10-QPeriod: Q3 FY2020

Burlington Stores, Inc. Quarterly Report for Q3 Ended Nov 2, 2019

Filed November 26, 2019For Securities:BURL

Summary

Burlington Stores, Inc. reported solid top-line growth in the third quarter and first nine months of fiscal year 2019, with total revenues increasing by 8.6% and 8.8%, respectively, compared to the prior year periods. This growth was driven by both an increase in comparable store sales (2.7% for the quarter and 2.2% for the nine months) and contributions from new and non-comparable stores. Net income also saw a significant improvement, rising by 25.6% to $96.5 million for the quarter and by 12.4% to $258.8 million for the nine months. A notable development during the period was the adoption of new lease accounting standards (ASU 2016-02), which resulted in the recognition of substantial operating lease assets and liabilities on the balance sheet. While this had a significant impact on the balance sheet presentation, management stated it did not materially impact liquidity. The company also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

48 data points
Beta

Revenue

$1.77B

42.4% Gross Margin

Net Income

$96.46M

5.4% Net Margin

EPS (Diluted)

$1.44

Total Assets

$5.51B

Cash & Equivalents

$140.51M

Free Cash Flow

$151.23M

Financial Statements
Beta
Revenue$1.77B
Cost of Revenue$1.02B
Gross Profit$752.04M
SG&A Expenses$583.64M
Operating Expenses$1.66B
Net Income$96.46M
EPS (Basic)$1.46
EPS (Diluted)$1.44
Shares Outstanding (Basic)65.96M
Shares Outstanding (Diluted)67.16M

Key Highlights

  • 1Total revenues increased by 8.6% to $1.77 billion for the third quarter and 8.8% to $5.06 billion for the nine months ended November 2, 2019, compared to the prior year.
  • 2Comparable store sales showed positive growth of 2.7% for the third quarter and 2.2% for the nine months.
  • 3Net income grew to $96.5 million for the third quarter and $258.8 million for the nine months, up from $76.8 million and $230.4 million in the respective prior year periods.
  • 4The company adopted new lease accounting standards (ASU 2016-02), significantly increasing operating lease assets and liabilities on the balance sheet, though it did not materially impact liquidity.
  • 5Gross margin as a percentage of net sales remained stable for the quarter (42.4%) and slightly decreased for the nine months (41.6% vs. 41.7%), impacted by freight costs and inventory write-offs.
  • 6The company continued its share repurchase program, buying back shares valued at $216.9 million during the nine-month period.
  • 7Operating cash flow increased significantly to $476.9 million for the nine months ended November 2, 2019, compared to $375.4 million in the prior year period.

Frequently Asked Questions

Burlington's revenue growth was driven by a combination of increased comparable store sales (2.7% for the quarter and 2.2% for the nine months) and the contribution from new and non-comparable stores. This indicates successful execution of the company's growth strategies and continued customer demand for its offerings.

The adoption of ASU 2016-02, 'Leases,' significantly impacted Burlington's balance sheet by recognizing substantial operating lease assets and liabilities. Specifically, approximately $2.3 billion in right-of-use assets and $2.6 billion in lease liabilities were added. However, management indicated that this adoption did not have a material impact on the company's liquidity.

Burlington demonstrated a commitment to returning capital to shareholders through its share repurchase program, having repurchased $216.9 million worth of stock in the first nine months of the fiscal year, with $481.6 million remaining under its authorizations. The company currently intends to retain all available funds and future earnings to fund capital expenditures and business initiatives, and does not anticipate paying cash dividends in the near term.

The gross margin as a percentage of net sales remained stable for the third quarter at 42.4%, but slightly decreased for the nine-month period to 41.6% from 41.7%. This was primarily due to higher freight costs and inventory write-offs, which were partially offset by increased merchandise margins.