Capital and a reduction in long-term debt through the redemption of notes.

As of November 2, 2013, Burlington Stores had approximately $1.48 billion in long-term debt, net of current maturities. The company actively managed its debt structure, including refinancing its Senior Secured Term Loan Facility and issuing new Senior Notes. Management stated that cash generated from operations, combined with existing cash and its ABL Line of Credit, is expected to be sufficient to fund its cash flow requirements and planned capital expenditures for at least the next twelve months and the foreseeable future. The company also confirmed compliance with all debt covenants.

The company's strategies for future growth and profitability focus on several key areas: enhancing the off-price model by focusing on product freshness and inventory turnover; sharpening its focus on the core female customer; improving the customer experience through store enhancements and better service; increasing e-commerce sales; and expanding its retail store base opportunistically and with a disciplined real estate strategy. Additionally, the company aims to enhance operating margins through markdown optimization, improved purchasing power, and driving operating leverage.