10-QPeriod: Q2 FY2018

Burlington Stores, Inc. Quarterly Report for Q2 Ended Jul 29, 2017

Filed August 24, 2017For Securities:BURL

Summary

Burlington Stores, Inc. reported a strong performance for the six months ended July 29, 2017, with significant increases in both net sales and net income compared to the prior year period. Net sales rose by 6.8% to $2.71 billion, driven by a 2.0% increase in comparable store sales and contributions from new stores. Net income more than doubled, reaching $99.3 million, up from $57.9 million in the same period last year. This improvement was fueled by a higher gross margin, which expanded to 40.8% due to lower markdowns and higher initial markups, coupled with a lower effective tax rate. The company also saw a reduction in selling, general, and administrative expenses as a percentage of net sales. Management's focus on enhancing the off-price model, improving the customer experience, and expanding their retail footprint appears to be driving positive results.

Financial Highlights

48 data points
Beta

Revenue

$1.37B

40.5% Gross Margin

Net Income

$46.90M

3.4% Net Margin

EPS (Diluted)

$0.66

Total Assets

$2.61B

Cash & Equivalents

$32.65M

Free Cash Flow

-$11.29M

Financial Statements
Beta
Revenue$1.37B
Cost of Revenue$808.13M
Gross Profit$555.10M
SG&A Expenses$437.20M
Operating Expenses$1.31B
Net Income$46.90M
EPS (Basic)$0.68
EPS (Diluted)$0.66
Shares Outstanding (Basic)68.81M
Shares Outstanding (Diluted)70.80M

Key Highlights

  • 1Net sales increased by 6.8% to $2.71 billion for the six months ended July 29, 2017, compared to $2.54 billion in the prior year period.
  • 2Net income significantly improved to $99.3 million, an increase of 71.5% from $57.9 million in the same period last year.
  • 3Gross margin expanded to 40.8% of net sales, up from 39.9% in the prior year, driven by lower markdowns and higher initial markups.
  • 4Comparable store sales increased by 2.0% for the six-month period, indicating healthy performance in existing stores.
  • 5The company opened 11 new stores and closed 3, bringing the total store count to 600, reflecting ongoing expansion efforts.
  • 6Earnings per share (diluted) saw a substantial rise to $1.40 from $0.80 in the comparable prior year period.
  • 7The company continued its share repurchase program, buying back $160.8 million of common stock during the period.

Frequently Asked Questions

For the six months ended July 29, 2017, Burlington Stores reported total revenue of $2.72 billion, an increase of 6.7% compared to $2.55 billion in the same period of fiscal year 2016. This growth was primarily driven by a 6.8% increase in net sales to $2.71 billion, supported by a 2.0% rise in comparable store sales and contributions from newly opened stores.

Profitability significantly improved due to several factors. Gross margin increased to 40.8% from 39.9% driven by lower markdowns and higher initial markups. Additionally, the company benefited from a lower effective tax rate, partly due to the adoption of new accounting standards for share-based payments, which positively impacted net income and earnings per share.

The company is actively expanding its retail footprint, having opened 11 new stores and closed 3 during the first half of fiscal year 2017, reaching a total of 600 stores. They plan to open approximately 37 net new stores for the full fiscal year. In terms of inventory, the company is focused on improving freshness and increasing inventory turnover, leading to a decrease in merchandise inventories to $727.0 million from $745.0 million year-over-year.

Burlington Stores believes that cash generated from operations, along with existing cash and its ABL Line of Credit, will be sufficient to fund its liquidity needs and planned capital expenditures for at least the next twelve months and the foreseeable future. The company continues to actively repurchase its common stock, indicating a commitment to returning value to shareholders. No cash dividends are anticipated in the near term.