Summary
Burlington Stores, Inc. reported a strong third quarter and nine-month performance for fiscal year 2017, showcasing significant year-over-year growth in net sales and net income. Net sales increased by 7.1% in the third quarter and 6.9% year-to-date, driven by a comparable store sales increase of 3.1% in Q3 and 2.4% for the nine months, along with contributions from new store openings. The company also demonstrated improved profitability with a notable expansion in gross margin and a reduction in selling, general, and administrative expenses as a percentage of net sales.
Financial Highlights
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Financial Statements
Beta
| Revenue | $1.44B |
| Cost of Revenue | $831.73M |
| Gross Profit | $606.44M |
| SG&A Expenses | $480.19M |
| Operating Expenses | $1.38B |
| Net Income | $44.88M |
| EPS (Basic) | $0.66 |
| EPS (Diluted) | $0.65 |
| Shares Outstanding (Basic) | 67.69M |
| Shares Outstanding (Diluted) | 69.54M |
Key Highlights
- 1Net sales grew by 7.1% to $1.44 billion for the third quarter and 6.9% to $4.15 billion for the nine months, reflecting solid sales momentum.
- 2Comparable store sales increased by 3.1% in Q3 and 2.4% year-to-date, indicating improved performance in existing stores.
- 3Gross margin expanded by 100 basis points to 42.2% in Q3 and 58.7% (as a % of net sales) for the nine months, driven by increased merchandise margin.
- 4Net income saw a substantial increase, rising to $44.9 million in Q3 and $144.1 million year-to-date, up significantly from the prior year periods.
- 5The company opened 47 new stores (including relocations) in the nine-month period, indicating continued physical expansion and market penetration.
- 6Significant share repurchases were executed, with $230.7 million spent in the nine-month period, demonstrating a commitment to returning capital to shareholders.
- 7The adoption of a new share-based accounting standard positively impacted net income per share by reducing the effective tax rate.
Frequently Asked Questions
During the third quarter of Fiscal 2017, 80 stores were closed for at least one day due to weather-related incidents, resulting in losses of $5.9 million for merchandise inventories and $9.7 million for property and equipment. The company incurred repair and maintenance costs, but also received approximately $11.7 million in insurance proceeds to offset these losses.
Inventory at October 28, 2017 increased to $903.7 million from $822.5 million in the prior year, primarily due to inventory for new stores and an increase in 'pack and hold' inventory. However, comparable store inventory saw a 2% reduction as part of an initiative to increase inventory turnover. Inventory turnover rate improved approximately 12% and comparable store inventory turnover rate improved approximately 10% year-over-year for the third quarter.
Burlington plans to expand its retail store base by opening a minimum of 30 net new stores annually, focusing on market-specific and financially disciplined real estate strategies. They also aim to enhance operating margins through optimized markdowns, increased purchasing power, and driving operating leverage by growing sales over fixed costs. E-commerce growth and category enhancement are also key initiatives.
On November 17, 2017, shortly after the quarter-end, Burlington entered into an amendment to its Term Loan Credit Agreement which reduced interest rate margins, extended the maturity date to November 2024, and replaced outstanding Term B-4 Loans with Term B-5 Loans. This transaction is expected to result in approximately $3 million in loss on extinguishment of debt and $1 million in costs related to debt amendments in the fourth quarter of Fiscal 2017.