10-QPeriod: Q2 FY2019

Burlington Stores, Inc. Quarterly Report for Q2 Ended Aug 4, 2018

Filed August 30, 2018For Securities:BURL

Summary

Burlington Stores, Inc. reported a strong second quarter and first half of fiscal year 2018, demonstrating robust revenue growth and significant improvements in net income. Total revenues for the three months ended August 4, 2018, increased by 9.9% to $1.50 billion, with comparable store sales rising by 2.9%. This top-line growth translated into a substantial increase in profitability, with net income more than doubling year-over-year to $71.0 million for the quarter and rising to $153.5 million for the first half of the year. The company benefited from improved gross margins and a lower effective tax rate, largely due to the Tax Cuts and Jobs Act of 2017. Burlington also continued its store expansion strategy, opening 29 new stores in the first half of the year, and announced an additional $300 million share repurchase program, indicating confidence in its future performance.

Financial Highlights

48 data points
Beta

Revenue

$1.50B

41.4% Gross Margin

Net Income

$70.96M

4.7% Net Margin

EPS (Diluted)

$1.03

Total Assets

$2.93B

Cash & Equivalents

$89.58M

Free Cash Flow

$44.51M

Financial Statements
Beta
Revenue$1.50B
Cost of Revenue$877.47M
Gross Profit$621.16M
SG&A Expenses$479.08M
Operating Expenses$1.43B
Net Income$70.96M
EPS (Basic)$1.06
EPS (Diluted)$1.03
Shares Outstanding (Basic)66.89M
Shares Outstanding (Diluted)68.77M

Key Highlights

  • 1Total revenues increased by 9.9% to $1.50 billion in Q2 2018 and by 11.3% to $3.02 billion in the first half of 2018.
  • 2Net income surged by 51.3% to $71.0 million in Q2 2018 and by 54.7% to $153.5 million in the first half of 2018.
  • 3Comparable store sales grew by 2.9% in Q2 2018 and by 3.8% in the first half of 2018.
  • 4Gross margin improved to 41.4% in Q2 2018 from 40.7% in Q2 2017.
  • 5The effective tax rate decreased significantly due to the Tax Cuts and Jobs Act of 2017.
  • 6The company opened 29 new stores (including 6 relocations) in the first half of 2018, expanding its retail footprint to 651 stores.
  • 7An additional $300 million share repurchase program was authorized, demonstrating commitment to returning capital to shareholders.

Frequently Asked Questions

Burlington's increased profitability was driven by a combination of factors, including a 9.9% increase in total revenues, a 2.9% rise in comparable store sales, improved gross margins to 41.4%, and a significantly lower effective tax rate due to the Tax Cuts and Jobs Act of 2017. These factors contributed to net income more than doubling year-over-year.

Burlington is actively expanding its store base. In the first half of fiscal year 2018, the company opened 29 new stores, including 6 relocations, bringing the total store count to 651. The company has a disciplined real estate strategy and expects to open 43 net new stores in fiscal year 2018, with a long-term goal of reaching 1,000 stores.

Burlington is committed to returning capital to shareholders. The company has an ongoing share repurchase program. In addition to the remaining authorization from a prior program, on August 15, 2018, the Board authorized an additional $300 million share repurchase program, to be executed through August 2020. The company currently intends to retain all earnings for capital expenditures and business initiatives rather than paying dividends in the near term.

The Tax Cuts and Jobs Act of 2017 significantly lowered the U.S. federal statutory tax rate from 35% to 21%. This resulted in a substantial decrease in Burlington's effective tax rate and income tax expense for the reporting periods, contributing directly to higher net income. The company is still completing its analysis and may make adjustments to provisional amounts.