10-QPeriod: Q1 FY2019

Burlington Stores, Inc. Quarterly Report for Q1 Ended May 5, 2018

Filed May 31, 2018For Securities:BURL

Summary

Burlington Stores, Inc. reported a strong first quarter for fiscal year 2018, with total revenues reaching $1,524.7 million, a significant increase of 12.8% compared to the prior year period. This growth was driven by a comparable store sales increase of 4.8% (on a shifted basis) and strong performance from new and non-comparable stores. Net income surged to $82.6 million, up from $52.4 million in the first quarter of fiscal year 2017, a substantial improvement attributed to higher merchandise margins, improved operating leverage, and the favorable impact of the U.S. Tax Cuts and Jobs Act of 2017, which lowered the effective tax rate. The company continues to execute its strategic initiatives focused on driving comparable store sales growth through enhancing its off-price model, sharpening its focus on the core female customer, and improving the customer experience. Furthermore, Burlington is expanding its retail footprint, planning to open 35-40 net new stores in fiscal year 2018, demonstrating confidence in its growth strategy and market opportunity.

Financial Highlights

48 data points
Beta

Revenue

$1.52B

41.2% Gross Margin

Net Income

$82.59M

5.4% Net Margin

EPS (Diluted)

$1.20

Total Assets

$2.83B

Cash & Equivalents

$83.01M

Free Cash Flow

-$172K

Financial Statements
Beta
Revenue$1.52B
Cost of Revenue$892.68M
Gross Profit$625.76M
SG&A Expenses$468.35M
Operating Expenses$1.42B
Net Income$82.59M
EPS (Basic)$1.23
EPS (Diluted)$1.20
Shares Outstanding (Basic)66.98M
Shares Outstanding (Diluted)68.97M

Key Highlights

  • 1Total revenue increased by 12.8% to $1,524.7 million, driven by a 4.8% comparable store sales growth (shifted basis).
  • 2Net income rose significantly by 57.7% to $82.6 million compared to $52.4 million in the prior year period.
  • 3Gross margin improved to 41.2% from 40.9%, primarily due to increased merchandise margin.
  • 4Selling, general, and administrative expenses as a percentage of net sales decreased to 30.8% from 31.3%, showing improved operating leverage.
  • 5The company opened 24 new stores (including 5 relocations) in the quarter, expanding its store count to 647.
  • 6Share repurchase activity continued, with $63.9 million spent on repurchasing 488,468 shares of common stock during the quarter.
  • 7The effective tax rate decreased substantially from 30.4% to 17.4% due to the impact of the U.S. Tax Cuts and Jobs Act of 2017.

Frequently Asked Questions

The primary driver of Burlington's revenue growth was a combination of increased comparable store sales, which grew by 4.8% on a shifted basis, and the net sales generated from new stores opened during the period. The company successfully executed its off-price model and enhanced its customer experience, contributing to higher sales.

The Tax Cuts and Jobs Act of 2017 significantly reduced Burlington's effective tax rate from 30.4% in the prior year to 17.4% in the current quarter. This reduction in tax expense directly contributed to the substantial increase in net income reported for the period.

Burlington plans to expand its retail store base strategically, aiming to open 35-40 net new stores in fiscal year 2018 and a minimum of 30 net new stores annually thereafter. This expansion is guided by a market-focused and financially disciplined real estate strategy, prioritizing attractive unit economics and returns.

Burlington focuses on managing inventory efficiently to maximize sales and gross margin dollars. This includes initiatives to reduce comparable store inventories to increase turnover, leveraging a pack-and-hold program for opportunistic buys, and using business intelligence systems to identify sell-through rates and capitalize on trends. The company also aims to increase the amount of current inventory as a percentage of total inventory.