10-QPeriod: Q1 FY2018

Burlington Stores, Inc. Quarterly Report for Q1 Ended Apr 29, 2017

Filed May 25, 2017For Securities:BURL

Summary

Burlington Stores, Inc. reported a significant increase in net income for the first quarter of fiscal year 2017, reaching $52.4 million compared to $37.5 million in the prior year period. This 39.8% growth was driven by a 5.0% increase in net sales, reaching $1,346.5 million, and an improvement in gross margin to 40.9% from 40.1%. The company also benefited from the adoption of a new accounting standard for share-based payments, which positively impacted earnings per share. Operationally, Burlington Stores saw a modest 0.5% increase in comparable store sales, indicating continued, albeit slow, growth in customer traffic. The company is actively pursuing strategies to enhance comparable store sales, improve the customer experience, and expand its e-commerce presence. Management is focused on optimizing margins through markdowns and purchasing power, and driving operating leverage. Despite a decrease in cash and cash equivalents driven by increased capital expenditures and lower net borrowings on its credit line, the company believes it has sufficient liquidity for the next twelve months.

Financial Highlights

48 data points
Beta

Revenue

$1.35B

40.7% Gross Margin

Net Income

$52.37M

3.9% Net Margin

EPS (Diluted)

$0.73

Total Assets

$2.56B

Cash & Equivalents

$29.59M

Free Cash Flow

-$24.33M

Financial Statements
Beta
Revenue$1.35B
Cost of Revenue$796.40M
Gross Profit$550.15M
SG&A Expenses$420.86M
Operating Expenses$1.28B
Net Income$52.37M
EPS (Basic)$0.76
EPS (Diluted)$0.73
Shares Outstanding (Basic)69.33M
Shares Outstanding (Diluted)71.50M

Key Highlights

  • 1Net income increased by 39.8% to $52.4 million from $37.5 million in the prior year quarter.
  • 2Net sales grew by 5.0% to $1,346.5 million, supported by a 0.5% increase in comparable store sales.
  • 3Gross margin improved to 40.9% from 40.1% year-over-year, indicating better merchandise profitability.
  • 4The adoption of ASU 2016-09 positively impacted EPS by $0.07 due to changes in accounting for excess tax benefits.
  • 5Inventory levels decreased by 9.8% year-over-year to $725.5 million, reflecting improved inventory management and turnover.
  • 6The company repurchased $48.9 million of its common stock during the quarter under its ongoing share repurchase program.
  • 7Capital expenditures increased significantly, reflecting investments in supply chain and store initiatives.

Frequently Asked Questions

The primary drivers for the net income increase were a 5.0% rise in net sales, an improvement in gross margin by 80 basis points, and the adoption of a new accounting standard for share-based payments which positively impacted earnings per share.

Comparable store sales increased by a modest 0.5% compared to a 4.3% increase in the prior year quarter. This indicates a slowdown in comparable store sales growth year-over-year.

The company believes that cash generated from operations, existing cash balances, and its ABL Line of Credit will be sufficient to fund its expected cash flow requirements and planned capital expenditures for at least the next twelve months and the foreseeable future. They are not currently paying dividends, preferring to retain earnings for capital expenditures and business initiatives.

Burlington Stores is focusing on driving comparable store sales through merchandise freshness and a sharper focus on its core female customer. They also plan to enhance the customer experience and increase sales via e-commerce. Margin improvement is targeted through optimizing markdowns, enhancing purchasing power, and driving operating leverage. The company also plans to expand its retail store base by approximately 30 net new stores annually.